Action Apartment Ass'n, Inc. v. City

• Decision Date: 02 August 2007
• Docket Number: No. S129448.,S129448.
• Citation: 163 P.3d 89,63 Cal.Rptr.3d 398
• Court: California Supreme Court
• Parties: ACTION APARTMENT ASSOCIATION, INC., et al., Plaintiffs and Appellants, v. CITY OF SANTA MONICA, Defendant and Respondent.

163 P.3d 89

63 Cal.Rptr.3d 398

ACTION APARTMENT ASSOCIATION, INC., et al., Plaintiffs and Appellants, v. CITY OF SANTA MONICA, Defendant and Respondent.

No. S129448.

Supreme Court of California.

August 2, 2007.

Law Offices of Rosario Perry, Rosario Perry, Santa Monica, Robert J. Franklin and Dionne Marucchi for Plaintiffs and Appellants.

Heidi Palutke for California Apartment Association as Amicus Curiae on behalf of Plaintiffs and Appellants.

Nielsen, Merksamer, Parrinello, Mueller & Naylor, John E. Mueller and James R. Parrinello, Mill Valley, for San Francisco Apartment Association, San Francisco Association of Realtors and Coalition for Better Housing as Amici Curiae on behalf of Plaintiffs and Appellants.

Marsha Jones Moutrie, City Attorney, Joseph L. Lawrence, Assistant City Attorney, Barry Rosenbaum, Adam Radinsky, Cara Silver and Eda Suh, Deputy City Attorneys, for Defendants and Respondents.

Stephen L. Collier, San Francisco, for Tenderloin Housing Clinic, Inc., as Amicus Curiae on behalf of Defendants and Respondents.

Michael Jenkins, City Attorney (West Hollywood), J. Stephen Lewis, Alison Regan; Dennis J. Herrera, City Attorney (San Francisco), Burke E. Delventhal, Wayne K. Snodgrass and Marie Crolett Blits, Deputy City Attorneys, for League of California Cities as Amicus Curiae on behalf of Defendants and Respondents.

Jones Day, Scott Bertzyk, Erik K. Swanholt, Los Angeles, Michelle Vizurraga, Rasha Gerges, Los Angeles; Wendy Marantz Levine, Elissa D. Barrett; and Denise McGranahan for Bet Tzedek Legal Services and Legal Aid Foundation of Los Angeles as Amici Curiae on behalf of Defendants and Respondents.

Wartelle, Weaver & Schreiber, Paul Wartelle, San Francisco, and J. Scott Weaver for San Francisco Tenants' Union, San Francisco Housing Rights Committee, St. Peter's Housing Committee and Oakland Just Cause as Amici Curiae on behalf of Defendants and Respondents.

David R. LaBahn, Sacramento; Michael J. Aguirre, City Attorney (San Diego) and Cindy D. Davis, Head Deputy City Attorney, for California District Attorneys Association as Amicus Curiae on behalf of Defendants and Respondents.

MORENO, J.

In this case, we determine whether and to what extent the litigation privilege of Civil Code section 47, subdivision (b), conflicts with and thus preempts a section of the City of Santa Monica's "Tenant Harassment" ordinance. In relevant part, the ordinance authorizes civil and criminal penalties against a landlord who maliciously serves a notice of eviction or brings any action to recover possession of a rental unit without a reasonable factual or legal basis. The Court of Appeal held that the litigation privilege conflicts with and thus preempts the entirety of this section of the City of Santa Monica's Tenant Harassment ordinance. We conclude, however, that while the litigation privilege preempts entirely the second provision of this section regarding filing an action to recover possession of a rental unit, it preempts only partially the first provision regarding serving a notice of eviction.

I. THE CITY'S TENANT HARASSMENT ORDINANCE

In 1979, the City of Santa Monica (City) adopted a rent control charter amendment, which established a rent control board to regulate rentals "so that rents will not be increased unreasonably and so that landlords will receive no more than a fair return." (Santa Monica City Charter, art. XVIII, § 1800.) Pursuant to this charter amendment, the rent control board adopted regulations that established a maximum percentage by which rental rates could increase each year. (Kavanau v. Santa Monica Rent Control Bd. (1993) 19 Cal.App.4th 730, 732, 23 Cal.Rptr.2d 724.)

In August 1995, California enacted the Costa-Hawkins Rental Housing Act (Costa-Hawkins), which established "what is known among landlord-tenant specialists as `vacancy decontrol,' declaring that `[n]otwithstanding any other provision of law,' all residential landlords may, except in specified situations, `establish the initial rental rate for a dwelling or unit.' (Civ.Code, § 1954.53, subd. (a).)" (DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 41, 99 Cal.Rptr.2d 366.) The effect of this provision was to permit landlords "to impose whatever rent they choose at the commencement of a tenancy." (Cobb v. San Francisco Residential Rent Stabilization and Arbitration Bd. (2002) 98 Cal. App.4th 345, 351, 119 Cal.Rptr.2d 741.) The Legislature was well aware, however, that such vacancy decontrol gave landlords an incentive to evict tenants that were paying rents below market rates. (Bullard v. San Francisco Residential Rent Stabilization Bd. (2003) 106 Cal.App.4th 488, 492, 130 Cal. Rptr.2d 819 (Bullard).) Accordingly, the statute expressly preserves the authority of local governments "to regulate or monitor the grounds for eviction." (Civ.Code, § 1954.53, subd. (e).)

A month later, in October 1995, the City enacted its Tenant Harassment ordinance. (Santa Monica Mun.Code, § 4.56.) When the Santa Monica City Council amended the ordinance in 1996, residents testified "that instances of tenant harassment [had] been increasing in the City since the passage of [Costa-Hawkins]—the statewide vacancy decontrol measure." (Santa Monica Ord. No. 1859ccs, § 1, subd. (a).) In addition, "[s]tatistical information supplied by the Rent Control Board staff show[ed] that since the passage of [Costa-Hawkins], controlled rental units [were] being vacated at substantially higher rates." (Santa Monica Ord. No. 1859ccs, § 1, subd. (b).)

The City's Tenant Harassment ordinance prohibits a variety of malicious acts by landlords directed at tenants in rental housing units, including prohibiting a landlord from, for example, abusing a tenant with offensive words, threatening a tenant with physical harm, or interfering with a tenant's right to quiet use and enjoyment of a rental housing unit. (Santa Monica Mun.Code, § 4.56.020.)¹ At issue in the instant case is Santa Monica Municipal Code section 4.56.020, subdivision (i)(1) (hereafter section 4.56.020(i)(1)), which prohibits a landlord from maliciously serving a notice of eviction or bringing any action to recover possession of a rental unit without a reasonable factual or legal basis.

The ordinance provides for both criminal and civil penalties. Any person convicted of violating the ordinance is guilty of a misdemeanor and may be fined in an amount not exceeding one thousand dollars, imprisoned for not more than six months, or both. (Santa Monica Mun.Code, § 4.56.040, subd. (a).) A civil enforcement action may be brought under the ordinance by "[a]ny person, including the City." (Id., subd. (b).) Civil penalties may include the greater of statutory damages in the amount of $1,000 or actual damages, attorney fees and costs, and punitive damages. (Id., subd. (d).) The ordinance also provides that a court may enjoin "[a]ny person who commits an act, proposes to commit an act, or engages in any pattern and practice which violates Section 4.56.020." (Id., subd. (c).)

II. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

In October 2002, plaintiffs Action Apartment Association, Inc., and Doreen Dennis, an owner and manager of multiunit apartment buildings in Santa Monica, filed an amended class action complaint against the City, challenging section 4.56.020(i)(1), which, as noted above, provides: "No landlord shall . . . do any of the following with malice: [¶] . . . [¶] (i)(1) Take action to terminate any tenancy including service of any notice to quit or other eviction notice or bring any action to recover possession of a rental housing unit based upon facts which the landlord has no reasonable cause to believe to be true or upon a legal theory which is untenable under the facts known to the landlord."

Plaintiffs alleged that the City had "engaged in a custom and practice of threatening housing provider class members with criminal and civil prosecution . . . for simply talking to their tenants, and/or serving their tenants or having their attorneys serve their tenants with a Notice to Cure or Quit or Notice to Terminate Tenancy; and/or filing an unlawful detainer complaint or having their attorneys file an unlawful detainer complaint against their tenants." They further alleged that the City had threatened Dennis with criminal and civil prosecution for "speaking to her tenant," and for directing her attorney to serve her tenant with a notice to quit and to file an unlawful detainer lawsuit for the purpose of allowing the owner to retake possession of the rental unit. Plaintiffs contended that section 4.56.020(i)(1) abridges a landlord's rights to free speech, to petition the government for redress of grievances, and to due process under the federal Constitution; violates a landlord's civil rights under title 42 United States Code section 1983; and is preempted by Code of Civil Procedure section 128.7 and the litigation privilege of Civil Code section 47, subdivision (b). With respect to their claim that the litigation privilege preempts section 4.56.020(i)(1), plaintiffs sought a writ of mandate directing the City to "vacate and annul section 4.56.020(i)(1)" as preempted by the litigation privilege. The City demurred as to each cause of action, contending that plaintiffs lacked standing and failed to state a cause of action. The trial court sustained the demurrer without leave to amend and entered judgment for the City.

The Court of Appeal reversed. Without reaching any of plaintiffs' alternative claims, it held that the entirety of section 4.56.020(i)(1) is preempted because it conflicts with the litigation privilege.² It reasoned that "under the litigation privilege, a landlord serving an eviction notice or filing an unlawful detainer is immune from suit based on those notices or filings, and cannot be enjoined from that conduct, even if the motivation is malicious, the factual allegations known to be untrue, and the legal theory untenable under the true facts. Under the ordinance,...