Rich v. Schwab

• Decision Date: 30 April 1998
• Docket Number: No. D026994,D026994
• Citation: 75 Cal.Rptr.2d 170,63 Cal.App.4th 803
• Parties: Irving J. RICH et al., Plaintiffs and Appellants, v. Ronald S. SCHWAB et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

Page 170

75 Cal.Rptr.2d 170

63 Cal.App.4th 803

Irving J. RICH et al., Plaintiffs and Appellants, v. Ronald S. SCHWAB et al., Defendants and Appellants.

No. D026994.

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

April 30, 1998.

Certified for Partial Publication ¹

Rehearing Denied May 27, 1998.

As Modified June 1, 1998.

Review Denied July 22, 1998.

Richard I. Singer and Elvi J. Olesen, San Diego, for Plaintiffs and Appellants.

Stephen P. Oggel, San Diego, Michael Christopher Spata, Chula Vista, G. Steven Andersen, and Andersen, Keleher & Spata, Manhattan Beach, for Defendants and Appellants.

BENKE, Acting Presiding Justice.

In this case we consider the remedies available to mobilehome park tenants when the owners of the park raise the tenants' rent in retaliation for the tenants' efforts to obtain relief from earlier rent increases.

As we explain in greater detail below, the victims of a retaliatory rent increase, including the tenants of mobilehome parks, are entitled to recover punitive damages under CIVIL CODE SECTION 1942.5². Moreover, because the punitive damages available under section 1942.5 are limited by the terms of the statute, they may be imposed without regard to the landlord's net worth. We also conclude that under section 1942.5 tenants are not required to vacate their premises in order to recover punitive damages for imposition of a retaliatory rent increase and that under the statute the trial court was required to award some of the successful tenants the attorney fees they incurred.

Because the trial court's rulings did not permit the tenants to recover all the amounts permitted under the statute, we reverse the judgment in part and remand the case for further proceedings.

I FACTUAL AND PROCEDURAL SUMMARY

The material facts which give rise to the tenants' claims occurred in late 1980 and early 1981. The tenants ³ were all residents of the Rancho Carlsbad Mobilehome Park (Rancho Carlsbad) which was owned by Western Land & Development Company (Western), a partnership. Defendants and appellants Ronald S. Schwab and David F. Dawes were Western's general partners.

In response to a 13 percent rent increase noticed by Western in 1980, the tenants at Rancho Carlsbad sought relief from the Carlsbad City Council. The council prevailed upon the tenants and Western to enter into an agreement to arbitrate the reasonableness of the rent increase. The arbitration agreement was executed on February 25, 1981. Nonetheless on March 2, 1981, Western mailed the tenants notice of yet another rent increase, in the amount of $80 a month, commencing on May 1, 1981.

The tenants vigorously contested the reasonableness of the 1980 rent increase as well the March 2, 1981, $80 increase. Eventually, the tenants were successful in establishing that the rent increases were not reasonable and they obtained a judgment against Western, Schwab and Dawes in the amount of the excessive rent.

In this proceeding, which was separate from the litigation in which they contested the validity of the rent increases, the tenants brought a class action in which they alleged, among other causes of action, that the March 1981 rent increase was imposed in retaliation Trial was conducted in two phases commencing in 1991. In the initial phase, a jury determined the March 1981 rent increase was in fact imposed in retaliation for the tenants' opposition to the earlier rent increase. In the second phase of the trial conducted in 1996, after an intervening bankruptcy proceeding initiated by Dawes, a second jury determined that 423 tenants had left Rancho Carlsbad as a result of Schwab's and Dawes's conduct and had suffered a total of $1.7 million in compensatory damages.

for their efforts to obtain relief from the earlier rent increase.

The jury also imposed against Schwab $1,000 in punitive damages for each of the 653 tenants who had suffered the $80 rent increase. However, following the jury's verdict the trial court refused to award any punitive damages to the 230 tenants who had stayed at Rancho Carlsbad notwithstanding the rent increase. The trial court also refused to award the tenants any of their attorney fees. Thereafter, a judgment against Schwab and Dawes was entered.

Schwab, Dawes and the tenants each appeal from the judgment.

II DISCUSSION

A. Retaliatory Eviction

Before reaching the various contentions of the parties, we believe it will be helpful to briefly set out the origins of the retaliatory eviction doctrine which, in the end, is at the heart of the tenants' claims against Schwab and Dawes.

In Barela v. Superior Court (1981) 30 Cal.3d 244, 249, 178 Cal.Rptr. 618, 636 P.2d 582 (Barela), the Supreme Court stated: "The retaliatory eviction doctrine is founded on the premise that '[a] landlord may normally evict a tenant for any reason or for no reason at all, but he may not evict for an improper reason....' [Citation.]

"The affirmative defense of retaliatory eviction was first recognized by this court in Schweiger v. Superior Court [ (1970) ] 3 Cal.3d 507 [90 Cal.Rptr. 729, 476 P.2d 97]. There, the statutory 'repair and deduct' provision (§ 1942) was construed so as to include protection against eviction for those tenants who exercised their statutory rights. The same year, the Legislature codified this protection in section 1942.5. The statute prohibited landlords from evicting a tenant in retaliation for the tenant's exercise of the right to repair and deduct or the tenant's complaint to the authorities about housing code violations."

In Aweeka v. Bonds (1971) 20 Cal.App.3d 278, 281, 97 Cal.Rptr. 650 (Aweeka), the court held that not only may a tenant use retaliation as a defense to an unlawful detainer action, a tenant may also allege an affirmative cause of action for retaliatory eviction. In Aweeka the tenants gave notice to the landlord that unless repairs to their apartment were made, they would deduct the cost of the repairs from their rent. In response the landlord almost doubled their rent. After they were unsuccessful in obtaining an injunction against enforcement of the rent increase, the tenants voluntarily vacated the premises. In finding that a common law cause of action for retaliatory eviction existed on these facts, the court stated: "We can discern no rational basis for allowing such a substantive defense while denying an affirmative cause of action. It would be unfair and unreasonable to require a tenant, subjected to a retaliatory rent increase by the landlord, to wait and raise the matter as a defense only, after he is confronted with an unlawful detainer action and a possible lien on his personal property." (Id. at p. 281, 97 Cal.Rptr. 650; see also Glaser v. Meyers (1982) 137 Cal.App.3d 770, 776, 187 Cal.Rptr. 242 (Glaser ).)

In 1979 the Legislature repealed section 1942.5 and reenacted it with amendments. (Stats.1979, ch. 652, §§ 1, 2, pp. 2005-2006.) Among the amendments was an express prohibition against retaliation by way of an increase in rent and express protection of tenants who have "lawfully organized or participated in a lessees' association or an organization advocating lessees' rights or has lawfully and peaceably exercised any rights under the law." (§ 1942.5, subd. (c).)

Importantly, and consistent with the earlier holding in Aweeka, the 1979 legislation added subdivisions (f) and (g) to section 1942.5 and therein created statutory rights of action against landlords who unlawfully retaliate against their tenants. Those subdivisions provide as follows: "(f) Any lessor or agent of a lessor who violates this section shall be liable to the lessee in a civil action for all of the following:

"(1) The actual damages sustained by the lessee.

"(2) Punitive damages in an amount of not less than one hundred dollars ($100) nor more than one thousand dollars ($1,000) for each retaliatory act where the lessor or agent has been guilty of fraud, oppression, or malice with respect to such act.

"(g) In any action brought for damages for retaliatory eviction, the court shall award reasonable attorney's fees to the prevailing party if either party requests attorney's fees upon the initiation of the action."

By way of the 1979 enactment of section 1942.5, the Legislature also stated in subdivision (h): "The remedies provided by this section shall be in addition to any other remedies provided by statutory or decisional law."

In sum then tenants who are the victims of retaliatory conduct by their landlords have complementary rights of action both in the common law and under the statutory scheme adopted by the Legislature. (See Barela, supra, 30 Cal.3d at p. 251, 178 Cal.Rptr. 618, 636 P.2d 582; Glaser v. Meyers, supra, 137 Cal.App.3d at p. 776, 187 Cal.Rptr. 242.) With this background in mind we turn to the various contentions of the parties.

B. Schwab's Appeal

On his appeal, Schwab contends alternatively that section 1942.5 does not provide protection to mobilehome park residents and that even if it did provide such protection, that protection has been preempted by the more specific provisions of the Mobilehome Residency Law (MHRL) (§ 798 et seq.). We reject both of these contentions.

1. Section 1942.5, Subdivisions (c) and (f)

The first time this case was before us we accepted, without discussion, the proposition that section 1942.5 applies to leases of mobilehome park spaces. See Rich v. Schwab (1984) 162 Cal.App.3d 739, 743-744, 209 Cal.Rptr. 417.) We also note that in Glaser, supra, 137 Cal.App.3d at page 773, 187 Cal.Rptr. 242, the parties and court made a similar assumption.

Nonetheless in his first argument on appeal, Schwab contends that because he was not in the business of renting dwellings, he was not subject to liability under section 1942.5, subdivision (c). Two important principles of statutory interpretation conflict with this argument: the requirement we consider first and foremost the plain meaning of a statute and the requirement that " ' "A sta...