Surreal Estate

Uncivil Civics

written by Justin A. Goodman

When basic civics no longer helps us, our civility can advance our cause.

We all learned basic civics in high school. The legislature writes the laws, the executive enacts them, and the judiciary interprets them. Each part checks and balances the others. San Francisco sees an over-excited need to regulate, so throw in another check of state preemption on local law. But at its basic level, the separation of powers maintains the rule of law to allow us to order our affairs—our investments, our habits, our hobbies, our daily lives—around the predictability and safety of our rights and protections.

Not every branch gets it right every time. (Depending on your politics or your luck in litigation, you may find the success rate rather low.) But on balance, our state and local governments have kept us safe and successful.

But of course, the pandemic revealed so many of our weaknesses—in safeguarding our essential employees, in having a comprehensive nationwide response to global health threats, in pivoting from home-sized to industrial toilet paper roles. As every branch, at all levels of government, moved quickly to react to the unprecedented, they had little time to consider the legal tenability of their actions.

Or maybe they knew exactly what they were doing. There’s no conspiracy theory here, merely our hardworking public servants trying to do the best they could for us, to uphold their oath in times that have tested our collective sanity. But the ends necessarily can’t justify the means, because there is no “right” law that would come about faster if not for all the pesky checks and balances. Instead, the checks and balances are the virtue, as they continuously create and course correct, trending toward ever “righter” laws. 

Unfortunately, while the pandemic accelerated the creation of new laws, it also suspended access to the courts to question them. And with the basic rules of checks and balances shifted, the game changes. The players can deploy a strategy that flouts checks and balances to achieve their goals without ever facing an answer to the question of whether the goals were proper in the first place. In a crisis, basic civics is decidedly less civil.

Of course, while this distortion is happening faster and more often right now, it’s nothing new. San Francisco addressed its famous distaste for the Ellis Act with a 2014 ordinance, sponsored by then-Supervisor David Campos, to require that landlords pay a 24-month “rental rate differential,” to subsidize displaced tenants facing market rents, as a condition of exercising their state law right to go out of business.

San Francisco landlords and trade associations, including SFAA, successfully challenged the ordinance in both state and federal courts. But mere months later, while appeals were pending, Supervisor Campos did it again! The colloquially known “Campos II” graciously limited the payment to $50,000.00 per rental unit (or potentially less if the tenant was market rate or the landlord could demonstrate a hardship).

The pair of bills was almost laughably prohibited by the Ellis Act. But the city new that. It was merely trying to slow the transition of affordable rent-controlled housing to owner-occupied housing with the only tool at its disposal—a law destined to be unlawful.

Campos I and II lost in the Court of Appeal but won on the streets. The Rent Board annual eviction reports show more than an 80% increase in Ellis Act termination year over year for 2013 and 2014, with a sudden drop of 46% for 2015, before increasing again in 2016—mere months after the superior court invalidated Campos II. (For comparison, owner and relative move-in evictions were unaffected and they increased significantly over all four years.)

While the effective lifespan of these laws wasn’t long (Campos II took effect on June 15, 2015, and by October 7, it was invalidated), they had an observable, distortive effect on the exercise of the Ellis Act. But politics aside, this is just the inevitable ebb and flow that the separation of powers operates in.

During the pandemic, however, laws bloom and wither before they can be pruned. San Francisco enacted its first emergency ordinance to freeze rent increases on April 21, 2020. An emergency ordinance only takes one reading at the Board of Supervisors (not two) and it is effective immediately upon passage by the Board (not 30 days after the Mayor signs it). At least, that’s what our Charter says.

The first rent freeze ordinance says it was effective retroactively to April 7, and that it was effective immediately upon “enactment” (i.e., being signed by the Mayor on April 24) not upon “passage” (on April 21). If you’re not confused yet, it won’t be for long, because emergency ordinances expire 61 days after “passage.” But… does that mean June 7, June 21, or June 24? Don’t worry. The Board will just “re-enact” the freeze to bring consistency to the uncertainty, by passing the re-enactment on… July 7? So, was there a one-month gap in the law? No time to worry about that either, because there was one more re-enactment through October 5 when landlords could increase the rent again.

The emergency ordinances ended there, and without challenge, but the result wouldn’t have been much of a surprise, because the Supreme Court told California cities in the mid-1970s that the one thing they had to do for constitutional rent control laws was to allow for inflation! So now, the city was playing whack-a-mole with the legislative process, but who was going to challenge these laws? They were set to expire the minute they passed (even if it wasn’t clear what day those minutes started ticking), and the freeze cost most landlords tens of dollars, not thousands.

Back then, you couldn’t demand rent in any amount, so the essential challenge was against “Preston I,” an ordinance that simply eliminated nonpayment of rent during the pandemic as a just cause for eviction. SFAA challenged the law for violating the unlawful detainer statutes (which is uncontroversial to authorize evictions when tenants don’t honor the basic bargain of their rental agreement by paying rent).

The trial court denied the petition, and while SFAA was seeking review in the Court of Appeal, the lawsuit was mooted (for all practical purposes) with AB 3088. As of September 1, 2020, the state occupied the field of laws enacted in response to the COVID-19 pandemic to protect tenants from evictions. It imposed a qualified suspension of all nonpayment of rent evictions (but allowed other bases for evictions to go forward).

Not to be outmaneuvered, San Francisco passed “Preston II” to stop nearly every other kind of eviction through March 31, 2021. No one challenged this law, in large part because of its short term. But when SB 91 extended the “covered period” of AB 3088 through June, the Board of Supervisors got to work drafting “Preston 2.1” to match its expiration date. Judicial review is unlikely for a new breed of aggressive local law that comes in such short bursts.

A local law that flouts state law would do well to evade judicial determination as much as possible. But these days, the courts seem content to avoid it themselves. Last December, the San Francisco housing court reviewed a tenant’s challenge to a breach of contract lawsuit seeking unpaid rent. The tenant pointed to AB 3088’s hefty expansion of small claims jurisdiction: a landlord had to wait until March 2021 to file, but he could enjoy a streamlined hearing without the byzantine rules of procedure or the normal limit on damages (and with no annoying lawyers!). The landlord insisted that this was an optional forum for relief, because that’s literally what the law said, and it would create constitutional problems to deny a plaintiff discovery, a jury, an appeal, or his lawyer. (Lawyers are good sometimes.)

But the decision was out of the housing court’s hands, it explained, because the presiding judge issued an order that diverted all breach of contract cases to small claims court no sooner than March. The landlord had never heard of the order, and the Court had never seen it. The landlord sent a public record’s request to find it, but it didn’t exist, so the landlord moved the Court to reconsider. SB 91 was enacted in the meantime. It affirmed a plaintiff’s choice of forum, but stayed all new breach of contract lawsuits until July of 2021, unless the lawsuit happened to begin before October 2020, as this one had. And yet the Court still tentatively ruled to prevent the action from going forward based on the inherent authority of the superior court to manage its caseload. At oral argument, the landlord ultimately persuaded the Court to revisit its tentative ruling, allowing the case to proceed, but it felt like the landlord advanced only through the advocacy of its counsel, rather than the clear dictate of state law.

The rule of law has a remedy to review the whims of a trial court judge. The landlord can appeal. But judicial inaction creates a winner by default, and resolution by settlement can’t succeed if there are no pressing claims to settle. These problems aren’t new, they’re just more obvious now. Our Housing Court has always been faced with a crisis of neutrality. The tenant often suffers a greater loss by losing than the landlord gains by winning. The law is supposed to ignore these hardships, but on balance, the Court has to prefer delay, deferral, suspension, if a resolution might emerge from outside the courthouse.

Likewise, our solution is not new, only more obvious now. Our industry has to be reasonable and balanced in supporting legislation. We need to be fair and patient in privately policing rights. We have to be responsible in accessing the Courts, not only when we can, but also not until we should. In the meantime, we should be generous in trying to wrap up the outstanding disputes that can be settled. This will narrow the odds against our side when the Courts must make a hard decision. For now, when basic civics no longer helps us, our civility can advance our cause.

Justin A. Goodman  is with Zacks, Freedman & Patterson,P.C. and can be reached at 415-956-8100.