Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)

Citation: Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)
Parent Document: Kavanau v. Santa Monica Rent Control Board, 16 Cal. 4th 761 (1997)
Jurisdiction: California (state)
Effective Date: 1997-08-26
Original Source: https://www.courtlistener.com/opinion/5607899/kavanau-v-santa-monica-rent-con... ↗

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In the present case, the basis of the Court of Appeal’s holding in the original Kavanau decision (see Kavanau v. Santa Monica Rent Control Bd. *791(1993) 19 Cal.App.4th 730 [23 Cal.Rptr.2d 724] (Kavanau I)) is unclear. The opinion can be read as a substantive due process case, concluding that the 12 percent cap found in the Santa Monica ordinance is arbitrary. As the majority herein explain, however, there is no reason why a 12 percent cap cannot “be one aspect of a comprehensive scheme that as a whole provide[s] landlords a fair return.” (Maj. opn., ante, at p. 778.) It appears from the dollar figures alleged in Earl W. Kavanau’s complaint and stated in the majority opinion (maj. opn., ante, at p. 767), that Kavanau may have made a bad business decision purchasing the rental property in question, since the amount of debt service and operating expenses exceed rental income. These facts on their face do not indicate a constitutional violation. “ ‘A regulated firm has no constitutional right to a profit.’ ” ( 20th Century Ins. Co., supra, 8 Cal.4th at p. 294, brackets omitted.) Although, as the majority point out, we are bound by the law of the case to the Court of Appeal’s conclusion that a 12 percent cap was arbitrary, this conclusion does not signify that Kavanau was in fact subject to “deep financial hardship” as the result of the rent regulation. The judgment of the Kavanau I court does not translate into the claim that Kavanau deserves just compensation under the Fifth Amendment to the United States Constitution.

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