Judge Michael E. Whitaker, Case Number: 24SMCV05564, Date: 2025-02-07 Tentative Ruling

Judge: Michael E. Whitaker, Case: 24SMCV05564, Date: 2025-02-07 Tentative Ruling

On November 15, 2024, Plaintiff Michael Fourticq, Trustee of the Michael and Teresa Fourticq Family Trust (“Plaintiff”) filed the verified complaint for unlawful detainer against Defendants Ramin Nouri (“Nouri”) and Bahareh Cheshmaghil (“Cheshmaghil”) (together, “Defendants”). Defendants now move for summary judgment.

“[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.” (Ibid.)

“On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence. While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues. Only when the inferences are indisputable may the court decide the issues as a matter of law. If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839 [cleaned up].) Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true. Nor may the trial court grant summary judgment based on the court's evaluation of credibility.” (Id. at p. 840 [cleaned up]; see also Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)

“The basic elements of unlawful detainer for nonpayment of rent ... are (1) the tenant is in possession of the premises; (2) that possession is without permission; (3) the tenant is in default for nonpayment of rent; (4) the tenant has been properly served with a written three-day notice; and (5) the default continues after the three-day notice period has elapsed.” (KB Salt Lake III, LLC v. Fitness Internat., LLC (2023) 95 Cal.App.5th 1032, 1045.)

The crux of Defendants’ argument is that the $226,000 past-due rent listed on the 3-day Notice to Pay Rent or Quit was overstated, and therefore the Notice was invalid, because it represents rent increases in excess of what is allowed under relevant law.

The Tenant Protection Act of 2019 (“TPA”) prevents owners of real property from terminating the tenancy of a tenant who has occupied the premises for 12 months without just cause, and limits the amount and number of times an owner may increase the rent per year for an existing tenant. (See Civ. Code, §§ 1946.2; 1947.12.)

(a)(1) Subject to subdivision (b) [not applicable here], an owner of residential real property shall not, over the course of any 12-month period, increase the gross rental rate for a dwelling or a unit more than 5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months prior to the effective date of the increase. In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded. The gross per-month rental rate and any owner-offered discounts, incentives, concessions, or credits shall be separately listed and identified in the lease or rental agreement or any amendments to an existing lease or rental agreement.

(2) If the same tenant remains in occupancy of a unit of residential real property over any 12-month period, the gross rental rate for the unit of residential real property shall not be increased in more than two increments over that 12-month period, subject to the other restrictions of this subdivision governing gross rental rate increase.

(5) Residential real property that is alienable separate from the title to any other dwelling unit, including a mobilehome, provided that both of the following apply:

(i) A real estate investment trust, as defined in Section 856 of the Internal Revenue Code.

(iii) A limited liability company in which at least one member is a corporation.

(B) (i) The tenants have been provided written notice that the residential real property is exempt from this section using the following statement:

“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”

Further, Civil Code section 1946.2 subdivision (i)(1)(A) provides that the provision of the Tenant Protection Act of 2019 preventing an owner of residential real property for terminating the tenancy without just cause of a tenant who has occupied the property for 12 months does not apply to “Residential real property subject to a local ordinance requiring just cause for termination of a residential tenancy adopted on or before September 1, 2019, in which case the local ordinance shall apply.”

The City of Los Angeles Rent Stabilization Ordinance (“LARSO”) is codified in Los Angeles Municipal Code sections 151.00 et seq. and provides, “It shall be unlawful for any landlord to demand, accept or retain more than the maximum adjusted rent permitted pursuant to this chapter or regulation or orders adopted pursuant to this chapter.”

During the COVID-19 pandemic, the City of Los Angeles enacted a rent increase moratorium beginning March 4, 2020 until February 1, 2024. From February 1, 2024 through June 30, 2024, and again from July 1, 2024 through June 30, 2025, rental increase rates were limited to 4%. (See Rent Stabilization Ordinance Nos. 186607, 188071.)[1]

The Costa-Hawkins Rental Housing Act, Civil Code section 1954.50 et seq., (“Costa-Hawkins”) provides:

(a) Notwithstanding any other provision of law, an owner of residential real property may establish the initial and all subsequent rental rates for a dwelling or a unit about which any of the following is true:

In support of the Motion, Defendants have provided the attorney Declaration of Heidi M. Wyckoff, attached to which are authenticated copies of Plaintiff’s operative Complaint (Ex. A) and Defendants’ Answer to the Complaint (Ex. B.)

The Verified Complaint alleges Plaintiff, as Landlord-Owner, and Defendants, as tenants, entered into a written agreement to lease the residential property located at 540 Crestline Drive for $60,000 per month. (Complaint at ¶¶ 1-6.) The Verified Complaint further alleges the tenancy is not subject to the Tenant Protection Act of 2019 because of Civil Code section 1946.2, subdivision (i)(1)(A) [“Residential real property subject to a local ordinance requiring just cause for termination of a residential tenancy adopted on or before September 1, 2019, in which case the local ordinance shall apply.”] (Complaint at ¶ 7.)

The Verified Complaint further alleges Defendants were served with a copy of the 3-day Notice to Pay Rent or Quit on November 11, 2024 by posting a copy on the premises, and such 3-day period expired on November 14. (Complaint ¶¶ 9-10.)

At the time the 3-day notice was served, the alleged amount of rent due was $226,000. (Complaint ¶ 12.) The fair rental value of the premises is $2,000 per day. (Complaint ¶ 13.) The written agreement between the parties provides for attorneys’ fees. (Complaint ¶ 15.) A copy of the written agreement was not attached to the original Verified Complaint.

3. On December 6, 2021, my wife and I entered into a residential lease agreement with Plaintiff (“Lease”) for the leasing of property located at 540 Crestline Drive, Los Angeles, CA 90049 (“Property”). The Property is a Single-Family Dwelling located in the City of Los Angeles.

4. The lease term was for one year, beginning February 1, 2022 and expiring January 31, 2023. The Lease was later amended for the lease term to begin March 1, 2022.

5. Included as part of the lease, Plaintiff served us with a California Association of Realtor’s Rent Cap and Just Cause Addendum (“RCJC”). Section I of the RCJC states that with certain exemptions, the landlord may be subject to the rent cap and just cause eviction provisions of the Civil Code. Section I goes on to inform the tenants that California law limits the amount the tenants’ rent can be increased pursuant to §1947.12 of the Civil Code. Section II of the RCJC states in pertinent part: “EXEMPTIONS TO BOTH RENT CAP REQUIREMENTS & JUST CAUSE EVICTIONS: …3. Single Family Residential property (including condominiums and units in planned developments) that is alienable separate from the title to any other dwelling unit if the notice below us check and delivered to the tenant.” The “Notice of Exemption” box that followed that section was not checked off.

6. Per the terms of the Lease rent was $35,000 per month to be paid in advance on the first of the month. Defendants took possession of the Property on March 1. 2022 and began paying rent.

7. On January 11, 2023, the term of the Lease was extended for one year, from February 1, 2023, to January 30, 2024, with the rent increased to $37,500 for the extension period.

8. On January 10, 2024 the term of the Lease was extended from January 30, 2024 to July 31, 2024 and the rent was increased from $37,500 to $48,500 which was a 29.33% increase in rent.

9. On September 3, 2024 the lease was extended again to October 31, 2024 and the rent was increase for August & Sept 2024 to $53,000 per month and for October 2024 the rent was increased to $60,000. From the inception of the Lease which was only two years prior the rent increases amount to approximately a 70% increase above the original rent.

10. On or about November 11, 2024 Plaintiff had us served with a 3 Day Notice to Pay Rent or Quit for August, September & October 2024 in the amount of $226,000.

11. Because the rent increases were illegal and the amount in the 3 Day Notice was not correct, among other reasons as indicated our Answer, we did not pay the $226,000.

(Nouri Decl. ¶¶ 2-11.) Attached to the Nouri Declaration are the following exhibits:

Defendants contend that although the original lease was for the one-year term beginning February 1, 2022 and ending on January 31, 2023, “The lease was later amended for the lease term to begin March 1, 2022.” (Motion at p. 5:13-15.)

In support of this statement, Plaintiff points to Exhibit 2 to the Nouri Declaration. But Exhibit 2 to the Nouri Declaration is not an amended lease or lease addendum; rather, it is a “Seller response and buyer reply to request for repair No. 1” indicating the “Seller agrees to modify the purchase price” to $7,450,000” and “Option money to stay $600,000. Seller will fix leak in laundry room and will replace water heater. Lease term to begin March 1, 2022.” Thus, there appears to also be some sort of purchase/sale agreement for the property between Plaintiff and Defendants, which Defendants have not explained, and for which documents are missing.

Notwithstanding, in Opposition, Plaintiff has provided clarity and authenticated documents that fill in the gaps in Defendants’ presentation of evidence. From the evidence submitted, the Court gleans the following:

· On or about December 21, 2021,[2] Plaintiff and Defendants entered into a Residential Purchase Agreement (Fourticq Decl. ¶ 6 and Ex. 1.) Pursuant to this agreement, Defendants were to purchase the property from Plaintiff, with a purchase price of $7,500,000, and escrow closing date of February 1, 2023.

· Also on or about December 16, 2021,[3] the parties entered into a Residential Lease Agreement, which included an Option (To Buy) Agreement. (Ex. 1 to Nouri Decl; Fourticq Decl. at ¶ 7 and Ex. 2.) Pursuant to that agreement, the lease term was to commence on February 1, 2022 and end on January 31, 2023. The original lease provided for monthly rent of $35,000. (Ibid.)

· The Residential Lease Agreement also included a “Rent Cap and Just Cause Addendum” which provided as follows:

With certain exemptions, Landlord must be subject to the rent cap and just cause eviction provisions of the Civil Code Landlord informs Tenant of the following:

California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the Tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the Tenants has continuously occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate a tenancy. See Section 1946.2 of the Civil Code for more information.

3. Single Family Residential property (including a condominium and units in planned developments) that is alienable separate from the title to any other dwelling unit if the notice below is checked and delivered to the Tenant:

o Notice of Exemption: This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946 (e)(8) of the Civil Code AND the Owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.

1. Subject to certain provisions of Civil Code Section 1947.12 subdivision (b), an Owner of real property shall not increase the rental rate for that property more than 5 percent plus the percentage charge in the cost of living, or 10 percent, whichever is lower, of the lowest rental amount charged for that property at any time during the 12 months prior to the effective date of the increase.

2. If the same Tenant remains in occupancy over any 12-month period, the gross rental rate shall not be increased in more than two increments over that 12-month period.

3. For a new tenancy in which no Tenant from the prior tenancy remains, the Owner may establish the initial rate not subject to paragraph 1 of this section. Paragraph 1 of this section is only applicable to subsequent increases after the initial rental rate has been established.

· In late January 2022, the Parties signed a “Seller Response and Buyer Reply to Request for Repair No. 1,” which modified the purchase price to $7,450,000 and modified the [1-year] lease term to begin on March 1, 2022 [and end February 28, 2023]. (Ex 2 to Nouri Decl.)

· On January 11, 2023, the parties amended the escrow instructions, extending the lease term another year, increasing the monthly rent to $37,500, increasing the purchase price to $7,762,900, and extending escrow to a new closing date of January 30, 2024. (Fourticq Decl. at ¶ 8 and Ex. 3.)

· On January 10, 2024, the parties further extended the lease to July 31, 2024 and increased the monthly rent to $48,500 (Ex. 5 to Nouri Decl; Fourticq Decl. at ¶ 9 and Ex. 4.)

· On September 3, 2024, the parties entered into amended escrow instructions, extending the close of escrow and the rental term to October 31, 2024. That agreement also increased the monthly rent to $53,000 for the months of August and September, 2024 and $60,000 for October 2024 (Ex. 6 to Nouri Decl; Fourticq Decl. at ¶ 10 and Ex. 5.)

Defendants contend that the January 10, 2024 lease extension from January 30, 2024 to July 31, 2024 that increased the rent from $37,500 to $48,500, represented a 29.33% increase in rent, and the ultimate $60,000 rent for October 2024 represented a 70% increase over the original $35,000 rent in just two years, violating both LARSO and the TPA.

Defendants argue that LARSO caps the allowable rent increase limits, because the Verified Complaint indicates the Property is not subject to the Tenant Protection Act of 2019 (which includes Civil Code section 1947.12) because it is subject to the City of Los Angeles Rent Stabilization Ordinance of the City of Los Angeles 4/21/1979 (“LARSO”). (See Complaint ¶ 7a.)

However, LARSO supersedes the TPA only for leases entered into on or before September 1, 2019. (Civ. Code, § 1946.2, subd. (i)(1)(A).) Here, the original lease was dated December 6, 2021, and the actual tenancy began in March 2022. Indeed, Plaintiff concedes in Opposition that the statement on the Verified Complaint is erroneous. (Opp. at p. 11.) Thus, LARSO does not supersede the TPA.

“When the Legislature intends for a statute to prevail over all contrary law, it typically signals this intent by using phrases like ‘notwithstanding any other law’ or ‘notwithstanding other provisions of law’ and “a provision that includes such a phrase controls over other provisions of law regarding the same subject.” (Young v. Midland Funding LLC (2023) 91 Cal.App.5th 63, 94.) Indeed, Costa-Hawkins has been expressly held to preempt City housing ordnances. (See Palmer/Sixth Street Properties, L.P. v. City of Los Angeles (2009) 175 Cal.App.4th 1396, 1404.)

Thus, Costra-Hawkins supersedes the rent increase limitations of LARSO and the TPA for alienable, separate residential properties.

Defendants also argue that the rent increases were invalid because they ran afoul of the notice requirements of Civil Code sections 827 and 1947.12.

(b)(1) In all leases of a residential dwelling, […] from week to week, month to month, or other period less than a month, the landlord may increase the rent provided in the lease or rental agreement, upon giving written notice to the tenant, as follows, by either of the following procedures:

(B) By serving a copy by mail under the procedures prescribed in Section 1013 of the Code of Civil Procedure.

(3)(A) If the proposed rent increase for that tenant is greater than 10 percent of the rental amount charged to that tenant at any time during the 12 months before the effective date of the increase, either in and of itself or when combined with any other rent increases for the 12 months before the effective date of the increase, the notice shall be delivered at least 90 days before the effective date of the increase, and subject to Section 1013 of the Code of Civil Procedure if served by mail.

(B) If the proposed rent increase for that tenant is caused by a change in a tenant’s income or family composition as determined by a recertification required by statute or regulation, the notice shall be delivered at least 30 days before the effective date of the increase as described in paragraph (2), and subparagraph (A) of this paragraph shall not apply.

Although Contra-Hawkins does not necessarily preempt the notice provisions of Section 827 (see Civ. Code, § 1954.52, subd. (a)(3)(B)(i) [“This paragraph does not apply to […] A dwelling or unit where the preceding tenancy […] has been terminated upon a change in the terms of the tenancy noticed pursuant to Section 827”]), those provisions, on their face, apply only to leases of a period one month or less. Here, none of the leases were for a term of one month or less. As such, Section 827’s notice provisions do not apply.

(5) Residential real property that is alienable separate from the title to any other dwelling unit, including a mobilehome, provided that both of the following apply:

(i) A real estate investment trust, as defined in Section 856 of the Internal Revenue Code.

(iii) A limited liability company in which at least one member is a corporation.

(B) (i) The tenants have been provided written notice that the residential real property is exempt from this section using the following statement:

Defendants argue that Plaintiff cannot rely on the TPA’s single family dwelling exemption to rent increase caps because Plaintiff did not check that box on the original lease, and therefore did not provide Defendants with requisite notice, as the TPA requires for the exemption to apply. But, as discussed above, Costra-Hawkins supersedes the TPA. As such, Plaintiff was free to increase the rent consistent with Costra-Hawkins, not because Plaintiff satisfied the single-family dwelling exemption of the TPA.

Notwithstanding, Defendants argue that Costa-Hawkins does not preempt the TPA’s notice requirement, because Costa-Hawkins also provides, “(c) Nothing in this section shall be construed to affect the authority of a public entity that may otherwise exist to regulate or monitor the basis for eviction.” (Civ. Code, § 1954.52, subd. (a)(3)(A).) “Public Entity” includes the state, county, and city. (Gov. Code., § 811.2.)

But the notice requirement at issue here is notice to the tenant that the tenancy is exempt from the TPA’s rent limit increase limitations, due to the fact that the unit is a single-family dwelling and the landlord meets certain criteria. By contrast, Costra-Hawkins freely permits rent increases on tenancies of separately alienable residential properties, “[n]otwithstanding any other provision of law.” Thus, pursuant to Costra-Hawkins, Plaintiff may freely increase Defendants’ rent, regardless of whether Plaintiff also satisfied the exemption requirements under the TPA.

Therefore, the Court finds Defendants have not satisfied their initial burdens of production and persuasion to demonstrate that the outstanding rent stated on the 3-day Notice to Pay or Quit was the overstated byproduct of improper rent increases.

Therefore, having found Defendants have not met their initial burdens of production and persuasion to demonstrate that the amount of back-owed rent stated on the 3-Day Notice to Pay or Quit is the overstated byproduct of illegal rent increases, the Court denies Defendants’ motion for summary judgment.

Defendants shall provide notice of the Court’s ruling and file the notice with a proof of service regarding the same.

[2] Defendants’ signatures are dated December 16, 2021 and Plaintiff’s signatures are dated December 21, 2021.

[3] The Residential Lease Agreement is dated December 6, 2021, but Defendants’ signatures are dated December 16, 2021 and Plaintiff’s signatures are dated December 21, 2021.

DEPARTMENT	207
HEARING DATE	February 7, 2025
CASE NUMBER	24SMCV05564
MOTION	Motion for Summary Judgment
MOVING PARTIES	Defendants Ramin Nouri and Bahareh Cheshmaghil
OPPOSING PARTY	Plaintiff Michael Fourticq, Trustee of the Michael and Teresa FOurticq Family Trust