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February 27, 2018August 27, 2018

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)”

February 25, 2018

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”

February 25, 2018February 25, 2018

SFAA v. CCSF (2018) – 9th Circuit Affirms N.D. Cal. Judgment on the Pleadings for San Francisco in Buyout Challenge

San Francisco Apartment Association and Small Property Owners of San Francisco Institute appealed the 2015 district court ruling upholding San Francisco’s Buyout Ordinance. The U.S. Court of Appeals for the 9th Circuit upheld the ruling of the U.S. District Court for the Northern District of California, affirming its judgment on the pleadings, and upholding the ordinance on constitutional grounds.

In so ruling, the Court concluded that the Buyout Ordinance did not violate the various constitutional rights asserted (e.g., free speech rights, equal protection of the laws, liberty to contract, right to privacy) under any of the distinct provisions challenged: (1) the “Disclosure Provision”, (2) the “Notification Provision”, (3) the “Rescission Provision”, (4) the “Database Provision”, (5) the “Penalty and Fee Provision”, and (6) the “Condominium Conversion Provision”.
Continue reading “SFAA v. CCSF (2018) – 9th Circuit Affirms N.D. Cal. Judgment on the Pleadings for San Francisco in Buyout Challenge”

February 18, 2018February 18, 2018

New San Francisco Annual Allowable Rent Increase and Relocation Assistance Payment Schedule, Effective March 1, 2018

The Rent Board announced the new allowable rent increase rate for San Francisco rent controlled tenancies for March 1, 2018 to February 28, 2019. The new allowable increase of 1.6% is effective for increases going into effect on or after March 1, 2018.

The Rent Board has also published new relocation payment amounts for Ellis Act evictions and other non-fault based evictions.

February 18, 2018February 18, 2018

Legislative Update: AB 1505 (2017): “Palmer Fix” Allows Local Governments To Exempt Certain New-Construction On-Site Units from Costa-Hawkins

In 2009, the Second District issued the opinion Palmer/Sixth Street Properties, L.P. v. City of Los Angeles (2009) 175 Cal.App.4th 1396, which vindicated a Los Angeles developer’s challenge to the city’s development plan requiring “vacancy control” for new rental units built in a development project that would remove 60 units of low income housing. The developer contended that the ordinance was preempted by Costa-Hawkins and, that even though Costa-Hawkins did create a carve out where a city provides density bonuses, the developer was not even building to authorized density. The Palmer court noted that, “the issue is whether requiring Palmer’s involuntary compliance with section 11.C’s affordable housing requirements is hostile or inimical to Palmer’s right under the Costa–Hawkins Act to establish the initial rental rates for the project’s dwelling units. We conclude that it is”.

Effective January 1, 2018, AB 1505, referred to as the “Palmer fix”, now authorizes cities to adopt ordinances that require, as a condition of development, that the development include a certain percentage of below-market rate rental units (or alternatives for in-lieu fees or off-site units).

San Francisco has had density bonus “accessory dwelling unit” ordinances, that provide property owners to exceed density limits in adding additional units, on the condition that they record agreements to subject the units to the Rent Ordinance. In response to AB 1505, the Board of Supervisors is also working on implementing the Palmer fix at the local level, with several changes to the Planning Code to amend the Inclusionary Housing Ordinance.

February 18, 2018February 18, 2018

Legislative Watch: AB 2343 (2018): Amendment to Unlawful Detainer Statutes To Extend Breach Cure Period and Tenants’ Time To Respond to Complaint

AB 2343 (2018), introduced by Assemblymember Chiu, seeks to significantly alter the the timing involved in unlawful detainer actions.

Unlawful detainers (often referred to as an “eviction lawsuit”) are unique among civil actions for their summary character. This is because, unlike other civil actions, they proceed on a five-day summons (instead of thirty), and most of their discovery and law & motion procedures are condensed as well. (Because of this, there have also been consequences for failure to “strictly comply” with the unlawful detainer statutes, in that a landlord must properly plead why she has standing for an unlawful detainer case (as opposed to, say, a breach of contract and ejectment lawsuit), as other causes of action and cross-complaints are generally not allowed. This also means that a landlord has served, e.g., a “three-day notice to cure or quit” that has expired prior to commencing the eviction lawsuit.
Continue reading “Legislative Watch: AB 2343 (2018): Amendment to Unlawful Detainer Statutes To Extend Breach Cure Period and Tenants’ Time To Respond to Complaint”

February 18, 2018March 14, 2018

Justin Goodman Featured in SF Apartment Magazine Legal Q&A for February 2018

Justin Goodman was featured in the Legal Q&A for the February 2018 issue of SF Apartment Magazine – the official publication of the San Francisco Apartment Association.

Justin discussed the distinctions between the landlord-tenant relationship and master tenant-subtenant relationship with respect to rent control. Justin also discussed where this distinction might be blurred, who might be considered the “original occupant” (for purposes of rent control and Costa-Hawkins) and how a landlord can best position themselves for clear-cut lines with well-defined rights going forward.

SFAA is dedicated to educating, advocating for, and supporting the rental housing community so that its members operate ethically, fairly, and profitably. SFAA’s is a trade association whose main focus is to support rental owners by offering a wide variety of benefits that address all aspects of rental housing industry.

Posted on January 27, 2018January 27, 2018

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”

Posted on January 26, 2018January 26, 2018

Justin Goodman Featured in SF Apartment Magazine Legal Q&A for January 2018

Justin Goodman was featured in the Legal Q&A for the January 2018 issue of SF Apartment Magazine – the official publication of the San Francisco Apartment Association.

Justin discussed San Francisco’s recent “ISP anti-monopoly” ordinance (titled “Occupant’s Right To Choose a Communications Services Provider”), explaining the ISP’s obligations in complying with the law while seeking access to a building, as well as an owner’s rights and duties in allowing (or lawfully refusing) access.

Posted on January 12, 2018January 12, 2018

SF Curbed Reports on Failed Costa-Hawkins Repeal Effort

Today, AB 1506 – the Assembly Bill aiming to repeal the Costa-Hawkins Rental Housing Act, failed to obtain the necessary votes to get out of the Housing and Community Development Committee. Costa-Hawkins prevents cities from imposing “strict” vacancy control (i.e., maintaining rental rates even after all tenants vacate) and it exempts certain kinds of property (like single family homes, condominiums and “new construction”) from price controls.

AB 1506 would simply have repealed Sections 1954.50, et seq. of the Civil Code, eliminating the preemptive state law, but it fell one vote short of the necessary four. Another repeal effort, styled as The Affordable Housing Act, may be headed to voters this November, if it obtains the necessary signatures by a June 28, 2018 deadline.