Opinion ID: 2585536
Heading Depth: 2
Heading Rank: 3

Heading: Harmonizing Landlord's Right to Withdraw the Property from the Rental Market Under the Ellis Act with Tenants' Defense of Retaliatory Eviction Under Civil Code Section 1942.5

Text: Government Code section 7060.1, subdivision (d), provides that nothing in the Ellis Act [supersedes any provision of ... Title 5 (commencing with Section 1925) of Part 4 of Division 3 of the Civil Code.... The Court of Appeal wrestled with the meaning of this subdivision, deciding ultimately that [i]n the Ellis Act context it would be a superficial act of interpretation to conclude that the use of the term `supersede,' in reference to a broad and detailed statutory scheme of the Civil Code, necessarily meant that a particular eviction defensefound in a single statuteremained applicable. The Legislature did not single out section 1942.5, but broadly referenced title 5, which includes sections 1925 through 1997.270 [of the Civil Code]. After weighing the competing policies of the two statutes, the Court of Appeal deemed it unreasonable to conclude that in the process of making broad references to entire systems of statutes in the Ellis Act, the Legislature intended the defense of retaliatory eviction to apply to unlawful detainer proceedings under the Act. Landlord asks us to embrace this reasoning and find that the Ellis Act superseded section 1942.5. To the extent Landlord invites us to ignore the language of Government Code section 7060.1, subdivision (d), and instead reweigh allegedly competing public policies as they relate to section 1942.5, we must decline the invitation. The judicial branch `has no power to rewrite the statute so as to make it conform to a presumed intention which is not expressed. ' ( Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 59, 124 Cal.Rptr.2d 507, 52 P.3d 685.) We therefore apply the plain language of Government Code section 7060.1, subdivision (d), and conclude the Act did not supersede section 1942.5. It does not follow, however, that section 1942.5 should be read to supersede the Act. When the Legislature provides that one law does not supersede another, the two are to be construed together. ( San Mateo City School Dist. v. Public Employment Relations Bd. (1983) 33 Cal.3d 850, 864-865, 191 Cal.Rptr. 800, 663 P.2d 523 [Education Code section 3540, which says that [n]othing contained herein shall be deemed to supersede other provisions of the Education Code, should be construed in harmony with ... existing sections of the Education Code]; Taylor v. Albion Lumber Co. (1917) 176 Cal. 347, 350-351, 168 P. 348 [`Section 1970 of the Civil Code is to be construed with [Code of Civil Procedure] section 377, not as superseding it']; Masonite Corp. v. County of Mendocino Air Quality Management Dist. (1996) 42 Cal.App.4th 436, 451, fn. 11, 49 Cal.Rptr.2d 639.) The parties therefore agree that our task is to harmonize the two schemes, provided that in doing so section 1942.5 is not `replaced, set aside or annulled by' the Ellis Act. ( San Mateo City School Dist. v. Public Employment Relations Bd., supra, 33 Cal.3d at p. 864, 191 Cal.Rptr. 800, 663 P.2d 523; accord, Black's Law Diet. (7th ed.1999) p. 1452 [defining supersede as annul, make void, or repeal by taking the place of'].) For the reasons set forth below, we do not find that permitting a landlord to invoke in good faith his or her right to withdraw the property from the rental market would replace, set aside, or annul section 1942.5. Our analysis must begin with the language of section 1942.5 itself. Tenants claim they are protected under section 1942.5, subdivision (a)(1), which bars a landlord from retaliating against a tenant within 180 days of the tenant's oral complaint regarding tenantability, as well as subdivision (c), which bars a landlord from retaliating against a tenant for the lawful and peaceable exercise of any rights under the law. In this proceeding, Landlord does not dispute that Tenants made an oral complaint or otherwise lawfully and peaceably exercised their rights under the lawnor does Landlord deny that he seeks to recover possession because of the oral complaint (§ 1942.5, subd. (a)) or for the purpose of retaliating against Tenants' exercise of their rights (id., subd. (c)). Landlord claims instead that the defense of retaliatory eviction can be defeated by proof that he has in good faith invoked his rights under the Ellis Act to withdraw the subject property from the rental market. His claim is based not on the theory that the Act has replaced, set aside, or annulled section 1942.5, but on the language of section 1942.5 itself and, in particular, on subdivision (d), which states in relevant part that [n]othing in this section shall be construed as limiting in any way the exercise by the lessor of his rights under any lease or agreement or any law pertaining to the hiring of property or his right to do any of the acts described in subdivision (a) or (c) for any lawful cause. Landlord reasons that subdivision (d) constitutes an exception to the prohibitions set forth in subdivision (a) and (c). Landlord's interpretation is consistent with the language of the statute. Section 1942.5, subdivision (d), provides that, in specified circumstances, a landlord may do any of the acts described in subdivision (a) or (c) and that, in those circumstances, [n]othing in section 1942.5 shall be construed as limiting the landlord in any way. Subdivision (d) then describes these circumstances: when the landlord exercises his or her rights under any lease or agreement or any law pertaining to the hiring of property or acts for any lawful cause. Landlord's interpretation is also consistent with the case law. Subdivision (c) of the statute [now reenacted with only conforming changes as subd. (d) provided that the landlord, even if he had retaliation in mind, could nevertheless prevail if the tenant violated `any lease or agreement or any law pertaining to the hiring of property....' For example, if the tenant was in default in payment of the agreed rent, or if he violated a covenant in a lease, or if he committed waste or maintained a nuisance, the landlord could move to evict him even though the tenant had complained about the habitability of the premises. ( Western Land Office, Inc. v. Cervantes (1985) 175 Cal.App.3d 724, 733, 220 Cal.Rptr. 784 (Cervantes ), italics added.) We therefore agree with Landlord that section 1942.5, subdivision (d), constitutes an exception to the limitations on landlord conduct set forth in subdivisions (a) and (c). ( Cervantes, supra, 175 Cal.App.3d at p. 733, 220 Cal.Rptr. 784.) But does a landlord's withdrawal of property from the rental market under the Ellis Act constitute an exercise of rights under a law pertaining to the hiring of property? Both Landlord and Tenants agree that the Act, which is designed to permit landlords to go out of business (Gov.Code, § 7060.7), is such a law. We therefore conclude that a landlord's withdrawal of rental property from the market under the Act constitutes the exercise of a right under a law pertaining to the hiring of property under section 1942.5, subdivision (d). The parties disagree vigorously over the significance of this conclusion. Landlord and some of his amici curiae contend that this is the end of the analysisi.e., that once the landlord has complied with the Act's procedural requirements, the exception set forth in section 1942.5, subdivision (d), has been satisfied, and the statutory defense of retaliatory eviction has been overcome. Tenants and their amici curiae, on the other hand, contend that even those landlords who seek refuge under subdivision (d) must nonetheless demonstrate an absence of retaliatory motive in order to prevail in the unlawful detainer action. Neither party's construction is consistent with the statute. We instead find guidance in section 1942.5, subdivision (e), which states that [notwithstanding the provisions of subdivisions (a) to (d), inclusive, a lessor may recover possession of a dwelling and do any of the other acts described in subdivision (a) within the period or periods prescribed therein, or within subdivision (c), ... if the notice of termination ... states the ground upon which the lessor, in good faith, seeks to recover possession.... If such statement be controverted, the lessor shall establish its truth at the trial or other hearing. (Italics added.) Landlord thus errs in terminating the analysis at subdivision (d), since subdivision (e) expressly applies notwithstanding the provisions of subdivisions (a) to (d) inclusive. Accordingly, landlords must assert their invocation of the Ellis Act in good faith. (§ 1942.5, subd. (e).) Tenants, on the other hand, err in assuming that a landlord who has invoked the Ellis Act, a law pertaining to the hiring of property under subdivision (d), must prove not only that the Act has been invoked in good faith but also that the Act has not been invoked for a retaliatory purpose. Such a requirement would nullify the language in subdivision (d) that [n]othing in this section shall be construed as limiting in any way the exercise by the lessor of his rights under ... any law pertaining to the hiring of property. 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. (See Cervantes, supra, 175 Cal.App.3d at p. 742, 220 Cal. Rptr. 784.) [2] This construction best harmonizes the Act with the text of the retaliatory eviction statute. We therefore find no statutory basis for Tenants' contention that Landlord 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 under subdivisions (a) and (c) of section 1942.5. Indeed, neither 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. (Cf. California Livestock Production Credit Assn. v. Sutfin (1985) 165 Cal.App.3d 136, 143, 211 Cal.Rptr. 152 [claim of retaliation is not a defense in unlawful detainer action based on foreclosure of property]; Carol Rickert & Associates v. Law (App.2002) 132 N.M. 687, 54 P.3d 91, 97-98 [claim of retaliation is not a defense in unlawful detainer action based on landlord's decision not to remain in the federal government's former Section 8 housing program]; see generally Robinson v. Diamond Housing Corporation (D.C.Cir.1972) 463 F.2d 853, 867.) Although we have at times analogized a tenant's defense of retaliatory eviction to an employee's defense of retaliatory termination (e.g., Barela v. Superior Court, supra, 30 Cal.3d at pp. 253-254, fn. 8, 178 Cal.Rptr. 618, 636 P.2d 582; Schweiger, supra, 3 Cal.3d at pp. 515-516, 90 Cal. Rptr. 729, 476 P.2d 97), neither Tenants nor the concurring and dissenting opinion identifies a single jurisdiction that has sustained a retaliatory termination defense where the employer was going out of business. (Cf. Textile Workers v. Darlington Co. (1965) 380 U.S. 263, 271, 85 S.Ct. 994, 13 L.Ed.2d 827 [`But none of this can be taken to mean that an employer does not have the absolute right, at all times, to permanently close and go out of business ... for whatever reason he may choose, whether union animosity or anything else'].) In sum, neither Tenants nor Justice Moreno has identified anything in the Act or in section 1942.5 to suggest the Legislature intended California to be the first to endorse a retaliatory withdrawal defense when a landlord seeks to go out of business. The mere fact the statutory defense is defeated when the landlord, in conformance with section 1942.5, subdivisions (d) and (e), establishes a bona fide intent to go out of business does not mean that section 1942.5 has been superseded by the Act. To supersede section 1942.5, the Ellis Act would have to replace, set aside, or annul section 1942.5. As demonstrated above, our analysis relies on a close reading and application of the precise provisions Tenants fear have been superseded. Far from allowing the Act to supersede section 1942.5, our construction has given effect to the plain language of that provision, including subdivisions (d) and (e), which permit a landlord to go out of business and evict the tenantseven if the landlord has a retaliatory motiveso long as the landlord also has the bona fide intent to go out of business. This is what the Cervantes court understood those provisions to mean when it construed subdivision (d) to allow a landlord to evict the tenant even if he had retaliation in mind.... ( Cervantes, supra, 175 Cal. App.3d at p. 733, 220 Cal.Rptr. 784.) If, on the other hand, the landlord cannot establish a bona fide intent to go out of business, the tenants may rely on subdivisions (a) and (c) to resist the eviction. [3] Tenants respond that the retaliatory eviction defense is the only method available to protect one's home from an alleged phony Ellis [Act] eviction. We disagree. As explained above, a tenant who believes the landlord's invocation of the Act is phony and that the landlord actually intends to offer the vacated units to new tenants may controvert the landlord's statement of intent. The landlord will then have the burden to establish his or her bona fide intent to withdraw the property from the market by a preponderance of the evidence. It is that requirement, and not the retaliatory eviction defense itself, that will prevent or deter phony evictions. Moreover, a defense of retaliatory eviction is of no help where the landlord's intention to withdraw units from the market is a sham but the tenant has not engaged in conduct protected under subdivision (a) or (c) of section 1942.5. (Cf.Civ.Code, § 1942.4, subd. (f).) Tenants worry next that a landlord may invoke the Act but secretly intend to re-rent the units once the existing tenants have been displaced. This fear, of course, presupposes that although the tenant controverted the landlord's intent, the landlord committed perjury at the hearing, the tenant was unable to uncover the perjury by cross-examination or by other evidence, and the fact finder was unable to detect the perjury. The likelihood of an erroneous outcome is further diminished by the landlord's awareness that an Ellis Act eviction followed closely in time by a re-renting of the premises to new tenants would be persuasive evidence of the landlord's bad faith in any future Ellis Act proceeding. (Civ.Code, § 1942.5, subd. (e); Evid. Code, § 1101, subd. (b).) Finally, we note that perjury concerns do not arise in this case, inasmuch as San Francisco has eliminated the incentive for sham Ellis Act evictions by adopting ordinances strictly limiting the landlord's right to re-rent the withdrawn property to others, to raise the rent, or to sell the property unencumbered by these limitations. (S.F.Admin.Code, § 37.9A, subds.(a), (c), (d), (g); see Gov. Code, §§ 7060.2, 7060.3.) Unable to find support in the statutory text, Tenants urge us instead to rely on isolated fragments of the Act's legislative history. They point us in particular to a single paragraph in a Senate committee analysis discussing proposed Government Code section 7060.1. The paragraph reads: This provision would limit a landlord's right to go out of business if the exercise of that right would jeopardize a tenant's rights under state law. For example, this provision would probably prohibit a landlord from going out of business if the tenant had requested repairs or reported housing code violations. An eviction of the tenant under such circumstances could be deemed a prohibited retaliatory eviction. (Sen. Rules Com., Off. of Sen. Floor Analyses, analysis of Sen. Bill No. 505 (1985-1986 Reg. Sess.) as amended Sept. 10, 1985, p. 3.) Yet the use of the words probably and could are sufficiently tentative and equivocal to caution us against relying too heavily on this snippet. (See Folsom v. Butte County (1982) 32 Cal.3d 668, 682, 186 Cal.Rptr. 589, 652 P.2d 437; In re Ramon A (1995) 40 Cal.App.4th 935, 939, 47 Cal.Rptr.2d 59.) [4] A contrary holding would also be inconsistent with other laws and lead to absurd results. The Legislature has made it clear that a landlord who seeks to withdraw rental property under the Ellis Act has no obligation to maintain the tenantability or habitability of the premises. (Civ. Code, § 1942.4, subd. (f); Code Civ. Proc., § 1174.2, subd. (d).) If the substandard conditions themselves cannot be used by tenants to resist an unlawful detainer action when the landlord invokes the Ellis Act, it would be bizarre to say that tenants could nonetheless force the landlord to remain in business by complaining about those same conditions. In such a scenario, the landlord would either be forced to make repairs, in violation of the above provisions, or would be compelled to continue to offer the property for rent, in violation of the Ellis Act. In addition, a contrary holding could permit tenants to force the landlord to remain in business indefinitely when, as here, the tenants have invoked section 1942.5, subdivision (c). This provision, which we have denominated a `boilerplate' provision because of its broad prohibition against retaliation by a landlord when a tenant has exercised valid legal rights ( Barela v. Superior Court, supra, 30 Cal.3d at p. 251, 178 Cal.Rptr. 618, 636 P.2d 582), is ongoing and not subject to the 180 day grace period or the limitation that it may only be invoked once a year, as are the other sanctions. (Review of Selected 1979 California Legislation (1979) 11 Pacific L.J. 601, 602.) As Justice Moreno concedes, the landlord could thus be compelled to remain in business indefinitely or, at the least, until a trier of fact determined that the retaliatory motive had dissipated. We are not persuaded the Legislature envisioned such a cribbed interpretation of the Ellis Act. [5] We therefore hold that where a landlord has complied with the Ellis Act and has instituted an action for unlawful detainer, and the tenant has asserted soothe statutory defense of retaliatory eviction, the landlord may overcome the defense by demonstrating a bona fide intent to withdraw the property from the market. If the tenant controverts the landlord's bona fide intent to withdraw the property, the landlord has the burden to establish its truth at the hearing by a preponderance of the evidence. (§ 1942.5, subd. (e).) In this case, the superior court denied Landlord's motion for summary adjudication without first considering whether Landlord had asserted a bona fide intent to withdraw the property and, if so, whether Tenants had controverted that intent. The Court of Appeal granted the writ of mandate and directed the superior court to enter an order granting Landlord's motion for summary adjudication, again without considering those facts. Under the circumstances, we will reverse the Court of Appeal with directions to remand the matter for the superior court to analyze the motion for summary adjudication under the proper standard. In the future, courts in similar circumstances may find it useful to consider first whether the landlord's intent to withdraw the property is bona fide. If it is, the statutory defense of retaliatory eviction has been overcome. If the landlord's intent is contested, the landlord has the burden to establish its truth. (§ 1942.5, subd. (e).) Only when the landlord has been unable to establish a bona fide intent need the fact finder proceed to determine whether the eviction is for the purpose of retaliating against the tenant under subdivision (a) or (c) of section 1942.5. Accordingly, evidence that the landlord has, in good faith, exited the rental business because of tenant conduct specified in subdivision (a) or (c) of section 1942.5 does not itself constitute an affirmative defense in an unlawful detainer proceeding under the Ellis Act.