Security Deposit - Held In Trust Or Not?

It is an understandable to assume that, when you entrust someone with your money, to hold and use only under certain conditions, and to return the money back to you when/if those conditions don't apply, the money are held by someone in trust for you (Dillon v. Cross (1907) 5 Cal.App. 766; Spencer v. Duncan (1895) 107 Cal. 423), or as a bailee (Niiya v. Goto (1960, Cal App 2d Dist) 181 Cal. App. 2d 682; CC § 1814).

Not so with the security deposits. The court in Korens v. R. W. Zukin Corp. (1989) 212 Cal.App.3d 1054, ruled that the money held by the landlords as security deposits create a debtor-creditor relationship, but are not held in trust, citing in support CC § 1950.5(d). (Id. at 1058-1059). Is the Korens Rule absolute? As it is with many legal concepts,  the answer is "it depends."

Waiver Defense Becomes Available To Landlords

Interpreting a lease agreement under the latest court decisions will be much different from the rules accepted among practitioners even a year ago. It seems the changes are now coming down almost every week, and the latest one is a rare specimen: Chen v. Kraft (2016) 243 Cal.App.4th Supp. 13. It holds, among other findings, that a landlord may not waive a prohibition against illegal use of the property, even if a landlord were to enter into a written agreement expressly permitting such use.

Of What Materials May Court Take Judicial Notice?

Request for judicial notice is a widely deployed vehicle for bringing court's attention to certain materials and records. In California, it is regulated by the California Evidence Code ("CEC"), Sections 450-460. It generally defines what requires judicial notice be mandatorily taken of (CEC 451), and what may be judicially noticed at court's discretion (CEC 452, 452.5). The rule is also stated for the contrary: what is not authorized by law, may not be judicially noticed (CEC 450). If the court declines to take judicial notice, the court shall let the parties know about its decision a.s.a.p., and indicate the denial on the record (CEC 456). However, such denial is never final and can be later reversed (CEC 458).

As comprehensive as the judicial notice statutes are written, they can't physically encompass every possible kind of matter litigants may request the court to take judicial notice of. It thus brings the question, what kind of non-obvious materials were previously judicially noticed? This post is a short review of items I was able to identify.

2015 Roundup In CA/SF Real Property Law

2015 was an eventful year, if measured in the scope of the real property legal changes. No stone left unturned. I got to witness it from the front seat myself: for this was the year when I decided to publish my book on the San Francisco eviction notices. It got published in April 2015, and I thought to be done with it for awhile. Little did I know, the changes would demand me to issue seven revisions during next five months, after which a big slew of changes came at once with the Ordinance 171-15, making me to rewrite almost the whole book anew! Version 2.0 went out in December (and yes, with some of the even more recent changes mentioned here, version 2.1 is already in the making).  But enough about me, let's look back and observe, what an enormous year 2015 was for the legal landscape in CA/SF real estate:

Senior Water Rights Are Suspended In California

Suspending senior water rights in California is a new development in the state's real property law, with its practical implications being of much more interest than its legal background. The drought affects all Californians and this reform relates to many. Will it sustain the challenge?

Drafting Eviction Notice In San Francisco -- Book's Volume I Is Published

I  am excited to report that the first part of my book, covering general requirements and nine "for-fault" evictions, is finally out and went live on Amazon today. Here are direct links: paperback and the ebook versions. Second volume is still in the works, it will cover the "no fault" evictions.

Historical Development Of Eviction Laws

An eviction lawsuit is not a modern invention. Its elements developed over the course of centuries, some surprisingly long time ago. This short article is an attempt to cover most noticeable cornerstones.

Employer's Bond To Appeal Labor Commissioner's Decisions - Mandatory or Not?

Not everyone works a 4-hour workweek, but all those who work some finite periods of time may wonder, when does the time worked starts counting toward the overtime. In California, a straightforward response would be, after 8 hours per day or after 40 hours per week. But not everything is straightforward, and the overtime may come sooner just as well as it may come later in the workday or workweek. In other words, "it depends."

When Overtime May Be Due Over A Shorter (Longer) Time?

Not everyone works a 4-hour workweek, but all those who work some finite periods of time may wonder, when does the time worked starts counting toward the overtime. In California, a straightforward response would be, after 8 hours per day or after 40 hours per week. But not everything is straightforward, and the overtime may come sooner just as well as it may come later in the workday or workweek. In other words, "it depends."

Rescind, Surrender, And Cancel. Courts' Handling Of Leases.

I recently had to ask a clerk of the San Francisco Superior Court to enter a default judgment "for possession only" in an eviction case. The procedure does not require many steps to comply with, but this time I talked the details over with the clerk, and left very glad that I did, because I accidentally discovered that the SF Court follows an ancient tradition of physically canceling an original instrument, the lease agreement.

Access to UK Caselaw And Beyond

If you need to look up a case decided in United Kingdom, try this free database. While there, look at the right column, entitled "World Law Resources," it has links to a collection of world jurisdictions.

Similarities Between Landlord-Tenant and Employer-Employee Relationships

Since I primarily practice litigation in these two fields, real property and labor law, it has caught my eye that the rights and obligations of the parties in rental and employment contexts have many similarities. To see just a few, consider the holdings I highlighted in this post.

In re: Christmas Trees

In the spirit of this season, I want to share a short post on the subject of Christmas trees. Decorating a tree seems to be an ancient tradition, predating Christ himself, and a custom of having a Christmas Tree also seems to exist for several centuries, yet the appearance of Christmas celebration in the US law is not that old--the oldest cases I was able to find only date back to 1879.

Paying Rent: Toward the Past and Back For The Future

There is almost nothing to discuss on the rent's timing, or when does a rent payment become due. And everybody knows what to do when the rent is past-due. Yet, there are a few more possible timing problems relevant to the rent obligations: retroactive application of rents, retroactive change of terms, or charging the already left tenants for a loss of future rent. While these problems were litigated over, the answers are not always straight-forward:

Ghostwriting in Federal Courts in California - allowed, disfavored, or banned?

Attorney's ghostwriting, a practice for an attorney to draft documents for client's submission in court without revealing who actually wrote the documents, becomes more and more acceptable as a form of practice and is now generally allowed in California (Cal. R. of Ct., Rs 3.36, 3.37), subject to some reasonable ethical considerations. If you ask BAR for an advice, they would refer you to Los Angeles Bar Association's publications on the subject, such as this one from 1999 and a fresh 2012 update. Yet, the view on ghostwriting practice in the Federal courts of this same state remains unsettled.

In Leasing an "In-Law" Apartment Don't Be "In Pari Delicto" - Beware of an Exception for Legal Enforcement of Illegal Contracts

Leasing an "unwarranted" unit contains inherent risks: recent court cases often treat such lease agreements as illegal contracts, a finding leading to a set of scary, but possible discussions, ranging from such lease being simply unenforceable to a claim for restitution of back rents. A question then naturally arises, what can be done with an illegal contract, and are there any exceptions or conditions for its enforcement. The basic rule is that the contracting parties are both "in pari delicto" and neither can enforce the contract or recover therefrom. There is, however, an exception developed in California, which still lets one side to such allegedly illegal contract to recover from the other. An exception itself is not new, but its application to "illegal" leases developed more recently.

Update 03-07-14: San Francisco pilot program for legalizing in-law apartments got approved at the Planning Commission level.
Update 04-07-14: Board of Supervisors approves the pilot program
Update 02-21-16: Decision in Chen v Kraft invalidated a lease with an unlawful object, under CC § 1598.

More on LLC's Personhood

A couple of recent cases, issued within a week of each other, touched on the subject of entity's personhood, seemingly from two opposite sides of the problem.

$1.7 million default judgment is possible, even after a 473(b) motion.

Obtaining a default judgment is not easy. And if the judgment debtor later moves to set default and a judgment aside, especially if done on "mandatory" grounds of attorney's mistake [CCP 473(b)], courts often read it as equally a mandatory requirement to grant the requested relief. Often, but not always. This recent case presents a rare situation, when a simple act of submitting a declaration with an acknowledgement of fault did not help. The case is even more unique because of its facts: the judgment at stake was for a significant amount of $1.7 million, and the party asking to set it aside submitted not one, but several declarations regarding its attorney's fault.

Verification on behalf of a dissolved or non-existent corporation

Can a non-existent or a dissolved corporation verify its discovery responses? Even if there is no human agent or officer left around? Court in a recent decision in Melendrez v. Los Angeles Sup. Ct. (In re: Special Electric Co.), 215 Cal.App.4th 1343 (2013), says "yes" and comes up with no less than three alternative solutions.

The Time Has Come to Abolish the Slave Law

Slavery was abolished with the passage of 13th Amendment in 1865, and now, with the State of Mississippi completing formalities of filing their ratification this year, it seems fully and universally approved, nationwide. It should be only logical that the "slave law," a body of pre-Amendment court decisions regarding slavery aspects, would become outlawed just as its subject did, instantaneously with it. I was surprised to find out that it didn't. Majority of the slave cases are still marked as "good law." Many of them are cited in decisions made decades after the Amendment. Some are even recognized authority in up-to-date treatises. I think this is an important issue, worthy of our attention, something we should, and now can, fix.