The San Francisco Chronicle - August 12, 2003
Ruling for landlords on tenant evictions
Dissent says decision counters state policy protecting occupants
- Harriet Chiang, Chronicle Legal Affairs Writer

A divided California Supreme Court strengthened the state's controversial Ellis Act Monday, ruling that landlords are free to evict tenants -- for whatever reason -- as long as the property owners intend to take their buildings off the rental market.

The 4-3 decision was a setback to a San Francisco tenant who claimed he was evicted for retaliatory reasons after he complained to his landlord about leaking sewage drains and other conditions in his apartment.

State law generally protects tenants from retaliation if they complain about their rental units. In Monday's ruling, however, the justices said tenants cannot rely on that defense if they are evicted under the Ellis Act, the 1985 law that allows property owners to get out of the rental business.

Tenants cannot raise the retaliatory defense as long as the landlord has a "bona fide intent to withdraw the property from the rental market under the Ellis Act," wrote Justice Marvin Baxter in the majority decision. He was joined by Chief Justice Ronald George and Justices Ming Chin and Janice Rogers Brown.

Lawyers for property owners called the ruling a rare victory for landlords in the California Supreme Court, which has issued few decisions on disputes between landlords and tenants. In fact, the Legislature passed the Ellis Act in response to a 1984 California Supreme Court decision that found that property owners did not have a constitutional right to go out of business.

Almost 20 years later, the court is more conservative and its ruling delighted landlords in San Francisco who complain that the city's tight restrictions have made it difficult for them to make a profit. Over the past few years, hundreds of property owners have relied on the Ellis Act to convert their buildings from rentals to owner-occupied residences. The conversions were particularly frequent during the dotcom boom when the real estate market was hopping.

"The court has essentially eliminated any roadblocks for landlords who want to stop being landlords," said Paul Utrecht, who filed a brief on behalf of the Small Property Owners of San Francisco, a grassroots group with 2,800 members.

The court's decision prompted a strongly worded dissent from Justice Carlos Moreno who argued that state law clearly bars landlords from retaliatory evictions.

Moreno, joined by Justices Joyce Kennard and Kathryn Mickle Werdegar, said the court's decision allows landlords to threaten tenants with eviction if they complain about the conditions or exercise their rights as tenants and may discourage the formation of tenant associations.

"The majority thus violates the public policy of this state by encouraging retaliatory evictions," Moreno wrote.

Andrew Zachs, the attorney for the San Francisco landlord in the case, estimated that in recent years more than 500 buildings in San Francisco have been converted from rentals to owner-occupied buildings.

"Property owners are going to have their right to go out of business," he said, "even if their hearts are not pure."

Zachs predicted that tenants' groups, which have been unsuccessful in persuading state lawmakers to limit the Ellis Act, now will urge the Legislature to strengthen the retaliatory eviction laws.

Randy Shaw, director of the Tenderloin Housing Clinic, which handles the majority of cases for tenants in San Francisco facing eviction under the Ellis Act, said that the decision still gives the tenants a defense.

Although tenants can't argue that they're being evicted for retaliatory reasons, he said, they now can challenge whether the landlord is really going out of the rental business.

He noted that the state appeals court in this case didn't allow tenants to raise any defense to an Ellis Act eviction.

But he said that the decision could be a setback for minorities who must rely on the retaliatory defense if they are evicted for racial reasons.

Monday's case involved a long-running dispute between Joel Drouet, who owned a two-unit apartment building on San Carlos Street in San Francisco and his tenant Jim Broustis, who had lived there since 1988.

Broustis repeatedly complained to his landlord about overcharging for utilities, refusing to pay interest on his security deposit and not repairing a leaking sewage drain and shower wall.

Instead of making any repairs, Drouet decided to evict Broustis in 1999 under the Ellis Act.

But Broustis and another tenant refused to leave. Instead, they sued in San Francisco Superior Court, arguing that they were being evicted for retaliatory reasons.

The state Supreme Court held the case for more than two years -- making it one of its oldest cases -- before the justices arrived at a decision on Monday.

Drouet's attorney, Zachs, said that Drouet moved into the building, but then sold it after Broustis moved into a unit next door..