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applying the same causation analysis to both public nuisance and UCL claims
Summary of this case from City of San Francisco v. Purdue Pharma L.P.Opinion
A146179
08-10-2017
LOUIS GAMACHE et al., Plaintiffs and Appellants, v. AIRBNB, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco County Super. Ct. No. CGC-14-541477)
Plaintiffs Louis Gamache and Danielle McGee (Plaintiffs) appeal the trial court's order sustaining without leave to amend the demurrer of defendant Airbnb, Inc. (Airbnb). We affirm.
FACTUAL BACKGROUND
"On review of the sufficiency of a complaint against a general demurrer, we treat the demurrer as admitting all properly pleaded material facts, but not contentions, deductions or conclusions of fact or law." (Aguilera v. Heiman (2009) 174 Cal.App.4th 590, 593, fn. 1 (Aguilera).)
In San Francisco, demand for housing far exceeds availability. The conversion of residential units into short-term rentals has contributed to this housing crisis, and more than 5,000 residential properties are unlawfully being rented as short-term rentals. Increased short-term rentals in apartment buildings also "create security problems, increased foot traffic, and far more noise than would otherwise exist"; and the short-term guests are "inconsiderate, destructive, violent, smoke in prohibited areas, [and] have more guests than allowed."
Airbnb provides "Hosts"—people offering their houses or apartments for rent—with an online platform to list the rental, photography services, advertising, calendaring software, pricing guidelines, payment processing, cleaning services, insurance, tax advice, and legal advice. Airbnb collects a percentage fee from each rental.
Plaintiffs live in a residential building in San Francisco. Short-term rentals in Plaintiffs' building have been made through Airbnb's online platform.
PROCEDURAL BACKGROUND
In September 2014, Plaintiffs filed a complaint against Airbnb on behalf of themselves and a proposed class of tenants in buildings with units rented through Airbnb. Plaintiffs' first amended complaint alleged causes of action for private nuisance; public nuisance; violation of the Unfair Competition Law (Bus. & Profs. Code, § 17200; UCL); and violations of San Francisco Administrative Code chapters 41 and 41A. The trial court sustained Airbnb's demurrer denying leave to amend with respect to the San Francisco Administrative Code claims, but granting leave to amend as to the nuisance and UCL causes of action.
Plaintiffs subsequently filed the operative second amended complaint, alleging causes of action for private nuisance, public nuisance, and violation of the UCL. Airbnb filed a demurrer. Plaintiffs opposed the demurrer and also sought leave to file a third amended complaint. The proposed third amended complaint added new plaintiffs and included new causes of action for aiding and abetting violations of San Francisco Administrative Code chapters 41 and 41A and aiding and abetting breach of the covenant of quiet enjoyment. The trial court sustained the demurrer and denied leave to file a third amended complaint. This appeal followed.
DISCUSSION
"[O]n appeal from a judgment of dismissal after a demurrer is sustained without leave to amend . . . [, w]e first review the complaint de novo to determine whether the complaint alleges facts sufficient to state a cause of action under any legal theory or to determine whether the trial court erroneously sustained the demurrer as a matter of law. [Citation.] Second, we determine whether the trial court abused its discretion by sustaining the demurrer without leave to amend. [Citation.] Under both standards, appellant has the burden of demonstrating that the trial court erred. [Citation.] An abuse of discretion is established when 'there is a reasonable possibility the plaintiff could cure the defect with an amendment.' " (Aguilera, supra, 174 Cal.App.4th at p. 595.)
I. Nuisance
"Anything which is injurious to health, . . . or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property, . . . is a nuisance." (Civ. Code, § 3479.) "A public nuisance is one which affects at the same time an entire community or neighborhood, or any considerable number of persons." (Id., § 3480.) Every nuisance that is not public is private. (Id., § 3481.) We agree with the trial court's conclusion that Plaintiffs' allegations do not establish Airbnb caused a public or private nuisance.
As an initial matter, Plaintiffs' contention that causation is not an element of nuisance is unpersuasive. When "liability is based upon nuisance . . . [, i]t extends to damage which is proximately or legally caused by the defendant's conduct, not to damage suffered as a proximate result of the independent intervening acts of others." (Martinez v. Pacific Bell (1990) 225 Cal.App.3d 1557, 1565; see also In re Firearm Cases (2005) 126 Cal.App.4th 959, 988 ["Merely engaging in what plaintiffs deem to be a risky practice, without a connecting causative link to a threatened harm, is not a public nuisance."].) Plaintiffs cite jury instructions, but these instructions include the element that the defendant's "conduct was a substantial factor in causing" the plaintiff's harm (CACI Nos. 2020, 2021), and thus undermines rather than supports their assertion. Plaintiffs' citation to cases discussing nuisance without identifying causation as an element does not establish that causation is not an element, in light of the authority discussed above.
Plaintiffs next contend they sufficiently alleged causation, pointing to allegations that (1) Airbnb facilitated short-term rentals at their building, and (2) the short-term rentals caused "parties, smoking, and additional noise," as well as "decreased safety, giving unique keys to individuals to the front door to the building without any credit or background check, failing to have guests adhere to the tenant policies, increased traffic and pollution, not being able to obtain assistance from the landlord in a timely fashion, increased smoking outside and inside the building, the front door to the building being left open, more guests than allowed in each room, break ins, threats, property damage, fires, and physical violence."
These allegations are insufficient to support causation. First, the direct cause of the harm is either the short-term renters themselves (the harms of smoking, noise, etc.) or the Plaintiffs' landlord (the harms of failure to ensure guests adhere to the tenant policies and the inability to obtain timely assistance from the landlord). Second, Plaintiffs do not allege that all short-term renters—or any of the short-term renters who caused the nuisance activity—secured their rentals through Airbnb. Third, even assuming some of the offending renters used Airbnb, Plaintiffs make no allegations that Airbnb operated its online platform in a manner that encouraged the nuisance activity in any way. Airbnb's facilitation of some number of short-term rentals in Plaintiffs' building, which may or may not have involved renters who smoked more or made more noise than long-term tenants, does not render Airbnb a proximate cause of the alleged harms.
As the trial court noted in the context of the UCL claim, there are no allegations that Airbnb "specifically selects for smokers or for loud partygoers . . . ."
Because we conclude Plaintiffs failed to allege causation, we need not decide whether or to what extent duty is an element of a nuisance claim.
Plaintiffs argue this case is similar to Birke v. Oakwood Worldwide (2009) 169 Cal.App.4th 1540. In Birke, an apartment complex resident sued the property manager, alleging secondhand smoke in the outdoor areas of the complex constituted a nuisance. (Id. at p. 1543.) The Court of Appeal held the property manager could be held liable for the secondhand smoke based on allegations that, because of "an affirmative business decision" to attract certain clientele, it "encouraged and facilitated the creation of a secondhand tobacco smoke hazard in the outdoor common areas by providing ashtrays for use by tenants and guests who smoke cigarettes and cigars, by permitting its own employees and agents to smoke in those areas of the complex and by refusing the requests of [the plaintiff's] father, that smoking in the outdoor common areas be limited or restricted." (Id. at p. 1552.) In contrast, Plaintiffs make no allegations that Airbnb encouraged the nuisance activity—the noise, smoke, etc.—by, for example, soliciting smoking renters or encouraging renters to make undue noise while in their rentals. The allegation that Airbnb encouraged rentals alone is not sufficient.
We also reject Plaintiffs' reliance on City of Modesto Redevelopment Agency v. Superior Court (2004) 119 Cal.App.4th 28, a lawsuit involving the alleged disposal of hazardous dry cleaning solvents into the public sewer systems. (Id. at p. 33.) The Court of Appeal considered allegations that, "with knowledge of the hazards involved, some of the defendants instructed the dry cleaners to set up their equipment to discharge solvent-containing wastewater into the drains and sewers, and that others gave dry cleaners instructions to dispose of spilled [solvent] on or in the ground," and "conclude[d] that these kinds of affirmative acts or instructions could support a finding that those defendants assisted in creating a nuisance." (Id. at p. 41.) Plaintiffs do not allege that Airbnb instructed renters to smoke, make excessive noise, or engage in any of the other harmful activities alleged.
Finally, we reject Plaintiffs' argument that Airbnb's conduct was a nuisance per se. "The concept of a nuisance per se arises when a legislative body with appropriate jurisdiction, in the exercise of the police power, expressly declares a particular object or substance, activity, or circumstance, to be a nuisance." (Beck Development Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th 1160, 1206.) Plaintiffs point to the following declaration of nuisance contained in the San Francisco Planning Code: "Any use, structure, lot, feature or condition in violation of this Code is hereby found and declared to be unlawful and a public nuisance." (S.F. Planning Code, § 176, subd. (a).) Plaintiffs contend San Francisco Planning Code section 317 "prohibit[s] the conversion of housing" and Airbnb violated or assisted others in violating this section. San Francisco Planning Code section 317—a lengthy section divided into numerous subdivisions—sets forth a permitting procedure by which an owner may demolish existing residential housing or otherwise remove it from the housing market. (S.F. Planning Code, § 317, subds. (a), (c)(1).) Plaintiffs fail to identify any specific provision violated or otherwise explain how Airbnb's conduct violated this section. (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 [" 'We are not bound to develop appellants' arguments for them.' [Citation.] 'The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived.' "].)
We grant Airbnb's May 17, 2016 unopposed request for judicial notice with respect to relevant sections of the San Francisco Planning Code, as well as relevant sections of the San Francisco Administrative Code discussed post, part III.B. We deny as irrelevant the request with respect to a failed San Francisco ballot initiative.
II. Unfair Competition Law
"The UCL prohibits, and provides civil remedies for, unfair competition, which it defines as 'any unlawful, unfair or fraudulent business act or practice.' " (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 320.) "[U]nder the UCL, standing extends to 'a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.' " (Id. at pp. 321-322.) To satisfy this requirement, a party must "(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim." (Id. at p. 322.)
Plaintiffs argue they sufficiently alleged injury in fact because their rent paid for repairs and maintenance to the building's common areas and amenities, and short-term renters "damage and diminish" these common resources yet do not pay for them. These allegations are insufficient to establish injury in fact. First, Plaintiffs do not allege they paid any additional money for repair or upkeep of the common areas as a result of the short-term renters. Second, for the reasons explained in connection with the nuisance claims (ante, part I), any damage allegedly from short-term renters was not caused by Airbnb: the direct cause was the short-term renters or Plaintiffs' landlord; Plaintiffs do not allege that any short-term renters who damaged the building's common resources secured their rentals through Airbnb; and Plaintiffs do not allege that Airbnb operated its online platform in a manner that encouraged damage to the building's common resources. Accordingly, Plaintiffs have failed to demonstrate standing under the UCL.
III. Leave to Amend
Plaintiffs contend the trial court abused its discretion by denying leave to file a third amended complaint. We find no abuse of discretion.
A. Nuisance, UCL
Plaintiffs argue their proposed third amended complaint included new factual allegations relevant to the nuisance and UCL claims. However, as the trial court noted in its order, "the proposed complaint suffers from the same proximate cause . . . problems" as the second amended complaint. Plaintiffs fail to explain how the new allegations—expanding on the harms allegedly caused by short-term renters and adding new proposed plaintiffs living in buildings with short-term renters—remedy the lack of causation that is fatal to these claims. (Aguilera, supra, 174 Cal.App.4th at p. 604 ["The plaintiff has the burden of proving an amendment will cure the defect."].)
B. Aiding and Abetting, San Francisco Administrative Code
Plaintiffs also sought to add new causes of action for aiding and abetting violations of San Francisco Administrative Code chapters 41 and 41A, which restrict short-term rentals of residential rental units. (S.F. Admin. Code, §§ 41.20, subd. (a), 41A.5, subd. (a).) In sustaining Airbnb's demurrer to Plaintiffs' first amended complaint, the trial court found the relevant provisions applied only to property owners and lessors, not to rental platforms like Airbnb. Plaintiffs did not appeal this ruling but argue solely that they can state a claim for aiding and abetting violations by owners and lessors. We disagree.
San Francisco Administrative Code chapter 41A was amended, operative February 2015, to impose certain requirements on "Hosting Platforms" such as Airbnb. Plaintiffs do not rely on these provisions. On July 6, 2016, Plaintiffs filed a request for judicial notice of a June 2016 further amendment to San Francisco Administrative Code chapter 41A, including changes to the Hosting Platform provisions. Airbnb opposed the request. Plaintiffs contend generally that the 2016 amendment "clarifies the scope" of the ordinance and "supports the allegations that [Airbnb's] conduct is unwanted, causes nuisances, and should be enjoined." These contentions do not alter our analysis of this case. While not entirely clear, Plaintiffs may be relying on violations of the amended provision for purposes of the UCL; however, this reliance would not cure Plaintiffs' lack of standing (ante, part II.) We therefore deny Plaintiffs' request for judicial notice as irrelevant. --------
Plaintiffs do not contend that the ordinances expressly impose liability for aiding or abetting violations by owners or lessors. Instead, Plaintiffs rely on the common law rule imposing liability for aiding and abetting a tort. (See Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144 [" ' "Liability may . . . be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person." ' "].)
Courts have declined to apply common law aiding and abetting liability to statutes absent a basis for such liability in the language of the statute itself. (Wolfe v. City of Fremont (2006) 144 Cal.App.4th 533, 552 ["in the absence of statutory authority, we reject the argument that we should recognize a civil cause of action for aiding and abetting a Brown Act violation"]; Clarke v. Horany (1963) 212 Cal.App.2d 307, 311 [declining to impose aiding and abetting liability where "[t]he liability is purely statutory [citation] and the statute makes no provision for imposing liability on agents or abettors"].) Plaintiffs rely on Vernon v. State (2004) 116 Cal.App.4th 114, in which the Court of Appeal considered the scope of common law aiding and abetting liability in the interpretation of a statute. (Id. at p. 131.) In that case, however, the statute itself imposed such liability by providing it was unlawful for " 'any person to aid, abet, incite, compel, or coerce the doing of any of the acts forbidden' by the [statute], or 'to attempt to do so.' " (Ibid., quoting Govt. Code, § 12940 (italics added by Vernon omitted).) Because the relevant ordinances do not provide for aider or abettor liability, and because we decline to read such liability into the statute absent a textual basis to do so, we reject Plaintiffs' claim.
C. Aiding and Abetting, Covenant of Quiet Enjoyment
Plaintiffs next contend they should be permitted to add a new cause of action for aiding and abetting a violation of the covenant of quiet enjoyment. We disagree.
"In the absence of language to the contrary, every lease contains an implied covenant of quiet enjoyment, whereby the landlord impliedly covenants that the tenant shall have quiet enjoyment and possession of the premises. [Citations.] The covenant of quiet enjoyment 'insulates the tenant against any act or omission on the part of the landlord, or anyone claiming under him, which interferes with a tenant's right to use and enjoy the premises for the purposes contemplated by the tenancy.' " (Andrews v. Mobile Aire Estates (2005) 125 Cal.App.4th 578, 588, fn. & italics omitted.)
Plaintiffs' authority does not establish the availability of a claim for aiding and abetting a breach of the covenant of quiet enjoyment. Plaintiffs do not dispute that the covenant of quiet enjoyment sounds in contract, yet they rely on Schulz v. Neovi Data Corp. (2007) 152 Cal.App.4th 86, which provides: " ' "Liability may . . . be imposed on one who aids and abets the commission of an intentional tort . . . ." ' " (Id. at p. 93, italics added.) "Conduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law." (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 515.) Plaintiffs have identified no independent tort-law duty violated here.
Plaintiffs argue a breach of the covenant of quiet enjoyment can be based on the actions of a third party acting with the landlord's permission. But this principle does not establish aider and abettor liability. Indeed, the cases cited by Plaintiffs on this point all involve claims made against the landlord, not against any purported aider and abettor. (Nativi v. Deutsche Bank National Trust Company (2014) 223 Cal.App.4th 261, 308 [considering whether "the Bank, as landlord, was liable for breach of the covenant of quiet enjoyment"]; Lee v. Placer Title Co. (1994) 28 Cal.App.4th 503, 505 [lawsuit between commercial tenant and landlords]; Petroleum Collections Inc. v. Swords (1975) 48 Cal.App.3d 841, 844 [lawsuit between commercial tenant and landlord's assignee].)
Plaintiffs also note the covenant of quiet enjoyment is codified in the Civil Code. The cited statutes do not provide for aiding and abetting liability. (Civil Code, §§ 1927 ["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, against all persons lawfully claiming the same." (italics added)], 1955 ["Except as otherwise agreed by the lessor and the lessee in lease agreements for a term of more than 20 days, one who leases personal property must deliver it to the lessee, secure his or her quiet enjoyment thereof against all lawful claimants, put it into a condition fit for the purpose for which he or she leases it, and repair all deteriorations thereof not occasioned by the fault of the lessee and not the natural result of its use." (italics added)].) As discussed ante, part III.B, we decline to incorporate common law aiding and abetting rules into statutes which, by their plain terms, impose no such liability.
IV. Discovery
Plaintiffs' final contention is the trial court erred in sustaining the demurrer before allowing Plaintiffs to conduct discovery. Plaintiffs argue discovery would reveal evidence regarding whether Airbnb was aware of unlawful activity and/or intended to encourage such activity. No such evidence would cure the problems we have identified with Plaintiffs' claims: lack of causation, lack of standing, and the unavailability of aiding and abetting liability.
DISPOSITION
The judgment is affirmed. Respondent is awarded its costs on appeal.
/s/_________
SIMONS, Acting P.J. We concur. /s/_________
NEEDHAM, J. /s/_________
BRUINIERS, J.