Reported by Giang Hoang-Burdette:

SLAPP bars tenant’s claims against landlord in unlawful detainer
The tenant of a rent-controlled apartment entered into a sublease with a subtenant. The subtenant was told by the landlord’s agent that landlord approval of his sublease was contingent upon the subtenant signing an addendum to the tenant’s lease and returning the signed addendum to the landlord. The subtenant gave the signed addendum to the tenant who agreed to deliver it to the landlord. The agent confirmed the signed addendum was delivered to the landlord. The subtenant moved into the apartment. Later, the landlord filed an unlawful detainer (UD) action to evict the subtenant, claiming the subtenant was in unlawful possession of the property since the landlord’s signature was required to approve the sublease and the landlord never signed the addendum. The subtenant was given the choice to either quit the property or enter into a separate lease at current market rates. The subtenant moved out, but sought damages from the landlord for the cost of his defense to the UD action, claming the UD action was a retaliatory eviction since the subtenant had never been informed the landlord’s signature was required for approval of the sublease. The landlord claimed he was not liable to the subtenant for the subtenant’s losses arising out of his defense of the UD action since a landlord may not be sued for exercising his right to file an UD action under the California anti-strategic lawsuit against public participation (anti-SLAPP) statute. A California appeals court held the subtenant’s claim for money based on an UD action being a retaliatory eviction was barred since California’s anti-SLAPP statute protects a landlord from lawsuits arising from him right to file a UD action. [1100 Park Lane Associates v. Feldman (February 25, 2008) __CA4th___]

Editor’s note—Although a landlord is protected under the anti-SLAPP statute against lawsuits arising from his protected activities (e.g., filing an unlawful detainer action), a landlord may still be liable for damages caused by knowingly misrepresenting facts in order to obtain higher rents.

Right of first refusal not triggered by conveyance to family member
A family partnership leased property it owned to a tenant. The lease agreement entered into granted the tenant the right of first refusal to purchase the property if the owner decided to sell the property on receiving an offer from a bona fide third party. In an estate planning scheme, one of the partners transferred the leased property to his grandchildren. The tenant sought to purchase the property under the right of first refusal, claiming the transfer was a bona fide sale of the property to a third party which triggered the tenant’s right of first refusal. The family partnership claimed the transfer did not trigger the tenant’s right of first refusal to buy the property since the transfer was not a sale to a bona fide third party, but a transfer to family members of the partners for a legitimate tax purpose. A California appeals court held the transfer did not trigger the tenant’s right of first refusal since the transfer was to family members of the partners as estate planning with a legitimate tax purpose, and not a sale to a third party. [Hartzheim v. Valley Land Cattle Company (2007) 153 CA4th 383]

Tenants evicted in an unlawful condo conversion have no unfair competition claim
A six-unit apartment building was acquired by several buyers who took title as tenancy-in-common (TIC). The buyers intended to sell to members of the public fractional interests in the TIC ownership subject to an unrecorded right to exclusively occupy a specific unit, a violation of the Subdivided Lands Act (SLA). To accomplish their goals, the new owners served notices terminating the tenancies of all the tenants, as allowed under the Ellis Act for owners wanting to go out of the rental business. The tenants refused to vacate, claiming the new owners violated the Unfair Competition Law (UCL) since they created an unauthorized subdivision of the property by intending to resell divided interest to members of the public with exclusive right to occupancy of a particular unit without first obtaining a final subdivision report from the Department of Real Estate. The new owners claimed the tenants could not avoid eviction by claiming the TIC resale program was an unfair competition claim since the tenants were not the ones injured by the subdivision violation and thus could not make a claim based on the violation. A California appeals court held the tenants must vacate their units as required under the Ellis Act and they had no unfair competition claim for the buyer’s violation of the SLA since the tenants losses were not caused by the TIC’s unauthorized subdivision. [Daro v. Superior Court (2007) 151 CA4th 1079]

Buyer’s deceit not part of use permit anti-SLAPP protection
A seller and a buyer entered into a purchase agreement for the transfer of two parcels. A dedicated road ran between the two parcels. The seller also owned two other adjacent parcels which depended on the road for access. The seller and buyer agreed the road was to be closed so the buyer could build a superstore on both parcels and the vacated roadway. By agreement with the seller and as part of the development application, the buyer applied for a permit to establish an alternative access road to the seller’s remaining parcels. Later and without notifying the seller, the buyer changed the development application to create an easement across the two parcels instead of an alternative dedicated access road. The transaction closed, and construction commenced. The seller discovered the existence of the easement in lieu of a dedicated access and sought his money losses for the impaired value of the remaining parcels. The buyer claimed the seller could not maintain a claim for money losses since all lawsuits arising out of the buyer’s petition for the development application are barred by anti-SLAPP (strategic lawsuit against public participation) statutes. The seller claimed his losses for the impaired value of his remaining parcels was not barred by anti-SLAPP statutes since his losses did not arise from the application process, but from the buyer’s misrepresentation of facts relating to the purchase. A California appeals court held the seller may pursue recovery of his lost property value since his claims are based on misrepresentation of facts relating to the purchase rather than protected application activity, which anti-SLAPP statutes would have barred. [Wang v. Wal-mart (July 25, 2007) __ CA4th ___]

Loan arranged by broker-licensed officer of lender was not usurious
A borrower executed a note and trust deed in favor of a lender to evidence a real estate loan. The interest rate on the loan exceeded the usury interest rate ceiling. A licensed real estate broker arranged the loan as an officer of the corporate managing partner of the limited partnership who was the lender. The broker negotiated and structured the entire loan transaction for which he was compensated. At closing, the broker signed the loan documents as the authorized representative binding the lender. After paying off the loan, the borrower sought to recover all the interest he had paid the lender, claiming the interest rate charged on the loan was usurious since the broker signed the loan documents on behalf of the lender and thus was acting as the lender (which was not itself licensed) in arranging the loan, subjecting the loan to the usury interest rate cap. The lender claimed the usury interest rate cap did not apply since the broker had arranged the loan as a third party for compensation. A California appeals court held the usury interest rate cap did not apply and the borrower could not recover interest paid the lender based on a usury claim since the broker was not acting as the lender when arranging the loan, but as a third party to the transaction in expectation of compensation for brokering the loan. [Stoneridge Parkway Partners v. MW Housing Partners III (August 3, 2007) __ CA4th ___]

Editor’s note — The broker in this case also failed to give the required Cal-RESPA disclosure to the borrower. While this is not a defense for a usury interest claim, failure to give a disclosure mandatory for all loans in California subjects the broker, not the lender, to liability for undisclosed costs and a refund of the brokerage fees he received. [See first tuesday Form 204]