S.F. Apartment Ass'n v. City & Cnty. of S.F.

3 Cal.App.5th 463

207 Cal.Rptr.3d 684

SAN FRANCISCO APARTMENT ASSOCIATION et al., Plaintiffs and Respondents,

v.CITY AND COUNTY OF SAN FRANCISCO, Defendant and Appellant.

A144702

Court of Appeal, First District, Division 3, California.

Filed September 19, 2016

Counsel for Appellant: City And County Of San Francisco Dennis J. Herrera, City Attorney, Kristen A. Jensen, Deputy City Attorney, Brian F. Crossman, Deputy City Attorney.

Counsel for Respondent: San Francisco Apartment Association et al. Nielsen Merksamer Parrinello, Gross & Leoni, James R. Parrinello, San Rafael, Christopher E. Skinnell, Sacramento, James W. Carson.

Jenkins, J.

This is an appeal from the trial court's grant of a writ of mandate and injunctive relief in favor of plaintiffs San Francisco Apartment Association (SFAA), Coalition for Better Housing (CBH), and San Francisco Association of Realtors (SFAR) (collectively, plaintiffs). Plaintiffs sought this relief against defendant City and County of San Francisco (City/County) on preemption grounds, asserting that a local ordinance, San Francisco Planning Code, article 3, section 317, subdivision (e)(4) (hereinafter, section 317(e)(4) or Ordinance), absolutely conflicted with the Ellis Act of 1985, Government Code section 7060 et seq. (hereinafter, Ellis Act).

The Ellis Act is a California statute that, among other things, protects property owners' right to exit the residential rental business. The Ordinance, in turn, was enacted in its current form in December 2013 as part of Ordinance No. 287–13 in response to a growing concern by the Board of Supervisors (and others) about the shortage of affordable local housing and rental properties. Pursuant to section 317(e)(4), certain residential property owners—to wit, those undertaking no-fault evictions, including so-called Ellis Act evictions—became subject to a 10–year waiting period after withdrawing a rental unit from the market before qualifying to apply for approval to merge the withdrawn unit into one or more other units.¹ Following several rounds of briefing and a contested hearing, the trial court agreed with plaintiffs that the Ordinance impermissibly penalized property owners for exercising their rights under the Ellis Act and, as such, was facially void on preemption grounds. Accordingly, the trial court entered an order enjoining the City/County from enforcing the Ordinance as to property owners undertaking no-fault evictions pursuant to the Ellis Act.

On appeal, the City/County challenges the trial court's reasoning and decision as legally flawed, as well as the trial court's threshold finding that plaintiffs had standing to bring this preemption action.

For reasons to follow, we reject the City/County's contention that plaintiffs lack standing to bring this preemption action. In addition, we conclude, like the trial court, that section 317(e)(4) is preempted by the Ellis Act to the extent it requires a landlord effectuating a no-fault eviction to wait 10 years before applying for a permit to undertake a residential merger on the property. Accordingly, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On January 28, 2014, plaintiffs filed a verified petition for writ of mandate and complaint for injunctive and declaratory relief (petition) alleging the City/County violated the Ellis Act by enacting section 317(e)(4) as part of the San Francisco Planning Code. This provision provides in relevant part: “The [City's] Planning Commission shall not approve an application for merger if any tenant has been evicted pursuant to [San Francisco] Administrative Code Sections 37.9(a)(9) through 37.9(a)(14) where the tenant was served with a notice of eviction after December 10, 2013 if the notice was served within ten (10) years prior to filing the application for merger.”² (§ 317(e)(4).)

The Administrative Code provisions referred to in section 317(e)(4)—namely, sections 37.9(a)(9) through 37.9(a)(14)—set forth six permissible grounds for evicting a non-faulting tenant, including conversion of the rental unit into a condominium and temporary removal for the purpose of undertaking capital improvements or rehabilitative work on the unit.³ (See S.F. Admin. Code, § 37.9, subds. (a)(9)–(a)(14).)

The Ellis Act, in turn, absolutely prohibits local government entities from “compel[ling] the owner of any residential real property to offer, or to continue to offer, accommodations in the property for rent or lease, except for guestrooms or efficiency units within a residential hotel....”⁴ (Gov. Code, § 7060, subd. (a).)

According to plaintiffs' petition, section 317(e)(4) effectively undermines this provision of the Ellis Act by “penaliz[ing] property owners who exercise their rights under state law and thereby seek[ing] to compel continuing residential rentals, notwithstanding the Ellis Act.” Plaintiffs thus sought the writ of mandate to enjoin the City/County from “enforcing section (e)(4) insofar as it applies to owners who notice evictions pursuant to Administrative Code section 37.9(a)(13) [to wit, Ellis Act evictions].”

On February 27, 2014, the City/County answered the petition, denying that section 317(e)(4) “adversely affect[ed] the ability of [plaintiffs] to purchase, sell, manage or otherwise control real property or to exercise their constitutional and statutory rights with respect to real property they own or manage in San Francisco.” The City/County also set forth several affirmative defenses, including lack of standing, police power and separation of powers.

On December 18, 2014, the trial court granted the writ of mandate and declared section 317(e)(4) facially invalid and unenforceable insofar as it applies to landlords who notice evictions pursuant to the Ellis Act. The trial court reasoned the Ordinance improperly sought to restrain plaintiffs from permanently exiting the residential rental business by requiring a 10–year waiting period before approval could be obtained for merging two or more units of the property. The trial court thus permanently enjoined the City/County and its agents and representatives from enforcing section 317(e)(4) as to landlords who notice evictions pursuant to the Ellis Act. The trial court entered judgment in plaintiffs' favor on December 18, 2014. This appeal of the trial court's ruling followed.

DISCUSSION

The City/County raises three primary contentions on appeal. First, the City/County contends that, as a threshold matter, plaintiffs have not established their associational standing to bring this action, requiring reversal on jurisdictional grounds without regard to the merits of their petition. Second, the City/County contends that, in any event, the Ordinance is a valid exercise of the police power preserved for local governments by the California Constitution. (Cal. Const., art. XI, § 7 [“A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws”].) As such, the City/County reasons, the Ordinance is not preempted by the Ellis Act, a state statute that expressly reserves for local governments the authority to enact such land use laws within their confines.⁵ And finally, the City/County contends that, even assuming the Ordinance could, in certain situations, apply in a manner in conflict with the Ellis Act, plaintiffs herein have mounted a facial challenge to the Ordinance, requiring a showing that “no set of circumstances exist under which the [law] would be valid.” (See Association of California Ins. Cos. v. Poizner (2009) 180 Cal.App.4th 1029, 1054, 103 Cal.Rptr.3d 458 ). Here, the City/County insists, plaintiffs have failed to make this requisite showing of facial invalidity. We address these issues in turn below.

I. Do Plaintiffs Have Standing to Bring this Action?

As an initial matter, the City/County challenges plaintiffs' associational standing to bring this action for writ relief on behalf of their members. The applicable law is not in dispute.

“A litigant's standing to sue is a threshold issue to be resolved before the matter can be reached on its merits. [Citation.] Standing goes to the existence of a cause of action (5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 862, p. 320), and the lack of standing may be raised at any time in the proceedings. [Citations.]” (Apartment Association of Los Angeles County v. City of Los Angeles (2006) 136 Cal.App.4th 119, 128, 38 Cal.Rptr.3d 575 [Apartment Association ].) “ ‘ “ ‘An association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.’ ” ' [Citation.] [Citation.]” (Apartment Association, supra , 136 Cal.App.4th at p. 129, 38 Cal.Rptr.3d 575.)

Here, the City/County disputes the existence of just one of the three identified criteria: The standing of individual members to sue on their own behalf. According to the City/County, plaintiffs have failed to establish their individual members could have challenged the validity of the Ordinance in their own right because they have failed to prove their members are “beneficially interested” in the outcome of these proceedings. (See Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 165, 127 Cal.Rptr.3d 710, 254 P.3d 1005[“As a general rule, a party must be ‘beneficially interested’ to seek a writ of mandate. (Code Civ. Proc., § 1086.)”]; see also Friends of Oceano Dunes, Inc. v. San Luis Obispo Air Pollution Control Dist . (2015) 235 Cal.App.4th 957, 962, 185 Cal.Rptr.3d 781 [for standing purposes, the “beneficial interest must be direct and substantial”].)

Below, the trial court found plaintiffs had satisfactorily proved the beneficial interest of their members, reasoning that section 317(e)(4) “infringes on the[ ] [memb...