Arguments laid out in short-term rental case
Couple represented by Goldwater Institute is arguing their due process rights were violated.
SAN JOSE >> Attorneys for a Pacific Grove couple that sued the city and lost over their belief they have a Constitutional right to provide short-term rentals have late last week filed a brief outlining their case before a state appellate court seeking to overturn a Monterey County Superior Court ruling.
The appellate suit is moving forward despite the couple — Susan and William Hobbs — putting their house in Pacific Grove up for sale. It was the house that the couple had been using for a shortterm or vacation rental. When the city began using a lottery to phase out short-term rentals in a specific area of the city, the couple sued.
The Hobbs are being represented by the Goldwater Institute, a conservative Arizona thinktank, which is arguing the Hobbs’ due process rights were violated when their house — chosen by a lottery — would not have its shortterm rental license renewed.
The Hobbs lost their lower court case when Monterey County Superior Court Judge Lydia Villarreal in 2019 dismissed Goldwater’s allegation since the shortterm rental licensing agreement clearly stated the term of the license is for 12 months and there was no guarantee it would be renewed.
The case, which is now in the Court of Appeal of the State of California Sixth District in San Jose, is being watched closely statewide. The appellate court ruling could have a significant effect on many cities in California which are trying to create more long-term housing by eliminating or reducing the number of shortterm rentals.
Both Monterey and Carmel have bans on short-term rentals that to date have not been challenged.
Repeated calls and email requests for comment sent to Hobbs’ lead attorney, Christina Sandefur, have not been returned.
Pacific Grove City Attorney David Laredo is still in the process of reviewing the brief, but so far there is nothing novel from Goldwater’s prior arguments, he said.
“My initial reading of their brief leaves me underwhelmed,” Laredo said. “It is devoid of new information or arguments. The city contends (the) appellants have no right to continue to operate their short-term rentals, and that City regulations are legally appropriate.”
There are a number of challenges to Villarreal’s ruling in the appellate brief. In earlier appellate decisions, including a decades-old Carmel case, the courts have ruled cities have the right to regulate home uses in residential neighborhoods in order to “preserve the essential character of a neighborhood.”
Goldwater is arguing that since Pacific Grove is a tourist destination, short-term rentals are “consistent with the historical character of Pacific Grove” and should not be phased out. Laredo and assistant attorney Heidi Quinn have argued in the lower court that the licenses allowing short-term rentals have always been subject to renewal, and that all shortterm rentals in the city have a 12-month license duration, and any renewal of the license is at the discretion of the city.
Villarreal agreed.
Among the appellate arguments is that licenses “were revoked” without any connection to public health, safety, and welfare, and also violated their substantive due process rights.” The argument can be viewed as the Hobbs did nothing wrong so why should they be penalized without the benefit of due process.
“This case is about whether California cities can suddenly and arbitrarily deprive responsible property owners — who are not accused of having committed any wrongdoing — of their legally vested right to rent their homes to overnight guests, particularly when the property owners detrimentally relied upon the existence of that vested right,” Goldwater wrote in last week’s appellate brief. “The city did so here by selecting people by lottery to have their use rights nullified, in violation of due process.”
Next up will be the city’s response to Goldwater’s challenges, scheduled on the court calendar for March 29.