Court Talk
by Clifford E. Fried
Castaneda v. Olsher
For the past several years, California judges have struggled to define the limits of a landlord’s liability for a tenant’s injuries resulting from third-party criminal conduct. In the recently decided case of Castaneda v. Olsher, the California Supreme Court recognized that a residential tenant’s behavior and known criminal associations may, in some circumstances, oblige a landlord to evict the tenant.
Ernest Castaneda was shot and injured while he was a bystander to a gang confrontation involving a resident of the mobile home across the street from his. George Olsher owned the mobile home park in which Castaneda and the other resident lived. Castaneda sued the park owner, contending Olsher had a duty not to rent to known gang members or to evict them when they harass other tenants. The trial court dismissed Castaneda’s case, but the Court of Appeal reversed the decision.
On review by the Supreme Court, it was held that landlords generally have no duty to reject prospective tenants they believe, or have reason to believe, are gang members. The court said to recognize such a duty would tend to encourage arbitrary housing discrimination and would place landlords in the untenable situation of facing potential liability no matter what choice they make about a prospective tenant.
With regard to eviction, the court agreed that a residential tenant’s behavior and known criminal associations may, in some circumstances, create such a high level of foreseeable danger to others that the landlord is obliged to take measures to remove the tenant from the premises. However, the court said that the facts known to Olsher didn’t make a violent gang confrontation involving his tenants so highly foreseeable as to justify imposition of a duty to undertake eviction proceedings. In other words, the decision to evict must be based upon the facts and circumstances of each case.
Here were the facts in Olsher. A couple of months before the shooting, Castaneda’s grandmother complained to the onsite manager that gang members were congregating in the mobile home across the street from hers and were breaking outdoor lights. Another resident testified about gang members drinking alcohol outside of their mobile home and acting in a rude manner. There was also evidence of gang-related graffiti, gunshots (with no injuries) and drug dealing at the park. The landlord said he could do nothing to evict and recommended that park residents call the police.
A landlord generally owes a tenant the duty to take reasonable steps to secure areas under the landlord’s control against foreseeable criminal acts of third parties. However, the existence and scope of the duty in each case is a question of law for the court to resolve. Based upon the facts presented in this case, the court examined: first, the duty to refuse to rent housing to members of street gangs; second, the asserted duty to evict gang member tenants; and third, other security measures that Castaneda asserted should have been taken.
The first duty, the court concluded, cannot be imposed except under circumstances where gang violence is extraordinarily foreseeable. The second, the court concluded, exists where violence involving gang member tenants is highly foreseeable, which didn’t exist in this case. With regard to security measures, the court said the evidence was legally insufficient to show their absence contributed causally to Castaneda’s injuries.
The court recognized that gang activity can often subject residents of an apartment building or mobile home park to unacceptable levels of fear and risk. However, the court would not impose a duty on landlords to withhold rental units from those they believe to be gang members. Nor would such a duty be consistent with the state’s public policy of fair housing. Allowing landlords to refuse rentals to suspected gang members would lead to many cases of arbitrary discrimination on the basis of race, ethnicity, family composition, dress and appearance or reputation.
In ruling on the duty to evict known street gang members, the court noted that the expense of evicting a tenant isn’t necessarily trivial and that the eviction leaves the unit vacant for some period. The court also recognized more difficulties where a municipality requires the landlord to provide and prove a cause for eviction. And the court noted that the eviction of a hostile tenant could subject the landlord or property manager to retaliatory harassment or violence. All of these factors led the court to establish a very high level of foreseeability of violence before there would be a duty to evict. Because it wasn’t highly foreseeable that Castaneda’s neighbors would commit violence upon Castaneda by shooting him, Olsher had no prior duty to evict.
The court also analyzed a landlord’s duty to hire and deploy security guards to prevent gang violence and to maintain brighter lights in common areas. With regard to security guards, there must first be prior similar incidents on the property or other sufficiently serious indications of a reasonably foreseeable risk of violent criminal assaults. In Castaneda’s case, the court said that security guards and better lighting wouldn’t have made a difference.
Action Apartment Association v. City of Santa Monica
The California Supreme Court has clarified the right of a landlord to serve eviction notices without fear of being sued for wrongful eviction or violating local eviction ordinances. At issue in Action Apartment Association v. City of Santa Monica was the validity of a new Santa Monica law prohibiting landlords from maliciously serving an eviction notice or bringing any action to recover possession of a rental unit without a reasonable factual or legal basis. Violation of the new law could result in civil and criminal penalties.
The Supreme Court ruled that the litigation privilege partially preempts the provision regarding the service of an eviction notice and completely preempts that portion of the Santa Monica law regarding filing an action to recover possession of a rental unit.
Action Apartment Association challenged the new law, claiming that the City of Santa Monica had threatened housing providers with criminal and civil prosecution for simply talking to their tenants, serving their tenants with notices to perform or quit or notices terminating tenancy, and filing unlawful detainer complaints against their tenants. The trial court ruled against Action, but the Court of Appeal reversed the decision.
On review by the Supreme Court, the court struck down most of the Santa Monica law because it conflicted with the litigation privilege that arises out of state law. The privilege, codified as Civil Code Sec. 47(b), provides that a publication or broadcast made as part of a judicial proceeding is absolutely privileged, irrespective of its maliciousness.
The purpose of the privilege is to afford litigants and witnesses the utmost freedom of access to the courts without fear of being subsequently harassed by related tort lawsuits. In the landlord-tenant arena, it protects landlords from wrongful eviction or rent ordinance violation claims simply because the landlord files an eviction lawsuit. In order to achieve the purpose in curtailing these derivative lawsuits, the litigation privilege is given a broad interpretation by the courts.
The Supreme Court acknowledged the legitimate purpose of the new Santa Monica law: to protect the city’s residents from abuse by landlords. But the court said a legitimate purpose doesn’t justify enforcement of a law that discourages all landlords, including those motivated by honest intentions, from initiating unlawful detainer actions.
The court concluded that the litigation privilege conflicts with and, thus, preempts Santa Monica’s law, which authorized a lawsuit based upon a landlord bringing an action to recover possession of a rental unit based upon facts that the landlord had no reasonable cause to believe to be true or upon a legal theory which is untenable under the facts known to the landlord.
As far as serving an eviction notice, the Supreme Court ruled that because a factual inquiry is required in order to determine whether a particular eviction notice is privileged, it is impossible to conclude that the litigation privilege would bar every action arising under the new Santa Monica law authorizing suits based upon unfounded notices of eviction.
The court said that the Santa Monica law, and presumably any similar law, would be preempted in regard to eviction notices to the extent it prohibits, criminalizes, and establishes civil penalties for eviction notices where litigation is contemplated in good faith and under serious consideration. But this would be a factual decision for the trial courts to make.
Nicole Daro v. Superior Court of
the City & County of San Francisco
Invoking the Ellis Act to recover possession of rental units and creating a tenancy-in-common to market and create exclusively owner-occupied units has been approved by the Court of Appeal. Daro v. CCSF answers many questions that homebuyers and developers may have had about the sale of TIC interests and related Ellis Act evictions.
In places like San Francisco, Los Angeles and Oakland, there has been a severe shortage of affordable homes to purchase. The concept of TICs has somewhat alleviated the shortage in San Francisco.
A TIC agreement, similar to a partnership agreement, defines the rights and obligations of the various owners. Typically, each owner is given an exclusive right to occupy a different unit in the building.
Daro and her partners purchased a six-unit building in San Francisco. Just prior to the close of escrow, all owners executed a TIC agreement giving each owner an undivided percentage interest in the property with exclusive rights to occupy particular units. The deed to the property was silent as to the occupancy rights provided by the TIC agreement. The TIC owners understood that they might have to invoke the Ellis Act in order to create vacancies in the units.
The building’s tenants filed a lawsuit seeking injunctive relief under California’s Unfair Competition Law. The tenants claimed that Daro had a regular practice of dividing property into five or more TIC interests for the purposes of sale. The tenants asserted that Daro failed to notify the real-estate commissioner of the intent to sell subdivided interests and failed to obtain a public report from the California Department of Real Estate before creating subdivided interests and offering them for sale, both in violation of the Subdivided Lands Act (SLA).
The tenants’ lawsuit didn’t describe Daro’s attempt to recover possession pursuant to the Ellis Act. Nor did the tenants attempt to enjoin any Ellis Act evictions that were ongoing. The reason the tenants omitted such claims has to do with the litigation privilege, as well as a landlord’s right to invoke the Ellis Act regardless of the landlord’s future use of the property.
The trial court granted the tenants’ request for injunctive relief. The court found that the purchase of the property and the creation of five undivided interests with an intent to sell created a subdivision subject to the requirements of the SLA. The trial court concluded that the plan violated the act and was, therefore, an unfair business practice. It also held that service of eviction notices under the Ellis Act furthered the unfair business practice.
The Court of Appeal reversed holding that Daro’s tenants had no standing to sue. The SLA isn’t intended to protect tenants, but instead exists to protect purchasers of units in subdivisions from fraud, misrepresentations or deceit. A private person has standing to sue only if that person has suffered injury and lost money or property resulting from unfair conduct.
The tenants’ threatened loss of a property interest resulted from the owners’ use of the Ellis Act to recover possession of rental units. Since Ellis Act evictions are lawful, it cannot be transformed into an unlawful business practice simply because it has some relationship to an activity forbidden by law (i.e., an improper subdivision).
The court ruled that in order for the tenants to have standing, they must show a causal connection between the harm suffered and the unlawful business practice. In this case, the lack of causation is illustrated by the fact that Daro’s tenants would suffer the same injury whether Daro complied with or violated the SLA. In either case, the tenants would still face eviction under the Ellis Act.
To the extent there has been some hesitation on the part of homebuyers and developers to perform Ellis Act evictions and create TICs, the Daro decision should go far to allay fears and lessen the risks. It will be interesting to see how the market reacts to this important court case.
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.