Rent Control Board Lawsuit Against Landlord Can Proceed
An appellate court has reinstated a Santa Monica Rent Control Board lawsuit against a landlord that a trial court had dismissed as a SLAPP suit. The lawsuit was the board's legitimate attempt to get a judicial determination that the landlord was violating local rent control laws, the Second District Court of Appeal ruled.
The litigation pitted two longtime nemesis — the rent control board and property rights attorney Rosario Perry, who in this case was sued as the property owner's manager and who was the defendants' lawyer. The lawsuit revolved around the rent charged for two units in a four-unit apartment building on Pearl Street.
In July 1999, the property owner — at that time Robert Hackamack — filed a notice that he intended to withdraw the property from the rental market. He did so as of August 30, 1999, and he evicted the tenants from units A and C, which were rent-controlled apartments. He and his mother were listed as the occupants of the other two units and they paid no rent.
In September 2000, Hackamack filed a notice with the rent control board stating his intention to restore the property to the rental market. Under state law and city ordinance, Hackamack could charge no more for the initial re-rental of units A and C than if the units had been continually rented. The board notified Hackamack that the maximum allowable rent was $467 per month for each unit.
Rental agreements indicated that as of November 1, 2000, each unit was rented for $467 a month. In February 2001, Pearl Street LLC — the legal entity that had assumed property ownership — filed a "vacancy unit registration" with the board for unit C and stated that rent would rise to $1,750 per month. In May, the landowner went through the same process for unit A, raising the rent to $1,661 per month.
The rent control board then filed a lawsuit alleging that the first re-rental periods were shams. The board contended that no one ever occupied unit C, and that Hackamack's mother — the listed tenant in Unit A for three months — was not a legitimate tenant and did not pay rent. Thus, the board contended the landlord could not charge more than $467 per month for rent.
The defendants countered that the litigation was a SLAPP — a strategic lawsuit against public participation. They contended the lawsuit was an attempt to punish them for filing documents with the board and exercising their rights under rent control law.
Los Angeles County Superior Court Judge Lorna Parnell ruled that the litigation was indeed a SLAPP suit. She dismissed the case and awarded the defendants attorneys' fees and court costs. The city appealed, and a three-judge panel of the Second District overturned the lower court.
At issue was whether the city's lawsuit "arose from" the property owners' constitutionally protected activities. Lawsuits that arise from protected activities are considered SLAPP suits because they chill the exercise First Amendment rights.
The Second District noted that the state Supreme Court in City of Cotati v. Cashman, (2002) 29 Cal.4th 69 (see CP&DR Legal Digest, October 2002) ruled that "arising from" does not mean the same thing as "in response to." And that is where the Santa Monica case turned.
"Here, defendants claim their protected activity is the filing of paperwork, with the board, to restore units A and C to the rental market, and to assert that an initial ‘first re-rental' of such units had occurred prior to the tenancies commencing on February 1, and May 11, 2001, respectively," Justice H. Walter Croskey wrote for the court. "But defendants were not sued for their conduct in exercising such constitutional rights. They were sued by the board to compel their compliance with the provisions of rent control law.
"Thus, while this suit may have been ‘triggered by' defendants' submission of such documents to the board, it is not true that this suit is based on the filing of such papers," Croskey continued. "Rather, the suit is based on activity that preceded the filing of the papers. This suit is based on the board's claim that defendants are charging an illegal rent for units A and C. … If we were to accept defendants' argument, then they could preclude any judicial review of their violation of the rent control law, no matter how egregious, by simply filing a SLAPP motion in response to any board complaint."
The court also rejected the argument that the rent control board was attempting to enforce portions of the rent control ordinance that had been stricken down in earlier litigation.
The court reversed the order awarding attorneys' fees and legal costs, and it sent the case back to the trial court for further proceedings.
Santa Monica Rent Control Board v. Pearl Street LLC, No. B157751, 03 C.D.O.S. 5444, 2033 DJDAR 6867. Filed June 20, 2003.
For the city: Doris Ganga, (310) 458-8781.
For Pearl Street: Rosario Perry, (310) 394-9831.