Cazares v. Ortiz

• Decision Date: 14 July 1980
• Docket Number: No. 150119,150119
• Citation: 168 Cal.Rptr. 108,109 Cal.App.3d Supp. 23
• Court: California Superior Court
• Parties: 109 Cal.App.3d Supp. 23 Petra CAZARES, Plaintiff and Respondent, v. Rita ORTIZ, Defendant and Appellant. Civ. A. Appellate Department, Superior Court, San Joaquin County, California

Page 108

168 Cal.Rptr. 108

109 Cal.App.3d Supp. 23

Petra CAZARES, Plaintiff and Respondent, v. Rita ORTIZ, Defendant and Appellant.

Civ. A. No. 150119.

Appellate Department, Superior Court, San Joaquin County, California.

July 14, 1980.

Emily E. Vasquez, Stockton, for defendant and appellant.

Harold I. Miller, Stockton, for plaintiff and respondent.

DOZIER, Acting Presiding Judge.

This case involves the ubiquitous problem of how damages should be computed for breaches of the implied warranty of habitability, an issue not yet decided by the appellate courts in California.

FACTS

In this unlawful detainer action, the tenant appeals from a judgment of the Stockton Municipal Court in which it was adjudged that the landlord recover the sum of $533.37 back rent plus costs of suit, plus supplemental costs if incurred in effecting eviction, with a stay of execution to December 21, 1979. The judgment was entered on December 26, 1979, so there was, in effect, no stay of execution at all. The tenant, however, left the premises on December 31st.

The tenant, in appealing the judgment, is not seeking a total reversal but simply modification of the judgment by reducing the rental damages from $533.37 to $167.07.

The engrossed settled statement discloses that the court had made a finding of breach of implied warranty of habitability, the factual basis for which is set forth therein. However, the engrossed settled statement does not disclose the problem raised on this appeal. It is necessary to look to Judge Fransen's memorandum decision of December 4, 1979, and his order for entry of judgment of December 26, 1979, in order to find out what actually happened. In his memorandum decision, Judge Fransen first found that the market rental value as impliedly warranted of the rental unit occupied by the defendant was $175. He then found a breach of the implied warranty of habitability which resulted in a 331/3 percent reduction in the habitability of the premises, which he held reduced the market rental value ("as is") to $116.67 (two-thirds of $175) per month from January 1979 to the date of trial, November 27, 1979. He then found that the tenant had paid $750 towards the rent during this period, and deducted that sum from the figure of $1,283.37, representing the reasonable value of the premises at the rate of $116.67 per month from January through November 1979. He thus arrived at the judgment figure of $533.37.

What the defendant tenant is objecting to is the use of the market rental figure of $175 per month as the basis for applying the 331/3 percent reduction in rent, since $175 per month was not the agreed rental. The engrossed settled statement discloses that the agreed rental at the time in question was $125 per month.

There was no expert testimony as to market rental value either as warranted or "as is." The tenant, during her testimony at the trial, made the statement that she had looked for other housing but landlords would not take children and she found the rents were outrageous, but that similar places to hers rented for $175 per month. It was this figure that Judge Fransen therefore adopted as representing the market rental value of the premises during the period in question if it had been in a condition as warranted.

As can be seen, this appeal is not concerned at all with the sufficiency of the evidence to support the finding of breach of implied warranty of habitability, as such evidence is outlined in the engrossed settled statement. Rather, the sole question is whether it was error for Judge Fransen to apply the percentage reduction in use of 331/3 percent to the market rental value of the premises (as warranted) rather than the agreed rent. If the agreed rental of $125 per month had been used, the rental still owing to the landlord by the tenant would be as the tenant contends on this appeal, only $167.07 ($125 times two-thirds, times months of occupancy, minus $750 paid) instead of the judgment figure of $533.37. The defendant simply seeks a modification of the judgment in this respect. She does not contest the award of costs to the landlord despite the fact that she was the prevailing party on the affirmative defense of breach of implied warranty of habitability.

The seminal case in California is, of course, Green v. Superior Court, 10 Cal.3d 616, 111 Cal.Rptr. 704, 517 P.2d 1168.

Here the California Supreme Court decided that to protect poor tenants from exploitation by powerful landlords there should be implied in residential tenancies an implied warranty of habitability, i. e., that the premises were reasonably habitable by average tenants. Through this doctrine aggrieved tenants could protect themselves by withholding a portion of the rent until the premises were made habitable, rather than being left to their impractical remedy of suing the landlord for repair. (84 Harv.Law Rev. 728 (1971) at p. 734.)

There have been only two Court of Appeal cases since Green and many issues are left unresolved. For example, does the implied warranty of habitability apply to protect a tenant who takes occupancy in spite of the patent defects observed by him? KNIGHT V. HALLSTHAMMAR (CAL.APP.) 160 CAL.RPTR. 847^* says No! but this conclusion is questionable in view of the fact that the implied warranty is mandatory and designed to force landlords to fix up dilapidated dwellings whether or not the defects are obvious. (See 84 Harv.Law Rev. at p. 737-6 and Teller v. McCoy (W.Va.) 253 S.E.2d 114 holding that for reasons of public policy the implied warranty of habitability cannot be waived by the tenant ; see also, Foisy v. Wyman, 83 Wash.2d 22, 515 P.2d 160, at pp. 167-68 holding that the warrant cannot be abrogated by tenant-landlord agreement.)

It does appear from Civil Code sections 1941 and 1942 that the tenant in California at the initiation of the tenancy can expressly agree to waive specific defects in habitability. Presumably then he cannot later base a claim of a breach of the implied warranty of habitability on such defects. However, note that the Civil Code sections apply only to the tenant's right to repair and charge the lessor.

A second question of importance is whether there is any difference in application of the doctrine to future rent abatement as distinguished from past tenant damages.

Our present case, however, is clean in the sense that it presents no other problem than the precise one of how the tenant's damages should be computed when he is no longer an occupant. Here the facts are that the tenant occupied premises not obviously defective and occupied them for several years while the rent slowly rose and the condition of the premises steadily deteriorate.

In the United States cases and law reviews, there have been five different methods suggested for computing the tenant's damages for breach of the implied warranty of habitability.

The first two are the alternatives suggested in Green, to wit:

I. Take testimony and find the market rental value monthly of the premises as impliedly warranted and then the market rental value monthly of the premises "as is", i. e., in their eventually known defective condition. The difference between the two multiplied by the months of occupancy is the figure for the tenant's damages.

This method has one theoretical defect and one practical defect. The first is that it is questionable whether there is a "market" rental value of premises patently defective. Is there a "market" rental value for premises known to be substantially in violation of housing codes and thus illegal? (56 B.U.Law Rev., at p. 23 points out the many hazards to expert testimony in this area.)

"In Steinberg v. Carreras, 74 Misc.2d 32, 38, 344 N.Y.S.2d 136, 144 (N.Y.City Civ.Ct. 1973), the trial judge noted: 'I seriously doubt that statistical information about the value of apartments operated in violation of law is available in a form that permits meaningful expert testimony.' " (Moskovitz on Implied Warranty, 62 Cal.Law Rev. 1444, fn. 105, hereafter, Moskovitz.)

The second flaw in this measure is that market rental value can properly be testified to only by experts who qualify by experience and the performance of market studies. In the usual small case like the present no one can afford to hire the experts.

Despite these defects, this method of computing damages was suggested as a possibility in Green, supra, and has been utilized in other states. (See cases cited in 56 B.U.Law Rev., p. 21, fn. 126.)

The method used by Judge Fransen to find market rental value as impliedly warranted ($175) based on the tenant's opinion that similar places which accept children rent for $175 was obviously inadequate as the tenant was in no sense a qualified expert. Admittedly, appellate courts in other states have ignored this obvious deficiency because of the expense of securing experts. (See Teller v. McCoy, supra, 253 S.E.2d 114.)

II. The second method suggested by Green is to first recognize the agreed contract rent as something the two parties have agreed to as proper for the premises as impliedly warranted. Then the court should take testimony and find on the percentage reduction of habitability (or usability) by the tenant by reason of the subsequently ascertained defects. Then reduce the agreed rent by this percentage, multiply the difference by the number of months of occupancy and voila!-the tenant's damages.

This method has the defect of the inherent uncertainty in measuring a percentage of loss of habitability. What percentage should be attributed to loss of aesthetic values (such as cracked and water-stained walls and ceilings) as distinguished from insufficient heat or water? (See, however, Knight v. Hallsthammar, supra, (Cal.App.) * 160 Cal.Rptr. 847, which held that the implied warranty of habitability guarantees only "necessary living requirements" and not amenities or pleasing aesthetics.) How should one measure intermittent defects as compared to continuous ones?

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