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.