Private Agreement Fails To Provide Relief From Rent Restrictions
A Los Angeles property owner who leased a multi-family dwelling could not collect a rent increase of more than about 3% per year, even if the tenant agreed to pay more. That is the most broadly applicable portion of a recent appellate court ruling in a nasty dispute between a landlord and tenant.
Tenant Andrew Gombiner and landlord Daniel Swartz appear to have been feuding off and on since January 1998, when Gombiner signed a two-year lease for a home on Sunset Plaza Drive in Los Angeles. The monthly rent was $3,500 for the first year, and $4,000 for the second. In June of that year, Gombiner sued Swartz for fraud for misrepresenting the residence as a single-family house. In fact, Swartz had converted the structure into a duplex; Gombiner leased the top portion, while Swartz resided in the lower unit. They settled in 2000 when Swartz paid his tenant $25,000, and Gombiner promised not to complain to any government authority about matters covered by the settlement. In July 2001, they signed an amendment raising the monthly rent to $5,900.
After a dispute involving repair of a broken water heater and late payment of rent, Gombiner sued his landlord for $83,400 in unauthorized rent increases. Los Angeles County Superior Court Judge Judith Abrams ruled that the property was subject to Los Angeles's rent stabilization ordinance, which limited annual rent increases to about 3%. The court's appellate department confirmed the ruling.
When Gombiner then stopped paying rent, Swartz filed an unlawful detainer suit. In a bifurcated trial, Los Angeles County Superior Court Judge Mary Ann Murphy ignored Judge Abrams's ruling and determined the rent stabilization ordinance in essence did not apply because Swartz and Gombiner had signed two agreements negotiated by attorneys. Murphy also ruled that as of November 2004, Swartz had converted the property back to a single-family house. In the second half of the trial, a jury found that Gombiner had breached the lease and settlement agreement by not paying rent and contacting the government. The jury ordered payment of back rent, damages, interest and attorney fees totaling $453,000.
The Second District Court of Appeal, Division Eight, ruled that Judge Murphy made several crucial errors stemming from her decision to ignore Judge Abrams's original ruling. Key among those errors was Murphy's ruling that the parties could by mutual consent exempt the property from the rent control ordinance.
"[A] landlord cannot, even with the tenant's acquiescence or by mutual agreement, circumvent that which the law prohibits. An agreement that violates the law is void and unenforceable," Justice Laurence Rubin wrote for the court.
Because of Murphy's incorrect ruling and subsequent erroneous jury instructions, the Second District sent the case back to Superior Court for a new trial.
In 2005, the city added a "nonwaiver provision" to the rent stabilization ordinance to make clear the law's applicability to all rented multi-family residences, except those built after 1978 and condominiums. The ordinance covers hundreds of thousands of housing units. As of July 2006, the maximum permitted rent increase is 4% annually.
Gombiner v. Swartz, No. B196182, 08 C.D.O.S. 13711, 2008 DJDAR 16410. Filed October 29, 2008.
For Gombiner: Leo Schwarz, (818) 222-2888.
For Swartz: James Cooper, Levinson, Arshonsky & Kurtz, (818) 382-3434.