Manufactured Housing Communities v. State
2000 Wash. LEXIS 830, 13 P.3d 183, 142 Wash. 2d 347 (2000)
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Rule of Law:
A state statute that grants a right of first refusal to a private party, thereby restricting a property owner's fundamental right to freely dispose of their property, constitutes an unconstitutional taking of private property for private use under Article I, Section 16 of the Washington State Constitution. This prohibition is absolute and is not cured by the payment of just compensation.
Facts:
- In 1993, the Washington State Legislature enacted chapter 59.23 RCW, the mobile home parks—resident ownership act, citing concerns about the insecurity of mobile home park housing.
- The Act grants a 'qualified tenant organization' in a mobile home park a statutory right of first refusal to purchase the park if the owner decides to sell it.
- To activate this right, the tenant organization must provide written notice to the park owner of its 'present and continuing desire to purchase the mobile home park.'
- If an owner with such notice enters into a sale agreement with a third party, the owner must notify the tenant organization of the agreement's terms.
- The tenant organization then has 30 days to tender a purchase agreement on terms as financially favorable as the third-party offer and pay 2% of the agreed purchase price.
- If the tenants meet these requirements, the park owner is legally obligated to sell the park to the tenant organization.
- An owner's failure to properly notify the tenant organization renders a pending third-party sale voidable.
- Manufactured Housing Communities of Washington is an association of mobile home park owners whose property rights are directly affected by the statute.
Procedural Posture:
- Manufactured Housing Communities of Washington (Park Owners) filed a declaratory judgment action in superior court against the State of Washington.
- The Park Owners sought a declaration that chapter 59.23 RCW constituted an unconstitutional taking of private property.
- The superior court denied the Park Owners’ motion for summary judgment.
- Subsequently, the superior court granted the State's motion for summary judgment and dismissed the Park Owners' complaint.
- The Park Owners, as appellants, appealed the dismissal to the Washington Court of Appeals.
- The Court of Appeals affirmed the superior court's judgment in favor of the State.
- The Park Owners then petitioned for, and the Washington Supreme Court granted, review of the Court of Appeals' decision.
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Issue:
Does a state statute (chapter 59.23 RCW) that gives mobile home park tenants a statutory right of first refusal to purchase the park when the owner decides to sell constitute an unconstitutional taking of private property for private use in violation of Article I, Section 16 of the Washington State Constitution?
Opinions:
Majority - Ireland, J.
Yes, the statute constitutes an unconstitutional taking of private property for private use in violation of the Washington State Constitution. A state law that takes a fundamental attribute of property ownership from one private party and transfers it to another private party is a taking for private use, which is absolutely prohibited by Article I, Section 16. The court first determined through a Gunwall analysis that the Washington Constitution provides greater protection for property rights than the Fifth Amendment, specifically through its explicit and absolute prohibition on taking private property for private use. The right to freely dispose of property is a fundamental attribute of ownership, and a right of first refusal is a valuable property right. The statute unconstitutionally takes this right from park owners and transfers it to tenants. While preserving affordable housing may be a public benefit or purpose, it does not qualify as a 'public use' under Washington's strict interpretation, which requires that the public actually be able to use the property. Since the property is transferred to a private tenant organization for its exclusive use, the taking is for a private use, which is unconstitutional regardless of whether just compensation is paid.
Dissenting - Johnson, J.
No, the statute does not constitute an unconstitutional taking. The majority improperly bypasses the correct threshold analysis for a facial takings challenge. First, under established Washington precedent such as Robroy Land Co. v. Prather, a right of first refusal is not a property interest at all, but rather a personal, contractual right; therefore, no 'property' has been taken. Second, even if a property interest were implicated, a facial challenge requires the claimant to prove that the mere enactment of the statute denies the owner of all economically viable use of their property. This Act clearly does not meet that high bar, as park owners can continue to operate their parks, collect rent, and ultimately sell the property for fair market value, meaning the economic impact is minimal and does not rise to the level of a constitutional taking.
Dissenting - Talmadge, J.
No, the Act is a valid exercise of the state's police power and does not effect a taking. The majority's decision marks a return to the discredited Lochner era, where courts improperly invalidated economic regulations designed to protect vulnerable populations. The statute was enacted to address the significant hardship mobile home owners face when a park is sold. Established takings jurisprudence, under both the Penn Central test and this court's precedent in Guimont, requires balancing the regulation's character, its economic impact, and its interference with investment-backed expectations. Here, the regulation is a minor adjustment of economic rights with a negligible economic impact that does not interfere with the owners' primary expectations. The majority's new rule, which treats any effect on a single 'stick' in the bundle of property rights as a per se taking, is a radical departure from precedent that would illogically invalidate countless valid regulations like zoning and anti-discrimination laws.
Concurring - Sanders, J.
Yes, the statute is an unconstitutional taking of private property for private use. This statute is not a legitimate exercise of the police power, which is meant to prevent harmful uses of property, not to appropriate property from one person to bestow a benefit on another. Property is a bundle of rights, and when the government takes one of those rights—such as the fundamental right to dispose of property—it has taken property in the constitutional sense. The dissent's argument that no taking occurs unless all economically viable use is lost applies only to use restrictions, not to the appropriation of other fundamental attributes of ownership like possession, exclusion, or disposition. Because the statute takes a fundamental attribute of ownership and transfers it to a private party, it is a per se taking for a private use, which is absolutely prohibited by the Washington Constitution.
Analysis:
This decision significantly strengthens private property rights under the Washington State Constitution by interpreting its takings clause more broadly than its federal counterpart. By defining a statutorily-created right of first refusal as a taking of a 'fundamental attribute of ownership,' the court established a form of per se taking that does not require a showing of economic loss or denial of all viable use. This precedent limits the legislature's ability to reallocate property rights between private parties, even for significant public policy goals like preserving affordable housing. The ruling reinforces a strict separation between a prohibited 'private use' and a permissible 'public use,' constraining legislative power and affirming the judiciary's role as the final arbiter of this distinction in Washington.
