Dunex, Inc. v. City of Oceanside

Filed 8/13/13
CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DUNEX, INC. et al., D061579

Plaintiffs and Respondents,

v. (Super. Ct. No. 37-2010-00061745-
CU-EI-NC)
CITY OF OCEANSIDE,

Defendant and Appellant.

APPEAL from a judgment of the Superior Court of San Diego County, Jacqueline

M. Stern, Judge. Reversed.

Richards, Watson & Gershon, Rochelle Browne, Ginetta L. Giovinco; John P.

Mullen, City Attorney, and Barbara L. Hamilton, Assistant City Attorney, for Defendant

and Appellant.

Hart, King & Coldren, Robert S. Coldren and Mark D. Alpert for Plaintiffs and

Respondents.

In this case, a municipality denied an application for a tentative subdivision map

and coastal development permit which would convert the applicant's mobilehome park
from a rental subdivision to one in which individual residents owned the spaces where

their respective mobilehomes were located. The municipality denied the application on

multiple grounds, including its finding that the application did not comply with the

municipality's local coastal program (LCP) and a separate finding that the application

was not a bona fide attempt to convert the park to individual ownership but was instead

an attempt to avoid the impact of local rent control ordinances.

The applicant challenged the denial of its application by way of a petition for a

writ of administrative mandate, which the trial court granted. The trial court found the

municipality had no power to deny the application on the grounds it was inconsistent with

policies embodied in the municipality's LCP. The trial court also found the record did

not support the municipality's finding that the application was an attempt to avoid the

impact of its rent control ordinances.

In light of the Supreme Court's opinion in Pacific Palisades Bowl Mobile Estates,

LLC v. City of Los Angeles (2012) 55 Cal.4th 783, 807-808 (Pacific Palisades), which

was filed after the trial court's judgment in this case was entered, we must reject the trial

court's determination that the municipality had no power to deny the application on the

grounds it was inconsistent with its LCP. In Pacific Palisades, our Supreme Court held

that Government Code section 66427.5 et seq., which permits conversion of rental

mobilehome parks to individual ownership, does not relieve the owner of a mobilehome

park from its obligation to comply with the separate provisions of the California Coastal

Act of 1976 (Pub. Resources Code, § 30000 et seq.; hereafter Coastal Act) and the Mello

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Act (Gov. Code, §§ 65590, 65590.1).1 The court further held that a mobilehome park

conversion is a project within the meaning of the Coastal Act and that a conversion

applicant must obtain a coastal development permit, which a municipality may deny if

the proposed conversion is inconsistent with an adopted LCP. Here, the record supports

the municipality's determination that, because the applicant's mobilehome park is in a

flood zone within the coastal zone, conversion is inconsistent with its adopted LCP,

which seeks to limit risk to lives and property in such areas.

Because the conversion was inconsistent with the municipality's LCP, the

municipality lawfully denied the conversion application. Accordingly, we reverse the

judgment of the trial court and direct that it enter a judgment denying the applicant's

petition.

FACTUAL AND PROCEDURAL BACKGROUND

A. Application

Plaintiffs and respondents Dunex, Inc. and Cavalier Mobile Estates (collectively

Dunex) own a mobilehome park, which they operate on a rental basis. The mobilehome

park is located within the City of Oceanside (the city), defendant and appellant herein.

In August of 2009, Dunex filed an application with the city under section 66427.5

for a tentative subdivision map converting its mobilehome park to individual lots that

residents could purchase from Dunex. The application was filed after Dunex had

unsuccessfully attempted to obtain a rent increase under provisions of the city's

1 All further statutory references are to the Government Code unless otherwise
indicated.
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mobilehome rent control ordinance.

As part of its application, and as required by section 66427.5, subdivision (d),

Dunex submitted a survey of tenant support for the proposed conversion. The occupants

of 166 of 339 spaces at the park responded to the survey. Of those that responded, 20

indicated support for the conversion, 14 declined to state an opinion, and 132 opposed the

conversion. Because a portion of its mobilehome park is within the coastal zone and

subject to the Coastal Act, along with its application for a tentative subdivision map,

Dunex also filed an application for a coastal development permit.

After Dunex filed its application, Dunex and city planners engaged in a great deal

of correspondence and disagreement with respect to what was required to complete a

conversion application. In particular, although city planners believed the application was

subject to the California Environmental Quality Act (CEQA), Public Resources Code

section 21000 et seq., Dunex argued that because it did not propose any physical change

to any structure in the mobilehome park, its application was not a project within the

meaning of CEQA. Alternatively, Dunex argued that the application fell within specific

CEQA exemptions. Accordingly, Dunex declined to provide the city with information

the city requested in order to prepare an initial evaluation of the conversion's likely

environmental impact.

Notwithstanding its request for environmental information, city staff later

determined it could process Dunex's application under a CEQA exemption for project

applications that are to be denied. Thus, on February 25, 2010, the city determined

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Dunex's application was complete.

B. Denial

The city's planning commission held a hearing on Dunex's application on May 24,

2010. The planning commission adopted the recommendation of city planners that

Dunex's applications for a tentative map and a coastal development permit be denied.

The planning commission found conversion was inconsistent with the LCP the city had

adopted because it would not minimize development in a flood zone. The planning

commission also found that in light of the lack of support for the conversion disclosed in

the tenant survey, the fact the application was filed shortly after Dunex unsuccessfully

attempted to raise rents at the park and statements Dunex representatives made at the time

its request for a rent increase was denied, the application was not a bona fide attempt to

convert the park to individual ownership but was instead an attempt to circumvent the

city's rent control ordinance.

Dunex filed an appeal with the city council, and its appeal was heard on August

25, 2010. The city council also denied Dunex's applications for a tentative subdivision

map and a coastal development permit. The council found that: (1) the proposed

subdivision was inconsistent with the city's LCP because it would create residential lots

in a flood zone; (2) the proposed subdivision was a sham conversion because the tenant

survey showed that only 5 percent of tenants supported it and because the conversion

application was made shortly after Dunex's application for relief from the city's rent

control ordinance was denied and one of its representatives stated that if its request was

5
denied it would apply to convert the mobilehome park to individual ownership; and (3)

Dunex did not provide information necessary to determine whether low-cost and

moderate-cost housing would have to be replaced under the provisions of the Mello Act.

C. Trial Court Proceedings

Dunex filed a timely petition for writs of ordinary mandate and administrative

mandate. The petition included constitutional claims that were later dismissed by

stipulation and without prejudice. The trial court denied Dunex's request for ordinary

mandate but granted its request for administrative mandate.

The trial court found that the city had no power to deny the tentative subdivision

map for failure to comply with the LCP. In addition, the trial court found that, in any

event, the conversion would not increase the flood risk for residents because it would not

involve any new construction or development.

The trial court found that the record did not support the city council's finding that

the conversion was a sham. In particular, the trial court found that the tenant survey,

Dunex's earlier attempt to obtain a rent increase, and statements its representatives made

at that time, did not establish that its application to convert the mobilehome park to

individual ownership was an attempt to avoid the city's rent control ordinance.

Finally, the trial court found that the city could not rely on the absence of

information about low-cost and moderate-cost housing because it had never requested

information from Dunex with respect to the Mello Act.

In light of its findings, the trial court issued a writ which commanded that the city

6
conduct another hearing on Dunex's application and that the hearing be limited to

consideration of the matters set forth in section 66427.5. The writ further prevented the

city from considering the absence of tenant support, Dunex's prior requests for a rent

increase, or statements its representatives made.

The city filed a timely notice of appeal.

DISCUSSION

I

After the trial court issued its writ, the Supreme Court filed its opinion in Pacific

Palisades, supra, 55 Cal.4th 783. As we have indicated, we believe Pacific Palisades

compels us to reverse the trial court's judgment granting mandamus relief to Dunex.

A. Pacific Palisades

In Pacific Palisades, as here, the owner of a mobilehome park applied to a

municipality for permission to convert the park from tenant occupancy to resident

ownership. The municipality refused to accept the application because the owner failed

to include applications for a coastal development permit or for approval under the Mello

Act. The owner challenged the city's rejection of its application by way of a petition for a

writ of mandate and a complaint for injunctive and declaratory relief. The owner argued

the conversion was not a development subject to the Coastal Act and that, in any event,

application of the Coastal Act was barred by the more specific provisions of section

66427.5, which set forth substantive and procedural requirements for obtaining

subdivision map approval of mobilehome park conversions. The trial court agreed with

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the owner and issued a writ of mandamus commanding the municipality to deem the

owner's application complete.

The Court of Appeal reversed, concluding that the policy considerations embodied

in the Coastal Act and the Mello Act are more extensive than those set forth in section

66427.5 and do not prevent a municipality from imposing conditions and requirements

mandated by those acts on a mobilehome converter. On review, the Supreme Court

affirmed the judgment of the Court of Appeal.

With respect to the Coastal Act, the Supreme Court noted: "The Coastal Act

expressly recognizes the need to 'rely heavily' on local government '[t]o achieve

maximum responsiveness to local conditions, accountability, and public

accessibility . . . .' [Citation.] As relevant here, it requires local governments to develop

local coastal programs, comprised of a land use plan and a set of implementing

ordinances designed to promote the act's objectives of protecting the coastline and its

resources and of maximizing public access. [Citations.] Once the California Coastal

Commission certifies a local government's program, and all implementing actions

become effective, the commission delegates authority over coastal development permits

to the local government. [Citations.] Moreover, '[p]rior to certification of its local

coastal program, a local government may, with respect to any development within its area

of jurisdiction . . . , establish procedures for the filing, processing, review, modification,

approval, or denial of a coastal development permit.' [Citation.] An action taken under a

locally issued permit is appealable to the commission. [Citation.] Thus, '[u]nder the

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Coastal Act's legislative scheme, . . . the [LCP] and the development permits issued by

local agencies pursuant to the Coastal Act are not solely a matter of local law, but

embody state policy.' [Citation.] 'In fact, a fundamental purpose of the Coastal Act is to

ensure that state policies prevail over the concerns of local government.' [Citation.]"

(Pacific Palisades, supra, 55 Cal.4th at p. 794.)

In addition to recognizing the significant role local agencies play in enforcing

Coastal Act policies, the Supreme Court determined that, notwithstanding the owner's

argument to the contrary, a mobilehome park conversion is a "development" subject to

the requirements of the Coastal Act. "An expansive interpretation of 'development' is

consistent with the mandate that the Coastal Act is to be 'liberally construed to

accomplish its purposes and objectives.' [Citation.] It thus has been held that

'development' is not restricted to physical alteration of the land. (DeCicco v. California

Coastal Com. (2011) 199 Cal.App.4th 947, 951 [Rejecting a claim that a subdivision is

not a land use and explaining, '[a]lthough a subdivision may not be a use of land, it is

quite clearly a "development" within the meaning of the Coastal Act. [Public Resources

Code s]ection 30106 expressly defines "development" to include "subdivision."'].)

Similarly, it has been recognized that the Coastal Act's definition of 'development' goes

beyond 'what is commonly regarded as a development of real property' [citation] and is

not restricted to activities that physically alter the land or water [citation]." (Pacific

Palisades, supra, 55 Cal.4th at p. 796.)

The Supreme Court also expressly rejected the notion that an owner could avoid

9
the Coastal Act on the grounds its proposed conversion will have no impact on density or

intensity of use: "In the first place, that a conversion might not immediately alter use of

land does not preclude the possibility it will lead to an increase in the density or intensity

of use. Additionally, a conversion might lead to problematic design features as owners

express their individuality by decorating or adding to their mobilehomes. Nor is it

impossible that owners would block public access to coastal areas or increase the number

of residents in their units." (Pacific Palisades, supra, 55 Cal.4th at p. 797.)

The Supreme Court found that conversions were also covered by the Mello Act.

By way of the housing elements law (§§ 65580–65589.8), the Legislature required that

each local government adopt, as a component of its general plan, a "housing element,"

which "shall make adequate provision for the existing and projected needs of all

economic segments of the community" (§ 65583). The Supreme Court found: "The

Mello Act supplements the housing elements law, establishing minimum requirements

for housing within the coastal zone for persons and families of low or moderate income.

[Citations.] It does not require local governments to adopt individual ordinances or

programs to ensure compliance with its provisions [citation], but it prohibits local

governments from authorizing '[t]he conversion or demolition of existing residential

dwelling units occupied by persons and families of low or moderate income, . . . unless

provision has been made for the replacement of those dwelling units with units for

persons and families of low or moderate income.' [Citations.]

"The Mello Act expressly applies to most conversions of residential units within

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the coastal zone, and also expressly applies to the conversion of a mobilehome or

mobilehome lot to a condominium, cooperative, or similar form of ownership." (Pacific

Palisades, supra, 55 Cal.4th at p. 798.)

Finally, the Supreme Court considered the owner's argument that, notwithstanding

the broad scope of the Coastal Act and the Mello Act, section 66427.5 exempts

mobilehome conversions from compliance with the requirements of any state law other

than those imposed by section 66427.5 itself.2 The owner relied upon section 66427.5,

subdivision (e) which provides that in considering an application for a mobilehome park

subdivision map conversion, local governing bodies are limited to "the issue of

compliance with this section."

After considering the express terms of section 66427.5 and its legislative history,

the Supreme Court found that nothing in its provisions relieved local governments of

their obligation to enforce the Coastal Act and the Mello Act when considering a

mobilehome park conversion. "Significant state policies favor an interpretation of

Government Code section 66427.5 that does not deprive the Coastal Act and the Mello

Act of jurisdiction over land use within the coastal zone. As we observed earlier, the

Coastal Act specifically recites that 'existing developed uses, and future developments

2 Section 66427.5 sets forth specific procedures and substantive requirements for
approval of subdivision map applications which convert mobilehome parks to individual
ownership. Section 66427.5, subdivision (a) provides protections to existing tenants in
the form of requiring that they be given the option of purchasing their respective units or
continuing their tenancy, subject to rent limitations set forth in section 66427.5,
subdivision (f). As we have noted, section 66427.5, subdivision (d) requires that the
owner provide the local government with a survey of tenant support for the conversion.
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that are carefully planned and developed consistent with the policies of [the act] are

essential to the economic and social well-being of the people of this state . . . .'

[Citation.] Moreover, as the Court of Appeal recognized, the Coastal Act explains that

the 'permanent protection of the state's natural and scenic resources is a paramount

concern to present and future residents of the state and nation.' [Citation.] The housing

elements law, which the Mello Act supplements, similarly responds to a concern 'of vital

statewide importance.' [Citation]." (Pacific Palisades, supra, 55 Cal.4th at p. 803.)

Thus, the Supreme Court concluded "that Government Code section 66427.5,

which states a uniform, statewide procedure for protecting nonpurchasing residents

against economic displacement, does not exempt conversions of mobilehome parks to

resident ownership from the requirements of the Coastal Act [citation] or the Mello Act

[citations], which also apply to such conversions, and has no effect on the authority those

acts delegate to local entities to enforce compliance with their provisions. Local

agencies therefore are not precluded from establishing such procedures and holding such

hearings as are appropriate to fulfill their responsibilities to ensure compliance with the

Coastal Act and the Mello Act." (Pacific Palisades, supra, 55 Cal.4th at pp. 810-811,

italics added.)

B. Analysis

Pacific Palisades largely disposes of Dunex's arguments with respect to the city's

finding that its application is inconsistent with its LCP. Pacific Palisades makes it clear

that because a large portion of Dunex's mobilehome park is in the coastal zone, Dunex

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was required to obtain a coastal development permit. (See Pacific Palisades, supra, 55

Cal.4th at p. 810.) Pacific Palisades further instructs that central to the city's delegated

authority under the Coastal Act is not only adoption of an LCP but enforcement of the

policies set forth in its LCP when considering coastal development permit applications.

(See id. at pp. 794, 810.)

In this regard, we note that like the trial court, Dunex relies upon the holding in

Hines v. California Coastal Com. (2010) 186 Cal.App.4th 830, 845 (Hines) for the

proposition that policies set forth in an LCP do not have the force of law. Dunex

misapprehends the holding of Hines. In Hines, a local government granted a coastal

development permit which permitted construction of a home within 100 feet of a riparian

area, notwithstanding the fact that the governing LCP recommended there be a 100-foot

setback from all riparian areas. However, the LCP also expressly permitted exceptions

from the recommended setback under specified conditions, which the local governing

body found existed. In this context, the court in Hines found that the recommended

setback in the LCP did not have the force of law, that the local governing body had

discretion to make an exception to it, and that it did not abuse its discretion in doing so.

Nothing in Hines suggests that a local governing body may ignore the policies set forth in

an LCP. Rather, Hines merely stands for the proposition that an LCP may provide a local

government with discretion in applying its policies and provisions.

Hines is entirely consistent with the holding in Pacific Palisades that a local

government is obligated, as a matter of state law, to consider the provisions of its LCP

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when an applicant, such as Dunex, is seeking a coastal development permit. (See Pacific

Palisades, supra, 55 Cal.4th at pp. 810-811.) In this regard, the Supreme Court's

description of the role of local governments under the Coastal Act bears repetition:

"'[U]nder the Coastal Act's legislative scheme, . . . the [LCP] and the development

permits issued by local agencies pursuant to the Coastal Act are not solely a matter of

local law, but embody state policy.' [Citation.]" (Pacific Palisades, at p. 794.)

The remaining question then is whether the city abused its discretion in finding

that subdivision of Dunex's mobilehome park was inconsistent with the city's LCP, which

expressly states that new development shall: "Minimize risks to life and property in areas

of high geologic, flood, and fire hazard." Dunex contends that because it was only

proposing a change in ownership and not any additional lots or any physical change to

the current configuration of the park, it was not proposing any additional risk to life or

property. We disagree.

As the Supreme Court's opinion in Pacific Palisades makes clear, even if the

conversion of a mobilehome park to individual ownership does not involve any

immediate physical change, such a change in ownership may create circumstances

warranting regulation under the Coastal Act or an adopted LCP. (Pacific Palisades,

supra, 55 Cal.4th at p. 797.) Here, the city could reasonably conclude that individual

ownership would be an unacceptable increase in the risk to life and property because it

would move the flood risk to individuals far less able to either respond to or bear that risk

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than a single owner.3

Because the city did not abuse its discretion in finding inconsistency with its LCP,

the city lawfully denied Dunex's application for the requisite coastal development permit

and, as a consequence, the city's denial of Dunex's application for a subdivision map was

also lawful.4 (See Pacific Palisades, supra, 55 Cal.4th at pp. 794, 810-811.)

Accordingly, the trial court erred in issuing a writ of administrative mandate.

DISPOSITION

The trial court's order issuing a writ of administrative mandamus is reversed, and

the trial court is directed to enter an order denying Dunex's petition. The city to recover

its costs of appeal.
BENKE, Acting P. J.
WE CONCUR:

AARON, J.

IRION, J.

3 We deny Dunex's request that we take judicial notice of and augment the record
with correspondence Dunex obtained from the city after the trial court issued its writ and
the city's recently adopted housing element. The correspondence, which indicates that
the city generally does not require physical changes to mobilehome parks that are situated
in flood zones, and the newly-adopted housing element, were not considered by the trial
court, and the city had no opportunity to respond to their relevance, if any. (See Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.)

4 Because Dunex's petition must be denied and no further proceedings on its petition
will take place on remand, we need not and do not reach the city's additional contentions
with respect to whether Dunex's conversion was bona fide and whether the city
adequately notified Dunex of the need to provide Mello Act information.
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