Court Limits Class Action Suits Against Landlords


Henry Chuang

by Henry Chuang on September 16, 2013

in Landlord/Tenant Disputes, Litigation, Real Estate Law

In a recent Second Appellate District ruling, the court made it more difficult for tenants to sue landlords in class action lawsuits.  In. Hendleman v. Los Altos Apartments, the appellate court upheld a lower court’s decision to deny certification of a class by a group of tenants who were trying to sue in a class action.  The court found that because the claim was for breach of habitability, the facts were too individualized for a class certification.

Facts of the Case

Los Altos Apartments (“LAA”), located in Los Angeles County, is an apartment complex with 68 units.  Of those units, about 40% were dedicated to low-income housing.  In 2007, LAA was found to violate Los Angeles’s zoning ordinance, was required to take certain steps to repair the violations, and was supposed to reduce the rent for most of the units.  Although LAA was instructed to make the repairs and collect less rent, LAA failed to do so.  The tenants sued, largely based on the breach of the warranty of habitability and LAA’s failure to reduce the tenants’ rent.

Holding

The appellate court affirmed the trial court’s decision to deny certification of the class on the grounds that there were too many individualized facts.  Regarding the breach of the warranty of habitability, the court noted that while each lease contains a warranty of habitability, the violation of statutory regulations does not necessarily indicate that there was a breach of the warranty.  In this instance, there were several code violations, such as failure to properly comply with fire-safety and weatherproofing regulations, which did not reduce services and may have been insufficient to constitute an actual breach of the warranty of habitability.  Further, even if there were issues with the property it did not necessarily follow that each tenant was impacted in the same way.  As the more serious violations were constrained largely to certain areas, other tenants would not be impacted and therefore could not be considered part of that class.

Regarding the collection of rent, the court found that the law allowed for LAA to collect the full, unreduced rent if it was voluntarily paid by the tenants.  However, it was a violation of the law if LAA intimidated the tenants to pay that amount.  As the determination of that distinction relied on highly individualized facts, class certification would not be proper for that cause of action.

Takeaway

This decision undermines one of the tenants’ strongest tools to sue landlords.  While not all cases are identical, many “habitability” cases involve similar allegations and contentions.  Given this ruling, tenants will now need to sue individually and resolve their matters individually, which generally is more costly for the tenant and may deter them from filing suit.

If you have questions regarding real estate matters and are seeking legal counsel, we would be happy to help.  We can be reached at (650) 327-2900 or to find out more about our law firm please visit us at www.brewerfirm.com.

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