May 21, 1996

I. Call to Order

President Becker called the meeting to order at 5:40 p.m.

II. Roll Call

Commissioners Present: Becker; Bierly; Moore; Mosser; Palma; Wasserman.
Commissioners not Present: Gruber.
Staff Present: Grubb; Wolf.

Commissioner Murphy appeared on the record at 5:45 p.m.; Commissioner Marshall appeared at 5:50 p.m.; and Commissioner Lightner arrived at the meeting at 5:55 p.m. Commissioner Palma went off the record at 7:00 p.m.

III. Approval of the Minutes

MSC: To approve the Minutes of May 7, 1996.
(Bierly/Palma: 4-0)

IV. Consideration of Appeals

738 Haight St. Q001-54A

The landlord filed a petition for rent increases based on comparables which was denied because the hearing officer found that the landlord had failed to prove that the initial rent for the unit had been set very low. The landlord’s appeal of the decision was accepted and the case was remanded to a new hearing officer to re-examine the comparables issue and to obtain assurance that the landlord had the authority to act on behalf of the estate. In the Decision on Remand, an increase from $700 to $1,450.00 was found to be justified. However, because of a Municipal Court judgment pursuant to an unlawful detainer action, the hearing officer found that the increase could not be effective until March 1, 1996. The landlord appeals the remand decision, asserting that the hearing officer erred in applying the doctrine of res judicata, because the judge specifically made no finding as to the amount of the monthly rent or terms of the tenancy.

MSC: To accept the appeal and remand the case to the hearing officer on the record to grant the rent increase retroactive to the effective date of the landlord’s notice, or June 1, 1995. (Palma/Bierly: 5-0)

V. Old Business

The Board briefly discussed proposed amendments to Rules Section 10.10 drafted by Commissioner Becker regarding the issue of constructive notice. This discussion will be continued at the Board meeting on June 4, 1996.

VI. Appeal Hearing

19 Noe St. #B Q001-37A
(rescheduled from 5/7/96)

The tenant’s petition alleging unlawful increases in rent was granted and the landlord was found liable to the tenant in the amount of $10,017.75 due to PG&E passthroughs being incorrectly calculated and improperly included in base rent for purposes of calculating annual increases. On appeal, the landlord asserted that the wrongful increases were de minimus and the result of a procedural error by the prior owner, which resulted in a windfall to the tenant; that the equitable doctrine of laches should apply to bar the tenant’s recovery because he knew of the existence of the Rent Board as far back as 1988 but failed to assert his rights; and that the hearing officer was mistaken in finding that the only harm to the landlord was economic. At their meeting on March 19, 1996, the Board accepted the landlord’s appeal for Board hearing and instructed the landlord to bring a copy of the Purchase Agreement for the property to the hearing in order to determine whether the landlord had a remedy against the prior owner. Staff was also asked to provide a chart showing the actual amount of the rent overpayments, which turned out to be $4,187.81.

The appeal hearing commenced at 6:30 p.m., at which time the parties stipulated to Findings of Fact numbers 1 through 17 in the Decision of Hearing Officer issued on February 6, 1996. The tenant appeared with his attorney; the landlord was accompanied by counsel and the prior owner of the property. The tenant’s attorney asserted that laches should not apply to an action at law, citing the California Supreme Court case of County of Los Angeles v. City of Alhambra (1980) 27 § Cal.3d 184, 195, 165 Cal. Rptr. 440, 612 p.2d 24; that even if the Board chose to consider laches, the tenant would prevail on the facts; that the Contingency Fund in the landlord’s Purchase Agreement was established to cover any future liability and/or the landlord had a cause of action against the prior owner as well as his attorney for failure to exercise due diligence; that the Board has no discretion regarding null and void rent increases; and that the Estoppel Certificate signed by the tenant was not binding, nor did the tenant warrant the legality of the base rent in signing it. The landlord’s attorney argued that the Rent Ordinance is not a doctrine of strict liability; that the Contingency Fund was not intended to cover the instant claim because the tenant failed to disclose the petition he had filed two days prior to signing the Estoppel Certificate; and that the tenant’s conduct and failure to exercise his rights should also be taken into account.

After conclusion of the hearing at 9:15 p.m., and consideration of the documentary evidence and testimony, the Board made the following motions:

MSF: To overturn the Decision of Hearing Officer and deny the tenant’s petition. (Murphy/Mosser: 2-3; Becker, Marshall, Wasserman dissenting)

MSC: To overturn the Decision of Hearing Officer based on equitable estoppel but, based on the equitable powers of the Board, to refund to the tenant the out-of-pocket amounts that were actually overpaid, not subject to the 3-year Statute of Limitations on rent overpayments. (Wasserman/Mosser: 4-1; Murphy dissenting)

VII. Communications

In addition to correspondence regarding the appeal consideration on the calendar, the Commissioners received a copy of a post card notifying them that the Office of the Chief Trial Counsel for the State Bar of California had received their referral of the attorney in the eviction case concerning 474 - 10th Ave. (Q001-36E).

VIII. Remarks from the Public

A member of the public inquired as to whether tenants’ base rents are readjusted back to the 1982 levels when rent increases are determined to be null and void, although rent overpayments are only refunded for a three-year period.

IX. Calendar Items

May 28, 1996 - NO MEETING

June 4, 1996
4 appeal considerations
Old Business:
A. Costa-Hawkins Bill (AB 1164)
B. Proposed Changes to Rules Section 10.10

X. Adjournment

President Becker adjourned the meeting at 9:45 p.m.