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LLC v. City of Carson

California Court of Appeals, Second District, Eighth Division

May 14, 2014

218 PROPERTIES, LLC, et al. Plaintiffs and Respondents,
CITY OF CARSON et al., Defendants and Appellants. IMPERIAL AVALON MOBILE ESTATES, LLC, Plaintiffs and Respondents,
CITY OF CARSON et al., Defendants and Appellants.

[As Modified on June 13, 2014]

APPEAL from a judgment of the Superior Court of Los Angeles County Nos. BS131337, BS131374, James C. Chalfant, Judge.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Aleshire & Wynder, William W. Wynder, Sunny K. Soltani and Jeff M. Malwy, for Defendants and Appellants, City of Carson and City of Carson City Council.

Gilchrist & Rutter, Richard H. Close, Thomas W. Casparian and Yen N. Hope, for Plaintiff and Respondent Imperial Avalon Mobile Estates, LLC.

Law Offices of Douglas W. Beck & Associates and Douglas W. Beck for Plaintiff and Respondent 218 Properties, LLC.



The City of Carson and its city council appeal from the trial court’s judgment directing Carson to approve the mobilehome conversion applications of 218 Properties, LLC and Imperial Avalon Mobile Estates, LLC. We reverse the trial court in part and direct it to enter judgment affirming Carson’s disapproval of the application for conversion by 218 Properties, LLC. We affirm, however, the trial court’s judgment to the extent it directs Carson to approve the application for conversion by Imperial Avalon Mobile Estates, LLC.


1. Background[1]

Traditionally, mobilehome park residents have owned the mobilehome coaches in which they lived, but did not own the plots of land that their

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coaches occupied. To encourage ownership of plots by residents, the Subdivision Map Act (Gov. Code, § 66410 et seq.)[2] at section 66427.5 provides a method by which a mobilehome park owner can convert the park from a community occupied by tenants who rent their plots into a community akin to a condominium association, in which residents own their plots.

Converting a mobilehome park into a resident-owned community affects rent control. Upon the park owner’s very first sale of a plot, all residents lose the protection of local rent control regardless of whether the owner sells any more plots. (El Dorado Palm Springs, Ltd. v. City of Palm Springs (2002) 96 Cal.App.4th 1153, 1164-1165 [118 Cal.Rptr.2d 15] (El Dorado).) For lower-income residents, state rent control law instead takes effect. (§ 66427.5, subd. (f)(2).) For all other residents, rent control disappears entirely. (§ 66427.5, subd. (f)(1).) Because a mobile park owner can escape local rent control by selling just one plot, an unscrupulous park owner can abuse the conversion process by pursuing a “sham” conversion without intending to convert the park into a wholly resident-owned community. To prevent sham conversions, the Legislature in 2002 added a tenant-survey requirement to the mobilehome park conversion statute. (Chino MHC, LP v. City of Chino (2012) 210 Cal.App.4th 1049, 1066 [148 Cal.Rptr.3d 753] (Chino MHC); Colony Cove Properties, LLC v. City of Carson (2010) 187 Cal.App.4th 1487, 1501-1502 [114 Cal.Rptr.3d 822] (Colony Cove).) The survey requirement, codified at subdivision (d) of section 66427.5, directs the local agency with authority to approve the conversion to “consider” the survey’s results as part of the agency’s review of the proposed conversion. Courts have wrestled with the meaning of the word “consider” in trying to apply the survey requirement to proposed conversions. We discuss later in this opinion how different courts have answered that question.

2. 218 Properties, LLC

218 Properties, LLC owned Park Granada Trailer Lodge, a 26-plot mobilehome park in Carson. 218 Properties owns five of the plots. In 2009, 218 Properties submitted to the City of Carson its application to convert Park Granada Trailer Lodge into a resident-owned park. In March 2010, the Carson planning commission approved the application. The Carson city manager thereafter appealed the planning commission’s approval to the Carson City Council.

In May 2010, the city council heard Carson’s appeal. The owner of 218 Properties, Thomas Heinemann, submitted his declaration in support of conversion. He declared that he had bought the mobilehome park as an

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investment to support his retirement, but the park generated a negative cash flow; consequently, he wanted to sell off the park’s plots to generate income. To ensure the conversion was bona fide, he was willing to agree to the following conditions: First, he promised a 15 percent discount on the sales price to park residents who bought their plots within the first 180 days of the conversion’s approval. Second, he promised to abide by rent control until he sold 20 percent of the plots. And third, he promised to require all future new residents of the park to buy their plots when moving into the park, thereby ensuring the entire park would eventually become fully resident owned.

In opposition to the conversion, the residents of the mobilehome park submitted a survey signed by 20 residents. The survey stated the 20 residents were not interested in buying their plots ‘at this moment nor in the near future’.[3] Carson’s city attorney advised the city council that the council could grant the city’s appeal, and thus disapprove the conversion, if the city council concluded the residents’ survey raised questions about the proposed conversion’s bona fides.[4] Concluding the promised inducements of 218 Properties’ owner, Thomas Heinemann, to encourage residents to buy their plots were illusory for several reasons, the city council disapproved the conversion based on the lack of resident support. First, according to the city council, the benefit of Heinemann’s promise to early buyers of a 15 percent discount on each plot’s sales price could not be calculated because the plots’ values were yet to be appraised. Second, Heinemann had not identified the appraiser. And third, Heinemann offered no evidence that any residents were non-low-income tenants who would benefit from his promise to continue rent control past the sale of the first plot. Accordingly, the record indicated in the city council’s assessment that 218 Properties did not expect to produce a change in the estate interest of a significant percentage of the mobilehome park residents. Thus, the conversion was not bona fide.

218 Properties filed in the trial court a petition for writ of mandate. Rejecting Carson’s reasons for disapproving the conversion, the trial court found Heinemann’s declaration was substantial evidence that the conversion was bona fide as a matter of law. The court noted that likely all of 218 Properties’ tenants were low income, meaning rent ...

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