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The Perils of Wrongful Eviction

Two recent California Court of Appeal decisions warn landlords of the expensive consequences of wrongful eviction. The appellate court approved a jury verdict of over $400,000 in such a claim resulting from an improper owner move-in / relative move-in eviction. 

What is a Wrongful Eviction?

A wrongful eviction occurs when an owner fails to follow the proper legal procedures for evictions in San Francisco. Examples include:

locking out the tenants,

removing their belongings,

failing to provide proper notice, and

threatening and intimidating the tenants to move.

In San Francisco there has also been an increase in cases brought against landlords for demanding that tenants leave without just cause or doing a fraudulent owner move-in. 

The Oakland and San Francisco rent ordinances allow an owner to recover possession of a rental unit for the occupancy of the owner or a relative for use as their principal residence for a period of at least three years, subject to some exceptions. Failure to comply with this law may result in a lawsuit. 

Delisi v. Lam

In Delisi v. Lam (2019) 39 Cal. App.5th 663, the court considered whether a jury award of $462,000 to the tenant in a wrongful eviction case was constitutional. The owners had purchased a four-unit building in San Francisco. They immediately served an owner move-in eviction notice to a tenant. They then did a relative move-in for the owner’s brother into another apartment. The tenants in the second unit had only been residing there for a year and a half. 

At trial there was evidence that the owners did not move into the first unit until after the relative move-in eviction notice was served (simultaneous occupancy by the owner is required). The jury found that the landlords violated the law and awarded economic damages of $110,000 plus $10,000 for emotional damages. These were trebled pursuant to the ordinance, resulting in a judgment for $360,000. The court then added over $100,000 in attorney’s fees and court costs. 

Wrongful Eviction Damages

This decision found that when calculating damages the jury may consider the rent differential which is the difference between the stabilized rent the tenant would have paid for the expected duration of her tenancy, and the market rent for the unit from which she was displaced. Additionally, the court found that the mandatory trebling is not constitutionally defective. 

Reynolds v. Lau

In Reynolds v. Lau (2019) 39 Cal.App.5th 953, the appellate court considered whether to uphold a jury verdict for over $600,000 when the owners did not directly violate the owner move-in provision. This case involved a mixed-use building in San Francisco consisting of three units, a ground floor liquor store operated by the owners, and two residential units above. Both apartments were occupied. Because the owners wanted to live closer to their business instead of commuting daily from San Bruno, and wanted to start a family, they served one of the tenants with an owner move-in eviction notice. 

Those tenants argued that the landlords sought to recover possession in bad faith because they chose to evict them, who had been living in the unit for over 20 years and were paying way under market rate rent. According to them, they should have moved into the other unit and choosing to move into their unit was bad faith. Before the notice period for the owner move-in eviction notice expired, the occupants in the other unit vacated. 

The jury found no violation of the rent ordinance. However, they still awarded, $223,858 in damages to the tenants. This amount was trebled for a total award of $671,574. The court of appeal found that there was no evidence to support the jury’s findings and affirmed the trial court’s decision of setting aside the award and ordering a new trial. 

Insurance for Wrongful Eviction Cases

The takeaway from this case is that a jury in San Francisco can be very tenant friendly. Even where they found that the owners did not violate the law, they still awarded a huge amount to the tenants. Fortunately for the owners, there was no finding of bad faith. Landlords need to be very cautious and to maintain the right type of insurance. 

-Don Vang, Esq.

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