Judge: Mark H. Epstein, Case: 20SMCV01558, Date: 2023-09-05 Tentative Ruling
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Case Number: 20SMCV01558 Hearing Date: September 5, 2023 Dept: I
Plaintiff filed a breach of contract action against
defendants. The complaint involves a
lease made to a start-up venture called Affinity House. The obligations under the lease were
guaranteed by defendants O’Neill and Chazanas.
The property was to be used to house various individuals in a co-living
arrangement, although plainly Affinity itself was and is a business
enterprise. Ultimately, COVID caused
Affinity to miss rent payments, which resulted in this lawsuit. Earlier at issue was plaintiff’s claim that
this was not a residential lease because Affinity was a business
enterprise. The court rejected that
theory on the ground that, while Affinity was a business, the people who
actually occupied the property lived there and that was the known intent of all
parties. Because the actual units were
used as residential units, the court viewed this as a residential lease. Plaintiff also argued that the individual
guarantors had none of the protections afforded to the lessee. The court rejected that argument as well,
finding that the various protections put in place due to COVID applied to
protect the guarantors as well. In any
event, it is undisputed that Affinity stopped paying rent at some point in
mid-April 2020 and, through self-certification, stated that it would continue
not paying rent so long as the various COVID laws protected it. In light of the foregoing rulings, the court
sustained prior demurrers, but always provided leave to amend, although in the
last go-‘round the court almost denied leave.
At issue now is the demurrer to the third amended complaint.
Since the case was filed, the various moratoria have expired or are about to expire. Recall that the COVID protections never directed that rent was not owed; the protections only delayed the date by which it must be paid and barred unlawful detainer actions for that period.
Defendants’ demurrer is to plaintiff’s claim of breach of contract. Their argument is that no rent is due under City of Los Angeles Municipal Code section 49.99.2(A). That section provides that rental “arrears accumulated between March 1, 2020, and September 30, 2021, under this subsection must be paid by August 1, 2023. Rental arrears accumulated between October 1, 2021, and January 31, 2023, under this subsection must be paid by February 1, 2024.” Defendants contend that they made the required payment on August 1, 2023, and thus are current on rent through September 30, 2021. They also argue that their obligation to pay the remainder has not yet matured, and therefore the suit cannot be maintained. (Defendants also note that the August 1, 2023 date was after the third amended complaint, and thus the complaint was improper for that reason as well. However, at least if defendants are to be believed, that whole issue is moot because the payment was made.)
Plaintiff re-iterates the arguments already made and rejected by the court. The court rejects those arguments again and will not go into its reasoning here. It has stated its reasoning on the record, and the record will stand.
Plaintiff also argues, however, that the Los Angeles ordinance is preempted by state law and LA County law. The court disagrees.
The County resolution at issue expired on March 31, 2023, although one aspect survived. Section V.A.3 states that protections “relating to nonpayment of rent . . . shall survive the expiration of the Resolution.” Section VI.A.1.c of the Resolution states that following its expiration, “if a Landlord seeks to evict a Residential Tenant described in subsection VI.A.1.b., above, for rent incurred from July 1, 2022, through March 31, 2023, the Landlord must first serve on the Residential Tenant a 30-day notice to cure or quit prior to initiating the unlawful detainer action. This protection shall not be construed as superseding or nullifying, in whole or in part, the Residential Tenant’s twelve (12) month repayment period . . . nor the Residential Tenant’s affirmative defense to an unlawful detainer action for such nonpayment of rent. . . . This protection shall survive the expiration of the Resolution.” Finally the Resolution notes that the rents owed during the Transition Protection Period should pay the rent per state law. The applicable state law is codified in CCP section 1179.05, which sets forth various dates upon which certain rents must be paid. It has a savings clause, however, that allows a local authority to adopt an ordinance applying to certain rent repayment dates so long as it does not apply to rental payments coming due between March 1, 2020, and June 30, 2020.
Plaintiff contends that the Legislature occupied the field on repayment of COVID rental debt, and therefore the City ordinance that gives defendants until February 1, 2024, is invalid. But the Legislature obviously did not intend complete preemption; that is why it included the savings clause and also why subdivision (f) states that the intent was to protect individuals negatively “impacted by the COVID-19 pandemic, and this section does not provide the Legislature’s understanding of the legal validity on any specific ordinance . . . adopted by a city . . . in response to the COVID-19 pandemic to protect tenants from eviction.” Thus, whether there is preemption depends on when the debt is incurred. The statute defines “COVID-19 rental debt” as unpaid rent or any other unpaid financial obligation of a tenant during the “Covered time period,” which is defined as between March 1, 2020, and September 30, 2021. The debt at issue here is outside that period, and thus not preempted by the Legislature. The County resolution has a similar time period.
The court simply does not find preemption here.
Turning to the City’s ordinance itself, the court is aware that the ordinance in question deals with evictions. Specifically, it makes it unlawful for a landlord to evict a tenant for non-payment of rent (or bring an unlawful detainer action) if the rent is unpaid during the moratorium and if it is timely paid thereafter. This case is not an eviction case; it is a case brought for money damages only. While the court believes the City could have been clearer as to whether it also meant that a lawsuit to recover rent was also abated temporarily, it would make little sense to allow the suit but not the eviction. Allowing such a lawsuit would, in theory, result in a money judgment against the tenant—one that could not be obtained through a UD case. That judgment could be enforced by wage garnishment, liens on bank accounts, and other powerful judgment collection methods. It beggars reason to believe that the City intended those remedies to be available so long as there was no attempt at eviction. The point is that the City (and the County and the State) concluded that due to the COVID pandemic, many tenants were simply not in a position to pay the rent when due. Obtaining and collecting on a money judgment is just an indirect eviction.
The bottom line is that the court agrees with defendants here. Assuming that the August 2023, payment has been paid, the court is inclined to SUSTAIN THE DEMURRER WITHOUT LEAVE TO AMEND. However, the remainder of the rent is still out there and will soon be due and owing. This order will not bar a cause of action by plaintiff if the remainder is not paid by February 1, 2024.