In this unlawful detainer action filed under the Ellis Act ( Gov. Code, § 7060 et seq. ), defendant Diego De Leo appeals from a judgment of possession entered in favor of his landlord, Martin J. Coyne. De Leo argues, inter alia, the trial court committed prejudicial error in its exclusion of evidence. We agree the trial court abused its discretion in excluding the evidence and reverse.
I. LEGAL BACKGROUND
The Ellis Act sets forth the procedure by which a landlord may go out of business by removing all of his or her rental units in a building from the market. ( Drouet v. Superior Court (2003)
Unlawful detainer actions are authorized and governed by Code of Civil Procedure section 1161 et seq."The statutory scheme is intended and designed to provide an expeditious remedy for the recovery of possession of real property. [Citation.] Unlawful detainer actions are, accordingly, of limited scope, generally dealing only with the issue of right to possession and not other claims between the parties, even if related to the property." ( Larson v. City and County of San Francisco (2011)
Retaliatory eviction, codified at Civil Code section 1942.5, is one such defense. ( Drouet, supra ,
In Drouet , our Supreme Court harmonized the Ellis Act and the retaliatory eviction statute. The landlord and tenants in that case had a long history of conflict. Several months after the tenants requested various repairs, the landlord served notice he was withdrawing his property from the rental
The Drouet court reversed and remanded, concluding the Ellis Act did not supersede the retaliatory eviction statute. ( Drouet, supra , 31 Cal.4th at pp. 593, 600,
The Drouet majority also rejected the tenants' argument that the landlord "should be compelled to prove not merely that he has a bona fide intent to go out of business but also that this bona fide intent was not motivated by the tenant's exercise of rights under subdivisions (a) and (c) of [Civil Code former] section 1942.5." ( Drouet, supra,
Drouet 's interpretation "give[s] effect to the plain language of [ Civil Code section 1942.5 ], including [former] subdivisions (d) and (e), which permit a landlord to go out of business and evict the tenants-even if the landlord has a retaliatory motive-so long as the landlord also has the bona fide intent to go out of business. ... If, on the other hand, the landlord cannot establish a bona fide intent to go out of business, the tenants may rely on [former] subdivisions (a) and (c) to resist the eviction." ( Drouet, supra ,
Bearing these principles in mind, we turn to the facts of this case.
The Parties and Lease
Martin Coyne has owned the real property located at 566-568A Chestnut Street, San Francisco (the Property) since 1996.
De Leo, who was 81 years old at the time of trial, had resided in the cottage since August 1989. Pursuant to an oral lease with the Property's previous owners, De Leo paid $770 per month in rent. After Martin purchased the Property, De Leo paid $800 per month in rent.
2012 Efforts to Move De Leo from the Cottage
The Property was completely occupied by tenants most of 2012. Maria Esclamado, who was also a Coyne Development employee, rented the upper unit for $2,250 per month. De Leo rented the cottage for $800 per month. Karl and Kate Beale rented the middle unit for $2,250 per month. Dan Guenther and his girlfriend rented the lower unit for $1,600 per month.
Martin testified that, sometime in 2012, he decided to move into the cottage. Martin asked De Leo to move to the lower unit in exchange for a reduced rent of $600 per month. Martin could not recall if he communicated, at the time, the reason he wanted De Leo to move.
De Leo then spoke with his son, who expressed concerns about De Leo moving. Neither De Leo's son, nor any other caregiver, would have a place to stay if De Leo moved to the lower unit. Thus, three to four weeks after he initially agreed to move, De Leo called Martin to say he changed his mind. Martin was frustrated and explained to De Leo that he was committed to moving himself and his children into the Property, and the only viable option
In December 2012, Martin transferred ownership of a portion of the Property to three trusts established for the benefit of his children, with Martin's sister, Margaret, acting as trustee. Martin, Michael, Deirdre, and Margaret acting as trustee of the three trusts, also executed a tenancy in common agreement. The amended and restated agreement, effective May 2016, assigned exclusive use of each of the four units as follows: the upper unit to Martin and the trust benefiting Cecilia, the cottage to Martin alone, the middle unit to Martin, Michael, and the trust benefiting Michael, and the lower unit to Martin, Deirdre, and the trust benefiting Deirdre.
In approximately February 2013, Esclamado moved from the upper unit to the lower unit. She paid $1,600 per month in rent. Deirdre moved into the upper unit in March 2013.
Initial Invocation of Ellis Act and First Unlawful Detainer Action
On July 1, 2013, Martin filed a "Notice of Intent to Withdraw Residential Units from the Rental Market" (NOITW) with the San Francisco Residential Rent Stabilization and Arbitration Board (Rent Board). That filing was superseded on August 8, 2013, with a second NOITW. In the second NOITW, Martin listed himself as the occupant of the upper unit, even though he did not reside in that unit until January or February 2016, over two years later.
On receiving notice of termination of his tenancy, De Leo requested an extension of the withdrawal date, based on his age. Martin notified De Leo that his tenancy would be extended to August 8, 2014. Martin also enclosed an amount equal to 50 percent of the relocation assistance to which De Leo was entitled as a senior. Martin also extended the date of withdrawal for the middle unit-the Beales' unit-to August 8, 2014. Martin did not extend the date of withdrawal for the upper and lower units. Thus, the Rent Board
After the cottage's withdrawal date expired without De Leo vacating the premises, Martin filed an unlawful detainer action against De Leo. De Leo successfully challenged the complaint on the ground the notice of termination of tenancy was technically defective. Judgment was entered in De Leo's favor.
Evidence of Continuing Tenancy in Upper Unit
In the meantime, not long after the second NOITW was filed, Cecelia and a friend, Margaret Owens, joined Deirdre in the upper unit. Owens moved into the upper unit in November 2013, and Cecelia followed in December 2013.
Even though the upper unit had been withdrawn from the rental market as of December 6, 2013, Deirdre collected rent from Owens until approximately February 2015. Owens had an oral month-to-month lease and paid $600 per month, primarily in cash.
Second Invocation of Ellis Act and Second Unlawful Detainer Action
Martin was angry that the first unlawful detainer action was unsuccessful. After the action was dismissed, Martin's and De Leo's counsel discussed whether De Leo would be willing to move into the lower unit. These negotiations were not productive and De Leo did not move from the cottage. Martin testified he would no longer agree to De Leo moving into the lower unit because De Leo had publicly protested the attempted eviction. Martin felt De Leo had "dragged [his] name through the mud," and he "didn't want to have to deal with [De Leo] anymore."
In May 2015, Martin, his sister Margaret (as trustee for the three trusts), Esclamado, Deirdre, and Michael filed a third NOITW. The third NOITW
De Leo again claimed an extension of the withdrawal date based on his senior status. Martin did not dispute the extension, and May 8, 2016, was the new date set for the cottage's withdrawal. The Board recorded new Notices of Constraints on Real Property, which provided that the top, middle, and lower units would be withdrawn from the rental market as of September 5, 2015. The cottage would be withdrawn as of May 8, 2016. The notices also described constraints on re-renting the units following the withdrawals ( Gov. Code, § 7060.2 ; S.F. Admin. Code, § 37.9A.)
During the second invocation of the Ellis Act, Martin specifically directed his children that no rent was to be collected. Martin testified that Michael contributed to the mortgage, property taxes, and building expenses. In December 2015, Deirdre vacated the upper unit. Although she continued to claim an ownership interest in the Property, she did not continue to contribute to expenses or discuss moving back into any of the Property's units after she moved out.
Martin testified he moved into the lower unit in August 2015, and then into the upper unit in January or February of 2016. Martin's friend, William Brisbane, also resided with Martin in the upper unit. Brisbane did not pay rent. In April 2016, Vincent Sollini, the son of a friend of Martin's, moved into the lower unit. Sollini paid no rent, considered himself a guest, and would move out if asked.
Martin filed the instant lawsuit for unlawful detainer in May 2016, when De Leo failed to vacate the cottage by its withdrawal date. Martin invoked the superior court's unlimited civil jurisdiction, seeking both possession of the cottage and fair market holdover damages. De Leo answered and alleged as affirmative defenses, inter alia, retaliatory eviction, noncompliance with the Ellis Act, and the Property was not intended to be withdrawn from the rental market.
Trial was to a jury. The jury's special verdict found Martin complied "with the necessary [Ellis Act] procedures" and had "a good faith intention to withdraw [the Property] from the residential rental business." The jury was polled in open court. The jurors were unanimous that Martin had complied with the procedural requirements for withdrawal. With respect to Martin's
The trial court entered judgment for possession in Martin's favor. De Leo filed a timely notice of appeal. Pursuant to a stipulation, enforcement of the judgment was stayed pending appeal, on the condition that De Leo move into the lower unit and deposit $800 monthly with the superior court. (See Code Civ. Proc., § 1176.) The parties also stipulated the appeal would be heard on an expedited basis and we granted, in part, Martin's unopposed motion for calendar preference. (Cf. id ., § 1179a.)
III. DISCUSSION
De Leo contends the trial court abused its discretion in sustaining Martin's objections to various categories of evidence De Leo offered to support his position on the key factual issue of whether Martin had a bona fide intent to withdraw the Property from the residential rental market. ( Drouet, supra , 31 Cal.4th at pp. 599-600,
A. Appellate Jurisdiction
Out of an abundance of caution, we briefly address our appellate jurisdiction. California's courts of appeal lack jurisdiction to hear appeals arising from the limited jurisdiction of the unified trial courts. ( Code Civ. Proc., § 904.1, subd. (a).) A cause of action for unlawful detainer, alleging less than $ 25,000 damages, is such a limited civil case. (Id ., § 86, subd. (a)(4).) Judgments in such matters are appealable to the appellate division of the superior court. (Id. , § 904.2.) The courts of appeal have jurisdiction to hear appeals from judgments arising under superior court unlimited civil case jurisdiction, which requires an amount in controversy of $ 25,000 or more, or which requires relief of a type that cannot be granted in a limited civil case. (Id ., §§ 85, 88, 904.1, subd. (a).)
When Martin's unlawful detainer complaint was filed, it was classified as an unlimited civil case because he prayed for damages in excess of $25,000.
B. Evidentiary Rulings
At trial, De Leo sought to introduce evidence that Martin sold Esclamado a sham ownership interest in the Property, thereby allowing Esclamado to remain as a tenant while Martin professed his intent to withdraw the Property from the residential rental market. Before any testimony was received, Martin moved in limine to exclude, among other things, such sham evidence, as well as all evidence of his behavior during the "previous Ellis Act withdrawal attempt."
In opposing these motions in limine, De Leo made an extensive offer of proof. The documents offered, but not presented to the jury, included documents facially showing Esclamado was deeded a 10 percent interest in the Property in April 2013. The deed was recorded a few months after Esclamado moved into the lower unit, where she had been paying $1,600 per month in rent, and a few months before the first NOITW was filed. Under the terms of the purchase agreement, which was signed in February 2013, Martin sold Esclamado a 10 percent interest in the Property for $500,000, and Esclamado obtained the exclusive right to occupy the lower unit. However, the terms of the sale were unusual. Esclamado did not make any down payment, and her purchase was 100 percent seller-financed by Martin. Esclamado signed a deed of trust and a promissory note in Martin's favor, pursuant to which she was to make monthly payments of interest only, in the amount of $1,583.33. The loan had a five-year term and required a balloon payment at the end. Martin paid all closing costs, including title insurance, except for a $20 notary fee paid by Esclamado. In April 2013, the tenancy in common agreement was amended to reflect Esclamado's ownership and exclusive right to possess the lower unit.
The trial court denied Martin's motion to exclude evidence of his behavior during the previous Ellis Act withdrawal attempt, explaining, "a broad range of evidence may reflect on the issue of [Martin's] intent ... when he announced his intention to withdraw from the rental business, and the court will not foreclose that examination ...." However, it granted Martin's fifth motion in limine, wholly excluding "evidence or argument concerning [Esclamado], her relationship to [Martin], [and] her position as an occupier of the property at the premises or as owner." In granting Martin's latter motion in limine, the trial court concluded any evidence to show the transfer to Esclamado was pretextual or a sham "would lead into a potentially wide reaching inquiry concerning the manner in which title was acquired" and "would introduce matters extraneous [and] would frustrate the summary nature of this unlawful detainer proceeding." The trial court further explained: "The relevance is slight , and any probative value is far outweighed by the probability of undue confusion and prejudice." (Italics added.)
Exclusion of Evidence Regarding Martin's Sale to Esclamado
De Leo contends the trial court abused its discretion in excluding evidence regarding the 2013 sale to Esclamado. He asserts the probative value of this evidence was not slight, but was highly probative of Martin's intent.
Only relevant evidence is admissible. ( Evid. Code, § 350.) Relevant evidence is evidence "having any tendency in reason to prove or disprove any disputed fact that is of consequence to the determination of the action." (Id. , § 210.) The trial court is permitted to "exclude evidence if its probative value is substantially outweighed by the probability that its admission will (a) necessitate undue consumption of time or (b) create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury." (Id. ,
We review a trial court's order to exclude evidence under Evidence Code section 352 for abuse of discretion. ( People v. Williams (1997)
De Leo argues the purchase contract, note, and deed of trust were sham agreements that did not, in substance, alter the tenant-landlord relationship between Esclamado and Martin. He contends the Esclamado evidence was thus highly probative of Martin's intent in 2015 to exit the residential rental market. Martin, on the other hand, contends the evidence was properly excluded for a variety of unpersuasive reasons.
In his first justification for the ruling, Martin argues the trial court "expressly stated" there was no evidence of continuing tenancies, other than De Leo's, during the 2015 Ellis Act withdrawal effort. As a factual matter, the trial court did not "expressly state" there was no evidence Esclamado was a tenant during the second invocation of the Ellis Act. The remark Martin relies on came during a discussion of jury instructions, well after the Esclamado motion in limine had been resolved and all such evidence excluded. Considered in context, the trial court was stating none of the evidence admitted at trial suggested tenancies (other than De Leo's) existed during the second invocation of the Ellis Act. In other words, there was no evidence Sollini or Brisbane were tenants.
Next, Martin attempts to convince us that Esclamado's status as an owner or a tenant is wholly irrelevant due to timing. According to Martin, it does not matter if Esclamado remained, in substance, a tenant after April 2013, because she vacated the Property in June 2015, which was after Martin filed his third NOITW, but before the date Esclamado's unit (the lower unit) was to be withdrawn from the rental market. Martin suggests we must narrowly focus on either his intent with respect to De Leo's unit alone or on his intent with respect to the entire Property only on the second Ellis Act withdrawal dates. He contends any broader focus on his intent will unduly burden a landlord's right to exit the residential rental market. Martin's argument would be better presented to the Legislature. The statute itself
Furthermore, the trial court explicitly rejected Martin's argument that only his actions during the second invocation were relevant in its ruling on another of Martin's motions in limine. To the extent the trial court contradicted itself and later viewed Martin's intent in 2013 as a completely separate issue from Martin's intent in 2015, the trial court acted arbitrarily and capriciously. Drouet emphasized the landlord's re-renting of the premises after a prior Ellis Act eviction is "persuasive evidence" in a subsequent effort to withdraw units from the residential rental market. ( Drouet, supra ,
Finally, Martin asserts broadly there is "no authority for the proposition that [De Leo] can defend termination of his tenancy on a perceived failure to terminate another' s alleged tenancy," particularly when San Francisco maintains ordinances that impose penalties for post-Ellis Act re-rentals. He is correct that both the Ellis Act and municipal ordinances impose penalties on landlords who re-rent withdrawn units in violation of the Ellis Act. ( Gov. Code, § 7060.2 ; S.F. Admin. Code, § 37.9A.) "In order to prevent abuses by landlords who would falsely remove rent-controlled units from the market and then attempt to return them to the rental market at current market rates, the Ellis Act uses a three-tiered timeline, during which a landlord who returns previously withdrawn units to the market suffers a penalty for doing so. ( [Gov. Code,] § 7060.2.) Thus, if the landlord offers the previously withdrawn rental units for rent within two years of their withdrawal, the landlord must offer the unit for rent or lease to the displaced tenant at the previous rental plus any intervening annual adjustments, the landlord is liable to the displaced tenant for actual and exemplary damages, and the landlord may be liable to the local public entity for exemplary damages. ( [ Id .,] § 7060.2, subd. (b).) [¶] If the landlord offers the previously withdrawn rental units for rent within five years
Drouet made clear that evidence controverting the landlord's stated intent was highly relevant. In rejecting the tenants' concern that "the retaliatory eviction defense is 'the only method available to protect one's home from an alleged phony Ellis [Act] eviction,' " the Drouet majority disagreed. ( Drouet, supra ,
Martin overlooks the clear teaching of Drouet : "[A] tenant who believes the landlord's invocation of the Ellis Act ... is phony and that the landlord actually intends to offer the vacated units to new tenants may controvert the landlord's statement of intent." ( Drouet, supra ,
It also appears the trial court mistakenly assumed title issues, of any kind, were entirely off limits in an unlawful detainer case. "In unlawful detainer proceedings, ordinarily the only triable issue is the right to possession of the disputed premises, along with incidental damages resulting from the unlawful detention. ( Larson v. City and County of San Francisco [, supra ,] 192 Cal.App.4th [at p.] 1297 [
In the usual unlawful detainer case, the tenant is estopped from challenging his or her landlord's title because (1) the tenant previously agreed to pay the landlord rent; and (2) if some third party has title to the property, the tenant nonetheless has no right to possession. ( Reay v. Cotter (1865)
De Leo contends he was not challenging his landlord 's title because he did not dispute Martin's title; he was challenging only Esclamado's title. However, even if the landlord's title is deemed at issue, Martin and the trial court misplaced their reliance on the general rule laid out in Martin-Bragg for another reason-it is not an Ellis Act case.
Here, in contrast to the more traditional unlawful detainer cases, it is undisputed the key issue relevant to possession was Martin's intent . (
We have been presented with no compelling reason which would justify precluding full and fair consideration of the key issue underlying possession in this matter (Martin's intent), especially when Martin filed his unlawful detainer action in unlimited civil jurisdiction. (See Ytuarte v. Superior Court, supra ,
Finally, Martin contends De Leo's proffered evidence was irrelevant because it cannot, as a matter of law, support the conclusion he and Esclamado continued to have a landlord-tenant relationship. In particular, Martin points to the grant deed as uncontroverted evidence of Esclamado's status as an owner, not a tenant.
Evidence Code section 662 provides: "The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof." (Italics added.) This section applies "when there is no dispute as to where legal title resides but there is question as to where all or part of the beneficial title should rest." ( Murray v. Murray (1994)
We question whether Evidence Code section 662 would necessarily apply in these circumstances. " Section 662 codifies the common law rule
De Leo's offer of proof showed that the sale's terms suggested the transaction was being used as a pretext to allow Esclamado to remain in possession of the lower unit without obtaining any fee simple interest in the Property. Esclamado purportedly agreed to purchase a 10 percent interest in the Property for $500,000, which does not appear to have any relationship to the valuation of the Property. Esclamado paid no down payment and the entire purchase price was secured by a purchase money deed of trust in Martin's favor, which imposed no personal liability on her. ( Stone v. Lobsien (1952)
A reasonable conclusion could be drawn that, despite the form of the transaction, Esclamado remained, in substance, a tenant-having obtained, in effect, only a present possessory interest in the lower unit, while Martin retained his future, reversionary interest. (See Avalon Pacific-Santa Ana, L.P. v. HD Supply Repair & Remodel, LLC (2011)
The trial court's and Martin's reliance on Santa Monica Rent Control Bd. v. Bluvshtein (1991)
The Second District Court of Appeal affirmed the trial court's judgment of dismissal, reasoning that "the oral agreement did not establish a landlord-tenant relationship" as a matter of law. ( Bluvshtein, supra,
Bluvshtein is distinguishable because the intent of the oral agreement at issue was clear. Furthermore, no extrinsic evidence suggested the Bluvshtein agreement was a sham. In particular, none of the owners were prior tenants of any other owner at the same building before the Ellis Act was invoked. No subset of the owners paid zero consideration for their ownership interests and merely paid interest to another owner in an amount that approximated their prior rent.
Contrary to Martin's suggestion, contract construction does not always present a question of law. "Interpretation of a written instrument becomes solely a judicial function only when it is based on the words of the instrument alone, when there is no conflict in the extrinsic evidence, or when a determination was made based on incompetent evidence. ( Parsons v. Bristol Development Co . (1965)
In contrast to Bluvshtein, the record here shows significant extrinsic evidence in addition to the deed and written agreements. (See Cedars-Sinai Medical Center v. Shewry (2006)
To be sure, the evidence may very well have damaged Martin's case, but Evidence Code section 352 's reference to "prejudice" does not mean "damaging" to a party's case. It means evoking an emotional response having very little to do with the issue on which the evidence is offered. ( People v. Karis (1988)
Rufo v. Simpson, supra,
IV. DISPOSITION
WE CONCUR:
SIMONS, Acting P. J.
NEEDHAM, J.
Notes
Civil Code section 1942.5 was recently amended. At the time relevant herein, the language now appearing in subdivisions (d), (f), and (g) was found in former subdivisions (c), (d), and (e) respectively. (See Stats. 2017, ch. 489, § 6.) Former subdivision (d), provided: "Nothing in this section shall be construed as limiting in any way the exercise by the lessor of his rights under ... any law pertaining to the hiring of property or his or her right to do any of the acts described in subdivision (a) or (c) for any lawful cause." Former subdivision (e) provided: "Notwithstanding subdivisions (a) to (d), inclusive, a lessor may recover possession of a dwelling ... if the notice of termination ... states the ground upon which the lessor, in good faith, seeks to recover possession ... or do any of the other acts described in subdivision (a) or (c). If the statement is controverted, the lessor shall establish its truth at the trial or other hearing ." (Italics added.)
Because Martin Coyne shares the same last name as his children, Deirdre, Michael, and Cecilia, we will refer to all by first name. Martin owns a contracting company, Coyne Development Company (Coyne Development), which employs Deirdre. During some of the time relevant herein, the Property has been owned by Martin, his children, and trusts benefiting his children, as tenants in common. However, Martin is the sole plaintiff in the unlawful detainer action.
According to De Leo, Martin did not state, in 2012, his desire to occupy the cottage.
Martin moved into the lower unit in August 2015. Deirdre vacated the upper unit in December 2015.
At her deposition, Owens testified she was told to pay in cash. At trial, she said the cash payments made balancing her checking account easier. Martin denied telling Owens or Deirdre that Owens should pay her rent in cash.
We need not address De Leo's alternative argument that the evidence was also relevant to whether Martin complied with the procedural requirements of the Ellis Act (Gov. Code, §§ 7060.4, subd. (a), 7060.6 ).
If anything, Martin-Bragg supports De Leo's position. In Martin-Bragg , the unlawful detainer defendant disputed the plaintiff's title to the property, and claimed he owned the property instead. (Martin-Bragg, supra ,
The parol evidence rule generally prohibits the consideration of extrinsic evidence to vary or contradict the terms of an integrated written instrument. (Code Civ. Proc., § 1856 ; Civ. Code, § 1625 ; Casa Herrera, Inc. v. Beydoun (2004)
More interesting for our analysis was the court's observation that rent is defined, "[f]or income tax deduction purposes ... as 'payments required to be made as a condition to the continued use or possession ... of property to which the taxpayer has not taken or is not taking title or in which he has no equity .' (
Nor are we suggesting the trier of fact in all Ellis Act unlawful detainer cases should make similar inquiries whenever a former tenant acquires an ownership interest. Our holding is limited to the unique circumstances presented in this case.
The jury was instructed on the legal requirements for creation of a landlord-tenant relationship: "An owner who invokes the Ellis Act only violates the Act if the owner enters into a landlord-tenant relationship after the effective date of withdrawal. The landlord-tenant relationship is created by a contract between the parties. This contract, known by a variety of names, may be oral or written and express or implied. The contract must show (expressly or from the facts) that the parties intend to create a landlord-tenant relationship and must contain the following: a designation of the parties, a description of the premises, the rent to be paid, the time and manner of payment, and the term for which the tenant will rent the property. Provisions for the payment of rent and a transfer of use and possession of property are essential elements of a lease. Rent is the consideration paid by the tenant for the use, possession and enjoyment of the demised premises. The lease or rental agreement should clearly specify the amount and manner of rent payment." Because De Leo has not urged any error in connection with this instruction, we do not address whether it provided a correct statement of the law.
During its deliberations, the jury also sent a note to the trial judge, which demonstrated the jury's focus on the intent issue.