Justices Back Rent Control for Mobile Home Owners : Property: Ending threat of landlord suits against cities, high court says laws apply even when tenants sell spaces.

In a far-reaching victory for California cities and their mobile home dwellers, the Supreme Court ruled unanimously Wednesday that local rent control laws apply even when mobile home tenants sell their spaces to new buyers.

“It’s a big decision for us in mobile home parks,” said Bill Kilduff, chairman of the Ventura City Mobile Home Owners Coordinating Council. Kilduff said the ruling should help mobile homeowners attract buyers who no longer have to fear steep rent increases after a sale.

The 9-0 decision in an Escondido case removes a legal threat that could have opened cities throughout California to large damage awards from lawsuits.

The ruling came as another sharp disappointment to conservatives who hoped the Supreme Court would force governments to pay compensation when they restrict use of private property. The conservatives base their view on the Constitution’s 5th Amendment, which says that “just compensation” must be paid when property is “taken for public use.”

But the justices said that the park owner’s property was not “taken” but merely regulated.

Cities have “broad power” to “regulate the landlord-tenant relationship without paying compensation for all economic injuries that such regulation entails,” Justice Sandra Day O’Connor wrote for the court.

Although the ruling affects laws in several states, its greatest impact is in California, where an estimated 800,000 people live in mobile homes. Because these homes cannot be easily moved, many city and state officials have decided that mobile home dwellers need special protections from steep rent increases or unjustified evictions.

In California, 87 cities, including five in Ventura County, restrict rent increases by mobile home park owners, and the state has forbidden the owners from forcing tenants to move except for reasons such as failure to pay rent. Ventura County has 106 mobile home parks with spaces for about 10,000 mobile homes.

Unlike most rent-control laws covering apartments, these mobile home ordinances typically maintain the lower rents even when a coach and the pad on which it sits are sold to a new buyer.

In a 1986 case from Santa Barbara, a federal appeals court concluded that these laws give tenants an undeserved “windfall” when they sell their mobile homes, money that should go to the park owner. As property values in California have soared, mobile home spaces have also risen in price, but mostly because of the increased value of the pad owned by the park.

By transferring this profit from the landowner to the coach owner, the cities are violating the constitutional rights of park owners, Judge Alex Kozinski said for the appeals court.

Based on this rationale, a federal judge handed down a $1-million verdict against the city of Los Angeles in November. The owner of the Tahitian Terrace Mobile Home Park in Pacific Palisades said that tenants receive an average $20,000 windfall each time a coach is sold. Because nearly 50 coaches had changed hands, the judge said, the city must pay $1 million in damages to the park owner.

On Wednesday, however, the Supreme Court flatly rejected the legal rationale for these decisions.

Wednesday’s ruling stemmed from a 1988 law enacted by the voters of Escondido in north San Diego County. The measure required mobile home park owners to get permission from a city board before raising rents. As soon as the law went into effect, John and Irene Yee, the owners of the Sunset Terrace and Friendly Hills mobile home parks, challenged the ordinance as unconstitutional. They relied heavily on the earlier federal court opinion by Judge Kozinski.

State courts in San Diego rejected the Yees’ complaint without a trial. But the high court agreed to hear the case (Yee vs. Escondido, 90-1947) because federal and state courts in California were divided on the issue.

The dispute became a battle that found two top appointees of the Ronald Reagan Administration on opposing sides. Former Judge Robert Bork, the rejected Supreme Court nominee, appeared on behalf of the Yees urging that the city law be declared unconstitutional, while the law firm of former U.S. Solicitor Gen. Rex Lee defended the city.

A lawyer for the California Mobile Home Parkowners Alliance called the ruling a “major disappointment.”

“There are a lot more tenants than landlords,” said Michael M. Berger, a Santa Monica attorney, so the ruling will only encourage measures that benefit renters at the expense of property owners.

Meanwhile, Bruce E. Stanton, a San Jose attorney for the Golden State Mobilehome Owners League, applauded the decision and said it will end legal challenges to rent control throughout California.

Times staff writer Jonathan Gaw contributed to this story from San Diego.