Tuesday, August 12, 2003
Supreme Court Rules:
Retaliatory Eviction No Defense if Landord Exiting Rental Market
By DAVID WATSON, Staff Writer
Retaliatory eviction is not available as a defense to an unlawful detainer action brought by a landlord who legitimately intends to go out of the residential rental business, the state Supreme Court ruled yesterday.
The court ruled 4-3 that a landlord who complies with the provisions of the Ellis Act, which allows landlords to withdraw property from the residential market, need only establish a bona fide intent to exit the market to prevail. If the tenant controverts the landlord’s evidence of intent, the landlord has the burden of establishing its truth by a preponderance of the evidence, Justice Marvin Baxter said in his opinion for the court.
Baxter was joined by Chief Justice Ronald M. George and Justices Janice Rogers Brown and Ming Chin.
Justice Carlos Moreno, joined by Justices Joyce Kennard and Kathryn M. Werdegar, dissented, arguing the court’s ruling undermines the purpose of the retaliatory eviction statute, Civil Code Sec. 1942.5.
All of the justices agreed that the First District Court of Appeal’s Div. One erred when it ruled in February of 2001 that retaliatory eviction is not available as a defense in Ellis Act eviction actions under any circumstances.
“In our view, the proper way to construe the statute when a landlord seeks to evict a tenant under the Ellis Act, and the tenant answers by invoking the retaliatory eviction defense under section 1942.5, is to hold that the landlord may nonetheless prevail by asserting a good faith—i.e., a bona fide—intent to withdraw the property from the rental market. If the tenant controverts the landlord’s good faith, the landlord must establish the existence of the bona fide intent at a trial or hearing by a preponderance of the evidence....This construction best harmonizes the Act with the text of the retaliatory eviction statute.”
The justice said there was “no statutory basis” for the contention of the tenants, Jim Broustis and Ivy McClelland, that their landlord, Joel Drouet, should “be compelled to prove not merely that he has a bona fide intent to go out of business but also that this bona fide intent was not motivated by the tenant’s exercise of rights” protected under Sec. 1942.5.
Broustis had lived in Drouet’s two-unit apartment building in San Francisco since 1988, and was joined by McClelland in 1999. Baxter noted there had been several conflicts between the landlord and the tenants involving the tenancy.
“[N]either Tenants nor the dissent has identified a single jurisdiction in this country that has sustained a retaliatory eviction defense—or what might more accurately be termed a retaliatory withdrawal defense—where a landlord seeks to take a building off the market,” Baxter declared. “A contrary ruling,” the justice argued, “could permit tenants to force the landlord to remain in business indefinitely.”
Baxter said the case should be remanded, since the trial court in considering Drouet’s motion for summary adjudication had not considered the question of “whether Landlord had asserted a bona fide intent to withdraw the property and, if so, whether Tenants had controverted that intent.”
Brown authored a separate concurrence, in which only Baxter joined, noting that San Francisco has enacted “disincentives”—permitted under the Ellis Act—to re-renting of property withdrawn from the rental market. Those disincentives, she said, include permitting the displaced tenants to return to the premises at a rent based on the rate at the time of withdrawal and permitting suits by the tenants and the city in which exemplary damages could be awarded.
“Because San Francisco’s disincentives for re-renting withdrawn properties are so significant, a landlord who, like the landlord here, has given notice of his intent to withdraw his property from the rental market is entitled to a presumption that he has a bona fide intent to do so,” the concurring justice wrote. “He should not, in the absence of any contrary evidence, be saddled with proving a negative, i.e., that he does not intend to re-rent the property in the future.”
In his dissent, Moreno noted that the Ellis Act, Gov. Code Sec. 7060 et seq., “expressly provides” that its provisions are not intended to supersede those of Sec. 1942.5, and warned that the court’s ruling could encourage retaliatory evictions.
“It is difficult to imagine why the Legislature would have specifically stated in the Ellis Act that it did not supersede the protections against retaliatory eviction in section 1942.5 if it simply intended, as the majority holds, that a landlord may evict a tenant for a retaliatory purpose under the Ellis Act as long as the landlord actually intends to withdraw the building from the rental market.”
The dissenting justice continued:
“The majority’s holding will permit landlords to threaten tenants that if they complain about the condition of their residence or exercise their rights under Civil Code section 1942 to make necessary repairs and deduct the cost from their rent, the landlord may remove the building from the rental market under the Ellis Act and evict them. Such a threat might be especially effective in discouraging the formation of tenant associations, which are specifically protected under section 1942.5, subdivision (c). The majority opinion thus violates the public policy of this state by encouraging retaliatory eviction.”
The case is Drouet v. Superior Court (Broustis), 03 S.O.S. 4335.
Copyright 2003, Metropolitan News Company