Conflicts of Interest

Agency board member can not participate in decision benefiting son’s company

Reported by Bradley Markano

A local agency considered borrowing money. The son of an agency board member had an ownership interest in the lender involved. The agency sought an opinion from the California Attorney General about a possible conflict of interest arising out of the board member’s connection to the lender through his son. The California Attorney General concluded no conflict of interest existed to prevent the board from borrowing from the lender so long as the board member, who had a conflict of interest due to his son’s ownership interest in the lender, did not participate in any official action related to the loan. [___Ops.Cal.Atty.Gen.___(January 14, 2009)]

Editor’s note See first tuesday’s Conflict of Interest Disclosure, Form 527.

Eminent Domain

City not liable on a taking for future development profits

Reported by Bradley Markano

A developer retained an architect to draw up plans for construction of a residential condominium on vacant property he held for development. The city government acquired the property through eminent domain prior to any on-site activity by the developer. The compensation offered by the city for the taking did not include anticipated profit from the planned development. The developer made a demand on the city for the value of the property based on the use proposed by his development plans, claiming the city must reimburse him for the profit from the planned development since he was entitled to compensation for any loss caused by the forced relocation by acquisition and development of other property. The city claimed it was not required to pay the estimated value added by the proposed development since the developer had not yet commenced any improvements, and any future value was speculative. A California appeals court held the city was not liable for the developer’s loss of the potential future profits from his proposed development since reimbursement for relocation of a developer’s business must be based on actual revenue historically generated by an ongoing business located on the property, not estimates of future profits based on proposed rental values of a yet-to-be-built project. [San Francisco v. Coyne (December 9, 2008) ___CA4th__]


Residential landlord to eliminate unsafe secondhand smoke in common areas

Reported by Bradley Markano

A family leased a unit in an apartment complex. The landlord permitted smoking in common areas. A child in the family suffered from asthma and allergies which were aggravated by secondhand smoke when using the facilities in the common areas. The family sought an injunction against the landlord to restrict smoking in public areas used by the tenants, claiming the landlord’s failure to limit secondhand smoke constituted a private nuisance. The landlord claimed he had no duty to prohibit smoking in common areas, and thus had not breached any duty by failing to do so. The family claimed the landlord had responsibility to prevent the harmful smoke since a residential landlord’s duty of care requires him to maintain the premises in a reasonably safe condition. A California appeals court held the landlord’s failure to limit smoking to prevent it from adversely affecting users of the common areas was a breach of his duty of care, since a landlord has a duty to maintain the premises in a reasonably safe condition for their intended use. [Birke v. Oakwood Worldwide (January 12, 2009)__CA4th___]
Editor’s note — This case was previously referenced by our April 2008 article “Tobacco smoke: a new nuisance for landlords”.

Prior assaults on tenants imposed duty on landlord to upgrade security

Reported by Anthony Renaud

An apartment complex was fenced in and two security gates installed after a non-tenant assaulted a tenant on the grounds. Separate from the tenant parking lot was the leasing office parking lot which was left ungated and available for tenant was parking after business hours. A second tenant was assaulted by a non-tenant in the leasing office parking lot. Later, a third tenant was also assaulted while parking as authorized in the ungated leasing office parking lot. That tenant sought to recover his injury-related money losses from the landlord, claiming the landlord had a duty to provide further security measures by relocating the existing gates to include the now ungated parking lot since the assault was foreseeable due to the prior incident in the ungated portion of the complex. The landlord claimed he had no duty and was not liable for the tenant’s losses since the assault on the tenant was not foreseeable and security measures beyond those in place at the time of the attack were not financially justifiable. A California appeals court held the landlord was liable for the tenant’s injuries resulting from the assault since three prior criminal assaults were similar enough in nature to the attack on the tenant to indicate the attack on the tenant was foreseeable, imposing a duty on the landlord to prevent future assaults: a reasonable expense for a complex of its size. [Tan v. Arnel Management Company (January 29, 2008) ___ CA4th ___]

Landlord violates rent stabilization ordinance to evict tenant

Reported by Anthony Renaud

A landlord filed an unlawful detainer action and evicted a tenant from a rent-controlled residence in order to transfer possession to a family member. The city Rent Stabilization Ordinance (RSO) allowed the landlord to evict the tenant without paying his relocation expenses if a family member of the landlord took possession of the property. No family member took possession. The tenant sought reinstatement of his tenancy, claiming he was unlawfully evicted since the landlord failed to meet the RSO’s family occupancy requirement. The landlord sought to have the tenant’s claim of an unlawful eviction dismissed under anti-SLAPP statutes, claiming the tenant’s claim arose out of evidence obtained from statements made in furtherance of the landlord’s constitutional rights since the filing of an unlawful detainer was protected speech. A California appeals court held the tenant was not barred by anti-SLAPP statutes from pursuing the right to recover possession of the unit since anti-SLAPP statutes did not protect the landlord from the tenant’s claims, which arose from the landlord’s failure to comply with the RSO, and not from information the tenant obtained from the landlord’s protected speech in the unlawful detainer proceedings in which the tenant was improperly evicted in violation of the RSO. [Clark v. Mazgani (January 7, 2009)__CA4th___]