Monarch Country Mobilehome Owners Assn. v. City of
Filed 3/7/13 Monarch Country Mobilehome Owners Assn. v.
City of Goleta CA2/6
NOT TO BE PUBLISHED
IN THE OFFICIAL REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE
DISTRICT
DIVISION SIX
MONARCH COUNTRY MOBILEHOME OWNERS ASSOCIATION,
Plaintiff and Respondent,
v.
THE CITY OF GOLETA et al.,
Defendants and Appellants;
GOLETA MOBILE
HOME PARK,
LP
Real Party In
Interest and Appellant.
2d Civil No.
B231244
(Super. Ct. No.
1337356)
(Santa
Barbara County)
Goleta
Mobile Home Park, LP (Park Owner), is the owner of Rancho
Mobilehome Park
(Park) in the City of Goleta
(City). The City Council approved Park
Owner's application to convert Park from rental units to resident
ownership. Park's homeowners'
association, Monarch Country Mobilehome Owners Association (Association), filed
a petition for a writ of administrative
mandate. Association sought to
overturn the City Council's approval of the project.
Park
Owner conducted a survey of resident support for the conversion. The trial court concluded that, contrary to Government
Code section 66427.5, the survey had not been conducted in accordance with an
agreement between Park Owner and Association.
Council had failed to consider the results of the survey. The trial court, therefore, granted
Association's petition.
Park
Owner and City appeal from the order granting the petition. Park Owner contends that substantial evidence
supports the City Council's implied finding that the survey of resident support
was conducted in accordance with an agreement between Park Owner and
Association. City concedes that there is
no direct evidence of
an agreement but maintains that, under the particular circumstances of this
case, it is either implied or the statutory requirement of an agreement is a
technicality. We are not bound by City's
concession. Both Park Owner and City
argue that the City Council considered the results of the survey.
We
conclude that substantial evidence supports the City Council's implied finding
that the survey was conducted in accordance with an agreement between Park
Owner and Association. We further
conclude that the City Council was required to consider, and did consider, the
results of the survey. However, its
consideration was limited to determining whether the proposed conversion is a
"sham transaction," i.e., intended merely to preempt a local rent
control ordinance. Here, the City
Council did not reach this issue on advice of the City Attorney. But this omission is harmless because, as a matter of law, the
evidence is insufficient to establish that the proposed conversion is a
sham. Accordingly, we reverse the order
granting Association's petition for a writ of administrative mandate.
In
September 2005 Park Owner's predecessor filed an application with City to
convert Park to resident ownership. Park
consists of 150 mobilehome spaces that are leased to residents who own
their own mobilehomes.
name="_ftnref2" title="">[2] The spaces are subject to City's rent-control
ordinance.
In April 2006 Park Owner
provided City with the results of a second survey of resident support for the
conversion. (An initial survey was
conducted in the fall of 2005.) Park
Owner represented to City that a "ballot form was prepared in conjunction
with [Association] and was distributed to all residents in the mobilehome
park." But responses were received from only 33
residents. Nine residents supported the
conversion, seventeen opposed it, and seven did not say whether they supported
or opposed it.
On
February 17, 2009, the City Council conducted a public hearing on the
project. Numerous Park residents spoke
in opposition. During the hearing, the
City Attorney informed the City Council:
"The State has specifically limited the City's role in reviewing a
conversion application. The procedure
specifically states that the City's only role is to determine whether or not
the Applicant has gone through each of the things that is required in the
statutes."
title="">[3]
At
the conclusion of the hearing, the City Council, by unanimous vote, approved
the project. Some council members
indicated that they were reluctantly voting for the project because they
had no choice in the matter. Council
Member Bennett stated: "[T]here's a
lot of uncertainty out there in this whole mess. And the State really and truly does not give
us any alternatives. . . .
If there were any alternatives, to take, I would be the first to
institute those." "There's
nothing more that I can say, nothing more that I can do; but I do, in fact,
support you [the opponents of the conversion], and I sympathize with you, and I
wish there was . . . more that we, as a City, could do to protect your
interests." Council Member Easton
said that "the State has put the City in a box." Council Member Connell declared: "I have reluctantly come to the
conclusion that what we're doing is the best we can do to protect your
interests." "[W]hen I was on
the Council before we worked very hard on the rent control issue. It's moved beyond that. State law has moved it beyond that to the
condo conversion which we have no ability to deny."
A
final public hearing on the project was conducted on March 3, 2009. The City Council again voted to approve the
project. That same date, City and Park
Owner signed a Development Agreement specifying the standards and conditions
for conversion of Park to resident ownership.
Trial Court's
Ruling
The
trial court determined that Park Owner and City had failed to comply with
section 66427.5. The court concluded
that "[t]here is no evidence in the administrative record to support the
Park [O]wner's contention that a second survey [of resident support for the
conversion] was done in 2006 with the
agreement of the homeowner's association." The court further concluded: "City did
not perform its duty to consider the
survey results in its vote to approve the development." "City, on advice of counsel, believed .
. . that it had no discretion to question the survey's origins, composition, or
results." The court continued:
"The survey results are important because they might indicate to the City
that the proposed project is a sham. . . . Preventing a sham conversion, one
that lacks resident support, is within the realm of the City's duties. In other words, the City is more than a rubber
stamp and must concern itself with such details. See Colony Cove Properties LLC
Cal.App.4th 1487." Thus, City
"abused its discretion in failing to ascertain that a proper survey had
been conducted, depriving it of a meaningful opportunity to consider the result
as part of its analysis of the merits of approving the project."
Section
66427.5: 2002 Amendment and Judicial Construction
Section
66427.5 "applies to all subdivisions
'to be created from the conversion of a rental mobilehome park to resident
ownership . . . .'
[Citation.]" (El Dorado Palm Springs Ltd. v. City of Palm Springs (2002) 96
Cal.App.4th 1153, 1174 (El Dorado).) It "establishes specific measures to
avoid the economic displacement of all nonpurchasing mobilehome park residents
through notice, an opportunity to purchase, and measured rent
increases." (Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles
(2012) 55 Cal.4th 783, 806.) For
residents who do not purchase their units, the statute preempts local rent
control laws. "As to nonpurchasing
residents who are not lower income households, . . . the monthly rent . . . may
increase from the preconversion rent to market levels . . . in equal annual
increases over a four-year period."
(§ 66427.5, subd. (f)(1).) "As to nonpurchasing
residents who are lower income households, . . . the monthly rent . .
. may increase from the preconversion rent by an amount equal to the average
monthly increase in rent in the four years immediately preceding the
conversion, except that in no event shall the monthly rent be increased by an
amount greater than the average monthly percentage increase in the Consumer
Price Index for the most recently reported period." (§ 66427.5, subd. (f)(2).)
Section 66427.5,
subdivision (e) provides: "The
subdivider shall be subject to a hearing by a legislative body or advisory
agency . . . . The scope of the hearing shall be limited to the issue of compliance
with this section." (Italics
added.) At the time of the
Cal.App.4th 1153), present subdivision (e) was included in former subdivision (d). Based on the above italicized language of the
statute, the El Dorado court held
that section 66427.5 "limits the power of the City Council to a
determination of whether the subdivider has complied with the provisions of the section . . .
." (Id., at p. 1166.)
"Thus, the City lacks authority to investigate or impose additional
conditions to prevent sham or fraudulent transactions at
the time it approves the tentative or parcel map. Although the lack of such authority may be a
legislative oversight, and although it might be desirable for the Legislature
to broaden the City's authority, it has not done so." (Id.,
at p. 1165.) In
argued that a sham or fraudulent transaction would occur if the purpose of a
conversion were to circumvent local rent control laws and raise rents for
nonpurchasing residents. (
The
El Dorado court noted that, although
"the statute does not specifically protect against sham or failed
transactions in which a single unit is sold, but no others, and the park owner
then claims a local rent control ordinance is preempted," the courts
"will not apply" the statute to such sham or failed transactions. (El
Dorado, supra, 96 Cal.App.4th at
p. 1166, fn. 10.) By way of example, the
El Dorado court cited this court's
opinion in Donohue v. Santa Paula West
Mobile Home Park (1996) 47 Cal.App.4th 1168. There, we refused to allow a rent increase
pursuant to section 66427.5 where residents filed a tentative map to convert a
mobilehome park to resident ownership, but the conversion did not occur.
The
Legislature responded to El Dorado by
amending section 66427.5 to add new subdivision (d), which provides: "(1) The subdivider shall obtain a
survey of support of residents of the mobilehome park for the proposed
conversion. [¶]
the subdivider and a resident homeowners' association, if any, that is
independent of the subdivider or mobilehome park owner. [¶]
a written ballot. [¶]
The survey shall be conducted so that each occupied mobilehome space has one
vote.
be submitted to the local agency upon the filing of the tentative or parcel
map, to be considered
prescribed by subdivision (e)."
(Italics added.)
In
an uncodified section of the amendatory act, the Legislature stated: "It is the intent of the Legislature to
address the conversion of a mobilehome park to resident ownership that is not a
bona fide resident conversion, as described by the Court of Appeal in [
subdivision map approval process specified in Section 66427.5 of the Government
Code may not provide local agencies with the authority to prevent nonbona fide
resident conversions. The court
explained how a conversion of a mobilehome park to resident ownership could
occur without the support of the residents and result in economic
displacement. It is, therefore, the
intent of the Legislature in enacting this act to ensure that conversions
pursuant to Section 66427.5 of the Government Code are bona fide resident
conversions." (Stats. 2002, ch.
1143, § 2.)
After
the 2002 amendment, section 66427.5 was considered in Sequoia Park Associates v. County of Sonoma (2009) 176 Cal.App.4th
1270 (Sequoia Park). The appellate court invalidated an ordinance
imposing conditions, i.e., percentage requirements of approval by residents in
the survey of resident support, additional to those required by section
66427.5.
In
2010 section 66427.5 was reconsidered in Colony
Cove Properties, LLC v. City of
Carson, supra,
ordinance similar to the one in Sequoia
Park. The appellate
invalid because it imposed requirements in addition " 'to the exclusive
statutory requirements of section 66427.5.'
[Citation & fn. omitted.]"
(Id., at p. 1508, fn.
omitted.)
The
importance of the results of the survey of resident support. It concluded "that the contents of the
survey, as opposed to its mere existence, are relevant to the approval
process." (Colony Cove, supra,
power of local entities and
results of the survey when processing a conversion application would consign
the 'to be considered' language of subdivision (d)(5) to surplusage." (Id.,
at pp. 1505-1506.) " 'We must
presume that the Legislature intended "every word, phrase and provision .
. . in a statute . . . to have meaning and to perform a useful function."
' [Citation.]" (Id.,
at p. 1505.) Thus, "by adding
the provisions requiring the subdivider to obtain and submit a survey of
resident support, the Legislature expressly expanded the statutory factors to
be considered at the subdivision map hearing to include the results of the
survey." (Id., at p. 1506.)
name="_ftnref6" title="">[6]
The
next case to consider section 66427.5 is Goldstone
v. County of Santa Cruz (2012) 207 Cal.App.4th 1038. There, Santa Cruz County
denied a conversion application because " '[t]he results of the survey [of
resident support], testimony and other evidence submitted by park residents
establishes [sic] near unanimous
opposition' to the conversion." (
at p. 1045.) The appellate court
upheld the denial. It reasoned that
"[u]nder section 66427.5, subdivision (d)(5), County was authorized to
take the results of the resident survey into account when making its
decision." (Id., at
p. 1041.) The Goldstone opinion implies that a local agency may deny a conversion
application if the survey of resident support demonstrates overwhelming
opposition by park residents. In
residents opposed the conversion, while only 2 supported it.
The latest case to consider section 66427.5 is
210 Cal.App.4th 1049 (Chino). We discuss this case at length below.
Sufficiency of the Evidence
to Show that Survey Was Conducted in
Association
The
trial court found that Park Owner had not secured Association's agreement for
the 2006 second survey. Park Owner
contends that the administrative record contains substantial evidence
supporting the existence of such an agreement.
Park Owner's contention has merit.
This is where the trial court exceeded its authority. It is not the fact finder. The City Council is the fact finder.
Where,
as here, the administrative decision did not involve or substantially affect a
fundamental vested right, "the trial court's review is limited to examining
the administrative record to determine whether the agency's decision and its
findings are supported by substantial evidence in light of the whole
record. [Citation.] [¶] . . . [A]n appellate court reviewing a trial
court's ruling on administrative mandamus [also] applies a substantial evidence
standard. [Citations.] . . . '[T]he appellate court's function is
identical to that of the trial court. It
reviews the administrative record to determine whether the agency's findings
were supported by substantial evidence, resolving all conflicts in the evidence
and drawing all [reasonable] inferences in support of them. [Citations.]'
[Citation.]" (
Angeles (2009) 173 Cal.App.4th 459, 469.)
"[W]e must examine the findings made by the
[agency] itself to determine whether they were supported by substantial
evidence, rather than limiting ourselves to a review of the findings made
by the trial court. [Citations.]" (Desmond
v. County of Contra Costa (1993) 21 Cal.App.4th 330, 335.) " '[S]ubstantial evidence has been
defined in two ways: first, as evidence of " ' "ponderable legal
significance . . . reasonable in nature, credible, and of solid value" ' "
[citation]; and second, as " 'relevant evidence that a reasonable mind
might accept as adequate to support a conclusion' " [citation].' [Citation.]" (Ibid.)
The City Council impliedly found that the 2006
second survey had been "conducted in accordance with an agreement"
between Park Owner and Association. (§ 66427.5,
subd. (d)(2).) In the Development
Agreement between City and Park Owner, City "acknowledges that . . .
[Park] Owner has submitted the results of a survey of support pursuant to the
provisions of Government Code Section 66427.5(d)." On the same date that the City Council
approved the conversion, it adopted the Development Agreement.
We
review the administrative record to determine whether the City
Council's implied finding is supported by substantial evidence. In a letter dated September 30, 2005, City
informed Park Owner that its application was incomplete because, among other
things, the application did not include a survey of resident support for the
conversion "conducted in accordance with an agreement between" Park
Owner and Association. In response to
the letter, Park Owner conducted an initial survey in the fall of 2005. Park Owner conceded in the trial court that
the "initial survey . . . was done without the agreement of [Association]." After conferring with Association, Park Owner
conducted a second survey in 2006.
The
trial court granted Park Owner's motion to augment the administrative record to
include a January 19, 2006 email from Dennis Shelly, the Association's
president, to Park Owner. Shelly
requested that the second survey ask "a series of [five] questions that
would serve to make [it] complete and meaningful." The first two questions were included in the
second survey. The gist of the third and
fourth questions were also included.
check mark before the following sentence:
"I would like to have more information about other options."
The email was not part of the original
administrative record. "'The
general rule is that a hearing on a writ of administrative mandamus is
conducted solely on the record of the proceeding before the administrative
agency. [Citation.]' [Citation.]
Augmentation of the administrative record is permitted only within the
strict limits set forth in [Code of Civil Procedure] section 1094.5,
subdivision (e) which provides as follows: 'Where the court finds that there is
relevant evidence which, in the exercise of reasonable diligence, could not
have been produced or which was improperly excluded at the hearing before
respondent, it may enter judgment as provided in subdivision (f) remanding the
case to be reconsidered in the light of that evidence;[
or, in cases in which the court is authorized by law to exercise its
independent judgment on the evidence, the court may admit the evidence at the
hearing on the writ without remanding the case.' [Citations.]" (Pomona
Valley Hospital Medical Center v. Superior
Court (1997) 55 Cal.App.4th 93, 101.)
Here, the trial court was not " 'authorized by law to exercise its
independent judgment on the evidence.' "
(Ibid.) Thus, the trial court erred in augmenting the
administrative record to include the email without remanding the matter to the
City Council for reconsideration in light of the new evidence.
The
court's error, however, was invited by the Association. In open court, counsel conceded that the
court could grant the motion to augment the administrative record to include
the email and, in addition, could consider the new evidence: "We've
responded [to the motion to augment] . . . by basically conceding the Court can
put it [the email] as part of its record and consider it and give it the weight
that it deems appropriate."
"If a party induces the commission of an error, 'he is estopped
from asserting it as grounds for reversal.
[Citations.]' [Citation.] 'At bottom, the doctrine rests on the purpose
of [a] principle, which is to prevent a party from misleading the trial court
and then profiting therefrom in the appellate court. [Citations.]'
[Citation.]" (
1401, 1406.)
We recognize that, after conceding that the trial
court could grant the motion to augment, Association's counsel
"suggest[ed]" that the trial court could not rely upon the email
"in reviewing the sufficiency of the city's action" because the email
"was not in the city's record when they acted on this thing." Counsel was contradicting himself. If a party concedes that the administrative record may be
augmented to include an item of evidence and the record is so augmented, the
party will not be heard to complain that the evidence cannot be relied upon
because it is not properly part of the administrative record.
In
view of the augmentation of the administrative record to include the email,
substantial evidence supports the City Council's implied finding that the 2006
second survey was conducted in accordance with an agreement between Park Owner
and Association. The agreement is
manifested by the parties' conduct. (See
Civ. Code, § 1621 ["An implied contract is one, the existence and
terms of which are manifested by conduct"].) Shelly requested that the second survey be
modified to include specific provisions, and Park Owner modified it to include
all but one of these provisions. The
omitted provision - an expression of a desire for information about other
options - was inappropriate because it was not pertinent to whether Park
residents supported the conversion.
Even
without the email, substantial evidence supports the implied finding of an
agreement for the 2006 second survey. In
a letter to City dated April 5, 2006, Park Owner's counsel, Hart, King &
Coldren, enclosed the results of the second survey. Counsel stated that the survey
"form was prepared in conjunction with the Home Owner
Association." In an attachment to a
letter dated November 3, 2006 from Dennis Shelly to City, Shelly's only
objection to the second survey was that Association had not yet received a copy
of the survey results. Shelly noted
that, prior to the second survey, Park owner had "conferred" with
Association. Shelly stated: "The
[2005] initial survey received almost no response – in part because [Park
Owner] failed to confer with [Association]; and in part because [Association]
then asked residents to NOT respond.
Then, after conferring with [Association], a [2006] second survey was
distributed. We were told that we would
receive a copy of the results of that survey, but to-date, we have
NOT." Unlike the 2005 initial
survey, Shelly did not say that Association had requested residents to not
respond to the 2006 second survey. The
absence of such a request is supported by the fact that 33 residents responded
to the second survey, while the initial survey "received almost no
response."
Support
We now must determine
whether the City Council properly considered the results of the survey. This requires us to interpret the 2002
amendment that added new subdivision (d) to section 66427.5. "Under settled canons of statutory
construction, in construing a statute we ascertain the Legislature's intent in
order to effectuate the law's purpose.
[Citation.] We must look to the
statute's words and give them their usual and ordinary meaning. [Citation.]
The statute's plain meaning controls the court's interpretation unless
its words are ambiguous." (
260.)
The
statutory language requires a local agency to consider the results of the
survey, but it provides no guidance on the permissible scope of this consideration. "Because of this ambiguity, '[i]t is
appropriate to consider evidence of the intent of the enacting body in addition
to the words of the measure, and to examine the history and background of the
provision, in an attempt to ascertain the most reasonable interpretation.' [Citation.]
We may also consider extrinsic aids such as the ostensible objects to be
achieved, the evils to be remedied, and public policy. [Citation.]" (People
v. Manzo (2012) 53 Cal.4th 880, 886.)
We
look for guidance to the Legislature's expression of intent in the uncodified
section of the 2002 act amending section 66427.5. (Stats. 2002, ch. 1143, § 2.) "Although . . . statements in an uncodified
section do not confer power, determine rights, or enlarge the scope of a measure,
they properly may be utilized as an aid in construing a statute. [Citation.]" (People
v. Canty (2004) 32 Cal.4th 1266, 1280.)
In
the uncodified section, the Legislature stated:
"It is the intent of the Legislature to address the conversion of a
mobilehome park to resident ownership that is not a bona fide resident
conversion, as described by the Court of Appeal in [El Dorado, supra, 96 Cal.App.4th 1153]. . .
. [T]he intent of the Legislature in
enacting this act [is] to ensure that conversions pursuant to Section 66427.5
of the Government Code are bona fide resident conversions." (Stats. 2002, ch. 1143, § 2.) The non-bona fide conversion described by the
El Dorado court was a conversion
"by a developer who was engaged in a sham or fraudulent transaction which
was intended to avoid the rent control ordinance." (El
Dorado, supra, at p. 1165.) The court pointed out that "the statute
does not specifically protect against sham or failed transactions in which a
single unit is sold, but no others, and the park owner then claims a local rent
control ordinance is preempted by section 66427.5, subdivision (d) [now
(f)]." (Id., at p. 1166, fn. 10.)
The El Dorado court did not
deem a conversion to be non-bona fide if it lacked resident support. The court observed that "[t]he
legislative intent to encourage conversion of mobilehome parks to resident
ownership would not be served by a requirement that a conversion could only be
made with resident consent."
name="_ftnref10" title="">[10] (Id.,
at p. 1182.)
The
Assembly Floor Analysis of the final version of the 2002 amendment is
consistent with the Legislature's expression of intent in the uncodified
section. (Conc. in Sen. Amends. to
Assem. Bill No. 930 (2001-2002 Reg. Sess.), Aug. 30, 2002 (Assembly Floor
Analysis).) The analysis shows that the
Legislature intended to empower local agencies to prevent sham or fraudulent
transactions designed to evade a local rent control ordinance. A floor analysis of a bill may be considered
in determining legislative intent. (
1067, 1075 [Senate Floor Analysis "demonstrates that the Legislature
intended" that the bill "correct [an] anomaly in the statutory
scheme"].)
The
Assembly Floor Analysis notes that
in El Dorado, supra, 96
Cal.App.4th at p. 1165, the court stated:
" 'We are equally concerned about the use of the section [66247.5]
to avoid local rent control,' but 'the City lacks authority to investigate or
impose additional conditions to prevent sham or fraudulent transactions.'
" (Assembly Floor Analysis, p.
3.) The analysis continues: "The [
[section] 66427.5 takes effect as soon as one unit is sold and supersedes a
local rent control ordinance.
[¶] As a result of [this] . . . court ruling[], the
proponents of this bill are seeking to address what they feel could potentially
become a way for park owners to get around local rent control ordinances. As evidence of these concerns, the supporters
have submitted a newsletter from a law firm that encourages park owners seeking
an 'exit strategy' from mobilehome park ownership to consider selling their
park on a space by space basis through conversion to resident ownership. The newsletter continues that, 'This decision
[El Dorado] offers mobilehome park
owners a new and more viable option to escape the draconian revenue limits
imposed by rent control.' " (
The
Assembly Floor Analysis goes on to state:
"This bill seeks to ensure that the conversion is not a sham
conversion by requiring a vote of the residents to be submitted to the local
agency. Essentially, the bill is
addressing a statement by the court in El
Dorado that 'the courts will not apply section 66427.5 to sham or failed
transactions, or to avoid a local rental control ordinance.' Making this determination would not be easy
for a local agency that did not proactively seek to inquire with the residents
on their position. [¶] This
bill seeks to provide a measure of that support for local agencies to determine
whether the conversion is truly intended for resident ownership, or if it is an
attempt to preempt a local rental control ordinance." (Assembly Floor Analysis, pp. 4-5.)
The
Assembly Floor Analysis emphasizes that a conversion is not a sham merely
because it lacks majority support: "The
fact that a majority of the residents do not support the conversion is not . .
. an appropriate means for determining the legitimacy of a conversion. The law is not intended to allow park
residents to block a request to subdivide.
Instead, the law is intended to provide some measure of fiscal
protection to nonpurchasing residents." (Assembly Floor Analysis, p. 5, italics
added.)
Both
the uncodified section of the act and the Assembly Floor Analysis, speak to a
"bona fide resident conversion."
This occurs when the subdivider truly intends that the spaces in the
mobilehome park be converted to resident ownership. A "sham transaction" occurs when
the subdivider's purpose in seeking conversion is merely "an attempt to
preempt a local rent control ordinance."
(Assembly Floor Analysis, p. 5; see Chino,
supra, 210 Cal.App.4th at p. 1069
["[A] sham conversion is one that is merely
intended to avoid rent control and not
to transfer ownership to residents"].)
The Assembly Floor Analysis shows that the Legislature intended that a
local agency should consider the results of a survey of resident support in
determining whether the conversion is a "bona fide resident
conversion" or a "sham transaction." If the local agency concludes that the
conversion is a "sham transaction," it has the authority to not
approve the conversion.
"It
is foreseeable that the results of this survey could be used to argue to a
court that the conversion is a sham and that the rent formulas in Section
66427.5 should not be applied." (Assembly
Floor Analysis, p. 5) That such an
argument could be made to a court does not preclude a similar argument from
being made to a local agency when it performs its statutory duty to
"consider" the results of the survey.
(§ 66427.5, subd. (d)(5).) The
Legislature wanted to prevent the approval of sham conversions by local
agencies. This protects mobilehome park
residents against rent increases resulting from sham conversions and relieves
them of the burden of suing to enjoin the increases.
The
administrative record indicates that the City Council did not consider whether
Park Owner's proposed conversion is a sham transaction designed to circumvent
City's rent control ordinance. The City
Attorney erroneously advised the City Council that its "only role
is to determine whether or not the Applicant has gone through each of the
things that is required in the statutes."
(See ante, p. 3.)
Because the City
Attorney did not advise the City Council that it could, as the finder of fact,
determine that the conversion was a "sham," i.e., intended merely to
preempt City's rent control ordinance, it may not be appropriate to imply a
finding that the conversion was not a "sham" based on the City
Council's approval of the project. We
would only order remand to the City Council if there were some showing of
sham. Pursuant to Chino, supra, 210
Cal.App.4th 1049, the City Council would abuse its discretion if, on remand, it
determined that the conversion was a sham.
In Chino
the mobilehome park had 260 residents.
Only 36 residents (14 percent) returned the survey, and 33 residents (13
percent) responded to the questions asked in the survey. Of these 33 respondents, 14 (42 percent)
supported the conversion, and 19 (58 percent) opposed it. The Chino
court decided that, based on these results, the local agency had abused its
discretion in denying the application for conversion to resident
ownership. (Id., at pp.
1074-1075.) The court reasoned:
"For purposes of this case . . . it suffices to hold that a majority of 58
to 42 percent is precisely the kind of bare majority that the Legislature did
not intend to be able to block a conversion." (
omitted.) The Chino court concluded that, even if only 10 residents had supported
the conversion and 23 had opposed it, the "level of support would be 30
percent," which would "still show[] the conversion was not a
sham." (Id., at p. 1074, fn.
16.) The court declared: "[A]ll the
survey showed was that the majority of residents did not care enough to return
the survey . . . . This is affirmative
evidence that the conversion was not a
sham." (Id., at
p. 1074.) The court distinguished
the facts before it from those in Goldstone
v. County of Santa Cruz, supra,
207 Cal.App.4th 1038, where the survey results "showed that residents
opposed the conversion by 119 to 2, out of a proposed potential total of
147." (Id., at pp.
1073-1074.) The court considered
paradigm case of a sham conversion."
(Id., at p. 1074.)
The Chino
court concluded that the survey was the only means available to prove that
the survey was a sham: "[U]nder subdivision (e) [of section 66427.5], a
local agency can consider only 'compliance with this section,' and under
subdivision (d), the subdivider need only obtain and submit a survey showing
that the conversion is not a sham.
Section 66427.5 simply leaves no room for opponents of the conversion to
show that a conversion is a sham, other
than by way of the survey." (
at pp. 1074-1075.) The court interpreted
the statute as proscribing "an attempt to prove, with extrinsic evidence [i.e., evidence other than the survey results],
that the conversion was, in fact, a
sham."
title="">[11] (
was a sham, the Chino City Council was precluded from considering a petition
opposing the conversion that was signed by residents of 230 of the 260
lots. The petition could not serve as a
substitute for the survey, and it "was irrelevant to whether the
sham." (Ibid.)
Here, the mobilehome park had 150
residents. Only 33 residents (22
percent) returned the survey, and 26 residents (17 percent) responded to the
questions asked in the survey. Of these
26 respondents, 17 (65 percent) opposed the conversion and 9 (35 percent)
supported it.
title="">[12] Pursuant to Chino, a majority of 65 to 35 percent was insufficient to show that
the conversion was a sham. Moreover, 78
percent of the residents "did not care enough to return the survey,"
which was "affirmative evidence
that the conversion was
supra, 210 Cal.App.4th at
p. 1074.) In addition, the approval
rating here (9 out of 150 residents, or 6 percent) was almost identical to the
approval rating in Chino (14 out of
260 residents, or 5.4 percent). Since
the local agency in Chino abused its
discretion in denying the conversion application, it follows that City would
abuse its discretion if, on remand, it denied Park Owner's conversion
application.
Accordingly, a remand to the
City Council is unwarranted even though it failed to consider the sham
transaction issue. Its failure to do so
was harmless error. As a matter of law,
the evidence in the administrative record is insufficient to establish a sham
transaction.
The judgment (order
granting petition for a writ of administrative mandate) is reversed. The matter is remanded to the trial court
with directions to deny the petition.
Park Owner and City shall recover their costs on appeal.
NOT TO BE PUBLISHED.
YEGAN,
J.
We concur:
GILBERT, P.J.
PERREN, J.
Denise
De Bellefeuille, Judge
Superior
Court County of Santa Barbara
______________________________
Tim W. Giles, City
Attorney, for Defendant and Appellant City of Goleta.
Gilchrist & Rutter,
Richard H. Close, Thomas W. Casparian and Yen N. Hope for Real Party in
Interest and Appellant Goleta Mobile Home Park.
Aleshire & Wynder,
William W. Wynder, Sunny K. Soltani, Jeff M. Malawy and Lindsay Tabaian for the
League of California Cities as Amicus Curiae on behalf of Defendant and
Appellant City of Goleta.
James P. Ballantine for
Plaintiff and Respondent Monarch Country Mobilehome Owners Association.
Law Office of William J.
Constantine and William J. Constantine for the Bay Federal Credit Union as
Amicus Curiae on behalf of Monarch Country Mobilehome Owners Association.
name="_ftn1" title="">[1] All statutory references are to the Government Code unless otherwise
stated.
" 'Mobile homes are largely immobile as a practical matter, because
the cost of moving one is often a significant fraction of the value of the
mobile home itself. They are generally
placed permanently in parks; once in place, only about 1 in every 100 mobile
homes is ever moved. [Citation.] A mobile home owner typically rents a plot of
land, called a "pad," from the owner of a mobile home park. The park owner provides private roads within
the park, common facilities such as washing machines or a swimming pool, and
often utilities. The mobile home owner often invests in site-specific improvements
such as a driveway, steps, walkways, porches, or landscaping. When the mobile home owner wishes to move,
the mobile home is usually sold in place, and the purchaser continues to rent
the pad on which the mobile home is located.'
[Citation.]" (
