Tuesday, January 25, 2005

MHC Financing v. City of Santee (Cal. Ct. App. - January 25, 2005)

This case is a toughie. To make matters worse, Justice Aaron's opinion is hardly a model of clarity. (And I say that with a great deal of respect; I think that Cynthia is extremely bright). Regardless, the underlying action is certainly an interesting -- and multifaceted -- dispute.

The actual facts of the case are somewhat convoluted, so I'll (over-)simplify them. Some citizens want to pass an initiative that would alter mobile home rent control in Santee. So they submit a proposed initiative -- we'll call it "Ordinance 381" -- to the City Attorney, and then go out to obtain the necessary signatures. Meanwhile, they discover that they've made some mistakes on their proposed initiative, so they edit the proposal and obtain signatures on the edited proposal -- we'll call it "Ordinance 412" -- rather than on the proposal reviewed and summarized by the City Attorney.

Once they've obtained the necessary signatures, the City of Santee is basically obligated to either (1) submit the initiative to the voters, or (2) pass the initiative itself. The City chooses (2). However, the City mistakenly passes Ordinance 381, rather than Ordinance 412, a fact that no one notices until many months after passage. Eventually, two years later, the City "corrects" Ordinance 381 by enacting Ordinance 412, states that Ordinance 412 is intended to merely correct the inadvertent text of Ordinance 381, and accordingly indicates that Ordinance 412 is retroactive to the date that Ordinance 381 was passed. At which point plaintiff sues.

Plaintiff makes a wide variety of interesting -- and facially plausible -- claims about the invalidity of one or both of the ordinances. But the claim that strikes me as the most persuasive is the assertion that Ordinance 412 can't be retroactive and that seeks damages from the City for the losses incurred during the two years between the passage of 381 and the passage of 412 (e.g., damages resulting from the retroactivity of 412).

Justice Aaron holds that Ordinance 412 can indeed be retroactive because the City made a mistake, and the proponents of the initiative -- who did nothing wrong (although, in truth, they actually did a fair amount of things wrong, but that's another story) -- should not suffer from that mistake, and hence were entitled to passage of the correct initiative. But the proponents weren't, in fact, entitled to passage; rather, they were merely entitled to either passage or presentation before the voters, and what the voters would have done at the polls is unclear. Further, I'm fairly unpersuaded by the proposition that when the only statute that the City evaluates and agrees to pass in 1999 is Ordinance 381, the court can permissibly hold that this passage is functionally equivalent to the passage of Ordinance 412, which is a different statute -- and one that they didn't evaluate, assess, or vote on until two years later.

So Justice Aaron seems wrong on the retroactivity point. But it gets even more confusing, because even though she holds that the statute is permissibly retroactive, Section III indicates that plaintiffs might be entitled to damages based upon the differences between the two ordinances during the relevant two-year period. But if the statute is properly retroactive, why are plaintiffs entitled to damages? If Ordinance 412 properly relates back to Ordinance 381, there shouldn't be any interim damages, right? After all, that's one of the major functions of the relation back doctrine.

In any event, this case is interesting on several different levels. It's definitely worth a read.