Lyles v. Sangadeo-Patel , 225 Cal. App. 4th 759 ( 2014 )

Filed 4/17/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
LAKEESHA LYLES, B247929
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC487275)
v.
DENISE SANGADEO-PATEL, as Trustee,
etc., et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los Angeles County, Suzanne
G. Bruguera, Judge. Affirmed.
Law Offices of Morse Mehrban, Morse Mehrban for Plaintiff and Appellant.
Laurence H. Lishner for Defendants and Respondents.
INTRODUCTION
Plaintiff and appellant Lakeesha Lyles, tenant of a rent-controlled apartment,
brought an action against her landlords, defendants and respondents Denise Sangadeo-
Patel individually and Denise Sangadeo-Patel in her capacity as trustee of the Denise
Sangadeo-Patel Trust. Plaintiff alleged various causes of action seeking damages and
restitution premised on defendants’ alleged failure to serve her with a copy of a valid
rental unit registration statement or annual rental unit registration renewal statement from
the Los Angeles Housing and Community Investment Department (Department), as
required by Los Angeles Municipal Code (LAMC) section 151.05, subsection A. That
provision is part of a rent control law. The trial court granted defendants’ demurrer to
plaintiff’s first amended complaint. Plaintiff elected not to amend the first amended
complaint, stipulated that the trial court could enter judgment, and appealed from that
judgment. We do not interpret the ordinance on which plaintiff’s claims depend to
provide for the remedies sought by plaintiff. We affirm.
BACKGROUND
In her first amended complaint, plaintiff asserted causes of action for violation of
the Los Angeles Rent Stabilization Ordinance (LARSO), violation of Civil Code section
1947.11 (section 1947.11), unjust enrichment, and violation of Business and Professions
Code section 17200 (section 17200) (the unfair competition law). Lyles based each cause
of action on the allegations that from October 1, 2003, she had been the tenant and lessee
of, and defendants had been the owners and lessors of, a unit in a four unit building on
Garthwaite Avenue in Los Angeles; during the term of her occupancy, defendants failed
to serve her with a copy of a valid rental unit registration statement or annual rental unit
registration renewal statement from the Department as required by LAMC section
151.05, subsection A.; from October 1, 2003, defendants had collected from her at least
$77,709 in rent; on June 6, 2012, she served defendants with a demand under section
1947.11 for a refund of that $77,709 in rent; and defendants refused to comply with her
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demand. Plaintiff sought restitution in the amount of $77,709, and, as provided by law,
treble damages, in the amount of $233,127.
Defendants demurred to plaintiff’s first amended complaint on the ground that it
did not state facts sufficient to state a cause of action.1 The trial court sustained
defendants’ demurrer and granted plaintiff five days to amend her first amended
complaint. Plaintiff declined to amend, and she and defendant stipulated, pursuant to
Code of Civil Procedure section 581, subdivision (f)(2), that the trial court could dismiss
her action and enter judgment for defendants.
DISCUSSION
A. Standard of Review
“In reviewing the sufficiency of a complaint against a general demurrer, we are
guided by long-settled rules. ‘We treat the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or law.
[Citation.] We also consider matters which may be judicially noticed.’ [Citation.]
Further, we give the complaint a reasonable interpretation, reading it as a whole and its
parts in their context. [Citation.] When a demurrer is sustained, we determine whether
the complaint states facts sufficient to constitute a cause of action. [Citation.] And when
it is sustained without leave to amend, we decide whether there is a reasonable possibility
that the defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we affirm.
[Citations.]” (Blank v. Kirwan (1985) 39 Cal. 3d 311, 318; see McCall v. PacifiCare of
1 Defendants filed their demurrer to plaintiff’s original complaint. Plaintiff
subsequently filed her first amended complaint, which differed from the original
complaint only by the addition of the cause of action for violation of section 17200
(which cause of action was based solely on the allegations stated in the original
complaint). The parties stipulated that the trial court could treat the demurrer to the
original complaint as a demurrer to the first amended complaint.
3
Cal., Inc. (2001) 25 Cal. 4th 412, 415 [“we examine the complaint de novo to determine
whether it alleges facts sufficient to state a cause of action under any legal theory, such
facts being assumed true for this purpose”]; see People Ex. Rel. Kennedy v. Beaumont
Investment, Ltd. (2003) 111 Cal. App. 4th 102, 113 (Beaumont) [“Interpretation of the
municipal rent control ordinance presents a question of law for our independent
review”].)
When, as here, a demurrer to a complaint is sustained with leave to amend and the
plaintiff declines to amend the complaint, the plaintiff may challenge the trial court’s
ruling on appeal from the subsequent dismissal of the action. (Alfaro v. Community
Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal. App. 4th 1356,
1372.) On appeal, we assume the complaint contained the strongest statement of the
plaintiff’s cause or causes of action. (Ibid.) Thus, unlike when a demurrer is sustained
without leave to amend, we determine only whether the plaintiff stated a cause of action,
and not whether plaintiff might be able to do so. (Reynolds v. Bement (2005) 36 Cal. 4th
1075, 1091, abrogated on another ground in Martinez v. Combs (2010) 49 Cal. 4th 35, 62-
66.)
B. Rules of Interpretation
We interpret ordinances using the same rules of interpretation applicable to
statutes. (Beaumont, supra, 111 Cal.App.4th at p. 113.) In interpreting a statute, words
“should be given the meaning they bear in ordinary use. [Citations.] If the language is
clear and unambiguous there is no need for construction, nor is it necessary to resort to
indicia of the intent of the Legislature . . . . [Citations.]” (Lungren v. Deukmejian (1988)
45 Cal. 3d 727, 735.) “Courts do not examine statutory language ‘in isolation, but in the
context of the statutory framework as a whole in order to determine its scope and purpose
and to harmonize the various parts of the enactment.’ [Citation.] We are required to
construe a provision ‘with reference to the entire scheme of law of which it is part so that
the whole may be harmonized and retain effectiveness’ [citation] and to avoid an
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interpretation that renders language a nullity [citation].” (May v. City of Milpitas (2013)
217 Cal. App. 4th 1307, 1336.)
Our Supreme Court has said, “Where the interpretation claimed leads to injustice,
oppression or to absurd consequences, the general terms used in a statute will be limited
in their scope so as to avoid such a result.” (People v. Ventura Refining Co. (1928) 204
Cal. 286, 290.) The court has added that it is “‘presumed the Legislature intended
reasonable results consistent with its expressed purpose, not absurd consequences.’”
(Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal. 4th 220,
235.) Even “the literal meaning of the words may be disregarded to avoid absurd
results.” (California School Employees Assn. v. Governing Bd. Of South Orange County
Community College Dist. (2004) 124 Cal. App. 4th 574, 588.)
C. Application of Relevant Laws and Legal Principles
1. The LARSO2
The LARSO provides for the maximum rent that can be charged tenants. It is a
so-called rent control ordinance.3 LAMC section 151.05, subsection A. states in relevant
part that “no landlord shall demand or accept rent for a rental unit without first serving a
copy of a valid [rental unit] registration or annual [rental unit] registration renewal
statement on the tenant of that rental unit.” Under LAMC section 151.11, subsection B.,
a tenant may withhold rent otherwise lawfully due and owing if the tenant’s landlord has
failed to comply with LAMC section 151.05, subsection A. by not serving the tenant with
a copy of a valid rental unit registration or annual rental unit registration renewal
statement. Once the landlord complies with LAMC section 151.05, subsection A.,
however, the tenant becomes obligated to pay the current rent and any back rent withheld
pursuant to LAMC section 151.11, subsection B.
2 LAMC sections 151.00 through 151.30.
3 See Santa Monica Beach, Ltd. v. Superior Court (1999) 19 Cal. 4th 952, 957.)
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LAMC section 151.10, subsection A. provides a remedy when a landlord has
charged excessive rent in violation of the LARSO. LAMC section 151.10, subsection A.
provides, “Any person who demands, accepts or retains any payment of rent in excess of
the maximum rent or maximum adjusted rent in violation of the provisions of this
chapter, or any regulations or orders promulgated hereunder, shall be liable in a civil
action to the person from whom such payment is demanded, accepted or retained for
damages of three times the amount by which the payment or payments demanded,
accepted or retained exceed the maximum rent or maximum adjusted rent which could be
lawfully demanded, accepted or retained together with reasonable attorneys’ fees and
costs as determined by the court.”
Plaintiff argues that the language of LAMC section 151.05, subsection A. is not
ambiguous or open to interpretation. She contends that the unambiguous meaning of the
section is that “[u]nless a landlord serves the referenced document on the tenant, he is not
entitled to any rent”—that is, the “maximum rent” the landlord may charge is zero.
Because, under this interpretation, defendants were not permitted to charge her any rent,
plaintiff contends she is entitled to damages under LAMC section 151.10, subsection A.
of three times the rent she paid—$233,127. We do not agree with plaintiff’s
interpretation of LAMC section 151.05, subsection A.
The language in LAMC section 151.05, subsection A. that a landlord may not
“demand or accept rent for a rental unit without first serving a copy of a valid [rental
unit] registration or annual [rental unit] registration renewal statement on the tenant of
that rental unit” does not concern a landlord’s entitlement to rent. It does not disentitle a
landlord to rent for a period during which the landlord is not in compliance with LAMC
section 151.05, subsection A. Instead, it concerns the timing of a landlord’s “demand” or
“acceptance” of rent to which the landlord remains entitled.
LAMC section 151.05, subsection A. prohibits a landlord from “demanding” or
“accepting” rent to which the landlord is otherwise entitled until the landlord serves the
tenant with a copy of a valid rental unit registration or annual rental unit registration
renewal statement. LAMC section 151.11, subsection B. makes this point clear.
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Subsection B. of LAMC section 151.11 permits a tenant to “withhold the payment of any
rent otherwise lawfully due and owing” if the tenant’s landlord has failed to comply with
LAMC section 151.05, subsection A. by not serving the tenant with copy of a valid rental
unit registration or annual rental unit registration renewal statement. Once such a
noncompliant landlord complies with LAMC section 151.05, subsection A., however, the
tenant becomes obligated to pay the current rent and any back rent withheld pursuant to
LAMC section 151.11, subsection B. Thus, the tenant is permitted to withhold rent to
which the landlord is otherwise entitled until the landlord complies with LAMC section
151.05, subsection A., at which time the tenant must pay the landlord all accrued rent.
The penalty provision of LAMC section 151.10, subsection A. applies only when a
landlord “demands, accepts or retains any payment of rent in excess of the maximum rent
. . . in violation of the provisions of this chapter.” The maximum rent is that allowed by
the rent control provisions of the LARSO. Defendants may have violated the ordinance
by accepting the rent at a time when the documents had not been served. But that does
not mean that defendants were not ultimately entitled to that rent.
Plaintiff argues that Carter v. Cohen (2010) 188 Cal. App. 4th 1038 (Carter)
supports her claim that defendants were not entitled to rent for the period during which
they were not in compliance with LAMC section 151.05, subsection A. Plaintiff states
that, like her, the tenant plaintiff in Carter “sued the landlord defendant to recover the
rent she had paid him because she was never served a copy of a valid registration or
annual registration renewal statement for the unit, in violation of Section 151.05(A).”
Plaintiff contends that “Carter answered the question posed by [defendants’] demurrer,
i.e., what is the ‘maximum rent’ or ‘maximum adjusted rent’ recoverable by the landlord
if she fails to comply with Section 151.05(A)? Following the explicit language of
Section 151.05(A), the court held that, if a landlord violates the subdivision, ‘the baseline
maximum rent is $0, for purposes of determining the “maximum adjusted rent.”’
(Carter, supra, 188 Cal.App.4th at p. 1051, fn. 7.)”
Plaintiff mischaracterizes the nature of the dispute in Carter, supra, 188
Cal. App. 4th 1038 and its holding. The Court of Appeal in Carter did not consider
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whether a tenant may recover any or all of the rent paid for a period during which the
tenant’s landlord was not in compliance with LAMC section 151.05, subsection A. due to
the landlord’s failure to serve the tenant with a copy of a valid rental unit registration or
annual rental unit registration renewal statement. The court expressly limited its holding
to whether the tenant was entitled to recover the amount of rent she paid in excess of the
rent permitted under the LARSO, even though the unit she rented lacked a certificate of
occupancy and was not registered under the LARSO. (Carter, supra, 188 Cal.App.4th at
pp. 1046-1047.) The court held that the provisions of the LARSO applied to the unit the
tenant rented, and that the tenant could recover the excess rent payments. (Ibid.)
In footnote 7 of its opinion in Carter, supra, 188 Cal. App. 4th 1038, the Court of
Appeal did not, contrary to plaintiff’s assertion, address LAMC section 151.05,
subsection A., and did not hold that if a landlord violated that subsection “‘the baseline
maximum rent is $0, for purposes of determining the “maximum adjusted rent.”’”
Instead, the language that plaintiff quotes incompletely concerned the landlord’s
argument that because the LARSO “defines ‘maximum rent’ in terms of ‘legal’ rent, the
[LARSO] does not bar landlords from collecting rent arising from unlawful agreements
of the sort present here.” (Carter, supra, 188 Cal.App.4th at p. 1051, fn. 7.) The court
observed that when, as in the case before it, “there was no ‘legal’ rent, the sole
implication of the [LARSO’s] definition of ‘maximum rent’ appears to be that the
baseline maximum rent is $0, for purposes of determining the ‘maximum adjusted rent.’
[The landlord’s] argument thus suggests that his liability for excessive rent payments was
potentially greater than the trial court determined it to be.” (Ibid.) The court did not
reach the issue suggested by the landlord’s argument, however, because the tenant had
not challenged the trial court’s ruling concerning the amount of the “maximum rent.”
Instead, the court concluded “only that nothing in the definition of ‘maximum rent’
exempted [the landlord] from the [LARSO’s] prohibition regarding the collection of
excess rent.” (Ibid.)
The idea that the failure of the landlord to serve a copy of a registration statement
upon the tenant would lead to a forfeiture of all rent, thereby allowing the tenant to reside
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rent free in a unit and recover a treble damage penalty, would be an absurd and
unreasonable consequence. The ordinance is part of a rent control provision. If a
landlord violates the rent control law by charging excessive rent, then sanctions make
sense. But the City Council could not have meant to impose such severe sanctions for
failure to serve annually a registration statement. Until the registration statement is sent,
allowing the withholding of rent appears to be the incentive provided by the City
Council.
2. Section 1947.11
Section 1947.11, subdivision (a) provides as follows: “In any city, county, or city
and county which administers a system of controls on the price at which residential rental
units may be offered for rent or lease and which requires the registration of rents, upon
the establishment of a certified rent level, any owner who charges rent to a tenant in
excess of the certified lawful rent ceiling shall refund the excess rent to the tenant upon
demand. If the owner refuses to refund the excess rent and if a court determines that the
owner willfully or intentionally charged the tenant rent in excess of the certified lawful
rent ceiling, the court shall award the tenant a judgment for the excess amount of rent and
may treble that amount. The prevailing party shall be awarded attorney’s fees and court
costs.”
Plaintiff contends that her cause of action for violation of section 1947.11 stated
facts sufficient to constitute a cause of action because defendants were not entitled to
collect any rent from her due to their failure to comply with LAMC section 151.05,
subsection A. Thus, plaintiff argues, under section 1947.11, she was entitled, at a
minimum, to the return of all rent she paid. Because, as we held above, defendants’
noncompliance with LAMC section 151.05, subsection A. did not disentitle defendants to
the rent they collected from plaintiff, defendants did not charge plaintiff rent “in excess
of the certified lawful rent ceiling.” Thus, plaintiff failed to state facts sufficient to
constitute a cause of action for violation of section 1947.11.
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3. Unjust Enrichment
“The elements for a claim of unjust enrichment are ‘receipt of a benefit and unjust
retention of the benefit at the expense of another.’ [Citation.] ‘The theory of unjust
enrichment requires one who acquires a benefit which may not justly be retained, to
return either the thing or its equivalent to the aggrieved party so as not to be unjustly
enriched.’ [Citation.]” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223
Cal. App. 4th 1105, 1132.)
Plaintiff contends that defendants were unjustly enriched by the rent they collected
from her because they were not entitled to collect any rent due to their failure to comply
with LAMC section 151.05, subsection A. As set forth above, plaintiff’s theory that
LAMC section 151.05, subsection A. disentitled defendants to rent for the period during
which they were not in compliance with the section fails. Accordingly, because
defendants remained entitled to the rent they collected, even though they were not in
compliance with LAMC section 151.05, subsection A., they did not receive a benefit at
plaintiff’s expense that they unjustly retained. Plaintiff failed to state facts sufficient to
constitute a cause of action for unjust enrichment. (Prakashpalan v. Engstrom, Lipscomb
& Lack, supra, 223 Cal.App.4th at p. 1132.)
4. Section 17200
Section 17200 defines “unfair competition” as “any unlawful, unfair or fraudulent
business act or practice and unfair, deceptive, untrue or misleading advertising and any
act prohibited by Chapter 1 (commencing with [Business and Professions] Section
17500) of Part 3 of Division 7 of the Business and Professions Code.” Generally, a
prevailing plaintiff in a section 17200 action is limited to injunctive relief and restitution.
(Zhang v. Superior Court (2013) 57 Cal. 4th 364, 369.) On appeal, plaintiff states that
“survival” of her section 17200 cause of action for unfair competition—i.e., whether her
cause of action stated facts sufficient to constitute a cause of action under her theory of a
section 17200 violation—“is dependent upon a finding that her remaining causes of
action are viable.” Because, as we held above, plaintiff failed to state facts sufficient to
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constitute her specific cause of action for a violation of the LARSO—or a violation of
section 1947.11,4 plaintiff, under her theory, failed to state facts sufficient to constitute a
cause of action for violation of section 17200. Moreover, plaintiff did not request an
injunction, and, because LAMC section 151.05, subsection A. does not disentitle a
landlord to rent for a period during which the landlord is not in compliance with LAMC
section 151.05, subsection A., plaintiff was not entitled to restitution, which is the
monetary remedy provided by section 17200. (See Zhang v. Superior Court, supra, 57
Cal.4th at p. 369.)
DISPOSITION
The judgment is affirmed. Defendants are awarded their costs on appeal.
CERTIFIED FOR PUBLICATION
MOSK, J.
We concur:
TURNER, P. J.
KRIEGLER, J.
4 Notwithstanding plaintiff’s statement that survival of her section 17200 depends
on the viability of her remaining causes of action—i.e., violation of the LARSO,
violation of section 1947.11, and unjust enrichment—her argument that she stated a valid
section 17200 cause of action does not rest on the existence of her unjust enrichment
cause of action.
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