Judge: Curtis A. Kin, Case: 24STCP01293, Date: 2024-11-05 Tentative Ruling

Case Number: 24STCP01293    Hearing Date: November 5, 2024    Dept: 86

            Respondents California Department of Transportation (“Caltrans”) and Housing Authority of the City of Los Angeles (“HACLA”) separately demur to the Second Amended Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief (“SAP”).  Respondent Caltrans also moves to strike portions of the SAP.

I.       Factual Allegations

            Seventy years ago, respondent Caltrans obtained residential and commercial properties through eminent domain to facilitate the northward extension of the 710 freeway. (SAP ¶ 1.) In 2018, Caltrans abandoned the extension. (SAP ¶¶ 1, 2.) The abandonment has left Caltrans with surplus properties. (SAP ¶ 2.)

            In March 2020, during the COVID-19 pandemic, petitioners and others took possession of such Caltrans-owned properties to shelter in place. (SAP ¶ 24.) Sometime shortly after November 26, 2020, Caltrans entered into a written Master Lease with respondent HACLA, whereby Caltrans leased 31 of the properties to HACLA for three years. (SAP ¶¶ 25, 26 & Ex. A.) Pursuant to the master lease, HACLA prepared transitional housing agreements that petitioners, except for petitioner Cynthia Diaz, signed to remain in the surplus properties. (SAP ¶¶ 21, 27 & Exs. B-H.) Petitioners currently occupy certain properties. (SAP ¶¶ 8-19, 29.)  

Petitioners allege that, under the Roberti Act, codified at Government Code sections 54235, et seq., the petitioners who reside in multi-family properties have the right of first refusal to rent units. (SAP ¶¶ 29, 36.) Petitioners also allege that the petitioners who reside in single-family homes have priority to purchase the homes under the Roberti Act at the original acquisition prices. (SAP ¶¶ 29, 36-39.)

Unlawful detainer proceedings against petitioners are either pending or imminent. (SAP ¶¶ 8-19.) Petitioners seek to stay any efforts to evict them. Petitioners also seek writs of mandate directing Caltrans to grant a right of first refusal to rent units in multi-family properties and to grant priority to purchase single-family homes.

II.      Demurrer Filed by Respondent California Department of Transportation

Respondent Caltrans’ requests for judicial notice are GRANTED. (Evid. Code § 452(a), (b).)

            As a preliminary matter, petitioners argue that Caltrans is equitably estopped from demurring to the SAP because Caltrans purportedly agreed by stipulation that the filing of the SAP would resolve its objections to the First Amended Petition (“FAP”). The stipulation and order filed on August 13, 2024 states that the parties “discussed alternatives to the filing of demurrers” to the FAP. (8/13/24 Stipulation at 4:5-7.) The parties agreed that petitioners shall have leave to file an SAP. (8/13/24 Stipulation at 4.) The stipulation contains no agreement from either Caltrans or HACLA to refrain from demurring to the SAP. The meet and confer communications presented by petitioners also do not contain any agreement from Caltrans that it would not demur to the SAP. (See Saucedo Decl. Ex. B.) Accordingly, while the SAP may have resolved certain objections of Caltrans to the FAP, there appears to be no agreement that would prevent Caltrans (or HACLA) from raising further objection to the SAP. The Court proceeds to rule on the merits of Caltrans’ demurrer.

With respect to petitioners residing in single-family homes, the Roberti Act states: “[A]ll single-family residences shall be offered, pursuant to this article, to their present occupants who have occupied the property for two years or more and who are persons and families of low or moderate income.” (Gov. Code § 54237(a)(2).) With respect to petitioners residing in multi-family housing, the Roberti Act provides that housing-related public entities who purchased the properties “shall cause the property to be used for low- and moderate-income rental or owner-occupied housing, with first right of occupancy to the present tenants.” (Gov. Code § 54237(d)(1)(A)(ii).)

Petitioners contend that they are occupants or present tenants under the Roberti Act. The Court disagrees. “Occupant” is defined by regulation as “a person 18 years or older who uses the Surplus Residential Property as their Principal Place of Residence and who is listed on the lease or rental agreement with the Department as of the date of the letter described in § 1478(a)(1).” (21 C.C.R. § 1476(a)(15).) Incorporating the definition of “Occupant” by reference, “Tenant” is defined by regulation as “an Occupant of a Surplus Residential Property who is a signatory to the lease or rental agreement as of the date of the letter described in § 1478(a)(1).” (21 C.C.R. § 1476(a)(22).) The regulations governing the Roberti Act thus require the person seeking to purchase or rent a surplus property to be listed on a lease or rental agreement with the “Department,” which is defined as Caltrans. (21 C.C.R. § 1476(a)(7).)  

            Petitioners do not allege that they signed a lease or rental agreement with Caltrans. Instead, petitioners, except for petitioner Diaz, allege that they signed agreements, titled “Participant Temporary User Agreement” (“PTUA”), with HACLA, not Caltrans. (SAP ¶ 28 & Exs. B-H.) Diaz is alleged not to have any lease or rental agreement regarding the property in which she currently lives. (SAP ¶ 10.) Accordingly, petitioners are neither “Occupants” nor “Tenants” under the Roberti Act.

In an attempt to sidestep such definitions of “Occupant” and “Tenant” under the Roberti Act, petitioners challenge the defining regulation as “unlawful and unenforceable” because such regulation purportedly “restricts, amends, and alters” the way that “occupant” is used by the California Legislature in the Roberti Act.” (SAP ¶ 90; see also SAP ¶¶ 61-63.)  However, “a regulation adopted by a state administrative agency pursuant to a delegation of rulemaking authority by the Legislature has the force and effect of a statute. [Citations.]” (Agricultural Labor Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 401.) The publication of a regulation in the California Code of Regulations creates a rebuttable presumption that the regulation was “duly adopted” pursuant to the Administrative Procedure Act (“APA”) in the language of the published text. (Stoneham v. Rushen (1984) 156 Cal.App.3d 302, 308, citing Gov. Code §§ 11343.6, 11344.6.) While petitioners argue that the Master Lease between Caltrans and HACLA and the PTUAs are “underground regulations” that are non-compliant with the APA (Opp. at 8:12-10:13), petitioners present no argument that 21 C.C.R. § 1476—the regulation that defines “Occupant” and “Tenant” for purposes of the Roberti Act—was invalidly promulgated.

Further, the definitions in 21 C.C.R. § 1476 are not inconsistent with the Roberti Act’s purpose.  “Whenever by the express or implied terms of any statute a state agency has authority to adopt regulations to implement, interpret, make specific or otherwise carry out the provisions of the statute, no regulation adopted is valid or effective unless consistent and not in conflict with the statute and reasonably necessary to effectuate the purpose of the statute.” (Gov. Code § 11342.2.)  Here, the definitions of “Occupant” and “Tenant” are not inconsistent with the statement of legislative intent in Government Code § 54235, where the Legislature declared that it intended to “preserve, upgrade, and expand the supply of housing available to persons and families of low or moderate income.” (Gov. Code § 54235.) Caltrans is authorized to “fill up the details” of the statutory scheme. (See Wendz v. California Department of Education (2023) 93 Cal.App.5th 607, quoting Batt v. City and County of San Francisco (2010) 184 Cal.App.4th 163, 171.) Caltrans had authority to promulgate regulations dictating which persons and families are entitled to the opportunity to purchase or rent surplus properties under the Roberti Act. So long as persons or families with low- or moderate-income surplus properties are provided the opportunity to purchase or rent the properties, the intent of the Legislature is effectuated.  Petitioners offer no argument or allegation as to how the definitions in 21 C.C.R. § 1476 are contrary to that purpose.  Other than the mere fact that the 21 C.C.R. § 1476 definitions of occupant and tenant exclude the petitioners, petitioners fail to adequately show how such definitions are inconsistent or in conflict with the Roberti Act’s purpose.

All of petitioners’ causes of action are based on the Roberti Act. (SAP ¶¶ 50, 62, 63, 76, 77, 80, 81, 85, 86, 90, 91.) For the reasons discussed above, petitioners have not stated any cause of action under the Roberti Act that would provide any of them with the opportunity to purchase or rent the properties where they currently live. The Court therefore does not address additional arguments raised by Caltrans that petitioners seek to interfere with lawsuits in other courts, that the controversy is not yet ripe, that petitioners’ statutory interpretation would result in an absurd and illegal result, that Caltrans had the right to enter into the Master Lease, or that certain petitioners’ claims are barred by the statute of limitations.

The demurrer to the entire Second Amended Petition is SUSTAINED. Before deciding whether to grant leave to amend, the Court will hear from petitioners regarding how the SAP can be amended to address the defects set forth above.

III.     Motion to Strike Filed by Respondent California Department of Transportation

Based on the ruling to Caltrans’ demurrer, Caltrans’ motion to strike is DENIED as MOOT.

IV.     Demurrer Filed by Housing Authority of the City of Los Angeles

HACLA’s request for judicial notice is DENIED as “unnecessary to the resolution” of the issues before the Court. (Martinez v. San Diego County Credit Union (2020) 50 Cal.App.5th 1048, 1075.)

            Respondent HACLA argues that the petitioners who signed a PTUA waived their right to assert a right to purchase or rent surplus properties. Section 4 of the PTUA states: “Participant acknowledges and understands that this Agreement or use of the Premises does not confer any Roberti Act standing or rights to the Participant(s) nor will the Premises be offered to Participant(s) for purchase.” (SAP Exs. B-H.) “Any one may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement.” (Civ. Code § 3513.)

To avoid waiver under section 4 of the PTUA, petitioners argue that the Roberti Act is a law established for a public reason—to preserve, upgrade, and expand the supply of housing to persons and families of low or moderate income. (Opp. at 8:4-6, citing Gov. Code § 54235.) “A law has been established ‘for a public reason’ only if it has been enacted for the protection of the public generally, i.e. if its tendency is to promote the welfare of the general public rather than a small percentage of citizens.” (Benane v. International Harvester Co. (1956) 142 Cal.App.2d Supp. 874, 878.) The Roberti Act was intended to preserve access to housing for persons and families of low or moderate income. While the Legislature declared that “the sale of surplus residential property pursuant to the provisions of this article will directly serve an important public purpose,” this declaration does not preclude a finding that the petitioners who signed the PTUAs waived any claim based on the Roberti Act. “Some public benefit is, however, inherent in most legislation. The pertinent inquiry [under Civil Code § 3513], therefore, is not whether the law has any public benefit, but whether that benefit is merely incidental to the legislation’s primary purpose.” (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1049.” Here, the Roberti Act grants present occupants of surplus properties the right of first refusal to purchase or rent the properties. (Gov. Code § 54237(a)(2), 54237(d)(1)(A)(ii).) While the general public may incidentally benefit from persons and families of low- and moderate-income having access to housing, the primary beneficiaries of the Roberti Act are the limited number of persons and families occupying the premises. Because petitioners would be the primary beneficiaries of the Roberti Act, their waiver of Roberti Act claims by signing the PTUAs is valid.

Petitioners additionally argue that, because the language of Civil Code § 1542 was not included in the PTUAs, they could not waive claims that they did not know existed for them at the time of signing. Civil Code § 1542 states: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” The release at issue is not general. It expressly references the Roberti Act. Petitioners therefore cannot claim that they did not know or suspect the existence of claims based on the Roberti Act. In addition, while the Roberti Act requires occupants to have lived in the property for two years before they may purchase the property (Gov. Code § 54237(a)(2)), petitioners cite no authority equating accrual of a claim to knowledge of a claim that may later accrue. Because section 4 of the PTUA expressly releases claims under the Roberti Act, petitioners cannot claim that they did not know or suspect they might have a claim under the Roberti Act.

Petitioners also contend that the PTUAs are underground regulations prohibited by the Administrative Procedure Act. To be a regulation, a guideline must meet two requirements: (1) “the agency must intend it to apply generally, rather than in a specific case”; and (2) the agency must adopt it to implement, interpret, or make specific the law enforced by the agency. (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 571.) A regulation that substantially fails to comply with the requirements of the APA may be judicially declared invalid. (Gov. Code § 11350.)

The PTUAs are not guidelines of general application. They are terms to which petitioners agreed that govern the signees’ usage of the properties as temporary invitees. (See SAP Exs. B-H §§ 3 [use of property is for a maximum of 24 months], 4 [no landlord/tenant relationship created].) Further, the PTUAs do not implement, interpret, or make specific the Roberti Law. As discussed above with respect to Caltrans’ demurrer, the Roberti Act is for the benefit of “occupants” and “tenants” of the surplus properties, and petitioners are neither, as defined in the implementing regulations because they do not have a lease with Caltrans. (SAP ¶ 28 & Exs. B-H; 21 C.C.R. § 1476(a)(15), (a)(22).) The PTUAs do not create any tenancy between petitioners and Caltrans and, accordingly, do not implement, interpret, or make specific the Roberti Act such that they would be viewed as underground regulations.

For the foregoing reasons, the waiver of any claims based on the Roberti Act is valid.

With respect to petitioner Diaz, even though she did not sign a PTUA, she cannot avail herself of the Roberti Act because she is not an “occupant” or “tenant” under the Act. Diaz admits that she does not have a written lease or other agreement with respondents. (SAP ¶ 10.) Accordingly, she has no claim under the Roberti Act.

All of petitioners’ causes of action are based on the Roberti Act. (SAP ¶¶ 50, 62, 63, 76, 77, 80, 81, 85, 86, 90, 91.) Because petitioners have either waived any claim under the Roberti Act, or otherwise do not qualify as an occupant or tenant under the Roberti Act, no cause of action survives. The Court therefore does not address HACLA’s other arguments that the Court cannot interfere with the judicial acts of another department of the Court and that certain petitioners’ claims are barred by the statute of limitations.