Pours v. City of Los Angeles

LAHER POUR et al., Petitioners and Appellants, v. CITY OF LOS ANGELES, Respondent.

B303925

California Court of Appeals, Second District, Third Division

July 16, 2021

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County No. BS174592 Mitchell L. Beckloff, Judge. Reversed with directions.

Noah Grynberg, Tyler Anderson, Gina Hong and Sarah Walkowicz, for Petitioners and Appellants Laher Pour, Nelya Feygin, Jorge Lopez and Tarzana Gardens Tenants Association.

Michael N. Feuer, City Attorney, Kathleen A. Kenealy, Chief Deputy City Attorney, Scott Marcus and Blithe S. Bock Assistant City Attorneys and Shaun Dabby Jacobs, Deputy City Attorney, for Respondent.

EDMON P. J.

This appeal concerns an apartment building first approved for occupancy in 1978 (the property). At all times between 1979 and 2016, the City of Los Angeles (the City) classified the property as subject to the Los Angeles Rent Stabilization Ordinance (RSO) (L.A. Mun. Code, ^[1] § 151.00 et seq.) which regulates rent increases on residential properties approved for occupancy prior to October 1, 1978. In 2017, however, the City exempted the property from the RSO after entering into a settlement agreement with the property's owners that designated the property “at all times and forever exempt from the RSO.”

Several of the property's tenants and its tenants' association sued the City and the owners, seeking, among other things, a writ of mandate directing the City to enforce the RSO with respect to the property, and a declaration that the settlement agreement was void as against public policy. The trial court voided the settlement agreement but concluded the tenants had not established that the property was subject to the RSO, and it thus denied the petition for a writ of mandate.

We reverse. Under the plain language of the RSO, a property is subject to rent control if, among other things, a building permit was issued prior to October 1, 1978. Here, a building permit for the property was issued in July 1977, well prior to the RSO's effective date. Moreover, applying the RSO to the property creates no conflict with state law, as the City asserts, because the property was not newly subjected to rent control after 1995. Accordingly, we conclude that the property is subject to the RSO, and the trial court erred in denying the petition for writ of mandate.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants Laher Pour, Nelya Feygin, and Jorge Lopez are tenants living in the property, a 38-unit apartment building located in Tarzana. Appellant Tarzana Gardens Tenants Association is an association of tenants living at the property. Jerie Petrosian, as trustee of the Petrosian Trust, and JKP Apartments are the property's owners.^[2] Respondent City is the municipality within which the property is located.

A. Construction and Occupancy of the Property

On July 11, 1977, the City issued a building permit for the construction of an apartment building on the property. The following month, the City issued a building permit for the construction of a swimming pool.

On February 16, 1978, the builder submitted a “request for modification of building ordinances” seeking a temporary certificate of occupancy pending completion of electrical work on the swimming pool. The City granted the request the same day. However, the City's files do not contain a temporary certificate of occupancy.

The City issued a final certificate of occupancy for the property on October 16, 1978.

B. The RSO

1. Pre-2017 Versions

The City adopted the RSO on March 15, 1979. For all properties subject to its provisions, the RSO sets out the maximum rents landlords are permitted to charge tenants.

The definition of properties subject to the RSO has been amended several times. As adopted in 1979, the RSO applied to “[a]ll dwelling units, efficiency dwelling units, guest rooms, and suites in the City of Los Angeles, ” but excepted housing accommodations “located in a structure for which a certificate of occupancy was first issued after October 1, 1978.” In 2011, the City Council added the following sentence to the definition of RSO properties, apparently in order to include some older properties built before the City routinely issued certificates of occupancy: “If the property was occupied for residential purposes prior to October 1, 1978 and a Certificate of Occupancy for the subject building was never issued or was not issued until after October 1, 1978, the housing accommodation shall be subject to the provisions of this Chapter if relevant documentation, such as a building permit, establishes that the building was first occupied for residential purposes prior to October 1, 1978.” (Former § 151.02.)

City representatives asserted in the present proceedings that although the initial version of the RSO facially embraced only those properties for which a certificate of occupancy had issued prior to October 1, 1978, the City has always considered a property subject to the RSO if it was “approved for occupancy” prior to October 1, 1978, whether or not a certificate of occupancy had been issued for the property. As the City Attorney told the court, it was the City's view that the RSO had always covered “all the properties that were either used or capable of being used” before October 1, 1978. (Italics added.)

2. 2017 Amendments

The City adopted the current version of the RSO in 2017. Currently, section 151.02 of the RSO defines properties subject to the RSO as follows: “Housing accommodations, located in a structure for which the first Certificate of Occupancy was issued after October 1, 1978, are exempt from the provisions of this chapter. If the structure was issued a Certificate of Occupancy, including a Temporary Certificate of Occupancy, on or before October 1, 1978, the housing accommodation(s) shall be subject to the provisions of this chapter. If the property was issued a building permit for residential purposes at any time on or before October 1, 1978, and a Certificate of Occupancy for the building was never issued or was not issued until after October 1, 1978, the housing accommodation shall be subject to the provisions of this chapter.” Thus, under the current version of the RSO, a property is subject to rent stabilization if, on or before October 1, 1978, the City issued either (1) a certificate of occupancy, (2) atemporary certificate of occupancy, or (3) a building permit.

The 2017 amendments were adopted at the recommendation of the Housing and Community Investment Department (HCID), to “provide clarity for both tenants and landlords on the administration of the City's rent stabilization and housing code enforcement programs.” They were “technical amendments”-i.e., amendments intended to “improve the language in the ordinance to make it more clear or easier to administer, ” not to “change the substance of any provision in the ordinance.” As relevant here, HCID noted that many owners had taken the position that a property was not subject to the RSO if a temporary certificate of occupancy for a property was first issued prior to October 1, 1978, but a final certificate of occupancy did not issue until after that date. HCID disagreed, explaining that “[f]or purposes of determining whether a rental unit is subject to the RSO, Temporary Certificates of Occupancy are a subcategory within the broader definition of Certificates of Occupancy, which allow the legal habitation of a building and permit the occupancy of the units.... [¶]... [¶] The [HCID], therefore, recommends amending the sixth exemption in the definition of ‘Rental Unit' in Section 151.02 of the RSO to affirm that a Temporary Certificate of Occupancy, when issued, is the first Certificate of Occupancy.” (Italics added.)^[3]

HCID also recommended amending the definition of “rental unit” to include units for which a building permit was issued prior to October 1, 1978, but a certificate of occupancy had never been issued or was issued after the relevant date. HCID explained: “The current language in 151.02 (exemption number 6) in the definition of ‘rental unit' references ‘the housing accommodation shall be subject to provisions of this Chapter if relevant documentation, such as a building permit, establishes that the building was first occupied for residential purposes....' However, Certificates of Occupancy do not establish when a rental unit is occupied, but when a housing accommodation is approved for residential occupancy. The application of the RSO is not based on the ‘physical occupancy' of a structure but on when a building may be legally occupied for residential purposes. [¶] [HCID], therefore, recommends a further amendment rephrasing the second part of the sixth exemption in the definition of ‘Rental Unit.' ”

C. The Owners' Request for Reclassification of the Property

It is undisputed that the property's original owners registered the property with the City in 1979, and that the City has classified the property as subject to the RSO since the ordinance's inception. Thus, when JKP Apartments and the Petrosian Trust (collectively, the owners) purchased the property in 1994, they did so subject to the RSO. They have annually paid RSO fees since that time.

In May 2016, the owners submitted a request to HCID to make a finding that the property was not subject to the RSO because the property's first certificate of occupancy “dates October 16, 1978.” On May 23, 2016, HCID responded that having conducted a review of its property records, it concurred with the owners that the property was not subject to the RSO, and thus the City's records “[would] be adjusted to reflect this RSO exemption for 38 units.” In June 2016, the owners informed their tenants of the City's determination and that...