Geraghty v. Shalizi
8 Cal. App. 5th 593
| Cal. Ct. App. | 2017Background
- In 2011 defendant Joseph Shalizi bought a four-unit building in San Francisco and sought to occupy unit 4, then occupied by plaintiff Brian Geraghty (tenant of ~22 years).
- Shalizi’s counsel threatened an owner move-in (OMI) eviction under the San Francisco rent ordinance but negotiated a buyout: Geraghty accepted $25,000 and signed a written release barring “any and all claims related to the Premises,” including ordinance claims and the right to reoccupy.
- Geraghty vacated; Shalizi moved in, renovated, then later moved out (job relocation) and re-rented the unit.
- Geraghty sued in 2013 alleging ordinance violations, fraud, negligence, and seeking rescission of the buyout agreement; Shalizi moved for summary judgment.
- The trial court granted summary judgment for Shalizi; the Court of Appeal affirmed, holding the release valid and that no triable fraud issue defeated enforcement of the buyout.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the buyout release is void as against public policy under S.F. Admin. Code §37.9(e) | Geraghty: ordinance bars tenant waivers of rent-ordinance rights, so the release is void | Shalizi: buyout was a negotiated settlement; waivers in settlement context are enforceable and the city’s history shows buyouts were recognized | The release is enforceable; §37.9(e) did not bar negotiated buyout settlements in 2011 |
| Whether the release covers post-agreement claims (e.g., right to reoccupy) | Geraghty: release only waived claims accrued at signing, not future claims | Shalizi: release language covers “any and all claims related to the Premises,” with no temporal limitation | The court reads the release to bar future claims including reoccupancy rights |
| Whether plaintiff presented triable promissory-fraud evidence that Shalizi never intended to comply with the ordinance or to move in | Geraghty: Shalizi induced the agreement by false promise to move in and to act in good faith under the ordinance | Shalizi: he actually moved in; counsel’s letter made clear buyout was intended to avoid OMI restrictions if settlement succeeded; no evidence of misrepresentation or reliance | No triable issue: statements were true (he moved in) and no evidence he promised to comply with ordinance provisions as part of the buyout |
| Whether public policy or later municipal regulation (post-2011) renders the buyout unenforceable | Geraghty: later city concern about unregulated buyouts shows buyouts should be void | Shalizi: city historically tolerated and regulated buyouts procedurally; later ordinances aimed at transparency and protections, not retroactively invalidating prior settlements | Court relies on statutory history and precedents to conclude buyouts were utilized and enforceable in the relevant period |
Key Cases Cited
- Village Northridge Homeowners Assn. v. State Farm Fire & Casualty Co., 50 Cal.4th 913 (party induced by fraud may rescind contract or affirm and seek damages)
- Lazar v. Superior Court, 12 Cal.4th 631 (elements of fraud and promissory fraud)
- Baba v. Board of Supervisors, 124 Cal.App.4th 504 (invalidating procedural waiver restrictions and discussing protections for tenants in waivers)
- Kaufman v. Goldman, 195 Cal.App.4th 734 (settlement waivers in landlord-tenant context enforceable; §37.9(e) does not bar negotiated settlements)
- Chapman v. Skype Inc., 220 Cal.App.4th 217 (discussing remedies for fraudulent inducement)