Pieri v. City and County of San Francisco

• Decision Date: 21 February 2006
• Docket Number: No. A110571.,A110571.
• Citation: 40 Cal.Rptr.3d 629,137 Cal.App.4th 886
• Court: California Court of Appeals Court of Appeals
• Parties: Jackie PIERI et al., Plaintiffs and Respondents, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Appellants.

40 Cal.Rptr.3d 629

137 Cal.App.4th 886

Jackie PIERI et al., Plaintiffs and Respondents, v. CITY AND COUNTY OF SAN FRANCISCO et al., Defendants and Appellants.

No. A110571.

Court of Appeal, First District, Division 4.

February 21, 2006.

Rehearing Denied March 16, 2006.

Review Denied June 21, 2006.

Andrew Mayer Zacks, James B. Kraus, Paul F. Utrecht, Zacks Utrecht & Leadbetter, P.C., San Francisco, for Plaintiff-Respondent.

Dennis J. Herrera, San Francisco City Atty., Wayne K. Snodgrass, Vince Chhabria, Deputy City Attys., Office of the City Attorney, San Francisco, for Defendant-Appellant.

RIVERA, J.

The City and County of San Francisco (the City) appeals after the trial court granted the petition for writ of mandate of Jackie Pieri, Lavinia Turner, and Small Property Owners of San Francisco (collectively Pieri), concluding the City's relocation assistance ordinance on its face violated the Ellis Act (Gov.Code,¹ § 7060 et seq.). We reverse.

I. BACKGROUND

Jackie Pieri and Lavinia Turner own residential rental properties in San Francisco which they seek to remove from the rental market. Small Property Owners of San Francisco is an organization seeking to promote home ownership in San Francisco. They filed a petition for writ of mandate on March 2, 2005, alleging the City's relocation assistance ordinance (ordinance No. 21-05), which required landlords to provide relocation assistance to their tenants when removing property from the rental market (S.F. Admin. Code, ch. 37, § 37.9A, subd. (e)(3)), facially violated the Ellis Act. The petition alleged the relocation ordinance was not reasonably related to the tenants' need for assistance, and therefore impermissibly placed a prohibitive price on the right to withdraw property from the rental market. The trial court granted the petition, ruling that the relocation ordinance facially violated the Ellis Act.

II. DISCUSSION

The Ellis Act was passed in response to a 1984 ruling of the California Supreme Court, Nash v. City of Santa Monica (1984) 37 Cal.3d 97, 207 Cal.Rptr. 285, 688 P.2d 894, which permitted a city to restrict the circumstances in which owners of residential properties could evict tenants in order to withdraw from the rental market. (See Channing Properties v. City of Berkeley (1992) 11 Cal.App.4th 88, 91, 14 Cal.Rptr.2d 32 (Channing Properties); § 7060.7.) It provides that no public entity may "compel the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease, except for [certain] guestrooms or efficiency units within a residential hotel ...." (§ 7060, subd. (a).)

The City's relocation ordinance requires owners of residential rental properties who seek to withdraw from the rental market to provide monetary relocation assistance to their tenants. As pertinent here, it requires that landlords who wish to withdraw all the rental units in a building from rent or lease provide each tenant $4,500, with a maximum payment of $13,500 per unit. (S.F. Admin. Code, ch. 37, § 37.9A, subd. (e)(3).) The City contends this requirement is proper under the Ellis Act, which provides: "Notwithstanding Section 7060, nothing in this chapter does any of the following: [¶] ... [¶] (c) Diminishes or enhances any power in any public entity to mitigate any adverse impact on persons displaced by reason of the withdrawal from rent or lease of any accommodations." (§ 7060.1.)²

The trial court concluded the language of section 7060.1, subdivision (c) allows public entities to require mitigation only for low income residents, and that an ordinance requiring relocation assistance regardless of income offended the purposes of the Ellis Act by "prevent[ing] all but the wealthiest landlords from going out of the rental business." To the extent the relocation ordinance conflicts with state law, it is preempted by the state law and is void. (See Reidy v. City and County of San Francisco (2004) 123 Cal.App.4th 580, 587, 19 Cal.Rptr.3d 894 (Reidy); Cal. Const., art. XI, § 7.) We review the trial court's interpretation of the Ellis Act de novo. (See Reidy, at p. 586, 19 Cal. Rptr.3d 894.)

The trial court's conclusion that the Ellis Act allows relocation assistance only for low income tenants was derived not from the current statutory language but from Channing Properties, a case interpreting an earlier version of section 7060.1, subdivision (c). At the time Channing Properties was decided, section 7060.1, subdivision (c), provided as follows: "Notwithstanding Section 7060, nothing in this chapter does any of the following: [¶] ... [¶] (c)(1) Diminishes or enhances any power which currently exists or which may hereafter exist in any public entity to mitigate any adverse impact on persons displaced by reason of the withdrawal from rent or lease of any accommodations in any residential hotel, as defined by Section 50519 of the Health and Safety Code, which is expressly reserved, or generally used, for occupancy by lower income households, as defined by Section 50079.5 of the Health and Safety Code. [¶] (2) The reference to residential hotels in paragraph (1) is not intended by the Legislature to diminish or enhance any power which currently exits or which may hereafter exist in any public entity to require those same actions for other types of accommodations." (Stats. 1985, ch. 1509, § 1, pp. 5560-5561.)

The plaintiff in Channing Properties challenged a Berkeley law requiring that landlords wishing to remove residential property from the rental market provide six months' notice and pay $4,500 per unit for relocation expenses. (Channing Properties, supra, 11 Cal.App.4th at pp. 91-92, 14 Cal.Rptr.2d 32.) The question facing the court was whether then section 7060.1, subdivision (c)(2) authorized public entities to require relocation assistance for all displaced tenants, or whether it allowed such assistance only for lower income tenants in accommodations other than residential hotels. (Channing Properties, at pp. 98-99, 14 Cal.Rptr.2d 32.) Division Two of the First Appellate District noted that former section 7060.1, subdivision (c)(1) was a "carefully worded statute affording protection to a specifically defined group, low income tenants in residential hotels." (Channing Properties, at p. 99, 14 Cal. Rptr.2d 32.) If then subdivision (c)(2) were interpreted to allow cities to require relocation assistance for all displaced tenants, regardless of income, former subdivision (c)(1) would be meaningless because there would be no need to specify that such assistance could be required for low income tenants of residential hotels. An interpretation restricting the assistance authorized by then subdivision (c)(2) to low income tenants "retain[ed] subdivision (c)(1)'s focus on lower income tenants but clarifie[d] that the specific reference to residential hotels in subdivision (c)(1) [did] not preclude cities from acting to mitigate the effects of removal of rental housing on lower income tenants in other types of housing." (Channing Properties, at p. 99, 14 Cal.Rptr.2d 32.) Furthermore, according to the court, such a construction would effectuate the Ellis Act's purpose of "`alleviat[ing] the plight of landlords'" because to allow relocation assistance for all tenants as a condition of removing rental housing units from the market would "place a potentially insurmountable obstacle in the path of landlords wishing to leave the business." (Id. at p. 99-100, 14 Cal.Rptr.2d 32.) "In the absence of any indication in the statutory language that the Legislature intended to extend protection to tenants other than the lower income tenants identified in section 7060.1, subdivision (c)(1)," the court construed then subdivision (c)(2) to apply only to lower income households. (Channing Properties, at pp. 100-101, 14 Cal.Rptr.2d 32.)

The Legislature amended the Ellis Act in 2003. Section 7060 was amended to exempt certain guestrooms and efficiency units in residential hotels from the reach of the Ellis Act. (§ 7060, subd. (a).)³ At the same time, section 7060.1, subdivision (c) was amended to eliminate the references to residential hotels used for occupancy by lower income households and other types of accommodations (Stats. 1985 ch. 1509, § 1, pp. 5560-5561), and instead to provide simply that the Ellis Act does not diminish or enhance any public entity's power "to mitigate any adverse impact on persons displaced by reason of the withdrawal from rent or lease of any accommodations."

Pieri argues, and the trial court agreed, that Channing Properties limitation on relocation assistance to lower income tenants survived the elimination of the statutory language upon which it was based. We see no basis for such a conclusion. As the court noted in Channing Properties, the intent shown in the wording of former section 7060.1, subdivision (c), was to protect lower income tenants. (Channing Properties, supra, 11 Cal.App.4th at p. 99, 14 Cal.Rptr.2d 32.) No such limitation on the legislative intent appears in the current statutory language. The Legislature has shown that it can draft language intended to protect only lower income tenants. In eliminating such language, and in including "persons displaced by reason of the withdrawal from rent or lease of any accommodations" (§ 7060.1, subd. (c), italics added), we can only conclude the Legislature meant what it said.

We are not persuaded otherwise by Pieri's argument that the Legislature did not express an intent to overturn the rule of Channing Properties. It is true that "it should not be presumed that the legislative body intends to overthrow long-established principles of law unless such intention is made clearly to appear either by express declaration or by necessary implication." (People v. Davenport (1985) 41 Cal.3d 247, 266, 221 Cal.Rptr. 794, 710 P.2d 861.) However, even if the court's construction in Channing Properties of former section 7060.1, subdivision (c) qualified as a ...