Hilaly v. Allen: Tenant Successfully Defends Ellis Act Eviction with “Change to Terms of Tenancy” Defense, Following Landlordís Reliance on Estoppel Statement

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“Allen had no contractual duty to complete the questionnaire. The parties indicated no shared understanding, discussions or advisement of the questionnaire’s binding nature. The questionnaire contained no express statement that the tenant would be bound by the assertions made in the questionnaire. The questionnaire was ambiguous on relevant terms, indicating that it was not the sort of communication that would lead to binding statements regarding terms and conditions of tenancy. And the record contains no indication that all parties were highly sophisticated or enjoyed similar bargaining power.”

Naseem and Naser Hilaly were residential landlords of a multiunit property in San Francisco. They purchased the building along with their son and his wife, who wanted to live together with each of their parents in the same property. Betty Allen was a long-term tenant who, prior to the sale of the building to the Hilalys, executed an estoppel statement describing that she did not have parking.

After failing to negotiate a buyout agreement, the Hilalys proceeded to withdraw the property pursuant to the Ellis Act. Allenís mother lived with her during this period, and a visiting nurse parked in the curb cut of the street, blocking the garage that the Hilalys were parking in. The Hilalys left a note that said, “I’ve told you not to park here again”.

At trial nearly a year later, Allen defended the eviction on the basis that the Hilalys had impermissibly “changed the terms” of her tenancy. The landlords raised several arguments against the use of such a defense. They argued that neither the statutory language of the Ellis Act nor its legislative history supported this as a defense. They urged that the seminal Supreme Court decision Drouet v. Superior Court established that a landlord had no obligation to maintain even the most fundamental terms of a tenancy (habitability) such that exalting something ancillary (like parking) canít comport with the decision. Finally, the landlords pointed out the obvious: Allen said she didnít have parking. Testimony at trial established that her tenancy had had use of the garaged parking space initially, but that the family gave the space to a neighbor years before the Hilaly’s purchased the property. Nonetheless, the trial court found that Allen was not estopped from testifying about her parking and instructed the jury that they could consider this as a defense.

The jury found that the landlords had complied with the Ellis Act procedures and had the proper intent in terminating the tenancy. However, the jury found that the Hilalys had violated Allenís rights by changing the terms of the tenancy, and awarded possession of the apartment to her.

The Appellate Division of the Superior Court affirmed, finding that this was a permissible defense under the Ellis Act, that the Hilalys had, in fact, taken away parking during the one-year Ellis withdrawal period, and that Allen was not estopped from raising the defense. The panel found that parking was a material term of a San Francisco tenancy, and Allen therefore established the defense.

The panel also seemingly distinguished Drouet by contrasting “habitability issues” (like heat) with changes to material terms, by suggesting that the right facts (like a landlord affirmatively turning off the furnace) would justify use of the defense. However, the panel did not actually cite Drouet in its analysis or consider any of its reasoningÖ all of which is to say that San Francisco landlords would be wise to file in unlimited civil jurisdiction.