Hall

Defendant Butte Home Health, Inc. (defendant) appeals from a judgment permanently enjoining its operation of a nonprofit group home for the disabled elderly in a residential neighborhood in Chico. The trial court granted the injunction to neighboring homeowners (plaintiffs) on the ground the operation of a group home was in violation of a restrictive covenant limiting the use of the property to a “private residence.” The trial court was aware of 1993 amendments to Government Code sections 12955 and 12955.6 forbidding discrimination through the enforcement of restrictive covenants prohibiting group homes for the disabled. The court declined to apply the amendments, however, concluding their retroactive application to preexisting restrictive covenants would be an unconstitutional impairment of contract.

As we explain, a finding that an exercise of the state’s police power impairs a contract “is the beginning, not the end of the analysis.” (City of Torrance v. Workers’ Comp. Appeals Bd. (1982) 32 Cal.3d 371, 377 [ 185 Cal.Rptr. 645 , 650 P.2d 1162 ] (City of Torrance).) An impairment exceeds constitutional bounds only if it is substantial. (Allied Structural Steel Co. v.…