Court Opinion

ID: 4438267
Source: CourtListenerOpinion
Date Created: 2019-09-13 23:02:00.64894+00
Date Added: 2024-06-11T13:31:49.264631
License: Public Domain

Filed 8/19/19 Modified and Certified for Publication 9/13/19 (order attached)

             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                    FIRST APPELLATE DISTRICT

                                               DIVISION ONE

ROBYN REYNOLDS et al.,
        Plaintiffs and Appellants,
                                                               A151825
v.
CORY LAU,                                                      (San Francisco County
                                                               Super. Ct. No. CGC-15-547285)
        Defendant and Respondent.

        Appellants Robyn and Ian Reynolds1 prevailed in a jury trial on a claim that their
former landlord, respondent Cory Lau, violated the owner move-in provisions of the San
Francisco Residential Rent Stabilization and Arbitration Ordinance (rent ordinance) when
he instigated eviction procedures against them. Appellants were awarded over $600,000
in damages. Following the verdict, the trial court, in a series of postverdict orders, called
for briefing on whether the verdict was subject to being set aside on a motion for
judgment notwithstanding the verdict (JNOV). In a detailed 68-page statement of
decision, the court granted Lau’s motion for JNOV and, alternatively, ordered a new trial,
after finding there was no substantial evidence to support the jury’s verdict. The
Reynoldses have appealed the resulting judgment. We affirm.

        1
        We sometimes refer to appellants by their first name in the interest of clarity. No
disrespect is intended.
                                                 I.
                  FACTUAL AND PROCEDURAL BACKGROUND
 A.    Owner purchase and notice of owner move-in
       The subject of this litigation is a mixed-use building in San Francisco consisting of
three units, a commercial space on the ground floor that houses a liquor store, a
residential unit on the second floor (456 Broadway), and a residential unit on the third
floor (458 Broadway). Four Fifty-six Broadway has three bedrooms and is 917 square
feet. Four Fifty-eight Broadway has two bedrooms and is 842 square feet and has a small
outdoor deck.
       Respondent Cory Lau purchased the property in August 2007. From 2007 to
2012, Lau and his fiancée, Sofia Bayawa, operated the ground floor liquor store on their
own. They lived in an apartment in San Bruno and commuted seven days a week to the
liquor store until January 2016, when they moved into 456 Broadway. At the time of
Lau’s purchase of the property, Robyn Reynolds had been a tenant of 456 Broadway
since 1995. Her husband Ian joined her in 2004.
       On April 20, 2015, Lau informed appellants that he had decided to move into their
unit and served them with a 60-day notice to terminate tenancy for owner.2 At the time
of the notice, appellants’ rent was $1,462.12 per month and they were on a month-to-
month lease. On June 1, 2015, Lau gave notice of his intent to vacate his apartment in
San Bruno. That same day, Robyn sent Lau a letter offering to pay $86,551 for two years
of advance rent at a rate of $3,000 per month, plus a refund of the initial relocation
payment of $5,551 and three months’ deposit of $9,000, in exchange for a new lease in

       2
         Section 37.9, subdivision (a)(8)(i) of the San Francisco Administrative Code
permits the eviction of a tenant when “[t]he landlord seeks to recover possession in good
faith, without ulterior reasons and with honest intent . . . [¶] . . . [f]or the landlord’s use or
occupancy as his or her principal residence for a period of at least 36 continuous
months.” All undesignated statutory references are to the San Francisco Administrative
Code.

                                                2
either of the property’s two apartments. Lau declined Robyn’s offer, responding that he
had already given notice to vacate his own apartment and that appellants would be
required to move out by June 20.
       Robyn wrote Lau on July 2, 2015 to “to please ask that you stop the unlawful
eviction of Ian and I from our home at 456 Broadway.” Her letter discussed that the
upstairs lessee at 458 Broadway, Peter Herrmann, had been renting his unit using short-
term rental websites for the past five years and Lau was acting in bad faith by evicting
them instead of Herrmann.3 The letter stated: “Why haven’t you terminated Peter’s
tenancy? Why haven’t you evicted Peter? Why would you try to evict us instead, unless
it’s because you want to remove 20 year tenants who are paying less in rent? That is bad
faith, Cory.” Robyn also claimed that because Herrmann’s unit was “unoccupied” Lau
was required by law to move into 458 Broadway instead of their unit.
 B.    Unlawful detainer and wrongful eviction actions
       Lau determined that his April 2015 notice to vacate was defective and had an
attorney prepare and serve appellants with a second 60-day notice to vacate on June 9,
2015. When appellants did not vacate 456 Broadway after 60 days, Lau initiated an
unlawful detainer action against them.
       Lau separately emailed Herrmann directing him to stop offering his apartment for
short-term rentals. A June 19, 2015 e-mail stated: “Robyn is building a case around you
and the way you are renting out your apartment. She has placed a camera in her window
monitoring the people going up and down the stairs. All Airbnb activity must stop until
you follow the correct procedures required by the laws of San Francisco. . . . I cannot
allow any further renting of your apartment until you are properly licensed by the city.”

       3
         On November 1, 2012, Peter Herrmann signed a one-year lease for the
third-floor unit, 458 Broadway, for $3,195 per month. The lease was renewed each year
thereafter. The original lease provided that Herrmann was allowed to have paying guests
for no longer than 15 days at a time.

                                             3
Over a period of 75 days from May through July, appellants observed 458 Broadway
being used for short-term rentals on 69 of those days. Herrmann responded to Lau that
he would remove the apartment from Internet listings, but Robyn continued to observe
458 Broadway listed on rental websites. Lau sent several follow-up e-mails in July and
August 2015. On August 14, 2015, Lau’s attorney sent Herrmann a 30-day notice to cure
or quit. Herrmann agreed to modify his lease to remove the provision allowing him to
have paying guests of no longer than 15 days at a time.4
       In August 2015, appellants filed a complaint for wrongful eviction against Lau and
various other defendants who are not parties to this appeal. The complaint alleged causes
of action for declaratory relief, negligence, breach of covenant of quiet enjoyment,
violation of the rent ordinance, intentional infliction of emotional distress, negligent
misrepresentation, and intentional misrepresentation. In the meantime, the trial court
granted Lau’s motion for summary adjudication in the unlawful detainer action,
concluding that 458 Broadway was not “vacant” or “available” for owner move-in
purposes because Peter Herrmann was an existing tenant who lives overseas and has
sublet the premises, with the landlord’s consent, to subtenants. On the day of trial, the
parties reached a settlement. Appellants agreed to vacate their unit by November 30,
2015, while retaining the option “to remain in possession of the Premises” as late as
December 31, 2015. The agreement further provided that “if the non-comparable
premises at 458 Broadway, San Francisco become vacant and available before
[appellants] vacate the Premises . . ., then [Lau] will offer the premises at 458 Broadway,
San Francisco, as set forth in §37.9 (a)(8)(iv) of the San Francisco Administrative Code.”

       4
        Although Herrmann was slow to remove the apartment from rental listings, he
complied with the directive to cease all short-term rentals as of July 4, 2015. Herrmann
subleased 458 Broadway to one tenant (Pawvel) from July 4 to August 18, 2015, and to
another tenant (Rawitz) from August 18 to December 15, 2015. On November 1, 2015,
Lau and Herrmann extended the lease on 458 Broadway for an additional one-year term.

                                              4
(Italics added.) Lau agreed to provide $41,352 toward relocation expenses and to dismiss
his unlawful detainer action.
        On December 19, 2015, Herrmann surrendered possession of 458 Broadway and
terminated his lease. Lau offered 458 Broadway to appellants at a rent of $4,000 per
month. Appellants refused the offer. On December 29, 2015, appellants surrendered
possession of 456 Broadway. Lau and Bayawa moved into 456 Broadway in January
2016.
 C.     Appellants’ wrongful eviction trial
        Trial in appellant’s wrongful eviction action commenced February 24, 2017, and
lasted seven days. The jury returned a verdict on March 7, 2017. Testimony from the
following key witnesses was adduced at trial.
Robyn Reynolds
        Robyn testified she moved into 456 Broadway in 1995. Shortly after Lau
purchased the building in 2007, he told her he did not plan on moving into the building.
The relationship with Lau was cordial for many years. He described her and Ian as
perfect tenants. Robyn planned on remaining in the apartment for the next 25 to 30 years.
        In 2012, she met Peter Herrmann, who had just rented the upstairs apartment at
458 Broadway. Herrmann told her that he traveled frequently for work and would be
renting out the apartment through Airbnb most of the time. Robyn met Amy Kee, who
was Herrmann’s Airbnb property manager. Robyn last saw Herrmann in November
2012. Prior to 2015, Robyn never observed anyone staying upstairs for more than 30
days at a time. She believed Lau was aware of Herrmann’s Airbnb activities, though she
had not advised Lau of any legal concerns until after receiving the notice of owner
move-in. Robyn acknowledged that all short-term rentals at 458 Broadway ceased in
June or July 2015, with one renter occupying the unit for 45 days and another renter
occupying the unit from August through December.

                                              5
       Robyn was surprised by Lau’s decision to move into 456 Broadway. Lau told her
his rent in San Bruno was increasing to $5,000 a month. Robyn offered to pay more rent
or to move upstairs into Herrmann’s unit, since nobody was living there and it was only
being used as a hotel room. Lau declined her offer. Robyn told Lau that Herrmann’s
Airbnb was illegal, and Lau responded that if this were true then he would evict
Herrmann as well. Robyn came to believe Herrmann’s apartment qualified as a vacant
unit that Lau was required to offer to her and Ian. If Lau had initially offered
458 Broadway to her, she would have accepted it. Robyn and Ian settled the unlawful
detainer action but did not waive their right to sue Lau. In exchange for agreeing to move
out, they received money for relocation expenses and moved out in December 2015.
When Lau offered them the upstairs unit, they declined because they had already
disposed of much of their furniture and signed a lease for a new apartment.
Cory Lau
       Lau began operating the ground floor liquor store soon after acquiring the property
in 2007. When he and Bayawa were living in San Bruno, they worked at the store seven
days a week, anywhere from 11 to 12 hours a day. Before opening for business, they
would spend an hour or two shopping. They were unable to get products delivered to the
store because they arrived too late to accept daytime deliveries. The store was open from
3:00 p.m. to 2:00 a.m. They decided to move into the building so that they could accept
deliveries, eliminate their commute, and have more time to spend together and raise a
family.
       Lau and Bayawa decided to move into 456 Broadway in 2015 because it had a
third bedroom and was on the second floor. Bayawa was pregnant at the time of trial.
She turned one of the three bedrooms in 456 Broadway into a closet/changing room, the
second bedroom was for the baby, and the master bedroom for the couple. Since moving
in, they have saved money on transportation and do more cooking at home.

                                             6
       Lau testified that by August 2015, the rent in his San Bruno apartment was slated
to increase to $2,740 if he signed a 12-month lease, $3,390 if he signed a six-month lease,
and $4,245 if he remained on a month-to-month lease. Lau and Bayawa elected to sign a
lease agreement for three months, at $3,655 per month. They later moved into his
parents’ house pending the eviction proceedings. Lau recalled telling Robyn that his rent
would increase to $4,000 on a month-to-month lease. He did not recall telling Robyn that
his rent would increase to $5,000 a month. He told Robyn that if he found out
Herrmann’s Airbnb was illegal, he would evict him. Following his attorney’s advice,
Lau served Hermann with a 30-day notice to cure or quit. The notice was not related to
Lau’s decision to move into the building. Rather, Lau was considering evicting
Herrmann because the short-term rental activity was becoming problematic. Lau later
agreed to extend Herrmann’s lease for another year; however, Herrmann did not pay rent
for December 2015.5 In late December, Lau offered 458 Broadway to appellants at
$4,000 per month. They did not accept. If the unit upstairs had become vacant earlier,
Lau would have offered it to Robyn and Ian.
       When Lau’s attorney sent out the second eviction notice to appellants, Lau did not
know whether Herrmann was actually living upstairs. Lau was aware that if the upstairs
unit was vacant and available, he might be required to cancel Robyn and Ian’s eviction.
After Herrmann surrendered his lease and left his belongings in the unit, Lau tried to rent
the apartment out as a furnished apartment in early January but was unsuccessful.
Sofia Bayawa
       Bayawa testified that she and Lau decided to move out of their San Bruno
apartment in 2015 because their financial situation was getting more difficult. Their rent
was increasing every year by about $200 to $300 per month, and the price of gas for their

      Lau’s attorney, Francisco Gutierrez, testified that Herrmann’s tenancy ended on
       5

December 18, 2015, when his subtenant turned over the keys.

                                             7
commute was increasing. From 2007 to 2012, they commuted seven days a week from
San Bruno to run the store. These years were very stressful because they were tired and
did not have time to see family and friends. They also wanted to start a family, and she
wanted to be able to babysit her nieces and have a place for visiting family members to
stay. The extra bedroom in the second floor unit was important to them. Since moving
in, their quality of life has improved and they have saved money. They have no plans to
move or sell the property.
       She and Lau were not aware of Herrmann’s short-term rental activity until Robyn
brought it to their attention. Appellants had not complained about it until after Lau
informed them he wanted to move into their unit. The timing of their decision to move in
did not have anything to do with Herrmann.
Jury Verdict
       On March 2, 2017, Lau’s attorney moved for a directed verdict on all causes of
action, including the owner move-in claim. The trial court denied the motion but noted it
might later consider a motion for JNOV. On March 6, 2017, the jury completed a special
verdict form that addressed each of appellants’ causes of action. The jury returned a
defense verdict on appellants’ claims for breach of covenant of quiet enjoyment,
intentional infliction of emotional distress, tenant harassment, and negligence.
       As to the owner move-in claim, the jury found that Lau had not sought “to recover
possession of 456 Broadway in good faith, without ulterior reasons and with honest intent
for use and occupancy as his principal residence for a period of at least 36 continuous
months.” Because of the way the special verdict form was written, the jury was not
directed to address whether 458 Broadway was a comparable unit to appellants’ unit
(456 Broadway), whether 458 Broadway was vacant and available at the time Lau sought
to recover possession of 456 Broadway, or whether 458 Broadway had been offered to
appellants. The jury answered “no” to the question: “Did Cory Lau act in knowing
violation of, or in reckless disregard of, the law concerning owner move in?” Damages

                                             8
were awarded to appellants in the amount of $223,858. Under section 37.9, subdivision
(f), the damages award was trebled, for a total award of $671,574. Judgment was entered
March 9, 2017.
 D.    Posttrial proceedings
       On March 16, 2017, the trial court issued the first of several posttrial orders,
requiring counsel to answer 36 written questions by March 29, 2017. The court’s
purpose in eliciting responses from counsel was to decide whether to notice its own
motion for JNOV. Lau and appellants submitted their responses to the trial court’s 36
questions. On March 30, 2017, the trial court issued a third posttrial order6 requiring Lau
to provide additional responses, including a timetable showing when Lau moved into
456 Broadway, with appropriate reference to the trial transcript and exhibits. The parties
were directed to prepare a list of legal issues that would need to be decided in connection
with a JNOV motion. The court also indicated they should assume the court had
tentatively decided not to notice its own motion for JNOV. Both sides filed responses to
the court’s third posttrial order.
       The trial court issued a sixth posttrial order requiring any motion for JNOV to
include a proposed statement of decision and a separate statement of undisputed material
facts supported by reference to the trial record. The parties were directed to file
responses to the other side’s statement of undisputed facts. A seventh posttrial order
required any party filing a notice of intent to move for a new trial to submit an exhibit
entitled, “Statement of How the Evidence is Insufficient to Justify the Results Reached
By the Jury.” The opposing party could file an exhibit entitled, “Statement of
Explanation Why the Evidence Introduced Supports the Result Reached By the Jury.”
       On April 18, 2017, Lau filed a notice of intention to move for JNOV and for a new
trial. On May 8, 2017, the Reynoldses filed their opposition to the JNOV and new trial

       6
           Nonpertinent orders are not discussed herein.

                                              9
motions and their response to the court’s third posttrial order. Both parties filed their
respective responses to the trial court’s seventh posttrial order.
       Lau’s noticed motion was heard on May 18, 2017. On May 31, 2017, the trial
court entered judgment setting aside the March 9, 2017 judgment and entering a new
judgment in favor of Lau. In its 68-page statement of decision, the court concluded the
jury verdict constituted “a substantial miscarriage of justice” because there was no
evidence to support the jury’s finding that Lau had violated section 37.9, subdivision
(a)(8) of the rent ordinance.
       The court observed that the trial had focused on extraneous matters involving
whether Lau’s actions were generally in “ ‘good faith,’ ” without “ ‘ulterior motive,’ ”
and with “ ‘honest intent,’ ” rather than on the legally permissible inquiry whether “Lau’s
reason and motive for seeking to recover possession of 456 Broadway was to use and
occupy the property continuously for 36 months.” Evidence presented by appellants,
including Lau’s alleged misrepresentation as to the amount of his rent increase in San
Bruno, his failure to evict Herrmann instead of them, and his failure to wait and move
into Herrmann’s unit upon the expiration of Herrmann’s lease, were “all completely
irrelevant under a legally correct interpretation of the owner move-in statute.”
       The trial court’s judgment was grounded in its determination that under section
37.9, subdivision (a)(8), the terms “in good faith,” “without ulterior reason,” and “honest
intent” have specific meanings that are not derived from “a general abstract dictionary
definition,” and that any contrary interpretation “would defeat the purpose of the owner
move-in ordinance and would make it vague and void under the California Constitution.”
Those terms, the court explained, relate specifically to a landlord’s “reason and motive
for recovering possession for his use and occupancy as his principal residence. These
terms do not apply to other actions . . . which do not relate to his reason and motive for
recovery.” The court found that Lau’s reason and motive for moving into 456 Broadway
as his long-term primary residence was “ ‘clear, positive and uncontradicted . . .

                                              10
[evidence] of such a nature that it cannot be rationally disbelieved.’ ” In the alternative,
the trial court granted Lau’s motion for a new trial on the basis of insufficient evidence to
support the jury’s verdict under Code of Civil Procedure section 657, subdivision 6.
                                              II.
                                       DISCUSSION
       Because we resolve this appeal on the basis of the trial court’s entry of judgment
notwithstanding the verdict, we do not reach the merits of the court’s order granting a
new trial. We review de novo a judgment notwithstanding the verdict applying the same
legal standard as the trial court, bearing in mind that “ ‘ “[t]he purpose of a motion for
judgment notwithstanding the verdict is not to afford a review of the jury’s deliberation
but to prevent a miscarriage of justice in those cases where the verdict rendered is
without foundation.” ’ ” (Oakland Raiders v. Oakland-Alameda County Coliseum, Inc.
(2006) 144 Cal. App. 4th 1175, 1194.)
       “ ‘ “ ‘A motion for judgment notwithstanding the verdict of a jury may properly be
granted only if it appears from the evidence, viewed in the light most favorable to the
party securing the verdict, that there is no substantial evidence to support the verdict. If
there is any substantial evidence, or reasonable inferences to be drawn therefrom, in
support of the verdict, the motion should be denied.’ ” ’ ” (Hansen v. Sunnyside
Products, Inc. (1997) 55 Cal. App. 4th 1497, 1510, quoting Clemmer v. Hartford
Insurance Co. (1978) 22 Cal. 3d 865, 877–878.) A court must make this assessment
without weighing competing evidence. Indeed, we must “disregard[] conflicting
evidence on behalf of the defendants and giv[e] to plaintiff’s evidence all the value to
which it is legally entitled, therein indulging in every legitimate inference which may be
drawn from that evidence.” (Reynolds v. Willson (1958) 51 Cal. 2d 94, 99.)
 A.    Posttrial orders for further briefing
       We first address appellants’ claim that the court violated posttrial procedures when
it required the parties to brief posttrial matters that contemplated a potential JNOV

                                             11
motion. While appellants concede that the trial court granted Lau’s noticed motion for
JNOV, and did not notice its own JNOV motion, they argue the court’s statement of
decision “reflects that it considered and granted a JNOV on many bases advanced by the
trial court itself,” and erred because it “did not follow the strict five-day notice
requirement.” We are not persuaded.
       Courts have broad and inherent authority to deal with the rights of parties and
control matters before them. (Cottle v. Superior Court (1992) 3 Cal. App. 4th 1367, 1377–
1378; see Code Civ. Proc., § 128, subds. (a)(1), (a)(8).) It is elementary that a court may
order additional briefing from the parties to assist in its evaluation of legal questions
before it. Appellant’s reliance on Code of Civil Procedure section 629, subdivision (a) is
misplaced,7 as it makes no mention of and in no way purports to limit the trial court’s
ability to order posttrial briefing. And because the trial court did not render judgment on
its own motion for JNOV, the five-day notice requirement is inapplicable.
       Appellants further contend the trial court improperly considered evidence from
posttrial filings when it granted the motion for JNOV, specifically, information the court
received as to when appellants retained counsel in this matter. They claim the court
relied on this information to draw the negative conclusion that Robyn received help from
an attorney in drafting an offer letter to Lau. Their assertion appears unfounded as the
court merely observed that the letter in question “had the appearance that it was written
with the assistance of counsel” and makes no reference to the hiring of appellants’

       7
         Code of Civil Procedure section 629, subdivision (a) provides: “The court,
before the expiration of its power to rule on a motion for a new trial, either of its own
motion, after five days’ notice, or on motion of a party against whom a verdict has been
rendered, shall render judgment in favor of the aggrieved party notwithstanding the
verdict whenever a motion for a directed verdict for the aggrieved party should have been
granted had a previous motion been made.”

                                              12
counsel. In any event, under de novo review we are not bound by any of the trial court’s
factual determinations or inferences it drew from the record.8
 B.    Owner move-in provisions
       The San Francisco rent ordinance restricts tenant evictions except upon certain
specified grounds. Relevant to this appeal, the owner move-in provisions permit the
eviction of a tenant when “[t]he landlord seeks to recover possession in good faith,
without ulterior reasons and with honest intent . . . [¶] . . . [f]or the landlord[’s] use or
occupancy as his or her principal residence for a period of at least 36 continuous
months.” (§ 37.9, subd. (a)(8)(i).) This must be the owner’s dominant motive for
recovering possession. (§ 37.9, subd. (c).) The ordinance further provided: “It shall be
rebuttably presumed that the landlord has not acted in good faith if the landlord or
relative for whom the tenant was evicted does not move into the rental unit within three
months and occupy said unit as that person’s principal residence for a minimum of 36
continuous months.” (§ 37.9, former subd. (a)(8)(v).)9 If a comparable unit owned by
the landlord is already vacant and is available, or becomes available during the period of
recovery, the owner may not recover possession and must “rescind the notice to vacate
and dismiss any action filed to recover possession of the premises.” (§ 37.9,
subd. (a)(8)(iv).) If a noncomparable unit becomes vacant and available before the
recovery of possession, the owner must offer the noncomparable unit to the tenant being
displaced. (Ibid.) Finally, the ordinance provides “[it] shall be evidence of a lack of
good faith if a landlord times the service of the notice, or the filing of an action to recover

       8
         Appellants also contend the trial court erred by deeming certain facts as
undisputed after they failed to submit a separate statement of undisputed facts in
conformity with the trial court’s sixth posttrial order. We need not resolve this claim
because we do not rely on the parties’ posttrial submissions for purposes of this appeal.
       9
         Section 37.9, subdivision (a)(8)(v) has since been amended. We refer to the
version of the ordinance in effect at the time Lau first sought to recover possession of the
rental unit in April 2015.

                                               13
possession, so as to avoid moving into a comparable unit, or to avoid offering a tenant a
replacement unit.” (Ibid.)
         We agree with the trial court that the “good faith,” “without ulterior reason,” and
“honest intent” requirements do not trigger a wide-ranging inquiry into the general
conduct and motivations of an owner who seeks to recover possession of a unit. Rather,
these terms serve a specific function, to determine whether the owner harbors a
good-faith desire to occupy the apartment as his or her primary residence on a long-term
basis.
         The plain language of the ordinance guides our analysis. The requirement that an
owner seek to recover possession of a unit in “good faith” is immediately followed by the
object of the owner move-in provision: “For the landlord[’s] use or occupancy as his or
her principal residence of at least 36 continuous months.” (§ 37.9, subd. (a)(8)(i).) That
the “good faith” condition is tethered to this specific purpose is reinforced in former
subdivision (a)(8)(v), which creates a rebuttable presumption that an owner has acted in
bad faith if he or she does not “move into the rental unit within three months” and occupy
the unit as their “principal residence.” The owner move-in provisions must be construed
in a manner that effectuates the purpose of the statute, to ensure than an owner seeking to
recover possession does so because he or she intends to establish a long-term primary
residence.
         The trial court’s observation that any contrary interpretation would defeat the
purpose of the owner move-in provisions and may pose constitutional problems is well
taken. “ ‘[A] statute which either forbids or requires the doing of an act in terms so vague
that men of common intelligence must necessarily guess at its meaning and differ as to its
application, violates the first essential of due process.’ ” (Ewing v. City of Carmel-By-
The-Sea (1991) 234 Cal. App. 3d 1579, 1594, quoting Connally v. General Const. Co.
(1926) 269 U.S. 385, 391.) It is manifestly unclear how the terms “good faith,” “honest
intent,” and “without ulterior reason” can be enforced against an owner if not on the basis

                                              14
of whether the owner intends to establish a long-term principal residence. We decline to
construe the ordinance in a manner that would permit owner move-in proceedings to be
subjected to a vague examination of the owner’s actions and motivations outside of their
desire to move into an apartment. With these legal principles in mind, we review
whether substantial evidence, and all reasonable inferences drawn therefrom, supports the
jury’s verdict.
 C.    No Substantial Evidence Supports the Jury’s Verdict
       We conclude the evidence is insubstantial to support the jury’s verdict that
respondent violated the owner move-in provisions of the rent ordinance and thus the
verdict must be set aside to prevent a miscarriage of justice. The evidence at trial was
uncontroverted that Lau and Bayawa intended to occupy 456 Broadway as their long-
term primary residence in 2015 when Lau sought to recover possession, they moved into
the unit within one month of taking possession, and they had established a permanent
residence by the time trial commenced the following year.
       Lau and Bayawa testified as to their reasons for wanting to move into 456
Broadway. They were commuting seven days a week from San Bruno to run the liquor
store, working 11- to-12 hour days, were unable to receive deliveries at the store, and
were unable to see their friends or family. They wanted to eliminate their commute to the
store, have more time to spend together, and raise a family. They chose 456 Broadway
because it was the larger of the two apartments, was on the second floor and had a third
bedroom, factors that were important to the couple because they were planning a family
and needed the extra space. Bayawa was pregnant at the time of trial and had converted
one of the bedrooms into a baby room and the other bedroom into a closet. Finally, both
testified they intended to raise a family and live in the apartment indefinitely, certainly
beyond 36 months.
       Appellants’ evidence at trial does not contradict any of the foregoing. Robyn
testified that in 2007, Lau told her he did not plan on moving into the building. Even as

                                             15
we credit this testimony, Lau’s intention in 2007 has no bearing on whether Lau intended
to occupy the unit as his primary residence in 2015. Indeed, appellants’ trial counsel
conceded the point when he argued to the jury in closing, “[y]ou know, and we’re not
really disputing that Mr. Lau wanted to move into 456 [Broadway].” Appellants’ briefs
likewise do not identify any evidence disputing that Lau intended to move into 456
Broadway to occupy as his long-term primary residence.
        Appellants instead contend that substantial evidence supports the jury verdict
because the good faith requirement encompasses “the landlord’s conduct and actions in
recovering possession of a rental unit that must be done in good faith, without ulterior
reasons, and with honest intent.” In other words, even if an owner intends to establish a
long-term occupancy, the owner may run afoul of the ordinance if his or her actions can
be deemed to have been in bad faith or with ulterior motives.
        Appellants rely on the following four points: (1) 458 Broadway was not occupied
in light of Herrmann’s short-term rentals, and Lau was required to cancel his owner
move-in eviction or offer the upstairs unit to them; (2) Lau’s decision to evict appellants
rather than Herrmann constitutes bad faith; (3) Lau’s rush to evict appellants while
renewing Herrmann’s lease on November 1, 2015 evidences bad faith timing; and
(4) Lau’s dishonesty with appellants and other actions demonstrate he had ulterior
reasons for displacing them based on financial motives. We address each contention in
turn.
        i.    No comparable unit was vacant and available
        Appellants argue Lau did “everything in his power to give the appearance that
458 Broadway was ‘occupied’ by Herrmann, even though [he] was only using 458
Broadway as his short-term rental business and lived overseas himself.” Because a
comparable unit was vacant and available, Lau was required to offer the upstairs unit to
them or cancel his eviction proceedings. They are mistaken.

                                             16
         Under section 37.9, subdivision (a)(8)(iv), a landlord may not recover possession
of a unit if a “comparable” unit owned by the landlord is already “vacant and is
available” or becomes available during the period of recovery. As a matter of law, 458
Broadway was not “vacant and available” during the period of recovery—it was under an
existing lease to Herrmann. Appellants also overlook their settlement agreement with
Lau in which they stipulated that 458 Broadway was not comparable to their own
apartment and in which they acknowledged that 458 Broadway was not available.
         No substantial evidence supports appellants’ position that 458 Broadway was
vacant and available. It is undisputed that Herrmann’s lease of 458 Broadway was
current until he surrendered the apartment on December 19, 2015. “An agreement to let
upon hire binds the letter to secure to the hirer the quiet possession of the thing hired
during the term of the hiring . . . .” (Civ. Code, § 1927.) “Under this section, there is an
implied covenant on the part of a landlord that a tenant shall have quiet enjoyment and
possession of the premises during the continuation of the term.” (Lee v. Placer Title Co.
(1994) 28 Cal. App. 4th 503, 512, italics added.) Because Herrmann was contractually
entitled to possession, his unit was not “vacant” or “available” as a matter of law and
could not be offered to anyone else without Herrmann’s consent. That guests would
check out of 458 Broadway and leave the keys does not support the conclusion that the
unit was “vacant and available.” Appellants cite no authority that requires a tenant to be
physically present in order to maintain his or her contractual right of possession under a
lease.
         Furthermore, appellants may not escape the consequences of their settlement with
Lau. The settlement agreement in the unlawful detainer action, executed on November 3,
2015, terminated appellants’ tenancy and provided that appellants would vacate
456 Broadway by November 30, 2015, while giving them the option “to remain in
possession of the premises” as late as December 31, 2015. The agreement further
provided that “if the non-comparable premises at 458 Broadway, San Francisco become

                                              17
vacant and available before [appellants] vacate the Premises . . ., then [Lau] will offer the
premises at 458 Broadway, San Francisco, as set forth in §37.9(a)(8)(iv) of the San
Francisco Administrative Code.” (Italics added.) In accordance with the agreement, Lau
offered 458 Broadway to appellants in late December 2015 when that unit became
available. Appellants rejected it. They cannot now disclaim their acknowledgement that
458 Broadway was not a comparable unit or available at the time they signed the
agreement. (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal. 3d 699, 710 [noting
general rule that “one who assents to a contract is bound by its provisions and cannot
complain of unfamiliarity with the language of the instrument”].)
       ii.    Lau was under no legal obligation to evict Herrmann instead of appellants
       Appellants next argue that Lau’s decision to evict them instead of Herrmann
manifests bad faith. They contend Lau did not take steps to evict Herrmann even after
being sent 200 pages of screenshots showing 458 Broadway listed on rental websites.
They argue that the evidence shows, and it may be reasonably inferred, that Lau was
aware of Herrmann’s short-term rentals since November 2012 because his lease
permitted such rentals and several e-mails show Lau was aware of large and disruptive
parties. Appellants’ arguments are unavailing. Even if Lau was aware of Herrmann’s
rental activity and believed it to be unauthorized, Lau did not owe appellants a duty to
evict Herrmann instead of them.
       In Castaneda v. Olsher (2007) 41 Cal. 4th 1205, the Supreme Court stated: “With
regard to eviction, we agree that a residential tenant’s behavior and known criminal
associations may, in some circumstances, create such a high level of foreseeable danger
to others that the landlord is obliged to take measures to remove the tenant from the
premises or bear a portion of the legal responsibility for injuries the tenant subsequently
causes.” (Id. at p. 1210.) In that case, the plaintiff was shot and injured as a bystander to
a gang confrontation involving a resident of the mobile home across the street from his.
The plaintiff sued the landlord, contending the landlord had breached a duty not to rent to

                                             18
known gang members or to evict them when they harassed other tenants. (Id. at p. 1209.)
The Supreme Court observed “courts in this and other states have recognized a tort duty
to evict a vicious or dangerous tenant only in cases where the tenant’s behavior made
violence toward neighbors or others on the premises highly foreseeable.” (Id. at p.1219.)
Even assuming Herrmann was a “ ‘problem tenant,’ ” the circumstances of the present
case are clearly distinguishable as there are no allegations that his short-term rentals
resulted in any violent behavior. Instead, the evidence showed only a few isolated
instances of rowdy guests and late-night parties.
       Castaneda does not establish a legal duty to evict Herrmann, and appellants offer
no authority to support their contention that the rent ordinance required Lau to evict a
different tenant on the basis of suspected illegal activity. But even if Lau owed appellants
such a duty, the evidence was undisputed that Herrmann was served with a 30-day notice
to cure, and he did so, ending all short-term rentals by July 4, 2015. Herrmann also
agreed to modify his lease in August 2015 to remove the provision allowing him to sublet
to others on a short-term basis. In short, there is no substantial evidence to find that Lau
could have evicted Herrmann on the basis of his short-term rentals. When Lau served the
30-day notice, a predicate to any eviction action, Herrmann cured.10

       iii.   No substantial evidence supports the claim that Lau timed the notice of
              eviction to avoid moving into a comparable unit
       Appellants argue that Lau timed the service of his eviction notice and the filing of
his action to recover possession so as to avoid moving into a comparable unit or avoid
offering appellants a replacement unit. (See section 37.9, subd. (a)(8(iv).) As explained

       10
          In their reply brief, appellants assert that they “did not contend that Herrmann
should have been evicted but rather . . . contended that [Lau] was not acting in good faith
where [he] was rushing to evict [them] while delaying addressing Herrmann’s actions in
order to be able to argue that the upstairs apartment was unavailable.” Even if we accept
this characterization, their claim is founded on the premise that Lau was obligated to
proceed against Herrmann and could have evicted him. No evidence or law supports this
contention.

                                             19
above, their assertion is incorrect because 458 Broadway was neither available nor
comparable to their own apartment. When Lau served notice on appellants in April 2015
and again in June 2015, 458 Broadway was under an existing lease. Lau could only
proceed with an owner move-in as to appellants’ apartment, which was on a month-to-
month tenancy.
       Appellants counter that Lau should have waited out the end of Herrmann’s lease,
and his decision to renew the lease on November 1, 2015 is suspect. Appellants ignore,
however, that they entered into a settlement agreement a few days later in which they
stipulated to a dismissal of the unlawful detainer action and agreed that 458 Broadway
was not comparable or available at the time. Lau was under no obligation to move into
an apartment that did not suit his or his fiancée’s needs, and Lau did offer a
noncomparable replacement unit to appellants when it became available. Nothing more
was required of Lau to satisfy the terms of the parties’ agreement or the rent ordinance.

       iv.    Conduct not related to Lau’s intent to establish a long-term primary
              residence is not evidence of bad faith under the ordinance
       As a final matter, appellants point to other actions by Lau as evidence that he
sought to recover possession in bad faith, without honest intent, and based on ulterior
reasons. For example, appellants assert Lau was dishonest because he misrepresented
that the rent for his unit in San Bruno would increase to $5,000 per month, when in fact it
only increased to $3,655 per month. They complain that Lau’s stated desire for three
bedrooms was false because he converted one of the bedrooms into a closet.
       As discussed above, appellants’ ill-defined standard of what conduct may be
deemed bad faith in the eyes of a jury would render the ordinance unconstitutionally
vague and possibly confiscatory. No provision requires a landlord to provide the tenant
with a justification for his or her decision to move into a unit in his or her building. That
Lau may have exaggerated the rent increase for his San Bruno apartment or failed to
disclose his plans for the extra bedroom is of no moment, as there is no dispute that he

                                             20
intended to occupy 456 Broadway as his long-term primary residence, consistent with the
statute’s objective for owner move-in.11
       Appellants also complain that Lau had an ulterior motive for displacing them—
they paid substantially less rent than Herrmann. After they moved out, Lau was able to
offer the upstairs apartment on Craigslist for $4,695 per month, more than three times
their previous rent. Taken to its logical conclusion, appellants’ argument would preclude
a landlord from ever choosing the unit with the lowest rent when contemplating an owner
move-in eviction, a constitutionally fraught proposition. In Bakanauskas v. Urdan (1988)
206 Cal. App. 3d 621, the Court of Appeal interpreted a similar owner move-in ordinance
from the City of Berkeley. The court concluded that “[b]ecause the apparent purpose of
the code section is to allow landlords to occupy one of their own rental units as their
personal residence when, in good faith and not for retaliatory or other unlawful purposes,
they wish to do so, reasonable subjective factors affecting the desirability of a unit for a
particular landlord must be considered. Otherwise, a landlord could be deprived,
possibly indefinitely, of his or her own property which he or she desires, for personal
reasons, to occupy as a personal residence, while the benefits of the property as a
residence could be enjoyed indefinitely by the tenant. Such result would render the
statute unconstitutionally confiscatory.” (Id. at p. 627.) Here too, Lau may not be barred
from enjoying the benefits of an apartment he owns and wishes to occupy as his primary
residence simply because it had rented more cheaply than another, noncomparable unit in
his building.

       11
          The jury’s verdict demonstrates the confusion that resulted below. The jury
found that Lau did not seek to recover possession of 456 Broadway in good faith, without
ulterior reasons, and with honest intent for use and occupancy as his principal residence,
but also found that Lau did not act in knowing violation of, or in reckless disregard of,
the law concerning owner move-in. Since the parties agree that Lau intended to move
into 456 Broadway as his primary residence, what remains is a verdict based upon other
unknown actions by the respondent that the jury deemed were in bad faith or dishonest,
but unintentionally so. These inconsistent findings are difficult to square.

                                             21
                            DISPOSITION
The judgment is affirmed.

                                22
                                      _________________________
                                      Sanchez, J.

WE CONCUR:

_________________________
Margulies, Acting P. J.

_________________________
Banke, J.

A151825 Reynolds et al. v. Lau

                                 23
Filed 9/13/19
                             CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                FIRST APPELLATE DISTRICT

                                        DIVISION ONE

ROBYN REYNOLDS et al.,                              A151825
        Plaintiffs and Appellants,
                                                    (San Francisco City & County
v.                                                  Super. Ct. No. CGC-15-547285)
CORY LAU,
                                                    ORDER CERTIFYING OPINION
        Defendant and Respondent.                   FOR PUBLICATION, MODIFYING
                                                    OPINION AND DENYING
                                                    REHEARING

                                                    [NO CHANGE IN JUDGMENT]

THE COURT:
        The opinion in the above-entitled matter filed on August 19, 2019, was not
certified for publication in the Official Reports. After the court’s review of requests
under California Rules of Court, rule 8.1120, and good cause established under
rule 8.1105, it is hereby ordered that the opinion should be published, as modified below,
in the Official Reports.
        It is further ordered that the opinion filed herein on August 19, 2019, be modified
as follows:
        1. On page 21, at the end of the last sentence in the text, which ends “than
another, noncomparable unit in his building,” add as footnote 12 the following footnote:
                        12
                            Appellants bring to our attention a recently published
                  opinion by our colleagues in Division Two of this court, DeLisi v.
                  Lam (Aug. 7, 2019, A151014) ___ Cal.App.5th ___ [2019 Cal.App.
                  Lexis 842]. DeLisi affirmed a jury verdict finding the owners of a
                  four-unit apartment building in violation of the San Francisco rent

                                                1
       ordinance based on their eviction of an existing tenant to facilitate
       move-in by a relative. We find DeLisi distinguishable, as evidence
       was presented that the relative may not have intended to establish a
       long-term principal residence. (See id. at p. *11 [noting the relative
       had never visited the apartment when the eviction notice was served
       and was unaware of essential details of his occupancy, including the
       number of bedrooms in the unit, the amount of rent he would pay,
       and when he would move in].) Here, the evidence was
       uncontroverted that Lau and his fiancé sought to recover possession
       of 456 Broadway as their long-term primary residence, and have
       lived there since. We do not read DeLisi to suggest that an owner
       may violate the rent ordinance if he or she entertains other motives
       in addition to having a good faith intent to establish a long-term
       primary residence. So long as the owner’s dominant motive for
       recovering possession is to occupy the unit as their principal
       residence for at least 36 continuous months (§ 37.9, subd. (a)(8)(i)),
       other ancillary reasons such as financial incentives or personal
       preferences generally may not be grounds for violation of the rent
       ordinance.
There is no change in the judgment.
Appellants’ petition for rehearing is denied.

                                          ___________________________
                                          Sanchez, Acting P. J.

                                      2
Trial Court: San Francisco County Superior Court

Trial Judge: Hon. A. James Robertson, II

Counsel:

Hooshmand Law Group, Mark Hooshmand and Jenny Jin for Plaintiffs and Appellants.

de la Peña & Holiday LLP, Gregory R. de la Peña and K. Anderson Franco for Defendant
and Respondent.

                                           3