The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
[Doc. Nos. 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30]
Presently before the Court is Defendants' Motion to Dismiss. Finding principles of Younger abstention are implicated, the Court STAYS this action pending a final judgment in the Superior Court of the State of California, for the County of San Diego, East County Division, Case No. GIE 020524, ("East County State Court Action").
On or about November 27, 1998, the City of Santee ("the City") began enforcing Ordinance 381, a mobile home rent control ordinance that was adopted by the City Council pursuant to an initiative petition. Ordinance 381 restricted rent increases more severely than the prior rent control ordinance, Ordinance 324/329. (First Amended Complaint "FAC" ¶ 7.)
Shortly after the adoption of Ordinance 381, the City was alerted that the version of Ordinance 381 adopted by the City Council differed from the petition circulated to the voting public. (FAC ¶ 8.)
On or about January 24, 2001 the City adopted Ordinance 412, which the Court refers to as the "Original Ordinance 412." This ordinance was intended to cure the error in the adoption of Ordinance 381. The City began enforcing Original Ordinance 412 on February 23, 2001. (FAC ¶ 9.) Original Ordinance 412 expressly provided that it was retroactively effective to the effective date of Ordinance 381.
MHC Challenges Original Ordinance 412 in State Court
On October 29, 2001, Plaintiff MHC, the owner and operator of the Meadowbrook Mobilehome Park ("Meadowbrook"), filed an action styled MHC Financing Limited Partnership Two v. City of Santee, San Diego County Superior Court, Case No. GIC 777094 (hereinafter, "Downtown State Court Action") against the City seeking a judicial declaration that both Ordinances 381 and 412 were null and void because Ordinance 381 and Original Ordinance 412 were enacted in violation of California law. (FAC ¶ 10.) MHC reserved all federal claims pursuant to England v. Louisiana Board of Medical Examiners, 325 U.S. 411 (1964). MHC further contended the City's enforcement of Ordinances 381 and Original Ordinance 412 impermissibly chilled MHC's right of petition for rent increases. (Id.)
Judge Haden of the San Diego County Superior Court and presiding judge in the Downtown State Court Action agreed with MHC, finding that the City illegally adopted Ordinances 381 and Original Ordinance 412 and the ordinances were thus void. Judge Haden also found that the City's enforcement of assessments and fee-shifting provisions of Ordinances 381 and Original Ordinance 412 chilled MHC's right to petition for rent increases in violation of the California Constitution. (FAC ¶ 12.)
On appeal, the California Court of Appeal found that the City could retroactively apply Ordinance 412 to the effective date of Ordinance 381, and thus reversed Judge Haden's determination that Ordinance 412 was void. The Court of Appeal affirmed Judge Haden's decision in all other respects, including his finding that the assessment and fee-shifting provision of Ordinance 381 and 412 had a chilling effect on MHC's right to petition for rent increases. The Court of Appeal held, however, that those provisions could be severed from the remainder of the ordinance. The Court remanded the case to determine (1) whether MHC suffered injury as a result of any differences between Original Ordinance 412 and Ordinance 381 and the retroactive application of Original Ordinance 412 and Ordinance 381; (2) whether MHC suffered any injury as a result of the assessment and fee-shifting provisions found unconstitutional; and (3) the proper remedy for such injury. (FAC ¶ 14.) See MHC Financing Limited Partnership Two v. City of Santee, 125 Cal.App.4th 1372 (2005).
In August and September 2007, Judge Kevin A. Enright of the San Diego Superior Court held a bench trial in accordance with the Court of Appeal's 2005 remand order. (FAC ¶ 22.) During the course of that proceeding, MHC claimed it had been injured by the City's enforcement of the chilling provisions declared invalid by the Court of Appeals and from the City's retroactive application of the differences between Ordinances 381 and 412. Those injuries included (1) denial of market rents; and (2) denial of the right to discretionary rent increase process. (FAC ¶ 24.) The City disputed any damages were owed, arguing the Commission would not have awarded MHC any rent increases because MHC had failed to pay annual assessments. (FAC ¶ 26.)
MHC's First Federal Challenge to Original 412 Ordinance
Going back to 2001, one month after filing the "Downtown State Action," MHC commenced an action in the Southern District of California, in Judge Benitez's court, challenging Original Ordinance 412 on federal and state takings, substantive due process, and equal protection grounds ("2001 Federal Action").*fn1 MHC asserted Original Ordinance 412 "caused a taking of [its] property without compensation and without substantially advancing a legitimate purpose in violation of the Fifth Amendment of the United States Constitution. MHC also alleged that ...