Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court for the County of Los Angeles. Dzintra Janavs, Judge.
Hart, King & Coldren, Robert S. Coldren, C. William Dahlin and Mark D. Alpert for Plaintiff and Appellant.
Aleshire & Wynder, William W. Wynder and Anthony R. Taylor for Defendant and Respondent.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
SUMMARY
The owner of a mobilehome park appeals from a rent control board’s decision awarding a smaller rent increase than the owner sought. An earlier decision by the same rent control board led to the issuance of a peremptory writ of mandate, a new board hearing and decision on the rent increase application, another trial court order, and a prior appeal.
The mobilehome park owner contends that the rent control board did not comply with this court’s prior appellate opinion or the trial court’s ensuing remand order. The owner argues that the board considered new evidence, that its decision was not supported by substantial evidence, and that it violated due process and the Ralph M. Brown Act (Brown Act).
Government Code section 54950 et seq.
We conclude that the rent control board fully complied with our earlier decision on appeal and the trial court’s resulting remand order. Neither a new report by the board’s staff nor the board’s use of averaging constituted the consideration of new evidence in violation of our prior decision. To the contrary, the new staff report complied with our ruling that the board must consider a gross profits maintenance analysis. The owner’s remaining claim that the board did not comply with our decision is based on an erroneous reading of our prior opinion. We further conclude that substantial evidence in the existing administrative record supports the board’s most recent decision on the owner’s rent increase application. The appellate record does not support the park owner’s contention that its due process rights were violated or that the board violated the Brown Act.
FACTS AND PROCEDURAL HISTORY
This is the second appeal stemming from Carson Gardens, L.L.C.’s (Carson Gardens) application for an increase in maximum allowable rent at its mobilehome park in the City of Carson. Our prior decision, Carson Gardens, L.L.C. v. City of Carson Mobilehome Park Rental Review Board (2006) 135 Cal.App.4th 856 (Carson Gardens I), set forth the terms of the City of Carson’s mobilehome space rent control ordinance and the history of administrative and trial court proceedings leading up to our decision in Carson Gardens I. In the interest of brevity, we will not repeat the procedural or legal matters set forth in that decision.
A. Trial court proceedings on remand
After Carson Gardens I was final, Carson Gardens filed a Motion for Entry of Order and Judgment on Supplemental Writ. The City of Carson Mobilehome Park Rental Review Board (Board) objected to Carson Gardens’s proposed remand order and submitted its own proposed remand order, which the trial court used, with modifications. The trial court vacated its prior order for a $113.36 per space per month rent increase and remanded the rent increase application to the Board for further consideration on the existing administrative record and in accordance with Carson Gardens I, the trial court’s April 16, 2003 peremptory writ of mandate (2003 writ), and the trial court’s December 14, 2004 order to the extent it was not reversed by Carson Gardens I.
Unless otherwise noted, all references to rent increases are to a per space per month increase.
B. Administrative proceedings following remand by the trial court
The Board’s staff prepared a new report dated June 14, 2006 (2006 staff report) that included a Gross Profits Maintenance (GPM) analysis. The report also reviewed the procedural history of the rent increase application, the “guidance” provided by Carson Gardens I and the trial court’s subsequent remand order, and the application of the Consumer Price Index (CPI) and comparable rents standards. The report recommended a rent increase of $61.44, which was the average of three differing potential rent increases: that indicated by the GPM analysis ($113.15), the increase in the CPI ($41.58), and the average of the difference between Carson Gardens’s rent and the rent at two comparable mobilehome parks in Carson ($29.59).
The Board conducted a public hearing on Carson Gardens’s application on June 21, 2006. Counsel for Carson Gardens, counsel for the residents of Carson Gardens, and some of the residents were permitted to argue their positions before the Board, but counsel for the Board repeatedly reminded Board members that they could not consider those arguments or any new evidence in rendering their decision. The Board rejected a motion to award a rent increase of $104.57, but approved a motion to award an increase of $61.44. At a second public hearing on June 28, 2006, the Board adopted Resolution No. 2006-242 (June 2006 resolution). It set forth the decision to award a rent increase of $61.44, along with the Board’s rationale and the history of the administrative and judicial proceedings pertaining to Carson Gardens’s application. Before the Board acted, counsel for Carson Gardens and one resident addressed the Board.
C. Trial court proceedings following the Board’s June 2006 resolution
On June 29, 2006, the Board filed a return on the supplemental writ. On July 18, 2006, Carson Gardens filed a Notice of Objection to Discharge of Writ and Notice of Intended Filing of Motion for Supplemental Writ to be Heard and Motion for Order Holding Respondent in Contempt of Court. Despite its declared intentions, Carson Gardens then filed a motion further to enforce the judgment on the 2003 writ. A few days later, Carson Gardens moved to disqualify the Board’s attorney, William Wynder, and his law firm, Aleshire & Wynder, from continuing to represent the Board in litigation.
The trial court heard Carson Gardens’s motions on November 3, 2006. It denied the motion to disqualify Attorney Wynder the same day and took under submission the motion further to enforce the judgment. On November 14, 2006, the court denied Carson Gardens’s motion for further enforcement. It expressly found that the June 2006 resolution complied with the prior appellate decision and the court’s own 2006 remand order. Accordingly, the court discharged the 2003 writ. Carson Gardens filed a motion for reconsideration on the basis of a new appellate opinion. The trial court granted reconsideration, but reaffirmed its earlier ruling.
Carson Gardens timely appealed.
DISCUSSION
1. The Board did not consider new evidence.
Carson Gardens argues that “the Board based its decision entirely on a new 2006 Staff Report that set forth a new methodology,” i.e., the averaging of the GPM, the change in the CPI, and the rents at two other rent-controlled parks. Carson Gardens does not cite any particular instances of new evidence contained in the 2006 staff report or any new evidence considered by the Board. Its claim is strictly limited to the entire report and the averaging “methodology.”
In particular, Carson Gardens does not contend that the Board relied on new evidence by permitting public comment and argument by attorneys for the parties and residents at the hearing. The Board’s attorney told the Board near the outset of the June 2006 hearing that it could not consider attorneys’ arguments or statements by members of the public in making its decision because the prior appellate decisions prevented the Board from considering new evidence.
We have reviewed the 2006 staff report, the transcripts of the 2006 administrative hearings, the June 2006 resolution, and the administrative record. We conclude that the Board did not rely on new evidence in reaching its decision to grant a rent increase of $61.44.
The 2006 staff report neither constituted nor relied on new evidence. Other than judicial rulings, all factual matters -- such as the purchase price, mortgage principal, increase in debt service, increase in operating expenses other than debt service, increase in CPI between June 1993 and August 2001, and rents at comparable parks -- to which the report referred or on which it relied were contained in the existing administrative record. The report recounted the history of the administrative and judicial proceedings, distilled for the Board the “guidance given to the Board” by the trial court’s latest remand order and this court’s decision in Carson Gardens I, provided a GPM analysis of data from the existing administrative record, addressed the application of other pertinent factors from the ordinance and guidelines, provided analysis of what increase would give Carson Gardens a fair return, recommended a greater increase than that necessary to provide a fair return, and addressed the mechanics of retroactive application of a new rent increase. The city attorney’s characterization of the staff report at the June 21, 2006 public hearing as an “assessment of the existing administrative record” is apt.
The “averaging methodology” used in the 2006 staff report did not constitute new evidence. It was simply a mathematical calculation and suggestion of a means of arriving at a rent increase that combined three factors expressly set forth in the ordinance and guidelines. The calculations used only facts already in the administrative record. Calculations using existing facts are not “new evidence.” Notably, Carson Gardens does not complain that the report included a GPM analysis, which also entailed a mathematical computation based on existing data.
Nor do the transcripts of the June 2006 administrative hearings or the 2006 resolution indicate that the Board considered any new evidence. Counsel for the Board repeatedly advised the Board that it could not consider comments made by the public or any of the attorneys in making its decision. The Board members’ statements during the hearings show that they based their decision on factual matters and analysis contained in the 2006 staff report, not on any new evidence. All factual matters -- other than judicial rulings -- cited in the June 2006 resolution were in the existing administrative record.
Accordingly, we reject Carson Gardens’s claim that the Board based its 2006 decision on new evidence.
We discuss any input Baar my have had in new decision in part 4(a), post.
2. The Board complied with the 2003 writ and prior appellate decision.
Carson Gardens contends the Board failed to comply with the 2003 writ and the earlier appellate decision in this case.
The 2003 writ required the Board to set aside its 2001 resolution; conduct a new hearing; reconsider its decision on the Carson Gardens rent increase application “in light of all relevant evidence offered at the new hearing, including new evidence, if any, not offered at [its] prior hearing . . .”; and “apply the gross profits maintenance analysis discussed in the Guidelines . . . or another reasonable analysis or methodology that gives due consideration to the Park’s actual reasonable operating expenses, including actual reasonable expenses incurred in acquiring the Park, and comports with the requirements of the pre-existing Ordinance and the Guidelines . . . .”
The prior appellate opinion in this case required the Board to comply with the trial court’s decision – which was not appealed -- in issuing the 2003 writ by “us[ing] gross profits maintenance analysis or some other methodology giving due consideration to debt service costs in calculating a fair return.” (Carson Gardens I, supra, 135 Cal.App.4th at p. 866.) We rejected Carson Gardens’s claim that the $113.36 rent increase awarded by the trial court was the only result supported by the administrative record; we noted that “nothing in the City’s ordinance requires the Board to apply any particular formula or methodology without deviation. Indeed, the City’s Guidelines specifically state that the gross profits maintenance analysis ‘is an aid to assist the Board in applying the factors in the Ordinance and is to be considered together with the factors in [the ordinance], other relevant evidence presented and the purposes of the Ordinance,’ and is not intended to create any entitlement to any particular rent increase.” (Id. at p. 868.) We therefore suggested that the Board could, “on the present administrative record, assess the evidence, consider the results of gross profits maintenance analysis, and make findings as to the appropriate implementation of that analysis -- all in consonance with its duty under the ordinance to grant an increase that both ‘protects Homeowners from excessive rent increases and allows a fair return on investment . . . .’ ” (Ibid.) Our decision prohibited the Board from taking or considering new evidence on remand. (Ibid.)
A review of the proceedings on remand to the Board establishes that the Board complied with the 2003 writ and our prior appellate decision by conducting a new hearing at which it reconsidered its decision on Carson Gardens’s application for a rent increase. The 2006 staff report conducted a GPM analysis based on factual matter already in the administrative record; the Board duly considered this analysis and used it -- along with other factors specified in the ordinance -- in computing the rent increase it ultimately awarded.
Carson Gardens’s contention that the Board did not comply with the 2003 writ and prior appellate decision appears to be based on a belief that the Board was limited to determining what percentage of Carson Gardens’s financing expenses should be considered in conjunction with the GPM analysis, then granting a rent increase based solely on GPM analysis. This is an incorrect reading of both the 2003 writ and prior appellate decision. The 2003 writ expressly refrained from constraining the Board’s discretion, so long as the Board applied either a GPM analysis or some other reasonable analysis or methodology that complied with the ordinance and guidelines and considered Carson Gardens’s operating expenses, including debt service. Our prior decision expressly noted that the Board was not required “to apply any particular formula or methodology without deviation,” and that the ordinance and guidelines required that the GPM analysis be considered with the other factors specified in the ordinance and its purposes.
3. Substantial evidence supports the Board’s decision.
Carson Gardens contends that the Board’s 2006 decision was not supported by substantial evidence. However, Carson Gardens’s specific arguments actually challenge only the Board’s use of “averaging methodology.” Carson Gardens does not dispute any of the particular factual matters the Board relied on, apart from a claim that the comparable rents data was “flawed” and the Board’s reliance on it was inappropriate because it had not previously relied on that data.
a. Relevant legal standards
An owner of property that is subject to rent control is entitled to a rent that provides a fair return. (Kavanau v. Santa Monica Rent Control Bd. (1997) 16 Cal.4th 761, 768, 771) This requires a balance between the owner’s and the tenants’ interests. (Id. at p. 771.)
“In determining a just and reasonable return, no particular formula or combination of formulas is mandated; the selection of an administrative standard must be left to local governments, not the courts.” (TG Oceanside, L.P. v. City of Oceanside (2007) 156 Cal.App.4th 1355, 1372 (TG Oceanside).) “[J]udicial inquiry as to whether or not a rate is just and reasonable is ‘ “is at an end” “[i]f the total effect of the rate order cannot be said to be unjust and unreasonable. . . . The fact that the method employed to reach that result may contain infirmities is not then important.” [Citations.] “[H]e who would upset the rate order . . . carries the heavy burden of making a convincing showing that it is invalid because it is unjust and unreasonable in its consequences.” ’ ” (Id. at p. 1373, quoting 20th Century Ins. Co. v. Garamendi (1994)8 Cal.4th 216, 318-319.) “[T]he actual method utilized to regulate rents is immaterial so long as the result achieved is constitutionally acceptable.” (Carson Harbor Village, Ltd. v. City of Carson Mobilehome Park Rental Review Bd. (1999) 70 Cal.App.4th 281, 290 (Carson Harbor Village).)
In reviewing a writ of mandate, this court reviews the administrative body’s final decision, not the trial court’s ruling. (TG Oceanside, supra, 156 Cal.App.4th at p. 1370.) In the context of an administrative ruling regarding controlled mobilehome rents, “this court must consider whether substantial evidence supports the hearing officer’s conclusion” that a particular rent will provide a fair rate of return. (Ibid.) We will disturb the decision only if it is neither reasonable nor lawful. (Id. at p. 1371; Carson Harbor Village, supra, 70 Cal.App.4th at p. 290.)
b. The Board’s Findings
In its June 2006 resolution, the Board made a number of findings regarding Carson Gardens’s rent increase request. First, it found that the maximum allowable increase was $105.50 because that was the increase Carson Gardens asked for in its application. Part V, section C of the City of Carson guidelines provides that the Board cannot grant an increase greater than that specified in the application. Because Carson Gardens sought an increase of $105.50 in its application (Administrative Record (AR) 1, 3), its request in the courts and before the Board since 2004 for a rent increase of $113.37 was improper.
The Board also found in its June 2006 resolution that applying GPM analysis “without deviation” would support a rent increase of $113.15, an amount that also exceeded the rent increase for which Carson Gardens applied. The Board further found that $76.71 of the increase supported by GPM analysis was attributable to the increase in debt service. These findings were supported by the calculations in the 2006 staff report, which were based on data that already were part of the administrative record.
The Board also found that the CPI increased 19.35 percent between the prior rent increase in 1993 and August 2001, the date of the original staff report. The increase in the CPI thus justified a rent increase of $41.58. This finding is supported by the 2001 staff report (AR 185-186) and repeated in the 2006 staff report.
The Board also found that, as of 2001, the rents at Carson Gardens were $47.45 less than the average base rent at “Laco MHP” and $11.73 less than the average base rent at Flamingo Gardens, which were deemed to be comparable mobilehome parks in Carson. These differences took into account the value of the gas service provided by Carson Gardens, but not the other two parks. This finding is supported by the 2001 staff report (AR 186-188) and repeated in the 2006 staff report. The Board found that the comparable parks analysis was “both uncontroverted and . . . accurate.” The average of the difference in average base rents was $29.59.
Based on Baar’s prior testimony and report, which was part of the existing administrative record, the Board found that an increase of $43.12 would give Carson Gardens a fair return. But the Board found it had to award a greater increase to comply with the prior appellate decision. The Board concluded, however, that awarding the entire $76.71 increase based on the increase in debt service costs under the GPM analysis “would not protect homeowners from excessive rent increases and would provide a windfall to Carson Gardens over the similarly situated mobilehome parks in the City.” The Board therefore found “that the best way to give due consideration to Carson Gardens’ debt service costs under each of the factors set forth in the Ordinance and Guidelines is to average the results of the GPM, CPI and comparability formulas.” Averaging these three figures yielded a result of $61.44, which the Board found “would strike a better balance between the interests of protecting homeowners from excessive rent increases and ensuring a fair return to Carson Gardens because it takes into account each of the factors set forth in the Ordinance and Guidelines as well as Carson Gardens’ debt service costs.”
The Board also considered the effect of the increase it granted on Carson Gardens’s net income. It found that the increase awarded would result in a $70,779 increase in annual net income for the park.
The June 2006 resolution reflects the Board’s review and consideration of the 2004 testimony and reports of Carson Gardens’s expert, Heather Xitco, and the appraisal report already in the record. However, the Board noted that Xitco conceded that her analysis did not take depreciation into account and that Baar criticized it in 2004 as addressing only profitability, not the reasonableness of the rent. The Board found that Xitco was not a “fair return expert,” and Baar provided the “only testimony and report as a qualified ‘fair return’ expert.”
c. Averaging
The Board’s decision to award the average rent increase that would be warranted by the GPM, CPI, and comparable rent analyses was permissible under the ordinance. It requires the consideration of each of these and other factors, but does not mandate the use of any particular formula or otherwise specify how the various factors should be combined. The guidelines expressly provide that no particular formula is mandated, but all factors must be considered and balanced.
The averaging approach was a reasonable one. More importantly, it yielded a reasonable result. The rent increase the Board awarded was significantly greater than the increase Baar determined was necessary to give Carson Gardens a fair return. It also was significantly greater than the increases that would have been justified by either CPI or comparable rents analysis. Carson Gardens has not carried its heavy burden to persuade us that the increase awarded was unjust and unreasonable.
Citing H.N. & Frances C. Berger Foundation v. City of Escondido (2005) 127 Cal.App.4th 1 (Berger), Carson Gardens argues that the averaging performed by the Board was inappropriate. In Berger, the rent control board arrived at its $31 rent increase by averaging three figures: $38.44, which Baar advised was the amount of increase “required to provide a fair return under” MNOI analysis; $25, which Baar found to be the difference between the rents at the park in issue and those at comparable rent-controlled parks; and $31.67, which was based on an increase of existing rents by 60 percent of the increase in the CPI. (Id. at pp. 10-11.) The appellate court found the rent increase granted was not supported by substantial evidence: “We conclude the Board’s ruling lacks evidentiary support. Although the Board was not required to employ any specific formula, its averaging method was faulty because there was no showing that two of the figures the Board relied on were within the range of reasonable rents under the fair return criterion. Conceptually, several figures may be averaged to arrive at a new rent only if each of the figures is independently within the range of reasonableness.” (Id. at p. 11.)
Defining the parameters of the “range of reasonableness” plainly is a difficult matter. The Berger court did not venture such a definition. Given the context, the phrase “range of reasonableness” appears to be a shorthand reference to the “broad zone of reasonableness” of rents that provide a fair return. (See, e.g., Galland v. City of Clovis (2001) 24 Cal.4th 1003, 1022 cited in Berger, supra, 127 Cal.App.4th at p. 8.)
A strict application of Berger’s rule regarding averaging would run afoul of the principle that “so long as the result achieved is constitutionally acceptable,” the method or formula used to reach the result is immaterial. (Carson Harbor Village, supra, 70 Cal.App.4th at p. 290.) If the result of the averaging provides a fair return, the fact that one or more of the averaged numbers might lie outside the “range of reasonableness” should be immaterial. It is the “total effect of the rate order” that matters, not the method of calculation or reasonableness of each component used in the calculation. (TG Oceanside, supra, 156 Cal.App.4th at p. 1373.)
Moreover, the Berger court found that the difference in comparable rents used by the board there was based on faulty data. The court concluded that under the Escondido ordinance, mobilehome parks that were not subject to rent control should have been included in the analysis. An appraiser had included unregulated parks in his report and determined that the rent differential was $40, not the $25 figure the board used in its averaging process. (Berger, supra, 127 Cal.App.4th at pp. 11-13.) In contrast, the City of Carson guidelines specifically provide that only rent-controlled mobilehome parks in Carson are to be considered in analyzing comparable rents. (Guidelines, ¶ III.A.)
Here, the only expert evidence regarding fair return was that of Baar, and he determined a rent increase of $36.44 would provide Carson Gardens with a fair return. The rent increase the Board granted was $61.44, significantly more that what was required for a fair return. Each of the three figures the Board averaged to arrive at the rent increase awarded was reasonable and supported by evidence in the existing administrative record. Indeed, two of the three factors—the CPI and GPM increases—were greater than the amount Baar found would provide a fair return, and the third figure (the comparable rents difference) was just $6.85 less than Baar’s fair return amount. We conclude that the resulting increase was constitutionally acceptable.
d. Comparable rent data
Carson Gardens challenges the Board’s reliance on comparable rents analysis on several grounds. First, it argues that the Board’s “prior decision and the prior staff reports did not rely on this data,” and therefore Carson Gardens had no reason to challenge it. However, the 2001 and 2006 staff reports and the Baar report included the same comparable rents analysis, as did the 2001 and 2004 resolutions. Although the rent increases recommended in the reports and awarded by the Board did not use comparable rents as an element in their computation, Carson Gardens is incorrect in asserting that prior decisions and reports did not rely on this data. The ordinance required consideration of comparable rents, and each resolution reflected that the Board considered comparable rents in determining what increase in rent would be reasonable and consistent with the ordinance and guidelines. Carson Gardens neither objected to nor provided a competing analysis of the comparable rent data at any time in the administrative proceedings. It therefore forfeited its right to challenge that data now. (Morgan v. Community Redevelopment Agency (1991) 231 Cal.App.3d 243, 258; Griswold v. Alcoholic Beverage Control (1956) 141 Cal.App.2d 807, 810-811.) Accordingly, Carson Gardens’s concerns on appeal about whether the parks were comparable or “represented a fair selection of comparable parks” are insufficient to show that the rent increase awarded was unreasonable.
4. The record does not establish any violation of Carson Gardens’s
right to due process.
Carson Gardens also contends the Board denied it due process. It asserts many theories in support of this contention.
a. Secret analysis by Baar
First, Carson Gardens argues the Board violated due process by relying on “a ‘secret’ analysis of Dr. Baar in developing the averaging methodology.” It also contends that its due process rights were violated because it had “no opportunity to rebut the appropriateness of the Board using the ‘averaging’ methodology,” or to review and respond to Baar’s opinion.
As previously discussed, the Board’s use of averaging was reasonable, permissible, and did not constitute new evidence. Carson Gardens’s claim that Baar advised the Board to use averaging is no more than speculation. Nothing in the 2006 staff report, and no statement by counsel, staff, or Board members at the 2006 hearings, suggests that Baar was the source of the averaging idea. The only reference to Baar providing input is a statement by counsel for Carson Gardens in a June 12, 2006 letter to the Board. As far as the record reveals, Baar did not supply the Board with any report or testimony after the Board’s 2004 decision on Carson Gardens’s application. Even if Baar suggested to the staff that they use averaging, the suggested calculation to combine alternative formulations does not constitute new evidence. The ordinance and guidelines do not tell the Board how it is to combine the figures suggested by the various factors that it must consider. Averaging is a simple, logical, and permissible means of combining these figures. Most importantly, none of the figures averaged was based on new evidence, and all but the GPM analysis result were contained in earlier staff reports.
Moreover, Carson Gardens responded to the 2006 staff report in both its June 12, 2006 letter to Board members and its remarks at the hearing on June 21, 2006.
b. Assertion of attorney-client privilege
Carson Gardens also contends that its due process rights were violated by the Board’s assertion of the attorney-client privilege to “shield” Baar’s role and consider new evidence from him. It bases this aspect of its claim on the privilege log the Board’s counsel provided to Carson Gardens’s counsel.
A review of the privilege log reveals that counsel for the Board -- Attorneys Wynder and Taylor -- included Baar among the recipients on several e-mails they sent to Board staff member Kenneth Freschauf (items 4, 10-12 & 18). None of these messages concerned Baar’s recommendations about Carson Gardens’s rent application. Items 4, 10, 11, and 18 pertained to the prior appeal in this case, the “litigation strategy,” and the remand order. Item 12 concerned “legal analysis” for the staff report. Freschauf included Baar among the recipients when he e-mailed the staff report to Wynder and Taylor. (Item 7.) Again, nothing indicates the message had to do with any recommendation by Baar. All of these messages were sent to Baar, not sent by him. The privilege log does include two messages sent by Baar, both of them directed to counsel and Freschauf. (Items 25 & 28.) Both of Baar’s messages concerned a newly filed appellate opinion, Los Altos El Granada Investors v. City of Capitola (2006) 139 Cal.App.4th 629, and were sent within one minute of each other. One message had an attachment and the other did not. Attorneys Wynder and Taylor each responded to Baar’s message about the new case. (Items 26 & 27.) None of the messages listed in the privilege log of which Baar was a recipient or sender went to any members of the Board. They were communications among counsel, staff, and Baar only.
The only message to the Board listed in the privilege log was a message from counsel described as “Client Memorandum re: Carson Gardens, LLC v. The City of Carson Mobilehome Park Rental Review Board (Appellate Case No. B180308; LASC Case No. BS072845); Status Report re Pending and Threatened Litigation.”
Accordingly, Carson Gardens’s claim that the Board shielded Baar’s role and received new evidence from him is not supported by the privilege log, or anything else in the record. It appears to be based upon nothing more than speculation.
Even if Baar provided information to counsel and the Board’s staff in 2006 -- other than notification of the new appellate opinion -- Carson Gardens has not shown any impropriety in the assertion of privilege for those communications. The Public Records Act exempts from mandatory disclosure “[r]ecords, the disclosure of which is exempted or prohibited pursuant to federal or state law, including, but not limited to, provisions of the Evidence Code relating to privilege.” (Gov. Code, § 6254, subd. (k).) Accordingly, communications between a public entity and its lawyer that are protected by the attorney-client privilege need not be disclosed. (Roberts v. City of Palmdale (1993) 5 Cal.4th 363, 373.) Baar is an attorney, as well as an expert in the field of mobilehome rent control. Carson Gardens has not established that counsel for the Board acted improperly in treating Baar as a member of the legal team or in treating communications from him as protected attorney work product.
c. Brown Act violation
Carson Gardens also contends that the “Board’s use of Baar as indicated in the documents listed on the privilege log also violates the Brown Act . . . .” It argues that the privilege log reveals “deliberations through a series of emails and letters involving members of the Board, the Board’s ‘staff,’ the Board’s counsel and the Board’s ‘expert/attorney.’ ”
The Brown Act is intended “to ensure that local governing bodies deliberate in public.” (Roberts v. City of Palmdale, supra, 5 Cal.4th at p. 373.) It applies only where there is “some sort of collective decisionmaking process.” (Id. at p. 375.) It does not bar the transmission of privileged written information from counsel to members of a local governing body. (Id. at p. 381.)
The privilege log reveals only one communication to the members of the Board: a memorandum from Attorneys Wynder and Taylor about the status of the litigation. (Item 31.) That document appears to be a privileged communication. The privilege log does not reflect any deliberations by or involving any Board members. Accordingly, Carson Gardens’s Brown Act contention has no merit.
d. Counsel’s “dual representation”
Carson Gardens also contends its due process rights were violated by Attorney Wynder’s “conflicting dual representation,” i.e., his “improper role as both independent advisor in connection with the Board’s second remand hearing and as litigation counsel in connection with Carson Gardens’ supplemental writ petition.” Carson Gardens further argues that counsel’s purportedly improper dual role required the trial court to grant Carson Gardens’s motion to disqualify counsel.
Carson Gardens relies primarily on Nightlife Partners, Ltd. v. City of Beverly Hills (2003) 108 Cal.App.4th 81 (Nightlife). There, Assistant City Attorney Boga advised the city in relation to Nightlife’s application to renew its business permit and also represented the city in litigation about denial of that application. (Id. at p. 84.) However, the impropriety addressed by the appellate court was Boga’s role in the administrative appeal of the permit denial, which was heard by the city’s risk manager, Holmquist. At the outset of the hearing, Holmquist announced that he had never presided over such a hearing and would be advised and assisted by Boga. Boga sat next to Holmquist throughout the hearing and conferred with him, “apparently in connection with evidentiary rulings and legal issues.” (Id. at p. 85.) A different attorney represented the city in the administrative hearing. (Ibid.)
The appellate court in Nightlife, supra, 108 Cal.App.4th 81, found a violation of procedural due process, because there was an “objectionable overlapping of the role of advocate and decision maker” that “occurred when Boga acted as both an advocate of City’s position and as advisor to the supposedly neutral decision maker.” (Id. at p. 94.) The court viewed as instructive the Administrative Procedure Act, which requires adequate separation of prosecutory aspects of administrative matters from the adjudicatory function. (Id. at p. 91.) Separation is required to “ ‘prevent the participant from being in the position of reviewing his or her own decision or adjudging a person whom he or she has either charged or investigated.’ ” (Id. at p. 92.) Citing Howitt v. Superior Court (1992) 3 Cal.App.4th 1575, 1585, the Nightlife court held that “a prosecutor, by definition, is a partisan advocate for a particular position or point of view. [Citation.] Such a role is inconsistent with the objectivity expected of administrative decision makers. [Citation.] Accordingly, to permit an advocate for one party to act as the legal advisor for the decision maker creates a substantial risk that the advice given to the decision maker will be skewed [citation], particularly when the prosecutor serves as the decision maker’s advisor in the same or a related proceeding.” (Nightlife, supra, 108 Cal.App.4th at p. 93.)
The Administrative Procedure Act does not apply to local agencies.
Nightlife, supra, 108 Cal.App.4th 81, is distinguishable from this case. Wynder played no role of a prosecutorial nature akin to Boga’s. He did not advocate granting or denying the application or the use of any particular analysis or computation. Nor did Wynder exchange a prosecutorial role for one advising the neutral decision maker. His role was always the same: he represented the Board. He discharged this role in differing ways appropriate to the context. While the Board considered Carson Gardens’s application, he rendered neutral legal assistance. When Carson Gardens threatened further litigation, he presumably advised the Board. After the Board made its decision and Carson Gardens resumed litigation, he represented the Board in the courts in an effort to uphold the Board’s decision. He presumably would have defended the Board’s decision in litigation no matter what the Board decided. Wynder never acted as an advisor to the trial or appellate courts reviewing the Board’s decision. It appears that Carson Gardens may have misread Nightlife as prohibiting an attorney who advises an administrative agency from representing it in litigation. This aspect of Boga’s conduct, however, was not faulted by Nightlife.
In Stardust Mobile Estates v. City of San Buenaventura (2007) 147 Cal.App.4th 1170, Division Six of this court addressed and rejected an identical claim raised by the owner of a rent-controlled mobilehome park. The court wrote, “Here, [attorney] Lincoln advised the Rent Board that considered the applications and appeared on behalf of the Rent Board and the City in superior court where the judge was reviewing the Rent Board’s decision. If Lincoln had represented and advised the superior court (the decision maker) concerning the Stardust rent control matter, rather than acting as an advocate in open court, Stardust’s bias argument would be relevant. Although Lincoln’s firm represented the City and the Rent Board in superior court, that is not equivalent to advising the decision maker who reviews the Rent Board rulings.” (Id. at p. 1190.)
Stardust Mobile Estates was represented -- on appeal at least -- by the same attorneys that represent Carson Gardens in this case.
Carson Gardens’s remaining citations also are unpersuasive. In Quintero v. City of Santa Ana (2003) 114 Cal.App.4th 810 (Quintero), a deputy city attorney who had, in other cases, served as advisor to the city’s personnel board, acted as an adversary representing the city in an administrative hearing before the personnel board about the termination of Quintero’s employment. (Id. at p. 812.) The appellate court found that the deputy city attorney’s “other interactions with the Board give the appearance of bias and unfairness and suggest the probability of his influence on the Board.” (Id. at p. 814.) The court found this was sufficient “to show the probability of actual bias. It would only be natural for the Board members, who have looked to Halford for advice and guidance, to give more credence to his arguments when deciding plaintiff’s case.” (Id. at p. 816.)
Unlike the deputy city attorney in Quintero, supra, 114 Cal.App.4th 810, however, Wynder did not act as an advocate before the Board. He was a neutral adviser to the Board and an advocate on its behalf in later litigation. The decision makers before which he advocated were the superior court and this court, neither of which had “looked to [Wynder] for advice and guidance” or was likely “to give more credence to his arguments when deciding” the case. (Id. at p. 816.)
Dept. of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd. (Quintanar) (2006) 40 Cal.4th 1, which Carson Gardens cites, is also distinguishable. There, the Supreme Court invalidated the practice by the Department of Alcoholic Beverage Control in which its ultimate decision maker on license revocations routinely received ex parte briefings by the attorney who prosecuted the license revocation accusation. (Id. at pp. 6, 15-17.) The court held that “a prosecutor cannot communicate off the record with the agency decision maker or the decision maker’s advisors about the substance of the case.” (Id. at p. 17.) Because Wynder did not act as an advocate before the Board, but simply as the Board’s legal advisor, Quintanar is inapplicable.
Carson Gardens also cites a case in which the Supreme Court has granted review, Morongo Band of Mission Indians v. State Water Resources Control Bd., review granted October 24, 2007, S1555589.
In addressing Carson Gardens’s motion to disqualify Wynder, the trial court expressed concern about two aspects of a statement Wynder made to the Board during the 2006 hearing. After the Board chair began to discuss the requirement of providing the owner a constitutionally fair return, Wynder interrupted:
“We believe the Court of Appeals has already said that if it were writing on a clean slate, it might very well have embraced $43.12 as a constitutional fair return. So we know -- I think we know. I think it is our legal opinion that $43.12 would be a constitutional fair return, but that is not what you are instructed to do. This is going to be an unusual case in which you’re grant [sic] a park owner more than a constitutional fair return. We know what the floor is. The board -- the Court of Appeals has now ordered you to consider your prior decision and take into account the ceiling, which is $113. So the analysis of whether or not you’ve got a constitutional fair return is not as difficult an analysis to perform in this case, because we know what the floor is. What we now need to do is for you to determine in the exercise of your sound discretion, based on substantial evidence taken from the record as a whole, what the ceiling is.”
The trial court said Wynder had made misleading statements that mischaracterized the prior appellate decision in this case as finding that an increase of $43.12 would provide a fair return and stating that the Board was going to grant more than a fair return.
Neither aspect of Wynder’s statement that caused the trial court concern demonstrates a departure from the role of neutral advisor to the Board. Although Wynder’s characterization of this court’s earlier decision may have been incomplete, it was not unfounded, unreasonable, or biased as a bottom-line summary of the practical effect of our decision. More importantly, the import of his entire statement was to inform the Board that it must exercise its obligation under the ordinance, guidelines, and constitution to establish a level of rent that would give Carson Gardens a fair return within the parameters established by the courts in the course of this litigation. Wynder’s statement did not advocate that the Board do or not do anything, except grant an increase that fell within the parameters established through the litigation.
Similarly, although Wynder’s statement about granting “a park owner more than a constitutional fair return” might sound biased if taken out of context, it is clear that Wynder was telling the Board, in a rather clumsy fashion, that it was required by the court rulings to grant a rent increase that exceeded the $43.12 the Board previously had determined would give Carson Gardens a constitutionally fair return.
A review of all of Wynder’s statements to the Board during the June 21, 2006 hearing reveals that he performed as a neutral advisor to the Board, not as an advocate for the residents, owner, or any other party appearing before the Board. He explained and subsequently reminded the Board not to consider any new evidence, including comments made by the residents at that hearing. He addressed legal issues raised by Carson Gardens, such as whether the staff report constituted new evidence or was invalid because it did not identify its author. He advised the Board that the prior appellate decision in this case did not require the Board to apply any particular formula or methodology. He read part of the opinion to the Board, and told Board members that they must assess the existing evidence, “choose which evidence to believe and which evidence to reject, articulate your reasons for accepting or rejecting evidence, set them forth on the record,” “[c]onsider the results of the gross profit maintenance analysis,” “give it such weight as you deem relevant through your independent assessment,” and “make findings as to the appropriate implementation of that analysis.” He told Board members that they had “a constitutional duty under the law and under this ordinance . . . to grant a rent increase that does two things: (1) protects homeowners from excessive rent increases and (2) allows a fair return on investment.” He later reminded them that they could “decide to give some percentage” of the GPM analysis figure, adding “it can’t be zero, but from some percentage to a 100 percent.” Viewing Wynder’s statements to the Board in context, we see nothing to suggest he departed from his proper role as a neutral advisor to the Board. Viewing the statements flagged by the trial court in the worst possible light, Wynder may not have fully advised the Board. He did not, however, act as an advocate before the Board. His performance in no way evoked the fairness concerns at issue in Nightlife and the other cases cited by Carson Gardens.
Accordingly, we conclude that Wynder’s role in the proceedings neither violated due process nor required the trial court to disqualify him or his firm from continuing to represent the Board in litigation.
DISPOSITION
The order is affirmed. Respondent Board is awarded costs on appeal.
We concur: COOPER, P. J. RUBIN, J.