Summary
In Little a purchaser at a foreclosure sale sought to raise the rent of the tenant who occupied the premises prior to foreclosure from $65 per month to $165 per month.
Summary of this case from Gross v. Superior CourtOpinion
Richs&sEzer and Mitchel J. Ezer, Los Angeles, for defendant and appellant.
Ira Reiner, City Atty., Jack L. Brown and Arthur B. Walsh, Deputy City Attys., for plaintiff and respondent.
HOGOBOOM, Judge.
This case appears to be one of first impression. The issue involves the application of Los Angeles Municipal Code sections 151.00-151.09 (Rent Stabilization Ordinance, hereafter, the Ordinance) to a purchaser of real property at a foreclosure sale. The question posed is whether a purchaser at a foreclosure sale under the power of sale contained in a deed of trust is bound by the restrictions of the Ordinance limiting the amount of rent which an owner may charge. The Ordinance does not address this problem specifically. The case comes before this court upon an appeal from a conviction, after trial by jury, of five misdemeanor counts of violation of section 151.04 of the Ordinance: "demanding, accepting or retaining" more than the maximum adjusted rent permitted by the Ordinance for the months of June, July, August, September and October, 1981. The facts are undisputed.
All references hereafter are to sections of the Los Angeles Municipal Code except where otherwise noted.
On August 21, 1980 appellant purchased the rental unit involved at a foreclosure sale. The deed of trust containing the power of sale under which appellant acquired the title was recorded on July 14, 1976. The Ordinance was enacted effective May 1, 1979. At the time appellant acquired his title, the premises were occupied by the complaining witness, Doughty, who had been paying $65 per month rent to the previous owner. Doughty had occupied the premises prior to the enactment of the Ordinance, and the rental unit was controlled by its provisions at all times from the effective date of the Ordinance until the date appellant acquired ownership.
After acquiring title to the premises in the foreclosure sale, appellant demanded rent from Doughty at the rate of $165 per month. Doughty refused to pay that sum, but offered to pay and tendered to appellant the sum of $70. The $70 sum was calculated to include the authorized seven percent increase allowed by the Ordinance on the existing $65 per month rent. Appellant refused the tendered sum and filed an action to evict Doughty after having served her with the required three-day notice to quit. The notice to quit and action were filed under the provisions of Code of Civil Procedure section 1161, subdivision 3 (Text of section operative until July 1, 1983):
"In either of the following cases, a person who holds over and continues in possession of real property, after a three-day written notice to quit the same, shall have been served upon him, or if there is a subtenant in actual occupation of the premises, also upon such subtenant, as prescribed in Section 1162 of the Code of Civil Procedure, may be removed therefrom as prescribed in this chapter.
"3. Where the property has been duly sold in accordance with Section 2924 of the Civil Code, under a power of sale contained in a deed of trust executed by him, or a person under whom he claims, and the title under the sale has been duly perfected."
The action under Code of Civil Procedure section 1161a was tried and resulted in a judgment for appellant. Immediately after the judgment ousting Doughty from her occupancy of the premises, appellant and Doughty entered into a new lease agreement setting the rental at $175 per month. The sum was paid by Doughty and was accepted by appellant for the next five months. The Ordinance provides that any person violating the maximum rent provisions is guilty of a misdemeanor. (§ 151.10, subd. B.) It is these five payments which constitute the basis for the misdemeanor conviction.
Appellant raises two principal contentions on this appeal. The first is that he did not violate the ordinance because it only regulates the relationship of landlord and tenant, and that there is no landlord-tenant relationship between a foreclosure purchaser and the occupant of the premises because the foreclosure "wipes out" all liens, encumbrances, and leases subsequent in time to the trust deed. Since the title acquired by such a purchaser "relates back" to the date of the trust deed, appellant contends he took the property as though it had never been controlled by the Ordinance and he was therefore free to set any rent he determined. He also contends in his closing brief that the State of California has preempted "all aspects of post-foreclosure relationships" between a foreclosure purchaser and the occupant of the premises.
Section 151.02, subdivision I provides that if a rental unit was not rented during the period used to establish the maximum legal rent, it may, thereafter be rented at any rental rate. Appellant contends that, since his ownership began for the first time when he acquired a title which relates back, he is free to set any rent.
Appellant did not argue state preemption in his opening brief. We do not deem it necessary to allow respondent the opportunity to reply to this contention.
Appellant's second contention is that he was entitled to rely on a "mistake of law" defense. In this regard he argues that the trial court committed error in not permitting him to call as a witness the trial judge in his prior eviction action, in not permitting him to introduce the court file of that action into evidence, and in failing to instruct the jury that he was relying on the decision in the eviction action and upon another decision in an unrelated matter in the same court. That proposed and refused jury instruction is set forth later in this opinion.
Much of the confusion in addressing the issues in this case results from the differences set forth in the Ordinance between the grounds for evicting a person from rent controlled property, and the grounds for thereafter lawfully increasing the rent for those premises. There are 10 specified grounds in the Ordinance for evicting a tenant. (§ 151.09, subd. A.) Only three of those grounds allow the landlord to thereafter lawfully establish a new rental in any amount chosen. (§ 151.06, subd. C.) Even though an eviction may be authorized, it does not necessarily allow for a rent increase. Nowhere in the Ordinance is there any provision allowing a foreclosure purchaser to evict an occupant of the premises. It follows, of course, that there is likewise no provision which specifically authorizes an increase in rent under those circumstances. The Supreme Court in Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 130 Cal.Rptr. 465, made two rulings of significance to this case. First, it held that rent control by a municipality was a valid exercise of the police power. Both parties in this appeal concede that the Ordinance is a valid exercise of the police power of the City of Los Angeles. The Berkeley ordinance under review in Birkenfeld required a landlord to obtain a certificate of eviction from the local rent control board before seeking repossession of property. The Supreme Court held that, insofar as a local rent control ordinance attempted to limit the procedural law of the State of California relating to a landlord's right to evict a tenant, it was invalid. The field of law relating to unlawful detainer and eviction had been preempted, the Supreme Court ruled, by the state in Code of Civil Procedure sections 1161 and 1161a.
The Supreme Court in Birkenfeld, Id., specifically held that a local rent control ordinance, as a substantive exercise of municipal police power, could prevent the landlord from evicting tenants upon grounds recognized by state law. The procedures established by state law for a landlord to secure possession may not be limited by local law, while the substantive basis entitled a landlord to exercise that right could be limited under the local police power. As the court stated:
"Plaintiffs contend that any regulation of the grounds for eviction is preempted by general state law. Code of Civil Procedure section 1161, subdivision 1, makes the continuation of a tenant's possession after expiration of the term a form of unlawful detainer for which the landlord may recover possession in summary proceedings under Code of Civil Procedure section 1164 et seq. However, these statutory provisions are not necessarily in conflict with the charter amendment's provision forbidding landlords to recover possession upon expiration of a tenancy if the purpose of the statutes is sufficiently distinct from that of the charter amendment. (See Galvan v. Superior Court, supra, 70 Cal.2d 851, 859 ; People v. Mueller, supra, 8 Cal.App.3d 949, 954 [88 Cal.Rptr. 157].) The purpose of the unlawful detainer statutes is procedural. The statutes implement the landlord's property rights by permitting him to recover possession once the consensual basis for the tenant's occupancy is at an end. In contrast the charter amendment's elimination of particular grounds for eviction is a limitation upon the landlord's property rights under the police power, giving rise to a substantive ground of defense in unlawful detainer proceedings. The mere fact that a city's exercise of the police power creates such a defense does not bring it into conflict with the state's statutory scheme. Thus, a landlord's violations of a city's housing code may be the basis for the defense of breach of warranty of habitability in a summary proceeding instituted by the landlord to recover possession for nonpayment of rent. (Green v. Superior Court, supra, 10 Cal.3d 616, 637-638 . Hinson v. Delis, supra, 26 Cal.App.3d 62 [102 Cal.Rptr. 661].) Similarly, the statutory remedies for recovery of possession and of unpaid rent (see Code Civ.Proc., §§ 1159-1179a; Civ.Code, § 1951 et seq.) do not preclude a defense based on municipal rent control legislation enacted pursuant to the police power imposing rent ceilings and limiting the grounds for eviction for the purpose of enforcing those rent ceilings. (Inganamort v. Borough of Fort Lee, supra, 62 N.J. 521, 537 [303 A.2d 298]; 18 Warren v. City of Philadelphia, supra, 382 Pa. 380, 385 [115 A.2d 218].)" (Pp. 148-149, 130 Cal.Rptr. 465.)
Appellant has correctly stated the law applicable to the rights between, and the relationship of, a foreclosure purchaser and an occupant of the premises, or the tenant of the prior owner. Appellant is quite correct that a foreclosure purchaser and an occupant do not bear the relationship of landlord-tenant. Appellant is incorrect, however, in his conclusion that this furnishes a defense to his alleged violation of the Ordinance.
The Ordinance by its terms does not attempt to regulate all relationships between landlords and tenants, nor between owners and occupants of real property. What the Ordinance does do, by its express language, is to regulate "rents." In its "Declaration of Purpose" the Ordinance recites the underlying facts upon which it found a necessity to control rent charges, and then stated: "Therefore it is necessary to regulate rents...." (§ 151.01.)
The Ordinance is a comprehensive enactment regulating the maximum rent which can be charged for controlled "rental units." It is clear under the evidence that the premises here involved were a "rental unit" as defined in the Ordinance. (§ 151.02, subd. M.) It is clear under the evidence that appellant meets the definition of a "landlord."
"G. Landlord: An owner, lessor, or sublessor, (including any person, firm, corporation, partnership, or other entity) who receives or is entitled to receive rent for the use of any rental unit, or the agent, representative or successor of any of the foregoing." (§ 151.02, subd. G.) Appellant was entitled under state law to evict Doughty. Appellant was not obligated to rent the premises to her thereafter. Appellant was, however, limited in the rental he could charge to anyone by the specific provisions of the Ordinance.
Appellant claims that state law preempts "all post foreclosure" relationships between a purchaser and the occupant of the property. This clearly is true as to the procedure for evictions. (Code Civ.Proc., § 1161a; Birkenfeld v. City of Berkeley, supra.) It is not true, as appellant asserts, as to "all" aspects of municipal regulation. The City of Los Angeles under the police power could have enacted a zoning ordinance, or a building code or a health regulation and appellant would have been bound thereby even though the law was enacted after the date of the trust deed under which he purchased. Even an existing property owner has no right to a continuity of the zoning of the general area of his property. (Robinson v. City of Los Angeles (1956) 146 Cal.App.2d 810.) There is no validity to appellant's claim that state law preempts the right of the City of Los Angeles to regulate his ability to charge rent in excess of that established for the unit he acquired at the foreclosure sale. He acquired the unit at foreclosure subject to the valid police power limitation on the maximum rent he could charge for its use.
Appellant's contention is that he was entitled to rely on a defense of "mistake of law." That mistake of law, as set forth in appellant's brief, is:
"... he was entitled to have the jury consider his affirmative defense of 'mistake of law', namely, that in setting Doughty's rent for the Unit he reasonably relied upon the decision of Judge Crahan in Doughty v. Little [sic] that the unit was not subject to the Rent Stabilization Ordinance."
In addition, appellant contends that, since Judge Crahan (the trial judge in the prior eviction action) relied on an opinion of Judge Younger in an unrelated case, he was entitled to the following jury instruction:
"The decisions of Los Angeles Municipal Court Judge Eric Younger in the case of Kahan v. Girouard, case number 263682, and Los Angeles Municipal Court Judge Brian Crahan in Little v. Doughty, case number 453, 836, dealt with the issue of the Preemption of California State foreclosure laws over section 151.09 of the Los Angeles Rent Stabilization Act. These Judges in fact held that the State laws preempted the Rent Ordinance. In Little v. Doughty, the parties and the rental unit were the same as in this case. If you believe that William Little relied on these decisions and in good faith therefore thought that the California State foreclosure laws preempted the entire Los Angeles Rent Stabilization Ordinance, Section 151.04 in particular, then you must acquit him of the charges alleged herein."
"Defendant William Little's Requested Jury Instructions, p. 12."
The judgment of Judge Crahan in the eviction case was strictly in accordance with the Supreme Court decision in Birkenfeld, supra. An examination of that case indicates that appellant filed the eviction proceeding under the provisions of Code of Civil Procedure section 1161a, alleging his entitlement to the premises on the grounds that he was a purchaser at a foreclosure sale. Judge Crahan was not called upon, and could not have validly ruled, that the foreclosure law of the State of California preempted the City of Los Angeles from controlling the rent charged for certain premises after foreclosure. The only issues before him was whether appellant could evict Doughty under the provisions of Code of Civil Procedure section 1161a.
It is correct, as respondent states, that there is no showing in the record that appellant relied in any manner on the ruling of Judge Younger in Kahan v. Girouard. It is true that the written opinion of Judge Younger was filed by appellant as a trial brief in the eviction action. However, even if legally a defense, appellant's only reliance on Judge Younger's opinion would be his reliance at the time he charged the rents for the month of June through October 1981.
The holding of the California Supreme Court in People v. Snyder (1982) 32 Cal.3d 590, 186 Cal.Rptr. 485 is controlling in this case under the facts shown:
" 'It is an emphatic postulate of both civil and penal law that ignorance of a law is no excuse for a violation thereof. Of course it is based on a fiction, because no man can know all the law, but it is a maximum which the law itself does not permit any one to gainsay.... The rule rests on public necessity; the welfare of society and the safety of the state depend upon its enforcement. If a person accused of a crime could shield himself behind the defense that he was ignorant of the law which he violated, immunity from punishment would in most cases result.' (People v. O'Brien (1892) 96 Cal. 171, 176 []; see Brown v. State Department of Health (1978) 86 Cal.App.3d 548, 554-555 [150 Cal.Rptr. 344], and cases cited.) Accordingly, lack of actual knowledge of the provisions of Penal Code section 12021 is irrelevant; the crucial question is whether the defendant was aware that he was engaging in the conduct proscribed by that section. (People v. Norton (1978) 80 Cal.App.3d Supp. 14, 21 [146 Cal.Rptr. 343]; People v. Howard (1976) 63 Cal.App.3d 249, 256 [133 Cal.Rptr. 689]; People v. Mendoza (1967) 251 Cal.App.2d 835, 843 [60 Cal.Rptr. 5].)" (Id. at pp. 592-593, 186 Cal.Rptr. 485.)
The testimony of Judge Crahan was properly rejected as irrelevant, as was the objection to the admission of the court file in the eviction case. (As was noted above the court file did not in fact reveal any basis for a defense by appellant.) Appellant's proposed jury instruction was an incorrect statement of both the facts and the law, and was properly rejected.
The judgment is affirmed.
FOSTER, P.J., and REESE, J., concur.