Category Archives: First District Court of Appeal

Hiona v. Superior Court (2154 Taylor LLC): Waiver of Incidental Damages in Unlawful Detainer Judgment Does Not Require Reclassification to Limited Jurisdiction

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In Hiona v. Superior Court, the owner of an apartment building withdrew the property from the rental market under the Ellis Act. Several tenants held over after the date of withdrawal, raising several dozen defenses each. Ultimately, the defenses lacked evidentiary support. The owner moved for (and was granted) summary judgment against each of the three groups of defendants.

A summary judgment motion is defeated if the opposing party can show that there is a “triable issue” as to any material fact. An action for unlawful detainer seeks possession of the property and per diem holdover damages, and so the easiest way for a defendant to defeat a property owner’s motion is to dispute the value of the damages. However, damages in an unlawful detainer case are merely incidental to the claim for possession. Owner 2154 Taylor LLC therefore conditionally waived damages for the purpose of seeking summary judgment.

The trial court awarded judgment to the owner. Then, because the owner had waived damages, the defendants each moved to reclassify a case from unlimited to limited jurisdiction. The distinction is partly vestigial and partly substantive. California formerly had municipal courts and superior courts, with distinct jurisdiction. In 1998, California voters amended the constitution to allow them to unify. Today, the trial court sitting in limited jurisdiction cannot award judgment above $25,000. Appeals from limited jurisdiction go to the Appellate Division of the Superior Court instead of to the Court of Appeal. There are also rules of “economic litigation” for limited cases, but these expressly do not apply to unlawful detainers.

The penalty for a plaintiff who “overpleads” their case (i.e., where the plaintiff alleges damages above $25,000 but recovers less) is that they may not be entitled to their costs, even as a prevailing party. Obviously, the cap on damages in limited jurisdiction is appealing to a defendant. But since unlawful detainer cases aren’t subject to economic litigation rules anyway, and since this owner waived damages, there would seem to be little sense in reclassifying these cases: the defendants would lose their argument that the case had been overpled.

However, there were other benefits for these defendants if the case were reclassified. It would be banal to note that Ellis Act evictions in San Francisco are political theater fixated on transfer of wealth. (A rent-controlled tenancy is, in effect, a highly valuable and non-transferrable property interest, which ends when the tenancy does.) San Francisco funds tenant eviction defense with the goal of elongating a tenant’s occupancy of their (former) rental unit. By reclassifying the case, defendants can potentially delay an adverse outcome by creating one more “rung” of appellate review. (Though not allowed by right, the Court of Appeal can grant a motion for transfer from the Appellate Division or review its ruling.)

The Appellate Division is also bound by its own decisions in a way that the Court of Appeal is not, and this is of particular importance for a San Francisco Ellis Act eviction defendant, following the excessively tenant-friendly opinion Hilaly v. Allen (2017). The reclassification motion was tantamount to forum-shopping.

The trial court denied the defendants’ motion. A judgment above $25,000 was still possible. (The defendants were preparing their appeal of the judgment, and a reversal would vacate the order where the plaintiffs waived damages.) Defendants sought a writ of mandate, reversing the trial court’s order, but the Court of Appeal affirmed.

It noted that “A party seeking to reclassify a case from unlimited to limited faces a ‘high threshold’. (Ytuarte v. Superior Court (2005) 129 Cal.App.4th 266, 278.) The trial court must conclude ‘that the verdict will ‘necessarily’ fall short of the superior court jurisdictional requirement of a claim exceeding $25,000.’ (Walker v. Superior Court (1991) 53 Cal.3d 257, 270.) ‘The unlikeliness of a judgment in excess of $25,000 is not the test. The trial court reviews the record to determine whether the result is obtainable. Simply stated, the trial court looks to the possibility of a jurisdictionally appropriate verdict, not to its probability.’ (Maldonado v. Superior Court (1996) 45 Cal.App.4th 397, 402.).”

Ultimately, the Court of Appeal found that the trial court did not abuse its discretion in denying the motions on purely statutory grounds. The reclassification statute expressly states that “Nothing in this section shall be construed to require the superior court to reclassify an action or proceeding because the judgment to be rendered, as determined at the trial or hearing, is one that might have been rendered in a limited civil case”. While the statute authorizes a defendant to reclassify the case at any time, the Court interpreted the language “the judgment to be rendered” as essentially foreclosing the option once the trial court granted the summary judgment motion.

http://costa-hawkins.com/wp-content/uploads/2020/07/2154-Taylor-Opinion.pdf

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Owens v. City of Oakland: Court of Appeals Fleshes Out Meaning of “Dwelling or Unit” under State Law

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“When the owner of a single-family home rents bedrooms in the home to separate tenants, does the Costa-Hawkins Rental Housing Act exempt each of the tenants’ rooms from local rent control because the home is considered an exempt dwelling under the Act? Jonathan Owens rented out bedrooms in his home to three unrelated individuals. He contends the City of Oakland’s Housing, Residential Rent and Relocation Board (the Rent Board) and the trial court erred when they determined the rented rooms are subject to Oakland’s rent control ordinance. We agree with the Rent Board and the court and affirm the trial court order denying Owens’s petition for writ of mandamus.”

Landlord Jonathan Owens owns a single-family home in Oakland. He lives in the home and rents three individual bedrooms to three unrelated tenants. One tenant filed a petition at the Oakland rent board “alleging her housing became unsuitable due to disruptive construction work and hazardous conditions on the premises [and that] Owens failed to provide required notice of the Rent Adjustment Program and retaliated against her by terminating her lease when she complained about the construction work and sought a reduction in rent.”

Owens responded that her tenancy was exempt from the jurisdiction of the rent board because the entire property was “alienable, separate from the title of any other dwelling unit” – a status that would exempt the property from local rent controls under Costa-Hawkins.

What happened next was procedurally bizarre. The hearing officer dismissed the petition on a finding that the tenant was in arrears on rent without justification. However, for some reason, the hearing officer made a gratuitous finding that the tenancy was not exempt because the rental of individual rooms meant that no dwelling was “separately alienable”.

Owens appealed to the rent board commission – presumably to avoid any collateral estoppel effect of this determination and renewed his argument for exemption under Costa-Hawkins/ The rent board unanimously affirmed the decision. Owens then petitioned for writ of mandate in the superior court, and the court affirmed as well, on the narrow issue of Costa-Hawkins preemption. The First District Court of Appeal affirmed.

The decision is problematic for several reasons. First, the broad scope of the petition related to many things having nothing to do with rent adjustments. As a result of the judicial powers doctrine, the rent board likely lacked the jurisdiction to render any relief. To render such a determination on a dismissed petition compounded the overreach. Finally, to the extent that most of this was about eviction controls (which Costa-Hawkins does not regulate), it is puzzling that Owens did not raise the argument that Section 8.22.350E of the Oakland Municipal Code exempts owner-occupied homes from eviction controls, if the owner shares “kitchen or bath facilities” with the tenants. While the opinion does not discuss whether Owens shares such facilities, it can almost be assumed from the description “single family home” that he and all the tenants shared the same half-and-half carton when making their coffees.

The rule of law is also somewhat hollow. The purpose of eviction controls is to prevent landlords from circumventing rent controls by the expediency of terminating the existing tenancy and raising rates on a new one. A finding that this is a multi-dwelling property for rent control purposes has little effect if Owens can capriciously terminate tenancies whenever he wants to increase the rents. Further, from a policy perspective, it is inconsistent that the institutional landlord of a single-family home can escape rent control, but a mom-and-pop owner-occupying landlord cannot. Nonetheless, Owens is a warning that landlords should be particularly cautious in renting multiple rooms under different leases.

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Division Four of First District Court of Appeal Harmonizes Litigation Privilege with Tenant Anti-Retaliation Statute in Winslett v. 1811 27th Avenue, LLC

“The litigation privilege is ‘not without limit’, as the Action Apartment court took pains to point out. (Action Apartment, supra, 41 Cal.4th at p. 1242.) Because recognition of the privilege here would neuter section 1942.5 by removing eviction from the statutory remedy of retaliatory eviction, we view the clash between section 47, subdivision (b), on the one hand, and section 1942.5, subdivisions (d) and (h), on the other, as irreconcilable. To be consistent with the high court’s guidance that we give section 1942.5 a liberal construction designed to achieve the legislative purpose, we conclude that the litigation privilege must yield to it.”

In Winslett v. 1811 27th Avenue, LLC (2018), a former tenant filed a complaint against a landlord for retaliation and retaliatory eviction, under Section 1942.5 of the Civil Code, as well as violations of Oakland’s just cause for eviction ordinance. The trial court granted the landlord’s anti-SLAPP motion to strike. The tenant appealed the trial court’s ruling that the litigation privilege barred the retaliation claims and that her claims under the eviction control ordinance were based on protected activity under the anti-SLAPP statute. The Court of Appeal agreed and reversed.

Continue reading Division Four of First District Court of Appeal Harmonizes Litigation Privilege with Tenant Anti-Retaliation Statute in Winslett v. 1811 27th Avenue, LLC

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SF Chronicle Reports on Court of Appeal Reversal of Ellis Act Judgment for Property Owner so Jury Can Hear Evidence of Alleged “Sham Transfer” to Co-Owner

Update: Division Five has certified Coyne v. De Leo for publication.

The San Francisco Chronicle reports on a recent unpublished ruling from Division Five of the First District Court of Appeal, reversing a judgment in favor of an Ellis Act-invoking landlord, on the basis that the trial court improperly excluded evidence of a “sham transfer”.

The Ellis Act requires property owners to withdraw all “accommodations” (i.e., residential rental units) from the market and to terminate all such tenancies. A landlord may not terminate some accommodations and leave others. (This is a common sense rule that allows a landlord to “go out of business” but not to evade rent control by evicting low-paying tenants and keep the market rate ones.)

In Coyne v. De Leo, the owner (Coyne) invoked the Ellis Act on a four-unit building with a single “tenant”. Other units were occupied by family members and friends – including one friend, Maria Esclamado, who was a former tenant until Coyne made her an owner so that she could participate in the Ellis withdrawal and remain in her home.

The tenant (De Leo) wanted to introduce evidence about this “transfer of ownership” to the jury. He argued that the transfer – with seller financing, a monthly payment conspicuously similar to the former “rent” payment, and an eventual “quitclaim deed” back to Coyne when she moved – was suspicious.

The Chronicle quoted Coyne’s attorney, Justin Goodman, as saying that Esclamado “received title to the property and had all the benefits of title” while “Martin (Coyne) took all the risks”, predicting that Coyne would prevail at a retrial even with the evidence that was previously barred.

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City and County of San Francisco v. Post (2018) – FEHA Does Not Preempt Local Anti-Discrimination Regulations Not “Encompassed by Its Provisions”

“[T]he purpose of FEHA is precisely as broad – and as narrow – as the field of exclusivity that FEHA’s preemption clause demarcates. The statute’s purpose is ‘to provide effective remedies” for the 14 categories of “discriminatory practice[]’ that FEHA itself addresses. All agree that FEHA does not reach the discriminatory practice of a landlord refusing to rent to a participant in the Section 8 program. This means that San Francisco’s ordinance prohibiting such conduct has, by definition, a different purpose from FEHA.”

In CCSF v. Post, the San Francisco City Attorney sued property owners for listing ads for rental units that included a statement that they would not accept Section 8 vouchers, in violation of Section 3304 of the San Francisco Police Code. The City sought (and received) a preliminary injunction against the alleged business practice. The property owners appealed, arguing that the California Fair Employment and Housing Act (FEHA) already occupied the field of discrimination in this area. FEHA already prevents “source of income” discrimination, but defines it more narrowly that Section 3304, therefore they are allowed to discriminate against Section 8 vouchers while still in full compliance with FEHA.
Continue reading City and County of San Francisco v. Post (2018) – FEHA Does Not Preempt Local Anti-Discrimination Regulations Not “Encompassed by Its Provisions”

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Small Property Owners of San Francisco v. City and County of San Francisco (2018) – Cities May Not Impose Land Use Penalties on Property Owners Who Have Invoked the Ellis Act

“By imposing a 10-year waiting period on alterations to non-conforming units where property owners have exercised their Ellis Act rights, the ordinance penalizes property owners who leave the rental market. The ordinance does not regulate the particulars of the remodeling of a nonconforming unit, but rather prohibits any such changes for a period of 10 years after the property owner exits the rental business. By imposing such a prohibition on property owners who have left the rental market, the ordinance challenged here improperly enters the field of substantive eviction controls over such property owners.”

In SPOSFI v. CCSF (2018), the Small Property Owners of San Francisco challenged San Francisco Ordinance 286-13. Prior to that ordinance, Section 181 of the Planning Code prohibited the “enlargement, alteration or reconstruction” of nonconforming units. (These are legally constructed units in buildings that were “down-zoned” after the fact. As this is essentially a “math” problem, a property owner would designate the particular unit in the property that gets the “nonconforming” designation.)

Ordinance 286-13, however, allowed such modifications within the existing building envelop, so long as residential use was principally permitted in the zoning district and the owner had not performed a non-fault eviction at the property. The owner could not make any changes for a period of ten years following a non-fault eviction.
Continue reading Small Property Owners of San Francisco v. City and County of San Francisco (2018) – Cities May Not Impose Land Use Penalties on Property Owners Who Have Invoked the Ellis Act

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SFAA v. CCSF (2018): City’s “Educator” Eviction Defense Upheld as “Substantive” Rather Than “Procedural”

Thus, under Birkenfeld, municipalities may by ordinance limit the substantive grounds for eviction by specifying that a landlord may gain possession of a rental unit only on certain limited grounds. But they may not procedurally impair the summary eviction scheme set forth in the unlawful detainer statutes. The Property Owners argue the Ordinance is procedural because it governs the timing of notices of eviction: ‘The Ordinance does not limit the allowable justifications for evicting tenants; it only delays certain evictions.’ Such questions of timing, they contend, are purely procedural. The City argues the Ordinance is substantive because timing is merely a component of the substantive defense to eviction: ‘When the household to be evicted includes a child under the age of 18 or an ‘educator’ within the terms of the Ordinance, ‘good cause’ for a landlord to undertake any of the specified types of no-fault evictions does not exist unless the eviction is to take effect during the summer months.’ As this case illustrates, the distinction between procedure and substantive law can be shadowy and difficult to draw in practice.

In SFAA v. CCSF, Division Five of the First District Court of Appeal overturned the SF Housing Court’s order mandating that the City not enforce a 2016 amendment to the Rent Ordinance (Ordinance 55-16) that created a substantive defense to certain non-fault evictions for “educators”.

Continue reading SFAA v. CCSF (2018): City’s “Educator” Eviction Defense Upheld as “Substantive” Rather Than “Procedural”

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First District Court of Appeal Analyzes Claim Splitting in the Context of Unlawful Detainer Rent Demand and Damages versus Past-Due Contract Rent in Hong Sang Market, Inc. v. Peng (2018)

“Accordingly, we hold that an unlawful detainer judgment awarding back-due rent does not preclude a lessor from seeking additional back-due rent in an ordinary civil action. However, the lessor is precluded from recovering back-due rent associated with a particular time period in the subsequent civil action if such a claim was actually determined on the merits in the unlawful detainer action. Thus, the lessor is not only precluded from recovering twice for the same items of damages but also may not renew a claim for back-due rent associated with a particular time period if that periodic claim was denied on the merits in the unlawful detainer action.”

Hong Sang Market, Inc. v. Peng (2018) tracks multiple years and multiple lawsuits, with a building owner, master tenant and subtenant battling over money judgments, unpaid rent, unlawful detainer damages and various awards of attorneys’ fees. For landlord-tenant practitioners, it provides a crucial analysis of the doctrine of res judicata, in the context of unlawful detainers based on the non-payment of rent, contract damages for non-payment of rent, and the holdover damages incidental to unlawful detainers.

Hong Sang is the owner of a commercial building. It leased to Ming Kee Game Birds, Inc., which then subleased to Vivien Peng. Ming Kee sued Peng for breach of the sublease, but Peng cross-complained against Ming Kee, obtaining a money judgment that she began to collect in the form of offsets to her rental payment obligation. However, Ming Kee and Hong Sang agreed to terminate the master lease, and a new tenant – Ming’s Poultry, LLC – assumed the master lease and began operating Ming Kee’s former business.

Continue reading First District Court of Appeal Analyzes Claim Splitting in the Context of Unlawful Detainer Rent Demand and Damages versus Past-Due Contract Rent in Hong Sang Market, Inc. v. Peng (2018)

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Sayta v. Chu (2017) – Parties Must Obtain Court Order To Retain Jurisdiction To Enforce After Dismissal

“Sayta subsequently brought a motion to enforce the settlement pursuant to section 664.6, alleging breach of a confidentiality provision and seeking liquidated damages. The trial court denied the motion on the merits and Sayta appeals Because the parties failed to request, before dismissal, that the trial court retain jurisdiction to enforce the settlement, or alternatively seek to set aside the dismissals, we find the court lacked jurisdiction to entertain the motion. We therefore reverse on that basis and do not reach the merits.”

Sayta v. Chu represents the importance of understanding civil procedure in crafting effective and enforceable settlement agreements.

Very few cases actually go to trial. Through all the posturing, law and motion, discovery and settlement discussions, attorneys are generally able to anticipate likely outcomes to obtain “good enough” results, without their clients paying for an answer to the question “who was right?”. (Or, put another way, settlement allows the parties to determine the outcome, while trial gives control over the outcome to the judge and jury.)

A “settlement agreement” is essentially a contract and is generally interpreted and enforced like a contract. This could create a problem of regression: settling a claim (like one for “breach of contract”) results in a “settlement contract”. The settlement contract could also be breached and enforced with a lawsuit, which can be settled with a settlement contract, which can be breached, etc., etc. Lawsuits could never be settled because the claim would only be deferred to the next lawsuit.
Continue reading Sayta v. Chu (2017) – Parties Must Obtain Court Order To Retain Jurisdiction To Enforce After Dismissal

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Golden State Ventures, LLC v. City of Oakland Rent Board – (Unpublished) Clarity on the “Sold Separately” Requirement for Condominium Decontrol under Costa-Hawkins

“The Rent Board contends the “sold separately” exception does apply under our facts because plaintiff “admits that it has control of and owns the entire building at 840 55th Street, Oakland, California.” The Rent Board also notes the building’s four units are all connected within the structure, there are no units in the building that were not converted to condominiums, plaintiff negotiated to purchase all the units together, none of the units were sold to new occupants, and the complaining tenants continued to reside in their units just as they had prior to the conversion. Essentially, the Rent Board asserts plaintiff did not meet the “sold separately” requirement because it purchased the entire apartment building, regardless of how the transaction was structured. Plaintiff counters that the “sold separately” exception “applies rent control only to condominium subdividers [like Kolevzon], not to subsequent purchasers like Golden State.” Plaintiff is correct.”

In Golden State Ventures, LLC v. City of Oakland Rent Board, a landlord purchased four out of four of the condominium units in a single building in Oakland, and then increased the tenants’ rents by 125%. Apparently quite proud of this purchase, “In a blog posting discussing the acquisition of the building, plaintiff’s principal, Arlen Chou, stated: ‘The best part of the property is that as they are condominiums, they are EXEMPT from rent control! I will soon own a little island of rent control free property in a rising neighborhood in Oakland. Who said there are no deals in the Bay Area???’.”

However, while Costa-Hawkins decontrols “separately alienable” units (like single family homes) from rent control, a 2002 amendment “closed the loophole” where condominium subdividers obtained final map approval for sale, but then kept entire buildings – formerly apartments – as rent-control-exempt property, exalting form over function. As noted by the court in Golden State Ventures, LLC, “Such conduct was entirely legal at that time”, until the 2002 amendment required that the units be “sold separately to a bona fide purchaser” before decontrol applied.

Continue reading Golden State Ventures, LLC v. City of Oakland Rent Board – (Unpublished) Clarity on the “Sold Separately” Requirement for Condominium Decontrol under Costa-Hawkins

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