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No Silver Lining on This Anniversary Cloud

San Francisco Apartment Magazine - April 6, 2004

June 2004 marks the 25th anniversary of the San Francisco Residential Rent Stabilization and Arbitration Ordinance (otherwise known simply as the Ordinance). Unfortunately this event, rather than a celebration for property rights, marks the appearance over the city of a dark cloud without any silver lining for property owners.

We all know that the Ordinance has turned out to be an unfair proposition. Although intentions behind it may have made sense at one time, it has developed into a real curse that impacts property rights. Several areas of the Ordinance are unconstitutional and violate due process of our property rights. These areas include for instance: (1) the limited ways a landlord can lawfully evict a tenant; (2) the time deadlines imposed on landlords after eviction to perform certain actions (3) the cumbersome and duplicative notice requirements; and (4) the imposition of treble damages on any violation.

This anniversary should motivate us all to challenge the most egregious of these provisions the treble damages provision and its application in litigation. No provision of the Ordinance increases tenant verdicts like the treble damages provision. In addition to rendering disproportionate verdict amounts, a practical problem with this provision is the fact that courts typically do not allow a jury to be informed of its application during a trial.

The treble damages provision itself is susceptible to attack. The original purpose behind it was to make historically low-valued landlord-tenant disputes attractive for lawyers to represent tenants. A straight wrongful eviction cause of action was originally not worth enough money to interest tenant attorneys. Damages were small, making potential verdicts small. The Ordinance included the treble damages provision to enhance the value of tenant damages, thus making such cases more attractive.

This has all changed. Now there is no such thing as a straight wrongful eviction lawsuit. Today tenants add multiple causes of action to increase the value, such as: breach of contract, breach of the warranty of habitability, breach of the covenant of quiet enjoyment, breach of the covenant of good faith and fair dealing, nuisance, negligence, negligent management of property, negligent infliction of emotional distress, intentional infliction of emotional distress and violation of the state’s Business & Professions Code.

A single claim of wrongful eviction often blossoms into a 10- or 11-count lawsuit. For this reason, the purpose behind treble damages in the Ordinance is now outdated. The value of a tenant’s claim is increased by the addition of these imaginative counts. It would be difficult to ask a jury to award damages attributable only to a violation of the Ordinance. Without a clear instruction, the tripling of these damages has the practical effect of unfairly increasing jury verdicts beyond the legislative purpose behind the treble damages provision in the Ordinance.

Under the current state of landlord-tenant practice in San Francisco, treble damages should be attacked. Until these damages are eliminated from the Ordinance, we should vigilantly oppose their application. Currently, once a jury finds that a landlord violated the Ordinance, it is asked to calculate the tenant’s actual damages resulting from the violation. Once the jury is excused, the judge triples the jury’s award.

A 2002 case, Bordeaux v. Jue, ended just this way. After the jury found against the landlords, they awarded the tenant $60,000 in actual damages. Unbeknownst to the jury, the court thereafter tripled the damage award to $180,000. When the jury was informed of this later, they felt blindsided and upset.

San Francisco courts historically refuse to allow the jury to be informed that the damages they award for a violation of the Ordinance will be tripled. This protocol is unfair and must be challenged.

In pretrial motions (motions in limine), counsel can first petition the court to allow a reference to the treble damages provision of the Ordinance during the trial. Undoubtedly, the judge will refuse this request. However, counsel should make a record of this demand. At the end of the presentation of all the evidence and during the jury instruction phase, counsel should demand instruction to the jury that explains that damages awarded will be tripled under the Ordinance. If the jury knows the award will be tripled, jurors will likely be more accurate in the calculation of the tenant’s actual damages.

Case law supports that a party is entitled to have the jury instructed on all theories presented, which are supported by the evidence and pleadings (National Medical Transportation Network v. Deloitte & Touche). Counsel should argue that because the tenant’s requests for treble damages under the Ordinance, the National Medical case mandates a jury instruction on such relief requested.

Courts may be reluctant to provide such instructions on the basis that a jury’s duty is to calculate damages untainted by the ultimate tripling by the court. However, because treble damages render exaggerated awards unrelated to a tenant’s actual damages, instructions on these damages should continue to be sought.

On this anniversary, the citizens of San Francisco should welcome fair changes to the Ordinance. As it stands, after 25 years, this silver occasion is tarnished.

Posted with Permission of the SFAA. The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Todd Wenzel is an attorney in the San Francisco office of Ropers Majeski Kohn & Bentley. His practice is in defense litigation, with an emphasis in landlord representation in tenant disputes. He can be reached directly at (415) 274-6316 or twenzel@ropers.com. Copyright © 2004.