BRIAN GERAGHTY, Plaintiff and Appellant, v. JOSEPH SHALIZI, Defendant and Respondent.
No. A144743
First Dist., Div. One.
Jan. 24, 2017.
8 Cal. App. 5th 593
Law Offices of Robert De Vries and Robert De Vries for Plaintiff and Appellant.
Dunn & Panagotacos, Ryan T. Dunn; Hayes, Scott, Bonino, Ellingson & McLay, Mark G. Bonino and Gabrielle A. Hollingsworth for Defendant and Respondent.
BANKE, J.—Plaintiff and former tenant Brian Geraghty seeks to undo the deal he made with his former landlord, defendant Joseph Shalizi. Shalizi, as the new owner of a four-unit apartment building in San Francisco, could have evicted Geraghty and moved into Geraghty‘s unit under the owner move-in provisions of San Francisco‘s rent ordinance. Instead, the two reached an agreement whereby Shalizi would pay $25,000 to Geraghty, and Geraghty, in turn, would vacate the apartment and refrain from suing Shalizi for any claim related to the unit, including any claim under the rent ordinance and any claim premised on a right to reoccupy. Shalizi moved in, but later moved out, and Geraghty sued. Shalizi successfully moved for summary judgment. We reject Geraghty‘s principal assertion, that his waiver was invalid and unenforceable, and affirm the judgment.
BACKGROUND
Shalizi was living and working in San Francisco, and renting a studio apartment when, in 2011, he purchased a four-unit apartment building. Three of the units were occupied. Shalizi leased out the vacant one, unit two, to his nephew for $1,100 a month. Shalizi, himself, desired to move into unit four, the unit he thought had the best light and views. Geraghty had been renting unit four for approximately 22 years and was paying $938 a month.
Shalizi‘s attorney, on March 3, 2011, sent Geraghty a letter informing him of Shalizi‘s interest in unit four. The letter stated Shalizi intended to commence an owner move-in eviction (termed an Ellis Act1 “no fault” eviction under the city‘s rent ordinance), but inquired whether the two might reach a voluntary buyout agreement to their mutual benefit. As Shalizi‘s lawyer put it, Geraghty would get a greater monetary payment than required (under the city‘s rent ordinance), Shalizi would avoid “the restrictions resulting” from an owner move-in eviction, and both would save time and stress and the costs of the eviction process. Shalizi and Geraghty eventually entered into an agreement dated May 25, 2011.
The buyout agreement, styled as a court pleading called “Stipulation for Settlement and Entry of Judgment or Dismissal,” promised Geraghty $25,000 (Geraghty had initially demanded $100,000) for leaving and gave him several months to depart (Shalizi had initially wanted a faster departure). Paragraph 10 was a release by which Geraghty released Shalizi from “any and all claims which have or may have arisen from Tenant‘s occupancy of the Premises at any time or any and all claims related to the Premises, including, but not
Geraghty vacated unit four in late July 2011, and Shalizi paid him the promised money. Shalizi then began $70,000 in renovations to prepare the unit for himself and his then-fiancée. He also made arrangements to leave his rented studio, and he and his then-wife moved into the unit in October 2011.
Six months later, Shalizi lost his job. In October 2012, Shalizi found new work, but with a company in the midst of relocating to Santa Clara. On about November 15, 2012, Shalizi moved to Cupertino to be closer to work and rented unit four to a new tenant for approximately $3,700 a month. Had it not been for the change in jobs, Shalizi avers he would have remained in San Francisco.
Meanwhile, Shalizi had discussions with two other tenants in his building. Sheyanne Johnson recalled a summer 2011 conversation during which Shalizi mentioned Geraghty‘s departure and the construction that would be taking place in unit four. He then mentioned an interest “in turning [Johnson‘s] apartment into an owner‘s unit encompassing the storage units that were below [her] unit.” Johnson‘s unit “was on the first floor, but there was some storage units that [Shalizi] wanted to encompass and turn the whole thing into an owner‘s unit and use the backyard and everything.” Johnson never had the impression Shalizi was trying to force her out, just that Shalizi was seeking an opportunity to make a deal. Upon reflection, Johnson decided she wanted to move anyway, and she proposed a $5,000 payment, which Shalizi accepted.
Wiebke Mueller recalled a conversation with Shalizi in the fall of 2011. Shalizi asked if he was “maybe interested in moving somewhere else in the city, [s]ince [he] was working” some distance from the building. Shalizi mentioned he hoped to do some extensive renovations in the building and it might be easier if Mueller‘s apartment were vacant. He also said he wanted to move into Mueller‘s apartment, which Mueller took to mean Shalizi could force him out. Mueller told Shalizi he did not think another “owner move-in” was appropriate given the departures of Geraghty and Johnson, and after some back and forth on that subject, the discussion ended.
After discovering Shalizi had moved and was again renting out unit four, Geraghty sued him in July 2013. Geraghty alleged causes of action for violation of the city‘s rent ordinance, negligence, fraud, and rescission of the buyout agreement.
DISCUSSION
On appeal, Geraghty contends the release in the buyout agreement, and particularly the release of any claims under the rent ordinance, is invalid and cannot shield Shalizi from his claims. Geraghty maintains he presented evidence raising a triable issue that Shalizi procured the release by fraud and asserts the buyout agreement should be rescinded.
Since Geraghty alleged a fraud cause of action, he could couple that with a request for rescission, as “a party who is fraudulently induced to execute a contract can either rescind the contract and restore the consideration, or can affirm the contract and recover damages for fraud.” (Village Northridge Homeowners Assn. v. State Farm Fire & Casualty Co. (2010) 50 Cal.4th 913, 923; see Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 234.)
Putting aside that Geraghty has apparently not, in his pleadings, offered to restore to Shalizi the $25,000 he received under their agreement, we turn to the elements of a fraud cause of action that would underlie a request for rescission. “‘The elements of fraud . . . are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter“); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.‘” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Ibid.)
According to Geraghty, Shalizi made the following false representations to induce him into entering the agreement: (1) Shalizi would move into the premises, and (2) Shalizi would do so in accordance with the San Francisco rent ordinance, which, claims Geraghty, requires a landlord to act in good faith, without ulterior reason, and with honest intent. (See
As to the second alleged misrepresentation, there is no evidence raising a triable issue that Shalizi made it. True, Shalizi‘s lawyer told Geraghty that Shalizi intended to proceed with an eviction under the owner move-in provisions of
Geraghty next maintains the release does not shield Shalizi because it only waives claims that had accrued as of the date of the agreement. However, Geraghty misquotes the release, creating a false impression of what it covers. While he asserts the release provides Shalizi safety from “any and all claims which have or may have arisen from Defendant‘s occupation of the premises at any time, including but not limited to . . . right to reoccupy the premises,” the release, in fact, applies to “any and all claims which have or may have arisen from Tenant‘s occupancy of the Premises at any time or any and all claims related to the Premises, including, but not limited to, claims for wrongful eviction, non-compliance with or violations of the provisions of the San Francisco Residential Rent Stabilization and Arbitration Ordinance and Rules and Regulations, . . . [or the] right to reoccupy the Premises.” (Italics added.) The italicized language, which Geraghty ignores, demonstrates the release covers all claims related to unit four, without time restriction, not only those that have or may have arisen from Geraghty‘s then soon-to-expire occupancy. Indeed, the plain language of the release unequivocally bars claims asserting a right to reoccupy unit four, which could only arise after execution of, and performance under, the agreement.
Finally, Geraghty asserts the release is void to the extent it waives claims under the city‘s rent ordinance. He relies on San Francisco Administrative
We examined the application of
In affirming summary judgment for the landlord, we concluded
In the instant case, litigation did not actually commence. However, Shalizi made clear he intended to institute legal action to recover Geraghty‘s unit if the parties were unable to reach a negotiated agreement. For the same reasons expressed in Kaufman, we conclude the parties should be held to the terms of their negotiated disposition, which afforded benefits to both and avoided burdening the court with a lawsuit.
Furthermore, the history of
Prior to 2002,
That year, the city‘s board of supervisors acted on concerns that “tenants who were not represented by counsel had been subjected to owner move-in or Ellis Act evictions and had waived their rights under the Rent Ordinance, purported to release landlords from their obligations under the Ordinance and/or agreed not to cooperate with the district attorney or the Rent Board.” (Baba, supra, 124 Cal.App.4th at p. 510, italics added.) The board amended both
Under San Francisco Administrative Code amended section 37.10A, subdivision (g), a waiver of ordinance-conferred rights could occur only when: “[T]he tenant is represented by independent counsel and the waiver is approved in a Court-supervised settlement agreement, or by a retired judge of the California Superior Court sitting as a mediator or arbitrator by mutual agreement of the tenant represented by independent counsel and the landlord. Any settlement agreement shall identify the judge, mediator, or arbitrator reviewing the settlement, all counsel representing the parties, and any other information as required by the Board. The landlord shall file a signed copy of the settlement agreement with the Board within ten days of execution. Unless otherwise required by the Board, the copy of the agreement filed with the Board shall redact the amount of payments to be made to tenants.” (
Significantly, these amendments were not presented as permitting buyout agreements for the first time. Rather, the amendments were presented as affording protections for unrepresented tenants and putting into place procedural limitations requiring that tenants have independent counsel. (S.F. Ord. No. 57-02, File No. 011575, pp. 17–18.) Had
In the wake of these amendments, two San Francisco tenants, a city landlord, and two city-based lawyers sued to invalidate portions of them, including
In 2014, three years after Kaufman concluded
An earlier July 2014 report of the Budget and Legislative Analyst‘s Office, likewise, concluded buyouts were “not subject to regulation by the City and County of San Francisco” and “can be cost-effective for landlords compared to No-Fault evictions.” (San Francisco Bd. Supervisors, Budget and Legis. Analyst, Policy Analysis Rep. (July 29, 2014) p. 1 [tenant buyouts].) The report analyzed some 688 buyout offers between 2008 and 2014 reported to the San Francisco Tenants Union, alone, and thus did not reflect the additional, and presumably significant number of, buyouts taking place without the Tenants Union‘s involvement. (See id. at pp. 7–8 & fn. 9.)4
Thus, when the city addressed buyout agreements in late 2014, those agreements were, in the city‘s view, (1) occurring regularly as part of the ordinary give and take of the rental market, and (2) not subject to current regulations.
Rather than outlawing buyout agreements as pernicious to its rent ordinance, and rather than touting the new regulation as an accommodation to landlords previously acting unlawfully, the city‘s 2014 ordinance, as did the 2002 ordinance, recognized the existence of such agreements and set forth a host of procedures to be followed when a landlord and tenant wish to negotiate one. (
Looking at the history of the city‘s legislation concerning landlord-tenant buyout agreements and the case law concerning these agreements, the conclusion is inescapable that these agreements have been utilized and honored for decades. The city has plainly taken this view of its rent ordinance. And the board of supervisor‘s summaries of existing law, when combined with the then-current practices of those in the rental market, are persuasive evidence of what the existing law was. (See Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 195; Eu v. Chacon (1976) 16 Cal.3d 465, 470; New Cingular, supra, 246 Cal.App.4th at pp. 798, 803 & fn. 16 [for “confirmation of the legislative intent, we may look to the pertinent statutory history and the wider circumstances of . . . enactment,” including relevant reports of public agencies].)
Further, “As a general proposition the courts have held that ‘“The very fact that [a] prior act is amended demonstrates the intent to change the pre-existing law. . . .“’ [Citations.] Although a legislative expression of the intent of an earlier act is not binding upon the courts in their construction of the prior act, that expression may properly be considered together with other factors in arriving at the true legislative intent existing when the prior act was passed.” (Eu v. Chacon, supra, 16 Cal.3d at p. 470; cf. Peralta Community College Dist. v. Fair Employment & Housing Com. (1990) 52 Cal.3d 40, 52 [“[t]he declaration of a later Legislature is of little weight in determining the relevant intent of the Legislature that enacted the law [citations] . . . when . . . such declared intent is without objective support in either the language or history of the legislation and (until recently) is contrary as well to the practice of the affected agency“].)
We therefore reject Geraghty‘s assertion that, as of 2011, when he negotiated a buyout agreement with Shalizi, he could not validly release any and all claims under the rent ordinance.6 Because the release extends to all of Geraghty‘s causes of action, the trial court properly granted summary judgment to Shalizi.
The judgment is affirmed.
Humes, P. J., and Dondero, J., concurred.