Weir v. Newsom

452 F.Supp.3d 921

BETTER HOUSING FOR LONG BEACH and Joani Weir, Plaintiffs,

v.Gavin NEWSOM, in his official capacity as Governor of the State of California, Defendant.

Case No.: CV 19-08861-CJC (JCx)

United States District Court, C.D. California.

Signed March 11, 2020

Paul J. Beard, II, FisherBroyles LLP, Los Angeles, CA, for Plaintiffs.

R. Matthew Wise, Office of Attorney General California Department of Justice, Sacramento, CA, for Defendant.

ORDER GRANTING GOVERNOR NEWSOM'S MOTION TO DISMISS [Dkt. 12]

CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiffs Better Housing for Long Beach and Joani Weir bring this action for declaratory and injunctive relief against Defendant Gavin Newsom in his official capacity as Governor of the State of California. (Dkt. 1 [Complaint, hereinafter "Compl."].) Plaintiffs contend that Assembly Bill 1482 ("AB 1482"), signed into law by the Governor in October 2019, violates the United States and California Constitutions.¹ Specifically, they challenge AB 1482's relocation assistance provision, which demands that landlords pay or waive one month's rent before terminating certain residential tenancies. See Cal. Civ. Code § 1946.2(d)(1). Before the Court is the Governor's motion to dismiss for failure to state a claim. (Dkt. 12 [Motion]; Dkt. 12-1 [Memorandum in Support, hereinafter "Mot."].) For the following reasons, the Governor's motion is GRANTED and this action is DISMISSED WITH PREJUDICE .

II. BACKGROUND

In September 2019, the California State Senate and Assembly passed AB 1482 or "the Tenant Protection Act of 2019." Cal. Assem. Bill No. 1482 (2019–2020 Reg. Sess.). The Governor signed the bill into law on October 8, 2019, and it became effective on January 1, 2020. Id. ; (Compl. ¶ 21). AB 1482 has three primary provisions, only one of which is challenged in the instant lawsuit.

First, AB 1482 implements statewide rent control or "rent-gouging" protections. Cal. Civ. Code § 1947.12(k)(1). For qualifying residential properties, this provision caps annual rent increases at five percent plus inflation or ten percent, whichever is lower. Id. § 1947.12(a).

Second, the bill prohibits residential landlords from terminating a tenancy without "just cause" if the tenant has lawfully and continuously occupied the property for more than twelve months. Id. § 1946.2(a). "Just cause" includes both "at-fault just cause" and "no-fault just cause." Id. § 1946.2(b). A landlord may terminate a tenancy for "at-fault just cause" if a tenant fails to pay rent, breaches a material term of the lease, or commits another enumerated act. Id. § 1946.2(b)(1). A landlord may terminate a tenancy for "no-fault just case" to occupy the property personally, to provide it to an immediate family member, to withdraw it from the rental market, to demolish or substantially remodel it, or if required by law. Id. § 1946.2(b)(2).

Third, and most relevant here, AB 1482 requires property owners to provide "relocation assistance" when they terminate a tenancy for "no-fault just cause." Id. § 1946.2(d)(1). Specifically, if a tenant has lived at the property for more than twelve months and the owner terminates his or her tenancy for "no-fault just cause," the owner must either "provide a direct payment to the tenant" of one month's rent or waive the tenant's final month of rent. Id. The owner's failure to provide this relocation assistance renders any notice of termination void. Id. § 1946.2(d)(4). Both the just cause provision and the relocation assistance provision apply to all residential properties except those specifically exempted by statute. See id. §§ 1946.2(a), (d). These exemptions include hotels, motels, and other transient occupancy properties; hospitals; religious institutions; residential care facilities; dormitories; single-family owner-occupied residencies with fewer than three units; and government-regulated affordable housing. Id. § 1946.2(e). The just cause and relocation assistance provisions also do not apply to properties subject to preexisting or more protective local ordinances. Id. § 1946.2(g).

Plaintiffs filed the instant action on October 15, 2019, one week after the Governor signed AB 1482 into law. In their complaint, they only challenge AB 1482's relocation assistance provision, and do not challenge the rent-gouging or just cause termination provisions. (See Compl. ¶¶ 56–76.) Plaintiff Better Housing for Long Beach ("Better Housing") is a nonprofit membership organization that represents the interests of rental-housing owners in the City of Long Beach. (Compl. ¶ 8.) Plaintiff Joani Weir is the founder and president of Better Housing and owns several rental-housing properties in Long Beach. (Id. ¶ 9.) Plaintiffs allege that AB 1482's relocation assistance provision has negatively affected Better Housing's members, including Weir. Specifically, it has allegedly impacted their "ability to plan for the management and disposition of their units, because they must now consider the financial penalty (i.e., relocation payment) that they must pay for the right to repossess those units." (Id. ¶¶ 8–9.) Plaintiffs also allege that Weir "has been forced to incur significant costs to change her rental-business model, including by converting one of her rental units ... into a furnished, extended-stay apartment." (Id. ¶ 9.)

In their Complaint, Plaintiffs argue that the relocation assistance provision is facially unconstitutional under the U.S. and California Constitutions. Plaintiffs seek declaratory relief and an order permanently enjoining the Governor from enforcing the provision. In the instant motion, the Governor argues that all of their claims fail as a matter of law.

III. LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. The issue on a motion to dismiss for failure to state a claim is not whether the claimant will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco Dev. Corp. , 108 F.3d 246, 249 (9th Cir. 1997). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the nonmoving party. Moyo v. Gomez , 32 F.3d 1382, 1384 (9th Cir. 1994). The district court may also consider additional facts in materials that the district court may take judicial notice, Barron v. Reich , 13 F.3d 1370, 1377 (9th Cir. 1994), as well as "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading," Branch v. Tunnell , 14 F.3d 449, 454 (9th Cir. 1994), overruled in part on other grounds by Galbraith v. Cty. of Santa Clara , 307 F.3d 1119 (9th Cir. 2002). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; see also Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (stating that while a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, courts "are not bound to accept as true a legal conclusion couched as a factual allegation" (citations and quotes omitted)).

IV. DISCUSSION

Plaintiffs assert four causes of action against the Governor, alleging that the relocation assistance provision is facially unconstitutional under (1) the Takings Clause of the Fifth Amendment to the U.S. Constitution, (2) the Takings Clause of the California Constitution, (3) the Fourth Amendment to the U.S. Constitution, and (4) the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. The Governor moves to dismiss all four causes of action for failure to state a claim. The parties' briefing focuses on Plaintiffs' first claim. The Court first examines relevant legal background on the Takings Clause and then addresses each of Plaintiffs' claims in turn.

A. Legal Background: Protections Against Takings and Exactions in the U.S. Constitution

The Takings Clause of the Fifth Amendment to the United States Constitution provides: "[N]or shall private property be taken for public use, without just compensation." The Clause is made applicable to the States through the Fourteenth Amendment. Chicago, B. & Q.R. Co. v. Chicago , 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979 (1897). It imposes two limits on the government's authority to appropriate private property: "the taking must be for a ‘public use’ and ‘just compensation’ must be paid to the owner." Brown v. Legal Found. of Wash. , 538 U.S. 216, 231–32, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003). Of course, these limits only apply when the government effects a "taking" of private property.

1. Possessory Takings and Regulatory Takings

The Supreme Court generally recognizes two types of takings: "possessory takings"—sometimes referred to as physical, categorical, or per se takings—and "regulatory takings." See Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency , 535 U.S. 302, 320–25, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002) (discussing this distinction); Yee v. City of Escondido , 503 U.S. 519, 528–38, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992) (same). The "classic taking" is one "in which the government directly appropriates private property for its own use," for example, "when the government appropriates part of a rooftop in order to provide cable TV access for apartment tenants, or when its planes use private airspace to approach a government airport." Tahoe-Sierra , 535 U.S. at 322–24, 122 S.Ct. 1465 (citations omitted). "When the government physically takes possession of an...