Thursday, October 16, 2008
C.A. Finds Right to Cross-Examination at Administrative Hearing
By STEVEN M. ELLIS, Staff Writer
A county rent review board violated due process when it declined to allow a mobile home park owner to cross-examine tenants challenging an increase in their rent, this district’s Court of Appeal ruled yesterday.
Ordering the matter remanded for a new hearing, Div. Six ruled that the County of San Luis Obispo Rent Review Board rendered the administrative process in which the owner claimed it was exempt from a county rent control ordinance fundamentally unfair when the board permitted the tenants to testify without being subject to cross-examination and then made findings against the owner based on that testimony.
Nine tenants of mobile home park owner Manufactured Home Communities who were each party to a 12-month lease agreement petitioned the board for relief after receiving notice that the owner was increasing their rent, contending that the increases violated a county mobile home rent control ordinance.
Exemption From Ordinance
Although the ordinance contained an exemption for tenancies covered by leases or contracts providing for more than a month-to-month tenancy, the tenants claimed at a hearing before the board that the owner’s agent had told them that the leases were subject to rent control, and accused the owner of “fraudulent misrepresentation” and “mob-like corporate bullying tactics.”
The owner argued that the exemption was applicable and sought to cross-examine the tenants, but the board denied the request, with one of its members explaining that the board “always allow[s] the people to speak without fear of cross-examination, because it is a fearful thing.”
The board then determined that even though the terms of the leases might normally make them exempt from the ordinance, the owner and the tenants had treated the tenancies as though they were subject to it.
Finding that the owner continued this practice, did not explain the leases and misrepresented the terms, and that the tenants had rescinded the leases, making them month-to-month tenancies subject to rent control, the board—in a decision later upheld by the county’s Board of Supervisors—determined the proposed rent increases were invalid.
Manufactured Home Communities petitioned for a writ of administrative mandamus, alleging that it was denied a fair hearing because of the board’s prohibition on the cross-examination of the tenants, but San Luis Obispo Superior Court Judge Martin J. Tangeman denied relief, finding that the leases were not exempt from the ordinance because they did not comply with state law and were fatally uncertain, illusory and invalid.
On appeal, the park owner renewed its assertion that it had been deprived of due process, and the Court of Appeal, in an opinion by Presiding Justice Arthur Gilbert, agreed.
“The Board found the tenants’ testimony to be credible and ‘never rebutted,’ he wrote. “But it did not allow MHC to test their veracity or rebut them through cross-examination.
“The tenants had an unfair advantage. They could select the facts they wanted the Board to hear, and avoid questions concerning those facts. The tenants also gave narrative statements, and one read from a prepared text.
“There are valid reasons for restricting cross-examination in some administrative proceedings. But this was not a quasi-legislative hearing or an informal public hearing where speakers are not sworn and cross-examination could inhibit public comment….
“This was an adversarial hearing where the tenants requested the Board to make findings against MHC. The rent control ordinance requires findings and testimony under oath, and the board exercised “judicial-like” powers in deciding the parties’ rights involving their individual leases.”
Noting that each tenant’s testimony involved individual circumstances and serious accusations, Gilbert concluded that the board had “undermined the fairness of the proceeding,” and instructed the trial court to remand the matter to the board for a new hearing.
Gilbert further determined that the leases themselves were facially valid and exempt from the ordinance, but wrote that there might be merit to the tenants’ claim that the owner was equitably estopped from imposing the rental increase.
“The Board admitted evidence to explain what the parties intended and found that the leases were augmented by oral representations…. It correctly determined that testimony was needed…[and] that the lease language “might exempt” it from the ordinance, but that testimony could reveal a different result.
“But the Board improperly restricted the testimony. After a hearing on remand, the Board could find that the tenants were misled, or that the park is estopped from claiming it is exempt from rent control…. But such findings must be based on substantial evidence and on testimony subject to cross-examination.”
Justices Paul H. Coffee and Steven Z. Perren joined Gilbert in his opinion.
The case is Manufactured Home Communities, Inc. v. County of San Luis Obispo, B196426.
Copyright 2008, Metropolitan News Company