DANGER PANDA, LLC, etc., Plaintiff and Appellant, v. NANCY ANN LAUNIU et al., Defendants and Respondents.
No. A149062
First Dist., Div. Four
Apr. 4, 2017
10 Cal. App. 5th 502
DANGER PANDA, LLC, etc., Plaintiff and Appellant, v. NANCY ANN LAUNIU et al., Defendants and Respondents.
Law Office of Paul J. Katz, Paul J. Katz; Zacks & Freedman and Andrew Zacks for Plaintiff and Appellant.
Dowling & Marquez and Curtis F. Dowling for San Francisco Apartment Association as Amicus Curiae on behalf of Plaintiff and Appellant.
Tenderloin Housing Clinic, Inc., Stephen L. Collier and Raquel Fox for Defendants and Respondents.
OPINION
RUVOLO, P. J.—
I. INTRODUCTION
Danger Panda, LLC (plaintiff), filed this unlawful detainer action against Nancy Ann Launiu, Nancy‘s adult son Donn, and Donn‘s wife Olga (collectively, defendants).1 Plaintiff alleged defendants have refused to vacate a unit in a building that plaintiff withdrew from residential rental use pursuant to the Ellis Act. (
The appellate division of the superior court affirmed the trial court‘s order, but then certified the matter for transfer to the Court of Appeal to settle the
II. STATUTORY OVERVIEW
A. Two Statutory Schemes
In 1979, the San Francisco Board of Supervisors enacted the Rent Ordinance ” ‘because the lack of affordable rental housing in San Francisco was creating hardships on senior citizens, persons on fixed incomes, and low- and moderate-income households. [[¶]] When adopting the Rent Ordinance, the Supervisors created a five-member Rent Board charged with safeguarding tenants from excessive rent increases, while also assuring landlords fair and adequate rents consistent with federal anti-inflation guidelines. . . . The Supervisors conferred on the Rent Board a range of powers and duties, including the power to “Promulgate policies, rules and regulations to effectuate the purposes of this Chapter.” (
In 1985, the California Legislature passed the Ellis Act, which provides that no public entity may “compel the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease, except for [certain] guestrooms or efficiency units within a residential hotel . . . .” (
“The Legislature enacted the Ellis Act following the California Supreme Court‘s opinion in Nash v. City of Santa Monica (1984) 37 Cal.3d 97, upholding a city ordinance that required owners of residential rental property to obtain a permit before they could remove property from the rental market. [Citation.] ‘[T]he Act was intended to overrule the Nash decision so as to permit landlords the unfettered right to remove all residential rental units from the market, consistent, of course, with guidelines as set forth in the Act and adopted by local governments in
In May 1986, following the passage of the Ellis Act, the Rent Ordinance was amended to add
There is no dispute in this case that the board of supervisors has the authority to require landlords to provide financial relocation assistance to tenants displaced by an Ellis Act eviction under
B. Relocation Assistance for Ellis Act Evictions
The nature and scope of the relocation assistance benefit conferred by
In September 1994, the board of supervisors approved an amendment to former section 37.9A(f) that limited “payment of relocation assistance to tenants in lower income households.” (Ord. No. 320-94, p. 1, capitalization omitted.) Payments under this version of former section 37.9A(f) were expressly referred to as “relocation payments” and were expressly limited to “tenants who are members of lower income households, who are elderly, or who are disabled . . . .” (Ord. No. 320-94, at p. 5.) An elderly or disabled tenant was entitled to a higher fixed payment. Payments that were due for a unit that was occupied by more than one tenant were to “be divided equally among all the occupying tenants, excluding those tenants” who were entitled to separate payments due to their elderly or disabled status. (Id. at pp. 6-7.)
In December 1999, the board of supervisors passed an ordinance that increased “the amount of relocation payments made by landlords to low-income tenants evicted pursuant to the Ellis Act . . . .” (Ord. No. 5-00, p. 1, capitalization omitted.) Pertinent provisions were amended to provide that “Tenants who are members of lower income households . . . and who receive a notice to quit based upon
In December 2004, the board of supervisors amended
Under
III. FACTUAL AND PROCEDURAL BACKGROUND
A. The Complaint
In April 2015, plaintiff filed a wrongful detainer complaint against defendants in which it alleged the following facts:
Plaintiff owns a building on Bartlett Street which includes “Unit 308A,” a residential unit. Defendants and Donn and Olga‘s minor son David occupy Unit 308A pursuant to a 1971 rental agreement between Nancy and plaintiff‘s
Relying on these general allegations, plaintiff alleged that it complied with all lawful provisions of the Ellis Act and the Rent Ordinance, and was therefore entitled to recover possession of its property from defendants and to damages for the fair market rental value of the premises. After plaintiff made multiple attempts to serve defendants personally with the summons and unlawful detainer complaint, the court authorized service by posting and mailing.
B. The Motion to Quash
On May 20, 2015, defendants filed a motion to quash service of the summons and wrongful detainer complaint. Among other things, defendants argued that plaintiff did not comply with
C. Superior Court Orders
On June 1, 2015, the trial court granted defendants’ motion to quash service of the summons and unlawful detainer complaint. In a brief order filed that day, the court found: “Plaintiff failed to tender a statutory relocation payment to defendants’ minor child David Launiu pursuant to Rent Ordinance
On July 15, 2016, the appellate division of the superior court filed an order affirming the superior court‘s ruling. The court clarified that the dispute was not about whether plaintiff paid the correct total amount under the Ellis Act, but rather whether the amount was properly allocated among the tenants. The court found that the amount was not properly allocated for the following reasons: (1) David was a tenant because he was “entitled to occupy the premises“; (2) David‘s status as a minor did not preclude him from receiving a check; and (3) if plaintiff had “properly divided the relocation payments in to [sic] four checks, David and his parents would have received an additional $650.”10 The appellate panel rejected plaintiff‘s contention that, even if the payments were not properly allocated, plaintiff substantially complied with the Ellis Act. According to the court, “since the relocation payments and the
The appellate panel also rejected plaintiff‘s contention that the motion to quash was barred by equitable estoppel. Plaintiff had argued that defendants were estopped to contest the allocation of the relocation payment because they accepted plaintiff‘s checks without objection, and if they had informed plaintiff of the issue regarding David‘s status, plaintiff could have sent new checks long before the unlawful detainer complaint was filed. In rejecting this equitable claim, the appellate panel found that the Ellis Act does not impose any obligation on defendants to raise this issue with plaintiff, and that there was insufficient evidence that defendants “deposited the checks and intentionally remained silent as to the relocation payments.”
IV. DISCUSSION
A. Issue Presented
The question presented to this court is whether a minor displaced by an Ellis Act eviction is a tenant entitled to a relocation payment under
As noted above, the appellate panel concluded that “since the relocation payments and the definition of a tenant owed those payments are expressly stated in the Ellis Act, the section must be strictly complied with.” The premise of this statement is erroneous.11 The Ellis Act does not expressly address relocation payments or define the term “tenant.” However, as noted above, the Ellis Act does recognize a public entity‘s authority to mitigate the
B. The Rent Ordinance Definition of a Tenant
As reflected in our statutory overview,
However, the general “Definitions” section of the Rent Ordinance contains the following definition: ”Tenant. A person entitled by written or oral agreement, sub-tenancy approved by the landlord, or by sufferance, to occupy a residential dwelling unit to the exclusion of others.” (
The parties disagree about whether David fits within the Rent Ordinance‘s general definition of a tenant. Construing section 37.2(t) according to its plain language, a tenant is a person who is entitled to occupy a residential unit (1) to the exclusion of all others and (2) pursuant to a written agreement; oral agreement; subtenancy approved by the landlord; or sufferance.
The first of these requirements, the right to occupy to the exclusion of others, is a key characteristic of a leasehold, which distinguishes a tenancy from a mere license. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1040.) Payment of rent is the consideration for this right to exclusive possession. (Avalon Pacific-Santa Ana, L.P. v. HD Supply Repair & Remodel, LLC (2011) 192 Cal.App.4th 1183, 1190 [“A lease is both a conveyance of an estate in real property and a contract between the lessor and the lessee for the possession and use of the property in consideration of rent.“]; see also 12 Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 517, p. 593.) Thus, an occupant of a rental unit who does not have the right to exclusive possession and the concomitant obligation to pay rent does not meet the generally accepted common law definition of a tenant. Nor does he or she fall within the section 37.2(t) definition of a tenant quoted above.
In the present case, the complaint alleged that Unit 308A is occupied pursuant to a written lease agreement. That agreement, which was incorporated into the complaint, was executed between plaintiff‘s predecessor in
However, David is a minor without capacity to enter into a rental contract or to incur an independent obligation to pay rent. (
Defendants argue that the complaint allegation acknowledging that David occupies Unit 308A pursuant to Nancy‘s written lease agreement establishes that David “is a tenant under the Rent Ordinance because he is a lawful occupant of the premises.” The lower courts reached similar conclusions. Without discussion, the trial court found that David is entitled to a relocation payment because he “has a right to occupy the premises with his parents/grandmother.” The appellate panel also found that “the definition in section 37.2(t) clearly states that a person is a tenant so long as they are entitled to occupy the premises.” In fact, though, section 37.2(t) does not state that every lawful occupant of the premises is a tenant, but rather that a tenant is a lawful occupant who acquired the right to exclusive occupancy in one of the specified ways.
Considering the Rent Ordinance as a whole reinforces the conclusion that “lawful occupant” and “tenant” are not interchangeable terms. According to plaintiff‘s calculations, the Rent Ordinance uses the word “occupants” about 40 times and the word “tenant” hundreds of times. For our purposes, we focus on three examples.
First, as previously noted,
Thus,
A second example that the Rent Ordinance distinguishes between legal occupants and tenants is found in
By describing newborn children and new family members of the tenant as occupants rather than tenants in their own right,
Our final example of the fact that the Rent Ordinance distinguishes between a lawful occupant and a tenant is found in
Second, in contrast to
Furthermore, because
C. Case Law
Defendants contend that the common law “is not determinative of this appeal, because the Rent Ordinance has specifically defined those who are tenants under the Ordinance in Section 37.2(t).” But defendants ignore language in section 37.2(t) that, as discussed above, is consistent with the traditional definition of a tenant.
Instead, defendants maintain that California courts have “repeatedly” interpreted the Rent Ordinance definition of a tenant to include “all lawful occupants of a dwelling.” The cases defendants cite fall into two general categories, one addressing lawful occupancy and the other addressing the rights of a minor child. As discussed below, these cases are not directly on point, and, to the extent they are relevant, they reinforce the conclusions outlined above.
1. Lawful Occupancy
Defendants posit that the fact David cannot be a party to a lease agreement does not preclude him from qualifying as a tenant under the Rent Ordinance because case law establishes that a lawful occupant of a San Francisco rental unit can be a tenant entitled to Rent Ordinance protection even absent an agreement to pay rent. (Citing Parkmerced Co. v. San Francisco Rent Stabilization & Arbitration Bd. (1989) 215 Cal.App.3d 490 (Parkmerced).)
In Parkmerced, supra, Clarence Honey rented a San Francisco apartment pursuant to a 1976 lease agreement. In 1981, Honey‘s sister, Margot Abenheim, moved into the apartment with Honey. From 1981 until 1985, Honey renewed his lease annually and listed Abenheim‘s name on the renewal. During this entire period, Abenheim used her own personal check to pay monthly rent for the apartment. Then, in 1985, Honey moved out. The landlord issued a new lease in Abenheim‘s name, informing her that she could remain in the apartment only if she agreed to a rent increase that was higher than the maximum amount of allowable rent the landlord could
The Parkmerced appellate court found that Abenheim was already a tenant protected by the rent increase limitations of the ordinance when the landlord generated a new lease agreement purporting to raise Abenheim‘s rent after Honey moved out of the apartment, explaining: “Since 1981 Parkmerced was aware of, and by its silence agreed to, Abenheim living in the apartment with her brother. Each year Honey submitted to Parkmerced an application for lease rental which listed Abenheim as an occupant of the apartment; pursuant to paragraph 25 of Parkmerced‘s lease these applications were incorporated into Honey‘s leases. Thus, because Abenheim was entitled to occupy the unit pursuant to a written agreement—Honey‘s leases—she falls squarely within the purview of section 37.2(r).”12 (Parkmerced, supra, 215 Cal.App.3d at p. 494, italics omitted.)
In reaching its conclusion, the Parkmerced court faulted the trial court for “ignor[ing] the fact that the ordinance protects those who legally occupy a rental unit, regardless of the basis of the person‘s obligation to pay rent.” (Parkmerced, supra, 215 Cal.App.3d at p. 494.) The Parkmerced court also disagreed with the lower court‘s summary conclusion that Abenheim had no obligation to pay rent until she signed her own rental agreement in 1985. (Id. at p. 495.) Citing authority recognizing that an obligation to pay rent can arise by operation of law based on occupancy accompanied by the owner‘s consent, the Parkmerced court rejected the notion that without a written lease, Abenheim could not have had an obligation to pay rent. (Ibid.) Finally, the Parkmerced court found that “interpreting the Rent Ordinance to extend protection to tenants based on legitimate occupancy is in keeping with the purpose of the legislation.” (Ibid.) The court reasoned that a ” ‘clear objective’ ” of the Rent Ordinance was to extend ” ‘some measure of protection to tenants in residence . . .’ [citation]” and that there was “absolutely no indication that this protection was intended to be limited to those tenants who sign formal lease agreements.” (Parkmerced, at p. 495, italics omitted.)
Aside from Parkmerced, defendants contend that a “long and uncontroverted line of appellate authority” establishes that the Rent Ordinance definition of a tenant “includes all lawful occupants of the dwelling.” But the cases they cite do not support this claim. For example, defendants rely on Aguirre v. Lee (1993) 20 Cal.App.4th 1646, 1653, for the proposition that “[t]he Ordinance focuses on occupancy as the factor that triggers rent control protection. [Citation.]” In that case, a San Francisco tenant was displaced temporarily from her leased residential unit due to earthquake damage. After making the necessary repairs, the landlord leased the unit to a third party in violation of the rights of the tenant. In the landlord‘s appeal from a jury verdict in favor of the tenant, the Aguirre court rejected the argument that the displaced tenant was not protected by the Rent Ordinance because the ordinance only protects tenants in occupancy. Nothing the court said supports defendants’ contention in this case that all lawful occupants of a rental unit are by definition tenants under section 37.2(t) of the Rent Ordinance.
Defendants contend Cobb v. San Francisco Residential Rent Stabilization & Arbitration Bd. (2002) 98 Cal.App.4th 345 (Cobb), illustrates that the Rent Ordinance definition of a tenant includes “occupancies created by consent and acceptance of rent.” It is not clear why defendants believe this proposition is relevant, particularly in light of the fact that section 37.2(t) states that a tenant can acquire the right to exclusive position by means of an oral agreement. Furthermore, Cobb is factually and legally inapposite. In that case, Richard Passalacqua was an adult when he went to live with his mother in a San Francisco apartment she rented. The landlord did not give his permission but knew that Passalacqua was living in the unit. Almost two years later, in May 1998, Passalacqua‘s mother moved out of the
2. A Minor‘s Occupancy Pursuant to a Written Lease
Insisting that a “tenant‘s child may be a tenant protected under the Rent Ordinance,” defendants direct our attention to Mosser Companies v. San Francisco Rent Stabilization & Arbitration Bd. (2015) 233 Cal.App.4th 505 (Mosser Companies) and T & A Drolapas & Sons, LP v. San Francisco Residential Rent Stabilization & Arbitration Bd. (2015) 238 Cal.App.4th 646 (Drolapas).
Mosser Companies, supra, 233 Cal.App.4th 505, was a dispute regarding a rent increase at a San Francisco apartment. In 2003, the Govender family moved into the apartment pursuant to a written lease agreement. Although Mr. and Mrs. Govender were the only “tenants” identified in the lease, it was undisputed that the landlord approved the occupancy of the three Govender children who were all minors at the time the lease was signed. (Id. at p. 509.) Nine years later, the Govender parents decided to move. By that time, two of the children had left home, but 23-year-old Brian continued living in the apartment.
After the Govender parents moved out, the landlord served notice that it was raising Brian‘s rent, which triggered a dispute about whether the increase was authorized by
The Govenders objected that the rent increase was unlawful because, even though the parents were no longer living in the apartment, Brian “was an original occupant entitled to continued rent control.” (Mosser Companies, supra, 233 Cal.App.4th at p. 509.) However, the landlord claimed that the statutory phrase “took possession” in
Affirming a judgment precluding the landlord from increasing Brian‘s rent, the Mosser Companies court concluded that “[t]he plain meaning of an ‘original occupant who took possession of the dwelling or unit pursuant to the rental agreement’ (
Drolapas, supra, 238 Cal.App.4th 646, was another case addressing whether a rent increase was authorized by
Defendants mistakenly rely on Mosser Companies and Drolapas. The primary issue in both of these cases was how to interpret statutory language in the Costa-Hawkins Act, specifically, the words “occupant” and “possession” in
To summarize our conclusions, the general definition of a tenant set forth in section 37.2(t) of the Rent Ordinance does not embrace a minor child who legally occupies a rental unit.
We emphasize that the question before us is not whether the San Francisco Board of Supervisors has the authority under the Ellis Act to confer a section 37.9A(e) relocation benefit on a child. Rather, we hold only that a minor is not a tenant entitled to a separate relocation payment under
V. DISPOSITION
The July 15, 2016 order by the appellate panel is reversed and this case is remanded for further proceedings consistent with this decision.
Reardon, J., and Rivera, J., concurred.