Judge: Christopher K. Lui, Case: 24STCV29193, Date: 2025-01-29 Tentative Ruling

Case Number: 24STCV29193    Hearing Date: January 29, 2025    Dept: 76

            Plaintiff tenants allege that Defendants rented out the subject property which was not in habitable condition and failed to rectify such condition.

Defendants filed a Cross-Complaint alleging that fraud against the tenants in connection with estoppel certificates signed and breach of fiduciary duty against Plaintiff’s counsel in connection with prior legal representation of Defendants.

Defendants demur to the Complaint.

TENTATIVE RULING

Defendants Albert Santos and Yvnne Santos’ demurrer to the eighth cause of action is SUSTAINED with 30 days’ leave to amend. Plaintiffs will only be given one more opportunity to properly plead this cause of action.

ANALYSIS

Demurrer

Meet and Confer

            The Declaration of Jacob C. Gonzales reflects that Defendant’s counsel satisfied the meet and confer requirement set forth in Civ. Proc. Code, § 430.41 (although it references the fourteenth cause of action rather than the eighth cause of action).

 Discussion

Defendants demur to the Complaint as follows:

1.         Eighth Cause of Action (Violation of LAMC § 151.05.A).

            Defendants argue that this cause of action fails because Plaintiffs are not entitled to a refund of the entire $243,950.00 collected in rent based on an alleged failure to serve a valid registration or annual registration statement on the tenant, as required by LAMC § 151.05.A. This argument is well-taken, as Lyles—cited by Defendants—held:

The LARSO provides for the maximum rent that can be charged tenants. It is a so-called rent control ordinance. LAMC section 151.05, subdivision A. states in relevant part that “no landlord shall demand or accept rent for a rental unit without first serving a copy of a valid [rental unit] registration or annual [rental unit] registration renewal statement on the tenant of that rental unit.” Under LAMC section 151.11, subdivision B., a tenant may withhold rent otherwise lawfully due and owing if the tenant’s landlord has failed to comply with LAMC section 151.05, subdivision A. by not serving the tenant with a copy of a valid rental unit registration or annual rental unit registration renewal statement. Once the landlord complies with LAMC section 151.05, subdivision A., however, the tenant becomes obligated to pay the current rent and any back rent withheld pursuant to LAMC section 151.11, subdivision B.

 [*766]

LAMC section 151.10, subdivision A. provides a remedy when a landlord has charged excessive rent in violation of the LARSO. LAMC section 151.10, subdivision A. provides, “Any person who demands, accepts or retains any payment of rent in excess of the maximum rent or maximum adjusted rent in violation of the provisions of this chapter, or any regulations or orders promulgated hereunder, shall be liable in a civil action to the person from whom such payment is demanded, accepted or retained for damages of three times the amount by which the payment or payments demanded, accepted or retained exceed the maximum rent or maximum adjusted rent which could be lawfully demanded, accepted or retained together with reasonable attorneys’ fees and costs as determined by the court.”

Plaintiff argues that the language of LAMC section 151.05, subdivision A. is not ambiguous or open to interpretation. She contends that the unambiguous meaning of the section is that “[u]nless a landlord serves the referenced document on the tenant, he is not entitled to any rent”—that is, the “maximum rent” the landlord may charge is zero. Because, under this interpretation, defendants were not permitted to charge her any rent, plaintiff contends she is entitled to damages under LAMC section 151.10, subdivision A. of three times the rent she paid—$233,127. We do not agree with plaintiff’s interpretation of LAMC section 151.05, subdivision A.

The language in LAMC section 151.05, subdivision A. that a landlord may not “demand or accept rent for a rental unit without first serving a copy of a valid [rental unit] registration or annual [rental unit] registration renewal statement on the tenant of that rental unit” does not concern a landlord’s entitlement to rent. It does not disentitle a landlord to rent for a period during which the landlord is not in compliance with LAMC section 151.05, subdivision A. Instead, it concerns the timing of a landlord’s “demand” for or “acceptance” of rent to which the landlord remains entitled.

LAMC section 151.05, subdivision A. prohibits a landlord from “demanding” or “accepting” rent to which the landlord is otherwise entitled until the landlord serves the tenant with a copy of a valid rental unit registration or annual rental unit registration renewal statement. LAMC section 151.11, subdivision B. makes this point clear. Subdivision B. of LAMC section 151.11 permits a tenant to “withhold the payment of any rent otherwise lawfully due and owing” if the tenant’s landlord has failed to comply with LAMC section [*39]  151.05, subdivision A. by not serving the tenant with copy of a valid rental unit registration or annual rental unit registration renewal statement. Once such a noncompliant landlord complies with LAMC section 151.05, subdivision A., however, the tenant becomes obligated to pay the current rent and any back rent withheld pursuant to LAMC section 151.11, subdivision B. Thus, the tenant is permitted to withhold rent to which [*767]  the landlord is otherwise entitled until the landlord complies with LAMC section 151.05, subdivision A., at which time the tenant must pay the landlord all accrued rent. The penalty provision of LAMC section 151.10, subdivision A. applies only when a landlord “demands, accepts or retains any payment of rent in excess of the maximum rent … in violation of the provisions of this chapter.” The maximum rent is that allowed by the rent control provisions of the LARSO. Defendants may have violated the ordinance by accepting the rent at a time when the documents had not been served. But that does not mean that defendants were not ultimately entitled to that rent.

. . . [*768] . . .

The idea that the failure of the landlord to serve a copy of a registration statement upon the tenant would lead to a forfeiture of all rent, thereby allowing the tenant to reside rent free in a unit and recover a treble damage penalty, would be an absurd and unreasonable consequence. The ordinance is part of a rent control provision. If a landlord violates the rent control law by charging excessive rent, then sanctions make sense. But the city council could not have meant to impose such severe sanctions for failure to serve annually a registration statement. Until the registration statement is sent, allowing the withholding of rent appears to be the incentive provided by the city council.

(Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 765-68 [bold emphasis and underlining added].)

            As such, Plaintiffs are not entitled to a refund of the entire $243,950.00 collected in rent based on an alleged failure to serve a valid registration or annual registration statement on the tenant, as required by LAMC § 151.05.A. (Complaint, ¶¶ 81 – 85.)

            The demurrer to the eighth cause of action is SUSTAINED with 30 days’ leave to amend. Plaintiffs will only be given one more opportunity to properly plead this cause of action.