Four Seas Inv. Corp. v. International Hotel Tenants' Assn.

• Decision Date: 06 June 1978
• Citation: 146 Cal.Rptr. 531,81 Cal.App.3d 604
• Court: California Court of Appeals Court of Appeals
• Parties: FOUR SEAS INVESTMENT CORPORATION, Plaintiff, Respondent and Appellant, v. INTERNATIONAL HOTEL TENANTS' ASSOCIATION et al., Defendants, Appellants and Respondents. Civ. 41054.

Page 531

146 Cal.Rptr. 531

81 Cal.App.3d 604

FOUR SEAS INVESTMENT CORPORATION, Plaintiff, Respondent and Appellant, v. INTERNATIONAL HOTEL TENANTS' ASSOCIATION et al., Defendants, Appellants and Respondents.

Civ. 41054.

Court of Appeal, First District, Division 1, California.

June 6, 1978.

As Modified on Denial of Rehearing June 26, 1978.

Hearing Denied Aug. 3, 1978.

Hanson, Bridgett, Marcus, Milne & Vlahos, William J. Bush, Gintjee, Wong & Shortall, San Francisco, for Four Seas Invest. Corp.

Michael G. W. Lee, Hardesty & Lau, Gilbert T. Graham, San Francisco Lawyers' Committee for Urban Affairs, San Francisco, Russell T. Kubota, Asian Law Caucus, Inc., Garrick S. Lew, Minami, Tomine & Lew, Oakland, Raul S. Picardo, Bautista & Bautista, Jeffrey G. Lewis, Senior Citizens Law Program, California Rural Legal Assistance, San Francisco, for appellants; Nelson G. Dong, Morrison & Foerster, San Francisco, of counsel.

NEWSOM, Associate Justice.

This appeal challenges the correctness of a judgment directing a verdict of unlawful detainer, and, in a cross-appeal, the adequacy of damages assessed against the detainer.

A jury trial in the San Francisco Superior Court ended when the jury failed to agree on the issue of liability, whereupon the trial judge after argument directed a verdict in favor of respondent on the issue of liability. The damage issue was then resolved by the jury in favor of respondent in the amount of $4,000.

Judgment was entered on May 3, 1976; on July 7, 1976, respondent's motion for a new trial on the damage issue was denied; the present appeals followed.

The factual background of this turbulent lawsuit may be summarized as follows.

Respondent is a California corporation which on October 31, 1973, purchased the International Hotel, located in downtown San Francisco, from its prior owners through their agent, Milton Meyer & Co.

When it purchased the hotel respondent knew of the existence of appellant, the International Hotel Tenants' Association, a month-to-month tenant of the previous owner, paying rental of $4,000 monthly, which up to mid-1973 had been attempting to negotiate a lease-purchase agreement with its landlord.

Escrow on the sale to respondent closed on December 31, 1973. Shortly thereafter, on January 29, 1974, the City and County of San Francisco filed suit against the former owners to abate the property as a public nuisance. Numerous code violations were listed, and a perusal of the complaint in the light of subsequent events makes it clear that the building was wretchedly substandard.

Respondent, refusing to negotiate with appellants, decided not to contest the action, permitted the city to obtain an abatement injunction and elected to demolish the building as part of a larger contemplated construction project.

Now events speeded up. As respondent's adamancy became clear, appellants heightened their efforts to enlist public and governmental support for their plight.

On September 22, 1974, respondent served a 30-day notice of termination on Diones, manager of the hotel, whereupon appellants discontinued direct rental payments, paying rent instead into an escrow account, refused to vacate, and filed a suit for damages on October 24, 1974.

On November 8, 1974, respondent filed the action for unlawful detainer on which this appeal is founded.

Appellants make three principal contentions in arguing for a reversal of the judgment. They contend that the trial court abused its discretion in directing a verdict for respondent on the issue of liability, in the light of substantial evidence establishing respondent's retaliatory motive in instituting the unlawful detainer action. They further contend that the trial court's jury instructions on the subject of agency constitute reversible error, and, finally, they contend the trial court erred in ruling that the notice to terminate need only have been served on the appellant association.

Respondent on its cross-appeal contends that the damages award of $4,000 was not based on substantial evidence, and that the trial court committed prejudicial error by instructing that, in assessing damages, the jury could consider respondent's alleged breach of the implied warranty of habitability.

I

A review of the record reveals that in negotiating the purchase of the hotel, respondent very well knew of the preexisting strife between its former landlord and tenants, and that the property had become a symbol in a bitter political, economic and sociological struggle among various factions in the community. Interesting though they may be, the origins of that struggle are irrelevant to the resolution of this issue.

The standard used in reviewing the correctness of a directed verdict is well expressed in Estate of Lances (1932) 216 Cal. 397, 14 P.2d 768, where the court stated: "A . . . directed verdict may be granted 'only when, disregarding conflicting evidence and giving to plaintiff's evidence all the value to which it is legally entitled, herein indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff if such a verdict were given.' (Citations.)" (P. 400, 14 P.2d p. 768. Cf. also Dailey v. Los Angeles Unified Sch. Dist. (1970) 2 Cal.3d 741, 745, 87 Cal.Rptr. 376, 470 P.2d 360.)

The so-called "scintilla of evidence" rule has been abandoned, and the test is now grounded on the substantiality of the evidence adduced by the party against whom the directed verdict is sought, viewing it alone and in its most favorable light. (Beck v. Kessler (1965) 235 Cal.App.2d 331, 335, 45 Cal.Rptr. 237.)

Having this well-fixed standard in mind, we can find no error in the trial court's direction of verdict.

A careful scrutiny of the entire record reveals no evidence in support of appellants' defense of retaliatory eviction. Rather, respondent's motivation seems clearly to have been a positive economic interest in gain, or profit.

Retaliatory eviction occurs, as Witkin observes, "When a landlord exercises his legal right to terminate a residential tenancy in an authorized manner, but with the motive of retaliating against a tenant who is not in default but has exercised his legal right to obtain compliance with requirements of habitability. . . ." (3 Witkin, Summary of Cal. Law (8th ed. 1973) Real Property, § 533, pp. 2204-2205.) It is recognized as an affirmative defense in California (cf. Schweiger v. Superior Court (1970) 3 Cal.3d 507, 90 Cal.Rptr. 729, 476 P.2d 97; S. P. Growers Assn. v. Rodriquez (1976) 17 Cal.3d 719, 724, 131 Cal.Rptr. 761, 552 P.2d 721); and as appellant correctly argues, it extends beyond warranties of habitability into the area of First Amendment rights. (Cf. Abstract Investment Co. v. Hutchinson (1962) 204 Cal.App.2d 242, 22 Cal.Rptr. 309, and Green v. Superior Court (1974) 10 Cal.3d 616, 111 Cal.Rptr. 704, 517 P.2d 1168.)

The evidence here, however, falls far short of establishing retaliatory eviction. It is true, as appellants argue, that motive is ordinarily a factual issue to be resolved by the trier of fact, but such an issue cannot be submitted to the jury unless substantial evidence appears in the record to support it. (Haft v. Lone Palm Hotel (1970) 3 Cal.3d 756, 91 Cal.Rptr. 745, 478 P.2d 465.)

The crucial factor which belies the...