High Court to Hear Escondido Rent Lawsuit : Litigation: In dispute over mobile home park ordinance, U.S. Supreme Court also may rule whether damages can be awarded for the impact of a government regulation.

The U.S. Supreme Court has agreed to hear an Escondido mobile home rent-control case that could redefine how and when damages can be awarded for the financial impact of a government regulation, it was announced Tuesday.

The court will hear arguments in a lawsuit first filed against the city in 1989 in San Diego County Superior Court by owners of two mobile home parks. California state courts have consistently upheld the city’s mobile home rent-control ordinance.

The Escondido ordinance was approved by voters in 1988 and prevents mobile home park owners from raising rents without a review by the city, even when tenants sell their coach and their rights to the low-rent space.

Attorneys for cities and park owners say the case will affect the more than 75 California cities with mobile home rent-control laws, as well as cities with similar laws nationwide. A ruling against Escondido could result in tens of millions of dollars of damages against cities with rent-control laws similar to Escondido’s, park owners’ attorneys said.

In the suit, John and Irene Yee, owners of two mobile home parks, contend that, under the Escondido law, their tenants have been able to sell their coaches for a much higher price than they would be able to do so without rent control.

The tenants are, in essence, selling not just the coaches but the right to occupy the spaces in the park at low rent, said the Yees’ attorney, Robert J. Jagiello.

“Coaches that were worth $10,000 or $15,000 are now selling at $75,000. All of a sudden they are appreciating in value. What they are selling is a property right that belongs to the owner of the land and not the owner of the coach,” Jagiello said in an interview Tuesday.

The law unfairly forces park owners to bear the burden of rent control that should be shouldered by the community as a whole, said Jagiello.

Attorneys for the city argue that virtually every regulation enacted by the city in some way economically affects somebody, and that it is within the rights of a city to impose rent-control laws as well as other laws that are in the interests of the community.

“To say that incidental economic effects amounts to the government snatching away someone’s private property stretches the law to the breaking point,” said Jeffrey Epp, the Escondido assistant city attorney handling the case.

There are 28 mobile home parks in Escondido with a total of 3,147 rental spaces. Statewide, there were about 450,000 mobile homes representing 4.5% of the state’s housing, with more than two-thirds of those homes situated in parks, according to a 1986 state survey.

Every California court that has heard the case since it was originally filed in San Diego County Superior Court in 1989 has ruled in favor of the city, but the case has yet to have a hearing in federal court.

Beyond the issue of mobile home rent-control, the high court could also use this case to further define a murky field of law that decides when a government must compensate a person for economic impacts caused by regulations, attorneys said.

For example, if a city were to take over a property from a person and turn it into a parking lot, that would constitute a “taking,” and the city would have to compensate the landowner. But, if the city were to impose zoning regulations such that there could be no other economically feasible use for the property other than a parking lot, it is unclear whether there is a “taking” or if compensation would be required, said Joel Hirsch, a Los Angeles attorney representing several mobile home park owners.

“There are so many inconsistencies in the takings doctrine that the government looks hypocritical, especially when it comes down to the government having to pay for something,” Hirsch said.

“For the U.S. Supreme Court to take this particular case, it’s possible that that means the new composition of the court is about to try and rework a completely antiquated and gerrymandered doctrine so it could be used in the 21st century,” Hirsch said.

The suit pits property rights against the governing rights of cities, two areas of which conservative courts have been traditionally protective, and it is unclear on which side this Supreme Court will come down, attorneys said.

David Hirsch, city attorney of Lompoc and chairman of a California League of Cities committee that looks into mobile home rent-control laws, said it is likely that several other cities will support Escondido in the suit, filing a friend of the court brief.

“This case is going to be very significant in the sense that they will be further defining the parameters of taking law. The issue fundamentally comes down to the question of how far cities can go in terms of regulating” before it becomes a taking, David Hirsch said.

A 1987 case from Santa Barbara that is very similar to the Escondido case is the basis for Yee’s suit, which has been joined by seven other mobile home park owners. That case did not reach the Supreme Court, but was settled out of court with the city paying the park owners $600,000 in damages and attorneys fees.

In that case, the federal 9th Circuit Court of Appeals ruled in favor of the property owners and specifically condemned the inability of park owners to raise rents after a mobile home space had been sold.

Escondido, in its response filed with the Supreme Court, argued that the Santa Barbara case has been undermined by subsequent decisions in which the courts seemed to have contradicted the ruling.

The Escondido ordinance was upheld by both the Superior Court and the 4th District Court of Appeal. Earlier this year, the California Supreme Court denied an appeal, letting the appellate court decision stand.