Opinion
Case Number C-00-20630-JF, Case Number C-01-20317-JF.
October 11, 2005
ORDER DENYING WITHOUT PREJUDICE MHC'S MOTION TO CLARIFY OBLIGATIONS UNDER PARAGRAPH 2.1(c) OF SETTLEMENT AGREEMENT
On October 7, 2005, the Court heard the motion of Manufactured Home Communities, Inc., MHC-DeAnza Financing Limited Partnership, Starland Vistas, Inc. and MHC A-1 (collectively "MHC") to clarify MHC's obligations under paragraph 2.1(c) of the Settlement Agreement and Consent Decree in the above-entitled actions ("the federal actions"). The De Anza Santa Cruz Homeowners' Association ("HOA") specially appeared through counsel to oppose the motion. The City of Santa Cruz ("the City") filed a statement setting forth its position that the instant motion is not properly before the Court because there is no current dispute between MHC and the City regarding the language of the Settlement Agreement and Consent Decree. For the reasons discussed below, the Court will deny the motion without prejudice.
The HOA's motion for leave to file opposition is granted.
The City requested that it not be required to appear at the hearing on the motion because it has no present controversy with MHC and because its counsel was unavailable on the date of the hearing. In light of the City's stated position, the Court concluded that appearance by the City's counsel was unnecessary.
MHC brought the instant federal actions to challenge the City's mobilehome rent control ordinance, which regulates the level of rents that may be charged to tenants of mobilehome parks. MHC and the City entered into a written Settlement Agreement (hereinafter "Settlement Agreement"), approved by the Court in a Consent Decree, under which the City agreed to exempt MHC from the mobilehome rent control ordinance under certain conditions. Specifically, MHC agreed to offer existing tenants who were under rent control at the time of the Settlement Agreement a thirty-four year lease containing internal "rent control" provisions limiting MHC's right to raise annual rents. The City agreed, however, that upon expiration of the lease and/or upon change in tenancy, MHC may increase rent to market rates as determined in MHC's sole discretion. In other words, upon expiration of a tenant's lease and/or upon change in tenancy, no rent control will be in effect as to the space in question.
At the time the Settlement Agreement was executed, there were six tenants who were not under rent control but who were parties to fifteen-year leases that will expire in 2006. MHC agreed to offer these six tenants the thirty-four year lease in 2006, subject to the provision that the six tenants' initial starting rent under that thirty-four year lease will be the "then-current market rent as determined by MHC in its sole discretion." Settlement Agreement ¶ 2.1(c). MHC asserts that it has begun negotiating the initial starting rent with these six tenants, and that the tenants have taken the position that ¶ 2.1(c) of the Settlement Agreement imposes at least some constraint upon MHC's ability to set the initial starting rent. MHC thus asks for clarification that ¶ 2.1(c) of the Settlement Agreement does not constrain its rights to set the initial starting rent at whatever rate it chooses in its sole discretion.
The HOA argues that there is no actual and present controversy between MHC and the City and that thus it would be inappropriate for the Court to offer clarification of the Settlement Agreement at this time. The HOA also asserts that the issue of the starting rent of the six tenants in question is being arbitrated before Ret. Judge Eugene Lynch of JAMS, and that any decision of this Court on the subject of starting rents would impermissibly interfere with the arbitration. MHC asserts that the issue of the starting rent of the six tenants initially was presented to Judge Lynch, but that that issue has been withdrawn from the arbitration and no longer is part of the arbitration.
The Court is quite troubled by the breakdown in communication evidenced by these competing assertions and the tone in which the assertions were advanced at the hearing. Ultimately, however, the question of whether the six tenants in question are participating in the arbitration is irrelevant to the instant motion. The Court is being asked to offer an advisory opinion with respect to a controversy that might arise between MHC and non-parties to the federal actions. The Court concludes that such an advisory opinion would be inappropriate under well-established principles governing Article III jurisdiction and, specifically, the ripeness requirement. See Thomas v. Anchorage Equal Rights Comm'n, 220 F.3d 1134, 1138 (9th Cir. 2000) (en banc) (holding that "[o]ur role is neither to issue advisory opinions nor to declare rights in hypothetical cases, but to adjudicate live cases or controversies consistent with the powers granted the judiciary in Article III of the Constitution.").
The Court certainly understands MHC's desire for clarity as to its rights and obligations vis a vis its tenants, particularly given the contentious history of MHC's litigation with the City. Clearly this Court has continuing jurisdiction to clarify its own orders. The Court concludes, however, that MHC's motion is premature. Accordingly, the motion will be denied without prejudice to a future motion by any party in the event an actual controversy arises regarding construction of the Settlement Agreement.
IT IS SO ORDERED.