Is Standing Required to Sue for Unlawful Detainer on Behalf of a Property Owner?

In the recent California appellate decision of Income Estate LLC v. Perez, Defendant Juan Perez appeals a judgment in favor of plaintiff Income Estate LLC in a residential unlawful detainer action for failure to pay rent involving a mobile home park.

The arguments raised by defendant are: (1) plaintiff, a property manager, was not the real party in interest and failed to introduce sufficient evidence conferring the right to prosecute this action; (2) the three-day notice was defective because it relied upon unlawful rent increases and improperly “round[ed] up” to the nearest penny; and (3) defendant was entitled to a directed verdict due to plaintiff serving two rent increases in one calendar year in violation of the Palmdale Municipal Code.

The appellate court found merit to defendant’s contention that plaintiff failed to satisfy its burden to prove it had standing to sue on behalf of the property owner, and it therefore reversed the judgment on this basis.

On February 9, 2024, plaintiff filed a complaint alleging a cause of action for unlawful detainer pertaining to a mobile home space in the City of Palmdale.

The complaint alleged plaintiff was the “landlord/owner” of the mobile home space; on November 1, 2012, defendants entered a written month-to-month agreement in which they leased the premises for rent of $456.792 per month; on July 11, 2023, plaintiff caused to be served upon defendants a three-day notice to pay past-due rent of $1,805.70 or to quit the premises; and the notice period expired without defendants’ compliance.

Plaintiff sought possession of the premises, forfeiture of the lease, past-due rent, daily damages, and attorney fees.

Defendant’s answer denied each allegation in the complaint. Defendant also alleged multiple affirmative defenses, including that the notice was defective because the rent demand exceeded the amount due, and that plaintiff lacked standing to bring the action as it was not the property owner or authorized to sue on the owner’s behalf.

Defendant filed a brief in support of an oral motion for judgment on the pleadings, arguing therein plaintiff was not the owner of the property or a real party in interest.

Defendant also requested judicial notice of recorded deeds which represented that in 2018, Income Estates LLC4conveyed its ownership interests in the premises to Joshuaview Corporation, and in 2020, Joshuaview Corporation conveyed its interests to Joshuaview, LLC.

The court granted plaintiff’s oral motion to amend the complaint, striking the word “owner” from paragraph 4 so that plaintiff’s alleged interest in the premises was only as the “landlord.”

The court denied the defense motion for judgment on the pleadings, finding the complaint satisfied the pleading standards.

The cause proceeded to a jury trial.

Defendants occupied a space at the mobile home park pursuant to a written lease agreement executed in 2012.

In January 2022, plaintiff, a property management company, was hired to manage the premises by Julian Pinedo, a representative of the property owner, Joshuaview LLC. Villeda was employed as the on-site resident manager who served defendants with rent increase notices in 2020 and 2022.

Ruiz, a resident in the mobile home park, testified to various uninhabitable conditions at the premises. Jacobs testified about his inspection of the habitability of the premises.

After plaintiff rested, defendants made a motion for nonsuit on various grounds, including the argument that plaintiff lacked standing to initiate the complaint. The court denied the motion for nonsuit, finding plaintiff elicited sufficient evidence to support a prima facie case for unlawful detainer.

After the filing of a joint stipulation, both parties rested, defendants moved for a directed verdict arguing, in pertinent part, that plaintiff introduced no evidence to prove it was authorized to bring the action on behalf of the owner.

The court denied the motion, finding plaintiff had standing to bring the action as the property manager for Joshuaview LLC, based on Villeda’s testimony “that he’s employed by [plaintiff] who is the managing company for the owner of the property.”

The jury issued special verdict findings that: (1) plaintiff was the lessor of the property, (2) plaintiff properly gave defendants a three-day written notice to pay past-due rent or vacate, (3) the amount of rent demanded in the three-day notice was not more than the amount owed by defendants, (4) defendants did not pay the rent demanded in the notice, and (5) there was not a substantial breach of habitability during the period for which rent was not paid.

Judgment was entered on the special verdicts for possession of the premises, forfeiture of the lease, past-due rent of $1,805.70, holdover damages, and unspecified attorney fees.

The court denied defendants’ motion for a new trial and for judgment notwithstanding the verdict, and defendant timely appealed the judgment.

Defendant contended the trial court erred in denying the motion for directed verdict because there was no substantial evidence to prove plaintiff had standing to prosecute this action.

Plaintiff’s argument in support of standing relied on the doctrines of agency and assignment.

As noted by a leading treatise, no published opinion has assessed the requisite proof for a property manager to prove it has standing, as a real party in interest, to initiate an unlawful detainer action.

A directed verdict may be granted only when, disregarding conflicting evidence, giving the evidence of the party against whom the motion is directed all the value to which it is legally entitled, and indulging every legitimate inference from such evidence in favor of that party, the court nonetheless determines there is no evidence of sufficient substantiality to support the claim or defense of the party opposing the motion, or a verdict in favor of that party.

The appellate court decides de novo whether sufficient evidence was presented to withstand a directed verdict.

A cause of action for unlawful detainer must set forth the facts on which the plaintiff seeks to recover (Code Civ. Proc., § 1166, subd. (a)(2)), including the allegation of ownership or some other enforceable right to possession.

A failure-to-pay unlawful detainer action may be brought by “the landlord, or the successor in estate of the landlord.

Except as otherwise authorized by statute, every action must be prosecuted in the name of the real party in interest. (Code Civ. Proc., § 367.)

The real party in interest is typically a party who has title to the cause of action, but in many instances, one who is not the owner of the property nonetheless may be the real party in interest if that person’s interests in the property are injured or damaged.

Plaintiff’s trial briefs asserted standing to sue as an assignee, but no evidence was adduced at trial to substantiate the claim that Joshuaview, LLC assigned to plaintiff any rights of the lease.

There is no case on point holding that a landlord can assign its interest in an unlawful detainer action to an agent and only general law permitting the assignment of claims.

Arguably, under agency law, an agent might have standing to file a UD if the landlord gave the agent written authority to sue and retake possession in the agent’s own name.

However, there is no known authority so holding; absent assignment of the principal’s interest in the property or allegation the agent is a party to the contract, suit in the agent’s name alone is likely to draw a general demurrer.

Additionally, an action may be brought by an authorized agent of the real party in interest if certain conditions are met.

Ordinarily, an agent for a party to a contract not made with or in the name of the agent is not a real party in interest with standing to sue on the contract.

An agent acting on behalf of a principal might have standing to sue, however, if the agent ‘has some beneficial interest in the subject matter. For example, an agent has standing to sue where a contract creates obligations for the agent as a fiduciary to the principal.

As applicable here, an agent may be authorized to do any acts which his principal might do, except those to which the latter is bound to give his personal attention. (Civ. Code, § 2304.)

An agent has the authority to do everything necessary or proper and usual, in the ordinary course of business, for effecting the purpose of his agency (Civ. Code, § 2319, subd. (1)), and the agent may act in its own name only if it is the usual course of business to do so. (Civ. Code, § 2322, subd. (a).

For example, a party who enters into a rental agreement on behalf of the owner who fails to comply with Civil Code section 1962 is deemed an agent of each person who is an owner. (Civ. Code, § 1962, subd. (d).)

Civil Code section 1962 requires a property owner to disclose to its tenants the name, telephone number, and street address at which personal service may be effected upon both (1) the person authorized to manage the premises, and (2) an owner of the premises or an authorized representative of the owner for the purpose of service of process and for the purpose of receiving and receipting for all notices and demands.(Civ. Code, § 1962, subd. (a)(1).)

Whereas the disclosure of any person or entity to whom rent payments shall be made is limited to the name, telephone number and address—but not the usual street address.

This distinction makes clear the Legislature intended to differentiate the obligations of property managers from property owners and their agents regarding the disclosure of certain information to tenants for the purpose of legal process.

In Powers v. Ashton, the plaintiff—a trust administrator—sued on behalf of four trusts, which authorized the trustees to take any legal action deemed necessary by them, while title to the trust assets was held by a separate corporate trustee.

The Court of Appeal upheld the sustaining of a demurrer, explaining: The recital that the plaintiff sues on behalf of the trusts is not an allegation of fact that she is authorized to sue on behalf of the trustees. The allegation that she is the duly authorized representative to sue and that she is administrator of the trust funds is inadequate to establish her as the real party in interest when read in conjunction with the trust instruments which are incorporated in the complaint. An agent for a party to a contract not made with or in the name of the agent is not a real party in interest with standing to sue on the contract.

In Arnolds Management Corp. v. Eischen, the plaintiff, who held a “special power of attorney” as the beneficiary of a deed of trust, sued to set aside a foreclosure sale. The action was brought derivatively without alleging the plaintiff’s interest in the property or any injury to plaintiff.

The appellate court affirmed the order sustaining a demurrer without leave to amend, holding that one who is described in an instrument, as the attorney in fact of another, does not hold the character of trustee, and is not a necessary party to represent the interest of the principal, and that the plaintiff has not alleged any facts which would allow it to maintain this action.

An unlawful detainer, being a summary proceeding, requires strict compliance with all applicable statutes.

The requirement of standing is no exception. Thus, an unlawful detainer case filed by a plaintiff who is not the real party in interest or an authorized representative may be subject to nonsuit.

In this case, Section 4 of the amended complaint alleged that plaintiff’s interest in the premises was as the “landlord,” and section 6(b)(2) alleged that defendant’s lease was made in 2012 with “plaintiff’s agent.”

The top left caption of the lease says “Joshua View MHP, but the lease does not identify the lessor and there is no signature in the allotted section for the “park management.

The rent increase notices attached to plaintiff’s opposition to defendant’s post-judgment motion interchangeably represented that the lessor was either “Joshua View MHP,” “Joshua View Mobile Home Park,” or “Joshua View Mobile Home Park/Income Estate LLC.”

There was no evidence about the role of Joshua View Mobile Home Park, and the court sustained plaintiff’s objections to defense counsel asking Villeda to identify the property owner.

Instead, the proof adduced at trial was only that in 2020, Joshuaview, LLC acquired the property subject to the lease executed by its predecessor in interest.

According to Villeda, plaintiff’s authority to manage the property derived from an “administrative contract” with Joshuaview, LLC, which was not introduced at trial.

Plaintiff took the position Villeda’s testimony—that he was the property manager charged with collecting rent, billing tenants, and supervising the property—was sufficient on its own to satisfy the standing requirement.

The trial court agreed with this position over the repeated objection of defendant, noting that “according to plaintiff, they are acting as agents for Jushua View LLC” and that Villeda was “employed by [plaintiff] who is the managing company for the owner of the property.”

The court erred as a matter of law and in its interpretation of the evidence.

Where the issue of standing is raised by the defense, a plaintiff acting as an agent of the real party in interest has the burden of producing sufficient evidence conferring the right to sue on behalf of the principal.

Proof of standing to sue must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.

The determination of a plaintiff’s standing to sue will depend on the unique facts of each case.

The lease agreement, which was introduced into evidence as Exhibit 1, is not included in the record on appeal. Usually, defendant’s failure to designate this exhibit for inclusion in the record would be deemed a forfeiture of the claim of error.

In this case, however, the lease agreement is included in the appendix as an exhibit to plaintiff’s June 28, 2024 opposition to defendant’s motion for a new trial and for JNOV.

The lease was supported by a declaration of plaintiff’s counsel, which averred that it was the same document admitted into evidence at trial, and that the foundation was tested in the trial court.

In other words, plaintiff’s alleged status as an on-site manager did not adequately confer standing to sue.

With regard to the evidence in this case, Villeda’s testimony on the issue of standing was that Pinedo, a representative of plaintiff, hired defendant as an on-site manager on behalf of Joshuaview LLC, and that in defendant’s capacity as the on-site resident manager, he collected rents and served defendants with rent increase notices in 2020 and 2022.

Villeda never testified that plaintiff was an authorized “agent” acting on behalf of Joshuaview, LLC. The only statements regarding plaintiff’s status as an alleged agent of the owner were from plaintiff’s counsel during argument. The unsworn statements of counsel were not evidence.

Tellingly, the only citation to the record in plaintiff’s brief supporting its position that it proved standing is a reference to the “Property Management Agreement” attached to plaintiff’s opposition to the post-judgment motion.

As noted, this document, unlike the lease, was not produced at trial and its foundation was not tested; therefore, this court may not consider it.

Appellate court considers only evidence which was part of the record at the time of the trial, and  it is improper to consider exhibits whose foundation was not tested.

In sum, plaintiff had multiple opportunities to introduce some modicum of evidence to support its alleged status as the real party in interest or an authorized agent of the real party in interest.

As repeatedly pointed out by defendant, plaintiff’s respondent’s brief, which mostly consists of block quotes pasted from a secondary source, is not a paragon of clarity.

Villeda’s testimony of being “the property manager,” without more, was not evidence of sufficient substantiality to support the determination that plaintiff had a legal basis to prosecute the case on behalf of Joshuaview, LLC.

The judgment was reversed, and the cause is remanded to the trial court to conduct further proceedings consistent with the opinion.

LESSONS:

1.         A cause of action for unlawful detainer must set forth the facts on which the plaintiff seeks to recover (Code Civ. Proc., § 1166, subd. (a)(2)), including the allegation of ownership or some other enforceable right to possession.

2.         Except as otherwise authorized by statute, every action must be prosecuted in the name of the real party in interest. (Code Civ. Proc., § 367.)

3.         The real party in interest is typically a party who has title to the cause of action, but in many instances, one who is not the owner of the property nonetheless may be the real party in interest if that person’s interests in the property are injured or damaged.

4.         An unlawful detainer, being a summary proceeding, requires strict compliance with all applicable statutes.

5.         The requirement of standing is no exception. Thus, an unlawful detainer case filed by a plaintiff who is not the real party in interest or an authorized representative may be subject to nonsuit.