Judge: Elaine Lu, Case: 20STCV11588, Date: 2022-10-27 Tentative Ruling

Case Number: 20STCV11588    Hearing Date: October 27, 2022    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On March 20, 2020, Plaintiff City of Los Angeles (“Plaintiff”) filed the instant action for violations of the Los Angeles Municipal Code (“LAMC”) and for public nuisance against Defendants Lance Jay Robbins Paloma Partnership, 7^TH Street Associates, Inc., and Lance Jay Robbins (collectively “Defendants”). 

On June 24, 2020, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants.  The FAC asserts three causes of action for (1) Unauthorized Change of Use Violation in violation of LAMC §§ 11.00(l), 12.21.A.1(a), (2) Unauthorized Zone and Land Use Designation Violation in violation of LAMC §§ 11.00(l), 12.21.A.1(a), 12.09.1, and (3) Public Nuisance in violation of Civil Code §§ 3479 and 3480.

On August 28, 2020, the Court – presided by the Honorable Jon R. Takasugi – granted Plaintiff’s request for a preliminary injunction prohibiting short term rental use of Defendant’s Property 15 East Paloma Avenue, Venice until trial.  (Minute Order 8/28/20.)

On January 28, 2021, Defendant Lance Jay Robbins filed a preemptory challenge, and the action was reassigned to the Honorable Gregory W. Alarcon.  Due to the retirement of the Honorable Gregory W. Alarcon, the instant action was transferred to the Honorable Wendy Chang on January 26, 2022.  On February 8, 2022, Defendant Lance Jay Robbins Paloma Partnership filed a preemptory challenge, which was granted.  Accordingly, the instant action was transferred to the current department.  (Minute Order 2/9/22.)

On August 2, 2022, the Court denied Plaintiff’s motion for summary judgment, or in the alternative, summary adjudication.

On June 21, 2022, Defendants filed the instant motion for leave to file a cross-complaint.  On October 14, 2022, Plaintiff filed an opposition.  On October 20, 2022, Defendants filed a reply.

Allegations of the Operative Complaint

The FAC alleges that:

            Defendants are owners of the Ellison Apartments located at 15 East Paloma Avenue in the Venice area of the City of Los Angeles.  (FAC ¶¶ 1, 5-7.)  The Ellison Apartments were established and have building permits as an apartment house.  (FAC ¶ 16.) 

            “The Ellison Apartments is located in a low density residential zone, RD1.5, in an area designated for multiple family residential land uses pursuant to the Los Angeles Municipal Code and the Venice Land Use Plan. The authorized and permitted land uses for the RD1.5 zone and the low-medium residential land use designation include various sized residential dwellings, from single family homes to multi-unit residential buildings. Commercial businesses and other non-residential uses, including hotel businesses, are not permitted land uses in the RD1.5 zone or in the area designated for multiple family residential land uses in the Venice Land Use Plan. The Ellison Apartments is also located in the coastal zone.”  (FAC ¶ 17.) 

            Pursuant to LAMC § 12.21.A.1(a) it is unlawful to use a building for a use not authorized by the relevant permits and not permitted in the zone in which the building is located.  (FAC ¶ 18.)   “The Ellison Apartments also is regulated by the City’s Rent Stabilization Ordinance (RSO), which applies to residential buildings constructed prior to 1978, and restricts the frequency and amount of rent increases for long term residents.”  (FAC ¶ 19.)

            Since 2015, Defendants have been operating the Ellison Apartments as an illegal hotel business by not re-renting vacant units and by using the units instead for short term rentals like a hotel room.  (FAC ¶ 20.)  Defendants have been advertising some of the units at the Ellison Apartments to potential guests on Airbnb, Booking.com, Expedia, theellisionsuites.com and theauthenticsuites.com. as a hotel with units at the Ellison Apartments advertised at $145-$300 per night.  (FAC ¶ 21.)  In contrast, long term tenants pay between $1500-$3000 per month.  (FAC ¶ 21.) 

            Defendants have remodeled the Ellison Apartments to look like a legally operating hotel business by removing and relocating the long-term tenants’ mailboxes from the lobby and adding a reception desk.  (FAC ¶ 22.)  Defendants have been renovating vacate units after long term tenants have moved.  (FAC ¶ 22.)  In addition, Defendants added a laundry room to launder the short-term guests’ linens which has caused hot and cold-water shortages to units occupied by long term tenants.  (FAC ¶ 22.)

            Defendants have employed at least six maids to clean the apartment units after guests to wash linens and with one or two employees at the reception desk to check-in guests.  (FAC ¶¶ 23-24.)  The guests are provided a small breakfast, free alcoholic beverages, and live entertainment.  (FAC ¶¶ 24-25.)  “[T]he provision of alcohol and live entertainment has resulted in loud noises clearly audible in long term tenants’ units several times a week and late at night.”  (FAC ¶ 25.)

            “Over the past five or so years, numbers of apartment units occupied by long term tenants have dwindled from 58 as they moved out and were not replaced with other long term tenants. Currently, there are fewer than 10 apartment units, out of the original 58 which are occupied by long term tenants, some of whom have been there for forty years. Defendants have offered many of the current and former tenants $10,000 or more to terminate their leases at the Ellison Apartments and have engaged in a campaign to evict other remaining tenants, in order to convert the residential units to guest rooms for their illegal hotel business.”  (FAC ¶ 26.)

Request for Judicial Notice

            In opposition, Plaintiff requests that the Court take judicial notice of:

1.      Petition and Complaint in Lance Jay Robbins Paloma Partnership v. City of Los Angeles, Los Angeles Superior Court Case No. 19STCP02761

2.      Minute Order Transferring Lance Jay Robbins Paloma Partnership v. City of Los Angeles, Los Angeles Superior Court Case No. 19STCP02761

3.      Notice of Outgoing Transfer of Lance Jay Robbins Paloma Partnership v. City of Los Angeles, Los Angeles Superior Court Case No. 19STCP02761 to Orange County Superior Court

4.      Notice of Transfer and Assignment of Hon. Judge Melissa R. McCormick and Case No. 30-2020-01157399-CU-WM-CJC to Lance Jay Robbins Paloma Partnership v. City of Los Angeles

5.      December 9, 2020, Judgment of Dismissal and November 19, 2020, Order Sustaining City’s Demurrer without leave to amend in Lance Jay Robbins Paloma Partnership v. City of Los Angeles

6.      June 7, 2022, Appellate Court decision in Lance Jay Robbins Paloma Partnership v. City of Los Angeles, Appellate Case No. G059744

As the Court may take judicial notice of court records and actions of the State, (See Evid. Code, § 452(c),(d)), Plaintiff’s unopposed requests for judicial notice are granted.  However, the Court does not take judicial notice of the truth of hearsay assertions within. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.) 

Legal Standard

Code of Civil Procedure section 428.10 provides that a party against whom a cause of action has been asserted may file a permissive cross-complaint setting forth: “(a) [a]ny cause of action he has against any of the parties who filed the complaint or cross-complaint against him.  Nothing in this subdivision authorizes the filing of a cross-complaint against the plaintiff in an action commenced under Title 7…”  (CCP § 428.10(a).)  A party shall obtain leave of court to file a cross-complaint if it is not concurrently filed with the answer or at any time before the court sets a trial date.  Leave may be granted in the interest of justice at any time during the course of the action.  (CCP § 428.50(c).)

Similarly, Code of Civil Procedure § 426.50, states: “[a] party who fails to plead a cause of action subject to the requirements of this article [for compulsory cross-complaints], whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.”  (CCP § 426.50.)

Discussion

Defendants seek to file a cross-complaint against Plaintiff asserting two causes of action for (1) Declaratory Relief, and (2) Violations of the California Coastal Act.  (Nitti Decl. ¶ 2, Exh. A.)  The proposed first cause of action seeks declaratory relief that Defendants’ use of the Ellison Apartments for short term rentals is a legal permissible use.  (Nitti Decl. ¶ 2, Exh. A at ¶¶ 1-17.)  The proposed second cause of action for Violations of the California Coastal Act seeks a judgment that Plaintiff’s restriction of short-term rentals violates the California Coastal Act.  (Nitti Decl. ¶ 2, Exh. A at ¶¶ 18-34.)  Defense Counsel states that recent Court of Appeal cases support the proposed claims in the cross-complaint – i.e., People v. Venice Suites, LLC (2021) 71 Cal.App.5th 715 and Keen v. City of Manhattan Beach (2022) 77 Cal.App.5th 142.  (Nitti Decl. ¶ 3.)

In opposition, Plaintiff contends that the Court must deny the because the proposed cross-complaint is permissive.  Plaintiff further contends that the first cause of action is not ripe, and the second cause of action is barred by res judicata.

The Proposed Cross-Complaint is Partly Compulsory

A cross-complaint is compulsory if the claim against the plaintiff is related to the subject matter of the complaint.

“Code of Civil Procedure section 426.30, subdivision (a), provides, ‘Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in another action assert against the plaintiff the related cause of action not pleaded.’ A ‘related cause of action’ is one that ‘arises out of the same transaction, occurrence, or series of transactions and occurrences as the cause of action which the plaintiff alleges in his complaint.’ (Code Civ. Proc., § 426.10, subd. (c).)”  (LGCY Power, LLC v. Superior Court (2022) 75 Cal.App.5th 844, 861, [italics added].)  “Because of the liberal construction given to the statute to accomplish its purpose of avoiding a multiplicity of actions, ‘transaction’ is construed broadly; it is ‘not confined to a single, isolated act or occurrence ... but may embrace a series of acts or occurrences logically interrelated [citations].’ ”  (Heshejin v. Rostami (2020) 54 Cal.App.5th 984, 993–994.)

Here, the proposed first cause of action seeks declaratory relief that Defendants’ use of the Ellison Apartments for short term rentals is a legally permissible use, including Plaintiff’s Homesharing Ordinance.  (Nitti Decl. ¶ 2, Exh. A at ¶¶ 1-17.)  The complaint concerns the same controversy.  In the FAC, Plaintiff seeks to prohibit Defendants from using the Ellison Apartments for short term rentals pursuant to the Los Angeles Municipal Code.  (FAC ¶¶ 5-26.)  The FAC and proposed first cause of action of the cross-complaint involve the same subject matter – i.e., Defendants’ use of the Ellison Apartments for short term rentals.

Plaintiff argues that the first cause of action is unrelated because the FAC does not raise issues regarding whether Defendants’ use of the Ellison Apartments violates Plaintiff’s Homesharing Ordinance.  This argument is contrary to the purpose of cross-complaints.

“The compulsory cross-complaint statute is designed to prevent ‘piecemeal litigation.’”  (Wittenberg v. Bornstein (2020) 51 Cal.App.5th 556, 564.)  “‘The law abhors a multiplicity of actions, and the obvious intent of the Legislature in enacting the counterclaim statutes [citations] was to provide for the settlement, in a single action, of all conflicting claims between the parties arising out of the same transaction. [Citation.] Thus, a party cannot by negligence or design withhold issues and litigate them in successive actions; he may not split his demands or defenses; he may not submit his case in piecemeal fashion.’ [Citation.]”  (Ibid.)
            While the first cause of action in the proposed cross-complaint would expand the instant action to includes statutes beyond the Los Angeles Municipal Code, it is clearly related to the dispute between the parties as to whether Defendants can use the Ellison Apartments for short term rentals.  Plaintiff’s argument would encourage piecemeal suits over Defendants’ use of the Ellison Apartments.  As noted above, this type of multiplicity is abhorred and unnecessary.  The declaratory relief action will resolve this dispute without needless repetitive litigation. 

The second cause of action seeks a judgment that Plaintiff’s restriction of short-term rentals violates the California Coastal Act.  (Nitti Decl. ¶ 2, Exh. A at ¶¶ 18-34.)  Specifically, that Plaintiff’s prohibition of short-term rentals for apartments constitutes a “development” which required the California Costal Commissions approval to be enforceable.  (Nitti Decl. ¶ 2, Exh. A at ¶¶ 18-34.)  Contrary to the assertion of Defendants, the second cause of action is a facial challenge to Plaintiff’s Homesharing Ordinance. 

“An ‘as applied’ challenge to a statute seeks ‘relief from a specific application of a facially valid statute ... to an individual ... under allegedly impermissible present restraint ... as a result of the manner ... in which the statute ... has been applied.’”  (Hatch v. Superior Court (2000) 80 Cal.App.4th 170, 192.)  In contrast, a facial challenge means a challenge to “the statutes themselves, not how the statutes are implemented[.]”  (Vergara v. State of California (2016) 246 Cal.App.4th 619, 627.)  “Although the vast majority of facial challenges to governmental enactments are on constitutional grounds, a facial challenge may be premised on the ground the enactment is inconsistent with statutory law.”  (Beach & Bluff Conservancy v. City of Solana Beach (2018) 28 Cal.App.5th 244, 260.)

Here, the proposed second cause of action of the proposed cross-complaint is a facial challenge because it seeks to invalidate Plaintiff’s Homesharing Ordinance on the grounds that the ordinance is inconsistent with statutory law – i.e., the California Coastal Act.  There is no allegation – with regard to the second cause of action – that the Homesharing Ordinance is being improperly applied to Defendants.  In fact, there is no allegation that the Homesharing Ordinance has even been applied at all to Defendants.  Moreover, the proposed second cause of action of the proposed cross-complaint is not related to the FAC because the FAC does not seek to enforce the Homesharing Ordinance but rather seeks to enforce Los Angeles Municipal Code Sections.  (FAC ¶¶ 5-26.)  Unlike the first cause of action which is directly related to Defendants’ use of the Ellison Apartments for short term rentals, the second cause of action is solely directed to the Homesharing Ordinance and is not related to the specific use of the Ellison Apartments.  Accordingly, the second cause of action of the proposed cross-complaint is not compulsory and is merely permissive.

The First Cause of Action is Ripe

“Courts will decline to resolve lawsuits that do not present a justiciable controversy, and justiciability ‘involves the intertwined criteria of ripeness and standing.”  (Qualified Patients Assn. v. City of Anaheim (2010) 187 Cal.App.4th 734, 751.)  “A controversy is ‘ripe’ when it has reached, but has not passed, the point that the facts have sufficiently congealed to permit an intelligent and useful decision to be made.”  (California Water & Tel. Co. v. Los Angeles County (1967) 253 Cal.App.2d 16, 22.)  “To determine if a controversy is ripe, we employ a two-pronged test: (1) whether the dispute is sufficiently concrete that declaratory relief is appropriate; and (2) whether withholding judicial consideration will result in the parties suffering hardship.”  (Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 540.)

While the first cause of action does involve other statutes which Plaintiff has not yet attempted to enforce against Defendants, Defendants’ use of the Ellison Apartments for short term rentals is clearly at issue.  The FAC specifically seeks to prevent Defendants’ use of the Ellison Apartments for short term rentals.  (FAC ¶¶ 6-25.)  The dispute is sufficiently concrete that declaratory relief is proper because Plaintiff is actively seeking to prevent Defendants’ use of the Ellison Apartments for short term rentals.  Further, withholding judicial consideration would create undue hardship because there is no indication that Plaintiff would not merely bring piecemeal litigation seeking to prevent Defendants’ use of the Ellison Apartments for short term rentals under separate statutes if the instant action is adversely determined against Plaintiff.  Thus, the sought declaratory relief is proper in the instant action.

The Second Cause of Action is Barred by Res Judicata

            Plaintiff contends that the Court should deny leave to amend as to the second cause of action because the proposed claim is barred by res judicata.  The Court agrees.

“‘Res judicata’ describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, ‘precludes relitigation of issues argued and decided in prior proceedings.’” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) Res Judicata has been used to refer to both claim and issue preclusion. (Ibid., Fn. 7.) The doctrine has two aspects: it applies to both a previously litigated cause of action, referred to as claim preclusion, and to an issue necessarily decided in a prior action, referred to as issue preclusion. (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 828; Teitelbaum Furs, Inc. v. Dominion Ins. Co. (1962) 58 Cal.2d 601, 604.)

This distinction is essential to understanding the analysis below, as courts have oft-noted the “seemingly ineradicable confusion over the distinctions between ‘res judicata’ (claim preclusion) and ‘collateral estoppel’ (issue preclusion).” (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 541, Fn. 21.) 

Issue preclusion applies only to issues that were actually litigated in the earlier matter; whereas claim preclusion extends to all legal theories, proofs, and demands for relief that might have been presented in the first matter, provided both suits assert the same cause of action.  (Ibid. citing Landeros v. Pankey (1995) 39 Cal.App.4th 1167, 1171; Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 148; Mycogen Corp. v. Monsanto Corp. (2002) 28 Cal.4th 888, 897; Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1687.) “Res judicata [claim preclusion] bars the relitigation not only of claims that were conclusively determined in the first action, but also matter that was within the scope of the action, related to the subject matter, and relevant to the issues so that it could have been raised” and includes ‘matters which were raised or could have been raised, on matters litigated or litigable.’” (Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1674-1675; accord Mark v. Spencer (2008) 166 Cal.App.4th 219, 229 [bars claims that parties had a fair opportunity to litigate].)  Claim preclusion applies as a bar to splitting a cause of action for partial, later litigation, or relitigation of the same cause of action based upon on another legal theory or associated with different relief, that could have been sought in the prior action. (Noble v. Draper (2008) 160 Cal.App.4th 1, 10; Hamilton v. Asbestos Corp., Ltd.  (2000) 22 Cal.4th 1127, 1146.)  Its purpose is “to preserve the integrity of the judicial system, promote judicial economy, and protect litigants from harassment by vexatious litigation.” (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 829.)

The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are the same: (1) A claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding.  (Ibid.)

Here, there is a final judgment in favor of Plaintiff in Lance Jay Robbins Paloma Partnership v. City of Los Angeles, Orange County Superior Court Case No. 30-2020-01157399-CU-WM-CJC.  (See Request for Judicial Notice “RJN” Exh. 5 [Judgment of Dismissal]; RJN Exh. 6 [Court of Appeal Order Affirming Dismissal].)  The prior action involved the same identical parties.  (RJN Exh. 5 [Judgment of Dismissal]; RJN Exh. 6 [Court of Appeal Order Affirming Dismissal].)  Moreover, the claim involved the same cause of action as the second cause of action of the proposed cross-complaint here.  (RJN Exh. 1 [Complaint in Lance Jay Robbins Paloma Partnership v. City of Los Angeles].)  The prior action sought declaratory relief that Plaintiffs Homesharing Ordinance’s ban of short-term rentals violated the California Coastal Act.  (RJN Exh. 1.)  Defendants only contention is that the prior 2019 action was a facial challenge to the statute in contrast to the second cause of action in the proposed cross-complaint, which Defendants contend is an as applied challenge.  However, as discussed above, the second cause of action of the proposed cross-complaint is a facial challenge and is thus identical to the prior 2019 action.  Accordingly, the second cause of action of the proposed cross-complaint is barred by res judicata.

As the second cause of action in the proposed cross-complaint is barred, the Court finds that there is no good basis to permit Defendants to file a barred cause of action in a proposed cross-complaint.

CONCLUSION AND ORDER

            Based on the foregoing, Defendants Lance Jay Robbins Paloma Partnership, 7^TH Street Associates, Inc., and Lance Jay Robbins’ motion for leave to file a cross-complaint is GRANTED IN PART. 

            Defendants may file the proposed cross-complaint including only the proposed first cause of action.  Leave to file a cross-complaint is DENIED as to the proposed second cause of action

of the cross-complaint.

            Defendants are to file the proposed cross-complaint as amended within thirty (30) days of notice of this order.

            Moving Party is to give notice and file proof of service of such.

DATED:  October 27, 2022                                                    _____________________________

                                                                                                  Elaine Lu

                                                                                                  Judge of the Superior Court