Judge Stephen I. Goorvitch, Case Number: 23STCP00072, Date: 2024-06-07 Tentative Ruling

Judge: Stephen I. Goorvitch, Case: 23STCP00072, Date: 2024-06-07 Tentative Ruling

Petitioner Michael Millman (“Petitioner”) owns two rental properties: (1) A five-unit residential rental property located at 2462 Coolidge Avenue in Los Angeles, California; and

(2) A four-unit residential rental property located at 2466 Coolidge Avenue in Los Angeles, California. These properties are subject to the City’s Rent Stabilization Ordinance (the “RSO”). Petitioner applied for a temporary, monthly rent increase under the RSO for seismic retrofit work. The Los Angeles Housing Department, Rent Stabilization Division (the “Department”) approved the increase for six units and denied the increase for three units. Now, Petitioner seeks a writ of administrative mandate directing Respondent City of Los Angeles (“Respondent” or the “City”) to set aside that decision. The hearing officer applied the regulations governing “primary renovation work” to Petitioner’s seismic retrofit work without any explanation, i.e., there is no apparent legal basis to do so, and the hearing officer did not make any factual finding that Petitioner’s seismic retrofit work falls within the definition of “primary renovation work.” Therefore, the court grants the writ and remands the case for reconsideration in light of this court’s opinion and judgment, per Code of Civil Procedure section 1094.5(f).

In 2015 and 2016, the City adopted Ordinances 183893, 184080, and 184081 (the “Ordinances”) to establish mandatory standards for earthquake hazard reduction in existing wood-frame buildings with soft, weak, or open-front walls (hereafter “seismic retrofit work”). (AR 64-96.) These Ordinances have been codified in the Los Angeles Municipal Code (“LAMC”) and authorize the Rent Adjustment Commission (“RAC”) to promulgate regulations to establish the health, safety, and habitability standards which shall be followed during seismic retrofit work. Such regulations shall include, among other things, “provisions regarding advanced notification.” (AR 91.) Pursuant to this authority, RAC promulgated regulations effective January 23, 2017, governing seismic retrofit work. (See RJN, Exh. 2.) The City’s LAMC and regulations authorize the Department to grant rental adjustments for rental units located in residential buildings upon which mandatory seismic retrofit work is performed. (AR 88; RJN, Exh. 1 at 5; RJN, Exh. 2 at 11.)

Petitioner was notified that his properties fell under the Ordinances and required mandatory Seismic Retrofit Work. (See e.g. AR 537.) Petitioner prepared a Tenant Habitability Plan (“THP”), which was accepted by the Department on or about February 7, 2018. (AR 132.) The THP identified five tenants, their unit numbers, their current rent, and the date of last rent increases. (AR 134.) The administrative record also includes documents titled “Notice of Seismic Retrofit Work” and that are addressed to the five tenants. (AR 138-149.) Petitioner performed the mandatory seismic retrofit work, and the City issued a certificate of compliance for such work on July 16, 2020. (AR 179.)

On October 1, 2020, Petitioner submitted an application for cost recovery for seismic retrofit work and claimed a total cost of $39,479.65. Originally, the Department approved the application for five out of the nine total units because only five units were included in the THP. After further review of additional documentation submitted, the Department revised its determination to conclude that six out of nine units are eligible for a cost recovery surcharge. The Department approved a total cost of $39,479.65 for seismic retrofit work and a per unit monthly rent increase of $21.16 for 120 months for six out of the nine units at the Property. (See AR 437-438; see also AR 840-855.)

Petitioner appealed the Department’s determination regarding cost recovery to a General Manager Hearing Officer (“GMHO”). The record contains two GHMO decisions. In the First GMHO Decision, hearing officer Brent Rosenbaum upheld the Department’s determination to deny cost recovery on the grounds that the “Rent Registry” for the Property had not been completed for the years 2019-2022. (See AR 685-693.) Petitioner subsequently corrected the rent registration issue. (See Oppo. 5:3-17; see also AR 265-379 and 434.) The First GMHO Decision is not at issue in this writ proceeding.

After correcting the rent registration issue, Petitioner filed a second hearing request and an evidentiary hearing on his appeal was held before hearing officer Angela Shaw (“Hearing Officer”) on May 30, 2023. The hearing officer upheld the Department’s determination to approve a total cost of $39,479.65 for seismic retrofit work and a per unit monthly rent increase of $21.16 for 120 months for six out of the nine units at the Property. (AR 439.) The hearing officer interpreted the Ordinances and RAC regulations governing “Primary Renovation Work” to prohibit the imposition of any rent increase, including for Seismic Retrofit Work, for residential units for which the initial rent was established after the date the THP for the Property was accepted by the Department. (AR 437-439.) Because the initial rents for three units were established after the date the THP was accepted, Petitioner was not entitled to a rental increase for seismic retrofit costs for those three units. (Ibid.)

Respondent requests judicial notice of the following documents: (1) excerpts from City’s Rent Stabilization Ordinance (“RSO”), Los Angeles Municipal Code (“LAMC”) § 151.07; (2) Department’s Rent Adjustment Commission Regulations 720.00 to 720.03, effective January 23, 2017; (3) excerpts from the City’s Rent Stabilization Ordinance, LAMC § 151.05; (4) LAMC § 91.9301, Ordinance No. 183,893; and (5) Excerpts from the City’s tenant habitability program, LAMC § 152.00 et. seq. Petitioner objects to the court doing so, having filed a motion in limine on this issue.

The court overrules Petitioner’s objections, denies Petitioner’s motion in limine on this issue, and grants Respondent’s request for judicial notice, per Evidence Code section 452(b) and (c). The matters subject to judicial notice constitute the statutory and regulatory laws of the City of Los Angeles. As a landlord operating a residential property within the City, Petitioner is on notice of the City’s laws and regulations that apply to his property. Indeed, those parts of the request for judicial notice that constitute Ordinances 183893, 184080, and 184081 are part of the certified administrative record and some parts of the Ordinances are included with Petitioner’s opening brief. (See AR 64-96 and Opening Brief Exh. 1.) For all of these reasons, Petitioner fails to show that the matters for which judicial notice is requested were “hidden and concealed” from him.

On November 30, 2023, Petitioner filed and served a demand that Respondent produce documents, as well as a witness, at the hearing on this petition for writ of mandate. Specifically, Petitioner seeks to compel the testimony of Dolly Li, the Department’s representative at the administrative hearing. “As a general rule, a hearing on a writ of administrative mandamus is conducted solely on the record of the proceeding before the administrative agency.” (Richardson v. City and County of San Francisco (2013) 214 Cal.App.4th 671, 702.) Petitioner has not complied with Code of Civil Procedure section 1094.5(e) to present oral or documentary evidence at the hearing. Further, Petitioner has not filed a request to present oral testimony pursuant to California Rules of Court, Rule 3.1306. Putting that aside, Petitioner establishes no good cause to stray from the administrative record in this case.

Petitioner submitted evidence with his opening brief and reply brief, specifically, his declaration, the declaration of a tenant, and various other exhibits, some of which are not part of the certified administrative record. In order to consider evidence outside the administrative record, Petitioner was required to file a noticed motion to augment the record, which he failed to do. Putting that aside, Petitioner does not satisfy the standard for consideration of evidence outside the administrative record, because he does not demonstrate that this evidence could not have been produced or was improperly excluded at the administrative hearing. (See Code Civ. Proc. § 1094.5(e).)

The remainder of Petitioner’s motion in limine seeks to exclude unspecified evidence based upon purported discovery abuses by Respondent. In this case, the court relied exclusively on the administrative record, which included many of the relevant regulations and the hearing officer’s decision. Regardless, Petitioner never sought leave to conduct discovery or sought to compel any discovery in advance of trial, and he has not provided copies of the relevant discovery requests or responses. Nor does his motion identify what he seeks to exclude. Accordingly, there is no basis to find that Respondent engaged in a misuse of the discovery process that would justify any sanction. (See, e.g., Code Civ. Proc. § 2023.030.)

Under Code of Civil Procedure section 1094.5, the pertinent issues are whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the agency has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (Code Civ. Proc. § 1094.5(b).)[1]

An agency is presumed to have regularly performed its official duties. (Evid. Code § 664.) “[A] trial court must afford a strong presumption of correctness concerning the administrative findings.” (Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.) Significantly, the petitioner seeking administrative mandamus has the burden of proof and must cite to the administrative record to support its contentions. (See Alford v. Pierno (1972) 27 Cal.App.3d 682, 691.) A reviewing court “will not act as counsel for either party to an appeal and will not assume the task of initiating and prosecuting a search of the record for any purpose of discovering errors not pointed out in the briefs.” (Fox v. Erickson (1950) 99 Cal.App.2d 740, 742.) When an appellant challenges “the sufficiency of the evidence, all material evidence on the point must be set forth and not merely [its] own evidence.” (Toigo v. Town of Ross (1998) 70 Cal.App.4th 309, 317.) Substantial evidence is relevant evidence that a reasonable mind might accept as adequate to support a conclusion (California Youth Authority v. State Personnel Board (2002) 104 Cal. App. 4th 575, 584-85), or evidence of ponderable legal significance which is reasonable in nature, credible and of solid value. (Mohilef v. Janovici (1996) 51 Cal. App. 4th 267, 305 n. 28.) Under the substantial evidence test, “[c]ourts may reverse an [administrative] decision only if, based on the evidence …, a reasonable person could not reach the conclusion reached by the agency.” (Sierra Club v. California Coastal Com. (1993) 12 Cal.App.4th 602, 610.)

However, the court conducts a de novo review with respect to certain issues. The court exercises “independent judgment” in addressing questions of law. (See Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.) “Interpretation of a statute or regulation is a question of law subject to independent review.” (Ibid.; see also State Farm Mut. Auto. Ins. Co. v. Quackenbush (1999) 77 Cal.App.4th 65, 77.)

The rules governing statutory construction are well settled. We begin with the fundamental premise that the objective of statutory interpretation is to ascertain and effectuate legislative intent. To determine legislative intent, we turn first to the words of the statute, giving them their usual and ordinary meaning. When the language of a statute is clear, we need go no further. However, when the language is susceptible of more than one reasonable interpretation, we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part.

(Nolan v. City of Anaheim (2004) 33 Cal.4th 335, 340, citations omitted.) To the extent “purely legal issues involve the interpretation of a statute an administrative agency is responsible for enforcing, [the court] exercise[s] [its] independent judgment, ‘taking into account and respecting the agency’s interpretation of its meaning.’” (Housing Partners I, Inc. v. Duncan (2012) 206 Cal.App.4th 1335, 1343; see also Yamaha Corp. of America v. State Bd. Of Equalization (1998) 19 Cal.4th 1, 11.) Similarly, “[a] challenge to the procedural fairness of the administrative hearing is reviewed de novo on appeal because the ultimate determination of procedural fairness amounts to a question of law.” (Nasha L.L.C. v. City of Los Angeles (2004) 125 Cal.App.4th 470, 482.)

There is no dispute that, per Los Angeles Municipal Code section 151.07(A)(1)(d), a landlord undertaking seismic retrofit work is entitled to “a temporary monthly rent surcharge” that shall be 50% of the cost amortized over 120 months. Pursuant to section 151.07(A)(8), the Rent Adjustment Commission implemented sections 721.00, et seq. of the “Regulations and Guidelines.” In deciding Petitioner’s challenge, the hearing officer did rely on these regulations. Instead, the hearing officer found as follows:

The issue under consideration is the landlord’s eligibility for a Primary Renovation Work rent increase based on the Commission’s Regulations. The Seismic Retrofit Program follows the Rent Adjustment Commission (RAC) Regulations and Guidelines for Primary Renovation Cost Recovery.

(AR 436.) The hearing officer then relied on RAC 223.04, which is titled “Permanent Rent Increase” and states as follows:

Any cost recovery allowed under these regulations shall constitute a permanent monthly increase in rent. However, no rent increase may be imposed on a unit where the initial rent was established after the date the Tenant Habitability Plan applicable to a given rent adjustment application was accepted by the Department.

Petitioner argues that the hearing officer prejudicially abused her discretion because section 151.07(A)(1)(d) does not require a THP as a condition of receiving reimbursement. Petitioner also argues that the hearing officer erred in applying RAC 223.04 to seismic retrofit work because seismic retrofit work is subject to a temporary rent increase, and RAC 223.04 relates to permanent monthly increases.

Neither the hearing officer nor Respondent’s counsel explains the legal or factual basis for the hearing officer’s conclusion that RAC 223.04 applies to seismic retrofit work. The court found no reference in RAC 720.00, et seq. incorporating RAC 223.04 or authorizing the Department to rely on that provision in assessing eligibility for reimbursement under Los Angeles Municipal Code section 151.07(A)(1)(d). The hearing officer may have relied on a factual determination that RAC 220.00, et seq. governs seismic retrofit work based upon the nature of the work. These regulations apply to “primary renovation work and related work.” (See AR 437, citing RAC 222.00.) However, there is no explanation in the hearing officer’s decision why Petitioner’s seismic retrofit work would fall within the scope of RAC 220.00, et seq. Nor has the City requested that the court take judicial notice of RAC 220.00, et seq., which prevents the court from reviewing the evidence in the administrative record to see whether it falls within the appropriate definition of “primary renovation work.” Regardless, even if an argument could be made that Petitioner’s seismic retrofit work constituted “primary renovation work and related work,” it is not the court’s function to search the administrative record and determine whether substantial evidence could support administrative findings that were never made.

Based upon the foregoing, the court finds that the hearing officer erred. A writ of administrative mandamus will not be issued unless the court is persuaded that an abuse of discretion was prejudicial. (See Thornbrough v. Western Placer Unified School Dist. (2013) 223 Cal.App.4th 169, 200.) However, in analyzing the issue of prejudice, the court must also consider the adequacy of the administrative findings. In Topanga Assn. for a Scenic Community v. County of Los Angeles, (1974) 11 Cal. 3d 506, 515, the Supreme Court held that “implicit in [Code of Civil Procedure] section 1094.5 is a requirement that the agency which renders the challenged decision must set forth findings to bridge the analytic gap between the raw evidence and ultimate decision or order.” This is critical.

[A]mong other functions, … findings enable the reviewing court to trace and examine the agency’s mode of analysis.… Absent such roadsigns, a reviewing court would be forced into unguided and resource-consuming explorations; it would have to grope through the record to determine whether some combination of credible evidentiary items which supported some line of factual and legal conclusions supported the ultimate order or decision of the agency….

(Id. at 516-517, citations and footnotes omitted; see also West Chandler Blvd. Neighborhood Ass’n vs. City of Los Angeles (2011) 198 Cal.App.4th 1506, 1521-22.) Although administrative findings are entitled to considerable latitude, “mere conclusory findings without reference to the record are inadequate.” (West Chandler Blvd. Neighborhood Ass’n, supra, 198 Cal.App.4th at 1521-22.)

In the instant case, the hearing officer’s administrative findings were based predominately on the RAC regulations governing primary renovation work. The Decision cites no legal basis for applying these regulations to seismic retrofit work, and the court’s review of the regulations identified none. To the extent the hearing officer relied on a determination that Petitioner’s work falls within the scope of “primary renovation work,” there is no factual finding on this issue. Respondent’s counsel does not address this issue sufficiently to defeat the petition. Because the matter must be remanded for further proceedings, the court does not reach the parties’ remaining contentions at this time.

3. The court finds that the hearing officer erred when she defined the issue as “the landlord’s eligibility for a Primary Renovation Work rent increase” and applied RAC Regulations 223.01, et seq. to Petitioner’s appeal.

4. Similarly, the court finds that the hearing officer did not provide a sufficient legal or factual basis for her conclusion that “[t]he Seismic Retrofit Program follows the Rent Adjustment Commission (RAC) Regulations and Guidelines for Primary Renovation Cost Recovery.”

5. The court finds that the hearing officer made insufficient findings pursuant to Topanga Assn. for a Scenic Community v. County of Los Angeles, (1974) 11 Cal. 3d 506 for denying the cost recovery as to the three rental units at issue.

6. The court remands the case for reconsideration in light of this court’s opinion and judgment, per Code of Civil Procedure section 1094.5(f).

[1] The administrative decision at issue does not affect a fundamental vested right. (See Northern Inyo Hosp. v. Fair Emp. Practice Com. (1974) 38 Cal.App.3d 14, 23 [“[T]here is no vested right to conduct a business free of reasonable governmental rules and regulations”].) Accordingly, the court applies the substantial evidence test to the administrative findings.