Peviani v. Arbors at Cal. Oaks Prop. Owner, LLC.

• Decision Date: 09 March 2021
• Docket Number: E073950
• Citation: 277 Cal.Rptr.3d 223,62 Cal.App.5th 874
• Parties: Kelley PEVIANI et al., Plaintiffs and Appellants, v. ARBORS AT CALIFORNIA OAKS PROPERTY OWNER, LLC. et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

62 Cal.App.5th 874

277 Cal.Rptr.3d 223

Kelley PEVIANI et al., Plaintiffs and Appellants,

v.ARBORS AT CALIFORNIA OAKS PROPERTY OWNER, LLC. et al., Defendants and Respondents.

E073950

Court of Appeal, Fourth District, Division 2, California.

Filed March 9, 2021

The Weston Firm and Gregory S. Weston, San Diego, for Plaintiffs and Appellants.

Lester & Cantrell, Riverside, Mark S. Lester and Colin A. Northcutt for Defendants and Respondents.

OPINION

MILLER, Acting P. J.

In a fifth amended class action complaint, Kelly Peviani, Judy Rudolph, and Zachary Rudolph (collectively, plaintiffs), on behalf of themselves and others similarly situated, sued Arbors at California Oaks Property Owner, LLC and JRK Residential Group, Inc. (collectively, defendants). The lawsuit included eight causes of action: (1) false advertising ( Bus. & Prof. Code, § 17500 ); (2) breach of the implied warranty of habitability; (3) nuisance; (4) breach of the implied covenant of good faith and fair dealing; (5) bad faith retention of security deposits; and (6) three causes of action for unfair competition ( Bus. & Prof. Code, § 17200 ). Plaintiffs moved for certification of two classes. The trial court denied the motion. Plaintiffs contend the trial court erred by denying their class certification motion. We reverse.

PROCEDURAL HISTORY

A. FIFTH AMENDED COMPLAINT

Defendants owned and operated an apartment complex in Murrieta known as The Arbors at California Oaks Luxury Apartments (the property). Kelly Peviani rented an apartment at the property from September 2016 to March 2017. Judy¹ and Zachary rented an apartment at the property from February 2014 to May 6, 2017.

Plaintiffs alleged the following facts: "Defendants advertise with colorful brochures and promising language that the Property is a safe, habitable, and luxurious place to live, with numerous amenities including a playground, cabanas and lounges, tennis and basketball courts, a rock climbing wall, gym, and pools and heated spas. [¶] But the Property is nothing of the kind. Instead, the Property is littered with used condoms, drug use, broken security gates, violence, is devoid of security patrols, and police are called to the complex on a regular basis. The pools are dirty, and the fitness equipment is broken. The complex is unsafe for tenants, especially children, and does not deliver on its material promises."

The first cause of action was for false advertising. ( Bus. & Prof. Code, § 17500.) Plaintiffs alleged that defendants' brochure showed renovated interiors, "quality plush carpeting," "sparkling swimming pools," heated spas, cabanas and lounges, a tennis/basketball court, a fitness center, a rock climbing wall, a community game room, a Wi-Fi café, barbeque grills, a picnic area, a dog park, a playground, a garden, a carwash area, and central heating and air conditioning.

Plaintiffs alleged that defendants' website showed pictures of "glistening pools, and manicured gardens." The website discussed assigned covered parking and a 48-hour maintenance commitment. Defendants also advertised the property on other websites, such as apartments.com and forrent.com. On those websites, the advertisements for the property described granite countertops, hardwood floors, full size washers and dryers in the apartments, controlled access to the property, and a smoke-free property.

Plaintiffs alleged the foregoing advertisements were false. They alleged the apartments were not newly renovated and carpeting was not plush. For example, "[t]he Rudolphs had mushrooms growing out of their carpet." They alleged the fitness equipment was dirty and broken; the swimming pools were dirty and diseased; the hot tubs were green with algae; the assigned parking rules were not enforced; the 48-hour maintenance promise was not kept; there was violence, crime, and drug use in the area of the barbecues, playground, and dog park; the property was not smoke-free; and the water connection in the carwash area was non-functioning.

The second cause of action was for breach of the implied warranty of habitability. Plaintiffs alleged the property lacked an adequate amount of trash receptacles, which caused trash to overflow, and the trash emitted a foul odor. In the common areas of the property, there were dog feces, used condoms, garbage, and rodents. The third cause of action was for nuisance. The fourth cause of action was for breach of the implied covenant of good faith and fair dealing. For the third and fourth causes of action, plaintiffs cited the same facts as those alleged in the second cause of action.

The fifth cause of action was for bad faith retention of security deposits. Kelly Peviani paid a security deposit of $1,175 when she moved into the property. When Peviani moved out of the property, she "thoroughly cleaned the apartment and left the apartment with no damage." Defendants retained $586.52 of Peviani's security deposit. Defendants deducted the following from the security deposit: $165.17 for "prorated paint"; $95 for housekeeping; $66.26 for industrial cleaning; $70 for carpet cleaning; $60 for reglazing the bathroom vanity; $111.51 for the February 2017 "UBill"² ; and $18.58 for the final "UBill" that pertained to March 1 through March 5, 2017.

When the Rudolphs moved into the property in February 2014, they paid a security deposit of $225. When the Rudolphs moved out of the property in May 2017, defendants retained the entire security deposit and billed the Rudolphs an additional $178.69, for a total amount of $403.69. The charges consisted of $116.99 for "prorated paint"; $60 for housekeeping; $66.26 for industrial cleaning; $60 for carpet cleaning; $79.30 for the April 2017 "UBill"; and $21.14 for the final "UBill" that pertained to May 1 through May 8, 2017. After plaintiffs' counsel became involved, defendants canceled the $178.69 bill and returned the Rudolphs' security deposit to them.

Plaintiffs alleged that defendants had a pattern and practice of improperly retaining security deposits by charging for normal wear and tear, adding frivolous charges, charging for repairs that were never performed, charging for unrepaired damage caused by previous tenants, and charging for utility bills that were already paid.

The sixth cause of action was for unfair business practices. ( Bus. & Prof. Code, § 17200.) Plaintiffs alleged defendants' conduct was unfair because (1) they falsely advertised the property, as described in the first cause of action; (2) the property was untenantable, as described in the second cause of action; and (3) when residents wanted to terminate their leases early, they must pay the current month's rent in full, two more months of rent in full, and a buyout fee in an amount greater than one month's rent—plaintiffs alleged the fees were an unlawful "liquidated damages clause" because the fees exceeded defendants' damages from an early-lease termination.

The seventh cause of action was for unlawful business practices. ( Bus. & Prof. Code, § 17200.) Plaintiffs alleged defendants' conduct was unlawful because of the facts alleged in the first, second, and fifth causes of action. The eighth cause of action concerned fraudulent business practices. ( Bus. & Prof. Code, § 17200.) Plaintiffs alleged defendants engaged in fraudulent business acts by utilizing false advertising as described in the first case of action.

Plaintiffs prayed for (1) an order requiring defendants to remedy the habitability problems; (2) an order enjoining defendants from engaging in deceptive business practices; (3) an order requiring defendants "to engage in a corrective advertising campaign"; (4) an order enjoining defendants "from withholding security deposits for ordinary wear and tear and without providing proper documentation"; (5) an order declaring leases are voidable for class members; (6) reformation of the leases; (7) an order enjoining defendants from engaging in unfair business practices; (8) an order requiring defendants to disgorge any unjust enrichment that resulted from their false advertising; (9) restitution in the amount of $15,000,000 for the false advertising and habitability issues; (10) damages of $10,000,000 for the withholding of security deposits; (11) pre and postjudgment interest; (12) punitive damages; (13) attorney's fees; and (14) costs.

B. MOTION FOR CLASS CERTIFICATION

Plaintiffs moved for certification of two classes. Plaintiffs asserted the property included 460 apartments. The first class would concern the false advertising and habitability issues (the advertising and habitability class). The people in that class would be all persons who paid rent at the property from March 15, 2013, to the present.

Plaintiffs asserted that common issues of law and fact predominated in the advertising and habitability class. Plaintiffs contended "[t]he warranty of habitability claims here involve only the common areas of [the property]." In regard to false advertising, they asserted there was common evidence reflecting defendants made false claims on a website, in a brochure, and during tours of the property.

The second class would focus on the security deposit issues (the security deposit class). The people in that class would be "[a]ll former residents who paid security deposits at [the property] (excluding officers, directors, and employees of Defendants), and to whom Defendants did not return more than $125 of the security deposit within 21 days of the vacation of the apartment from March 15, 2013 to the present."

Plaintiffs contended that common issues of law and fact predominated in the security deposit class. Plaintiffs asserted, "There is common proof that Defendants have a policy of applying improper charges to security deposits regardless of cleanliness or damage. [Citations.] In addition, there is common proof that Defendants have a policy of failing to provide the required documentation to tenants within 21 days of move-out."

In addition to their own declarations, plaintiffs offered the...