Campbell v. FPI Mgmt.

• Docket Number: B322619
• Decision Date: 18 January 2024
• Citation: Campbell v. FPI Mgmt., 317 Cal.Rptr.3d 391 (Cal. App. 2024)
• Parties: Ruth CAMPBELL et al., Plaintiffs and Appellants, v. FPI MANAGEMENT, INC., Defendant and Respondent.
• Court: California Court of Appeals

317 Cal.Rptr.3d 391

Ruth CAMPBELL et al., Plaintiffs and Appellants,

v.FPI MANAGEMENT, INC., Defendant and Respondent.

B322619

Court of Appeal, Second District, Division 7.

Filed January 18, 2024

APPEAL from a judgment and post-judgment order of the Superior Court of Los Angeles County, Elihu M. Berle, Judge. Reversed in part and affirmed in part. (Los Angeles County Super. Ct. No. BC576604)

The Law Offices of Alan Himmelfarb, Alan Himmelfarb; Parisi & Havens, David C. Pansi, Suzanne Havens Beekman, Sherman Oaks; and Thomas W. Kielty, Los Angeles, for Plaintiffs and Appellants Rutti Campbell, Jair Campbell, Alexis Gray and Sheila Handy.

Lewis Brisbois Bisgaard & Smith, Jeffrey

A. Miller, Jon P. Kardassakis, Los Angeles, Brittany B. Sutton, San Diego, and Michael K. Grimaldi, Los Angeles, for Defendant and Respondent.

EVENSON, J.^*

The central issue in this appeal is whether tenants in subsidized low-income housing developments have standing to bring suit under the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) against a property management company that terminated their tenancies prematurely pursuant to legally deficient notices. We hold that they do.

Plaintiffs Ruth Campbell, Jair Campbell, and Alexis Gray (collectively the HOME plaintiffs) lived in housing managed by FPI Management, Inc. (FPI) that was federally subsidized pursuant to the HOME Investment Partnerships Program (HOME) of the Cranston-Gonzalez National Affordable Housing Act of 1990 (42 U.S.C. § 12701 et seq.). Under that program, the government provides money to housing owners, and in return it requires the owners to rent apartments to low-income tenants and to follow laws protecting those tenants’ rights—including by giving at least 30 days’ notice before terminating a tenancy. FPI terminated the HOME plaintiffs’ tenancies after providing just three days’ notice. Plaintiffs allege that FPI’s termination of their tenancies with insufficient notice is an unfair business practice actionable under the UCL.

The trial court granted summary judgment to FPI, ruling that the HOME plaintiffs did not suffer an injury in fact as is required to confer standing under the UCL because they remained in possession of their apartments for more than 80 days after receiving the three-day termination notices. However, the HOME plaintiffs have shown that they were prematurely deprived of property rights and subjected to imminent legal peril when FPI provided legally deficient termination notices. The HOME plaintiffs faced these consequences even as they remained in possession of their apartments for more than 30 days. We hold that the HOME plaintiffs’ loss of property rights and exposure to legal peril amount to an injury in fact sufficient to confer standing under the UCL.

A different analysis applies to plaintiff Sheila Handy and the class she represents (collectively, the Section 8 plaintiffs), who lived in housing managed by FPI that was subsidized by section 8 of the United States Housing Act of 1937, as amended (42 U.S.C. § 1437f) (Section 8). The trial court ruled that FPI was not required to provide 30 days’ notice before terminating a Section 8 tenancy. The Section 8 plaintiffs fail to demonstrate that this was error.

In this appeal, plaintiffs contest the trial court’s orders granting FPI’s motion for summary judgment, denying plaintiffs’ motion for summary adjudication, and awarding costs to FPI as the prevailing party. We reverse in part and affirm in part.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs, a group of low-income housing tenants, first brought suit in 2015 alleging a variety of claims against 27 property owners and managers. In the intervening years, the parties and claims have been significantly revised and narrowed.

At issue in this appeal is plaintiffs’ claim in the operative fifth amended complaint that FPI, their former property manager, terminated their tenancies through unlawful notices of termination of tenancy, an unfair business practice under the UCL.

A. FPI Terminates Plaintiffs' Tenancies with Less than 80 Days' Notice

1. Ruth and Jair Campbell

Between 2011 and 2016, Ruth Campbell and her grandson Jair Campbell lived in a federally subsidized apartment in a 49-unit building known as Casa De Angeles in Los Angeles, California.

The owner of Casa De Angeles, AMCAL Casa De Angeles Fund, LP, had received approximately $3.5 million from the City of Los Angeles in 2007 for the purpose of purchasing the property and constructing the building. The City’s subsidy was paid from HOME funds it had received from the United States Department of Housing and Urban Development. In exchange for its receipt of those funds, the property owner agreed to make a certain number of units available to and affordable for low-income households and to abide by the terms of the HOME program.

In March 2009, the property owner retained FPI to manage and lease Casa De Angeles. In November 2011, FPI, acting on behalf of the owner, agreed to rent a HOME-subsidized apartment at Casa De Angeles to the Campbells.

The Campbells allege that during their tenancy, their only source of income was government assistance that came in three separate payments each month. They also allege that, with the knowledge of the building’s management, they regularly had to pay rent late because of the timing of their receipt of the assistance payments.

On March 10, 2015, FPI served the Campbells with a three-day notice to pay rent or quit. The Campbells allege that shortly thereafter the sprinkler system in an upstairs unit flooded their apartment, causing mold and significant damage to their personal property. They further allege that building management refused to offer alternative accommodations or replace their ruined property.

On April 6, 2015, FPI served the Campbells with another three-day notice to pay rent or quit. The Campbells allege they had the ability to pay the demanded rent and attempted to make a partial payment, but FPI would not accept it, Although it. acknowledges the partial payment attempt, FPI asserts that the Campbells never tendered the full amount of back rent it alleges they owed. On April 16, 2015, an unlawful detainer action was filed against the Campbells on behalf of the property owner. The parties ultimately resolved the matter with a stipulation entered on November 18, 2015. Under the stipulation, the Campbells agreed to vacate the unit by January 9, 2016, in exchange for waiver of the alleged back rent.

2. Alexis Gray

In 2016, Alexis Gray lived in a federally subsidized low-income unit in the Terracina Apartments in Los Angeles, California.

The owner of the Terracina Apartments, AMCAL Terracina Fund, L.P., received approximately $5.8 million from the County of Los Angeles’s HOME funds to finance the apartment building in 2012. The owner later retained FPI to manage the property.

In January 2016, Alexis Gray entered a lease to live in one of the HOME-subsidized units on the property. Like the Campbells, Gray’s unit was subject to affordability restrictions that were imposed as part of the property owner’s receipt of the HOME funds.

On February 4, 2016, FPI served Gray with a three-day notice to pay rent or quit. She paid the demanded rent on February 8. FPI served Gray with another three-day notice to pay rent or quit on March 4, 2016. Gray alleges that she later sent management a letter explaining that she was down on her luck, her car was towed, she was working part-time and unable to secure full-time work, and she loved her apartment and wanted to stay there.

FPI served Gray additional three-day notices to pay rent or quit on April 4, May 4, and August 4, 2016. Gray alleges she was turned away when she attempted to pay her August rent. FPI denies this. On August 12, 2016, an unlawful detainer was filed against Gray on behalf of the property owner. After Gray failed to file an answer, the court entered a default judgment and later issued a writ of possession. The sheriff’s department issued a notice requiring Gray to vacate by September 21, 2016. Gray moved out on October 4, 2016.

3. Sheila Handy

Sheila Handy moved into an apartment at Casa De Angeles after signing a lease in September 2009. Handy’s rent was subsidized by Section 8.

On March 10, 2015, FPI served Handy with a three-day notice to pay rent or quit. Handy alleges that she attempted to pay her rent that month, but the mailbox where she regularly deposited rent had been removed and there was no one in the management office to pay. On April 6, 2015, FPI served Handy with another three-day notice to pay rent or quit. Handy alleges that FPI refused her attempt to pay the demanded rent within three days of receiving the notice. FPI denies this and asserts Handy had not paid rent for three months. On April 16, 2015, an unlawful detainer was filed against Handy on behalf of the property owner. Handy ultimately moved out in July 2015, and the action was dismissed.

B. Plaintiffs Bring Suit Against Property Owners and Managers

On March 24, 2015, two tenants filed a class action lawsuit against 27 property owners and managers, including FPI, alleging claims under the UCL and claims for unjust enrichment, injunctive relief, and fraudulent concealment. As the case evolved, the original plaintiffs were eventually replaced by others, including the four plaintiffs who bring this appeal, and the claims were significantly revised.

On January 23, 2019, plaintiffs filed the operative fifth amended complaint, which alleges that FPI and other defendants imposed improper late fees and terminated class members’ tenancies unlawfully with less than 30 days’ notice. On April 10, 2019, the trial court granted plaintiffs’ request to dismiss their late fee claims, as well as the associated plaintiffs and defendants. This left only the plaintiffs who bring this appeal and their allegations that the defendants’ practice of terminating tenancies without 30 days’ notice amounts to an unfair business...