California Court of Appeals, Second District, Third Division
PUB. ORDER 8/20/13 (SEE END OF OPN.)
APPEAL from an order of the Superior Court of Los Angeles County, No. BC406059 Michael Johnson, Judge.
Law Office of Sheri L. Kelly, Sheri L. Kelly; Consumer Law Offices and Daniel T. LeBel for Plaintiffs and Appellants.
Willis Depasquale, James M. Hansen, Larry N. Willis and Thomas M. Rutherford, Jr., for Defendants and Respondents.
Named plaintiffs David Hendleman and Anne Aaronson appeal from the order of the trial court denying their motion for certification of a class of tenants at the Los Altos Apartments in the context of their lawsuit against the landlord. Plaintiffs brought this action alleging the landlord failed to repair and maintain the property in a safe and habitable condition over a period of 10 months, unlawfully demanded increased rents, and retaliated against the tenants for exercising their rights. The trial court denied plaintiffs’ motion for class certification for lack of ascertainability, community of interest, and superiority. In their appeal, plaintiffs contend that the class is ascertainable and there are common issues of law and fact, with the result they should be able to proceed as a class against defendants Los Altos Apartments, L.P., Charles and Cynthia Eberly, Inc., Allen Gross, Charles Eberly and David Strahm who are owners, managers, or representatives of the apartment building (together the landlord or defendants). To the extent problems of ascertainability or commonality exist, they argue, the class can be modified. We conclude the trial court correctly ruled that individual issues of law and fact predominate all five causes of action. Accordingly, we affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
1. The ordinances at issue
Plaintiffs’ lawsuit is premised on two City of Los Angeles ordinances, the Rent Escrow Account Program (REAP) (L.A. Mun. Code, § 162.00 et seq.) and the Los Angeles Rent Stabilization Ordinance (RSO) (L.A. Mun. Code, § 151.00 et seq.). The Los Angeles City Housing Code is designed to address the problem of “substandard and unsanitary residential buildings” in the city that render the dwellings “unfit or unsafe for human occupancy” and are detrimental to the health, safety, and welfare of their occupants and threaten the physical, social, and economic stability of residential buildings. (L.A. Mun. Code, § 161.102.) The goal of REAP is to provide a “just, equitable and practical method” for enforcement of the purposes of the Housing Code and “to encourage compliance by landlords with respect to the maintenance and repair of residential buildings, structures, [and] premises.” (L.A. Mun. Code, § 162.01(A).) The RSO addresses a declared shortage of decent, safe and sanitary housing at affordable levels that has a detrimental effect on substantial numbers of renters in the city. (L.A. Mun. Code, § 151.01.) The RSO regulates rents to safeguard tenants from excessive rent increases while providing landlords with reasonable returns from their rental units. (Ibid.)
Under REAP, the Los Angeles Housing Department (LAHD), among other city agencies, periodically inspects rental buildings and orders landlords to correct violations of the city’s Housing Code and California’s Health and Safety Code (L.A. Mun. Code, § 161.401, 161.201, 161.602.1, 161.701.2 & 161.702.) If the property is the subject of one or more of such orders, the period for compliance has expired, and the orders concern violations that affect the health or safety of the occupants, or if the property is subject to the RSO and results in the deprivation of housing services or habitability, the LAHD places the property into REAP. (L.A. Mun. Code, §§ 162.03-162.05.) Among the effects of being placed into REAP is a mandatory reduction in rents, up to 50 percent, according to a schedule that takes into account the nature of the violation, the severity of the conditions, and the history of past untenantable conditions. (L.A. Mun. Code, § 162.05.)
When it accepts a property into REAP, the LAHD serves notice on all affected tenants (L.A. Mun. Code, § 162.04(E)) and establishes a trust fund account into which tenants may deposit rent payments. (L.A. Mun. Code, § 162.07(a)(1).) Once the landlord complies with the notices and corrects the violations, the LAHD terminates REAP and returns the funds in the escrow account minus fees to the landlord. (L.A. Mun. Code, § 162.08.)
The RSO regulates rents. (L.A. Mun. Code, § 151.01.) A rent increase is defined as an increase in rent or a reduction in housing services without a concomitant reduction in rent. (L.A. Mun. Code, § 151.02.) The RSO controls the rate at which a landlord may increase rent for property that is subject to the RSO.
2. The Los Altos Apartments and the LAHD
The Los Altos Apartments, located at 4121 Wilshire Boulevard, Los Angeles, is a 68-unit, five story apartment building constructed in the 1920s. Twenty eight units, or 40 percent of the apartments, are affordable units intended for low-income tenants.
The LAHD inspected the Los Altos Apartments three times in May, July, and August 2006. It placed the property into REAP in February 2007 (Case No. 79550) and reduced the rents by the maximum of 50 percent for “almost every single unit.” The REAP order became final in March 2007. (L.A. Mun. Code, § 162.02(A).)
The Los Altos Apartments sued the City of Los Angeles (the City) for placing it into REAP. Among other things, the landlord alleged that it had cooperated with LAHD’s inspectors and timely repaired the violations. The trial court dismissed the action because, inter alia, the Los Altos Apartments failed to exhaust its administrative remedies. Another division of this District Court of Appeal affirmed the lawsuit’s dismissal on the basis that the Los Altos Apartments failed to present a timely claim. (Los Altos Apartments, L.P. v. City of Los Angeles (July 7, 2011, B222174) [nonpub. opn.].)
3. The instant complaint brought by the named plaintiffs
The named plaintiffs filed the fourth amended complaint on behalf of similarly situated tenants who resided at, and paid rent to, the Los Altos Apartments between January 22, 2005 and September 2010. The complaint alleges that the LAHD issued the landlord repeated notices and placed the property into REAP for the following: fire safety violations, such as the failure to maintain required self-closing, self-latching separation fire doors in the common areas, obstructed exits and stairwells blocked emergency egress, and problems with the exterior weatherproofing, all of which defects are alleged to have an impact on the common areas and constitute violations of the Los Angeles Municipal Code and California’s Health and Safety Code. The complaint alleges that during the class period, the landlord reduced the following housing services: (1) fire and emergency safety and (2) weatherproofing, which service reductions caused the building to be accepted into REAP; along with (3) trash pickup causing overflowing trash bins; (4) elevator function; and (5) security, all of which deficiencies affect tenants in a similar fashion. The complaint alleges further that in violation of REAP, the landlord demanded the full unadjusted rent, and sometimes more, by (1) issuing multiple notices to plaintiffs and the putative class falsely stating the tenants were obligated to pay the full amount directly to the landlord, (2) issuing three-day notices to pay rent or quit, and (3) issuing notices falsely stating the tenants owed past due rent in the amount of hundreds and sometimes thousands of dollars.
Plaintiffs allege against the landlord: (1) violation the RSO (L.A. Mun. Code, § 151.04) by charging the full rent despite reducing housing services; (2) retaliation against the class in violation of REAP (L.A. Mun. Code, § 162.00 et seq.) by demanding every tenant pay rent that exceeded the reduced amounts, issuing three-day notices to pay rent or quit, and demanding tenants pay past-due rent directly to the landlord; (3-4) breach of the implied warranty of habitability and nuisance by reducing services and causing the property to be accepted into REAP; and (5) abuse of process. In addition to damages, plaintiff seek an injunction to abate the nuisance and the landlord’s harassment.
4. Plaintiffs’ class certification motion
a. class and subclass definition
The two named plaintiffs moved for certification of a class defined as follows: “All tenants of the Los Altos Apartments, located at 4121 Wilshire Blvd., Los Angeles, CA 90010, during any part of the time period of January 22, 2005 to the present.”
Plaintiffs’ proposed subclass would consist of “Any class member who received any of the following notices: (1) a three-day notice to pay rent or quit on or about April 12, 2007; (2) a notice dated April 16, 2007 stating that the tenant was obligated to ‘pay your full rent directly to the landlord;’ or (3) a notice in late June, 2007 stating that the ...