TENANT CHALLENGE to California Ellis Act may go to Supreme Court

By Julia Cheever
Bay City News

A lawyer for a group of San Francisco apartment tenants said today they are considering appealing a ruling that barred them from using a real estate subdivision law to challenge their eviction.

Dean Preston, a lawyer with the Tenderloin Housing Clinic, said, “We are definitely considering petitioning for review in the California Supreme Court.”

The tenants in five of the six units in a building on Francisco Street are opposing their landlords’ bid to evict them under the Ellis Act, a state law that allows property owners to go out of the rental business.

The building owners are four partnerships and two individuals who want to divide the property into tenancies in common and eventually into condominiums.

The tenants claimed in a San Francisco Superior Court lawsuit that the owners violated an unrelated law, the Subdivided Lands Act, by failing to obtain a public report on the property for potential buyers.

A trial judge agreed and blocked the eviction on that basis.

But in a decision filed in San Francisco on Wednesday, the Court of Appeal said the tenants couldn’t use the subdivision law to challenge the eviction because they weren’t directly harmed by the alleged violation.

Justice William McGuinness wrote, “Allowing tenants to challenge Ellis Act evictions on the basis of violations of unrelated laws frustrates the purpose of the act, which is to permit landlords the right to go out of the rental business.”

Andrew Zacks, a lawyer for the building owners, said, “The court reaffirmed the central purpose of the Ellis Act – that the government cannot force people to be landlords.”

Preston said that in addition to a possible appeal, the tenants will continue to oppose the eviction with several other claims that are still pending in Superior Court.

The tenants’ lawsuit had claimed the alleged failure to comply with the subdivision law was a violation of the state’s Unfair Competition Law, which bars unfair and illegal business practices.

In 2004, California voters in Proposition 64 amended that law to say that only plaintiffs who were directly harmed could sue for unfair business practices.

The appeals court said the tenants couldn’t sue under the amended business law because they did not lose money or property from the alleged subdivision law violation.

McGuinness wrote for a three-judge panel, “The tenants are not among the class of persons the Subdivided Lands Act was intended to protect and they have suffered no harm as a result of any violation of its provisions.”

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