McHugh v. Santa Monica Rent Control Bd.

• Decision Date: 17 August 1989
• Citation: 777 P.2d 91,261 Cal.Rptr. 318,49 Cal.3d 348
• Parties: , 777 P.2d 91 Haidy McHUGH, Plaintiff and Respondent, v. SANTA MONICA RENT CONTROL BOARD, Defendant and Appellant; Linda L. SMITH et al., Real Parties in Interest and Respondents; Helen McClellan et al., Interveners and Respondents. L.A. 32062.
• Court: California Supreme Court

Page 318

261 Cal.Rptr. 318

49 Cal.3d 348, 777 P.2d 91

Haidy McHUGH, Plaintiff and Respondent, v. SANTA MONICA RENT CONTROL BOARD, Defendant and Appellant Linda L. SMITH et al., Real Parties in Interest and Respondents Helen McClellan et al., Interveners and Respondents.

L.A. 32062.

Supreme Court of California In Bank.

Aug. 17, 1989.

Rehearing Denied Nov. 1, 1989.

Joel M. Levy, Ralph H. Goldsen, Barbara O'Hearn, Marla Kraus, Barbara Greenstein, Michael Heumann, Santa Monica, Stephen P. Wiman, Marsha Jones Moutrie, Los Angeles, Dennis M. Mullen and Rhodes, Maloney, Hart, Mullen, Jakle & Watters, Santa Monica, for defendant and appellant.

No appearance for real parties in interest.

Christopher M. Harding and Lawrence & Harding, Santa Monica, for plaintiff/respondent.

Marsha N. Cohen as amicus curiae on behalf of defendant and appellant.

Thomas A. Seaton, Oakland, as Amicus Curiae on behalf of respondent.

LUCAS, Chief Justice.

In this appeal we consider whether a provision of the Santa Monica Rent Control Charter Amendment (art. XVIII, Santa Monica City Charter, hereafter Charter Amendment) which provides for administrative adjudication of excess rent claims and imposition of treble damages (id., former ¹ § 1809, subd. (b)) is unconstitutional because it permits the Santa Monica Rent Control Board (Board) to exercise judicial powers in violation of article VI, section 1 of the California Constitution.

We will conclude that administrative adjudication of excess rent claims under the Charter Amendment does not, in and of itself, violate the judicial powers clause. We will hold, however, that imposition of treble damages is a power beyond the Board's authority. We will also conclude that, on the facts of this case, the Board's order, which authorizes immediate rent withholding, violates the judicial powers clause.

I. Facts

A. The Charter Amendment

In April 1979 the voters of the City of Santa Monica adopted by initiative a rent control ordinance to be administered by the Board. The Charter Amendment gives the Board power to promulgate pertinent regulations, and to hear and determine complaints of violations of the system as administered. ( §§ 1803, subd. (g); 1805, subd. (d); former § 1809, subd. (b).)

The Charter Amendment regulates the maximum allowable rents for controlled rental units and authorizes adjustments in maximum rents by way of both general (i.e., "across the board") and individual proceedings. ( §§ 1804, 1805.) Under section 1810, any violation of the Charter Amendment by a landlord constitutes a misdemeanor punishable by a fine of not more than $500 or imprisonment for not more than six months in county jail, or both. Under section 1811, the Board, tenants or landlords of controlled units may seek a court order enjoining violations of the rent control law.

In addition, section 1809 of the Charter Amendment permits a court action for damages. (Id., subds. (a) & (d).) At the time this case arose (see post, fn. 2), subdivision (a) of section 1809 provided: "Any landlord who demands, accepts, receives, or retains any payment of rent" in excess of the maximum allowed under the ordinance or the rules promulgated thereunder "shall be liable ... to the tenant ... for reasonable attorney's fees and costs as determined by the court, plus damages in the amount of five hundred dollars ($500) or three (3) times the amount by which the payment ... received or retained exceeds the maximum lawful rent, whichever is the greater."

Furthermore, former subdivision (b) of section 1809 established an alternative administrative remedy: "In lieu of filing a civil action as provided for in Section 1809(a), the Board shall establish by rule and regulation a hearing procedure [to determine claimed violations of the regulatory system]. After said determination, the tenant may deduct the penalty from future rent payments in the manner provided by the Board." This latter subdivision, with its provision for administrative adjudication of "excess rents," is the focus of our inquiry. ²

Section 1808 provides for review of the Board's decision. "A landlord or tenant aggrieved by any action or decision of the Board may seek judicial review by appealing to the appropriate court within the jurisdiction." The method of "appeal" utilized has been the filing of a petition for writ of administrative mandate pursuant to Code of Civil Procedure section 1094.5.

B. The Proceedings Below

Two tenants, Smith and Plevka, filed an administrative complaint under the Charter Amendment, asserting plaintiff McHugh had charged them excess rent. After a hearing officer made initial determinations and orders, all parties appealed to the Board. The Board held the tenants had been overcharged, and awarded restitution of excess rent as well as treble damages. It expressly authorized Plevka (who remained in possession of the rental unit) to withhold $2,797.91, calculated as follows: $2,448 in treble damages ($816 for excess rent charged before the hearing examiner's findings, multiplied by three) plus $252 (excess rent charged after the hearing examiner's findings) plus $97.91 (interest on excess rents). The Board's order further stated, "The withheld amounts shall not form the basis for an unlawful detainer proceeding based upon non-payment of rent." (See § 1806, subd. (a).) The Board ruled that Smith (who had since vacated the rental unit) was entitled to total recovery of $1,593.08, calculated as follows: $1,411.50 in treble damages ($470.50 in excess rent charged before the hearing examiner's findings, multiplied by three) plus $130 (excess rent charged after the hearing examiner's findings) plus $51.58 (interest on excess rents).

Plaintiff filed a petition for writ of mandate (Code Civ.Proc., § 1094.5) pursuant to section 1808. Subsequently, other landlords were permitted to file a complaint in intervention. Plaintiff's petition sought to compel the Board to set aside its decision on the ground that administrative adjudication of "excess rents" under former section 1809, subdivision (b), violates, inter alia, the judicial powers clause of the California Constitution. (Art. VI, § 1.) Plaintiff also sought to enjoin the Board from acting on any complaints for excess rent under the former subdivision. The intervening landlords sought not only similar declaratory and injunctive relief, but also a declaration that interveners had a constitutional right to jury trial in any "case" for damages or penalties.

After a hearing, the trial court granted plaintiff's and interveners' motions for summary judgment and entered judgment granting the petition for writ of mandate. It issued a peremptory writ ordering the Board to vacate the Plevka and Smith decisions, and declared former section 1809, subdivision (b), of the Charter Amendment "invalid because it requires the ... Board to exercise judicial powers which fall within the ambit of Article VI, Section 1, of the California Constitution." The court issued a permanent injunction prohibiting the Board from proceeding on any pending or future complaint for excess rents under the former subdivision, and declared the Board's regulations invalid insofar as they implemented the former subdivision, but did not address interveners' jury trial claim. The Board appealed.

II. Analysis

A. Background

Article VI, section 1 of the California Constitution provides: "The judicial power of this State is vested in the Supreme Court, courts of appeal, superior courts, municipal courts, and justice courts...." Despite the breadth of that statement, various administrative agencies in this state are authorized by the Constitution to exercise judicial powers. Some of these agencies are created by the Constitution, and are thereby vested with certain judicial powers (e.g., arts. XX, § 22 [Department of Alcoholic Beverage Control]; XII [Public Utilities Commission] ); others have been legislatively endowed with judicial powers pursuant to a specific constitutional authorization (see art. XIV, § 4 [Workers' Compensation Appeals Board]; id., § 1 ["The Legislature may provide ... for the general welfare of employees and for [that purpose] may confer on a commission legislative, executive, and judicial powers"] ). ³ The authority of such agencies to exercise judicial powers is not at issue here.

We have often noted that agencies not vested by the Constitution with judicial powers may not exercise such powers. "[A]rticle VI disposes of all judicial power not expressly disposed of elsewhere in the Constitution.... [A]lthough the Legislature retains the authority to grant a multitude of powers to local bodies pursuant to article XI, powers of a judicial nature are no longer at its disposal." (Strumsky v. San Diego County Retirement Assn. (1974) 11 Cal.3d 28, 42, 112 Cal.Rptr. 805, 520 P.2d 29, italics in original.) ⁴ In this case we must determine whether the challenged Charter Amendment provision unconstitutionally authorizes the Board to exercise "judicial powers" within the meaning of article VI, section 1.

B. The Jersey Maid Decision

Almost 50 years ago we held an ostensibly similar grant of power to an administrative agency unconstitutional under article VI, section 1. (Jersey Maid Milk Products Co. v. Brock (1939) 13 Cal.2d 620, 651-652, 91 P.2d 577; see also Pacific Coast Casualty Co. v. Pillsbury (1915) 171 Cal. 319, 322, 153 P. 24 [commission that is authorized to finally settle liability disputes between employers and employees exercises judicial power] [dictum]; Western Metal Supply Co. v. Pillsbury (1916) 172 Cal. 407, 411-413, 156 P. 491 [same] [dictum].) Plaintiff asserts Jersey Maid controls this case, and requires that we affirm the trial court. As we explain below, however, we decline to apply Jersey Maid 's holding to the challenged remedial powers in this case.

Jersey Maid involved a broad constitutional challenge to the Milk Stabilization Act. In creating the act, the Legislature expressly...