Preview
1 Robert Salinas (SBN 184260)
Rocio Toriz (SBN 252491)
2 Annie B. Banh (SBN 322939)
SALINAS LAW GROUP
th
3 428 13 Street, Eighth Floor
Oakland, California 94601
Tel:(510) 663-9240
4 Fax(510) 663-9241
5 Leah Simon-Weisberg (SBN 225954)
Jackie Zaneri (SBN 318088)
6 Ethan Silverstein (SBN 334836)
ACCE INSTITUTE
7 2220 Livingston Street, Suite # 214
Oakland, California, 94606
8 Phone Number: (510) 916-2034
9 Attorneys for Plaintiffs
10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 COUNTY OF ALAMEDA – UNLIMITED JURISDICTION
12
ANDREW YEN, JAMES BALL, KAITLIN Case No.: RG21-100261
13 BLANCO, and MELINA TESSIER, on behalf of
themselves and all others similarly situated, Case Assigned to Hon. Evelio Grillo in
14 Dept.21 for all Purposes
Plaintiffs,
15 OPPOSITION TO DEFENDANTS
v.
16 ) COMBINED OMNIBUS DEMURRERS TO
AND MOTIONS TO STRIKE PLAINTIFFS’
NEVEO MOSSER, THE MOSSER
17 COMPANIES, INC., 533 SYCAMORE STREET SECOND AMENDED COMPLAINT
18 ASSOCIATES, LP, 1428 JACKSON STREET
ASSOCIATES, LP, CONSERVICE, LLC, FPI
Judge: Hon. Evelio Grillo
19 MANAGEMENT, INC., OAK9 PORTFOLIO
Date: March 22, 2022
OWNER, LP, OAK 406 VAN BURREN AVE
20 PROPERTY, LLC, OAK-533 SYCAMORE, Time: 10:00 am
Dept.: 21
LLC, OAK 1425 HARRISON STREET
21 PROPERTY, LLC, OAK-1428 JACKSON, LLC,
22 PACH AFFORDABLE HOLDINGS, LLC, SAC Filed: December 3, 2021
YARDI SYSTEMS, INC., YES ENERGY
Trial Date: None
23 MANAGEMENT, INC., and DOES 1-500,
24
Defendants. Reservation No.: 774512897603
25
26
27
28
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND
AMENDED COMPLAINT
1 TABLE OF CONTENTS
2 PRELIMINARY STATEMENT ...................................................................................................... 1
3 INTRODUCTION ............................................................................................................................. 2
4 STATEMENT OF FACTS ALLEGED IN COMPLAINT ............................................................ 3
5
ARGUMENT...................................................................................................................................... 5
6
I. LEGAL STANDARDS ...................................................................................................... 5
7
II. PLAINTIFFS STATE A CLAIM UNDER OAKLAND’S RENT ADJUSTMENT
8 ORDINANCE FOR UNLAWFUL, UNPETITIONED RENT INCREASES .............. 6
9 A. Oakland’s Rent Adjustment Ordinance Must be Interpreted as a Whole,
Looking to its Text and its Purpose .................................................................................. 6
10
B. The Landlord and Management Defendants Violate Numerous Provisions of
11
The Rent Adjustment Ordinance ..................................................................................... 7
12
1. Defendants Violate the Rent Adjustment Ordinance by not Filing Petitions for Rent
13 Increases that are not Based on the CPI or Banking....................................................... 7
14 2. Even if Defendants had filed Petitions, as the Rent Adjustment Ordinance Requires,
the Monthly Variable Rent Increases would not be Allowed ........................................... 9
15
16 3. Defendants’ Monthly Increases Violate the One Annual Increase Rule........................ 12
17 4. Defendants do not Provide Proper Notices with their Monthly Rent Increases ............ 12
18 C. Plaintiffs Have a Private Right of Action to Indirectly Enforce the Regulations,
Including 10.1.10 .............................................................................................................. 14
19
20 III. PLAINTIFFS STATE A CLAIM UNDER THE TENANT PROTECTION
ORDINANCE ................................................................................................................... 15
21
A. Plaintiffs State a Claim for Failing to Provide Housing Service ................................. 15
22
B. Plaintiffs State A Claim for Other Repeated Acts and Omissions Designed to
23 Make Plaintiffs Waive Their Rights ............................................................................... 17
24 IV. THE LANDLORD AND MANAGEMENT DEFENDANTS WERE OVERRULED
ON THEIR FIRST DEMURRER TO UCL .................................................................. 17
25
26 V. THE SERVICE PROVIDERS ENGAGE IN UNFAIR AND FRAUDULENT
BUSINESS PRACTICES. ............................................................................................... 18
27
A. Defendants Rely on Inapplicable Law to Argue They Have no Duty to Conduct
28 Business Fairly ................................................................................................................. 19
i
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 B. Exempting the Service Providers from a Duty to not Engage in Unfair Practices
Toward Tenants is not “Clearly Supported by Public Policy.” ................................... 21
2
C. The Service Defendants are not Similar to Payroll Companies .................................. 22
3
D. Plaintiffs State an “Unfair” Claim Regardless of Which Test the Court Utilizes ..... 23
4
5 1. Plaintiffs state a claim under the “Balancing Test.” ..................................................... 24
6 2. Plaintiffs State a Claim Under the Section 5 Test.......................................................... 25
7 3. Plaintiffs State a Claim Under the Tethering Test ......................................................... 27
8 E. The Service Providers Engage in Fraudulent Business Practices ............................... 29
9
1. The Service Defendants Deceived Tenants by Leading them to Believe that the
10 Tenants Were Responsible for Paying Unlawful Utilities Charges and Service
Fees ................................................................................................................................. 31
11
2. The Service Defendants Deceived Tenants by Charging Inflated Utilities
12 Charges that did not Correlate to a Building’s Actual Utilities Usage ......................... 33
13
3. The Service Defendants Deceived Tenants by Creating a Misleading Formula and
14 Failing to Disclose Their Billing Practice. .................................................................... 33
15 4. Plaintiffs Are not Required to Plead Aiding and Abetting ............................................. 34
16 VI. CONCLUSION ................................................................................................................ 35
17
18
19
20
21
22
23
24
25
26
27
28
ii
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 TABLE OF AUTHORITIES
2 CASES
3 Alch v. Superior Court
(2004) 122 Cal.App.4th 339 ............................................................................................................ 5
4
5 Aleksick v. 7-Eleven, Inc.
(2012) 205 Cal.App.4th 1176 ........................................................................................................ 29
6
Auto Equity Sales, Inc. v. Superior Court
7 (1962) 57 Cal.2d 450 ..................................................................................................................... 28
8 Becerra v. McClatchy Co.
9 (2021) 69 Cal.App.5th 913 ...................................................................................................... 18, 23
10 Belton v. Comcast Cable Holdings, LLC,
(2007) 151 Cal.App.4th 1224 ........................................................................................................ 27
11
Brown v. USA Taekwondo
12
(2019) 40 Cal.App.5th 1077 .......................................................................................................... 19
13
Brown v. USA Taekwondo
14 (2021) 11 Cal.5th 204 .................................................................................................................... 19
15 Cabral v. Ralphs Grocery Co.
(2011) 51 Cal.4th 764 .................................................................................................................... 21
16
17 CADC/RADC Venture 2011-1 LLC v. Bradley
(2015) 235 Cal.App.4th 775 .......................................................................................................... 28
18
Camacho v. Automobile Club of Southern California
19 (2006) 142 Cal.App.4th 1394 .................................................................................................. 25, 26
20
Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.
21 (1999) 20 Cal.4th 163 .................................................................................................. 25, 27, 28, 29
22 Chapman v. Skype Inc.
(2013) 220 Cal.App.4th 217 .......................................................................................................... 30
23
24 Clauson v. Superior Court
(1998) 67 Cal.App.4th 1253 ............................................................................................................ 5
25
Cortez v. Purolator Air Filtration Products Co.
26 (2000) 23 Cal.4th 163 ........................................................................................................ 18, 23, 30
27 Day v. A T & T Corp.
28 (1998) 63 Cal.App.4th 325 ............................................................................................................ 30
i
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Del E. Webb Corp. v. Structured Materials Co.
(1981) 123 Cal.App.3d 593 ............................................................................................................. 5
2
Fremont Indemnity Co. v. Fremont General Corp.
3
(2007) 148 Cal.App.4th 97 ............................................................................................................ 20
4
Fuller v. First Franklin Financial Corp.
5 (2013) 216 Cal.App.4th 955 .......................................................................................................... 19
6 Goonewardene v. ADP, LLC
(2016) 5 Cal.App.5th 154 ........................................................................................................ 28, 29
7
8 Goonewardene v. ADP, LLC
(2019) 6 Cal.5th 817 ...................................................................................................................... 22
9
Gray v. Dignity Health
10 (2021) 70 Cal.App.5th 225 ............................................................................................................ 28
11
H & M Associates v. City of El Centro
12 (1980) 109 Cal.App.3d 399 ........................................................................................................... 25
13 Hewlett v. Squaw Valley Ski Corp.
(1997) 54 Cal.App.4th 499 ...................................................................................................... 18, 23
14
15 Hillsboro Properties v. Public Utilities Com’n
(2003) 108 Cal.App.4th 246 .......................................................................................................... 10
16
In Re A.N.
17 (2020) 9 Cal.5th 343 ........................................................................................................................ 6
18 In re R.T.
19 (2017) 3 Cal.5th 622 ........................................................................................................................ 6
20 In re Tobacco Cases II v. Am. Tobacco Co.
(2013) Cal. Super. LEXIS 670....................................................................................................... 30
21
In re Tobacco II Cases
22
(2009) 46 Cal.4th 298 .................................................................................................................... 30
23
Ion Equipment Corp. v. Nelson
24 (1980) 110 Cal.App.3d 868 ........................................................................................................... 21
25 John v. Superior Court
(2016) 63 Cal.4th 91 ........................................................................................................................ 6
26
27 Jolley v. Chase Home Finance, LLC
(2013) 213 Cal.App.4th 872 .............................................................................................. 24, 28, 29
28
ii
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Klein v. Chevron U.S.A., Inc.
(2012) 202 Cal.App.4th 1342 .................................................................................................. 29, 34
2
Klein v. Earth Elements, Inc.
3
(1997) 59 Cal.App.4th 965 ............................................................................................................ 24
4
Koch v. Rodlin Enterprises
5 (1990) 223 Cal.App.3d 1591 ........................................................................................................... 5
6 Linear Technology Corp. v. Applied Materials, Inc.
(2007) 152 Cal.App.4th 115 .......................................................................................................... 30
7
8 Los Angeles County Bd. of Supervisors v. Superior Court
(2016) 2 Cal.5th 282 ........................................................................................................................ 6
9
McKell v. Washington Mutual
10 (2006) 142 Cal.App.4th 1457 .................................................................................................. 29, 30
11
Morgan v. AT&T Wireless Services, Inc.
12 (2009) 177 Cal.App.4th 1235 ........................................................................................................ 30
13 Motors, Inc. v. Times Mirror Co.
(1980) 102 Cal.App.3d 735 ..................................................................................................... 24, 25
14
15 Nationwide Biweekly Admin., Inc. v. Superior Court
(2020) 9 Cal.5th 279 ................................................................................................................ 23, 30
16
Pacific Gas & Electric Co. v. Public Utilities Com.
17 (2015) 237 Cal.App.4th 812 .................................................................................................... 18, 23
18 People ex rel. Bill Lockyer v. Fremont Life Ins. Co.
19 (2002) 104 Cal.App.4th 508 .......................................................................................................... 34
20 Podolsky v. First Healthcare Corp.
(1996) 50 Cal.App.4th 632 ................................................................................................ 23, 24, 29
21
Quelimane Co., Inc., v. Steward Title Guaranty Company
22
(1998) 19 Cal.4th 26 ........................................................................................................................ 5
23
Qwest Communs. Corp. v. Weisz
24 (S.D.Cal. 2003) 278 F.Supp.2d 1188 ............................................................................................. 19
25 Riverside Cty. Sheriff’s Department v. Stiglitz
(2014) 60 Cal.4th 624 .................................................................................................................... 16
26
27 Rowland v. Christian
(1968) 69 Cal.2d. 108 .................................................................................................................... 21
28
iii
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Schnall v. Herz Corp
(2000) 78 Cal.App.4th 1144 .................................................................................................... 33, 34
2
Schulz v. Neovi Data Corp.
3
(2007) 152 Cal.App.4th 86 ............................................................................................................ 31
4
Serrano v. Priest
5 (1971) 5 Cal.3d 584 ......................................................................................................................... 5
6 Smith v. State Farm Mutual Automobile Ins. Co.
(2001) 93 Cal.App.4th 700 ...................................................................................................... 23, 24
7
8 State Farm Fire & Casualty Co. v. Superior Court
(1996) 45 Cal. App. 4th 1093 ........................................................................................................ 29
9
Stevens v. Superior Ct.
10 (1999) 75 Cal.App.4th 598 .............................................................................................................. 5
11
Thurman v. Bayshore Transit Management, Inc.
12 (2012) 203 Cal.App.4th 1112 .................................................................................................. 14, 15
13 Zhang v. Superior Court
(2013) 57 Cal.4th 364 .............................................................................................................. 28, 29
14
15 STATUTES
16 Bus. & Prof. Code, § 17200 ............................................................................................................... 23
17 Cal. Civ. Code, § 1714 ....................................................................................................................... 21
18 Cal. Civ. Code, § 1714 subd. (a) ........................................................................................................ 18
19 Cal. Code Civ. Proc., § 436 ................................................................................................................. 5
20 Cal. Code Civ. Proc., § 437 ................................................................................................................. 5
21 Cal. Code Civ. Proc., § 452 ................................................................................................................. 5
22 Cal. Lab. Code, § 1198 ...................................................................................................................... 15
23 OMC, § 8.22.010 ................................................................................................................................. 7
24 OMC, § 8.22.020 ......................................................................................................................... 2, 7, 8
25 OMC, § 8.22.065 subd. (A) ....................................................................................................... 3, 8, 12
26 OMC, § 8.22.065 subd. (B)...................................................................................................... 9, 14, 15
27 OMC, § 8.22.070 subd. (A) ............................................................................................................... 12
28 OMC, § 8.22.070 subd. (H)(1)........................................................................................................... 13
iv
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 OMC, § 8.22.070 subd. (H)(1)(b) ...................................................................................................... 13
2 OMC, § 8.22.070 subd. (H)(6)........................................................................................................... 14
3 OMC, § 8.22.150 subd. (C)................................................................................................................ 15
4 OMC, § 8.22.180 ............................................................................................................................... 17
5 OMC, § 8.22.640 subd (A)(1)............................................................................................................ 15
6 OMC, § 8.22.640 subd. (A)(1)........................................................................................................... 16
7 OMC, § 8.22.640 subd. (A)(22)................................................................................................... 15, 17
8
9 OTHER AUTHORITIES
10 OMC, § 8.22.065 subd. (B).................................................................................................................. 8
11 Rent Adjustment Ordinance Regulation 10.1.10 ........................................................................ passim
12 Rent Adjustment Ordinance Regulation 2.2 ........................................................................................ 7
13 Rent Adjustment Ordinance Regulation 10.1.10 ................................................................................. 9
14 Rent Adjustment Ordinance Regulation 10.1.9 ....................................................................... 9, 10, 11
15 Rent Adjustment Ordinance Regulation 2.3 ........................................................................................ 7
16
17
18
19
20
21
22
23
24
25
26
27
28
v
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 PRELIMINARY STATEMENT
2 The present matter is one of five related cases. This case involves a utility billing scheme
3 that violates Oakland’s Rent Control. The four related cases, non-class-actions, are brought by
4 forty-six individual Plaintiffs. Only twelve of those plaintiffs were subjected to the practices
5 discussed in this brief. All twelve of these plaintiffs have independent grounds for their claims.
6 The table below is provided to assist the court in applying its ruling in this matter to the related
7 cases.
8 Case Defendants Causes of Action Relief Is the request
Challenged by Requested by timely (CCP
9 Defendants Defendants 430.41(b))?
Annus v. Nuisance Demurrer No
10 Mosser Mosser
Defendants Unruh Act Demurrer No
- No Plaintiffs
11
billed divided
12 utilities.
Boulakdem v. Rent Adjustment Ordinance Demurrer/MTS Yes
13 Mosser1 Tenant Protection Ordinance Demurrer/MTS Yes
- 2 out of 30 Mosser UCL Demurrer Already
14 Plaintiffs billed Defendants Overruled
divided utilities Nuisance Demurrer No
15 Unruh Act Demurrer No
YARDI Negligence Demurrer Repeat Motion
16 Tenant Protection Ordinance Demurrer Repeat Motion
UCL Demurrer Repeat Motion
17
Yes UCL Demurrer/MTS Yes
18 Negligence Demurrer Yes
Rogachevsky v. Rent Adjustment Ordinance Demurrer/MTS Yes
19 Mosser Tenant Protection Ordinance Demurrer/MTS Yes
- 3 out of 6 Mosser UCL Demurrer Already
20 Plaintiffs billed Defendants Overruled
divided Unruh Act Demurrer No
21 utilities. FEHA Demurrer Yes
YES Energy UCL Demurrer/MTS Yes
22 and Yardi
Rent Adjustment Ordinance Demurrer Yes
23
Tenant Protection Ordinance Demurrer Yes
24 UCL Demurrer Already
FPI Overruled
25 Unruh Act Demurrer Yes
FEHA Demurrer Yes
26 Conservice UCL Demurrer/MTS Yes
Oak9 and Nothing filed Nothing Filed Nothing Filed
27 PACH
28
1
In this matter YES is named for the billing practices subject of this brief. YES billed two of the thirty Plaintiffs.
YARDI is named for a distinct harassment campaign, not discussed in this brief, directed at twenty-eight Plaintiffs.
1
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Rosenberg v. Rent Adjustment Ordinance Demurrer Yes
Mosser Tenant Protection Ordinance Demurrer/MTS Yes
2 -7 out of 7 Mosser UCL Demurrer Already
Plaintiffs billed Defendants Overruled
3 divided Nuisance Demurrer No
utilities. YES Energy UCL Demurrer/MTS Yes
4 Negligence Demurrer Yes
5 INTRODUCTION
6 Defendants have distilled the issues in their second demurrer. In a stark reversal,
7 Defendants now concede that water and garbage removal services are utilities. They now admit
8 that the Rent Adjustment Regulations are part of the Rent Adjustment Ordinance. Most
9 importantly, they admit that the variable payments for the “utilities” in question are “rent” (albeit
10 unlawful) for purposes of the Rent Adjustment Ordinance (hereafter “RAO”) and its regulations.
11 Defendants’ new position boils down to the following incorrect conclusion: “while a
12 utility cost may itself be characterized as rent, fluctuations in that cost are not a rent increase.”
13 (Dem./MTS, at 26:18-19.) Defendants ask this Court to agree that invoicing tenants variable
14 monthly rent bills, surcharging the rental rate stated in their lease agreement, is not a rent
15 increase because the rent bills are allegedly based on a building’s utility expenses.
16 This reading of the RAO would allow landlords to impose any rent increase they please
17 by claiming, without any documentary evidence or administrative review, that the variable rent,
18 paid to the landlord, is a “utility.” Defendants advocate for a version of rent control where the
19 moment the landlord labels the surcharged costs a “utility,” suddenly the rent demand is not
20 subject to rent control at all. Such a reading, in light of the RAO’s policy of “rent stability” and
21 its overall scheme yields an absurd result that should be rejected.
22 As will be shown, billing-back a quotient of a building’s monthly utility bill is a rent
23 increase that violates numerous provisions of the RAO. Additionally, these monthly rent
24 increases are subject to the RAO Regulations, which prohibit dividing a utility bill between
25 rental units (Regulation 10.1.10), which Defendants do not address. The variable water and
26 garbage bill-backs violate the RAO as follows:
27 1) Variable monthly “rent” invoices surcharged on top the fixed rental rate are rent
28 increases; (Oakland Municipal Code (hereafter OMC), § 8.22.020 (“Rent” definition).)
2
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 2) Landlords must first file a Rent Board petition before imposing any rent increases not
2 based on CPI or banking; (OMC, § 8.22.065 subd. (A).)
3 3) The Landlord Defendants failed to file any rent petitions; (SAC, at ¶¶ 128, 132.)
4 4) Even if the Landlord Defendants had filed petitions, they could not divide a utility bill
5 between rental units on a variable basis each month, as a surcharge to the base rental rate.
6 (Regulation 10.1.10.)
7 As such, Defendants’ demurrer must be overruled.
8 Plaintiffs do not seek downward adjustments of the rental rates they agreed to. Instead,
9 Plaintiffs seek a permanent injunction prohibiting Defendants’ unlawful practice, as well as the
10 return of all amounts unlawfully collected.
11 STATEMENT OF FACTS ALLEGED IN COMPLAINT
12 The residential rental properties which are the subject of this action are covered by
13 Oakland’s Rent Adjustment Ordinance (“RAO”). (SAC, at ¶ 32.) Plaintiffs and the Landlord
14 Defendants entered into residential rental agreements with fixed monthly rental rates; for
15 example, plaintiff YEN agreed to pay monthly rent of $2,450. (SAC, at ¶ ¶ 44, 46.) Plaintiffs
16 also agreed to pay an undisclosed amount of additional “rent” justified as alleged “utility” costs,
17 which are billed-back to Plaintiffs under an “allocation factor” formula each month. (SAC, at ¶
18 44, EX. 1 ¶ 3-4) Plaintiffs’ leases did not specify a dollar amount or even an approximate dollar
19 amount they would be billed each month for this additional rent. (SAC, at EX. 1.)
20 Infrastructure is not available for Plaintiffs to contract directly for water or garbage
21 services. (SAC, at ¶ 49.) Defendants claim to divide each building’s utility-related bills between
22 the building’s rental units. (SAC, at ¶ 49.) Plaintiffs each signed a “Yes Energy Utility
23 Addendum” as part of their lease to pay water, sewer, and garbage. (SAC, at Ex. 1.) The Utility
24 Addendum states in part:
25 Landlord shall be responsible for the payment of the following utility services for
your unit (mark as appropriate): ( ) Electricity ( ) Gas ( ) Water ( )
26 Trash/Garbage ( ) Telephone ( ) Cable TV/Sat. ( ) Sewer ( ) Energy to heat
Hot Water
27
Each utility service not provided at the Landlord's expense, i.e., not checked
28 above, is to be provided to your unit at Tenant's expense.
3
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 (SAC, at Ex. 1, ¶ 1.)
2 No utility services were checked off by Plaintiffs’ landlords. Id. Thus, according to Defendants’
3 Utility Addendum, Plaintiffs are responsible for water and garbage utility costs.
4 Defendants also state in the addendum that utilities will be billed-back on a monthly
5 basis, and charged as additional rent:
6 … charges for utilities paid to Landlord or Landlord's agent are considered Rent
since such utilities are generally considered Housing Services (SAC, Ex. 1 ¶ 3
7 (emphasis).)
8 “In addition to the monthly rent amount set forth in Paragraph 4 of the Lease,
Tenant is also responsible for paying to Landlord additional charges for the
9 utilities not checked in Paragraphs 1 or 2 above as invoiced by Landlord or
Billing Provider.” (SAC, Ex. 1 ¶ 3 (emphasis).)
10
“Utility bills for water, sewer, and garbage service are billed in arrears and will
11 be issued by Landlord's Billing Provider or by Landlord directly on a monthly
billing statement.” (SAC, Ex. 1 ¶ 7(a) (emphasis).)
12
“Payment is to be paid to Mosser Companies on the 1st of each month. Failure to
13 pay utilities as required by this Addendum will be treated as non-payment of
14 rent.” (SAC, Ex. 1 ¶ 7(b) (emphasis).)
“The amounts reflected on the utility bill sent by Landlord or Billing Provider
15 may be considered a part of Rent for the purpose of calculating allowable rent
16 increases under the Ordinance.” (SAC, Ex. 1 ¶ 3 (emphasis).)
17 Not set forth in the Utility Addendum is any mention of a “billing admin” or “service” fee.
18 (Complaint, ¶ 51, Ex. 1.) Defendants reserve their rights to alter the utility cost proportions that
19 they bill Plaintiffs each month. (SAC, at Ex. 1 ¶ 6.) They also claim that costs outside of those
20 “related” to the utility bill itself may be assessed to tenants, “including, but not limited to”
21 “charges contained on tax bills.” (SAC, at Ex. 1 ¶ 4.)
22 The Service Providers, do not act as mere administrative support for landlord and
23 Management defendants. (SAC, at 171-71.) Each and every month, the Service Providers send
24 bills on their own letterheads directly to tenants, demanding that the tenants pay their landlords’
25 unlawful rent increases. (SAC, at ¶ 171.) The Service Providers also indirectly charge tenants for
26 their “services,” by adding “service” and “billing admin” fees to the rent demands. (SAC, at ¶
27 172.) While this conduct is unfair and fraudulent in itself, Plaintiffs also allege the Service
28 Provider help landlords pass off more than a proportional share of utilities. (SAC, at ¶¶ 184-92.)
4
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 ARGUMENT
2 I. LEGAL STANDARDS
3 Demurrer - The Court must construe complaints liberally “. . . with a view to substantial
4 justice between the parties.” (Cal. Code Civ. Proc., § 452; Stevens v. Superior Ct. (1999) 75
5 Cal.App.4th 598, 601 (citations omitted).) In considering a demurrer, the court may not weigh
6 either the likelihood or probability of the facts alleged, but must credit every fact as true.
7 (Serrano v. Priest (1971) 5 Cal.3d 584, 591; Del E. Webb Corp. v. Structured Materials Co.
8 (1981) 123 Cal.App.3d 593, 604.)
9 In California, a plaintiff “is required only to set forth the essential facts of [her] case with
10 particularity sufficient to acquaint a defendant with the nature, source and extent of [her] cause
11 of action.” (Alch v. Superior Court (2004) 122 Cal.App.4th 339, 382). On demurrer if the
12 essential facts state any valid claim entitling plaintiff to relief, any cause of action, then the
13 complaint should survive a general demurrer. (Quelimane Co., Inc., v. Steward Title Guaranty
14 Company (1998) 19 Cal.4th 26, 38-39.)
15 Review of a ruling on demurrer is governed by well-settled principles. “When reviewing
16 an order sustaining a demurrer without leave to amend, this court must treat the demurrer as
17 admitting all properly pleaded facts, but not contentions, deductions or conclusions of fact or
18 law. We must read the complaint as a whole and give it a reasonable interpretation. [Citation.] If
19 the complaint, liberally construed, can state a cause of action, or if it is reasonably possible that
20 the plaintiffs can cure the complaint by amendment, the trial court should not sustain a demurrer
21 without leave to amend.” (Koch v. Rodlin Enterprises (1990) 223 Cal.App.3d 1591, 1595.)
22 A defendant can strike “any irrelevant, false, or improper matter.” (Cal. Code Civ. Proc., § 436.)
23 Motion to Strike - A motion to strike’s “grounds … shall appear on the face of the
24 challenged pleading or from any matter of which the court is required to take judicial notice.”
25 (Cal. Code Civ. Proc., § 437.) When considering motions to strike, courts “read allegations of a
26 pleading … as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior
27 Court (1998) 67 Cal.App.4th 1253, 1255.) There is no legal authority for the filing of a
28 combination demurrer/motion to strike that requests the court choose the proper remedy.
5
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 II. PLAINTIFFS STATE A CLAIM UNDER OAKLAND’S RENT ADJUSTMENT
ORDINANCE FOR UNLAWFUL, UNPETITIONED RENT INCREASES
2
3 Plaintiffs’ Second Amended Complaint more than adequately states a claim for unlawful
4 rent increases which violate the RAO. Defendants agreed to a fixed monthly rent amount with
5 Plaintiffs. Defendants also required that Plaintiffs pay an additional, variable amount of rent not
6 specified in the lease. Defendants attempt to justify this rent surcharge, by claiming, without
7 showing evidence, that the rent increases correlate to the building’s (not the tenants’) utility
8 usage. These monthly rent increases are not based on CPI or banking. Therefore, Defendants
9 were required to file rent petitions before billing these amounts as additional “rent.” They failed
10 to do so. Even if they did file petitions, the rent increases would still not be authorized as
11 Oakland’s regulations explicitly prohibit this practice. Knowing this, Defendants instead operate
12 outside of the law. This scheme violates numerous provisions of the RAO, its regulations, and
13 the public policy in which they are rooted.
14 A. Oakland’s Rent Adjustment Ordinance Must be Interpreted as a Whole,
Looking to its Text and its Purpose
15
16 The legal standards observed in statutory interpretation are well-established: A legislative
17 act is expected to make sense as a whole, consistent with its overall purpose.
18 “We start with the statute's words, which are the most reliable indicator of
legislative intent.” (In re R.T. (2017) 3 Cal.5th 622, 627.) “‘We interpret relevant
19 terms in light of their ordinary meaning, while also taking account of any related
provisions and the overall structure of the statutory scheme to determine what
20 interpretation best advances the Legislature's underlying purpose.’” (Ibid., quoting
21 Los Angeles County Bd. of Supervisors v. Superior Court (2016) 2 Cal.5th 282,
293.) “If we find the statutory language ambiguous or subject to more than one
22 interpretation, we may look to extrinsic aids, including legislative history or
purpose to inform our views.” (John v. Superior Court (2016) 63 Cal.4th 91, 96.)
23
24 (In Re A.N. (2020) 9 Cal.5th 343, 351-52).
25 The RAO’s findings and statements of intent reveal that its primary purpose is rent stability.
26 Article I. - Residential Rent Adjustment Program
… The present shortage of rental housing units and the prevailing rent levels have
27 a detrimental effect on the health, safety, and welfare of a substantial number of
Oakland residents, particularly senior citizens, persons in low and moderate income
28 households, and persons on fixed incomes. Stability in their housing situation is
6
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 important for individuals and families in rental housing.
2 (OMC, § 8.22.010 (“Findings and purpose”) (emphasis added).)
3 Oakland residents with low, moderate and fixed incomes, who pay a large portion of their
4 monthly income on rent, underpin the RAO’s primary stated purpose – rent stability. The first
5 lines of Oakland’s ordinance immediately cast doubt onto Defendants’ variable rent agreements.
6 B. The Landlord and Management Defendants Violate Numerous Provisions of
The Rent Adjustment Ordinance
7
8 Consistent with its purpose of rent stability, the RAO tightly Regulates Rent Increases.
9 The RAO’s stringent rent-increase limitations assume an agreed fixed monthly “rent.” "‘Rent’
10 means the total consideration charged or received by an owner in exchange for the use or
11 occupancy of a covered unit including all housing services provided to the tenant.” (OMC, §
12 8.22.020 (“Rent” definition) (emphasis).) There is an agreed “total” amount of rent in exchange
13 for occupancy of the rental unit and all associated housing services such as water supply and
14 garbage removal. This “total” is referred to in the Regulations as the “base rent.”
15 “Base Rent: The monthly rental rate before the latest proposed increase.”
16 “Current Rent: To keep current means that the tenant is paid up to date on rental
payments at the base rental rate.”
17
18 (Rent Adjustment Ordinance Regulations 2.2-2.3.) Once this concept of fixed rent, and regulated
19 rent increases is understood, Defendants’ numerous RAO violations become immediately
20 apparent.
21 1. Defendants Violate the Rent Adjustment Ordinance by not Filing Petitions
for Rent Increases that are not Based on the CPI or Banking
22
23 “On August 5, 2016, finding that ‘the requirement in the current Rent Adjustment
24 Ordinance for tenants to file petitions to challenge rent increases discourages many tenants from
25 contesting what might be invalid rent increase[sic.]’ Oakland City Council passed Resolution
26 86320, which Placed Measure JJ on the November 2016 Ballot.” (SAC, at ¶ 138.) 75.24% of
27 Oakland voters voted to pass Measure JJ, amending Oakland’s Rent Adjustment Ordinance.
28 (SAC, at ¶¶ 138-40.) The ballot measure added the following provision to the RAO:
7
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 A. Notwithstanding any other provision of this Chapter, owners may increase rents
only for increases based on the CPI Rent Adjustment or Banking, or by filing a
2 petition to increase rent in excess of that amount. Any rent increase not based on
the CPI Rent Adjustment or Banking that is not first approved by the Rent
3
Adjustment Program is void and unenforceable.
4 B. Rent Increases are subject to the requirements of this Chapter and Regulations.
5 (OMC, § 8.22.065 subds. (A)-(B) (emphasis); SAC, at ¶¶ 138-40.)
6 Here, both Plaintiffs and Defendants agree that the charges in question are “rent.”
7 (Dem./MTS, at 24:28-25:9.)There is no dispute the Landlords are the parties which contract with
8 the utility providers for each building’s water, sewer and garbage services. There is no
9 infrastructure for individual rental units to do so. Thus, under the RAO, Plaintiffs’ base rent
10 payments are “in exchange” for water, sewer and garbage services. (OMC, § 8.22.020 ("housing
11 services” and “rent” definitions).)
12 In contravention of the RAO, Landlords accept these base rent payments, but then
13 surcharge tenants an alleged share of the building’s “housing services” as additional “rent.”
14 (SAC, at Ex. 1 ¶¶ 3, 7(a),(b).) On a variable and monthly basis, the Landlords claim to divide
15 their bills for housing services between the residents of their rental units. Again, these variable
16 surcharges are “billed in arrears.” (SAC, Ex 1, ¶ 7(a)). These bill-backs also contain
17 administrative or other charges. (SAC, at ¶ 39.) In addition to there being no provision of the
18 RAO authorizing a rent increase based on utility usage, there is also no provision in the RAO for
19 additional rent increases based on a landlord providing alleged “services” or “billing admin” –
20 these are all unlawful rent increases.
21 Because these additional, variable “rent” amounts are not based on CPI or Banking, or on
22 an owner petition, they are rent increases which violate the Rent Adjustment Ordinance. (OMC,
23 § 8.22.065 subd. (A)). Any such rent increase “…not first approved by the Rent Adjustment
24 Program is void and unenforceable.” (Ibid. (emphasis).) The Landlord Defendants’ and
25 Management Defendants’ demurrer should be overruled on this basis alone. The court need not
26 enquire further than that Defendants adjusted Plaintiffs’ rent not based on the CPI or banking, yet
27 failed to file landlord petitions. This violation is especially troubling considering that even if the
28 Landlords had filed the proper petitions, their scheme would be disallowed.
8
OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 2. Even if Defendants had filed Petitions, as the Rent Adjustment Ordinance
Requires, the Monthly Variable Rent Increases would not be Allowed
2
3 As explained above, each month Defendants claim to calculate utility bill quotients.
4 Defendants and their billing agents then surcharge Plaintiffs this as additional “rent” each month.
5 Rent increases are subject to the RAO and its Regulations. (OMC, § 8.22.065 subd.
6 (B)). Defendants now concede this point. (Dem./MTS, at 25:19-26:21, note 6.) There are
7 circumstances where a tenant may be responsible for certain utility costs, but those are not
8 satisfied here: Tenants must agree at the inception of the tenancy to shoulder the utility costs and
9 the tenant must have the ability to contract directly with the utility provider.
10 The transfer of utility costs to the tenant by the landlord is not considered as part of
the rent increase unless the landlord is designated in the original rental agreement
11 to be the party responsible for such costs.
12 (Rent Adjustment Ordinance Regulation 10.1.9.)
13
Preview
1 Robert Salinas (SBN 184260) Rocio Toriz (SBN 252491) 2 Annie B. Banh (SBN 322939) SALINAS LAW GROUP th 3 428 13 Street, Eighth Floor Oakland, California 94601 Tel:(510) 663-9240 4 Fax(510) 663-9241 5 Leah Simon-Weisberg (SBN 225954) Jackie Zaneri (SBN 318088) 6 Ethan Silverstein (SBN 334836) ACCE INSTITUTE 7 2220 Livingston Street, Suite # 214 Oakland, California, 94606 8 Phone Number: (510) 916-2034 9 Attorneys for Plaintiffs 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 COUNTY OF ALAMEDA – UNLIMITED JURISDICTION 12 ANDREW YEN, JAMES BALL, KAITLIN Case No.: RG21-100261 13 BLANCO, and MELINA TESSIER, on behalf of themselves and all others similarly situated, Case Assigned to Hon. Evelio Grillo in 14 Dept.21 for all Purposes Plaintiffs, 15 OPPOSITION TO DEFENDANTS v. 16 ) COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ NEVEO MOSSER, THE MOSSER 17 COMPANIES, INC., 533 SYCAMORE STREET SECOND AMENDED COMPLAINT 18 ASSOCIATES, LP, 1428 JACKSON STREET ASSOCIATES, LP, CONSERVICE, LLC, FPI Judge: Hon. Evelio Grillo 19 MANAGEMENT, INC., OAK9 PORTFOLIO Date: March 22, 2022 OWNER, LP, OAK 406 VAN BURREN AVE 20 PROPERTY, LLC, OAK-533 SYCAMORE, Time: 10:00 am Dept.: 21 LLC, OAK 1425 HARRISON STREET 21 PROPERTY, LLC, OAK-1428 JACKSON, LLC, 22 PACH AFFORDABLE HOLDINGS, LLC, SAC Filed: December 3, 2021 YARDI SYSTEMS, INC., YES ENERGY Trial Date: None 23 MANAGEMENT, INC., and DOES 1-500, 24 Defendants. Reservation No.: 774512897603 25 26 27 28 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 TABLE OF CONTENTS 2 PRELIMINARY STATEMENT ...................................................................................................... 1 3 INTRODUCTION ............................................................................................................................. 2 4 STATEMENT OF FACTS ALLEGED IN COMPLAINT ............................................................ 3 5 ARGUMENT...................................................................................................................................... 5 6 I. LEGAL STANDARDS ...................................................................................................... 5 7 II. PLAINTIFFS STATE A CLAIM UNDER OAKLAND’S RENT ADJUSTMENT 8 ORDINANCE FOR UNLAWFUL, UNPETITIONED RENT INCREASES .............. 6 9 A. Oakland’s Rent Adjustment Ordinance Must be Interpreted as a Whole, Looking to its Text and its Purpose .................................................................................. 6 10 B. The Landlord and Management Defendants Violate Numerous Provisions of 11 The Rent Adjustment Ordinance ..................................................................................... 7 12 1. Defendants Violate the Rent Adjustment Ordinance by not Filing Petitions for Rent 13 Increases that are not Based on the CPI or Banking....................................................... 7 14 2. Even if Defendants had filed Petitions, as the Rent Adjustment Ordinance Requires, the Monthly Variable Rent Increases would not be Allowed ........................................... 9 15 16 3. Defendants’ Monthly Increases Violate the One Annual Increase Rule........................ 12 17 4. Defendants do not Provide Proper Notices with their Monthly Rent Increases ............ 12 18 C. Plaintiffs Have a Private Right of Action to Indirectly Enforce the Regulations, Including 10.1.10 .............................................................................................................. 14 19 20 III. PLAINTIFFS STATE A CLAIM UNDER THE TENANT PROTECTION ORDINANCE ................................................................................................................... 15 21 A. Plaintiffs State a Claim for Failing to Provide Housing Service ................................. 15 22 B. Plaintiffs State A Claim for Other Repeated Acts and Omissions Designed to 23 Make Plaintiffs Waive Their Rights ............................................................................... 17 24 IV. THE LANDLORD AND MANAGEMENT DEFENDANTS WERE OVERRULED ON THEIR FIRST DEMURRER TO UCL .................................................................. 17 25 26 V. THE SERVICE PROVIDERS ENGAGE IN UNFAIR AND FRAUDULENT BUSINESS PRACTICES. ............................................................................................... 18 27 A. Defendants Rely on Inapplicable Law to Argue They Have no Duty to Conduct 28 Business Fairly ................................................................................................................. 19 i OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 B. Exempting the Service Providers from a Duty to not Engage in Unfair Practices Toward Tenants is not “Clearly Supported by Public Policy.” ................................... 21 2 C. The Service Defendants are not Similar to Payroll Companies .................................. 22 3 D. Plaintiffs State an “Unfair” Claim Regardless of Which Test the Court Utilizes ..... 23 4 5 1. Plaintiffs state a claim under the “Balancing Test.” ..................................................... 24 6 2. Plaintiffs State a Claim Under the Section 5 Test.......................................................... 25 7 3. Plaintiffs State a Claim Under the Tethering Test ......................................................... 27 8 E. The Service Providers Engage in Fraudulent Business Practices ............................... 29 9 1. The Service Defendants Deceived Tenants by Leading them to Believe that the 10 Tenants Were Responsible for Paying Unlawful Utilities Charges and Service Fees ................................................................................................................................. 31 11 2. The Service Defendants Deceived Tenants by Charging Inflated Utilities 12 Charges that did not Correlate to a Building’s Actual Utilities Usage ......................... 33 13 3. The Service Defendants Deceived Tenants by Creating a Misleading Formula and 14 Failing to Disclose Their Billing Practice. .................................................................... 33 15 4. Plaintiffs Are not Required to Plead Aiding and Abetting ............................................. 34 16 VI. CONCLUSION ................................................................................................................ 35 17 18 19 20 21 22 23 24 25 26 27 28 ii OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 TABLE OF AUTHORITIES 2 CASES 3 Alch v. Superior Court (2004) 122 Cal.App.4th 339 ............................................................................................................ 5 4 5 Aleksick v. 7-Eleven, Inc. (2012) 205 Cal.App.4th 1176 ........................................................................................................ 29 6 Auto Equity Sales, Inc. v. Superior Court 7 (1962) 57 Cal.2d 450 ..................................................................................................................... 28 8 Becerra v. McClatchy Co. 9 (2021) 69 Cal.App.5th 913 ...................................................................................................... 18, 23 10 Belton v. Comcast Cable Holdings, LLC, (2007) 151 Cal.App.4th 1224 ........................................................................................................ 27 11 Brown v. USA Taekwondo 12 (2019) 40 Cal.App.5th 1077 .......................................................................................................... 19 13 Brown v. USA Taekwondo 14 (2021) 11 Cal.5th 204 .................................................................................................................... 19 15 Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764 .................................................................................................................... 21 16 17 CADC/RADC Venture 2011-1 LLC v. Bradley (2015) 235 Cal.App.4th 775 .......................................................................................................... 28 18 Camacho v. Automobile Club of Southern California 19 (2006) 142 Cal.App.4th 1394 .................................................................................................. 25, 26 20 Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. 21 (1999) 20 Cal.4th 163 .................................................................................................. 25, 27, 28, 29 22 Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217 .......................................................................................................... 30 23 24 Clauson v. Superior Court (1998) 67 Cal.App.4th 1253 ............................................................................................................ 5 25 Cortez v. Purolator Air Filtration Products Co. 26 (2000) 23 Cal.4th 163 ........................................................................................................ 18, 23, 30 27 Day v. A T & T Corp. 28 (1998) 63 Cal.App.4th 325 ............................................................................................................ 30 i OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Del E. Webb Corp. v. Structured Materials Co. (1981) 123 Cal.App.3d 593 ............................................................................................................. 5 2 Fremont Indemnity Co. v. Fremont General Corp. 3 (2007) 148 Cal.App.4th 97 ............................................................................................................ 20 4 Fuller v. First Franklin Financial Corp. 5 (2013) 216 Cal.App.4th 955 .......................................................................................................... 19 6 Goonewardene v. ADP, LLC (2016) 5 Cal.App.5th 154 ........................................................................................................ 28, 29 7 8 Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817 ...................................................................................................................... 22 9 Gray v. Dignity Health 10 (2021) 70 Cal.App.5th 225 ............................................................................................................ 28 11 H & M Associates v. City of El Centro 12 (1980) 109 Cal.App.3d 399 ........................................................................................................... 25 13 Hewlett v. Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499 ...................................................................................................... 18, 23 14 15 Hillsboro Properties v. Public Utilities Com’n (2003) 108 Cal.App.4th 246 .......................................................................................................... 10 16 In Re A.N. 17 (2020) 9 Cal.5th 343 ........................................................................................................................ 6 18 In re R.T. 19 (2017) 3 Cal.5th 622 ........................................................................................................................ 6 20 In re Tobacco Cases II v. Am. Tobacco Co. (2013) Cal. Super. LEXIS 670....................................................................................................... 30 21 In re Tobacco II Cases 22 (2009) 46 Cal.4th 298 .................................................................................................................... 30 23 Ion Equipment Corp. v. Nelson 24 (1980) 110 Cal.App.3d 868 ........................................................................................................... 21 25 John v. Superior Court (2016) 63 Cal.4th 91 ........................................................................................................................ 6 26 27 Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872 .............................................................................................. 24, 28, 29 28 ii OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342 .................................................................................................. 29, 34 2 Klein v. Earth Elements, Inc. 3 (1997) 59 Cal.App.4th 965 ............................................................................................................ 24 4 Koch v. Rodlin Enterprises 5 (1990) 223 Cal.App.3d 1591 ........................................................................................................... 5 6 Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115 .......................................................................................................... 30 7 8 Los Angeles County Bd. of Supervisors v. Superior Court (2016) 2 Cal.5th 282 ........................................................................................................................ 6 9 McKell v. Washington Mutual 10 (2006) 142 Cal.App.4th 1457 .................................................................................................. 29, 30 11 Morgan v. AT&T Wireless Services, Inc. 12 (2009) 177 Cal.App.4th 1235 ........................................................................................................ 30 13 Motors, Inc. v. Times Mirror Co. (1980) 102 Cal.App.3d 735 ..................................................................................................... 24, 25 14 15 Nationwide Biweekly Admin., Inc. v. Superior Court (2020) 9 Cal.5th 279 ................................................................................................................ 23, 30 16 Pacific Gas & Electric Co. v. Public Utilities Com. 17 (2015) 237 Cal.App.4th 812 .................................................................................................... 18, 23 18 People ex rel. Bill Lockyer v. Fremont Life Ins. Co. 19 (2002) 104 Cal.App.4th 508 .......................................................................................................... 34 20 Podolsky v. First Healthcare Corp. (1996) 50 Cal.App.4th 632 ................................................................................................ 23, 24, 29 21 Quelimane Co., Inc., v. Steward Title Guaranty Company 22 (1998) 19 Cal.4th 26 ........................................................................................................................ 5 23 Qwest Communs. Corp. v. Weisz 24 (S.D.Cal. 2003) 278 F.Supp.2d 1188 ............................................................................................. 19 25 Riverside Cty. Sheriff’s Department v. Stiglitz (2014) 60 Cal.4th 624 .................................................................................................................... 16 26 27 Rowland v. Christian (1968) 69 Cal.2d. 108 .................................................................................................................... 21 28 iii OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Schnall v. Herz Corp (2000) 78 Cal.App.4th 1144 .................................................................................................... 33, 34 2 Schulz v. Neovi Data Corp. 3 (2007) 152 Cal.App.4th 86 ............................................................................................................ 31 4 Serrano v. Priest 5 (1971) 5 Cal.3d 584 ......................................................................................................................... 5 6 Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700 ...................................................................................................... 23, 24 7 8 State Farm Fire & Casualty Co. v. Superior Court (1996) 45 Cal. App. 4th 1093 ........................................................................................................ 29 9 Stevens v. Superior Ct. 10 (1999) 75 Cal.App.4th 598 .............................................................................................................. 5 11 Thurman v. Bayshore Transit Management, Inc. 12 (2012) 203 Cal.App.4th 1112 .................................................................................................. 14, 15 13 Zhang v. Superior Court (2013) 57 Cal.4th 364 .............................................................................................................. 28, 29 14 15 STATUTES 16 Bus. & Prof. Code, § 17200 ............................................................................................................... 23 17 Cal. Civ. Code, § 1714 ....................................................................................................................... 21 18 Cal. Civ. Code, § 1714 subd. (a) ........................................................................................................ 18 19 Cal. Code Civ. Proc., § 436 ................................................................................................................. 5 20 Cal. Code Civ. Proc., § 437 ................................................................................................................. 5 21 Cal. Code Civ. Proc., § 452 ................................................................................................................. 5 22 Cal. Lab. Code, § 1198 ...................................................................................................................... 15 23 OMC, § 8.22.010 ................................................................................................................................. 7 24 OMC, § 8.22.020 ......................................................................................................................... 2, 7, 8 25 OMC, § 8.22.065 subd. (A) ....................................................................................................... 3, 8, 12 26 OMC, § 8.22.065 subd. (B)...................................................................................................... 9, 14, 15 27 OMC, § 8.22.070 subd. (A) ............................................................................................................... 12 28 OMC, § 8.22.070 subd. (H)(1)........................................................................................................... 13 iv OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 OMC, § 8.22.070 subd. (H)(1)(b) ...................................................................................................... 13 2 OMC, § 8.22.070 subd. (H)(6)........................................................................................................... 14 3 OMC, § 8.22.150 subd. (C)................................................................................................................ 15 4 OMC, § 8.22.180 ............................................................................................................................... 17 5 OMC, § 8.22.640 subd (A)(1)............................................................................................................ 15 6 OMC, § 8.22.640 subd. (A)(1)........................................................................................................... 16 7 OMC, § 8.22.640 subd. (A)(22)................................................................................................... 15, 17 8 9 OTHER AUTHORITIES 10 OMC, § 8.22.065 subd. (B).................................................................................................................. 8 11 Rent Adjustment Ordinance Regulation 10.1.10 ........................................................................ passim 12 Rent Adjustment Ordinance Regulation 2.2 ........................................................................................ 7 13 Rent Adjustment Ordinance Regulation 10.1.10 ................................................................................. 9 14 Rent Adjustment Ordinance Regulation 10.1.9 ....................................................................... 9, 10, 11 15 Rent Adjustment Ordinance Regulation 2.3 ........................................................................................ 7 16 17 18 19 20 21 22 23 24 25 26 27 28 v OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 PRELIMINARY STATEMENT 2 The present matter is one of five related cases. This case involves a utility billing scheme 3 that violates Oakland’s Rent Control. The four related cases, non-class-actions, are brought by 4 forty-six individual Plaintiffs. Only twelve of those plaintiffs were subjected to the practices 5 discussed in this brief. All twelve of these plaintiffs have independent grounds for their claims. 6 The table below is provided to assist the court in applying its ruling in this matter to the related 7 cases. 8 Case Defendants Causes of Action Relief Is the request Challenged by Requested by timely (CCP 9 Defendants Defendants 430.41(b))? Annus v. Nuisance Demurrer No 10 Mosser Mosser Defendants Unruh Act Demurrer No - No Plaintiffs 11 billed divided 12 utilities. Boulakdem v. Rent Adjustment Ordinance Demurrer/MTS Yes 13 Mosser1 Tenant Protection Ordinance Demurrer/MTS Yes - 2 out of 30 Mosser UCL Demurrer Already 14 Plaintiffs billed Defendants Overruled divided utilities Nuisance Demurrer No 15 Unruh Act Demurrer No YARDI Negligence Demurrer Repeat Motion 16 Tenant Protection Ordinance Demurrer Repeat Motion UCL Demurrer Repeat Motion 17 Yes UCL Demurrer/MTS Yes 18 Negligence Demurrer Yes Rogachevsky v. Rent Adjustment Ordinance Demurrer/MTS Yes 19 Mosser Tenant Protection Ordinance Demurrer/MTS Yes - 3 out of 6 Mosser UCL Demurrer Already 20 Plaintiffs billed Defendants Overruled divided Unruh Act Demurrer No 21 utilities. FEHA Demurrer Yes YES Energy UCL Demurrer/MTS Yes 22 and Yardi Rent Adjustment Ordinance Demurrer Yes 23 Tenant Protection Ordinance Demurrer Yes 24 UCL Demurrer Already FPI Overruled 25 Unruh Act Demurrer Yes FEHA Demurrer Yes 26 Conservice UCL Demurrer/MTS Yes Oak9 and Nothing filed Nothing Filed Nothing Filed 27 PACH 28 1 In this matter YES is named for the billing practices subject of this brief. YES billed two of the thirty Plaintiffs. YARDI is named for a distinct harassment campaign, not discussed in this brief, directed at twenty-eight Plaintiffs. 1 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Rosenberg v. Rent Adjustment Ordinance Demurrer Yes Mosser Tenant Protection Ordinance Demurrer/MTS Yes 2 -7 out of 7 Mosser UCL Demurrer Already Plaintiffs billed Defendants Overruled 3 divided Nuisance Demurrer No utilities. YES Energy UCL Demurrer/MTS Yes 4 Negligence Demurrer Yes 5 INTRODUCTION 6 Defendants have distilled the issues in their second demurrer. In a stark reversal, 7 Defendants now concede that water and garbage removal services are utilities. They now admit 8 that the Rent Adjustment Regulations are part of the Rent Adjustment Ordinance. Most 9 importantly, they admit that the variable payments for the “utilities” in question are “rent” (albeit 10 unlawful) for purposes of the Rent Adjustment Ordinance (hereafter “RAO”) and its regulations. 11 Defendants’ new position boils down to the following incorrect conclusion: “while a 12 utility cost may itself be characterized as rent, fluctuations in that cost are not a rent increase.” 13 (Dem./MTS, at 26:18-19.) Defendants ask this Court to agree that invoicing tenants variable 14 monthly rent bills, surcharging the rental rate stated in their lease agreement, is not a rent 15 increase because the rent bills are allegedly based on a building’s utility expenses. 16 This reading of the RAO would allow landlords to impose any rent increase they please 17 by claiming, without any documentary evidence or administrative review, that the variable rent, 18 paid to the landlord, is a “utility.” Defendants advocate for a version of rent control where the 19 moment the landlord labels the surcharged costs a “utility,” suddenly the rent demand is not 20 subject to rent control at all. Such a reading, in light of the RAO’s policy of “rent stability” and 21 its overall scheme yields an absurd result that should be rejected. 22 As will be shown, billing-back a quotient of a building’s monthly utility bill is a rent 23 increase that violates numerous provisions of the RAO. Additionally, these monthly rent 24 increases are subject to the RAO Regulations, which prohibit dividing a utility bill between 25 rental units (Regulation 10.1.10), which Defendants do not address. The variable water and 26 garbage bill-backs violate the RAO as follows: 27 1) Variable monthly “rent” invoices surcharged on top the fixed rental rate are rent 28 increases; (Oakland Municipal Code (hereafter OMC), § 8.22.020 (“Rent” definition).) 2 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 2) Landlords must first file a Rent Board petition before imposing any rent increases not 2 based on CPI or banking; (OMC, § 8.22.065 subd. (A).) 3 3) The Landlord Defendants failed to file any rent petitions; (SAC, at ¶¶ 128, 132.) 4 4) Even if the Landlord Defendants had filed petitions, they could not divide a utility bill 5 between rental units on a variable basis each month, as a surcharge to the base rental rate. 6 (Regulation 10.1.10.) 7 As such, Defendants’ demurrer must be overruled. 8 Plaintiffs do not seek downward adjustments of the rental rates they agreed to. Instead, 9 Plaintiffs seek a permanent injunction prohibiting Defendants’ unlawful practice, as well as the 10 return of all amounts unlawfully collected. 11 STATEMENT OF FACTS ALLEGED IN COMPLAINT 12 The residential rental properties which are the subject of this action are covered by 13 Oakland’s Rent Adjustment Ordinance (“RAO”). (SAC, at ¶ 32.) Plaintiffs and the Landlord 14 Defendants entered into residential rental agreements with fixed monthly rental rates; for 15 example, plaintiff YEN agreed to pay monthly rent of $2,450. (SAC, at ¶ ¶ 44, 46.) Plaintiffs 16 also agreed to pay an undisclosed amount of additional “rent” justified as alleged “utility” costs, 17 which are billed-back to Plaintiffs under an “allocation factor” formula each month. (SAC, at ¶ 18 44, EX. 1 ¶ 3-4) Plaintiffs’ leases did not specify a dollar amount or even an approximate dollar 19 amount they would be billed each month for this additional rent. (SAC, at EX. 1.) 20 Infrastructure is not available for Plaintiffs to contract directly for water or garbage 21 services. (SAC, at ¶ 49.) Defendants claim to divide each building’s utility-related bills between 22 the building’s rental units. (SAC, at ¶ 49.) Plaintiffs each signed a “Yes Energy Utility 23 Addendum” as part of their lease to pay water, sewer, and garbage. (SAC, at Ex. 1.) The Utility 24 Addendum states in part: 25 Landlord shall be responsible for the payment of the following utility services for your unit (mark as appropriate): ( ) Electricity ( ) Gas ( ) Water ( ) 26 Trash/Garbage ( ) Telephone ( ) Cable TV/Sat. ( ) Sewer ( ) Energy to heat Hot Water 27 Each utility service not provided at the Landlord's expense, i.e., not checked 28 above, is to be provided to your unit at Tenant's expense. 3 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 (SAC, at Ex. 1, ¶ 1.) 2 No utility services were checked off by Plaintiffs’ landlords. Id. Thus, according to Defendants’ 3 Utility Addendum, Plaintiffs are responsible for water and garbage utility costs. 4 Defendants also state in the addendum that utilities will be billed-back on a monthly 5 basis, and charged as additional rent: 6 … charges for utilities paid to Landlord or Landlord's agent are considered Rent since such utilities are generally considered Housing Services (SAC, Ex. 1 ¶ 3 7 (emphasis).) 8 “In addition to the monthly rent amount set forth in Paragraph 4 of the Lease, Tenant is also responsible for paying to Landlord additional charges for the 9 utilities not checked in Paragraphs 1 or 2 above as invoiced by Landlord or Billing Provider.” (SAC, Ex. 1 ¶ 3 (emphasis).) 10 “Utility bills for water, sewer, and garbage service are billed in arrears and will 11 be issued by Landlord's Billing Provider or by Landlord directly on a monthly billing statement.” (SAC, Ex. 1 ¶ 7(a) (emphasis).) 12 “Payment is to be paid to Mosser Companies on the 1st of each month. Failure to 13 pay utilities as required by this Addendum will be treated as non-payment of 14 rent.” (SAC, Ex. 1 ¶ 7(b) (emphasis).) “The amounts reflected on the utility bill sent by Landlord or Billing Provider 15 may be considered a part of Rent for the purpose of calculating allowable rent 16 increases under the Ordinance.” (SAC, Ex. 1 ¶ 3 (emphasis).) 17 Not set forth in the Utility Addendum is any mention of a “billing admin” or “service” fee. 18 (Complaint, ¶ 51, Ex. 1.) Defendants reserve their rights to alter the utility cost proportions that 19 they bill Plaintiffs each month. (SAC, at Ex. 1 ¶ 6.) They also claim that costs outside of those 20 “related” to the utility bill itself may be assessed to tenants, “including, but not limited to” 21 “charges contained on tax bills.” (SAC, at Ex. 1 ¶ 4.) 22 The Service Providers, do not act as mere administrative support for landlord and 23 Management defendants. (SAC, at 171-71.) Each and every month, the Service Providers send 24 bills on their own letterheads directly to tenants, demanding that the tenants pay their landlords’ 25 unlawful rent increases. (SAC, at ¶ 171.) The Service Providers also indirectly charge tenants for 26 their “services,” by adding “service” and “billing admin” fees to the rent demands. (SAC, at ¶ 27 172.) While this conduct is unfair and fraudulent in itself, Plaintiffs also allege the Service 28 Provider help landlords pass off more than a proportional share of utilities. (SAC, at ¶¶ 184-92.) 4 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 ARGUMENT 2 I. LEGAL STANDARDS 3 Demurrer - The Court must construe complaints liberally “. . . with a view to substantial 4 justice between the parties.” (Cal. Code Civ. Proc., § 452; Stevens v. Superior Ct. (1999) 75 5 Cal.App.4th 598, 601 (citations omitted).) In considering a demurrer, the court may not weigh 6 either the likelihood or probability of the facts alleged, but must credit every fact as true. 7 (Serrano v. Priest (1971) 5 Cal.3d 584, 591; Del E. Webb Corp. v. Structured Materials Co. 8 (1981) 123 Cal.App.3d 593, 604.) 9 In California, a plaintiff “is required only to set forth the essential facts of [her] case with 10 particularity sufficient to acquaint a defendant with the nature, source and extent of [her] cause 11 of action.” (Alch v. Superior Court (2004) 122 Cal.App.4th 339, 382). On demurrer if the 12 essential facts state any valid claim entitling plaintiff to relief, any cause of action, then the 13 complaint should survive a general demurrer. (Quelimane Co., Inc., v. Steward Title Guaranty 14 Company (1998) 19 Cal.4th 26, 38-39.) 15 Review of a ruling on demurrer is governed by well-settled principles. “When reviewing 16 an order sustaining a demurrer without leave to amend, this court must treat the demurrer as 17 admitting all properly pleaded facts, but not contentions, deductions or conclusions of fact or 18 law. We must read the complaint as a whole and give it a reasonable interpretation. [Citation.] If 19 the complaint, liberally construed, can state a cause of action, or if it is reasonably possible that 20 the plaintiffs can cure the complaint by amendment, the trial court should not sustain a demurrer 21 without leave to amend.” (Koch v. Rodlin Enterprises (1990) 223 Cal.App.3d 1591, 1595.) 22 A defendant can strike “any irrelevant, false, or improper matter.” (Cal. Code Civ. Proc., § 436.) 23 Motion to Strike - A motion to strike’s “grounds … shall appear on the face of the 24 challenged pleading or from any matter of which the court is required to take judicial notice.” 25 (Cal. Code Civ. Proc., § 437.) When considering motions to strike, courts “read allegations of a 26 pleading … as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior 27 Court (1998) 67 Cal.App.4th 1253, 1255.) There is no legal authority for the filing of a 28 combination demurrer/motion to strike that requests the court choose the proper remedy. 5 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 II. PLAINTIFFS STATE A CLAIM UNDER OAKLAND’S RENT ADJUSTMENT ORDINANCE FOR UNLAWFUL, UNPETITIONED RENT INCREASES 2 3 Plaintiffs’ Second Amended Complaint more than adequately states a claim for unlawful 4 rent increases which violate the RAO. Defendants agreed to a fixed monthly rent amount with 5 Plaintiffs. Defendants also required that Plaintiffs pay an additional, variable amount of rent not 6 specified in the lease. Defendants attempt to justify this rent surcharge, by claiming, without 7 showing evidence, that the rent increases correlate to the building’s (not the tenants’) utility 8 usage. These monthly rent increases are not based on CPI or banking. Therefore, Defendants 9 were required to file rent petitions before billing these amounts as additional “rent.” They failed 10 to do so. Even if they did file petitions, the rent increases would still not be authorized as 11 Oakland’s regulations explicitly prohibit this practice. Knowing this, Defendants instead operate 12 outside of the law. This scheme violates numerous provisions of the RAO, its regulations, and 13 the public policy in which they are rooted. 14 A. Oakland’s Rent Adjustment Ordinance Must be Interpreted as a Whole, Looking to its Text and its Purpose 15 16 The legal standards observed in statutory interpretation are well-established: A legislative 17 act is expected to make sense as a whole, consistent with its overall purpose. 18 “We start with the statute's words, which are the most reliable indicator of legislative intent.” (In re R.T. (2017) 3 Cal.5th 622, 627.) “‘We interpret relevant 19 terms in light of their ordinary meaning, while also taking account of any related provisions and the overall structure of the statutory scheme to determine what 20 interpretation best advances the Legislature's underlying purpose.’” (Ibid., quoting 21 Los Angeles County Bd. of Supervisors v. Superior Court (2016) 2 Cal.5th 282, 293.) “If we find the statutory language ambiguous or subject to more than one 22 interpretation, we may look to extrinsic aids, including legislative history or purpose to inform our views.” (John v. Superior Court (2016) 63 Cal.4th 91, 96.) 23 24 (In Re A.N. (2020) 9 Cal.5th 343, 351-52). 25 The RAO’s findings and statements of intent reveal that its primary purpose is rent stability. 26 Article I. - Residential Rent Adjustment Program … The present shortage of rental housing units and the prevailing rent levels have 27 a detrimental effect on the health, safety, and welfare of a substantial number of Oakland residents, particularly senior citizens, persons in low and moderate income 28 households, and persons on fixed incomes. Stability in their housing situation is 6 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 important for individuals and families in rental housing. 2 (OMC, § 8.22.010 (“Findings and purpose”) (emphasis added).) 3 Oakland residents with low, moderate and fixed incomes, who pay a large portion of their 4 monthly income on rent, underpin the RAO’s primary stated purpose – rent stability. The first 5 lines of Oakland’s ordinance immediately cast doubt onto Defendants’ variable rent agreements. 6 B. The Landlord and Management Defendants Violate Numerous Provisions of The Rent Adjustment Ordinance 7 8 Consistent with its purpose of rent stability, the RAO tightly Regulates Rent Increases. 9 The RAO’s stringent rent-increase limitations assume an agreed fixed monthly “rent.” "‘Rent’ 10 means the total consideration charged or received by an owner in exchange for the use or 11 occupancy of a covered unit including all housing services provided to the tenant.” (OMC, § 12 8.22.020 (“Rent” definition) (emphasis).) There is an agreed “total” amount of rent in exchange 13 for occupancy of the rental unit and all associated housing services such as water supply and 14 garbage removal. This “total” is referred to in the Regulations as the “base rent.” 15 “Base Rent: The monthly rental rate before the latest proposed increase.” 16 “Current Rent: To keep current means that the tenant is paid up to date on rental payments at the base rental rate.” 17 18 (Rent Adjustment Ordinance Regulations 2.2-2.3.) Once this concept of fixed rent, and regulated 19 rent increases is understood, Defendants’ numerous RAO violations become immediately 20 apparent. 21 1. Defendants Violate the Rent Adjustment Ordinance by not Filing Petitions for Rent Increases that are not Based on the CPI or Banking 22 23 “On August 5, 2016, finding that ‘the requirement in the current Rent Adjustment 24 Ordinance for tenants to file petitions to challenge rent increases discourages many tenants from 25 contesting what might be invalid rent increase[sic.]’ Oakland City Council passed Resolution 26 86320, which Placed Measure JJ on the November 2016 Ballot.” (SAC, at ¶ 138.) 75.24% of 27 Oakland voters voted to pass Measure JJ, amending Oakland’s Rent Adjustment Ordinance. 28 (SAC, at ¶¶ 138-40.) The ballot measure added the following provision to the RAO: 7 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 A. Notwithstanding any other provision of this Chapter, owners may increase rents only for increases based on the CPI Rent Adjustment or Banking, or by filing a 2 petition to increase rent in excess of that amount. Any rent increase not based on the CPI Rent Adjustment or Banking that is not first approved by the Rent 3 Adjustment Program is void and unenforceable. 4 B. Rent Increases are subject to the requirements of this Chapter and Regulations. 5 (OMC, § 8.22.065 subds. (A)-(B) (emphasis); SAC, at ¶¶ 138-40.) 6 Here, both Plaintiffs and Defendants agree that the charges in question are “rent.” 7 (Dem./MTS, at 24:28-25:9.)There is no dispute the Landlords are the parties which contract with 8 the utility providers for each building’s water, sewer and garbage services. There is no 9 infrastructure for individual rental units to do so. Thus, under the RAO, Plaintiffs’ base rent 10 payments are “in exchange” for water, sewer and garbage services. (OMC, § 8.22.020 ("housing 11 services” and “rent” definitions).) 12 In contravention of the RAO, Landlords accept these base rent payments, but then 13 surcharge tenants an alleged share of the building’s “housing services” as additional “rent.” 14 (SAC, at Ex. 1 ¶¶ 3, 7(a),(b).) On a variable and monthly basis, the Landlords claim to divide 15 their bills for housing services between the residents of their rental units. Again, these variable 16 surcharges are “billed in arrears.” (SAC, Ex 1, ¶ 7(a)). These bill-backs also contain 17 administrative or other charges. (SAC, at ¶ 39.) In addition to there being no provision of the 18 RAO authorizing a rent increase based on utility usage, there is also no provision in the RAO for 19 additional rent increases based on a landlord providing alleged “services” or “billing admin” – 20 these are all unlawful rent increases. 21 Because these additional, variable “rent” amounts are not based on CPI or Banking, or on 22 an owner petition, they are rent increases which violate the Rent Adjustment Ordinance. (OMC, 23 § 8.22.065 subd. (A)). Any such rent increase “…not first approved by the Rent Adjustment 24 Program is void and unenforceable.” (Ibid. (emphasis).) The Landlord Defendants’ and 25 Management Defendants’ demurrer should be overruled on this basis alone. The court need not 26 enquire further than that Defendants adjusted Plaintiffs’ rent not based on the CPI or banking, yet 27 failed to file landlord petitions. This violation is especially troubling considering that even if the 28 Landlords had filed the proper petitions, their scheme would be disallowed. 8 OPPOSITION TO DEFENDANTS COMBINED OMNIBUS DEMURRERS TO AND MOTIONS TO STRIKE PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 2. Even if Defendants had filed Petitions, as the Rent Adjustment Ordinance Requires, the Monthly Variable Rent Increases would not be Allowed 2 3 As explained above, each month Defendants claim to calculate utility bill quotients. 4 Defendants and their billing agents then surcharge Plaintiffs this as additional “rent” each month. 5 Rent increases are subject to the RAO and its Regulations. (OMC, § 8.22.065 subd. 6 (B)). Defendants now concede this point. (Dem./MTS, at 25:19-26:21, note 6.) There are 7 circumstances where a tenant may be responsible for certain utility costs, but those are not 8 satisfied here: Tenants must agree at the inception of the tenancy to shoulder the utility costs and 9 the tenant must have the ability to contract directly with the utility provider. 10 The transfer of utility costs to the tenant by the landlord is not considered as part of the rent increase unless the landlord is designated in the original rental agreement 11 to be the party responsible for such costs. 12 (Rent Adjustment Ordinance Regulation 10.1.9.) 13