LALPI Analysis

REVIEW OF THE CASE:

Los Angeles Lincoln Place Investors, Ltd. v. City of Los Angeles

54 Cal.App.4th 53 (April 7,1997)

by Jan Book

April 18, 2005

Amended July 9, 2005

(NOTE: The purpose of the following Analysis is to outline how and why this case is an aberration.)

FACTS: The plaintiff (LALPI) invoked the Ellis Act to evict the tenants and sought to demolish the building pursuant to the Ellis Act (Gov. Code Section 7060). The city refused to process the demolition permit based on former section 91.0303(a)(5). LALPI sued on the basis that the ordinance was unlawful and invalid because if conflicted with the Ellis Act. The trial court held that because the Ellis Act preempted section 91.0303(a)(5), the city was required to issue the demolition permit. The appellate court upheld the trial court decision.

Former section 91.0303(a) provides that the department shall issue a demolition permit once it has determined the plans are in conformity with relevant city codes and ordinances. The department refused to process the permit based on former section 91.0303(a)(5), which provides a demolition permit shall be withheld until any plans to construct a condominium, ....or community apartment project are approved by the city. Also, former section 91.0303(a)(5)(B) provided a demolition permit "shall be withheld until" the owner waived "the right to construct on the subject lot, a condo .... or community apartment project for a period of ten years from the date of the demolition..."

HELD: The LALPI court cited Javidzad v. City of Santa Monica (1988) 204 Cal.App.3d 524, as their authority in affirming the trial courts decision that the Ellis Act prohibits the city from imposing the disputed conditions on the issuance of a demolition permit. (If the trial court were to prohibit the authority of the city to issue demolition permits, they should have based that decision on police powers not on the Ellis Act. Because the 1985 version of the Ellis Act, Gov. Code section 7060.1 clearly states that "nothing in this chapter does any of the following:...(b) Diminishes or enhances, except as specifically provided in Section 7060.2, any power which currently exists or which may hereafter exist in any public entity to grant or deny any entitlement to the use of real property, including, but not limited to, planning, zoning, and subdivision map approvals." In addition, section 7060.7 read in 1985, " It is the intent of the Legislature in enacting this chapter to supersede any holding or portion of any holding in Nash v. City of Santa Monica, 37 Cal.3d 97 to the extent that the holding, or portion of the holding, conflicts with this chapter, so as to permit landlords to go out of business. However, this act is not otherwise intended to do any of the following: ... (a) Interfere with local governmental authority over land use, including regulation of the existing housing to condominiums." And the 1985 Committee Reports clearly state that while a Landlord may withdraw the rental units from the marketplace, the landlord is not automatically guaranteed a demotion permit. Thus, the court should have found the disputed conditions which prevented the issuance of a demolition permit prohibited based on a violation of the police powers, not based on the Ellis Act. But as will be seen, the court in LALPI didn't discuss the police powers available to the city, and in fact, the court did very little analysis of any kind.)

DISCUSSION: (In the LALPI case, both the trial court and the appellate court got confused on many levels. First of all, they misinterpreted the terminology in the Ellis Act by inserting whenever there was the word 'withdraw', 'withdrawal' or 'withdrawn', they inserted the word 'demolish'. As a result, the LALPI court automatically granted the landlord a demolition permit. In addition, they misquote prior court decisions on several occasions resulting in twisting the meaning within those court decisions. And finally, throughout the LALPI court decision, they use circular reasoning to reach a conclusion which is both inconsistent with prior court decisions and not logical. The end result is bad law.)

The first case and leading case interpreting the Ellis Act (Gov. Code section 7060) is City of Santa Monica v. Yarmark (1988) 203 Cal.App.3d 153. In this case, the landlord (Yarmark) decided to go out of the residential rental business by invoking the Ellis Act and attempting to evict all the tenants from all seven (7) apartment buildings located throughout Santa Monica. However, at that time, Santa Monica required a Removal Permit (slightly different than in the Javidzad case, but just as onerous) before Yarmark could evict the tenants. The Court of Appeals held "that Santa Monica's removal and eviction controls conflict with the Ellis Act, and thus are invalid to the extent they are applied to prevent a landlord from evicting their tenants so that they may withdraw their controlled units form the residential rental market and go out of business."

The Yarmark case discusses in length the Legislative intent in creating the Ellis Act (emphasis added):

"The legislative history of the Act consistently demonstrates the purpose of the Act is to allow landlords who comply with its terms to go out of the residential rental business by evicting their tenants and withdrawing all units from the market, even if the landlords could make a fair return, the property is habitable, and the landlords lack approval for future use of the land. In addition to the statement of legislative intent contained in the Act (Gov. Code, § 7060.7), the various legislative committee reports concerning the Act indicate the Act was intended to overrule the Nash decision so as to permit landlords the unfettered right to remove all residential rental units from the market, consistent, of course, with guidelines as set forth in the Act and adopted by local governments in accordance thereto. (See Sen. Com. on Judiciary (1985-1986) Analysis of Sen. Bill No. 505,"

And concludes with (emphasis added):

"The Ellis Act is a general state law. Together with other statutes governing landlord-tenant relationships, it completely occupies the field of substantive eviction controls over landlords who wish to withdraw all accommodations fn. 9 from the residential rental market in order to go out of business.

The Act contains explicit boundaries, leaving areas for local control in a fashion consistent with its terms. For example, the Act does not apply to landlords who wish to withdraw fewer than all accommodations from the residential rental market. (Gov. Code, § 7060.7, subd. (3).) The Act bears no effect on a public entity's power under law to enforce residential rental or lease contracts, fn. 10 regulate land use through planning, zoning, and subdivision map approvals, or mitigate any adverse impact on displaced tenants of residential hotels or other accommodations. (Gov. Code, § 7060.1.) In particular, the Act does not interfere with local governmental authority over regulation of the conversion of existing housing to condominiums or other subdivided interests. (Gov. Code, § 7060.7, subd. (1).)

Concerned about the possible adverse effect on rent control ordinances, the Legislature included provisions to insure against the removal of rental units for the sole purpose of circumventing rent control ordinances by, e.g., subjecting withdrawn accommodations to rent control if offered again for residential purposes. (Gov. Code, § 7060.2.) Also, the Act contains specific guidelines for public entities wishing to enact supplemental ordinances consistent with the Act. (Gov. Code, §§ 7060.2-7060.5.)

Although we mention these above aspects of the Act, we do so only to show the Legislature's concern for preventing abuses of the right to withdraw controlled units from the residential rental market."

The Javidzad case was the second case to be heard at the Appellate level involving the Ellis Act. It is interesting to note that the LALPI case quoted almost entirely from the Javidzad decision.

In the Javidzad case, the City of Santa Monica required a Removal Permit [City Charter, section 1803(t)] before an application for a Demolition Permit could be processed. Section 1803(t), states:

"Any landlord who desires to remove a controlled rental unit from the rental housing market by demolition, conversion or other means is required to obtain a permit from the Board prior to such removal from the rental housing market in accordance with rules and regulations promulgated by the Board. In order to approve such a permit, the Board is required to find that the landlord cannot make a fair return by retaining the controlled rental unit. Notwithstanding the foregoing provisions ... the Board may approve such a permit if the Board finds that the controlled rental unit is uninhabitability and is incapable of being made habitable in an economically feasible manner, or ...." the landlord planned to redevelop the property wherein at least 15% of the units was for low income tenants, etc."

The Javidzad court held that where a landlord has invoked the Ellis Act and has gone out of the rental business by withdrawing all the accommodations from the market, there was no longer any need for the Removal Permit, and the city must process the landlord's application for a Demolition Permit. However, while the Javidzad court did conclude that requiring a landlord to obtain a Removal Permit was not permitted under the Ellis Act, they also were emphatic that invoking the Ellis Act does not automatically grant the landlord a demolition permit, for the city still retains its police powers with respect to land use.

Copied here is the pertinent section of the Javidzad's court opinion in its entirety (emphasis added):

"Appellants' argument misconstrues the import of the subject sections of the Act, which authorize continued local land use controls to the extent they comport with the Act. As the trial court here and City of Santa Monica v. Yarmark, supra, 203 Cal.App.3d 153, have both found, section 1803(t) conflicts with the Act because it impermissibly conditions the landlord's right to go out of business on compliance with requirements not found in the Act.

In arguing that section 1803(t) is consistent with the Act, appellants seek to characterize the removal permit requirement as a land use regulation "authorizing the permanent demolition, conversion, alteration, etc. of the units."

The contention is unpersuasive. Section 1803(t), set forth ante in full, does not purport to regulate the subsequent use of property following its withdrawal from the rental market. However, the section does prescribe standards governing the Board's approval of a removal permit in the first instance and thus infringes on a landlord's decision to go out of the rental housing business and thereby directly conflicts with the Act.

Appellants also argue that in adopting the Act, the Legislature intended to supersede Nash only to the extent Nash compelled landlords to remain in business. They submit that in passing the Act, the Legislature intended nothing more than to enable a landlord to go out of business by evicting all the tenants residing in a building, and a property owner who has done so has obtained the full benefit of the Act. Appellants do recognize the denial of a removal permit precludes the redevelopment of a property. They insist, however, a landlord who is thereby left with a vacant apartment building is merely paying the price of choosing to go out of business!

Appellants' strained reading of the Act would result in an absurdity. Denying a section 1803(t) removal permit to a landlord who has gone out of the rental housing business imposes a prohibitive price on the exercise of the right under the Act. Appellants' continued adherence to the removal permit requirement after the Legislature has spoken flouts the will of that body in adopting the Act.

While appellants repeatedly argue a landlord's right to go out of business pursuant to the Act does not automatically entitle an owner to demolish units or alter the use of the property, the City's continuing regulatory power is not in dispute. The trial court made it clear that notwithstanding the Act, the City otherwise retains its police power with respect to land use, and therefore denied the Javidzads' request for a demolition permit to issue forthwith. Likewise, amici curiae recognize the owners, in any redevelopment of the property, are subject to and must comply with all local planning and zoning laws.

Contrary to appellants' protestations, the invalidation of the removal permit process in no way impairs the City's power to regulate the subsequent use of the property. Our holding merely relieves landlords who seek to exercise their rights under the Act from complying with the onerous conditions of section 1803(t).

Conclusion

Section 1803(t) does not purport to regulate the subsequent use of the property following its removal from the rental market, but rather impermissibly burdens a landlord's right to go out of business under the Act.

While the requirement that a removal permit be obtained is superseded by the Act, the City otherwise retains its police power to regulate the particulars of demolition and the redevelopment of property following its withdrawal from the rental housing market."

*** The following is a discussion of how the LALPI court misquoted and misinterpreted the prior court decisions and twisted their meaning to arrive at a bad decision:

In example one, the LALPI court wrote (emphasis added):

" In Javidzad, our colleagues of Division Three invalidated a Santa Monica rent control ordinance which conditioned the issuance of a demolition permit on: the landowner securing a removal permit; the permit required as a prerequisite a showing the landowner could not make a fair return on the rental units; in the alternative, the landowner could demonstrate the property was uninhabitable; and finally as an additional alternative, the landowner could promise to develop new units subject to rent control. Our Division Three colleagues concluded the ordinance conflicted with the Ellis Act because it conditioned the landowner's right to go out of business on compliance with requirements which were not found in Government Code section 7060 et seq. (204 Cal.App.3d at p. 530.) "

(Note: The LALPI court is saying that you can't put words in the Legislature's mouth, and yet later, the LALPI court refuses to accept the words that the Legislature has written.)

There are three issues to point out here. The first is that Javidzad was the tenant, not the landlord; Javidzad was not going out of business, he just wanted the demolition permit to be granted automatically since the landlord had already gone out of business. The second issue is that in both Yarmark and Javidzad, the court held that invoking the Ellis Act does not automatically grant the landlord a demolition permit. In other words, once a landlord goes out of the rental business and withdraws all the rental units from the housing market, the City still "retains its police powers to regulate the particulars of demolition and the redevelopment of property." (Javidzad)

But more importantly, the ordinance in the Javidzad case was section 1803(t) which was the Removal Permit, not the Demolition Permit. It is true that the City of Santa Monica required a landlord to first obtain a Removal Permit before their application for a Demolition Permit could be processed. However, the Javidzad court confirmed that the Demolition Permit could have been denied on other grounds established under the city's police powers (not just limited to the granting of the Removal Permit). In addition, the court in Javidzad concluded "the invalidation of the removal permit process in no way impairs the City's power to regulate the subsequent use of the property."

And yet, the LALPI court concluded requiring a landlord to obtain a demolition permit automatically prevents a landlord from going out of business and since Gov. Code section 7060 was silent, the city could not make such a requirement. First of all, requiring a landlord to obtain a demolition permit does not prevent them from going out of business, it only prevents them from doing something else with their property. Which is the clear intent of the Ellis Act. To allow a landlord to withdraw the rental units from the marketplace, but then give the public entity the right to regulate what the future use of the property might be.

As noted on page one, the Ellis Act expressly gives the city the power to regulate land, which by implication, would mean granting or denying a demolition permit. However, for the court to order the city to grant LALPI the demolition permit because the Ellis Act has not used the magic word "demolition", is to put words in the Act which the Legislature had not intended. How does the court justify their decision in light of the explicit language of the Act and the well established police powers of the city. The court is refusing to assume that the city has these powers. In addition, how can they cite both the Yarmark and Javidzad cases without also acknowledging the holdings in these cases that invoking the Ellis Act does not automatically grant the landlord a demolition permit.

To reach this conclusion, the LALPI court used inconsistent parallel reasoning.

The Javidzad court reasoning was as follows: Since Santa Monica's Removal Permit required the landlord to meet certain conditions before the landlord could go out of the rental business, and since the Ellis Act does not specifically require such a precondition, therefore, the Removal Permit cannot be required of a landlord under the Ellis Act prior to going out of business.

However, the LALPI reasoning goes one step further. It states: Since a Santa Monica Removal Permit was required before Santa Monica would issue (process) a Demolition Permit, and since the Javidzad court held that a Removal Permit was not permitted under the Ellis Act, therefore, the requirement for a Demolition Permit also cannot be required under the Ellis Act, and by requiring a landlord to obtain a Demolition Permit it prevented a landlord from going out of business.

By using this parallel reasoning approach, the LALPI court did not have to address the obvious conflict it would have faced if it looked directly at the Ellis Act. In the Javidzad case, the court examined the Removal Permit which clearly prevented the landlord from withdrawing the rental units from the rental market in order to go out of business. In the LALPI case, the denial of a demolition permit did not prevent the landlord from removing the rental units from the market in order to go out of the rental business. And while the denial of the demolition permit did prevent the landlord from moving forward with any plans he may or may not have had with the property, the Ellis Act addresses this issue.

If the LALPI court had used the same approach as the Javidzad case, the court would have had to note that the Ellis Act was not silent when it came to a cities right to regulate land use as it governs demolition and redevelopment of residential property. (Gov. Code section 7060.7(b), which states in part: "this act is not otherwise intended to do any of the following: ... (b) Preempt local or municipal environmental or land use regulations, procedures, or controls that govern the demolition and redevelopment of residential property.")

(Also, see examples three and four below where the LALPI court is use this same circular reasoning to side step discussing the issues of the case.)

In example two, the LALPI court wrote (emphasis added):

"Javidzad also rejected as "an absurdity" the claim that the Ellis Act was intended to do nothing more than protect the landowner's right to go out of business by ejecting tenants and did not intend to encompass ordinances which deny a removal permit which have the effect of precluding redevelopment of the property. (Id. at pp. 530-531.) Our colleagues concluded, "Denying ... a removal permit to a landlord who has gone out of the rental housing business imposes a prohibitive price on the exercise of the right under the Act." (Id. at p. 531.)"

The LALPI court combined two unrelated sentences which results in implying that the Javidzad court believed the Ellis Act would not permit a city ordinance which precluded the redevelopment of the property. When in fact, the Javidzad court specifically held that the Ellis Act permitted a city to establish ordinances which did preclude the redevelopment of the property under its police powers.

In example three, the LALPI court wrote (emphasis added):

"Thus, the ordinance in this case, like the one in Javidzad, violated the provisions of Government Code section 7060 et seq. because it impermissibly infringed on the owner's right to simply go out of the rental business in the first instance by refusing to issue a demolition permit based on conditions which are not a part of the Ellis Act. (Gov. Code, §§ 7060, subd. (a), 7060.7.)"

The Javidzad court held that while a Removal Permit may not prevent a landlord from going out of the rental business, the Ellis Act did not automatically grant the landlord the right to demolish the building. In addition, the Javidzad court was aware of the fact that while the landlord may go out of business and withdraw all the rental units from the market, the city's police powers could prevent the landlord from demolishing the building. The Javidzad court was explicit in stating that the city retained its police power to regulate the particulars of demolition and the redevelopment of property following its withdrawal from the rental housing market. How has the LALPI court addressed this discrepancy?

The LALPI court is attempting to equate the Santa Monica Removal Permit ordinance with the Los Angeles demolition ordinance and conclude that therefore, the LA demolition ordinance is also superseded by the Ellis Act. But where is the analysis, where has the LALPI court compared and contrasted these two very different ordinances. How does the LALPI court reconcile the Javidzad's decision that invoking the Ellis Act does not automatically grant the landlord the right to demolish the buildings? Where's the discussion that the LA City violated its police powers? There is no discussion in the LALPI decision.

Yes, the LA city ordinance restricted the landlord's right to demolish their building by refusing to issue a permit, but according to the Javidzad case, this was permissible, even under the Ellis Act.

(Also, see examples one and four where the LALPI court is use this same circular reasoning to side step discussing the issues of the case.)

In example four, the LALPI court wrote (emphasis added):

"We also are not persuaded by the city's argument its ordinance is simply a means to regulate the future use of the property so that it complies with the city's general plan which is permitted by Government Code sections 7060.7, subdivision (1) and 7060.1, subdivision (b). ... As noted above, because the ordinance conditions the issuance of the demolition permit in the first instance on conditions which are not contained in the Ellis Act, we are required to reject the city's arguments in this regard."

Same problem as stated in example one and three above. The LALPI court is using circular reasoning to side step discussing the issues in the case.

In example five, the LALPI court wrote (emphasis added):

"Moreover, we cannot construe this ordinance as simply a means by which the city is exercising its power to determine whether a future use of the property will conflict with its general plan because the ordinance also impermissibly prevents the plaintiffs from exercising their right to simply go out of the rental business. The Court of Appeal has held: "What [a landlord] proposes to do with his [or her] property once he [or she] has gone out of the business of offering residential rental units has no bearing ... in determining [the landlord's] right to decide to go out of that business and to invoke the protection extended [the landlord] for this purpose by the Ellis Act. [Citations.] The City retains an amplitude of powers, which are expressly recognized in the Ellis Act ..., that may be relevant insofar as the City may see fit 'to regulate the subsequent use of the property following its removal from the rental market.' [Citation.]" (Bullock v. City and County of San Francisco (1990) 221 Cal.App.3d 1072, 1102 [271 Cal.Rptr. 44], original italics.)"

The LALPI court has misquoted the Bullock case above. What the Bullock court wrote was (emphasis added): " What plaintiff proposes to do with his property once he has gone out of the business of offering residential rental units has no bearing at this time in determining plaintiff's right to decide to go out of that business and to invoke the protection extended him for this purpose by the Ellis Act. (See Javidzad v. City of Santa Monica, supra, 204 Cal.App.3d 524 at pp. 530-531; City of Santa Monica v. Yarmark, supra, 203 Cal.App.3d 153 at p. 165.) The City retains an amplitude of powers, which are expressly recognized in the Ellis Act (see Gov. Code, §§ 7060.1, 7060.7), that may be relevant insofar as the City may see fit "to regulate the subsequent use of the property following its removal from the rental market." (Javidzad v. City of Santa Monica, supra, at p. 531, original italics.)"

First of all, the Bullock case did not involve a request by a landlord to demolish his building. The landlord invoked the Ellis Act so as to evict the tenants because he was changing his business from operating a residential hotel to a transient tourist hotel.

The Bullock court used the wording "at this time" to emphasis the right of the city to assert their police powers in regulating landuse after a landlord has gone out of the residential rental market. This is further supported by the cases cited which the LALPI court omitted.

By failing to include the words "at this time", the LALPI court changed the meaning of the Bullock court. The "at this time" pertains to the time in which the landlord decided to go out of business and withdraw all the rental units. At that time, the subsequent use of the land is not relevant. However, the subsequent use does become relevant when the former landlord is deciding what future business he wants to now pursue with the property.

The Ellis Act needs to be viewed as a two step process. Step one is that the landlord has the right to go out of the residential rental business and withdraw all the rental units from the marketplace, no questions asked. And at that time, once all the rental units are withdrawn, the landlord is no longer in the rental business although the former landlord does own a vacant building.

Step two gives the power of the city to decide what the former landlord can now do with the property. The fact that the city can deny the former landlord the right to demolition the property does not prevent the landlord from going out of business, it only prevents the former landlord from going into a future business.

These are two separate issues and the Ellis Act was worded in order to make it clear to the landlord that they would not be forced to remain a landlord if they no longer wanted to be a landlord, but there were no guarantees as to what they may do with the vacant building and land.

The LALPI court is saying that if the city denies the landlord a future use for the land, the city has interfered with the landlord's right to go out of business. But this is not true. The Ellis Act says that no public entity shall compel a landlord to rent or to continue to rent accommodations. The landlord in the LALPI case can stop renting the apartments and thus go out of the rental business.

However, the LALPI court is saying that because the city is denying LALPI the right to demolish the buildings, the city if preventing LALPI from going out of business. This is not true. What the city is denying LALPI is the right to enter into a future business. According to the Nash case and the 1985 Committee Reports, business owners do not have a guarantee to success in operating their business ventures. There are risks involved, and under the Ellis Act that is the explicit risk, that the landlord will withdraw all the rental units and be stuck with a vacant building.

And finally, the LALPI court is trying to argue that because the demolition permit was denied on the grounds that the landlord did not know what he planned to do with the property, the city therefore prevented the landlord from going out of the rental business under the Ellis Act. Which is not supported by the Bullock case nor the language of the Ellis Act as discussed above.

Once again the LALPI court is using circular reasoning which is not grounded in the case law it is citing.

In example six, the LALPI court wrote (emphasis added):

"We also reject the city's theory that plaintiffs are not entitled to the protection of the Ellis Act because they are not seeking to remove all 795 units of the complex based upon Government Code section 7060.7, subdivision (3). Section 7060.7, subdivision (3) states the Ellis Act does not: "Permit an owner to withdraw from rent or lease less than all of the accommodations, ..." According to the city, in order for the Ellis Act to protect plaintiffs they would have to seek to demolish all 795 units of the complex. We decline to interpret the statutes to require the plaintiffs to demolish the entire 795-unit complex in order to exercise their right to go out of business with respect to the 17-unit structure under the Ellis Act."

Now at this junction, the LALPI court will not accept the plain letter of the law and is picking and choosing what it wants to accept, even though the Legislature was very clear about what they intended. (It is interesting that in their arguments in examples one, three and four above, the LALPI court refused to add words to the Legislature's intent, but now, they refuse to accept the intent of the Legislature as expressed in their words.)

While the Ellis Act and court cases use the term 'notice of intent to withdraw', 'withdrawal' and 'withdrawn' to mean that a residential rental unit has been 'withdrawn from the rental market', ie, the unit is no longer made available for rent or the units have been 'removed' from the rental market, the LALPI court continues to use the word 'demolish'. And yet, if we accept the definition of the LALPI court that withdraw and demolish mean the same, why did the Legislature make a distinction in Gov. Code section 7060.2(d), which reads in part: "If the accommodations are demolished..." ?

Part of the answer is because the LALPI court continually used the word 'demolish' where the Legislature used the word 'withdraw'. Reading the Ellis Act as it is written, the landlord must withdraw all residential rental units from the market place. Whether the units will be subsequently demolished, is not at issue here. As stated above in Yarmark, Javidzad and Bullock, the Ellis Act entitles the landlord to evict the tenants and go out of the residential rental business, but does not automatically grant the landlord the right to demolish the buildings. That question depends on the city's powers to "grant or deny any entitlement to the use of real property, including, but not limited to, planning, zoning, and subdivision map approvals (Gov. Code section 7060.1(b)). And according to Gov. Code section 7060.7 However, this act is not otherwise intended to do any of the following:

(a) Interfere with local governmental authority over land use,

including regulation of the conversion of existing housing to

condominiums or other subdivided interests or to other nonresidential

use following its withdrawal from rent or lease under this chapter.

(b) Preempt local or municipal environmental or land use

regulations, procedures, or controls that govern the demolition and

redevelopment of residential property.

And when the Ellis Act 'does not permit an owner to withdraw from rent less than all of the accommodations', why does the LALPI court refuse to accept that the Legislature intended to require a landlord to withdraw all of the accommodations? And how can a landlord claim to be going out of the rental business if the landlord still owns and operates rental units? And where in the Ellis Act does the Legislature say that a landlord can withdraw only a portion of the rental units that the landlord owns? (A review of the Committee Reports confirm that the Legislators did not intend landlords to use the Ellis Act to withdraw a portion of the rental units. See below analysis.) Based on all the prior and subsequent court decisions, all the landlords were withdrawing all their rental units from the market place and were completely going out of the rental business. Why did the LALPI court decide that the LALPI landlord was an exception? And how has the LALPI court differentiated their holding from prior court decisions?

The LALPI court does not address these questions, but merely brushes them aside.

The answer, however, can be found in the definition of "any", "property", and "accommodations'.

Under the Ellis Act, no public entity shall compel the owner of "any" residential real property to offer, or to continue to offer, accommodations in the "property" for rent. According to the Webster's II New Riverside University Dictionary, copyright 1984, the word "any" is defined as "one or some, regardless of sort, quantity, or number; the whole amount of." Thus the landlord described by the Ellis Act could be an owner of one residential real property or many residential real properties. Therefore, no public entity shall compel the owner of one property or many properties to rent or continue to rent accommodations in the property for rent.

Furthermore, according to the Webster's II New Riverside University Dictionary, copyright 1984, page 943, the word "property" is defined as "a possession; possessions as a whole". Thus, the property on which the accommodations are located may be a single property, many properties, or the whole quantity of property owned by the landlord. Therefore, no public entity shall compel the owner of one property or many properties to rent or continue to rent accommodations located in one property, many properties, or the whole quantity of properties for rent.

Under the Ellis Act, accommodations are defined as either: (A) The residential rental units in "any" detached physical structure containing four or more residential rental units, or (B) with respect to a detached physical structure containing three or fewer residential rental units, the residential rental units in that structure and in any other structure located on the same parcel of land, including any detached physical structure specified in subparagraph (A).

Thus, the only requirement involving a parcel of land pertains to (B) above and those accommodations would most likely be small rental properties. However, the accommodations defined in (A) above would and could involve many parcels of land, as long as the physical structures on the parcel(s) of land contain four or more residential rental units.

Furthermore, since the word "any" has been defined to mean "one or the whole amount of", the number of detached physical structures referred to above could be one or the whole amount", as long as the physical structure contains four or more residential units.

Under the Gov. Code Section 7060.7, "it is the intent of the Legislature... to permit landlords to go out of business. However, this act is not intended to do any of the following:... (d) Permit an owner to withdraw from rent or lease less than "all" of the accommodations, as defined by paragraph (1) or (2) of subdivision (b) of Section 7060.

According to the Webster's II New Riverside University Dictionary, copyright 1984, page 93, "all" is defined as "the total entity or extent of; the whole number, amount, or quantity of". Thus, if the owner is required to withdraw not less than "all" of the accommodations, they are referring to the total extent of or whole number of accommodations which are defined by section 7060 (A) and (B).

In summary, under the Ellis Act, no public entity shall compel the owner of one or more residential real properties to offer or continue to offer residential rental units located in one or more physical structures containing four or more residential rental units as long as the owner is withdrawing not less than the entire quantity of such residential rental units located on all the properties which the owner owns.

Another way of saying the above is: If a landlord is going out of business, they must be going completely out of business.

In example seven, the LALPI court wrote (emphasis added):

"Adopting the city's interpretation that in order for plaintiffs to obtain the benefits of the Ellis Act, they would have to demolish all 795 units would be an absurd consequence which the Legislature could not have intended. As noted above, the purpose of the statute was to preempt local regulations which prohibited landlords from removing rental units from the marketplace. (Gov. Code, § 7060.7; Javidzad v. City of Santa Monica, supra, 204 Cal.App.3d at p. 530; City of Santa Monica v. Yarmark, supra, 203 Cal.App.3d at p. 165.) The Ellis Act was not meant to require a landlord to completely exit the rental business in order to exercise the right to remove the rental units from the market. The city, despite the opportunity to do so, has been unable to cite to any evidence of such an unusual and unlikely intention on the part of the Legislature."

The LALPI court is using selective reasoning. Why did the LALPI court refuse to add meaning to the Ellis Act when it is silent (as in examples one, three and four above), but now refuses to accept the words of the Legislature when it is explicit (as in examples six and seven)?

Once again the LALPI court is using the word 'demolish', when the statute and court cases use the word 'withdraw'. As the court cases cited above have established, the Ellis Act does not automatically grant the landlord the right to demolish the buildings.

And yes, why wouldn't the Legislature have intended that 795 rental units would be withdrawn from the rental market if the landlord elected to invoke the Ellis Act to evict the tenants because the landlord was going out of business. The Legislature wanted to give a landlord the right to go out of the rental business, no questions asked. But in return, all the rental units owned by that landlord would have to be withdrawn or removed.

As expressed in the Bullock case,

"The Legislature, under the apparent impression that the Nash court had denied the existence of a " 'fundamental right' to cease doing business as a landlord" (id. at pp. 103-108), passed the Ellis Act to alleviate the plight of landlords. The Legislature codified its "intent ... in enacting this chapter to supersede any holding or portion of any holding in Nash v. City of Santa Monica, to the extent that the holding, or portion of the holding, conflicts with this chapter, so as to permit landlords to go out of business." (Gov. Code, § 7060.7.) The core of the Ellis Act is this prohibition: "No public entity ... shall, by statute, ordinance, or regulation, or by administrative action implementing any statute, ordinance, or regulation, compel the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease." (Gov. Code, § 7060, subd. (a).)"

"First, "[i]t is a paramount canon of statutory construction that statutes should be given effect according to the usual and ordinary import of the words used in the statute." Second, the Legislature is presumed to have been aware of existing judicial and statutory constructions of terms, and to have adopted those meanings in framing subsequent statutes. Third, we look to other provisions of the Ellis Act because "'the court should construe a statute with reference to the whole system of law of which it is a part.' " Finally, because the Ellis Act was passed in response to Nash, it is acceptable to construe the former with reference to the latter in order to effectuate the Legislature's professed intent to supersede Nash."

As stated Gov. Code Section 7060.7, the intent of the Legislature is to supersede any holding or portion of any holding in Nash v. City of Santa Monica to the extent that the holding conflicts with this chapter, 'so as to permit landlords to go out of business'. In the Nash case the landlord wanted to evict the tenants, demolish the building and just hold the raw land as an investment. The California Supreme Court held that the City of Santa Monica had sufficient reasons under their police powers to prevent the landlord from going out of business.

The Legislature, as outlined in the Yarmark case above, stated that the purpose of the Ellis "Act is to allow landlords who comply with its terms to go out of the residential rental business by evicting their tenants and withdrawing all units from the market. ... The Ellis Act is a general state law. Together with other statutes governing landlord-tenant relationships, it completely occupies the field of substantive eviction controls over landlords who wish to withdraw all accommodations from the residential rental market in order to go out of business. ... The Act contains explicit boundaries, leaving areas for local control in a fashion consistent with its terms. For example, the Act does not apply to landlords who wish to withdraw fewer than all accommodations from the residential rental market. (Gov. Code, § 7060.7, subd. (3).)"

To understand what 'going out of business' means, you have to first ask, what business is the landlord in, and the answer is 'renting residential rental units'. Therefore, when a landlord is going out of business, it means that the landlord is no longer in the business of 'renting residential rental units'. This reasoning is supported by Gov. Code section 7060.7, subd.(3) which requires that the owner withdraw 'not less than all the accommodations' and that would have to mean all the accommodations the landlord would own. For again, when a landlord goes out of the rental business and is no longer a landlord, and he would, by definition, be withdrawing all of his rental units from the market, and thus be going completely out of the rental business. (See analysis above in Example 5.)

(Note: Being a landlord is like the old saying, 'you can't be a little bit pregnant'. Whether a landlord owns one rental unit or thousands of rental units, he is still in the business of being a landlord. And the only way a landlord can go out of the business of being a landlord, is to withdraw all of his rental units from the market.)

Epilogue - First Presbyterian Church of Berkeley v. City of Berkeley, 59 Cal. App. 4th 1241 (1997):

In December, 1997, the Court of Appeals decided the First Presbyterian Church of Berkeley v. City of Berkeley case. In this case, the Church bought a building they wanted to tear down although it had some historical value. The court held that the Ellis Act did not preempt CEQA.

"Contrary to the trial court's ruling, the Ellis Act does not preempt the continuing regulatory power of public entities to submit applications for demolition permits to discretionary review pursuant to their police power with respect to land use, where this regulatory review is based on criteria having nothing to do with the maintenance of residential units in the rental market. Thus, the trial court erred in ruling that the City may not require the preparation of an EIR pursuant to CEQA, or exercise its discretion to deny issuance of a demolition permit under the LPO and NPO based on the historic or aesthetic value of the building to be demolished. As long as the demolition permit process is not conditioned on or tied to a permit to withdraw residential units from the rental market, the City retains such discretion to deny a demolition permit under its police power with respect to land use."

"The Ellis Act contains explicit limitations on its scope, leaving areas beyond its reach in which local public entities may continue to regulate land use in a manner otherwise consistent with the terms of the act. ... Nowhere in the Ellis Act is there any provision granting landlords the right to demolish buildings regardless of local land use controls."

In citing the Yarmark case, the court confirmed that

"even while upholding preemptive scope of the Ellis Act with respect to Santa Monica's attempts to restrict the power of landlords to evict tenants and remove rental units from the market, the Yarmark court noted that the Ellis Act did not interfere with local land use authority." And in citing the Javidzad case, the court confirmed that "the Santa Monica removal permit at issue did not purport to regulate the subsequent use of property following its removal from the rental market, but instead prescribed standards governing removal of rental units from the market in the first instance. Because it infringed on a landlord's right to go out of the rental housing business, it conflicted directly with the Ellis Act. ... the owners, in any redevelopment of the property, are subject to and must comply with all local planning and zoning laws." (Ibid.) Thus, "[w]hile the requirement that a removal permit be obtained is superseded by the Act, the City otherwise retains its police power to regulate the particulars of demolition and the redevelopment of property following its withdrawal from the rental housing market."

The most interesting part of this case is when the court discusses the LALPI case as follows:

" The trial court's judgment goes further, however, by ruling that the Ellis Act guarantees landlords the right to demolish formerly residential structures subject to no more than purely ministerial permit requirements, without regard to otherwise valid land use regulations aimed at environmental or historical preservation. The practical effect of the trial court's interpretation of the Ellis Act is to grant landlords seeking to demolish buildings a blanket exemption from all environmental and landmark preservation land use regulations. We are unconvinced the Legislature intended the Ellis Act to be read this broadly.

The case upon which both the Church and the trial court rely for this over broad interpretation of the Ellis Act is Los Angeles Lincoln Place Investors, Ltd. v. City of Los Angeles... Unlike the Los Angeles ordinance at issue in Lincoln Place, the LPO does not establish conditions on the granting of a demolition permit that force a landowner to stay in the rental housing market. This is because, unlike the facially preempted provisions of the NPO, the purpose of the LPO is not to maintain or enhance the residential rental housing needs of the City. Even in instances when the LPO applies to residential housing, its purpose is purely "the prevention of ... needless destruction and impairment" of "structures, sites and areas of special character or special historical, architectural or aesthetic interests or value," through "[t]he protection, enhancement, perpetuation and use" of such structures, sites, and areas. fn. 8 Simply put, the goal of the facially preempted provisions of the NPO is to keep landlords in the rental business, while the goal of the LPO is to preserve buildings for historical or aesthetic reasons. Thus, the demolition policies contained in the LPO have nothing to do, either directly or indirectly, with in any way regulating or governing the right or power of a landowner to cease offering units of property for rent or lease."

This kind of local control over the use of property subsequent to its removal from the rental housing market is simply unaffected by the Ellis Act. The Ellis Act explicitly states that it is not intended to interfere with local governmental authority over the regulation of land use. (§§ 7060.1, 7060.7.) As emphasized in Javidzad, the Ellis Act does not automatically entitle an owner to demolish units or alter the use of property. Local governments retain their regulatory police powers with respect to land use. ... Unlike the ordinances at issue in Yarmark, Javidzad, and Lincoln Place, and the NPO itself, the LPO does not place any burdens on landlords who seek to exercise their right under the Ellis Act to withdraw their property from the rental market, and themselves quit the residential rental housing business. The purpose of the Ellis Act is to protect a landowner's right to leave the rental housing market without hindrance from the government.

We conclude the trial court was incorrect in ruling the Ellis Act "provides landlords with the right ... to demolish those structures removed from the rental market." As so phrased, the trial court's ruling would grant landlords a special exemption from local land use control over any building that was once used for residential rental purposes, but has since been removed from the market. This is in conflict with the explicit provisions of the Ellis Act leaving to local governments the power to regulate the use of land subsequent to its removal from the rental market. (Javidzad, supra, 204 Cal.App.3d at p. 531.)

More broadly, the trial court's statement that "the issuance of [a] demolition permit is guaranteed by the Ellis Act as a ministerial action" is in error. This statement fails to take into account those circumstances in which a demolition permit application may be subject to discretionary review on the basis of land use regulations dealing with environmental or historical preservation concerns, but having nothing to do with the provision or maintenance of rental housing. The Ellis Act is not intended to interfere with the police power of local governments to regulate land use.

The Ellis Act has no impact on the continuing power of local governments to exercise such discretionary regulatory oversight over land use for purposes having nothing to do with restricting landlords from leaving the rental market. ... Certainly in cases where the building in question has already been removed from the rental market, the Ellis Act has no effect on a local government's discretionary oversight of its demolition permit procedure.

We hold that as long as the City's demolition permit process is not conditioned on or tied to a permit to withdraw residential units from the rental market, or the building in question has already been removed from the rental market, the City retains its discretion to deny a demolition permit under its police power with respect to land use. We therefore reverse the trial court's ruling that the City may not require the preparation of an EIR pursuant to CEQA, or otherwise exercise its discretion to deny issuance of a demolition permit under the LPO and the NPO based on the historical, architectural, aesthetic, landmark or other environmental status of the building to be demolished."

Epilogue - Drouet v. Superior Court (Broustis) (2003) 31 Cal. 4th 583

The case of Drouet involved a two unit apartment building in which Drouet (L/L) invoked the Ellis Act, evicted Broustis (tenant) and was forced to file an unlawful detainer action against Broustis.

"Where a landlord has complied with the Ellis Act and has instituted an action for unlawful detainer, and the tenant has asserted the statutory defense of retaliatory eviction, the landlord may overcome the defense by demonstrating a bona fide intent to withdraw the property from the market. If the tenant controverts the landlord's bona fide intent to withdraw the property, the landlord has the burden to establish its truth at the hearing by a preponderance of the evidence. ... In the future, courts in similar circumstances may find it useful to consider first whether the landlord's intent to withdraw the property is bona fide. If it is, the statutory defense of retaliatory eviction has been overcome. If the landlord's intent is contested, the landlord has the burden to establish its truth. (§ 1942.5, subd. (e).) Only when the landlord has been unable to establish a bona fide intent need the factfinder proceed to determine whether the eviction is for the purpose of retaliating against the tenant under subdivisions (a) or (c) of section 1942.5. [12] Accordingly, evidence that the landlord has, in good faith, exited the rental business because of tenant conduct specified in subdivisions (a) or (c) of section 1942.5 does not itself constitute an affirmative defense in an unlawful detainer proceeding under the Ellis Act."