Monday, October 31, 2016

"Educators" ban on evictions is gone, no longer

[02-14-2018: Court of appeals reversed the judgment];
[Cal. Sup. Ct. denied review on April 25, 2018; Rent Ordinance reinstated back the "educators" ordinance's language on May 15, 2018, see the press release here].

On September 28, 2016, the San Francisco court adjudged the writ of mandate granted on August 31, invalidating the infamous ordinance of last year, which was injecting a new type of a protected tenant, the "educators." That the new limitation was overbroad and unnecessary wide, both as to covering categories of tenants, and in including previously unheard-of amount of types of evictions (even the temporary move-out for repairs)—all that I have already had an opportunity to cover in my earlier post. Thus, the Court's decision, invalidating the ordinance, was not a surprise to me.

What is surprising is how the Court arrived to invalidating this ordinance. This path seems to me worth our attention, to make a mental note in case of a similar argument in the future.

The text of the order is now published on the Rent Board's site (link).  We are also given an opportunity to see the transcript of the hearing leading to the order. The hearing record is attached to the October 28, 2016, Request For Transcript, see the docket link for scanned documents.

Perhaps, I am not as mighty a legal prophet as I thought of myself, when I wrote down my predictions of reasons, why the Educators' ordinance should be invalidated. Save for a couple of hints, one where the Court asks counsel if the ordinance is so broad it would include a "yoga teacher," who does it once a week (see the hearing transcript on page 16), and another in discussing a hypothetical that an owner would have to wait until a summer break, even when a boiler breaks and the unit has no heat (Id., see pages 10 and 23), none of my points were considered as factors in the actual order, and the actual reason behind the Court's grant of the writ did not occur to me at all.

The main analysis of whether to invalidate the ordinance was hinged on the reasons I would never have imagined. Not only I haven't speculated about it as a potential ground, I am still puzzled how it could be the only and determinative factor. What satisfied the Court, was the uncertainty of timing of the notice, when its only measurement is directed by referencing a summer break in the school year, something another department of the same municipality sets annually at its whim. (Order, footnote 1). Requiring a landlord to adjust her eviction notice per the school-year break was the factor "A" in the order (Order, p.2:12-18), and technically the only one, since the second factor "B" logicality follows from the first: if a landlord fails to comply with the ordinance, a tenant gets an affirmative defense to challenge the eviction.

The Order explains that it is improper for a landlord to learn after-the-fact that her notice was invalid, because only after the notice was already served, would the tenants respond in stating their "educator" status, and thus render invalid any notice served with the maturity date outside of the school year.

Critics may point out that we have already several grounds in the rent ordinance, operating without challenge on similar mechanics: in OMI/RMI evictions, the responding tenants may present, within 30 days following service of the notice, their evidence of being a household with kids, thus requiring the eviction to happen only within the summer break (the same timing definition as one invalidated in this ordinance). See the pre-ordinance version of 37.9(j)(3). Tenants also have rights to deliver after-the-fact "fatal news" to the noticing landlords in other situations: a 45-day period to rescind the already agreed-upon buyout agreement (37.9E(g)); or when an approved tenant may return to reside in the unit together with a non-approved occupant, thus invalidating a notice under 37.9(a)(7).

In my personal observation, a landlord often faces uncertainty of shooting in the dark when serving a notice, because the actual situation with the unit and unit's occupants may differ from what the landlord imagines it to be. But getting back to the examples raised at the hearing: a temporary eviction for capital improvements or repairs (Sec. 37.9(a)(11)) involves a different species of a notice: it requires that the landlord undergoes obtaining all needed building permits before the notice is served. See, 37.9(a)(11), first sentence: "[t]he landlord ... has obtained all the necessary permits on or before the date upon which notice to vacate is given." This, my friends, is often not as ordinary a step as it seems.  It often takes much time and money, and the tenants may take a landlord for a ride or two by appealing the permit application, something now happening more often than in the past, since the DBI now requires to notify tenants in most of the scenarios before a permit can be issued, sometimes before it can be even applied for.

When all the hoops are jumped and the permits are received, those permits still have an expiration date, and their shelf-live is limited. And after all these efforts and expenditures to have a notice served, to learn that the tenant claims an "educator" status, it would be a big and expensive blow. Especially since being an "educator" in the proposed definition is so unobvious (unlike a tenant being over a certain age, or having kids, something a landlord may at least predict in most situations).

The Court in the present case disposed of the "educator" ordinance by viewing it as regulating the eviction's procedural steps rather than the substantive ones. And if it is so, the Court found it preempted by the state law, under the rule "that the timing of landlord-tenant transactions is a matter of statewide concern not amenable to local variations" Tri County Apt. Ass'n v. City of Mt. View (1987) 196 Cal.App.3d 1283, 1298. Again, not that we don't have timing limitations imposed in our local ordinance for other eviction grounds. For example, the ordinance requires no less that 10 days to give a tenant to cure a violation in connection with subletting (Sec. 37.9(a)(2)(D)), whereas the state only asks for 3 days (CCP § 1161). And for each eviction, except non-payment of rent, the local ordinance imposes an additional procedural step at the notice level, to file a copy with the Rent Board (Sec. 37.9(c), 4th sentence), and an additional procedural step at the complaint level, "to plead and prove" a ground for eviction under Section 37.9 (Id., 6th sentence).

The second case cited in the order, Channing Properties v. City of Berkeley (1992) 11 Cal.App.4th 88, 96-97, discusses the difference between the limitations on municipal ordinance to add substantive vs. procedural regulations in addition to what is required under the state law. The Channing Properties case relates to the Ellis Act.  Interestingly enough, when it comes to the Ellis Act, the rule seems to be exactly the opposite—substantive regulations are left to the state, while at least some procedural protections are allowed for interpretation by municipalities: "While the Ellis Act does not prohibit local governments from providing procedural protections designed to prevent abuse of the right to evict tenants (Gov. Code § 7060.7, subd. (c)), it “completely occupies the field of substantive eviction controls over landlords who wish to withdraw” all units from the residential rental market." Johnson v. City and County of San Francisco (2006) 137 Cal.App.4th 7, 14, citing City of Santa Monica v. Yarmark (1988) 203 Cal.App.3d 153, 167.*

In short, the Order is unusual, and its treatment at the appellate level deserves attention, as it may affect other provisions in our local ordinance, and, perhaps, other municipal ordinances as well. Worse comes to worse, I hope that the "right result" rule will help this Order to survive the appeal, because "[i]f right upon any theory of the law applicable to the case, it must be sustained regardless of the considerations which may have moved the trial court to its conclusion." Ziegler v. Barnes (1988) 200 Cal.App.3d 224, 233, fn. 8, citing D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19.

The practical outcome of the September 28, 2016, decision in SFAA v CCSF, is that the provisions of the Section 37.9(j)(4), previously enlarged by the Ordinance 55-16, are now shrank back to the pre-ordinance limits, applying only to the OMI/RMI evicting under Section 37.9(a)(8), and containing no "educator" additions. But be cautious in relying on this decision just yet—the City has already appealed the order, and we may expect a new turn on this subject within half a year.

So, in the meanwhile, anyone who needs to fix a boiler—don't waste another minute, the coast is clear and you don't have to wait, neither until the next summer, nor until the appeal is over, do it now, before another ordinance comes up with some hurdle.

More real property posts

* Preemption of the Ellis Act is such an often topic, we have it discussed in the post immediately before this one, covering the case against 10-year ban on mergers.

If you are concerned about your rights and obligations in a landlord-tenant relationship, make your first step toward taking control over the circumstances, and call my office at (415) 987-7000. I will be glad to assist in guiding you through the jungle. The only thing you can't afford is to stay put and uninformed. My office provides a confidential assessment of your particular scenario, free of charge, and I will share with you the results of the analysis along with my thoughts on available solutions.

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