MRL Rent Control Victory
VICTORY IN ORANGE COUNTY SUPERIOR COURT
In 2021, the California Legislature enacted AB 978, a rent control law made applicable to certain mobilehome parks starting on January 1, 2022. The law, enacted as part of the Mobilehome Residency Law and codified under Civil Code section 798.30.5, applied to any park located within and governed by the jurisdiction of two or more incorporated cities. The law restricted annual space rent increases to 3% plus the percentage change in the cost of living or 5%, whichever was lower. However, the law provided no procedure or mechanism (i.e. rent review board, arbitration, etc.) for the park owner to follow if the owner wished to seek a rent increase greater than the 3%-5% cap.
In 2022, Rudderow Law Group (RLG) filed a lawsuit in Orange County Superior Court challenging the rent control law on behalf of its client, Anaheim Mobile Estates. This park is subject to the jurisdiction of two cities (Anaheim and Stanton) and therefore was subject to the state rent control law. After filing the lawsuit, RLG filed a motion for judgment on the pleadings which argued that the rent control law was unconstitutional on its face because it denied the owner any opportunity to seek a rent increase beyond 3%-5%. Specifically, RLG argued that a property owner has a constitutional right to seek a rent increase which would allow for a “just and reasonable” return on his/her property, and that the state’s rent control law denied the owner any procedure or mechanism to seek such an increase, making the law itself unconstitutional.
After hearing oral argument, Orange County Superior Court Judge Richard Y. Lee granted the motion for judgment in favor of the park owner, finding that the state law’s absence of any procedural mechanism or process for the owner to seek a fair return rent increase rendered the law confiscatory thereby violating the due process clause of the California Constitution.
Anaheim Mobile Estates is pleased that this lawsuit could be brought and adjudicated by the state court judge without the need for discovery or a trial. The park is now waiting to see if the State of California appeals the ruling.
Should you have any questions regarding the ruling, please reach out to Dan Rudderow or RLG attorney Chris Chapman who filed and argued the motion.