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Anchor Pacifica Management Company v. Sharon Green

April 23, 2012


(Los Angeles County Super. Ct. No. 10U00127) APPEAL from a judgment of the Superior Court of Los Angeles County, Michael Villalobos, Judge. Reversed.

The opinion of the court was delivered by: Perluss, P. J.


Must a management company operating a senior apartment complex developed with assistance from a local redevelopment agency and subject to agency oversight identify good cause when it evicts a tenant participating in the agency's housing assistance program upon expiration of the tenant's lease? Sharon Green, who is disabled and receives federal income-supplement benefits, contends the trial court erred when it denied her motion to dismiss this unlawful detainer action on the ground her eviction without cause from her subsidized apartment at the end of her lease violated her right to due process under the state and federal constitutions or, in the alternative, failed to allow her to present this defense to the jury. We agree on the facts of this case Green's eviction from government-subsidized and regulated low income housing constituted state action that deprived her of a protected property interest. Accordingly, we reverse the judgment entered after a jury rejected Green's alternate defense of retaliatory eviction and order judgment entered in her favor.

factual and procedural background

In 1990 the City of Glendora Community Redevelopment Agency (City) entered into a development agreement with Andover Glendora Associates (Andover), a private developer, to build between 146 and 156 units of senior housing (Heritage Oaks Apartments) on a parcel previously donated to the City for that purpose. In exchange for a 55-year lease of the property, Andover agreed to develop the land pursuant to the City's specifications, maintain the development with City oversight and pay the City a minimum (at the commencement of the lease) of 20 percent of the net proceeds of the development. Upon expiration of the ground lease, ownership of the improvements will revert to the City as owner of the land.

The development agreement and ground lease require Andover to reserve--throughout the lease term--30 percent of the permitted units for low and very low income tenants whose rents are required to be set at levels commensurate with comparable affordable housing guidelines. The City is required to provide Andover a list of prospective tenants whose eligibility for the affordable units has been determined by the City for use in selecting tenants for the affordable units. The City reserved the right to provide assistance to any tenants on the site from available housing assistance funds. Although the City disavowed any obligation to fund such subsidies, once assistance had been provided to a particular tenant, the City committed it would not withdraw assistance for a period of five years. Andover agreed to accept any subsidies paid by the City and to accept the low and very low income tenants referred by the City "subject to standard background and credit report inquiries at [Andover's] discretion." Throughout the lease term Andover is required to submit quarterly reports to the City certifying its compliance with the affordable housing component of the agreement.

After construction of the Heritage Oaks Apartments complex, 47 units of the 151 units were set aside for low and very low income tenants, some of whom, in addition to mandatory limitations on their rent, received additional assistance in the form of rent subsidies. Over the years these subsidies were funded either by federal housing programs or by funds set aside by the City for that purpose. Although the City does not appear to have subsidized all tenants of the low income units, once a subsidy had been approved, there is no evidence in the record the City discontinued or terminated that subsidy.

In October 2007 Green was certified by the City as eligible for one of the low income housing units. She moved into the Heritage Oaks Apartments, which are managed by Anchor Pacifica Management Company (Anchor Pacifica), and signed a one-year lease for a unit with a monthly rent of $740. Green paid $328; the City paid Anchor Pacifica the remainder of Green's rent. In December 2008, subject to a renewed one-year lease, Green moved to a first floor apartment with a monthly rent of $758, of which she paid $213. On January 10, 2009 Green signed another one-year lease at the same monthly rate, and the City again subsidized her rent.

On October 8, 2009 Anchor Pacifica served Green with a 90-day eviction notice. The notice did not provide any reason for the termination of her tenancy at the conclusion of her lease. An unlawful detainer action was filed on January 21, 2010. Green answered, asserting, among other defenses, Anchor Pacifica's attempt to evict her without good cause violated her federal and state right to due process. On June 7, 2010 she moved to dismiss the action on the ground Anchor Pacifica had failed to provide good cause for her eviction or, in the alternative, to allow her to present that defense to the jury.

Before trial the court conducted an evidentiary hearing under Evidence Code section 402 to determine whether Green would be permitted to assert as a defense her due process right to good cause eviction. Following completion of the evidentiary hearing on August 17, 2010, the trial court denied the motion, ruling Green had "failed to prove or show she has an enforceable right [to the subsidy]; the plaintiff is not required to provide good cause notice for terminating a month to month tenancy." The case proceeded to trial, and the jury found in favor of Anchor Pacifica, rejecting Green's defense of retaliatory eviction. Judgment was entered on September 17, 2010, and Green was evicted.

Green appealed to the appellate division of the superior court, which affirmed the judgment based on a lack of state action: The appellate division concluded the City had not been sufficiently involved with either the project or Green's tenancy to subject Anchor Pacifica's decision to evict Green at the end of her lease to constitutional limitations. We granted Green's petition to transfer the appeal to this Court pursuant to California Rule of Court, rule 8.1006.

discussion 1. Due Process Protections for Low Income Tenants

The Fourteenth Amendment to the United States Constitution prohibits any state deprivation or termination of a protected property interest without procedural due process safeguards. "Procedural due process imposes constraints on governmental decisions which deprive individuals of 'liberty' or 'property' interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment." (Mathews v. Eldridge (1976) 424 U.S. 319, 332 [96 S.Ct. 893, 47 L.Ed.2d 18].) As relevant here, a protected property interest may be terminated or withdrawn by governmental action only for cause. (Logan v. Zimmerman (1982) 455 U.S. 422, 430 [102 S.Ct. 1148, 71 L.Ed.2d 265].)

The California Constitution contains a similar due process guarantee: Article I, section 7, subdivision (a), states a person may not be deprived of life, liberty or property without due process of law.*fn1 "[T]he core purpose of procedural due process [is] ensuring that a citizen's reasonable reliance is not frustrated by arbitrary government action." (Town of Castle Rock v. Gonzales (2005) 545 U.S. 748, 791, fn. 20 [125 S.Ct. 2796, 162 L.Ed.2d 658] (dis. opn. of Stevens, J.).) Even in an action against a nominally private entity, a due process claim is properly allowed when the state has been sufficiently involved with the private entity's conduct to hold that entity to the standards imposed on governmental actions that deprive a person of a protected property interest: "'Conduct that is formally "private" may become so entwined with governmental policies or so impregnated ...

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