Court Talk

Right to Attempt Tenant Buyouts Protected

by Clifford E. Fried

Kelly Hames v. Citi Properties
Historically, most tenant lawsuits for San Francisco Rent Ordinance violations have been based upon a landlord either losing an unlawful detainer action or wrongfully endeavoring to recover possession of the rental unit. If a landlord lost an eviction case, there was no just cause for eviction and most rent ordinances require just cause to evict.

Likewise, most rent ordinances prohibit any wrongful endeavors to recover possession of a unit from a tenant. Tenant advocates argue that attempting to recover possession from a tenant without having just cause or serving a notice would be a wrongful endeavor and a violation of the law. Attempted tenant buyouts where no just cause is stated in an eviction notice have triggered lawsuits. Even mere informal requests to move have led to legal action.

There is a growing trend in the courts to dismiss tenant lawsuits where the basis for the suit is either a landlord’s request to the tenant to give up the rental unit or where the landlord loses an eviction case. Kelly Hames v. Citi Properties is a good example of a tenant lawsuit being dismissed by the courts.

In Kelly Hames, the tenant filed a lawsuit alleging that her landlord had repeatedly pestered her with phone calls attempting to coerce her into relinquishing possession in exchange for money. The landlord also filed an unlawful detainer action based upon habitual late payment of rent—one of the just causes for eviction under the San Francisco Rent Ordinance. Hames won the unlawful detainer action because her landlord accepted rent after the eviction notice period had expired.

The Hames lawsuit set forth a cause of action for violation of the Rent Ordinance. The Ordinance provides that whenever a landlord endeavors to recover possession of a rental unit in violation of the ordinance, the tenant may sue for treble damages and attorneys’ fees.

The landlord, Citi Properties, filed a special motion to strike the lawsuit as a strategic lawsuit against public participation (commonly referred to as an anti-SLAPP motion). For reasons that weren’t entirely clear, the trial court denied the motion. The landlord filed an appeal.

An anti-SLAPP motion involves a two-part inquiry by the court. First the defendant (here, the landlord) must demonstrate that the challenged lawsuit arises from protected activity, an act in furtherance of the defendant’s right of petition or free speech. Such activity includes any written or oral statement made in connection with an issue under consideration by a judicial body. But even prelitigation statements are within the scope of protected activity if made in anticipation of and in connection with litigation.

When the defendant can show that the activity is protected, then the burden shifts to the plaintiff (here, the tenant) to demonstrate a probability of prevailing in the lawsuit. If the plaintiff fails to carry that burden, the court will strike the lawsuit.

On appeal, the Hames court ruled that the prosecution of an unlawful detainer action is indisputably protected activity within the meaning of the anti-SLAPP law. It appears that the court based its decision on the litigation privilege that litigants possess. In general, when you have a privilege to file a lawsuit, such as an unlawful detainer action, you can’t be sued for filing the action.

The existence of the litigation privilege in the eviction arena is currently the subject of much debate. In fact, the California Supreme Court is reviewing the matter in Action Apartment Association v. Santa Monica. And in another appellate decision, Baba v. Board of Supervisors, the litigation privilege was upheld in the landlord-tenant context. While Baba is a final decision and is binding on trial courts, the Supreme Court’s upcoming decision in Action Apartment Association may effectively reverse, uphold or modify Baba.

The Hames court also ruled that Citi’s alleged buyout efforts were in anticipation of and in connection with the unlawful detainer action and was therefore protected activity. This means that so long as buyout efforts are in connection with an anticipated eviction for, let’s say, habitual late payments of rent or the Ellis Act, the landlord’s activity is protected.

Hames was then required to demonstrate a probability of prevailing in the lawsuit. She failed to do this; she provided no evidence to show that the filing of the unlawful detainer action wasn’t within the scope of the litigation privilege. The court said that the fact that Hames prevailed in the eviction lawsuit because Citi accepted rent, or because of a defect in the service of the eviction notice, doesn’t negate the litigation privilege.

Hames tried to argue that her complaint was based primarily on Citi’s buyout attempts, which were not covered by the litigation privilege. The court disagreed, ruling that these communications may be viewed as anticipatory to the litigation and thus within the scope of the privilege. More importantly, the court said that the buyout attempts by Citi were constitutionally protected free speech, as established in Baba v. Board of Supervisors.

Un Sil McNairy v. C.K. Realty
Most residential landlords are familiar with habitability claims raised by tenants as a defense to nonpayment of rent evictions. Where a unit lacks certain affirmative standard characteristics, or where substantial code violations exist, the law may not require the tenant to pay full rent.

But habitability claims may also be raised in lawsuits filed by tenants against their landlords. While some of these lawsuits are filed in anticipation of an eviction notice being served for nonpayment of rent, a tenant has the statutory right to sue even when rent is being paid.

In recent years, habitability lawsuits are becoming more popular than lawsuits for wrongful evictions. This may have something to do with the judicial system’s increasing acceptance of the litigation privilege and free speech rights held by landlords.

In Un Sil McNairy v. C.K. Realty, 114 tenants successfully sued their landlords for breach of the warranty of habitability and negligent and intentional violations of statutory duties. The trial focused on an infestation of cockroaches and rust in the tap water. The tenants testified at trial that the cockroaches and rusty water left them ashamed, concerned, frustrated and upset. Some tenants were ashamed to invite friends to their units. Others were inconvenienced by the water condition and described themselves as victims of conditions beyond their control. There was little evidence of physical losses or other damages.

The trial court found that the landlords breached the warranty of habitability and violated California Civil Code Sec. 1942.4. It also ruled that the landlords acted with malice in that their conduct was carried on with a willful and conscious disregard for the rights or safety of others. Each tenant was awarded $5,000 in actual damages, $1,000 in special damages and $4,000 in punitive damages.

On appeal, the landlords argued that there was no evidence of liability under Sec. 1942.4 and that an award of actual damages within the meaning of Sec. 1942.4 cannot be premised solely on emotional distress.

Sec. 1942.4 permits a residential tenant to sue for special and actual damages where a landlord demands or collects rent and all of the following conditions exist:

the dwelling substantially lacks certain standard characteristics such as effective waterproofing and weather protection, approved water supply capable of producing hot and cold running water, heat and the absence of garbage, rodents and vermin;
a city inspector has informed the landlord in writing of his or her obligation to abate the nuisance or repair the substandard conditions;
the conditions have not been abated for 60 days beyond the date of the city’s notice to abate and the delay is without good cause; and
the conditions were not caused by an act or omission of the tenant.

The Court of Appeal found sufficient evidence of rusty water and cockroaches, as noted by city housing inspectors, which continued unabated for more than 60 days. There was no evidence that the tenants caused these problems. The court also ruled that the plain language “actual damages” includes damages for emotional distress.

One point not argued by the landlords in this case, that should have been made, was that the property in question didn’t substantially lack any of the characteristics required by law. As pointed out in the court’s opinion, for liability to attach, the conditions must have existed for a substantial period of time. Not having heat or hot water for a day or two doesn’t make the premises uninhabitable.

Another argument landlords should make, whenever possible, is that the tenant caused the conditions or that the tenant interfered with or prevented timely repairs. In fact, in many nonpayment of rent situations, the tenant will delay repair efforts in order to argue that the landlord violated Civil Code Sec. 1942.4. Landlords should carefully document all tenant efforts to interfere with, or prevent, repairs.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. The information within this article is general in nature. Consult an attorney for any specific problem. Clifford E. Fried is a partner with Wiegel & Fried, LLP, 415-552-8230. Copyright © 2007 by SF Apartment Magazine. All rights reserved.