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Court of Appeal Rules on San Francisco Proposition M (Tenant Harassment

Larson v. City and County of San Francisco (2011)
192 Cal. App. 4th 1263 (February 23, 2011)
Proposition M:

In November 2008, San Francisco voters approved Proposition M, an initiative measure that amended the City’s Rent Ordinance. The voter materials stated the amendments were necessary to ensure property owners do not abuse their statutory rights under the Costa-Hawkins Rental Housing Act which was enacted in 1995, to raise rent to market rates on vacated units. The voter materials described several reports of harassing conduct aimed at getting tenants to move. Prior to the passage of Proposition M, the City’s Rent Ordinance defined “housing services” as follows: “services provided by the landlord connected with the use or occupancy of a rental unit including, but not limited to: repairs, replacement, maintenance; painting; light; heat; water; elevator service; laundry facilities and privileges; janitor service; refuse removal; furnishings; telephone; parking; rights permitted the tenant by agreement, including the right to have a specific number of occupants . . . and any other benefits, privileges or facilities. ” Proposition M added to this definition of “Housing Services,” the “quiet enjoyment of the premises, without harassment by the landlord as provided in Section 10B.

The proposition further specified any conduct violating new section 37.10B constitutes a “substantial and significant decrease” in services, and tenants may file a petition with the Rent Board for a reduction in rent. According to the voter materials, Proposition M thus provided tenants “a simple mechanism to stop harassment at the Rent Board, without lawyers or lawsuits.”

Proposition M also provided for a civil remedy. A lawsuit can be initiated by “any person, including the City” against “[a]ny person who violates or aids or incites another person to violate” the provisions of section 37.10B. (§ 37.10B, subd. (c)(5).) In such action, “[a]ny person who violates or aids or incites another person to violate the provisions of this Section is liable for each and every offense for money damages of not less than three times actual damages suffered . . . (including damages for mental or emotional distress) . . . .” In addition, the proposition provided any violation of section 37.10B is a misdemeanor, punishable by a fine of up to $1,000 and six months in the county jail.

Proposition M also added a mandatory cost and attorney fees provision to the Rent Ordinance, which states: “In any action to recover possession of a rental unit subject to the Chapter, unless the sole basis of the notice to quit is Section 37.9[, subdivision] (b),[3] the court shall award the tenant reasonable attorney fees and costs incurred in defending

THE LITIGATION:

Several parties including landlords, landlord-tenant attorneys, and real estate agents filed a lawsuit (a combined petition for writ of ordinary mandamus and complaint for declaratory relief) challenging Proposition M.

Judge Charlotte Woolard of the San Francisco Superior Court, granted the petition and complaint in part. Both sides appealed to the Court of Appeal.

Holdings: The Court of Appeal, Banke, J., held that:

(1) provisions authorizing rent control board to grant rent reductions for quantifiable losses were not facially invalid under judicial powers clause; but

(2) provisions authorizing rent control board to grant rent reductions for nonquantifiable losses were facially invalid under judicial powers clause; but

(3) provision prohibiting fraud or coercion to compel tenant to vacate did not violate constitutional speech rights;

(4) provision prohibiting threats to compel tenant to vacate did not violate constitutional speech rights; but

(5) provision prohibiting unwanted offers of payments to vacate violated First Amendment; and

(6) city lacked authority to require attorney fee award to every prevailing tenant in unlawful detainer actions.

HERE IS PROPOSITION M, ANNOTATED TO REFLECT THE
COURTS’ DECISIONS [Commentary in italics.]

Sec. 37.10B Tenant Harassment.
[Added by Proposition M, effective December 19, 2008]

(a) No landlord, and no agent, contractor, subcontractor or employee of the landlord shall do any of the following, in bad faith or with ulterior motive or without honest intent:

[Clause struck out by Judge Woolard’s order]

(1)Interrupt, terminate or fail to provide housing services required by contract or by State, County or local housing, health or safety laws;

(2) Fail to perform repairs and maintenance required by contract or by State, County or local housing, health or safety laws;

(3) Fail to exercise due diligence in completing repairs and maintenance once undertaken or fail to follow appropriate industry repair, containment or remediation protocols designed to minimize exposure to noise, dust, lead, paint, mold, asbestos, or other building materials with potentially harmful health impacts;
[The Court upheld Sections (1) through (3) above, which can be enforced through a decreased services petition at the Rent Board, or in a lawsuit for damages, including treble damages and attorney fees. The Court stated:
“We see a clear distinction between subdivision (a)(1), (2) and (3) of new section 37.10B, and subdivision (a)(4) through (15). Subdivision (a)(1), (2) and (3) prohibits “bad faith” interruption, termination or failure to “provide housing services,” and failure to perform maintenance and repairs. (§ 37.10B, subd. (a)(1)-(3).) These are matters which ordinarily would produce a quantifiable, pecuniary loss and, thus, a rent reduction that is “restitutive.” Indeed, such matters are seemingly already within the ambit of the other decrease in services provisions of the Rent Ordinance.”]

[The following Sections (4) through (6) and (8) through (10) cannot be enforced through a decreased services petition, but may be enforced through a lawsuit]:

(4) Abuse the landlord's right of access into a rental housing unit as that right is provided by law;

(5) Influence or attempt to influence a tenant to vacate a rental housing unit through fraud, intimidation or coercion;
[Court upholds this restriction on speech as permissible, content neutral, not overbroad, not unduly vague, and prohibits speech “integral to unlawful conduct”]

(6) Attempt to coerce the tenant to vacate with offer(s) of payments to vacate which are accompanied with threats or intimidation;
[Court upholds this restriction on speech as permissible, content neutral, not overbroad, not unduly vague, and prohibits speech “integral to unlawful conduct”]

(7) Continue to offer payments to vacate after tenant has notified the landlord in writing that they no longer wish to receive further offers of payments to vacate;
[Court invalidates this section as restricting speech that is not misleading or unlawful, and because it is not narrowly drawn enough to survive constitutional scrutiny.
The Court stated: “we conclude the restriction is “more extensive than necessary to further the City’s interest in preventing the subversion of its rent control ordinance and in protecting any reasonable notion of the right to peaceful occupancy. For example, we cannot fathom how an offer of payment to vacate made six months after a tenant has declined such an offer, either undercuts the Rent Ordinance or impinges upon a reasonable understanding of the right to peaceful occupancy. Indeed, if general economic conditions, or a tenant’s personal economic circumstances, were to change after an initial offer to vacate, the tenant might be interested in a new offer. Yet such an offer is absolutely prohibited by subdivision (a)(7).]


(8) Threaten the tenant, by word or gesture, with physical harm;

(9) Violate any law which prohibits discrimination based on actual or perceived race, gender, sexual preference, sexual orientation, ethnic background, nationality, place of birth, immigration or citizenship status, religion, age, parenthood, marriage, pregnancy, disability, AIDS or occupancy by a minor child;

(10) Interfere with a tenant's right to quiet use and enjoyment of a rental housing unit as that right is defined by California law;

(11) Refuse to accept or acknowledge receipt of a tenant's lawful rent payment;

(12) Refuse to cash a rent check for over 30 days;

(13) Interfere with a tenant's right to privacy;

(14) Request information that violates a tenant's right to privacy, including but not limited to residence or citizenship status or social security number;

(15) Other repeated acts or omissions of such significance as to substantially interfere with or disturb the comfort, repose, peace or quiet of any person lawfully entitled to occupancy of such dwelling unit and that cause, are likely to cause, or are intended to cause any person lawfully entitled to occupancy of a dwelling unit to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy.

(b) Nothing in this Section 37.10B shall be construed as to prevent the lawful eviction of a tenant by appropriate legal means.


(c) Enforcement and penalties.


(1) Rent Board. Violation of this Section 37.10B is a substantial and significant decrease in services as defined in Section 37.2(g) and tenants may file a petition with the Rent Board for a reduction in rent.
[Rent Board petitions allowed only as to Sections (1) through (3)]

(2) Criminal Penalty. Any person who is convicted of violating this Section shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not greater than one thousand dollars or by imprisonment in the County Jail for not more than six months, or by both such fine and imprisonment.

(3) Civil Action. Any person, including the City, may enforce the provisions of this Section by means of a civil action. The burden of proof in such cases shall be preponderance of the evidence. A violation of this Chapter may be asserted as an affirmative defense in an unlawful detainer action.

(4) Injunction. Any person who commits an act, proposes to commit an act, or engages in any pattern and practice which violates this Section 37.10B may be enjoined therefrom by any court of competent jurisdiction. An action for injunction under this subsection may be brought by an aggrieved person, by the City Attorney, or by any person or entity who will fairly and adequately represent the interest of the protected class.

(5) Penalties and Other Monetary Awards. Any person who violates or aids or incites another person to violate the provisions of this Section is liable for each and every such offense for money damages of not less than three times actual damages suffered by an aggrieved party (including damages for mental or emotional distress), or for statutory damages in the sum of one thousand dollars, whichever is greater, and whatever other relief the court deems appropriate. In the case of an award of damages for mental or emotional distress, said award shall only be trebled if the trier of fact finds that the landlord acted in knowing violation of or in reckless disregard of Section 37.9, 37.10A, or 37.10B herein. In addition, a prevailing plaintiff shall be entitled to reasonable attorney's fees and costs pursuant to order of the court. The trier of fact may also award punitive damages to any plaintiff, including the City, in a proper case as defined by Civil Code Section 3294. The remedies available under this Section shall be in addition to any other existing remedies which may be available to the tenant or the City.

(6) Defending Eviction Lawsuits. In any action to recover possession of a rental unit subject to the Chapter, unless the sole basis of the notice to quit is Section 37.9(b), the court shall award the tenant reasonable attorney fees and costs incurred in defending the action upon a finding that the tenant is the prevailing party under Code of Civil Procedure Section 1032(a)(4).

[Invalidated by Judge Woolard on equal protection grounds, invalidated by the Court of Appeal on the ground that the CCSF has no authority to effectively amend the California unlawful detainer statute to add attorney fees.
The Court stated: “The unlawful detainer statutes provide for summary proceedings, with limited remedies. And not only is there no provision for attorney fees in ordinary unlawful detainer proceedings, but the Legislature has expressly provided for fees in only two limited instances, where habitability and retaliatory eviction claims are at issue. Thus, … we conclude the City cannot, by local ordinance, effectively amend the state unlawful detainer statues to add a mandatory, one-sided attorney fees provision.”]

(d)Severability. If any provision or clause of this Section 37.10B, or Section 37.2(g), or the application thereof to any person or circumstance is held to be unconstitutional or to be otherwise invalid by any court of competent jurisdiction, such invalidity shall not affect other provisions of this Section 37.10B or Section 37.2(g) and all clauses of these Sections are declared to be severable.