Maarten v. Cohanzad

• Docket Number: B308055
• Decision Date: 18 September 2023
• Parties: JIANNA MAARTEN et al., Plaintiffs and Appellants, v. ISAAC COHANZAD et al., Defendants and Respondents
• Court: California Court of Appeals Court of Appeals

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JIANNA MAARTEN et al., Plaintiffs and Appellants, v. ISAAC COHANZAD et al., Defendants and Respondents

B308055

California Court of Appeals, Second District, Third Division

September 18, 2023

APPEAL from an order of the Superior Court of Los Angeles County No 19STCV00094, Yvette Palazuelos, Judge. Reversed and remanded.

Moneymaker &Stewart, Ryan Stewart; Tycko &Zavareei Annick Persinger and Hassan Zavareei for Plaintiffs and Appellants.

Law Office of Parham Hendifar and Parham Hendifar for Defendants and Respondents.

ADAMS J.

The plaintiffs appeal from a trial court order sustaining a demurrer to the class allegations in their complaint against the defendants, their former landlords.^[1] The complaint asserts claims under the Ellis Act (Gov. Code, § 7060 et seq.)^[2] and the Los Angeles Rent Stabilization Ordinance (the Ordinance) (Los Angeles Municipal Code (LAMC) §§ 151.00-151.31), as well as for fraud and violations of section 17200 of the Business and Professions Code (Unfair Competition Law) (Bus. &Prof. Code, § 17200 et seq.). Defendants evicted plaintiffs from their rent controlled apartments. Plaintiffs allege that although defendants declared they were removing the apartment buildings from the rental market entirely, defendants subsequently listed units in the same buildings for rent on Airbnb, thereby returning the properties to the residential rental market while evading rent control laws, before eventually demolishing the buildings to make way for new construction.

Defendants demurred to the class allegations in the complaint, asserting plaintiffs could not satisfy the requirements for class certification as a matter of law. The trial court found plaintiffs could not satisfy the community of interest requirement for liability or damages, and class treatment was not the superior method for resolving the litigation.

We conclude the trial court erred in finding, as a matter of law, that there is no reasonable probability plaintiffs will show common questions of law or fact predominate as to the classwide claims for liability. While plaintiffs' allegations indicate a need for individualized proof or calculation of damages, we conclude plaintiffs have alleged such issues may be effectively managed and there remains a reasonable probability plaintiffs will satisfy the requirements for class certification. We reverse and remand with directions to reinstate the class allegations.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs' original complaint, filed in January 2019, asserted a theory of class liability based on the Ordinance, specifically LAMC section 151.25, which incorporates the Ellis Act. Under that provision, when a rent-controlled property is withdrawn from the rental market pursuant to the Ellis Act, but is offered again for residential rental within two years, "[t]he landlord shall be liable to any tenant or lessee who was displaced from the property for actual and exemplary damages." (LAMC, § 151.25, subd. (A).) Plaintiffs filed a first amended complaint in June 2019. Defendants demurred to the class allegations. The trial court determined plaintiffs adequately alleged that common issues predominated as to their first cause of action for liability under the Ellis Act. However, the court found plaintiffs had not alleged sufficient facts to support a class claim for fraud and thus sustained the demurrer with leave to amend.

Plaintiffs filed a second amended complaint in January 2020. The complaint asserts six causes of action: (1) violation of the Ordinance, LAMC sections 151.00-151.31; (2) fraud; (3) violation of the Unfair Competition Law; (4) breach of the covenant of quiet enjoyment; (5) intentional infliction of emotional distress; and (6) breach of the warranty of habitability. Plaintiffs again seek to bring their first three causes of action on behalf of a class.

According to the complaint, Wiseman Management LLC (Wiseman) owns and operates at least 35 apartment buildings in Los Angeles. Isaac Cohanzad, Benjamin Cohanzad, and Michael Cohanzad control Wiseman and have created various shell companies to carry out their business practices. The complaint alleges Wiseman buys rent-controlled buildings and falsely declares to the City of Los Angeles (the City) that it is permanently removing all of the units in the buildings from the rental market, thus allowing it to evict the existing tenants. Wiseman then offers the apartments for rent on Airbnb before eventually tearing down the properties, constructing new buildings, and renting out new apartments for as much as $5,195 per month.

Plaintiffs resided in apartment buildings owned by defendants and subject to the Ordinance. After defendants submitted a Notice of Intent to Withdraw from the rental market for each building, they received approval from the City to evict the tenants. Defendants used the "standard Ellis Act form" and made identical representations to the City on each form, certifying that all accommodations in the building would be permanently removed from rental housing. Defendants then provided each plaintiff and class member an eviction notice on the City's standard form.

According to the complaint, after the evictions, defendants, using various aliases, offered to rent or re-rented the apartments on Airbnb. The Airbnb postings allow hosts to set a minimum and maximum number of nights for a rental. The complaint alleges that "[v]irtually all the Airbnb listings posted by Defendants had a maximum stay of 1,125 nights, and at least nine included optional 'monthly' rates." Two hosts linked to defendants' properties had at least 42 Airbnb listings each. There were other alias host names as well, with listings matching Wiseman properties for which notices of withdrawal were filed.

Plaintiffs seek to certify a class of "former tenants of any property owned by any Defendant who were displaced from their rental units pursuant to the Ellis Act and where at least one rental unit within their buildings was offered for rent or lease within two years of the date of the withdrawal of that rental unit from the rental market."

Defendants successfully demurred to the second amended complaint. The trial court rejected the prior court's determination that the class allegations in the first cause of action were sufficient. Instead, the court concluded individual issues predominated as to all of plaintiffs' claims, including liability under the Ellis Act. The trial court also found common issues did not predominate as to damages, and that a class action was not a superior means of litigating plaintiffs' first three causes of action. The court granted leave to amend. Plaintiffs timely appealed the trial court order.^[3]

DISCUSSION

I. Standard of Review

Although a court generally determines whether a case is suitable for class treatment on a motion for class certification, it is "beyond dispute that trial courts are permitted to decide the issue of class certification on demurrer." (Schermer v. Tatum (2016) 245 Cal.App.4th 912, 923 (Schermer).) A trial court "may decide the question earlier [than class certification] by sustaining a demurrer to the class action allegations of a complaint only if it concludes as a matter of law that, assuming the truth of the factual allegations in the complaint, there is no reasonable possibility that the requirements for class certification will be satisfied." (Bridgeford v. Pacific Health Corp. (2012) 202 Cal.App.4th 1034, 1041-1042 (Bridgeford), citing Vasquez v. Superior Court (1971) 4 Cal.3d 800, 813; Tucker v. Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 211 (Tucker).)

The general principles that govern review of an order sustaining a demurrer apply to an order specific to class allegations. (Schermer, supra, 245 Cal.App.4th at pp. 922-923; Newell v. State Farm General Ins. Co. (2004) 118 Cal.App.4th 1094, 1100 (Newell).) We review the"' "complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose." [Citations.]' [Citation.]" (Tucker, supra, 208 Cal.App.4th at p. 210; Schermer, at p. 922.) "The court does not, however, assume the truth of contentions, deductions or conclusions of law." (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 (Aubry); Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

"If a demurrer is sustained, we exercise our independent judgment on whether a cause of action has been stated as a matter of law, regardless of reasons stated by the trial court. [Citation.] We affirm if the trial court's decision was correct on any theory. [Citation.]" (Tucker, supra, 208 Cal.App.4th at pp. 210-211.)

II. Applicable Law on Class Certification

A class action may be maintained if there is an ascertainable and sufficiently numerous class, a well-defined community of interest among the class members, and substantial benefits from certification render proceeding as a class superior to other alternatives. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1021 (Brinker); Code Civ. Proc., § 382.) The trial court concluded plaintiffs established there is an ascertainable class and defendants do not challenge that analysis on appeal. Instead, the parties' dispute concerns the community of interest and superiority requirements.

"As part of the community of interest requirement, the party seeking certification must show that issues of law or fact common to the class predominate." (Duran v U.S. Bank National Assn. (2014) 59 Cal.4th 1, 28 (Duran).) This inquiry" 'hinges on "whether the theory of recovery advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to class treatment." [Citation.] "As a general rule...