Besaro Mobile Home Park, LLC v. City of Fremont et al

Filing 55

ORDER by Judge Claudia Wilken Granting 50 Motion to Dismiss. (ndr, COURT STAFF) (Filed on 7/29/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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BESARO MOBILE HOME PARK, LLC,

No. C 10-0478 CW

Plaintiff,

ORDER GRANTING
MOTION TO DISMISS
(Docket No. 50)

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United States District Court
For the Northern District of California

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v.
CITY OF FREMONT, CITY OF
FREMONT RENT REVIEW OFFICER MAY
LEE, and CITY OF FREMONT HEARING
OFFICER RUTH J. ASTLE,
Defendants.
________________________________/

Plaintiff Besaro Mobile Home Park, LLC brought this action

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against the City of Fremont, its rent review officer, May Lee, and

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its hearing officer, Ruth S. Astle, under the Fifth and Fourteenth

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Amendments to the United States Constitution.

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Fremont and Lee move to dismiss for lack of subject matter

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jurisdiction and failure to state a claim.

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motion.

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argument, the Court now grants the motion.

Plaintiff opposes the

After considering the parties’ submissions and oral

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Defendants City of

BACKGROUND
Plaintiff filed its second amended complaint (2AC) on April

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3, 2013.

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complaint and documents attached to Defendant’s Request for

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Judicial Notice (RJN).1

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Docket No. 49.

The following facts are taken from that

Besaro owns and operates a 236-space mobile home park in
Fremont, California.

2AC ¶ 10.

Since 1992, it has been subject

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The Court grants Defendants’ unopposed request to take judicial
notice of: Fremont’s rent control ordinance, Besaro’s pleadings from its
prior lawsuits challenging the ordinance, and the dispositive orders and
appellate decisions from those past lawsuits. Docket No. 51, RJN.

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to a local rent control ordinance that places a cap on the annual

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percentage by which mobile home parks may increase their rent.

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Id. ¶ 16.

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provision that prohibits park owners from raising the rent on any

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mobile home space by more than fifteen percent after a tenant

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vacates that space.

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§ 9.55.060(a)(3).

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The ordinance also includes a “vacancy control”

Id. ¶ 20; see Fremont, Cal., Mun. Code

In July 2005, Besaro filed a lawsuit in this Court alleging
that the vacancy control provision violated the Takings and Due

United States District Court
For the Northern District of California

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Process Clauses of the federal Constitution and analogous

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provisions of the California Constitution.

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complaint sought a judicial declaration that the provision was

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unconstitutional, both on its face and as applied to Besaro.

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Ex. 2, Complaint in Case No. 05-2886, at ¶¶ 40-62.

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Id. ¶ 21.

Its

RJN,

This Court dismissed Besaro’s complaint in October 2006.

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RJN, Ex. 3, Order Granting Defendant’s Second Motion to Dismiss,

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at 62-63; Besaro Mobile Home Park v. City of Fremont, 2006 WL

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2990201, at *4 (N.D. Cal.) (Besaro I).

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Besaro’s facial takings challenge was time-barred; its as-applied

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takings challenge was unripe; and its due process challenge failed

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to state a claim.

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Court dismissed the complaint “with prejudice to filing a facial

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challenge to the ordinance,” but granted Besaro leave “to re-

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fil[e] an as-applied challenge upon exhaustion of State remedies.”

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Id. at 62.

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2008.

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Fremont, 289 Fed. App’x 232, 232 (9th Cir. 2008).

Id. at 59-62.

The Court found that

Based on these rulings, the

The Ninth Circuit affirmed the dismissal in August

RJN, Ex. 4, at 67; Besaro Mobile Home Park v. City of

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Five months later, in January 2009, Besaro filed a petition

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with the City for a “major rent increase.”

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ordinance requires park owners to file such a petition whenever

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they seek to raise their rents beyond the “standard rent

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increases”2 set forth in the municipal code.

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Fremont, Cal., Mun. Code § 9.55.050(e).

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rent review officer who determines whether the requested rent

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increase is appropriate based on a variety of factors.

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include recent changes in the park’s “net operating income,”

2AC ¶¶ 24-25.

The

RJN, Ex. 1, at 11;

Every petition is heard by a

These

United States District Court
For the Northern District of California

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current rents at “comparable mobile home parks,” and whether the

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park owner is receiving “a fair return on [its] investment,” among

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other considerations.

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Cal., Mun. Code § 9.55.150.

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2AC ¶ 65; RJN, Ex. 1, at 26-27; Fremont,

Besaro’s petition requested an across-the-board rent increase

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to $895 per month for each of its 236 spaces.

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City held a hearing on the petition in August 2009, during which

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Besaro presented evidence that its average monthly rent -- roughly

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$670 per space in 2008 -- was lower than that of the City’s two

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other mobile home parks.

Id. ¶¶ 25, 72.

2AC ¶¶ 24-25.

The

Besaro’s expert witness

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The provision setting forth the “standard rent increases” reads
as follows:

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Once every 12 months the park owner may impose a standard rent
increase equal to the greater of:
(1) Three percent; or
(2) Ten dollars per month; or
(3) Sixty percent of the percent change in the
Consumer Price Index; provided, that no standard
rent increase of more than six percent may be
imposed in any 12-month period.
All standard rent increases shall become a permanent part of
the base rent upon which future increases are based.
Fremont, Cal., Mun. Code § 9.55.050(a); RJN, Ex. 1, at 10.

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testified that, in the absence of rent control, the market rate

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for a typical space at Besaro would be roughly $895 per month.

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Id. ¶ 34.

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The City denied Besaro’s petition in November 2009.

Id.

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¶ 64.

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conformity with the takings, due process and equal protection

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clauses of the United States Constitution,” the hearing officer,

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Defendant Astle, concluded that the request was not “properly

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raised in the hearing.”

United States District Court
For the Northern District of California

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Although Besaro asked “to have the ordinance applied in

Id. ¶ 69.

Three months later, in February 2010, Besaro sought a writ of

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administrative mandamus in Alameda County Superior to challenge

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the City’s decision.

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this action by filing a separate “petition for administrative

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mandamus” in federal court.

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2010, this Court stayed the federal action pending resolution of

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the state action.

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Id. ¶ 73.

The same day, Besaro initiated

Petition, Docket No. 1.

In July

2AC ¶ 74.

In November 2010, the Alameda County Superior Court denied

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Besaro’s petition for a writ of administrative mandamus.

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¶ 74.

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March 2012, rejecting Besaro’s argument “that the denial of [the]

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major rent increase was contrary to the Ordinance and violated its

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rights under the California Constitution.”

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at 101; Besaro Mobile Home Park v. City of Fremont, 204 Cal. App.

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4th 345, 354 (2012) (Besaro II).

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under the takings, due process, and equal protection provisions of

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the State Constitution before the Court of Appeal, it did “not

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raise any federal constitutional claims” and “explicitly stated in

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its opening brief that it [was] reserving any such claims for

Id.

The First District Court of Appeal affirmed the decision in

Id. ¶ 76; RJN, Ex. 6,

Although Besaro raised claims

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litigation in federal court.”

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354.

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Besaro II, 204 Cal. App. 4th at

In June 2012, the California Supreme Court denied Besaro’s

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petition for review, thus ending the state court proceedings.

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¶ 77.

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exhausted its state remedies, the Court lifted its stay of the

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present action.

After the parties notified this Court that Besaro had

Id. ¶ 78.

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2AC

This motion followed.
LEGAL STANDARD

Subject matter jurisdiction is a threshold issue which goes

United States District Court
For the Northern District of California

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to the power of the court to hear the case.

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matter jurisdiction must exist at the time the action is

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commenced.

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Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988).

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court is presumed to lack subject matter jurisdiction until the

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contrary affirmatively appears.

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Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).

Federal subject

Morongo Band of Mission Indians v. Cal. State Bd. of
A federal

Stock W., Inc. v. Confederated

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Dismissal is appropriate under Rule 12(b)(1) when the

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district court lacks subject matter jurisdiction over the claim.

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Fed. R. Civ. P. 12(b)(1).

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attack the sufficiency of the pleadings to establish federal

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jurisdiction, or allege an actual lack of jurisdiction which

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exists despite the formal sufficiency of the complaint.

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Publ’g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th

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Cir. 1979); Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir.

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1987).

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A Rule 12(b)(1) motion may either

Thornhill

DISCUSSION
Besaro asserts that the denial of its petition for a major
rent increase represents an unconstitutional regulatory taking
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under the Fifth Amendment.

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violated its Fourteenth Amendment rights to due process and equal

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protection.

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City’s decision and declaring the rent control ordinance

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“unconstitutional as applied.”

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that these claims are barred by res judicata.3

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It also alleges that the denial

Accordingly, Besaro seeks an order vacating the

2AC ¶ 107.

Defendants contend

The doctrine of res judicata, or claim preclusion, prohibits

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the re-litigation of any claims that were raised or could have

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been raised in a prior action.

Tahoe–Sierra Pres. Council v.

United States District Court
For the Northern District of California

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Tahoe Reg’l Planning Agency, 322 F.3d 1064, 1077 (9th Cir. 2003).

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Here, there are two prior court decisions which could potentially

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preclude Besaro’s present claims: this Court’s 2006 decision

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dismissing with prejudice Besaro’s facial challenge to the City’s

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rent control ordinance, Besaro I, 2006 WL 2990201, at *4, aff’d

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289 Fed. App’x at 232, and the California Court of Appeal’s 2012

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decision denying Besaro’s request for a writ of administrative

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mandamus, Besaro II, 204 Cal. App. 4th at 349.

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does not assert a facial challenge here, only the Court of Appeal

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decision is relevant.

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Because Besaro

“To determine the preclusive effect of a state court judgment

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federal courts look to state law.”

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Inc. v. City of San Jose, 420 F.3d 1022, 1031 (9th Cir. 2005)

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(MHC).

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right theory,” which holds that “the violation of a single primary

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right gives rise to but a single cause of action.”

Manufactured Home Communities

In California, res judicata is based upon the “primary

Crowley v.

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The issue may be raised on a motion to dismiss when doing so does
not raise any disputes of fact. Scott v. Kuhlmann, 746 F.2d 1377, 1378
(9th Cir. 1984).

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Katleman, 8 Cal. 4th 666, 681 (1994).

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multiple legal theories upon which recovery might be predicated,

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one injury gives rise to only one claim for relief.”

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Corp. v. Monsanto Co., 28 Cal. 4th 888, 904 (2002) (citation

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omitted).

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plaintiff cannot assert any claim that was raised or could have

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been raised in a prior action.

“Even where there are

Mycogen

Thus, under California’s doctrine of res judicata, a

Id. at 908.

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The Ninth Circuit relied on this principle in MHC, 420 F.3d

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at 1031, to dismiss claims nearly identical to those asserted by

United States District Court
For the Northern District of California

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Besaro here.

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challenge the City of San Jose’s rent control ordinance in federal

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court after the city denied its petition for a rent increase and

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the California Court of Appeal denied its petition for a writ of

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administrative mandamus.

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owner’s claims -- which, as in the present case, arose under the

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Fifth and Fourteenth Amendments -- were barred by res judicata

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because they had already been adjudicated in state court.

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The court explained,

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In that case, a mobile home park owner sought to

The Ninth Circuit held that the park

Id.

MHC’s claims all relate to a single Ordinance and the
City’s application of that Ordinance to MHC’s petition
for a rent increase. MHC’s different Counts are simply
different legal theories under which MHC may recover.
Different theories of recovery are not separate primary
rights.
Id. at 1031-32.
The same logic governs here.

Just as in MHC, Besaro’s claims

arise from a “single primary right” -- namely, the right to
increase its rent -- that has already been adjudicated in state
court.

Id. at 1031.

Indeed, Besaro seeks exactly the same relief

in this action that it previously sought in state court and has
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even styled its complaint as a “Petition for a Writ of

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Administrative Mandamus.”

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failed to obtain that relief in state court, it may not pursue it

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again here.

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Barbara, 604 F.3d 1142, 1149 (9th Cir. 2010) (“The damages that

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Adam Bros. now seeks to obtain in federal court are identical to

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those it sought in state court.

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is irrelevant that Adam Bros. attempts to recover under different

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legal theories.”); MHC, 420 F.3d at 1032 (“MHC’s claims either

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United States District Court
For the Northern District of California

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have been or should have been raised in state court, and MHC is

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precluded from raising them in federal court.”).

See Docket No. 49.

Because Besaro

See Adam Bros. Farming, Inc. v. County of Santa

For purposes of res judicata, it

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Besaro contends that res judicata is inapplicable here

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because it reserved its federal claims under England v. Louisiana

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Bd. of Medical Examiners, 375 U.S. 411 (1964).

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rejected this argument in San Remo Hotel, LP v. City of San

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Francisco, 545 U.S. 323 (2005).

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takings challenge to a San Francisco zoning ordinance.

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plaintiffs in the case had previously challenged the ordinance

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under the California Constitution during an administrative

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mandamus proceeding in state court.

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failed to obtain relief under state law, they challenged the

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ordinance in federal court under the Fifth Amendment, arguing that

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they had reserved their federal takings claim under England.

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Supreme Court, however, held that their claims were still

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precluded by res judicata because the plaintiffs’ state claims

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“effectively asked the state court to resolve the same federal

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issues they asked it to reserve.”

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explained, “Because California courts had interpreted the relevant

The Supreme Court

San Remo involved a federal

Id. at 330.

Id. at 341.

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The

After they

The

The Court

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substantive state takings law coextensively with federal law,

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petitioners’ federal claims constituted the same claims that had

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already been resolved in state court.”

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Besaro argues that this reasoning is based on the false

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assumption that California takings law is coextensive with federal

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takings law.

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examined the relationship between California and federal takings

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law in San Remo.

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[the] decision” that “the Ninth Circuit properly interpreted

It notes that the Supreme Court never actually

Instead, the Court “assume[d] for purposes of

United States District Court
For the Northern District of California

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California preclusion law” and “that the California Supreme Court

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was correct in its determination that California takings law is

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coextensive with federal law.”

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Id. at 337 n.18.

Although San Remo does not explicitly hold that California

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takings law is coextensive with federal law, other courts have

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held that the two bodies of law essentially mirror each other.

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Small Prop. Owners of S.F. v. City of San Francisco, 141 Cal. App.

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4th 1388, 1396 (2006) (“California courts generally construe the

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federal and California takings clauses congruently.”); Dunn v.

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County of Santa Barbara, 135 Cal. App. 4th 1281, 1299 n.10 (2006)

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(“[S]tate takings law is coextensive with federal law.”).

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the Ninth Circuit’s decision in San Remo held that the California

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Supreme Court’s prior rejection of the plaintiffs’ state takings

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claims required “an ‘equivalent determination’ of such claims

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under the federal takings clause.”

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San Francisco, 364 F.3d 1088, 1098 (9th Cir. 2004).

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not attempted to distinguish this aspect of the Ninth Circuit’s

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decision, which remains binding in light of the Supreme Court’s

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decision.

Indeed,

San Remo Hotel, LP v. City of
Besaro has

Besaro has likewise failed to show that its equal
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protection or due process claims would fare any differently under

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the federal constitution than they did under the California

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Constitution.

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Edde, 173 Cal. App. 4th 883, 891 (2009) (“The equal protection

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clause contained in article I, section 7, of the California

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Constitution is coextensive with its federal counterpart found in

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the Fourteenth Amendment.”); Ryan v. Cal. Interscholastic Fed’n,

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94 Cal. App. 4th 1048, 1069 (2001) (“[P]rocedural due process

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under the California Constitution is ‘much more inclusive’ and

See generally In re Conservatorship & Estate of

United States District Court
For the Northern District of California

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protects a broader range of interests than under the federal

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Constitution.” (citations omitted)).

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Besaro’s final argument is that Besaro II lacks preclusive

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effect because it was based on faulty factual findings by the

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hearing officer.

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decision, which held that issue preclusion “does not apply when

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the factual finding in the prior proceeding was arrived at based

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on a lower standard of proof than the one required in the

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subsequent proceeding.”

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194 Cal. App. 4th 1494, 1503 (2011).

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here, however, because the Besaro II court did not rely on the

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hearing officer’s fact findings in rejecting Besaro’s state

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constitutional claims.

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in analyzing whether the hearing officer properly applied the

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ordinance.

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claims, the court relied on undisputed facts, see, e.g., Besaro

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II, 204 Cal. App. 4th at 358 (“Besaro does not claim that it has

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been denied a fair return on its investment.”), or accepted

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Besaro’s own factual allegations as true, see, e.g., id. at 360

For support, Besaro cites a recent state court

Grubb Co., Inc. v. Dep’t of Real Estate,
This rule is inapposite

The court only discussed the fact findings

In its separate discussion of Besaro’s constitutional

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(“Even if we assume the three parks are similarly situated, equal

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protection is not denied simply because some landlords may receive

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rents different than those received by other landlords.”).

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has not identified any disputed fact on which the Court of Appeal

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actually relied in rejecting Besaro’s constitutional claims.

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Accordingly, the hearing officer’s factual findings -- and the

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standard by which the Court of Appeal reviewed those findings --

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do nothing to alter the preclusive effect of Besaro II.

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United States District Court
For the Northern District of California

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Besaro

CONCLUSION
For the reasons set forth above, Defendants’ motion to

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dismiss (Docket No. 50) is GRANTED.

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judgment and close the file.

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IT IS SO ORDERED.

The clerk shall enter

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Dated: 7/29/2013

CLAUDIA WILKEN
United States District Judge

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