Yee v. City of Escondido
503 U.S. 519, 118 L. Ed. 2d 153, 1992 U.S. LEXIS 2115 (1992)
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Rule of Law:
A government regulation on the use of property, such as a rent control ordinance, does not constitute a per se physical taking under the Fifth Amendment if it does not compel the property owner to submit to a physical occupation by a third party, even if it significantly impacts the property's economic value and the owner's right to exclude.
Facts:
- John and Irene Yee owned mobile home parks in Escondido, California, where they rented land pads to mobile home owners.
- Due to the high cost of moving them, mobile homes are largely immobile once placed on a pad.
- California enacted the Mobilehome Residency Law, which sharply limited the grounds upon which a park owner could terminate a tenancy or refuse to approve the sale of a mobile home to a new tenant.
- Subsequently, the City of Escondido passed a rent control ordinance that set rents for mobile home pads at 1986 levels and required city council approval for any increases.
- The combination of state and local laws allowed incumbent tenants to sell their mobile homes at a premium, capturing the economic value of the right to occupy the pad at a below-market rent.
- The Yees were prohibited from evicting tenants to raise rents to market rates and had limited ability to select new tenants.
Procedural Posture:
- John and Irene Yee sued the City of Escondido in the San Diego County Superior Court (a trial court), seeking damages and a declaration that the ordinance was an unconstitutional taking.
- The Superior Court sustained the city's demurrer (a motion to dismiss) and dismissed the Yees' complaint.
- The Yees appealed to the California Court of Appeal, which consolidated their case with 11 similar lawsuits.
- The California Court of Appeal affirmed the trial court's dismissal, disagreeing with federal cases that had found similar ordinances to be physical takings.
- The Yees' petition for review to the California Supreme Court was denied.
- The Yees, along with seven other park owners, successfully petitioned the U.S. Supreme Court for a writ of certiorari to resolve a conflict between the state court and federal circuit courts.
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Issue:
Does a municipal rent control ordinance, when combined with a state law limiting a mobile home park owner's ability to terminate tenancies and disapprove of new tenants, amount to a compelled physical occupation of the owner's property, thus constituting a per se taking requiring just compensation?
Opinions:
Majority - Justice O’Connor
No. The Escondido rent control ordinance, even in conjunction with the California Mobilehome Residency Law, does not authorize a physical taking of the petitioners' property. A physical taking occurs only when the government requires a landowner to submit to a physical occupation of their land. Here, the Yees voluntarily chose to rent their property to mobile home owners; the government did not force tenants upon them. The laws in question regulate the landlord-tenant relationship and the use of the property, not compel an unwanted physical invasion. The state law even allows park owners to evict tenants if they wish to change the use of their land. Arguments about the transfer of wealth or the inability to choose new tenants are relevant to a regulatory takings analysis, not a per se physical takings claim. The Court declined to address the petitioners' regulatory taking and substantive due process claims because they were not properly presented in the petition for certiorari.
Concurring - Justice Blackmun
Yes, I agree that the ordinance does not constitute a physical taking under Loretto. I also agree that the regulatory taking and substantive due process claims are not properly before the Court. However, unlike the majority, I do not believe the Court should have discussed whether the regulatory taking claim was ripe or what arguments would be relevant to such a claim, as the Court was not deciding it.
Concurring - Justice Souter
Yes, I concur in the judgment. I would join the Court’s opinion except for its references to the relevance of the petitioners' allegations to a potential claim of a regulatory taking.
Analysis:
This case solidifies the distinction between physical and regulatory takings, making it significantly harder to challenge economic regulations like rent control as per se physical takings. The Court established that as long as the initial use of the property for rental purposes is voluntary, subsequent government regulations on the landlord-tenant relationship will be analyzed under the more flexible (and harder to win) regulatory takings framework of Penn Central, not the rigid physical occupation rule of Loretto. This decision forces property owners challenging such regulations to demonstrate a severe economic deprivation or lack of a legitimate state interest, rather than simply proving that their right to exclude has been curtailed. The ruling thus protects a wide range of state and local housing regulations from facial constitutional attack under a physical takings theory.
