Drouet v. Superior Court

• Decision Date: 11 August 2003
• Docket Number: No. S096161.,S096161.
• Citation: 73 P.3d 1185,31 Cal.4th 583,3 Cal.Rptr.3d 205
• Court: California Supreme Court
• Parties: Joel DROUET, Petitioner, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent; Jim Broustis et al., Real Parties in Interest.

3 Cal.Rptr.3d 205

73 P.3d 1185

31 Cal.4th 583

Joel DROUET, Petitioner, v. The SUPERIOR COURT of the City and County of San Francisco, Respondent;

Jim Broustis et al., Real Parties in Interest.

No. S096161.

Supreme Court of California.

August 11, 2003.

Law Offices of Andrew M. Zacks, Andrew M. Zacks and James B. Kraus, San Francisco, for Petitioner.

Brad Seligman, Berkeley, and Jennifer Cynn for The Impact Fund, Protection and Advocacy, Inc., Legal Aid Foundation of Los Angeles, Public Interest Law Project, East Bay Community Law Center, Lawyers' Committee for Civil Rights of the San Francisco Bay Area and the American Civil Liberties Union of Northern California as Amici Curiae on behalf of Petitioner.

R.S. Radford for Pacific Legal Foundation as Amicus Curiae on behalf of Petitioner.

Law Offices of Paul F. Utrecht and Paul F. Utrecht, San Francisco, for Small Property Owners of San Francisco as Amicus Curiae on behalf of Petitioner.

Wiegel & Fried and Clifford E. Fried, San Francisco, for San Francisco Apartment Association as Amicus Curiae on behalf of Petitioner.

Law Offices of Rosario Perry and Rosario Perry, Santa Monica, for Action Apartment Association as Amicus Curiae on behalf of Petitioner.

No appearance for Respondent.

Law Offices of William M. Simpich, William M. Simpich, Oakland; Law Offices of Philip D. Rapier, Philip D. Rapier, Oakland; Law Offices of Marc S. Janowitz and Marc S. Janowitz, San Francisco, for Real Parties in Interest.

Gen Fujioka, San Francisco; Tom Weathered, Robert Capistrano; Roderick T. Field; and Dara Schur for Asian Law Caucus, Bay Area Legal Aid, The Los Angeles Housing Law Project and The

Western Center on Law & Poverty as Amici Curiae on behalf of Real Parties in Interest.

Daniel Berko as Amicus Curiae on behalf of Real Parties in Interest.

BAXTER, J.

The Ellis Act (Gov.Code, § 7060 et seq.) provides that no statute, ordinance, regulation, or administrative action "shall ... compel the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease." (Gov.Code, § 7060, subd. (a).) A landlord who complies with the Ellis Act may therefore go out of the residential rental business by withdrawing the rental property from the market. (Los Angeles Lincoln Place Investors, Ltd. v. City of Los Angeles (1997) 54 Cal.App.4th 53, 61, 62 Cal.Rptr.2d 600

.) If necessary, the landlord may institute an action for unlawful detainer to evict the tenants and recover possession of the property. (Gov.Code, § 7060.6.)

In unlawful detainer actions, tenants generally may assert legal or equitable defenses that "directly relate to the issue of possession and which, if established, would result in the tenant's retention of the premises." (Green v. Superior Court (1974) 10 Cal.3d 616, 633, 111 Cal.Rptr. 704, 517 P.2d 1168

.) The defense of retaliatory eviction, codified at Civil Code section 1942.5 (section 1942.5), is one such defense. This defense bars a landlord from recovering possession of the dwelling in an unlawful detainer action where recovery is "for the purpose of retaliating" against the tenant because of his or her lawful and peaceable exercise of any rights under the law (§ 1942.5, subd. (c)) or "because of his or her complaints regarding tenantability (id., subd. (a)).

In this case, the tenants have asserted the statutory defense of retaliatory eviction in an unlawful detainer proceeding instituted by the landlord under the Ellis Act. In their view, section 1942.5 can force a landlord to continue to offer the property for rent or lease if the landlord's decision to withdraw the property is motivated by a desire to retaliate against the tenants in the ways prohibited by subdivisions (a) and (c). The landlord, on the other hand, counters that he is entitled to exit the rental business, notwithstanding an allegation of retaliation for tenant conduct, under section 1942.5, subdivision (d), which provides that "[n]othing in this section shall be construed as limiting in any way the exercise by the lessor of his rights under ... any law pertaining to the hiring of property or his right to do any of the acts described in subdivision (a) or (c) for any lawful cause."

We find that the Ellis Act qualifies as a "law pertaining to the hiring of property" under section 1942.5, subdivision (d), and that a landlord's withdrawal of the property from the market is an exercise of "`the right to go out of the rental business'" (First Presbyterian Church v. City of Berkeley (1997) 59 Cal.App.4th 1241, 1253, 69 Cal.Rptr.2d 710

) under that law. We further conclude, in accordance with subdivisions (d) and (e) of section 1942.5, that a landlord's bona fide intent to withdraw the property from the rental market under the Ellis Act will defeat the statutory defense of retaliatory eviction. Because the trial court did not consider the landlord's motion for summary adjudication under this standard, we reverse the Court of Appeal, which had issued a writ of mandate directing the superior court to grant the landlord's motion for summary adjudication, with directions to remand the matter to the superior court for further proceedings consistent with this opinion.

BACKGROUND

Petitioner Joel Drouet (Landlord) owns a two-unit apartment building at 378-380 San Carlos Street in San Francisco. Real parties Jim Broustis and Ivy McClelland (Tenants) occupy the unit at 378 San Carlos Street on a month-to-month basis. Broustis has lived in the unit since 1988; McClelland joined him in early 1999. Over the years, Landlord and Broustis have had several conflicts involving the tenancy. Tenants have alleged, for example, that Landlord illegally attempted to raise the rent, overcharged for utilities, refused to pay interest on security deposits, and violated the lease by refusing to permit Broustis to have a roommate. In April 1999, when Tenants discovered Landlord had failed to pay his share of the garbage bill, they informed him they planned to deduct this amount from their rent. Around the same time, they notified Landlord of a leaking sewage drain and shower wall.

Landlord did not make the requested repairs. Instead, on August 5, 1999, Landlord commenced Ellis Act proceedings on the San Carlos Street units by filing a "Notice of Intent to Withdraw Residential Units from the Rental Market" with the San Francisco Residential Rent Stabilization and Arbitration Board. (Gov. Code, § 7060.4; S.F. Admin. Code, § 37.9A, subd. (f).) That same day, Landlord served Tenants with written notice terminating the tenancy (Civ.Code, § 1946) and requiring them to quit the premises and deliver up possession within 60 days. The notice of intent and a memorandum regarding withdrawal of the units from rent were attached to the notice.

The parties do not dispute that Landlord complied with all Ellis Act procedures. Nonetheless, Tenants did not quit the premises.

Consequently, on October 6, 1999, Landlord filed a complaint for unlawful detainer in the Superior Court for the City and County of San Francisco. Tenants answered the complaint and alleged four affirmative defenses, including retaliatory eviction. Landlord moved for summary adjudication on each of the defenses. The superior court granted the motion in part but, without considering whether Landlord's invocation of the Ellis Act was bona fide, denied it with respect to the defense of retaliatory eviction.

Landlord sought a writ of mandate in the appellate division of the superior court to compel the trial court to set aside the denial of summary adjudication, alleging that the defense of retaliatory eviction is unavailable as a matter of law in unlawful detainer proceedings under the Ellis Act. After briefing and oral argument, the appellate division agreed with Landlord and granted the petition for writ of mandate. It said: "When a landlord has complied with all procedures for withdrawing his rental units from the rental market, his motive for withdrawing the units is irrelevant." The Court of Appeal ordered the case transferred on its own motion (Cal. Rules of Court, rule 62(a)) and, in a published opinion, agreed with the appellate division: "[I]n unlawful detainer proceedings properly commenced under the Ellis Act, a tenant may not raise an affirmative defense of retaliatory eviction to prevent displacement."

DISCUSSION

In a writ proceeding challenging the denial of summary adjudication, we review the trial court's ruling de novo. (Buss v. Superior Court (1997) 16 Cal.4th 35, 60, 65 Cal.Rptr.2d 366, 939 P.2d 766

.) Since there are no disputed issues of fact, we consider only the legal effect of Civil Code section 1942.5 in an unlawful detainer proceeding under the Ellis Act. We examine each statutory scheme in turn.

A. The Ellis Act

The Ellis Act (Act) sets forth the procedure by which a landlord may go out of business by removing rental units from the market. Its intent is "to supersede any holding or portion of any holding" in Nash v. City of Santa Monica (1984) 37 Cal.3d 97, 207 Cal.Rptr. 285, 688 P.2d 894 (Nash) "to the extent that the holding, or portion of the holding, conflicts with this chapter, so as to permit landlords to go out of business." (Gov.Code, § 7060.7.)

Nash involved a section of the Santa Monica City Charter that prohibited landlords from withdrawing rental units from the market absent a removal permit from the Santa Monica Rent Control Board. To obtain a removal permit, a landlord had to show that removal would not and could not displace low- or moderate-income persons, that removal would not adversely affect the city's supply of housing, and that the landlord could not make a fair return on investment by retaining the unit. (Nash, supra, 37 Cal.3d at pp. 100-101, fn. 3,

207 Cal.Rptr. 285,

688 P.2d 894.) In Nash, we rejected a due process challenge to this procedure (id. at p. 103, 207 Cal.Rptr. 285,

688 P.2d 894), even though (as the dissent observed) it compelled a...