Court Opinion

ID: 9411535
Source: CourtListenerOpinion
Date Created: 2023-07-26 23:03:26.722844+00
Date Added: 2024-06-11T17:21:07.212104
License: Public Domain

Filed 6/28/23; Certified for Publication 7/26/23 (order attached)

        IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              FIRST APPELLATE DISTRICT

                                         DIVISION TWO

 640 OCTAVIA, LLC,
         Plaintiff and Respondent,
                                                           A164531
 v.
 KARL HEINZ PIEPER et al.,                                 (San Francisco County
                                                           Super. Ct. No. CUD-21-667662)
         Defendants and Appellants.

        The trial court granted plaintiff landlord 640 Octavia, LLC’s (640
Octavia) summary judgment motion in this unlawful retainer action under
the Ellis Act (Gov. Code, § 7060 et seq.). Tenants Karl Pieper and Jose
Montoya argue that the trial court (1) improperly sustained 640 Octavia’s
objections to evidence relating to the landlord’s lack of intent to withdraw its
property from the residential rental market, and (2) “improperly discounted”
other evidence it did consider, relating to the landlord’s failure to strictly
comply with the Ellis Act. We disagree and affirm.
                                        BACKGROUND
        640 Octavia is a Wyoming limited liability company, managed by
Edward Kountze, that owns the real property at 640 Octavia Street in San
Francisco, which has four residential units. Kountze lives in a unit in the
building with his partner. When 640 Octavia became the owner of the
property in 2017, Pieper and Montoya (tenants) lived in unit 3.

                                                   1
      In January 2020, 640 Octavia served tenants with a “Notice of
Termination of Tenancy” (NOT). The NOT stated that the landlord was
terminating tenancy and 640 Octavia was withdrawing the property “from
the residential rental market” pursuant to the Ellis Act and section 37.9A of
the San Francisco Residential Rent Stabilization and Arbitration Ordinance
(S.F. Admin. Code, ch. 37) (Rent Ordinance). The NOT continued: “This
notice (the ‘Notice’) is what is commonly referred to as an ‘eviction notice’.”
The landlord also executed and filed with the San Francisco Residential Rent
Stabilization and Arbitration Board (Rent Board) a “Notice of Intent to
Withdraw Residential Units from the Rental Market” (NOITW). 640 Octavia
recorded the NOITW with the county recorder.
      The Ellis Act provides, with certain exceptions not relevant here, that
no statute, ordinance, regulation, or administrative action shall “compel the
owner of any residential real property to offer, or to continue to offer,
accommodations in the property for rent or lease.” (Gov. Code, § 7060,
subd. (a).) “A landlord who complies with the Ellis Act may therefore go out
of the residential rental business by withdrawing the rental property from
the market.” (Drouet v. Superior Court (2003) 31 Cal.4th 583, 587 (Drouet).)
Section 37.9A, subdivision (e) of the Rent Ordinance requires the landlord
make relocation payments to tenants who lose their residence when it is
removed from the rental market. The Rent Board publishes updates of the
relocation amount due per tenant. The landlord must pay half of the
relocation payment when it serves the NOT and pay the other half when the
tenant vacates the unit. When 640 Octavia served the NOT, it owed the
tenants relocation payments of $6,985.23.
      Counsel for the landlord testified by declaration that she sent the NOT
to the tenants’ address and enclosed checks for $3,492.62 for each of them.

                                        2
She explained the postal service “returned to sender” the NOT and checks
due to the overflow of mail in the tenants’ mailbox.
      The landlord and tenants had been engaged in protracted litigation,
including in a case brought by the landlord in federal court based on diversity
jurisdiction, and so on March 11, 2020, counsel for 640 Octavia sent the NOT
and checks to tenants’ counsel. Counsel explained the NOT and checks had
been returned by the postal service. On March 20, the tenants’ counsel
responded that he had been “recently retained” in connection with the
correspondence from 640 Octavia, notwithstanding his representation of
them in ongoing litigation against the landlord, but was “not authorized to
accept or receive” the relocation payments and therefore they were “rejected.”
He also stated that his clients were exercising their right to extend occupancy
of the rental unit until at least February 3, 2021, based on the tenants’
disabilities.1
      640 Octavia filed this unlawful detainer action on February 11, 2021.
It alleged that 640 Octavia had withdrawn the property from the rental
market under the Ellis Act and complied with all applicable provisions of the
Rent Ordinance, but the tenants had failed to vacate and continued in
possession of the premises. The tenants demurred, and the trial court
overruled the demurrer. The tenants then answered the complaint, asserting
various affirmative defenses, including that 640 Octavia had bad faith,

      1 Section 37.9A, subdivision (f)(3) of the Rent Ordinance describes the

effective date of withdrawal of rental units under the Ellis Act, and that if a
tenant is disabled as defined in Government Code section 12955.3 and has
lived in their unit for at least a year prior to the filing of the NOITW, the
effective date “shall be extended to one year after the date of delivery of that
notice to the Rent Board” upon written notice of entitlement to the landlord.
The landlord did not challenge the tenants’ request to extend their tenancy
under this provision.

                                        3
ulterior, and improper reasons for seeking to recover possession of the
premises.
      640 Octavia moved for summary judgment. It submitted, among other
things, the NOT, NOITW, and memorandum of the NOITW. Kountze
declared that, since at least January 2019, he had a “bona fide intent to
withdraw the Property from the residential rental market.” He stated that
when he purchased the property in 2016, he had “intended to use it for my
family—one unit for myself, one unit for my partner, and one unit for my
adult daughter, with a shared family office,” and now “would like to provide
her a place to call home in the Bay Area where she can focus on her
[graduate] studies.” In November 2019, 640 Octavia signed license
agreements for non-exclusive occupancy and use of unit 1 (with Daniel
Amarel) and unit 2 (with Kountze and his partner). Unit 4 was vacant.
Kountze declared that, other than the tenants in unit 3, none of the other
units were occupied.
      The tenants opposed summary judgment. They submitted, among
other things, notices to quit or cure sent by 640 Octavia to them in 2017 and
2018, reports of private investigations conducted on the property in 2017,
police reports from 2017 to 2019, screenshots from surveillance video in 2018
purporting to show Kountze making a neck “slashing” motion into the
camera, text messages between Kountze and Amarel from 2018 and 2019,
and documents from the unsuccessful federal action initiated by 640 Octavia
against them. 640 Octavia objected to this evidence on various grounds,
including relevance.
      The trial court granted summary judgment for 640 Octavia and against
the tenants. It sustained 640 Octavia’s relevance objections to the evidence

                                       4
summarized above.2 The court concluded that 640 Octavia “has proven its
compliance with all applicable state and local requirements, and has
established its bona fide intent to withdraw the subject property from rent or
lease.” Specifically, it determined that 640 Octavia had the right to seek
possession of the premises because it complied with the Ellis Act and
applicable provisions of the Rent Ordinance in terminating the tenancies. It
also determined that 640 Octavia’s “dominant motive in terminating this
tenancy” was to “comply with the Ellis Act and withdraw the Property and
the Premises from the residential rental market.”
      The trial court concluded that 640 Octavia “established all elements of
an Ellis Act unlawful detainer,” and the tenants had “failed to create a triable
issue as to any material fact regarding elements of the cause of action or to
any affirmative defense.” The court explained that the tenants’ affirmative
defenses could not overcome 640 Octavia’s prima facie case, were not
defenses as a matter of law, or lacked sufficient admissible evidence to create
a triable issue of fact. The court entered judgment in favor of 640 Octavia for
restitution of possession of unit 3. The tenants appeal.
                                DISCUSSION
      The tenants, Pieper and Montoya, argue that they presented evidence
of triable issues of material fact on 640 Octavia’s claim. Specifically, the
tenants rely on evidence they say the trial court either “ignored” by
sustaining 640 Octavia’s relevancy objections, or “improperly discounted”
amongst the evidence it did consider. The tenants challenge both the trial
court’s evidentiary rulings and its ultimate determination that the tenants

      2 The trial court also sustained 640 Octavia’s objections to the

characterization of a 2017 “false” police report as speculative opinion, and to
defendants’ submission of the March 11, 2020 letter without enclosures as
lacking foundation.

                                        5
failed to raise any triable issue of material fact.
                                    I. Waiver
      640 Octavia preliminarily responds that the tenants waived their
evidentiary arguments, and that we need not consider evidence excluded by
the trial court. We disagree. “ ‘As with an appeal from any judgment, it is
the appellant’s responsibility to affirmatively demonstrate error and,
therefore, to point out the triable issues the appellant claims are present by
citation to the record and any supporting authority. In other words, review is
limited to issues which have been adequately raised and briefed.’ ” (Claudio
v. Regents of the University of California (2005) 134 Cal.App.4th 224, 230.)
640 Octavia contends that the tenants include only “cursory statements”
about evidentiary error, and “make no effort to argue the trial court abused
its discretion with respect to these rulings.”
      We agree that the tenants’ opening brief should have contained clearer
argument and authority regarding the excluded evidence and sustained
objections. (Pipitone v. Williams (2016) 244 Cal.App.4th 1437, 1451, fn. 12
(Pipitone).) But, 640 Octavia acknowledged in its respondents’ brief that the
tenants rely on evidence excluded by the trial court in making this appeal.
Given that 640 Octavia had notice and opportunity to address these
evidentiary arguments and, as explained below, the applicable standard of
review is an open question, we deem the arguments to be properly before us
as “part and parcel” of this appeal. (Id. at p. 1451, fn. 12.)
                           II. Standards of Review
      The typically well-established standard of review on a trial court’s
order granting summary judgment has a wrinkle in this case as a result of
the trial court’s evidentiary rulings. Summary judgment is generally
appropriate “if all the papers submitted show that there is no triable issue as

                                         6
to any material fact” and that it “is entitled to a judgment as a matter of
law.” (Code Civ. Proc., § 437c, subd. (c).) A plaintiff moving for summary
judgment bears the initial burden of “showing that there is no defense to a
cause of action if that party has proved each element of the cause of action
entitling the party to judgment on the cause of action.” (Id., subd. (p)(1).)
Once the plaintiff has met that burden, the burden shifts to the defendant to
“set forth the specific facts showing that a triable issue of material fact exists
as to the cause of action or a defense thereto.” (Ibid.) “There is a triable
issue of material fact if, and only if, the evidence would allow a reasonable
trier of fact to find the underlying fact in favor of the party opposing the
motion in accordance with the applicable standard of proof.” (Aguilar v.
Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)
      We typically review the record de novo to independently determine
whether triable issues of material fact exist. (Guz v. Bechtel National, Inc.
(2000) 24 Cal.4th 317, 334.) “We liberally construe the evidence in support of
the party opposing summary judgment and resolve doubts concerning the
evidence in favor of that party.” (Wilson v. 21st Century Ins. Co. (2007)
42 Cal.4th 713, 717.) The appellant, however, still “has the burden of
showing error, even if he did not bear the burden in the trial court.” (Claudio
v. Regents of the University of California, supra, 134 Cal.App.4th at p. 230.)
      The parties disagree about whether we review the trial court’s rulings
on 640 Octavia’s evidentiary objections de novo or for abuse of discretion. In
determining whether there is any triable issue of material fact, we “consider
all the evidence set forth in the moving and opposition papers except that to
which objections have been made and properly sustained.” (Pipitone, supra,
244 Cal.App.4th at p. 1452.) “Only admissible evidence is liberally construed

                                        7
in deciding whether there is a triable issue.” (Bozzi v. Nordstrom, Inc. (2010)
186 Cal.App.4th 755, 761.)
      The standard of review in cases like this one remains an open question.
Our Supreme Court identified, but did not resolve, the issue in Reid v.
Google, Inc. (2010) 50 Cal.4th 512 (Reid). There, the trial court had declined
to rule on Google’s written evidentiary objections to summary judgment
evidence and the Court of Appeal decided the merits of those objections raised
on appeal. (Id. at pp. 522, 525.) Google claimed the appellate court had
“ ‘breache[d] the review limitations placed upon it by the abuse of discretion
standard,’ ” while Reid argued that the de novo standard applied. (Id. at
p. 535.) The court rejected Google’s request for remand, as Google had
“expressly invited the Court of Appeal to address its evidentiary objections”
and remand was unnecessary. (Id. at p. 535.) The court concluded: “Thus,
we need not decide generally whether a trial court’s rulings on evidentiary
objections based on papers alone in summary judgment proceedings are
reviewed for abuse of discretion or reviewed de novo.” (Ibid.)
      The weight of authority before and after Reid supports application of
the abuse of discretion standard (e.g., Alexander v. Scripps Memorial
Hospital La Jolla (2018) 23 Cal.App.5th 206, 226; LAOSD Asbestos Cases
(2023) 87 Cal.App.5th 939, 946 [“We agree with the majority of courts which
have held that the abuse of discretion standard applies”]), but courts have
concluded that de novo review is appropriate where written evidentiary
objections on summary judgment are based on questions of law. (Pipitone,
supra, 244 Cal.App.4th at p. 1451; see also Strobel v. Johnson & Johnson
(2021) 70 Cal.App.5th 796, 817 [electing to employ de novo standard of review
given evidentiary ruling rested on legal premises].) Like Reid, however, we
need not resolve any debate because, as described below, we conclude there

                                       8
was no reversible error in the challenged evidentiary rulings under either
standard.
      With this framework in mind, we turn to the tenants’ specific
arguments regarding the triable issues of material fact they claim to have
shown here. They contend the trial court erred in concluding that 640
Octavia: (1) had a bona fide intent to exit the rental market; (2) served the
NOT on all known tenants at the property; and (3) complied with the Ellis
Act and Rent Ordinance in its service of the relocation payment checks. We
address each alleged error in turn.
               III. Bona Fide Intent to Exit Rental Market
      The tenants argue that, as a result of erroneous evidentiary rulings,
the trial court incorrectly concluded that 640 Octavia had a bona fide intent
to remove the property from the rental market. The tenants’ argument fails
here as a result of the law reconciling a retaliatory eviction defense with an
unlawful detainer claim in the context of the Ellis Act.
      The defense of retaliatory eviction is codified at Civil Code section
1942.5. (Drouet, supra, 31 Cal.4th at p. 587.) This defense bars a landlord
from recovering possession in an unlawful detainer action in retaliation
against a tenant because of his or her exercise of rights or complaints made
regarding tenantability. (Ibid.) Here, the tenants alleged that 640 Octavia
sought to evict them in retaliation for the ongoing conflicts between Kountze,
Pieper, and Montoya. The Ellis Act allows a landlord to respond to a
retaliatory eviction defense by proving the landlord had a bona fide intent to
exit the rental market. The California Supreme Court explained in Drouet:
“where a landlord has complied with the Ellis Act and has instituted an
action for unlawful detainer, and the tenant has asserted the statutory
defense of retaliatory eviction, the landlord may overcome the defense by

                                        9
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.” (Drouet, at pp. 599–560.)
      The trial court sustained 640 Octavia’s objections to three categories of
evidence as irrelevant. The tenants contend that these evidentiary rulings
were an abuse of discretion or otherwise reversable error, because the
evidence relates to 640 Octavia’s lack of intent to take its property off the
rental market.
      We agree with the trial court. Evidence Code section 352 vests the trial
court with discretion to “balance the probative value of the offered evidence
against its potential of prejudice, undue consumption of time, and confusion.”
(Kessler v. Gray (1978) 77 Cal.App.3d 284, 291.) “That balancing process
requires consideration of the relationship between the evidence and the
relevant inferences to be drawn from it, whether the evidence is relevant to
the main or only a collateral issue, and the necessity of the evidence to the
proponent’s case as well as the reasons recited in [Evidence Code] section 352
for exclusion.” (Ibid.)
      First, the tenants cite excluded evidence related to 640 Octavia’s
federal action against Pieper, which was based on diversity jurisdiction (since
640 Octavia is a Wyoming limited liability company). In opposition to the
summary judgment motion in this case, the tenants submitted 640 Octavia’s
February 2018 complaint from the federal case, which included unlawful
detainer, breach of contract, and private nuisance claims. The complaint
alleged 640 Octavia could not rent other units in the building as a result of
Pieper’s allegedly disruptive conduct. A jury found against 640 Octavia, and
640 Octavia then appealed that result to the United States Court of Appeals

                                       10
for the Ninth Circuit. On summary judgment in this case, the tenants also
submitted the Ninth Circuit’s decision affirming the federal judgment after
the jury verdict against 640 Octavia. The tenants argue that this evidence
shows that 640 Octavia did not have a bona fide intent to exit the rental
market, since the company maintained the federal case even after it served
the NOT in January 2020, and after Kountze’s declaration said he had
formed the intent to take the property off the rental market.
      The tenants’ argument has a number of flaws. The judgment in the
federal action was entered nine months before the NOT was served.
Moreover, contrary to the tenants’ suggestion, the federal action and
subsequent appeal do not bear on whether 640 Octavia intended to continue
in or re-enter the rental market. Rather, in the federal case 640 Octavia
sought to evict Pieper and recover lost rent it alleged to have suffered because
of Pieper’s conduct. Intent to recover lost rent is not the same as intent to
continue renting or re-rent. 640 Octavia also observes that the federal case
could be viewed as evidence of its bona fide intent to exit the rental market
because it reflects the landlord’s exasperation with the market. The trial
court did not err in excluding evidence about the federal case for purposes of
the summary judgment motion.
      Second, the tenants contend that Kountze’s declaration in support of
his company’s summary judgment motion—stating he had a bona fide intent
to withdraw as of January 2019, and that when he purchased the property in
2016, he intended to use it for his family—contradicted his own testimony in
the federal action. We again disagree. The transcript reflects the following
testimony on cross-examination:
      “Q.   And beginning on May 26, 2019, you won’t be able, under
            this notice, to rent the building to any tenants; correct?

      “A.   Correct.

                                       11
      “Q.   And that was your idea to begin with when you discussed the
            situation with the other tenants of the building back in 2015
            when the building was for sale?

      “A.   Incorrect. That’s false.

      “Q.   Okay. You told them that your idea then was to take the
            building off the market; correct?

      “A.   No. I don’t know what I told them. I said a 501(c)(3). It is not an
            Ellis Act at all.”

      The trial court was justifiably not persuaded that Kountze’s discussion
of his intent with “other tenants” in 2015 was relevant to the question of
whether, five years later, he had a bona fide intent to withdraw his
company’s property from the rental market. Rather, the testimony is
consistent with Kountze’s declaration that 640 Octavia intended to take the
property off the rental market since January 2019. Nor does Kountze’s
uncertainty about what he told other tenants when the building was for sale
back in 2015 contradict his purported intent to use it for family when he
purchased the property in 2016.
      Third, the tenants cite police reports, private investigation reports,
surveillance video screenshots, and notices to cure or quit, which were
excluded by the trial court on summary judgment, as evidence of 640
Octavia’s “harassing and retaliatory conduct” towards the tenants. The trial
court did not commit error in excluding this evidence as irrelevant given the
law concerning retaliatory eviction in the context of the Ellis Act. The Drouet
decision is instructive here. As in this case, the landlord and tenants in
Drouet had a long history of conflict. (Drouet, supra, 31 Cal.4th at p. 588.)
The tenants in Drouet had alleged, for example, that the landlord illegally
attempted to raise the rent, overcharged for utilities, refused to pay interest
on security deposits, and violated the lease by refusing to permit one of the

                                       12
tenants to have a roommate. (Ibid.) When the tenants discovered that the
landlord had failed to pay his share of the garbage bill, they told him they
planned to deduct this amount from their rent. (Ibid.) Around the same
time, the tenants notified the landlord of a leaking sewage drain and shower
wall. (Ibid.) A few months after the tenants requested those repairs, the
landlord served tenants with a notice he was withdrawing his property from
the rental market pursuant to the Ellis Act. (Ibid.)
      The court in Drouet rejected the contention that the 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 Civil Code section 1942.5. (Drouet, supra, 31
Cal.4th at p. 596.) The court explained that its construction of the statute
“permits 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.” (Id. at p. 597.) It further reasoned that any
incentive for “sham Ellis Act evictions” (a landlord who may “secretly intend
to re-rent” after evicting an existing tenant) has been mitigated by
San Francisco 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.”3 (Drouet, at p. 598.)
      There is no dispute that the parties in this case have been engaged in
ongoing conflict for many years. The trial court appropriately excluded
evidence reflective of that longstanding conflict as irrelevant. At most, the

      3 Section 37.9A of the Rent Ordinance, for example, provides that if a

unit withdrawn from the rental market is offered for rent or lease within 10
years of the withdrawal date, the rent cannot be increased for the next five
years, the displaced tenant has the first right of refusal, and in certain
circumstances an owner may be liable for damages to the displaced tenant.

                                       13
evidence shows that 640 Octavia’s desire to exit the rental business was
impacted by its protracted fights with the tenants. The Drouet decision,
however, makes clear that such evidence, without more, does not raise a
triable issue regarding 640 Octavia’s bona fide intent to withdraw from the
rental market. (Drouet, supra, 31 Cal.4th at p. 597.) Nothing in the police
reports, investigation reports, surveillance video, or prior notices, evidences
any intent to continue in or re-enter the rental market.
      The tenants’ reliance on Coyne v. De Leo (2018) 26 Cal.App.5th 801
(Coyne) does not help them. In Coyne, a tenant sought to introduce evidence
that his landlord had sold a “sham ownership interest” in the property to
another tenant, thereby allowing that tenant to remain while the landlord
professed his intent to withdraw the property from the rental market. (Id. at
p. 812.) The tenant submitted documents showing that the landlord had
deeded a 10 percent interest in the property to the other tenant a few months
before the notice of intent to withdraw was filed. (Ibid.) The purchase
agreement indicated that the sale was for $500,000, but the other tenant did
not make any down payment and her purchase was entirely “seller financed”
by the landlord. (Ibid.) The loan required monthly payments of $1,583, only
17 dollars less than what she had been paying in rent. (Ibid.) The Coyne
decision concluded that the trial court erred in excluding this evidence, as
relevant to whether the landlord had a bona fide intent to withdraw or
whether the purchase by the other tenant was a sham and did not, in
substance, change their landlord-tenant relationship. (Id. at p. 823.) Here,
unlike Coyne, the tenants only proffer evidence of past conflicts with 640
Octavia to contend that it had a retaliatory motive in deciding to evict them.
There is nothing that contradicts 640 Octavia’s stated intent, however
motivated, to withdraw from the landlord business.

                                       14
      In sum, we see no error in the trial court’s decision to exclude evidence
of the parties’ protracted negative interactions here. We conclude that the
trial court did not err in determining that the tenants failed to raise a triable
issue of material fact as to 640 Octavia’s bona fide intent to exit the rental
market.4
                         IV. Service of All Tenants
      The tenants argue that they have shown a triable issue of material fact
as to whether 640 Octavia served “all tenants” with the NOT. The tenant-
defendants received the NOT. According to the tenants, however, the
evidence excluded by the trial court suggests that Amarel, Kountze, and his
partner—not defendants nor subject to any other eviction proceedings—were
also tenants in the building. The tenants thus argue that 640 Octavia needed
to present evidence that it also served these three individuals with the NOT.
640 Octavia responds that the written license agreements it submitted on
summary judgment show Amarel, Kountze, and his partner were “licensees”
rather than tenants, and that there was no need to serve any of them with
the NOT.
      Section 37.2, subdivision (t) of the Rent Ordinance defines a “tenant” as
“[a] person entitled by written or oral agreement, sub-tenancy approved by
the landlord, or by sufferance, to occupy a residential dwelling unit to the
exclusion of others.” A tenant must also pay rent. (Danger Panda, LLC v.
Launiu (2017) 10 Cal.App.5th 502, 513 [“an occupant of a rental unit who
does not have the right to exclusive possession and the concomitant
obligation to pay rent does not meet the generally accepted common law
definition of a tenant. Nor does he or she fall within the section 37.2(t)

      4 Given this conclusion, we reject the tenants’ additional argument that

they should be permitted to argue their affirmative defenses at trial because
they have shown a triable issue of fact as to 640 Octavia’s bona fide intent.

                                       15
definition of a tenant quoted above”].) “Rent may not necessarily be a single
specific dollar amount. It consists even of services.” (Rossetto v. Varross
(2001) 90 Cal.App.4th Supp. 1, 5.) A licensee, in contrast, does not have
exclusive possession of the property. (See Spinks v. Equity Residential
Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1040 [“One key
characteristic that distinguishes a tenancy from a mere license is the right to
exclusive possession as against the whole world, including the landowner”];
Rossetto, at p. 5 [same].)
      The tenants argue that text messages between Amarel and Kountze
excluded by the trial court show that Amarel was paying “rent” by providing
various services to Kountze, like painting, giving keys to Kountze’s guests,
and requesting quotes for garage door repairs. We disagree with the trial
court that this evidence was irrelevant to the issue of whether Amarel was a
tenant, but conclude any error on this evidentiary ruling was harmless.
(Bader v. Johnson & Johnson (2022) 86 Cal.App.5th 1094, 1111 [evidentiary
error reviewed for prejudice and reversible “if there is a reasonably
probability, or a reasonable chance, appellant would have obtained a more
favorable result”].)
      The excluded messages from 2018 and 2019 do not show that Amarel
was providing services as “rent” at the time the NOT was served in January
2020. Further, there is nothing in the messages showing Amarel had
exclusive possession of any unit at the property. As explained above,
exclusive possession is necessary for an individual to satisfy the definition of
a “tenant.” (Danger Panda, LLC v. Launiu, supra, 10 Cal.App.5th at p. 513.)
Without such evidence, the tenants have not shown a triable issue on the

                                       16
tenancy of others who did not receive the NOT (and who were not being
evicted).5
      We are not persuaded by the tenants’ argument that Amarel’s
deposition testimony in this case—evidence to which 640 Octavia did not
object—showed Amarel had exclusive possession of unit 1. Amarel testified
that, after October 2018, he spent most of his nights staying at the unit. He
testified that Kountze explained “very early on” that he was “getting out of
the rental business” and “couldn’t take rent,” but Amarel could stay as long
as he needed. Amarel also testified, however, that multiple guests of Kountze
stayed in unit 1 when Amarel was there. This testimony contradicts any
suggestion that Amarel had exclusive possession of the unit.
      Finally, the tenants contend that the license agreement between 640
Octavia and Amarel—evidence submitted by 640 Octavia—is a “complete
sham” because it was signed in November 2019, one year after he moved in
and three months before the NOT was served. Even accepting this premise,
it does not raise a triable issue of material fact that Amarel was a tenant. As
explained above, there is no evidence that shows tenancy here. If anything,

      5
        The tenants also cite Belmont County Water District v. State of
California (1976) 65 Cal.App.3d 13 (Belmont) for their proposition that
“estoppel may apply to make a license irrevocable and have it treated as a
tenancy under law.” The Belmont case involved a revocable permit for
construction of a water supply pipeline. (Id. at p. 16.) It explained that,
under certain circumstances, a license may become irrevocable when the
licensee has made substantial expenditures and constructed valuable
improvements in reliance upon the licensor’s representations, as it would be
unjust to permit cancellation without first compensating the licensee for its
losses. (Id. at p. 17.) The tenants offer no authority that this principle from
Belmont applies to a license of a residential unit, nor any evidence or
argument that Amarel made “substantial expenditures” through his services
to Kountze. (Ibid.)

                                       17
the tenants’ challenge to the license agreement raises the question of whether
Amarel was even a licensee.
      The tenants repeat similar arguments with respect to Kountze and his
partner: that Kountze’s testimony about maintenance he conducted as the
manager of 640 Octavia shows he was a tenant, and that the license
agreement he and his partner signed was a sham. But the tenants offer no
authority for their position that, in performing services as the manager of 640
Octavia, Kountze could be considered a tenant required to be served with the
NOT. (Cf. Santa Monica Rent Control Bd. v. Bluvshtein (1991) 230
Cal.App.3d 308, 317 [agreement for maintenance payments by owner
occupants was not lease].) Nor do the tenants present any argument or
authority that Kountze’s partner performed such services. Without showing
any triable issue regarding tenancy, the tenants’ argument regarding the
license agreement again fails because it only raises the question of whether
or not Kountze and his partner were licensees.
      We conclude that the trial court did not err in determining that the
tenants had failed to raise a triable issue of material fact as to 640 Octavia’s
service of the NOT as required under the Ellis Act.
                     V. Service of Relocation Payments
      The tenants argue that they have shown a triable issue of material fact
as to whether 640 Octavia complied with all of its statutory requirements by
providing the first half of the relocation payments required by the Ellis Act
with the NOT. 640 Octavia responds that it complied with its Ellis Act
obligations.

                                       18
      Section 37.9A, former subdivision (e)(3)(A) of the Rent Ordinance
provided,6 in relevant part, that one-half of the relocation benefit
“shall be paid at the time of the service of the notice of termination of
tenancy,” and the other half paid “when the Eligible Tenant vacates the
unit.” The tenants argue that we should interpret this statute to mean that
the first payment must be received and completed by the time the NOT is
served.
      The tenants’ proposed statutory construction is not the right one.
“Pursuant to established principles, our first task in construing a statute is to
ascertain the intent of the Legislature so as to effectuate the purpose of the
law. In determining such intent, a court must look first to the words of the
statute themselves, giving to the language its usual, ordinary import and
according significance, if possible, to every word, phrase and sentence in
pursuance of the legislative purpose. A construction making some words
surplusage is to be avoided. The words of the statute must be construed in
context, keeping in mind the statutory purpose, and statutes or statutory
sections relating to the same subject must be harmonized, both internally
and with each other, to the extent possible.” (Dyna-Med, Inc. v. Fair
Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386–1387.)
      Section 37.9A, former subdivision (e)(3)(A) of the Rent Ordinance sets
forth the timing of when both portions of the relocation payment are to be
made: the first half “at the time of the service of the notice of termination of
tenancy,” and the other half paid “when the Eligible Tenant vacates the
unit.” The plain language of the phrase “at the time of the service of the
notice of termination of tenancy” allows for concurrent service of the first

      6 Section 37.9A, subdivision (e)(3)(A) was amended on May 17, 2022,

and now appears as subdivision (e)(1)(A).

                                       19
payment check and NOT. Such a construction is consistent with cases like
Johnson v. City and County of San Francisco (2006) 137 Cal.App.4th 7, which
accepted provision of the payment check enclosed with the termination notice
as consistent with section 37.9A, subdivision (e) and the Ellis Act. (Johnson,
at p. 15 & fn. 5.) If the Legislature had intended the meaning the tenants
suggest, it would have used phrasing like “by the time” instead.
      We conclude that the trial court did not err in determining that
defendants had failed to raise a triable issue of material fact as to 640
Octavia’s compliance with the Ellis Act and Rent Ordinance in its payment of
the relocation payments.
                                 DISPOSITION
      The judgment is affirmed. 640 Octavia is entitled to its costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(1), (2).)

                                         20
                                           _________________________
                                           Markman, J.*

We concur:

_________________________
Stewart, P.J.

_________________________
Richman, J.

640 Octavia, LLC. v. Pieper et al. (A164531)

     * Judge of the Alameda Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

                                      21
Filed 7/26/23

                      CERTIFIED FOR PUBLICATION

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        FIRST APPELLATE DISTRICT

                                DIVISION TWO

 640 OCTAVIA, LLC,
         Plaintiff and Respondent,            A164531

 v.                                           (San Francisco County
 KARL HEINZ PIEPER et al.,                    Super. Ct. No. CUD-21-667662)
         Defendants and Appellants.
                                              ORDER CERTIFYING
                                              OPINION FOR PUBLICATION

THE COURT:
       The opinion in the above-entitled matter, filed on June, 28, 2023, was
not certified for publication. For good cause, request for publication is
granted.
       Pursuant to California Rules of Court, rule 8.1105, the opinion in the
above-entitled matter is ordered certified for publication in the Official
Reports.

Dated: __________________                   ____________________________
                                            Stewart, P.J.

                                        1
Trial Court:               San Francisco County Superior Court

Trial Judge:               Hon. Ronald E. Quidachay

Attorneys for Defendants   Peretz & Associates
And Appellants:            Yosef Peretz
                           David Garibaldi

Attorneys for Plaintiff    Zacks, Freedman & Patterson, PC
and Respondent:            Scott A. Freedman
                           Emily L. Brough

                                   2