By James L. Jacobson
THE SLIPPERY ROAD
TO SECOND CLASS CITIZENSHIP
Santa Monica rental property owners often object to being called “landlords” for good reason: because they are the exact opposite of “landlords.” A much better description would be “landservants” because they are required by local laws to serve their tenants and lose many of the civil rights enjoyed by other citizens once they become the “owners” of rental property.
I would not be a “landlord” in an area with radical rent controls because the California courts have allowed local governments make “landlords” second class citizens to such an extent that it is questionable which side won the American Civil War. This Rent Board Story will review some of the court decisions which led to this situation where property owners are second class citizens.
Birkenfeld v. Berkeley –
Rental Agreements Become Tenant Life Estates
The first step on the road to second class citizenship for property owners came from the California Supreme Court Decision of Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129 which effectively gave all existing tenants property a right to remain on the “landlords” property for life unless they were evicted for “just cause.” As a result, although tenants still had the right and liberty to terminate their tenancies at will property owners could only terminate tenancies by filing eviction actions for limited, specified reasons. The Birkenfeld decision makes this major change on the law seen quite harmless by stating:
These permitted grounds for eviction appear to cover most if not all of the grounds that would otherwise be available except that of termination of the tenancy. No other omitted grounds have been called to our attention and we assume for present purposes that the effect of the provision is simply to prohibit the eviction of a tenant who is in good standing at the expiration of the tenancy unless the premises are to be withdrawn from the rental housing market or the landlord’s offer of a renewal lease has been refused.”
Notice how harmless the quotation above seems. Instead of saying that “landlords” under rent control are permanently forced to continue a business relationship and provide services to persons they no longer wish to associate with (and might have come to despise), the issue is stated as though landlords retain most of their rights except the right to terminate a tenancy. The right NOT to associate with others or to refuse service to anyone is eliminated by this apparently innocuous paragraph. But this was only the beginning of the elimination of the rights of those people known as “landlords.”
Nash v. City of Santa Monica –
Involuntary Servitude Lawful When Applied to Landlords
Although the Birkenfeld quotation above seems to indicate that “landlords” may go out of business because it says that rental units may be “withdrawn from the housing market” this is misleading. The Rose Bird Supreme Court did not actually mean that it would actually uphold the right of “landlords” to exercise the liberty to go out of business. Quite the opposite. Although the Civil War might seem to have outlawed slavery and although the California Constitution at Article 1 Section 6 states, “Slavery is prohibited. Involuntary servitude is prohibited,” the Rose Bird Supreme Court reversed the Court of Appeal on that issue in Nash v. City of Santa Monica (1984) 37 Cal.3d 97 at 110-111, where the Court’s complete disregard for the rights of property owners was best summed up by Judge Rose Bird’s concurring Opinion as follows:
Further, the ordinance [sic] imposes only a minimal constraint on Nash’s freedom. As the majority point out, he can escape from the landlord business by the simple expedient of selling his property or withholding rental units from the market as they become vacant. Nash does not contend that this particular piece of property is especially important to him or that a sale would harm his ability to provide for himself or his dependents. In short, the ordinance burdens Nash’s right to withhold personal services only by limiting his ability to maximize the profits from his property. Though this is a burden, it is not an unduly harsh one in view of the city’s compelling interest in providing housing for its residents.
Thus, according to Rosie and the Supremes, involuntary servitude is a minimal constraint on freedom which “landlords” can easily escape by selling their property and getting out of town. This interpretation of the law seems to be in direct conflict with California Constitution Article I Section 1 which states: “All people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.” Unfortunately, the California Supreme Court ignored this part of the California Constitution for approximately 80 years.
Following the Decision in Nash, the State Legislature passed the Ellis Act to permit apartment owners to go out of business if they paid their tenants thousands of dollars in “relocation fees,” which clearly proves that there is no “right” to possess property or to refuse to perform services in this State because the Legislature can revoke this “privilege” at any time and because no Constitutional right may be conditioned upon paying money to another person.
Pennell v.City of San Jose –
Landlords Are Not Entitled to Equal Protection of the Law
The next step the California Supreme court took to deprive property owners of their rights was to make them responsible for the welfare of tenants by limiting the rent levels to the amount of rent that tenants could afford to pay. This took place in the Decision of Pennell v.City of San Jose which was in conflict with the Court’s earlier decision In Department of Mental Hygiene v. Kirchner (1964) 60 Cal.2d 716.
In Kirchner, the Supreme Court held that equal protection requirements of the State and Federal Constitutions prohibited the State from requiring a small class of persons– parents of adults who were involuntarily confined in state mental institutions– to pay the public expense of a patient’s confinement. This Decision was based upon the Takings Clause of the Fifth Amendment to the United States Constitution which forbids the taking of private property for public use without just compensation. This clause “was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” (Armstrong v. United States (1960) 364 U.S. 40)
In Pennell v. City of San Jose, the Court of Appeal applied the Kirchner decision and determined that the landlord’s duty to support their tenants could be no greater than a child’s duty to support his parent and struck down that part of the San Jose rent control law. Unfortunately, the Rose Bird Supreme Court ran to the rescue again and decided that landlords have greater duties than citizens generally by stating the following at 60 Cal.2d 716:
Although Kirchner’s principles have been applied in various “responsible relative “reimbursement cases (see, e.g., In re Jerald C. (1984) 36 Cal.3d 1, 10 [201 Cal.Rptr. 342, 678 P.2d 917] (plur. opn.) (and cases there cited)), we have not applied “Kirchner analysis” outside that context. In this regard, there is no authority suggesting Kirchner prohibits rent control generally, or that it prohibits the present tenant hardship scheme specifically. We have often confirmed the propriety of local rent control legislation that in effect placed the burden of “subsidizing” tenants (to the extent of the difference between unregulated market rents and regulated “fair return” rents) not on the local government but on local landlords.”
After the California Supreme Court rendered this outrageous Decision which made it perfectly clear that California cities were “forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” that Decision case was appealed to the U.S. Supreme Court, the only two justices who wanted to hear the case were Justices Scalia and O’Connor. Justice Rehnquist wrote the majority opinion which found that the case was not “ripe for review” because no landlord specifically proved that his/her rents had been reduced because of tenant hardship.
The Danekas Decision –
Impairment of Contracts Permitted at Will
California Article 1 Section 9 states: “A bill of attainder, ex post facto law, or law impairing the obligation of contracts may not be passed.” This provision might sound good, but has no meaning when applied to rental agreements in rent controlled areas as proven by Danekas v. San Francisco Residential Rent Stabilization & Arbitration Bd. (2001)95 Cal.App.4th 638 at 651, the Court of Appeal interpreted this provision as follows:
“Legislative impairment of contract rights is forbidden only if the impairment is substantial and lacks a legitimate and significant public purpose. [Citations omitted.]
Therefore, although the Constitution says that the government may not pass a law which impairs contracts, the Courts say that it may do so unless the citizen proves that the impairment is “substantial” and the government does not have a good reason for doing it. For some reason, this approach is never applied to abortion, pornography, flag burning, discrimination or any other issue that liberals favor.
In the Danekas decision, the Court of appeal decided that “landlords” could not limit their contacts to specified persons, but had to permit tenants to replace tenants who departed their rental units even if the rental agreement specifically prohibited this. The Decision said that this impairment was not substantial because landlords operate in a “highly regulated industry” and because “Rent control, like the imposition of a new tax, is simply one of the usual hazards of the business enterprise.”
The judges might have a different attitude if someone broke their contracts and/or moved onto their properties without permission, but those who criticize “landlords” and support controls on them rarely invest any of their own money to providing housing or put their own rights at risk.
Pick v. Cohen –
No Right to Refuse Service to Anyone
It is common to see signs posted in businesses which say, “We reserve the right to refuse service to anyone.” But these signs are never seen in rent-controlled apartment buildings because “landlords” don’t have the right to refuse service to anyone any more.
As explained above, in Birkenfeld v. Berkeley the Supreme Court effectively converted month-to-month rental agreements into life estates for tenants, but that did not go far enough for the little City of West Hollywood where nothing ever seems to go far enough. That City decided that tenants could invite relatives or “domestic partners” to share the rental units (no matter what the rental agreement said) with the additional benefit that the rental agreements became inheritable estates for the domestic partner if the authorized tenant died or became incapacitated.
The Appellate Department of the Los Angeles Superior Court approved this Ordinance in Pick v. Cohen (2000) 83 Cal.App.4th Supp. 6 and explained that this law was a “proper use of police power” for the following reasons:
“The section at issue applies only to certain specific relatives or domestic partners of the named tenant, and provides the named tenant is restricted to only allow one person in this category to move into the premises, the person must have been in residence for more than one year, and the tenant must have died before the disputed section provides any protection. This is a proper use of police power to protect a specific group of relatives or domestic partners residing in the controlled property on a permanent basis from involuntary displacement due to a death or incapacity in the family. Additionally, the protection is only from eviction as a termination of tenancy of the named tenant; all of the good cause reasons for termination remain should the relative or domestic partner not perform his obligations as a tenant.
The restrictions seem reasonable until one realizes that every “named tenant” gets to invite one additional tenant to share the rental unit and that forming a “domestic partnership” in West Hollywood is less serious than joining a good bowling team as fewer qualifications are required.
After the Pick v. Cohen decision was rendered, the Santa Monica Rent Board thought this ordinance was a great idea and had the Rent Control Law amended to basically accomplish the same purpose. This Law was the subject of Rent Board Story 113 titled “How Landlord Virginia Finally Got Her Rental Unit Back.”
For all of the reasons stated, Santa Monica property owners rightfully object to being called “landlords” because the term is not reasonably applicable to them and neither is the Bill of Rights. And if you don’t believe it, go to any good law library and read the Rent Board Stories cited here.
