May the Jury Determine Whether the Dwelling Tenant’s Renting was Legal?

In the recent California second appellate court of appeal decision in Emmons v. Jesso,  Richard Fox Emmons, Jr. (tenant), appealed from avjudgment following a jury trial in this action tenant filed against Tobias Jesso, Jr. (landlord), to recover rent payments on a unit tenant claimed was illegal.

The jury found against tenant and in favor of landlord in the amount of $14,700 plus interest and costs on landlord’s cross-complaint for rent not paid.

The appellate court found no error and affirmed the judgment.

In April 2015, tenant entered into a written lease agreement for the lower level of 2500 Lake View Avenue for $1,000 per month. In 2016, landlord purchased the property.

Landlord inspected the property prior to the purchase. The property consisted of two structures. The unit on the top two floors of the main building was occupied by a renter who was moving out.

Tenant was renting the main building’s bottom floor unit. Another renter resided in the separate cottage with the address 2502 Lake View Avenue.

Landlord’s real estate agent assured him “everything was legal,” and the two renters were legally on the property.

Following some renovations, landlord moved into the unit on the top two stories of the main building in July or August 2016.

After purchasing the property, landlord complied with tenant’s requests to finish the floors, remove carpet, and fix the living room ceiling.

In February 2018, landlord approached tenant asking him to vacate the property. Landlord informed tenant he and his wife were planning on starting a family and wanted to claim the first floor unit for owner occupancy.

Landlord offered tenant $7,000 and three months rent-free to move out rather than just evicting tenant.

In response, tenant put a threatening letter on landlord’s door, indicating landlord would be sued for harassment. Landlord thereafter avoided trying to work things out with tenant. The letter also claimed landlord was liable for $115,000 in back rent.

In February 2018, Los Angeles Housing Department (LAHD) received a complaint concerning the property.  During a March 6, 2018 site inspection, no violations were noted. The case was closed on March 9, 2018.

In March 2018, landlord received an order from the city saying the unit he was renting to tenant was illegal.

Landlord believed the order resulted from a complaint filed by tenant or tenant’s lawyer.

Landlord went to the Los Angeles Department of Building and Safety (LADBS) to correct the mistake, bringing paperwork, which the LADBS reviewed with him. After landlord provided the building permit, certificate of occupancy and other necessary paperwork, LADBS rescinded the order on June 6, 2018.

However, based on the order, tenant refused to move out and stopped paying rent.

In May 2018, landlord received a notice from LAHD indicating the property was subject to the rent stabilization ordinance (RSO). LAHD had reviewed a complaint regarding failure to post “RSO Notice.” Tenant received a courtesy copy.

The letter also noted LADBS had issued a “Substandard Order and Notice of Fee,” effective April 30, 2018.

The violations cited in the order included illegal occupancy of the lower unit. The letter provided a procedure the landlord must follow to evict a tenant to comply with a government order.

Tenant understood the letter relieved him from paying rent, so he declined to pay rent.

However, documents entered into evidence at trial, including City of Los Angeles Statements of Registration of Rental Units for 2500 Lake View Avenue, which were issued pursuant to the RSO, reflected registration payments made by landlord from 2016–2020 for two rental units in the duplex located at 2500 Lake View Avenue.

On February 15, 2019, landlord sent tenant a letter asking tenant to vacate the property within 60 days. Tenant failed to vacate.

On April 10, 2019, landlord presented tenant with a three-day notice to pay rent or quit. Tenant failed to pay rent or quit the premises within three days of that notice.

On April 19, 2019, landlord sent tenant another three-day notice to pay rent or quit. Tenant again refused to comply.

Tenant lodged another complaint with the LAHD Code Enforcement Division on April 23, 2019, which was closed immediately 

On May 8, 2019, LAHD served a notice and order to comply to landlord, citing unapproved units, illegal construction, and unapproved use or occupancy. On June 13, 2019, the compliance date, the complaint was closed with no violations resolved.

On May 22, 2019, landlord served tenant with a “Declaration of Intent to Evict in Order to Comply with a Government Agency’s Order.”

On June 12, 2019, landlord filed a “Relocation Services OR Demolition Monitoring Services Application.” Landlord checked as the reason for his application, “Eviction for compliance with a government agency order.”

On July 2, 2019, landlord sent his first check in the amount of $21,200 to tenant’s lawyer for relocation expenses. Tenant’s lawyer insisted he never received it.

Landlord was not permitted to evict tenant based on “no relocation payment being cashed.”

Landlord had to refile for eviction.

Eventually tenant cashed landlord’s second check for $21,200. Tenant moved out on September 3, 2019. Tenant had not paid the $1,050 monthly rent in 14 months.

Tenant filed his complaint on June 17, 2019, alleging (1) violation of statute (Civ. Code, § 1942.4), (2) restitution based on unjust enrichment, (3) violation of Business and Professions Code section 17200, (4) money had and received, (5) damages for breach of contract, (6) damages for fraud and deceit, (7) violation of Los Angeles RSO, and (8) damages for breach of implied warranty of habitability.

The jury trial commenced on April 21, 2023, and lasted six days. Tenant proceeded on a single cause of action for violation of the Municipal Code, and landlord proceeded on a single cross- claim for breach of contract.

On April 27, 2023, the court gave its final instructions to the jury. The jurors began deliberating on the morning of April 28, 2023. On the same day, the jurors reached a unanimous verdict in landlord’s favor on tenant’s claim for violation of the Municipal Code, and in landlord’s favor on his cross-claim against tenant for breach of contract.

The jury awarded nothing to tenant and awarded $14,700 in favor of landlord against tenant, with interest and costs to be determined by the court.

Tenant first argued the trial court erred as a matter of law by allowing the jury to determine whether the dwelling tenant was renting was legal.

In this matter, landlord has never disputed that tenant’s unit was subject to the RSO. Landlord paid registration fees in accordance with the RSO throughout tenant’s tenancy.

Tenant cites no law suggesting it is improper for a court to allow a jury to determine whether a property is illegal when this is a contested factual issue in the cas

Tenant cites portions of his trial brief where he argued landlord was prevented from denying the illegality of the unit on the grounds of estoppel, waiver, and failure to exhaust administrative remedies.

The existence of estoppel is generally a factual question, as is waiver.

The court informed the jury the parties had competing positions on the issue of the legality of tenant’s unit. The jury heard testimony from the parties and government employees, including employees of LADBS and LAHD, involving the question of whether tenant’s unit was illegal.

A jury may properly determine whether a landlord has violated the law.

Tenant provided no law supporting his position that it was improper for the jury to resolve this contested factual issue. As such, tenant failed to meet his burden on appeal.

One of Tenant’s arguments was based on the May 2019 “Declaration of Intent to Evict in Order to Comply with a Government Agency’s Order,” which landlord served on tenant in an effort to evict tenant.

In sum, tenant argued landlord waived the right to argue his unit was legal, or was estopped from arguing his unit was legal, due to landlord’s reliance on the purported illegality of the unit to attempt to evict tenant.

Tenant argued the trial court committed prejudicial error by failing to determine as a matter of law that landlord waived his right to challenge the LAHD’s initial determination that the dwelling was illegal.

Tenant admitted the general rule is the determination of waiver is a question of fact.

However, tenant argued, when the facts are undisputed and only one inference may reasonably be drawn, the issue becomes one of law. Tenant argued the undisputed facts demonstrate landlord waived his right to challenge the LAHD’s determination the property was illegal by complying with the LAHD’s order that landlord evict the tenant.

The undisputed facts show landlord executed a declaration stating his intent to evict tenant in order to comply with the LAHD’s notice and order to comply. The form indicated tenant’s unit was an “[i]llegal [c]onversion.”

Landlord testified he signed the declaration of intent to evict to comply with a governmental  agency order.

Landlord understood he was required to pay a relocation fee, and he signed the form to comply with that requirement. Because landlord signed these forms and paid the relocation fee, tenant argued, the court should have determined landlord waived his right to challenge LAHD’s determination that tenant’s unit was illegal.

If landlord was going to take the position that the dwelling was legal, tenant argued, he should have challenged LAHD’s determination of illegality in an administrative hearing.

The appellate court noted tenant has failed to point to a citation in the record showing tenant objected to allowing the jury to determine the issues of waiver and estoppel based on landlord’s use of a notice of intent to evict to comply with LAHD’s notice and order.

Further, in making his argument, tenant disingenuously ignored the competing facts presented to the jury. Landlord was required to comply with the LAHD notice and order.

However, the jury heard from city agencies and viewed documents showing it was later determined the property was not illegal. In addition, tenant provided conflicting testimony as to his understanding of whether the unit was legal or illegal.

The facts surrounding the circumstances of landlord’s compliance with LAHD’s notice and order, the legality of tenant’s unit, and the ultimate question of whether landlord waived his right to challenge LAHD’s initial determination, were disputed factual issues the jury properly decided based on all of the evidence presented at trial.

Tenant made a similar argument citing the doctrine of estoppel, arguing the trial court erred in allowing landlord to argue the dwelling was legal after landlord acted upon the LAHD’s notice and order that the dwelling was illegal, in an attempt to evict tenant.  

Tenant argued the trial court should have determined as a matter of law that landlord was estopped from arguing that the dwelling was legal.

The doctrine of estoppel applies where (1) the party to be estopped is apprised of the facts; (2) he intends that his conduct shall be acted upon, or acts in a manner such that the party asserting the estoppel had a right to believe it was so intended; (3) the other party is ignorant of the true state of facts; and (4) relies on the conduct to his injury.

Equitable estoppel may be found when (1) [t]he party to be estopped has engaged in blameworthy or inequitable conduct; (2) that conduct caused or induced the other party to suffer some disadvantage; and (3) equitable considerations warrant the conclusion that the first party should not be permitted to exploit the disadvantage he has thus inflicted upon the second party.

Reliance by the party asserting the estoppel on the conduct of the party to be estopped must have been reasonable under the circumstances.

Estoppel involves factual issues that must be decided by a jury.  

Tenant failed to point to a citation to the record where tenant requested the trial court to determine the issue of estoppel as a matter of law. As such, the issue is forfeited on appeal.

Further, as set forth above, the question of estoppel involves the resolution of several factual components, which were highly contested in this case. Accordingly, tenant proposed, andthe trial court gave, a special instruction to the jury on the doctrine of estoppel.

LESSONS:

1.         The existence of estoppel is generally a factual question, as is waiver.

2.         The doctrine of estoppel applies where (1) the party to be estopped is apprised of the facts; (2) he intends that his conduct shall be acted upon, or acts in a manner such that the party asserting the estoppel had a right to believe it was so intended; (3) the other party is ignorant of the true state of facts; and (4) relies on the conduct to his injury.

3.         Equitable estoppel may be found when (1) [t]he party to be estopped has engaged in blameworthy or inequitable conduct; (2) that conduct caused or induced the other party to suffer some disadvantage; and (3) equitable considerations warrant the conclusion that the first party should not be permitted to exploit the disadvantage he has thus inflicted upon the second party.

4.         A jury may properly determine whether a landlord has violated the law.