Bronitsky Law

In an ordinary business dispute when the parties are unable to agree, one files a civil action and the court or jury ultimately decides who is right and who is wrong.  When the parties are also landlord and tenant the landlord’s right to evict and the tenant’s right to seek relief from lease forfeiture add additional tactical considerations.

In the recent case of Gill Petrolium, Inc. v Hayer (2006) 137 Cal.App.4th 826, the parties were in a dispute about who was responsible to pay the state the fees for the underground storage tanks on the leased premises which included a gas station.  Ultimately the landlord paid the fees, added them as rent under the lease and filed an unlawful detainer (eviction action) against the tenant.  The trial court entered judgment for the landlord, awarded money damages and a termination of the lease.  Thus, the tenant initially not only lost on the point of who was to pay the fees, but also lost its favorable lease on the property.  What this demonstrates is that the possibility of terminating the lease and regaining possession of the property gives the landlord an additional sword with which to attack a tenant when a dispute arises.

The tenant, however, under California Code of Civil Procedure Section 1179, successfully sought relief from the forfeiture of the lease and thus ended up only losing on the business issues and kept the favorable lease.  However, tenants must realize that under §1179, tenants who lose an unlawful detainer case must show “hardship” in order to avoid forfeiture.  While much is left to the discretion of the trial court in this area, hardship must be something more that just the loss of the lease itself and the trial court must make a full examination of all of the equities involved.

Thus, tenants need to be cautious when disputing business issues with their landlord.  The safest course of conduct would be for the tenant to pay the disputed amount and then sue the landlord rather than risk losing the lease as well as the dispute.  As always, consult your attorney before taking any course of action as the law is in flux and your particular situation may present facts that would help make a better decision.

We provide this material for information only. We are not providing legal advice of any kind to anyone, nor are we creating an attorney client relationship with anyone using this information and therefore you may not rely on this information in taking any action or failing to take action. If you want advice specific to your situation, you can contact us through our contact page here at the blog to discuss your matter and determine if we can provide you with representation. DO NOT take any action without consulting an attorney regarding your particular situation as the action you take may not comply with the law.

In the recent case of Johnson v City & County of San Francisco (2006) 137 Cal.App.4th 7 the California Court of Appeal held that the San Francisco Rent Control Ordinance which required a landlord to tell a tenant the amount the landlord believed the tenant was entitled to under the Ellis Act was invalid.

Johnson owned an interest in a multi-unit residential building in San Francisco and had an exclusive right to occupy a unit in that building, from which he sought to evict the tenants. The San Francisco Ordinance required landlords who sought to evict under the Ellis Act (Govt C §§7060-7060.7)—which allows landlords to evict tenants in order to go out of business and to pay their tenants’ relocation costs (people with disabilities or older than 62 received additional benefits) to notify their tenants about their right to receive payment and “the amount of payment which the landlord believes to be due.” Johnson challenged this requirement in the Superior Court which ruled against Johnson.

The California Court of Appeal reversed the trial court, holding that while the Ellis Act does not prohibit local governments from providing procedural protections designed to prevent abuse of the right to evict tenants, it completely occupies the field of substantive eviction controls and therefore preempts the belief requirement because the belief requirement creates an substantive defense not permitted under the Ellis Act.

The Court of Appeal held that Government Code §7060.4 provides detailed guidance regarding the types of local ordinance provisions that may be enacted to require property owners to give notice of their intent to leave the rental market. By carefully spelling out only specific types of notice that may be require, the Ellis Act clearly sets forth the understanding that only those types of notice are authorized and other, additional notice requirements are therefore not allowed.

We provide this material for information only. We are not providing legal advice of any kind to anyone, nor are we creating an attorney client relationship with anyone using this information and therefore you may not rely on this information in taking any action or failing to take action. If you want advice specific to your situation, you can contact us through our contact page here on the blog to discuss your matter and determine if we can provide you with representation. DO NOT take any action without consulting an attorney regarding your particular situation as the action you take may not comply with the law and therefore you could subject yourself to significant risks