Stanford Law School - Robert Crown Law Library

Filed 1/11/07

IN THE SUPREME COURT OF CALIFORNIA

LUIS J. CACHO et al.,
Plaintiffs and Appellants,
S133378
v.
Ct.App. 4/1 D043396
LOUIS J. BOUDREAU et al.,
San Diego County
Defendants and Respondents. )
Super. Ct. No. GIS 007670

The state Mobilehome Residency Law (Civ. Code, § 798 et seq.)1 regulates
relations between the owners and the residents of mobilehome parks. Three of its
provisions are at issue here. The first provision states: “A homeowner shall not
be charged a fee for other than rent, utilities, and incidental reasonable charges for
services actually rendered.” (§ 798.31.) Under the second provision, which
applies only in parks subject to local rent control laws, a local agency that
administers a rent control law must allow a park owner to separately charge park
residents for certain government-imposed fees, assessments, and other charges
(§ 798.49, subd. (a)), but this provision expressly does not apply to property taxes
(§ 798.49, subd. (d)(4)). Under the third provision, which applies when a park
resident is the prevailing party in a civil action to enforce rights granted by the
Mobilehome Residency Law, the trial court is vested with discretion to impose on

1
Unless otherwise stated, all further statutory references are to the Civil
Code.
1

---

the park owner a civil penalty not exceeding $2,000 for each “willful violation” of
that law. (§ 798.86.)
We granted review here to address these issues: Does the state
Mobilehome Residency Law preempt a local rent control ordinance that allows a
mobilehome park owner to separately charge park residents for property taxes
imposed on the land on which the park is situated? If a park owner, relying on
such an ordinance and the assurances of local officials charged with administering
local law, separately charges park residents for property taxes, and the ordinance is
thereafter held to be preempted, has the owner committed a “willful” violation of
the Mobilehome Residency Law so as to justify imposition of civil penalties? If
so, does the imposition of civil penalties violate the park owner’s constitutional
right to due process of law?
We conclude that the state Mobilehome Residency Law does not preempt
local rent control ordinances insofar as they allow mobilehome park owners to
separately charge park residents for property taxes imposed on park land. This
conclusion renders the other two issues moot, and we do not address them.
I. FACTS AND PROCEDURAL BACKGROUND
Luis J. Cacho and three of his children (Luis A. Cacho, Daniel Cacho, and
Elizabeth Cacho) own a 129-space mobilehome park known as Don Luis Estates.
The park is located in the City of Chula Vista (in San Diego County), which has a
rent control ordinance regulating the space rent that mobilehome park owners like
the Cachos may charge the residents in their mobilehome parks. (Chula Vista
Mun. Code, tit. 9, ch. 9.50.)
Until 1994, Luis J. Cacho’s mother had also been a part owner of Don Luis
Estates, but she died during that year. Because of the change in ownership
resulting from her death, the county assessor reassessed the mobilehome park
property, and the property taxes increased by $18,676.57.
2

---

At that time, Chula Vista’s rent control ordinance defined “space rent” as
“the consideration . . . demanded or received in connection with the use and
occupancy of the mobilehome space . . . exclusive of . . . allowable pass-throughs
. . . .” (Chula Vista Mun. Code, tit. 9, ch. 9.50, former § 9.50.030, subd. (A),
italics added.) One of the pass-throughs that the ordinance then allowed, and
excluded from the definition of “space rent,” was “governmental assessments such
as real property taxes . . . .” (Id., former § 9.50.030, subd. (H).) The ordinance
also listed “[p]roperty or other taxes” as one component of the owner expense
factor that the mobilehome rent review commission was to consider in fixing
space rent through the hearing process. (Id., former § 9.50.073, subd. (A)(1)(a).)
In April 1998, the Cachos consulted Juan Arroyo, a senior official with the
Housing Division of the Chula Vista Community Development Department, to
determine whether they could “pass through” their property tax increase to the
park residents without following the administrative procedure required to obtain a
space rent increase. In a letter dated October 26, 1998, Arroyo told them that the
proposed pass-through of the property tax increase would not violate Chula
Vista’s rent control ordinance. Although he acknowledged that the state
Mobilehome Residency Law, in section 798.49, “contains language which could
preclude the automatic pass-through of increased property taxes as a separately
stated amount,” he asserted that “where a City’s rent control ordinance specifically
allows the pass-through of increased property taxes, such pass-through does not
violate the State Law.” Arroyo added this caution: “As we have stated in past
discussions, the City Attorney cannot be your legal counsel. Our conclusions are
for the benefit of the City. You should consult with your own attorney regarding
the legal interpretation of Section 798.49.” In the letter, Arroyo also requested
that the pass-through “not be included in the space rent” and instead that it be
3

---

“billed as a separate item to avoid confusion and to ensure that such pass-through
is not included in any calculation of the increase in the rent.”
The leases for the rental spaces contained a provision stating that the rent
could be changed upon 90 days’ notice under the state Mobilehome Residency
Law and that any rental increase would be governed by the City of Chula Vista.
In November 1998, to implement the property tax pass-through, the Cachos sent
the residents a 90-day notice of a rental increase in the amount of $12.31 per
month per space. Thereafter, the Cachos began including this amount as part of
the “monthly rent” specified in lease agreements for park spaces and in the
monthly rental invoices sent to park residents.2 The Cachos increased the pass-
through amount to $12.56 in 2000 and to $12.81 in 2001. On the invoices, the
amount was variously listed as “rent tax,” “rent adj,” “adj,” “other,” and
“CVMC9.50.030H.”
In 2001, some of the park residents filed individual small claims actions
against the Cachos alleging that the property tax pass-through was invalid because
it violated the state Mobilehome Residency Law. In September 2001, the Cachos
filed a complaint for declaratory relief in superior court, naming as defendants the
same park residents who had brought the small claims actions. Those residents
dismissed their small claims actions and instead cross-complained against the
Cachos, seeking injunctive and declaratory relief, damages, statutory penalties,
and attorney fees. In April 2002, in overruling the Cachos’ demurrer to the
residents’ cross-complaint, the superior court issued an interlocutory ruling that

2
In leases for the calendar year 1999, and again for the year 2001, the
monthly rent was broken down into two components, one of which was the
property tax pass-through. In leases for the year 2000, the monthly rent was stated
as a single amount, but that amount included the pass-through.
4

---

the pass-through provisions of Chula Vista’s rent control ordinance, which
allowed a property tax charge that was separate from and in addition to space rent,
were preempted by sections 798.31 and 798.49.
While this litigation was proceeding, the Cachos applied for an increase in
space rent as a substitute for the disputed property tax pass-through. In May 2002,
the Chula Vista Mobilehome Rent Review Commission approved the Cachos’
request for a rent increase to compensate for the property tax increase, at the same
time directing that the Cachos “should no longer bill residents for this increase in
property tax.” By this means, the Cachos continued to obtain reimbursement for
the added expense caused by the property tax increase, albeit in the form of a
discretionary rent increase rather than a pass-through of the property taxes as a
separately stated item on the monthly rent invoices. The residents have apparently
not challenged the validity of that rent increase.3
The litigation proceeded. In March 2003, the parties filed cross motions for
summary judgment or summary adjudication. The superior court granted
summary judgment in favor of the residents, and it awarded damages of $10,067,
civil penalties of $23,000, attorney fees of $87,321, and litigation costs of $9,230.
The court treated the Cachos’ reliance on the city’s advice about the legality of the
pass-through as a mitigating factor in fixing the amount of the statutory penalty.
The judgment was filed in February 2004, and the Cachos appealed.

3
Around the same time, in July 2002, the Chula Vista City Council repealed
the pass-through provisions of the city’s rent control ordinance, instead amending
the ordinance’s definition of “rent” to exclude “any separate charge for those fees,
assessments or costs which may be charged to mobilehome residents pursuant to
the California Civil Code.” (Chula Vista Mun. Code, tit. 9, ch. 9.50, § 9.50.010,
subd. (G).)
5

---

The Court of Appeal affirmed the judgment. It agreed with the superior
court that the Chula Vista ordinance that formerly had permitted mobilehome park
owners to pass through property taxes to park residents conflicted directly with,
and was preempted by, the state Mobilehome Residency Law, and that the
Cachos’ violation of that state law was willful. It also concluded that the superior
court had not abused its discretion in awarding civil penalties in the amount of
$23,000.
II. PREEMPTION
“A county or city may make and enforce within its limits all local, police,
sanitary, and other ordinances and regulations not in conflict with general laws.”
(Cal. Const., art. XI, § 7.) A local law conflicts with state law, and is therefore
preempted and invalid, if it “duplicates [citations], contradicts [citation], or enters
an area fully occupied by general law, either expressly or by legislative
implication [citations].” (Lancaster v. Municipal Court (1972) 6 Cal.3d 805, 807-
808; accord, Great Western Shows, Inc. v. County of Los Angeles (2002) 27
Cal.4th 853, 860; Sherwin-Williams Co. v. City of Los Angeles (1993) 4 Cal.4th
893, 897.)
State law, in section 798.31, prohibits mobilehome park owners from
imposing on their residents any fee “for other than rent, utilities, and incidental
reasonable charges for services actually rendered.” A charge for real property
taxes is neither a charge for utilities nor a charge for services actually rendered by
the mobilehome park owner to the park residents. Thus, under state law, a
mobilehome park owner may not charge residents a fee for real property taxes
unless that charge constitutes “rent” within the meaning of that term in section
798.31. Under Chula Vista’s rent control ordinance during the time at issue here,
however, real property taxes were an allowable separate charge, or pass-through,
that was excluded from the ordinance’s definition of “space rent.” Did this
6

---

constitute an actual and irreconcilable conflict between state and local law, as the
Court of Appeal concluded, or was it just an immaterial difference in terminology,
as the Cachos argue?
To answer that question, we begin by inquiring into the purpose of the state
law.
The state Mobilehome Residency Law does not define the term “rent.” In
the absence of a statutory definition, we assume that the Legislature intended that
“rent” would have its ordinary meaning, which is compensation for the use of land
(Shintaffer v. Bank of Italy etc. Assn.. (1932) 216 Cal. 243, 246) and the means by
which landlords make a profit on their property (Action Apartment Assn. v. Santa
Monica Rent Control Bd. (2001) 94 Cal.App.4th 587, 598). In a mobilehome
park, rent is compensation not only for the use of the resident’s individual space
but also for use of common areas. (Robinson v. City of Yucaipa (1994) 28
Cal.App.4th 1506, 1513 (Robinson).) The terms of the lease for the rented space
will normally determine the amount of the agreed-upon rent.
In Dills v. Redwoods Associates, Ltd. (1994) 28 Cal.App.4th 888 (Dills),
the Court of Appeal traced the history of section 798.31: “When first enacted in
1971, the predecessor to section 798.31 simply provided, ‘The owner of a
mobilehome park . . . shall not charge any fees to tenants other than charges for
rent, utilities, or incidental reasonable service charges.’ (Stats. 1971, ch. 1143,
§ 2, p. 2165.) In 1975, the Legislature amended the statute, prescribing that any
service charges be for services actually rendered, that the rental agreement
disclose any services (and the charges associated with them), and that no services
and fees could be assessed against current tenants without notice of 60 days. The
Legislature also added a proscription against service charges for pets, short-term
guests, per-person charges (if the persons are immediate family members), and
enforcement of park rules. (Stats. 1975, ch. 613, § 1, pp. 1342-1343; id., ch. 1092,
7

---

§ 2, pp. 2659-2660.) In 1978, the Legislature transferred the substance of the
former statute to current section 789.15, subdivision (f)—governing the contents
of rental agreements—and sections 798.31 through 798.36 (the article concerning
fees and charges) ‘without substantive change.’ (4 Stats. 1978 (Reg. Sess.)
Summary Dig., p. 280.)” (Dills, supra, at pp. 892-893; see also People v. Mel
Mack Co. (1975) 53 Cal.App.3d 621, 626.)
The Dills Court of Appeal drew this conclusion: “As this progression
demonstrates, the focus of the Legislature was the prevention of a proliferation of
service charges above and beyond rent or utilities. The unscrupulous park owner
could lure mobilehome owners with a competitive rent, then ‘nickle-and-dime’
this relatively captive market with an array of unanticipated charges which when
aggregated could render the tenant unable to afford to continue the tenancy.”
(Dills, supra, 28 Cal.App.4th at p. 893, fn. omitted.) What the legislative history
does not show is any concern about whether park owners structure space rent as a
lump sum, rather than breaking it down into separate components, or any concern
about park owners passing on to park residents the expense of property taxes.
Despite its various limitations on allowable fees, the state Mobilehome
Residency Law does not restrict the amount of rent that a mobilehome park owner
may charge park residents; it is not a rent control law. (Griffith v. County of Santa
Cruz (2000) 79 Cal.App.4th 1318, 1323 (Griffith); Vance v. Villa Park
Mobilehome Estates (1995) 36 Cal.App.4th 698, 702, 707 (Vance).)
In the absence of a state law imposing rent control in mobilehome parks,
many California cities, including Chula Vista, have enacted mobilehome park rent
control ordinances. (See Galland v. City of Clovis (2001) 24 Cal.4th 1003, 1010.)
The state Mobilehome Residency Law does not prohibit local governments from
imposing rent control in mobilehome parks. (Griffith, supra, 79 Cal.App.4th at
p. 1323; Robinson, supra, 28 Cal.App.4th at p. 1513.) To be constitutionally
8

---

valid, however, a rent control law must permit the landlord to earn a fair return on
investment and thereby not be confiscatory. (Galland v. City of Clovis, supra, at
p. 1021; see also Santa Monica Beach, Ltd. v. Superior Court (1999) 19 Cal.4th
952, 962-964.) Typically, rent control laws contain a list of factors for the
regulator to consider in setting the maximum allowable rent, including typical
business costs. One of the typical business costs commonly included as a
consideration in fixing allowable rents is property taxes. (See Galland v. City of
Clovis, supra, at p. 1010; Carson Mobilehome Park Owners’ Assn. v. City of
Carson (1983) 35 Cal.3d 184, 188, fn. 2, & 193-194.) In this sense, property taxes
have commonly been treated as a component of rent.
To determine the proper meaning of the term “rent” in section 798.31
(which prohibits mobilehome park owners from imposing on their residents any
fee “for other than rent, utilities, and incidental reasonable charges for services
actually rendered”), and whether that section prohibits pass-throughs of business
expenses like property taxes, it is helpful to consider that section in relation to
another provision of the state Mobilehome Residency Law at issue here, section
798.49. Two subdivisions of section 798.49—subdivisions (a) and (d)—are
relevant here.
Subdivision (a) of section 798.49 states: “Except as provided in
subdivision (d), the local agency of any city, including a charter city, county, or
city and county, which administers an ordinance, rule, regulation, or initiative
measure that establishes a maximum amount that management may charge a
tenant for rent shall permit the management to separately charge a homeowner for
any of the following: [¶] (1) The amount of any fee, assessment or other charge
first imposed by a city, including a charter city, a county, a city and county, the
state, or the federal government on or after January 1, 1995, upon the space rented
by the homeowner. [¶] (2) The amount of any increase on or after January 1,
9

---

1995, in an existing fee, assessment or other charge imposed by any governmental
entity upon the space rented by the homeowner. [¶] (3) The amount of any fee,
assessment or other charge upon the space first imposed or increased on or after
January 1, 1993, pursuant to any state or locally mandated program relating to
housing contained in the Health and Safety Code.” Thus, subdivision (a)
mandates a pass-through of certain mobilehome park business expenses—the
specified government fees and assessments—to the park residents.
The government fees and assessments listed in subdivision (a) of section
798.49 do not include property taxes. To prevent any possible confusion on this
point, subdivision (d) of section 798.49 states that the section “shall not apply” to
property taxes. That means only that local rent control agencies are not required
to allow park owners to separately charge park residents for property taxes; it does
not mean that local rent control agencies are prohibited from doing so.
Although the pass-through mandated by subdivision (a) of section 798.49
does not include property taxes, it is nonetheless significant in determining the
meaning of the term “rent” in section 798.31, and, more specifically whether rent
includes otherwise lawful pass-throughs of business expenses like property taxes.
On its face, section 798.49, subdivision (a), appears inconsistent with
section 798.31. Under section 798.31, a mobilehome park owner may not charge
the park residents for anything other than rent, utilities, or “incidental reasonable
charges for services actually rendered,” but under section 798.49, subdivision (a),
a local rent control agency must allow a mobilehome park owner to “separately
charge” the residents for new or increased governmental fees or assessments
imposed on the rented spaces. Under accepted rules of statutory construction, we
must harmonize these provisions, if possible, giving full effect to each. (Mejia v.
Reed (2003) 31 Cal.4th 657, 663; DeVita v. County of Napa (1995) 9 Cal.4th 763,
778-779.)
10

---

We may resolve the inconsistency between these statutory provisions in
either of two ways. Section 798.49, subdivision (a), might be construed as
establishing an implied exception to section 798.31. Under that construction, the
charges that a mobilehome park owner is permitted to impose on park residents
fall into four categories: (1) rent, (2) utilities, (3) “incidental reasonable charges
for services actually rendered,” and (4) the governmental fees and assessments
listed in subdivision (a) of section 798.49. There is a serious objection to that
construction, however, because under general rules of statutory interpretation
“amendments by implication” and “exceptions by implication” are generally
disfavored and are accepted only in the absence of another rational way to
harmonize the statutory provisions. (Peatros v. Bank of America (2000) 22
Cal.4th 147, 167-168 (plur. opn. of Mosk, J.); Lesher Communications, Inc. v.
City of Walnut Creek (1990) 52 Cal.3d 531, 540-541; In re Sean W. (2005) 127
Cal.App.4th 1177, 1187.)
As previously mentioned, there is another way to reconcile the two
provisions. Unlike the construction just mentioned, this interpretation does not
treat subdivision (a) of section 798.49 as establishing an implied exception to
section 798.31. Rather, the separate charges for governmental assessments and
fees allowed under subdivision (a) of section 798.49 may be included as a
component of rent within the meaning of that term in section 798.31. Under this
construction, the charges that a mobilehome park owner is permitted to impose on
park residents are limited to three categories: (1) rent (which may include separate
charges for governmental fees and assessments listed in subdivision (a) of section
798.49), (2) utilities, and (3) “incidental reasonable charges for services actually
rendered.” Because it fully harmonizes the two provisions, this construction is
favored under the rules of statutory construction. To satisfy ourselves that it is not
11

---

inconsistent with legislative intent, we consider the legislative history of section
798.49.
Enacted in 1992 as Senate Bill No. 1365 (Stats. 1992, ch. 338, § 3,
pp. 1306-1307), section 798.49 was proposed by the Western Mobilehome
Association (WMA). A legislative committee analysis summarized the argument
in favor of the legislation in these words: “WMA asserts that several rent control
ordinances in California contain provisions which place an unfair burden on
mobilehome park owners. One of the most onerous requirements is the imposition
of additional government mandated costs without the ability to offset or pass
through those new costs in rent control jurisdictions. In a number of local
jurisdictions, the local ordinance provides a set formula for the maximum
permissible yearly rent increase. Some local ordinances, however, do not allow
any additional offset or price increase for added costs that may be imposed by a
state or local mandate, e.g., new fees for local program. SB 1365 would enable
the park owner to separately bill and charge the park tenant for any new or
increased fees imposed upon the park space by the local government or by a state
or locally mandated program relating to housing health and safety standards.”
(Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Sen. Bill
No. 1365 (1991-1992 Reg. Sess.) as amended June 25, 1992, pp. 2-3.) The same
legislative committee analysis gives this explanation of the legislation’s purpose:
“The purpose of this bill is to enable mobilehome park owners to pass-through the
costs of any new government fee or program to the park tenants in rent control
jurisdictions.” (Id. at p. 2.)
Thus, the aim of the legislation was to enable park owners to pass through
to park residents the costs of new or increased fees and assessments imposed on
the rented spaces. In the absence of local rent control, the park owners would
accomplish this through a rent increase, but some local rent control agencies did
12

---

not allow rent adjustments for this purpose, with the result that park owners had to
bear this “unfair burden.” To prevent this perceived inequity, section 798.49
mandates that local rent control agencies allow park owners to separately bill and
charge the tenants for the new or increased fees. Although the separate charge is
thereby exempted from the restrictions on rent increases in rent control
jurisdictions, it may be considered “rent” within the meaning of section 798.31.
Nothing in section 798.49 prohibits park owners from structuring their leases for
park spaces to including the separate charge as a component of rent. The separate
charge is compensation for the use of the rented space and common areas of the
park, and thus within the common definition of “rent.” Because nothing other
than the renting of the space is required to trigger the charge, it is unlike the
service charges for pets and short-term guests that the Legislature has expressly
prohibited. Moreover, the government fees and assessments passed through to the
tenants are a category of business expense that owners of mobilehome parks and
other rental property have traditionally recovered from their tenants through the
amount charged as rent.
With this understanding in mind, we may now harmonize section 798.49,
subdivision (a), with section 798.31, under which a mobilehome park owner may
not charge the park residents for anything other than rent, utilities, or reasonable
service charges. We conclude that these two provisions are best harmonized by
construing the separate charges for governmental assessments and fees under
section 798.49, subdivision (a), as a permissible component of the total rent.
Accordingly, section 798.49 demonstrates that the state Mobilehome Residency
Law does not prohibit park owners from separately charging park residents, as a
component of the total rent, for governmental fees and assessments.
This conclusion is not inconsistent with subdivision (d) of section 798.49,
which states that the section “does not apply” to property taxes. As we have
13

---

explained, this means only that local rent control agencies are not required to
allow park owners to separately charge park residents for property taxes; it does
not mean that local rent control agencies are prohibited from doing so. The effect
of the exclusion is to preserve the authority of local rent control agencies to deal
with property taxes as a pass-through item, like the assessments and fees listed in
subdivision (a) of section 798.49, as a factor to be considered in periodic
discretionary adjustments of base rent, or as both (as did the former provisions of
the Chula Vista ordinance at issue here).
Our review of the text and history of sections 798.31 and 798.49 leads us to
conclude that the state Mobilehome Residency Law does not preempt local rent
control ordinances that permit mobilehome park owners to pass-through property
taxes to park residents as a separately stated item. Exclusion of the property tax
pass-through from the definition of “space rent” under the local ordinance is not
inconsistent with the inclusion of the property tax pass-through within the
meaning of “rent” as that term is used in section 798.31. A single term (here,
“rent”) may have different meanings in different legal contexts. (See, e.g., People
v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660 [noting that
the term “jurisdiction” has various meanings]; Grissom v. Vons Companies, Inc.
(1991) 1 Cal.App.4th 52, 58 [same for term “necessary”]; see also Delaney v.
Baker (1999) 20 Cal.4th 23, 41-42 [a term is not presumed to have the same
meaning when it appears in different statutory schemes with distinct objectives].)
Here, the ordinance does not purport to define the term “rent” under the state
Mobilehome Residency Law or as used in the leases subject to the ordinance. It
merely defines and uses the term “space rent” as a way of specifying the charges
that the ordinance regulates. In recognizing other charges that the ordinance refers
to as “allowable pass-throughs” and that the ordinance excludes from its own
14

---

definition of “space rent,” the ordinance does not prohibit the parties from
including those other charges as rent in their leases, as the parties did here.
When it has been included within the overall rental charge specified in the
lease for the rented space, a property tax pass-through is appropriately
characterized as rent under section 798.31 because nothing other than use of the
rented space and common areas is required to trigger the charge, because it is
compensation for the use of the rented space and common areas of the park, and
because property taxes are a business expense that owners of mobilehome parks
and other rental property have traditionally recovered from their tenants through
the amount charged as rent. This conclusion means, of course, that a property tax
pass-through, because it is rent, is subject to provisions of the state Mobilehome
Residency Law regulating rent, such as the requirement that the park management
give the resident at least 90 days’ notice of any increase in the rent. (§ 798.30.)
This conclusion is consistent with the Court of Appeal decisions in Dills,
supra, 28 Cal.App.4th 888, and Robinson, supra, 28 Cal.App.4th 1506, but
inconsistent with the decision in Karrin v. Ocean-Aire Mobile Home Estates
(1991) 1 Cal.App.4th 1066 (Karrin).
In Karrin, the City of Oxnard enacted a rent control ordinance for
mobilehome parks. (Karrin, supra, 1 Cal.App.4th at p. 1068.) The ordinance
allowed park owners to “ ‘segregate and separately bill the actual cost for any
mobilehome ordinance assessment . . . and pass on any increase in such charges as
they occur’ ” (ibid.), and it expressly excluded from the definition of “space rent”
“ ‘[p]assthrough items, including but not limited to mobilehome ordinance
assessment[s], . . . and capital improvements’ ” (id. at pp. 1068-1069). Following
the procedure set forth in the ordinance, a mobilehome park owner held an
election for the park residents to determine whether they should assess themselves
$7.35 per month for repaving roads within the park. (Id. at p. 1069.) After
15

---

obtaining the residents’ approval through the election, the park owner began
charging the assessment. (Ibid.)
One of the park residents sued the owner, alleging that the capital
improvement assessment imposed under the local ordinance violated the state
Mobilehome Residency Law. (Karrin, supra, 1 Cal.App.4th at p. 1069.) The trial
court upheld the election and the assessment, but after the resident appealed, the
Court of Appeal reversed the trial court’s judgment. The court noted that the park
owner could have (but had not) applied for a discretionary rent increase based on
the capital improvement costs. (Id. at p. 1072.) Rejecting the argument that the
assessment could be considered a form of rent, the Court of Appeal observed that
the ordinance “expressly distinguishes between rent and assessments for pass-
through items . . . .” (Id. at p. 1073.) The court declined to consider a city council
resolution declaring that the assessment “ ‘is and was part of the rent’ ” on the
ground that it could not consider it because it had occurred after the trial court had
entered judgment. (Id. at p. 1070.)
In Dills, however, another Court of Appeal took a somewhat different view.
There, a lease for a mobilehome park space provided for “base rent” in a specified
amount and subject to annual increases according to a specified formula, with
property taxes and utility charges to be added to the base rent when they exceeded
certain threshold levels. (Dills, supra, 28 Cal.App.4th at p. 890.) Finally, the
lease provided for a pass-through of the costs of capital improvements to the park,
to be amortized over five years, describing the pass-through amount “ ‘as a
component separate from the base rent.’ ” (Ibid.) When the park owner added a
$15 charge to the monthly rent bills to cover the cost of road repairs within the
park, two of the residents sued for declaratory and injunctive relief, as well as
damages. (Id. at p. 891.) They maintained that the capital improvement pass-
through violated section 798.31 of the state Mobilehome Residency Law as a
16

---

charge for other than rent, utilities, or services actually rendered. (Ibid.) The trial
court sustained the park owner’s demurrer to the complaint, and the residents
appealed from the resulting judgment of dismissal. (Id. at p. 889.)
The Court of Appeal affirmed the judgment. It concluded that “the
breakdown of rent into separately calculated base-rent and capital-improvement
components does not invalidate the capital component.” (Dills, supra, 28
Cal.App.4th at p. 892.) The court observed that the parties had proposed
conflicting definitions of “rent”: “Both parties have cited authority that either
‘rent is what you call it’ or ‘rent is defined by function.’ (E.g., Cal-American
Income Property Fund IV v. Ho (1984) 161 Cal.App.3d 583, 586 [207 Cal.Rptr.
532] [unlawful detainer action; certain charges that could have been charged as
‘rent’ categorized otherwise in lease, so not rent]; Granberry v. Islay Investments
(1984) 161 Cal.App.3d 382, 390-391 [207 Cal.Rptr. 652] [in distinguishing
security deposits from rent, ‘merely calling an item “rent” does not make it so’];
cf. Shakespeare, Romeo and Juliet, act II, scene 2, lines 43-44 [roses].)” To
determine the meaning of “rent” in section 798.31, the Dills court reviewed the
historical context of that provision’s enactment and amendment. It concluded:
“Neither the original enactment nor its amendments signaled in any way a concern
with limiting a mobilehome park owner’s recovery of capital expenditures. Since
capital expenditures have otherwise been a traditionally recoverable component of
rent, even under rent control ordinances, there is nothing in the statute which
precludes a park owner from structuring its rent in the manner of the defendants.”
(Dills, supra, at p. 893, fn. omitted; accord, Vance, supra, 36 Cal.App.4th at
pp. 705-706.)
The Dills court added that allowing park owners to pass through the costs
of capital improvements by means of assessments “inures to the benefit of tenants”
because they pay “only for actual costs as incurred.” (Dills, supra, 28 Cal.App.4th
17

---

at p. 893.) Otherwise, park owners would be forced to guess at future capital costs
over the course of a lease, and likely would set the rent high enough to cover any
possible expenditures. (Ibid.) The court acknowledged that its reasoning was not
consistent with that of the Court of Appeal in Karrin, supra, 1 Cal.App.4th 1066,
and it “respectfully part[ed] company from Karrin” to the extent it implied “that
any effort to recover capital costs explicitly as opposed to an implicit component
of rent run[s] afoul of” section 798.31. (Dills, supra, at p. 893.)
In Robinson, the owner of a mobilehome park in the City of Yucaipa
resurfaced the park streets and in 1989 began to obtain reimbursement from the
park residents through normal rent increases. (Robinson, supra, 28 Cal.App.4th at
p. 1510.) The city council of Yucaipa then adopted a mobilehome park rent
control ordinance that rolled back rents to those in effect on December 31, 1988.
(Id. at pp. 1510-1511.) The park owner applied for and obtained a capital
improvement rent increase under the ordinance to recover the cost of the park road
resurfacing, in the amount of $9.63 per month per space for a duration of 156
months. (Id. at pp. 1511-1512.) Two park residents challenged the decision by
petitioning the superior court for a writ of mandate, contending that the ordinance
was preempted by section 798.31 insofar as it allowed capital improvement rent
increases. (Id. at p. 1512.) The trial court denied the petition, and the Court of
Appeal affirmed. (Id. at pp. 1512, 1518.)
The Court of Appeal in Robinson noted that Yucaipa’s rent control
ordinance was in some respects similar to the Oxnard ordinance at issue in Karrin,
supra, 1 Cal.App.4th 1066. The Yucaipa ordinance stated “that capital
improvement increases ‘shall not be included as part of the monthly space rent.’ ”
(Robinson, supra, 28 Cal.App.4th at p. 1514.) But the court found reasons to
depart from Karrin’s conclusion: “[O]ther parts of the City’s ordinance do not
distinguish between rent and assessments for capital improvements, but rather
18

---

treat capital improvement adjustments as one of the components of the rental rate
formula. [Citation.] Moreover, as noted above, the City’s ordinance defines rent
to include the consideration paid not only for use of a space on which to place a
mobile home but also for related housing services. [Citation.]” (Robinson, supra,
at p. 1514.) The court concluded that under the ordinance, “a capital improvement
adjustment is a rent adjustment, not a fee” and therefore section 798.31 did not
preempt the ordinance. (Ibid.)
The Robinson court rejected the residents’ contention “that any ordinance
that permits rent to be fragmented into a number of separate assessments is void as
contrary to public policy,” with this explanation: “Residents concede that a
general discretionary rent increase is valid, but [they argue that] a separate charge
based on only one factor is not. Residents make a distinction without a difference.
So long as an increase is a rent increase, rather than a separate fee or assessment, it
is permissible under the Mobilehome Residency Law.” (Robinson, supra, 28
Cal.App.4th at pp. 1514-1515.)
The reasoning of Dills and Robinson supports the conclusion here that the
former property-tax pass-through provisions of the Chula Vista mobilehome park
rent control ordinance upon which the Cachos relied are not preempted by section
798.31 of the state Mobilehome Residency Law. Although the reasoning of those
decisions was addressed specifically to capital improvement pass-throughs, much
of that reasoning applies also to property tax pass-throughs. Because both capital
improvement costs and property tax expenditures have traditionally been
recoverable components of rent, even under rent control ordinances, section
798.31 does not prohibit a park owner, or a local rent control ordinance, from
structuring mobilehome park space rent to allow pass-throughs for capital
expenditures and property taxes as charges separate from a base rent. (Dills,
supra, 28 Cal.App.4th at p. 893.)
19

---

Just as the Yucaipa ordinance at issue in Robinson treated capital
improvement costs as a component of the rental rate formula (Robinson, supra, 28
Cal.App.4th at p. 1514), so also the Chula Vista ordinance at issue here treats
property taxes as a component of the rental rate formula, supporting the
conclusion that a property tax pass-through is a rental charge, not a fee prohibited
by section 798.31. Just as a discretionary rent increase to compensate for
increased capital expenses does not differ in substance from a separately itemized
pass-through of those same expenses (Robinson, supra, 28 Cal.App.4th at pp.
1514-1515), so also a discretionary rent increase to compensate for increased
property taxes and a separately itemized pass-through of those same property tax
increases do not differ in any way that is relevant to the discernable purposes of
the Mobilehome Residency Law.4
III. DISPOSITION
The Court of Appeal’s judgment is reversed.
KENNARD,
J.
WE CONCUR:

GEORGE, C. J.
BAXTER, J.
WERDEGAR, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.

4
To the extent it is inconsistent with our holding here, Karrin v. Ocean-Aire
Mobile Home Estates, supra, 1 Cal.App.4th 1066, is disapproved.
20

---

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Cacho v. Boudreau
__________________________________________________________________________________

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted XXX 127 Cal.App.4th 707
Rehearing Granted

__________________________________________________________________________________

Opinion No.

S133378
Date Filed: January 11, 2007
__________________________________________________________________________________

Court:

Superior
County: San Diego
Judge: Luis R. Vargas

__________________________________________________________________________________

Attorneys for Appellant:

Bruce Cornblum; Walters & Ward, R. Michael Walters; Bien & Summers, Elliot L. Bien and E. Elizabeth
Summers for Plaintiffs and Appellants.

Berger & Kahn and Arthur Grebow for California Mobilehome Parkowners Alliance as Amicus Curiae on
behalf of Plaintiffs and Appellants.

__________________________________________________________________________________

Attorneys for Respondent:

Law Offices of Ron A. Stormoen, Stormoen & Associates, Ron A. Stormoen and Lori L. Krupa for
Defendants and Respondents.

Barbara A. Jones, Susan Ann Silverstein and Michael Schuster for AARP and National Consumer Law
Center as Amici Curiae on behalf of Defendants and Respondents.

Law Office of Bruce E. Stanton and Bruce E. Stanton for California Mobilehome Resource and Action
Association, Inc., as Amicus Curiae on behalf of Defendants and Respondents.

Maurice A. Priest for Golden State Manufactured-Home Owners League, Inc., as Amicus Curiae on behalf
of Defendants and Respondents.

Richard I. Singer Law Offices and Elvi J. Olesen for County Mobilehome Positive Action Committee, Inc.,
Santee Mobilehome Owners Action Committee, San Marcos Mobilehome Residents Association,
Escondido Mobile/Manufactured Home Positive Action Committee, Inc., and Oceanside Manufactured
Homeowners Alliance as Amici Curiae on behalf of Defendants and Respondents.

---

Counsel who argued in Supreme Court (not intended for publication with opinion):

Elliot L. Bien
Bien & Summers
23 Palomino Road
Novato, CA 94947
(415) 898-2900

Ron A. Stormoen
Stormoen & Associates
111 Elm Street, Suite 350
San Diego, CA 92101
(619) 236-8655

---

Opinion Information

Date:	Docket Number:
Thu, 01/11/2007	S133378

Disposition
Jan 11 2007	Opinion: Reversed

Dockets
Apr 27 2005	Petition for review filed   by counsel for appellants (Luis J. Cacho et al.). (40.1b)
Apr 27 2005	Record requested
Apr 29 2005	Received Court of Appeal record   3 vols./accordion file
Apr 29 2005	Request for depublication (petition for review pending)   By Lincoln Center Mobilehome Park (NON-PARTY).
May 2 2005	Received Court of Appeal record   One doghouse.
May 6 2005	Request for depublication filed (another request pending)   by Michael G. Silverman (non-party)
May 10 2005	Request for extension of time filed   counsel for respondent requests extension of time to June 17, 2005 to file the answer to petition for review.
May 13 2005	Extension of time granted   Respondent's time to serve and file the answer to petition for review is extended to and including June 17 , 2005.
May 13 2005	Request for depublication (petition for review pending)   by David Spangenberg (non-party)
May 16 2005	Request for depublication (petition for review pending)   by S. Robert Diener
May 17 2005	Request for depublication (petition for review pending)   California Mobilehome Parkowners Alliance (non-party) (40.1(b))
May 18 2005	Opposition filed   by resps to the depub request of Lincoln Center Mobilehome Park
Jun 2 2005	Received:   letter from aplt re citations in petn
Jun 16 2005	Answer to petition for review filed   by respondedts
Jun 16 2005	Time extended to grant or deny review   to 7/26/05
Jun 27 2005	Reply to answer to petition filed   by counsel for aplts
Jul 13 2005	Petition for review granted (civil case)   George, C.J., was absent and did not participate. Votes: Werdegar, ACJ, Kennard, Baxter, Chin, and Moreno, JJ.
Jul 27 2005	Certification of interested entities or persons filed   by counsel for aplts
Jul 27 2005	Request for extension of time filed   for aplts to file the opening brief on the merits, to 9-12-05.
Aug 1 2005	Certification of interested entities or persons filed   by counsel for respondent
Aug 3 2005	Extension of time granted   to 9-12-05 for appellants to file the opening brief on the merits
Aug 12 2005	Note: Mail returned (unable to forward)   addressed to David Spangenberg "forwarding time expired"
Sep 13 2005	Opening brief on the merits filed   by aplts (timely-CRC 40.1b)
Sep 13 2005	Request for judicial notice filed (granted case)   by aplts
Oct 3 2005	Request for extension of time filed   by resps to file the answer brief on the merits, to 11/21/05.
Oct 7 2005	Extension of time granted   to 11/21/05 for resp to file the answer brief on the merits.
Nov 14 2005	Filed:   letter from counsel for aplt re opening brief on the merits.
Nov 15 2005	Request for extension of time filed   for resps to file the answer brief on the merits and response to aplts' request for judicial notice, to 12/21/05
Nov 17 2005	Extension of time granted   to 12-21-05 for respondents to file the answer brief on the merits and response to aplts' motion for judicial notice.
Nov 29 2005	Note: Mail returned (unable to forward)   addressed to atty. David Spangenberg "Forwarding time expired"
Dec 14 2005	Received application to file Amicus Curiae Brief   by AARP and National Consumer Law Center in support of resopndents.
Dec 19 2005	Permission to file amicus curiae brief granted   AARP and National Consumer Law Center in support of Respondents, answer due in twenty days.
Dec 19 2005	Amicus curiae brief filed   AARP and National Consumer Law Center in support of Respondents.
Dec 21 2005	Received application to file Amicus Curiae Brief   California Mobile Home Resource and Action Assocation Inc., in support of respondents
Dec 21 2005	Answer brief on the merits filed   respondents, Louis J. Broudreaul, et al Ron Stormoen, counsel
Dec 21 2005	Opposition filed   by respondents, Louis J. Boudrea, et al, to appellants motion for judicial notice
Dec 28 2005	Permission to file amicus curiae brief granted   California Mobilehome Resource and Action Association, Inc. in support of respondents.
Dec 28 2005	Amicus curiae brief filed   California Mobilehome Resource and Action Association, Inc., in support of respondents. The answer is due within twenty days.
Jan 4 2006	Request for extension of time filed   appellants, Luis J. Cacho, et al. to file the reply brief on the merits and answer to two amicus briefs, asking until January 17, 2006.
Jan 11 2006	Extension of time granted   For appellants Luis J. Cacho, et al., to file the reply brief on the merits and answer to amicus curiae briefs of AARP and National Consumer Law Center and California Mobile Home Resource and Action Association to January 17, 2006.
Jan 18 2006	Reply brief filed (case fully briefed)   appellants, Cacho which includes the answer to Amicus Curiae Briefs of AARP, National Consumer Law Association, and California Mobilehome Resource and Action Associations, Inc. 40.1(b) by counsel, Elliot L. Bien
Jan 18 2006	Received application to file Amicus Curiae Brief   Golden State Manufactured-Home Owners League, Inc. by counsel, Maurice A. Priest
Jan 19 2006	Amicus curiae brief filed   Golden State Manufactured-Home Owners League, Inc., in support of respondents.
Jan 19 2006	Filed:   appellant's, Cacho et al., reply in support of their request for judicial notice.
Jan 19 2006	Permission to file amicus curiae brief granted   Golden State Manufactured-Home Owners League, Inc. in support of respondents, answer due within twenty days
Jan 25 2006	Note: Mail returned and re-sent
Feb 16 2006	Received application to file Amicus Curiae Brief   California Mobilehome Parkowners Alliance [in support of aplts] Attorney Arthur Grebow, Retained
Feb 16 2006	Received application to file Amicus Curiae Brief   County Mobilehome Positive Action Committee, et al. in support of respondent Louis J. Boudreau
Feb 24 2006	Permission to file amicus curiae brief granted   California Mobilehome Parkowners Alliance in support of appellants.
Feb 24 2006	Amicus curiae brief filed   California Mobilehome Parkowners Alliance in support of appellants. Answer is due within twenty days.
Feb 28 2006	Permission to file amicus curiae brief granted   County of Mobilehome Positive Action Committee, Inc.; Santee Mobilehome Owners Action committee; San Marcos Mobielhome Residents Association; Escondido Mobile/ Manufactured Home Positive Action Committee, Inc.; and Oceanside Manufactured Homeowners Alliance in support or respondent.
Feb 28 2006	Amicus curiae brief filed   County Mobilehome Positive Action Committee, Inc.; Santee Mobilehome Owners Action Committee; San Macos Mobilehome Residents Association; Escondido Mobile/Manufactured Homeowners Alliance in support of respondent. An answer thereto may be served and filed by any party within twenty days of the filing of the brief.
Mar 17 2006	Response to amicus curiae brief filed   Louis J. Boudreau, et al., respondent by Ron A. Stormoen, counsel crc.40.1(b(
Mar 21 2006	Response to amicus curiae brief filed   Luis J. Cacho et al.., Appellants / CRC 40.1(b) by Elliott L. Bien, counsel to AC brief filed by County Mobilehome Positive Action Committe, Inc., et al.,
Nov 7 2006	Case ordered on calendar   Tuesday, December 5, 2006, at 2:00 p.m., in Los Angeles
Nov 15 2006	Note: Mail returned (unable to forward)
Nov 30 2006	Request for judicial notice granted   The Motion for Judicial Notice of Legislature History Materials, brought by Plaintiffs and Appellants Luis J. Cacho, et al., and filed in this court on September 13, 2005, is granted.
Dec 5 2006	Cause argued and submitted
Dec 13 2006	Note: Mail returned (unable to forward)   for counsel David Spagenberg.
Dec 15 2006	Note: Mail returned (unable to forward)   to Elvi J. Olesen
Jan 10 2007	Notice of forthcoming opinion posted
Jan 11 2007	Opinion filed: Judgment reversed   Court of Appeal's Judgment. Opinion by Kennard, J. - joined by George, C.J., Baxter, Werdegar, Chin, Moreno, and Corrigan, JJ.
Jan 23 2007	Note: Mail returned (unable to forward)   copy of opinion to David Spangenberg.
Feb 13 2007	Remittitur issued (civil case)
Feb 20 2007	Note: Mail returned (unable to forward)   to David Spangenberg
Mar 8 2007	Received:   Acknowledgement of receipt of remittitur signed for by Rita Rodriguez, Deputy Clerk

Briefs
Sep 13 2005	Opening brief on the merits filed
Dec 19 2005	Amicus curiae brief filed
Dec 21 2005	Answer brief on the merits filed
Dec 28 2005	Amicus curiae brief filed
Jan 18 2006	Reply brief filed (case fully briefed)
Jan 19 2006	Amicus curiae brief filed
Feb 24 2006	Amicus curiae brief filed
Feb 28 2006	Amicus curiae brief filed
Mar 17 2006	Response to amicus curiae brief filed
Mar 21 2006	Response to amicus curiae brief filed

If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website