Laurel Park Community, LLC v. City of Tumwater

Citations: 790 F. Supp. 2d 1290; 2011 U.S. Dist. LEXIS 51904; 2011 WL 1868069Docket: Case No. C09-5312BHS

Court: District Court, W.D. Washington; May 16, 2011; Federal District Court

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The United States District Court for the Western District of Washington issued an order on May 16, 2011, granting the City of Tumwater's motion for summary judgment and denying Laurel Park Community, LLC's motion for partial summary judgment, resulting in the dismissal of the case. The procedural history reveals that the plaintiffs initially sought partial summary judgment on February 19, 2010, while Tumwater filed a motion for summary judgment on March 17, 2010. The court stayed these motions pending the outcome of Guggenheim v. City of Goleta, which was reheard en banc on December 22, 2010. Following the renewal of motions in March 2011, both parties engaged in comprehensive briefings.

Factually, the plaintiffs challenged two ordinances adopted by Tumwater—Ordinance Nos. O2008-27 and O2008-009—effective March 23, 2009. Tumwater defended its actions by asserting compliance with Washington's Growth Management Act (GMA), which mandates protection of property rights and compensation for public use takings. The GMA requires comprehensive plans to identify adequate land for various housing types, including manufactured homes. The court noted a significant increase in manufactured home park (MHP) closures in Washington between 1989 and 2008, prompting Tumwater to propose a manufactured home park district (MHP District) to align with GMA requirements. The initial proposal included ten MHPs, which was later reduced to six.

Tumwater established a Mobile Home Park (MHP) District through Ordinance No. O2008-009, codified in Chapter 18.49 of the Tumwater Municipal Code (TMC). The MHP District aims to promote high-density, single-family residential development and ensure sufficient land for manufactured homes. The permissible uses within this district include MHPs, designated manufactured homes on existing lots, existing MHPs established before July 1, 2008, single-family dwellings on single lots, recreational facilities, support facilities, and certain childcare services. Conditional uses encompass churches, schools, community centers, and more. MHP owners can request use exceptions if they demonstrate a lack of reasonable use under current zoning or if the authorized uses are not economically viable. The MHPs involved in litigation include Laurel Park, Tumwater Mobile Estates, and Velkommen Park. Plaintiffs argue that Tumwater's ordinances constitute a regulatory taking and violate their substantive due process and equal protection rights, in addition to alleging illegal spot zoning. They seek relief based on these constitutional claims. 

The summary judgment standard requires that no genuine issue of material fact exists for the movant to be entitled to judgment as a matter of law. The nonmoving party must provide substantial evidence supporting their claims, and a genuine dispute exists if evidence warrants a trial to resolve different factual interpretations. The court assesses the substantive evidentiary burden that the nonmoving party must meet, typically a preponderance of the evidence in civil cases.

The Court resolves factual controversies in favor of the nonmoving party only when their specific assertions directly contradict those of the moving party. A nonmoving party cannot simply claim they will discredit the moving party's evidence; they must provide specific facts rather than vague statements in affidavits. The excerpt also addresses cross motions for summary judgment, with Plaintiffs seeking partial summary judgment on constitutional claims, while Tumwater opposes with a motion for summary judgment on all claims. 

Land use law is recognized as primarily under local control, with federal courts generally reluctant to intervene. The Supreme Court has affirmed the broad authority of local governments in zoning and land use management as essential for community quality of life. 

Regarding regulatory takings, the Fifth Amendment prohibits the taking of private property for public use without just compensation. The Supreme Court emphasizes that the Fifth Amendment aims to prevent certain individuals from bearing public burdens alone. Regulatory takings include both direct physical invasions and regulations that are so burdensome they equate to appropriation. Other regulatory takings are assessed using the Penn Central framework. Plaintiffs allege a facial challenge to the relevant ordinances, rather than an as-applied challenge.

To succeed in a facial takings challenge, Plaintiffs must demonstrate that the mere enactment of the ordinances amounts to a taking, as established in Keystone Bituminous Coal Ass'n v. DeBenedictis. The analysis is confined to whether the regulation's enactment is excessive, with the burden on Plaintiffs to prove that the ordinances diminish their property's value significantly and effectively appropriate it for public use. The Court notes that facial challenges are inherently difficult, as they focus on the regulation's overall scope rather than specific provisions. Plaintiffs assert their case aligns with the Penn Central framework to evaluate the takings claim, which the Court accepts without definitive ruling. The Supreme Court has clarified that the Penn Central analysis does not consider whether a regulation substantially advances state interests—a criterion deemed relevant for due process claims, not regulatory takings. The relevant factors for a Penn Central analysis include the economic impact of the regulation on the claimant, the extent of interference with investment-backed expectations, and the nature of the governmental action. The absence of physical invasion in this case means that interference from a public program aimed at adjusting economic benefits and burdens is considered less likely to constitute a taking. Lastly, the comparison of the value taken from the property to the value remaining is central to determining if a regulatory taking has occurred.

To establish a regulatory taking claim, Plaintiffs must demonstrate substantial economic impact from the ordinances in question. The Ninth Circuit, in Garneau, highlighted Plaintiffs' failure to provide evidence of economic impact, noting the absence of data on property value changes pre- and post-enactment of the TRAO, as well as anticipated economic consequences. Plaintiffs did not claim that the TRAO rendered their apartment buildings commercially unviable, nor could they identify any building that was no longer profitable. The record lacks sufficient evidence to assess the economic impact of the TRAO, focusing instead on as-applied claims rather than facial ones. Plaintiffs failed to show a significant decrease in property values necessary to demonstrate a Penn Central taking, with their own expert not performing a before-and-after analysis of the ordinances' effects. While Plaintiffs argue that the ordinances led to a wealth transfer to tenants by requiring perpetual MHP housing, they did not quantify this transfer adequately. Furthermore, they have not proven that the ordinances deprived them of all reasonable use of their property, as mere disappointment of expectations does not constitute an unconstitutional taking. Plaintiffs also contend that the Parks cannot pursue potentially more profitable land uses, urging the Court to consider their constitutional injury rather than financial loss. However, under Penn Central, establishing economic injury is essential for a constitutional claim. Plaintiffs acknowledged the need to show loss of value that is significant but not necessarily total, yet they failed to create a sufficient record to support this claim. Even speculative arguments do not meet the burden required for a viable facial challenge, as illustrated by the DeBenedictis case involving coal companies and the Pennsylvania Act mandating coal preservation for structural support.

The DeBenedictis Court highlighted the significant burden on plaintiffs in cases concerning the economic impact of ordinances on mining operations. Petitioners failed to demonstrate that the enactment of the ordinances rendered their bituminous coal mining commercially impracticable, as they did not identify any specific mine that could no longer be operated profitably. The court contrasted their situation with other cases where plaintiffs successfully argued that certain mining practices became economically unfeasible due to legislative actions. Tumwater presented evidence indicating that the Parks' operations remained economically viable, including an appraisal of their property, Velkommen, at $1.4-1.5 million in 2008, prior to the ordinances. Although the prior owner listed Velkommen for sale at higher prices, the sale in 2011 for $1.6 million, post-ordinance, exceeded the 2008 valuation, undermining the plaintiffs' claims of a constitutionally significant decrease in property value due to the ordinances.

Regarding distinct investment-backed expectations, the Ninth Circuit defined these expectations as grounded in reasonable probability rather than speculative hopes for favorable legal changes. Plaintiffs contended that the Parks invested in properties with the expectation of potential redevelopment into more profitable ventures, such as shopping centers. However, the court noted that the properties in the MHP District were always zoned for residential use, and the surrounding zoning remained consistent before and after the ordinances. Although one MHP was excluded from the MHP District, it was surrounded by commercially zoned land, unlike the others. Plaintiffs argued that the ordinances restricted the Parks’ use of their properties solely to MHPs, leading to dashed investment expectations.

Plaintiffs presented evidence suggesting that a 2008 offer for Velkommen included a premium for potential condominium redevelopment, which they claim is now lost due to the challenged ordinances. However, the inability to maximize property profits does not substantiate a 'takings' claim, as established in Goldblatt v. Hempstead. Courts require concrete evidence of a quantified loss rather than speculative claims about property value reduction. The plaintiffs failed to demonstrate a distinct, probable investment-backed expectation regarding zoning laws, which is unsupported by case law. Additionally, the argument that they could operate a Mobile Home Park (MHP) until it becomes unviable does not show how the ordinance undermines that expectation in a manner warranting a takings claim.

The 'character of regulation' factor favors Tumwater, as there is no evidence of confiscation or invasive measures; the economic life of the area has remained stable for decades. Consequently, the plaintiffs did not sufficiently challenge the facial validity of Tumwater's ordinances, failing to establish a material question of fact regarding their takings claim.

In terms of substantive due process, plaintiffs contend that even in the absence of a taking, the ordinances violate their rights. Both parties agree that a rational basis scrutiny applies, requiring the plaintiffs to show that a state actor deprived them of a constitutionally protected interest. A due process violation is not negated by the Takings Clause if the land use action is found to be arbitrary or irrational.

To challenge a municipality's land use action, a plaintiff must demonstrate that the governmental action is constitutionally arbitrary, requiring evidence of egregious conduct. Here, plaintiffs acknowledge that Tumwater's ordinances aim to provide affordable housing in line with the Growth Management Act (GMA) but argue that the means employed are improperly related to this purpose. However, they fail to substantiate this claim, merely indicating that the ordinances restrict property use and that alternatives exist for supporting affordable housing. Under rational basis scrutiny, which the plaintiffs accept applies to their case, the court must assess whether the ordinances are rationally related to Tumwater's goal of complying with the GMA, rather than whether the action restricts use or whether better alternatives exist. The plaintiffs have not provided sufficient evidence to create a material question of fact regarding their federal substantive due process claim, leading to its preemption by the Takings Clause.

Regarding Washington State substantive due process, plaintiffs contend that Tumwater's ordinances are excessively oppressive. The state inquiry assesses three prongs: 1) whether the regulation aims for a legitimate public purpose; 2) whether the means are reasonably necessary to achieve that purpose; and 3) whether it is unduly oppressive on the landowner. With the court previously determining that the federal claim fails, the focus shifts to the third prong, which typically proves challenging. This inquiry requires balancing public interests against those of the landowner, considering factors such as the nature of harm being avoided, effectiveness of less drastic measures, and economic impacts on the property owner. Public interest factors include the seriousness of the issue and the regulation's feasibility, while landowner factors consider value loss, remaining uses, and the nature of the regulation.

Plaintiffs argue that the Tumwater ordinances are excessively oppressive, citing the case of Guimont, where the court deemed an act oppressive due to its requirement that mobile home park (MHP) owners cover tenant relocation costs upon park closure. However, the Guimont case is factually different, as Plaintiffs have not demonstrated any similar provisions in their case or provided evidence of significant loss in value of their MHPs. The record indicates that MHP owners intended to continue operating their parks as they had for decades, and the zoning regulations allow for use exceptions if economic viability declines. Tumwater has shown that the MHP District is a reasonable approach to affordable housing that does not significantly hinder MHP owners' operations. The court finds Plaintiffs' assertion that zoning for their longstanding, profitable use is oppressive to be illogical. Consequently, Plaintiffs have failed to present sufficient evidence to support their substantive due process claim.

Regarding the Equal Protection claim, Plaintiffs must demonstrate they were intentionally treated differently from similarly situated parties without a rational basis for such treatment. They have not provided competent evidence to show that Tumwater treated the MHP District differently or that any such treatment lacked a rational basis. Tumwater has presented evidence of similar ordinances that impose restrictions on various districts, indicating a consistent rationale behind its zoning decisions. Thus, Plaintiffs have not met the burden to defeat Tumwater's motion for summary judgment on either claim.

Tumwater's ordinances regarding Mobile Home Parks (MHPs) are viewed as rationally related to its comprehensive plan under the Growth Management Act (GMA). The Plaintiffs argue that other MHPs are not subjected to similar restrictions, which they claim violates their equal protection rights. They note that the designation of MHP Districts was narrowed to six properties, while other MHPs were excluded. However, Tumwater has demonstrated that these excluded MHPs were either too small or zoned commercially rather than residentially, thus justifying the differential treatment. Furthermore, even if the properties were considered similarly situated, the Plaintiffs failed to present credible evidence that the ordinances lacked a rational basis for their disparate treatment.

Regarding the claim of illegal spot zoning, the rational basis test applies since no suspect class is involved. Spot zoning is defined as the reclassification of a small area different from the surrounding land, inconsistent with the comprehensive plan. The inquiry centers on whether the zoning action serves the community's general welfare. The Washington Supreme Court recognizes that while spot zoning may violate substantive due process or equal protection, not all such actions are illegal. The overall analysis indicates that the Plaintiffs have not substantiated their claims regarding equal protection or spot zoning violations.

In Anderson v. Seattle, the court evaluates challenges to county rezone actions, specifically regarding claims of illegal spot zoning. The critical consideration is whether the zoning action significantly relates to the general welfare of the community. A rezone may be overturned only if it provides a discriminatory benefit to specific property owners, harming neighbors or the community without adequate justification. In this case, the plaintiffs failed to demonstrate that Tumwater's ordinances were inconsistent with the city's comprehensive plan or that the zoning of the Manufactured Housing Park (MHP) District was significantly different from surrounding land classifications. The Tumwater city council found the MHP District consistent with the area's zoning and concluded that the proposed ordinances supported the community's health, safety, and welfare. Therefore, the court ruled against the plaintiffs' spot zoning claim due to insufficient evidence. Tumwater's motion to strike certain declarations from plaintiffs was denied, as the ruling on the summary judgment made the motion unnecessary. Consequently, the court denied the plaintiffs' motion for partial summary judgment, granted Tumwater's motion for summary judgment, denied the motion to strike, and dismissed the case due to the absence of triable issues of fact.