Opinion
A100345. A101238. A101546.
10-8-2003
THE BLAINE FAMILY TRUST et al., Plaintiffs and Respondents, v. SAN FRANCISCO RESIDENTIAL RENT STABILIZATION AND ARBITRATION BOARD, Defendant and Appellant; DOUGLAS PERLSTADT et al., Real Parties in Interest and Appellants.
Does a tenant who rents two side-by-side apartments as an expanded residence qualify for rent control on both units? The San Francisco Residential Rent Stabilization and Arbitration Board (the Board) has decided that the tenant is protected from rent increases on both units. We will reverse the trial courts order granting the landlords petition for administrative mandamus and reinstate the administrative decision.
FACTUAL AND PROCEDURAL HISTORY
Douglas Perlstadt first rented a studio apartment in a building on Pierce Street in 1985 or 1986. In 1989, he moved into a one-bedroom apartment in the same building, apartment number 306, where he has resided ever since. In 1996, Perlstadts then fiancée, Lori, moved from her own one-bedroom apartment elsewhere in the city into apartment 306. However, the couple began looking for a two-bedroom apartment to give them more living space. At this same time the studio apartment next door—apartment 305—became available, and effective September 15, 1996, the Perlstadts rented that apartment to use together with apartment 306 to give them a two-bedroom, two-bath residence. The two apartments have no internal access between them, but the entry doors are adjacent in an "L" configuration.
The Blaine Family Trust and The Timothy M. Blaine and Kathleen T. Friedrich Revocable Trust (the Landlord) purchased the apartment building in 1999 and continued to accept rents from the Perlstadts for both apartments. In 2001, the Landlord notified the Perlstadts of its intent to increase the rent on apartment 305 from $1,298 to $1,850. The Landlord also filed a petition with the Board to ratify the rent increase. Landlord took the position that while apartment 306 was protected by the San Francisco Residential Rent Stabilization and Arbitration Ordinance (the Rent Ordinance), apartment 305 was not.
Under the Rent Ordinance, a landlord may impose rent increases only under defined circumstances upon "tenants in occupancy." (S.F. Admin. Code, § 37.3, subd. (a).) Section 1.21 of the Boards rules and regulations (hereafter section 1.21), as adopted by the Board in June 2001, defined a "tenant in occupancy" as a tenant "who resides in a rental unit as his or her principal place of residence."
A hearing on the Landlords petition was held before an administrative hearing officer in September 2001. The Landlord asserted (1) that the Perlstadts were not "residing" in apartment 305 but were using the apartment as a place of business for Douglas Perlstadt and (2) that the Perlstadts could not have their principal place of residence in both apartments 305 and 306. The Landlord presented evidence that Douglas Perlstadt listed his business address on a fictitious business name statement as "suite 305" and his residence address as "apt. 306." And he used the same apartment number as his address on his checks from his business bank account. Moreover, apartment 305 was outfitted with office furniture, with no bed. The Perlstadts, on the other hand, presented evidence that Douglas Perlstadt did not conduct business in apartment 305. He performed his consulting services on the clients premises; at most, he prepared bills and correspondence in apartment 305. He received personal and business mail addressed to apartment 306, and all telephone lines were located in apartment 306. Apartment 305 contained a futon that could be used as a bed, as well as exercise equipment and a computer used frequently by both Douglas and Lori Perlstadt. The couple kept books, clothes, and other personal belongings in both apartments. The Perlstadts asserted that apartment 305 was an expansion of their residence in the adjacent apartment 306.
The administrative hearing officer resolved the conflicting evidence in favor of the Perlstadts and found that the Perlstadts used both apartments 305 and 306 for residential purposes and that they used both apartments together as their principal place of residence. Accordingly, the hearing officer concluded that the Landlord could not impose the proposed rent increase on apartment 305.
The Landlord appealed that decision to the full Board, challenging only the second prong of the hearing officers ruling. That is, the Landlord no longer asserted that the Perlstadts were using apartment 305 for nonresidential purposes, but the Landlord argued that the hearing officer erred in allowing two separate rental units to qualify as a single place of residence. The Landlord urged the Board to conclude as a matter of law that only one unit can serve as a tenants principal place of residence. After hearing arguments from both sides, the Board denied the Landlords appeal without comment.
The Landlord then petitioned the superior court for a writ of administrative mandamus, seeking an order to compel the Board to set aside its decision and to permit the proposed rent increase on apartment 305. The trial court reviewed the submissions and arguments from the Landlord and the Board and granted the petition. The court concluded that "a tenant can only have one rental unit as their [sic] principal place of residence." The court then awarded the Landlord $7,500 in attorney fees.
The Perlstadts sought to enter the case by filing a motion for new trial and a motion for relief from default. The Perlstadts alleged that they had been led to believe the Board would represent their position in the lawsuit, but in fact the Board had failed to present an important argument concerning the invalidity of section 1.21. The trial court denied the motions without ruling on the merits.
Three consolidated appeals are now before us: the Boards appeal from the order granting administrative mandamus (A100345); the Boards appeal from the order awarding attorney fees to the Landlord (A101238); and the Perlstadts appeal from the order denying their motions for relief and for a new trial (A101546).
Postjudgment Events
By motion filed January 22, 2003, the Board has asked this court to take judicial notice of an amendment made to section 1.21 during the pendency of this appeal.[] We deferred decision on the request, and we now grant the unopposed request. On December 3, 2002, the Board voted to amend section 1.21 so that it now expressly allows a tenant to use more than one rental unit within the same building as his or her principal place of residence.
The two requests for judicial notice filed by the Landlord are denied.
DISCUSSION
I. Tenants in Occupancy
The Rent Ordinance was enacted in 1979 to respond to the hardships faced by tenants from excessive rent increases coupled with a shortage of affordable housing. (S.F. Admin. Code, § 37.1, subd. (b); Golden Gateway Center v. San Francisco Residential Rent Stabilization & Arbitration Bd. (1999) 73 Cal.App.4th 1204, 1211; Parkmerced Co. v. San Francisco Rent Stabilization & Arbitration Bd. (1989) 215 Cal.App.3d 490, 495.) The Rent Ordinance limits rent increases that may be imposed "upon tenants in occupancy."[] (S.F. Admin. Code, § 37.3, subd. (a).) Occupancy, then, is the factor that triggers rent control protection. (Parkmerced, at pp. 493-494; accord, Aguirre v. Lee (1993) 20 Cal.App.4th 1646, 1653.) The restrictions on rent increases do not apply once the tenant vacates the premises.[] The clear purpose of the Rent Ordinance is to protect tenants who are legitimate occupants of the residence. (Parkmerced, supra [original tenants sister became the occupying tenant]; see also Getz v. City of West Hollywood (1991) 233 Cal.App.3d 625, 629-630 [new occupant took over tenancy].)
A "tenant" is defined by the Rent Ordinance 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." (S.F. Admin. Code, § 37.2, subd. (t).)
An integral part of the Rent Ordinance is a restriction on evictions. The landlord may recover possession of a rental unit only under certain circumstances. (S.F. Admin. Code, § 37.9.)
The term "occupancy" is left undefined in the Rent Ordinance, but in June 2001, the Board adopted section 1.21, which defined a "tenant in occupancy" to mean a tenant "who resides in a rental unit as his or her principal place of residence. Occupancy does not require that the individual be physically present in the unit at all times or continuously, but it must be his or her usual place of return."[] The parties seem to agree that the Boards purpose in adopting section 1.21 was to assure that a tenant who gets the benefit of rent control actually resides on the premises and is not using the rent-controlled property as a second, part-time residence. (Cf. Miller & Desatnik Management Co. v. Bullock (1990) 221 Cal.App.3d Supp. 13 [after tenants death, mother continued to pay rent on rent-controlled apartment in daughters name, though mother did not reside there].)
The Board is authorized by the Rent Ordinance to promulgate policies, rules and regulations to effectuate the purposes of the ordinance. (S.F. Admin. Code, § 37.6, subd. (a).)
In the present case, it bears emphasizing that the administrative hearing officer rejected the Landlords contention that the Perlstadts were using apartment 305 as a place of business and found that the Perlstadts resided in apartment 305 as well as apartment 306. The Landlord did not challenge that factual finding on appeal to the Board, nor does the Landlord now dispute that the Perlstadts were simultaneously occupying both apartments 305 and 306 as their residence. The question raised in the Landlords appeal involves an interpretation of the Rent Ordinance and a determination of how the ordinance should be applied to the now undisputed facts: Do the Perlstadts qualify as tenants in occupancy of apartment 305 when they are indisputably also residing in apartment 306 next door? The question is one of law for our independent review. (Golden Gateway Center v. San Francisco Residential Rent Stabilization & Arbitration Bd., supra, 73 Cal.App.4th at p. 1207.)
The Board itself, however, has now resolved the question by changing the language of section 1.21 to clarify its meaning. Section 1.21, in pertinent part, now reads as follows: "A tenant in occupancy is [a tenant] . . . , who actually resides in a rental unit or, with the knowledge and consent of the landlord, reasonably proximate rental units in the same building as his or her principal place of residence. Occupancy does not require that the individual be physically present in the unit or units at all times or continuously, but the unit or units must be the tenants usual place of return." (Italics added.)
Moreover, the Board made the changed language retroactive. It declared that the amendment to section 1.21 "clarifies that the Board intends and has understood the phrase `in a rental unit not to preclude a tenants use of more than one unit in a building as a principal place of residence . . . . This clarifying amendment shall apply to . . . all pending decisions for which no final court decision has been issued as of the effective date." The conclusion is inescapable that the Perlstadts qualify as "tenant[s] in occupancy" and that the Boards adjudicatory decision on the Landlords petition for a rent increase conformed to section 1.21.
We reject the Landlords argument that the amendment to section 1.21 is ineffective because it is inconsistent with the purpose of the Rent Ordinance, which was to alleviate the housing shortage. First, we are not persuaded by the Landlords assertion that section 1.21 gives tenants an incentive to "hoard" rental units and thereby remove them from the rental market. We observe that section 1.21, as amended, allows a tenant to occupy more than one rental unit as his or her principal place of residence only when the tenant "actually resides" in those units, the units are "reasonably proximate rental units in the same building," and the tenant acts with "the knowledge and consent of the landlord." In our view, these qualifications, together with the practical reality that the tenant must pay rent on each unit, will make multiple occupancy a rare occurrence. In any event, the Landlord misstates the policies underlying the Rent Ordinance. The goal of the Rent Ordinance was obviously not to increase the vacancy rate in rental housing; the rent control provisions actually give tenants a disincentive to move out of their units. Rather, the crisis addressed by the Rent Ordinance was the escalating rents being charged by landlords aggravated by the limited number of housing units available for rent. The goal of restricting rent increases is not undermined by extending protection to a tenant who occupies more than one unit as a single, expanded residence.
II. Other Issues
We need not decide whether the trial court erred in awarding attorney fees to the Landlord pursuant to Government Code section 800. Because we conclude that the trial courts order granting the petition for administrative mandamus must be reversed, the order awarding attorney fees necessarily must be reversed as well. The Landlord is no longer the prevailing party and is not entitled to attorney fees under any theory.
We also decline to reach the procedural and substantive issues raised by the Perlstadts in their separate appeal. The Perlstadts did not participate in the administrative mandamus proceedings but sought to enter the case after the trial court had granted the Landlords petition.[] Now that we have concluded that the Boards ruling was correct and that the petition for administrative mandamus should have been denied, there is no further relief available to the Perlstadts. Their argument concerning the validity of section 1.21 is moot. Their appeal will be dismissed.
The Perlstadts attempt to enter the case on a motion for new trial was not for the purpose of challenging the Boards adjudicatory ruling, which was in their favor. Rather, the Perlstadts sought to challenge the Boards quasi-legislative action in enacting section 1.21 in the first place, arguing that the section changes and expands upon the Rent Ordinance and thereby invades the power of the San Francisco Board of Supervisors. The Board has not submitted a formal response to the Perlstadts brief.
DISPOSITION
The judgment is reversed and the matter is remanded to the trial court with directions to deny the petition for writ of administrative mandamus. Costs on appeal are awarded to the Board, the appellant in A100345 and A101238. The appeal in A101546 is dismissed, and the parties shall bear their own costs in that appeal (A101546).
We concur: STEVENS, Acting P.J. and GEMELLO, J.