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Thursday, October 22, 2009

Court Orders Reparations As It Overturns Goleta Rent Control Law

From an Oct. 12 e-alert by Nossaman LLP law firm (via Leonard Gilroy on Reason's blog). The 2-1 opinion was written by Jay Bybee, the author of a Justice Dept. torture memo that made him one of the targets of an impeachment resolution that failed to pass at the end of the 2008 Libertarian Party of California convention.  Adjournment prevented the offering of this alternative.

A Sep. 28 opinion from the federal Ninth Circuit Court of Appeals, Guggenheim v. City of Goleta, demonstrates that regulatory takings litigation can have teeth. In Guggenheim, the Ninth Circuit holds that the City of Goleta's rent control ordinance on mobile home parks went too far and that the City will have to pay the park's owners just compensation. This case, particularly coupled with two other recent regulatory takings cases, Monks and Casitas, suggests that agencies may now need to pay close attention to their regulations if they hope to avoid a regulatory takings bite.

The Court ruled that the City of Goleta owes compensation to mobile home park owners for the economic losses that resulted from the City's enactment of a mobile home rent control ordinance. The Court described these economic losses as amounting to a "naked transfer" of about 90 percent of the park's value from the park owners to the park tenants. 

The implication for government agencies is that they may now find themselves at a greater risk of ultimately having to pay just compensation when their regulations go too far.  And in California, if agencies are found liable for a regulatory taking, they can find themselves on the hook not only for just compensation but also for all of the attorneys' fees that the property owner or developer incurred in litigating the issues. (See Code Civ. Proc., § 1036 [a prevailing plaintiff in an inverse condemnation action is entitled to litigation expenses, including attorneys' fees].) 

[The Libertarian Party Platform says: "Property rights are entitled to the same protection as all other human rights. The owners of property have the full right to control, use, dispose of, or in any manner enjoy, their property without interference, until and unless the exercise of their control infringes the valid rights of others. We oppose all controls on wages, prices, rents, profits, production, and interest rates."]

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