Bassler v. Stephens Institute CA1/1 ( 2024 )

Filed 9/18/24 Bassler v. Stephens Institute CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
MARGARET BASSLER et al.,
Plaintiffs and Appellants, A166639
v.
(San Francisco City & County
STEPHENS INSTITUTE,
Super. Ct. No. CGC-17-557866)
Defendant and Respondent.
This appeal involves a class action brought by college students against
a private university alleging tenant harassment in violation of section 37.10B
of San Francisco’s Residential Rent Stabilization and Arbitration Ordinance
(S.F. Admin. Code, § 37.1 et seq., hereafter Rent Ordinance). After the
students presented their evidence at a bifurcated bench trial, the trial court
granted the university’s motion for judgment (Code Civ. Proc., § 631.8.),
finding the students failed to prove they were tenants as defined by the Rent
Ordinance. The students appeal, raising a host of purported errors. We
conclude the trial court’s decision on the tenancy issue is supported by
substantial evidence and affirm the judgment.
I. BACKGROUND
A. The Parties
Plaintiffs Margaret Bassler and Chloe Stanfield are former students at
Stephens Institute, doing business as The Academy of Art University
(Academy). The Academy is a California corporation that operates a for-
profit art school. Plaintiffs allege the Academy violated the Rent Ordinance
by falsely representing to students housed in Academy-operated housing that
their rooms were not subject to the Rent Ordinance and requiring students to
“waive their tenants’ rights” in order to live in it.
B. The Rent Ordinance
The Rent Ordinance was enacted in 1979 to respond to the hardships
faced by tenants from excessive rent increases coupled with a shortage of
affordable housing. (Rent Ordinance, § 37.1, subd. (b); Golden Gateway
Center v. San Francisco Residential Rent Stabilization & Arbitration Bd.
(1999) 73 Cal.App.4th 1204, 1211; Parkmerced Co. v. San Francisco Rent
Stabilization & Arbitration Bd. (1989) 215 Cal.App.3d 490, 495.)
Section 37.10B of the Rent Ordinance, entitled “Tenant Harassment,”
prohibits a “landlord” or any “agent, contractor, subcontractor or employee of
the landlord” from doing various acts “in bad faith.” (Rent Ordinance,
§ 37.10B, subd. (a).) The prohibited acts include interrupting or failing to
provide required housing services; abusing a landlord’s right of access into a
rental housing unit; using fraud, intimidation, or coercion to influence a
tenant to vacate a housing unit; interfering with the tenant’s right to quiet
enjoyment of the unit or right to privacy; and causing a tenant to surrender
or waive any rights in relation to occupancy of a rental unit. (Ibid.)
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C. The Academy’s Student Housing and Housing License Agreement
The Academy offers residential housing to students “enrolled full-time
and onsite as determined by the Office of the Registrar.” Eligible students
may be assigned housing by entering into a separate agreement with the
Academy each academic year (housing license agreement). The housing
license agreement expressly states: “This Agreement grants Student
permission to use a bed space within [an Academy] residence hall . . . . It is
understood and agreed by Student and the [Academy] that this Agreement is
a license and not a lease, and that no lease nor any other interest or estate in
real property is created by this Agreement . . . . Student is further informed
and acknowledges that his or her room . . . does not constitute a Rental Unit
as defined by the [Rent Ordinance] or the regulations promulgated pursuant
to the Rent Ordinance . . . .” The housing license agreement further states
the Academy “may terminate the Student’s license to use the room upon 24-
hours written notice to Student . . . without alleging just cause under the
Rent Ordinance.”1
D. Procedural History
On July 8, 2021, the court certified a class consisting of student
residents of the Academy who executed housing license agreements for the
academic years 2015 through 2020.
In April 2022, the Academy brought a motion for summary judgment
and a motion to strike plaintiffs’ jury trial demand or in the alternative to
bifurcate the trial. The court denied the summary judgment motion, but
granted the motion to bifurcate as to two preliminary issues, whether
plaintiffs were “tenants” within the meaning of the Rent Ordinance, and
1 Exemplars of the housing license agreement are included in the
record.
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whether plaintiffs’ action was barred by res judicata based on a prior action
against the Academy filed by the City and County of San Francisco alleging
similar violations of the Rent Ordinance.
A bench trial began on June 27, 2022, and the court heard six days of
testimony. During their case-in-chief, plaintiffs called Victor Postemski, an
independent contractor hired by the Academy to manage student housing.
Part of his job included getting students to sign housing license agreements.
Postemski explained, “A housing license agreement is an individual license
for students at Academy of Art University. So if a student applies for campus
housing, they need to sign a license individually. And that gives them the
opportunity to be assigned to campus housing and be a participant in our
student resident program.”
Postemski testified there were often multiple licenses for a single room
or unit. The individual license rate for a room does not change based on the
number of students who actually license a bed space in that room. Only full-
time, on-site students are eligible for Academy student housing; licenses are
terminated when students no longer meet the eligibility requirements.
Students agree to comply with numerous community policies and conduct
regulations. Students’ rights to have visitors are limited by these policies.
Quiet hours are in effect during certain hours of the day; during finals, 24-
hour quiet hours are in effect. The Academy employs student resident
assistants who help build and maintain community relations “needed for
proper academic success.” The resident assistants conduct nightly rounds of
the buildings, help mediate any conflicts, and address violations of the
housing license agreement.
The Academy retains the right to remove students from student
housing for conduct violations upon 24 hours’ notice. Postemski explained
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there was “no possible way” to create the Academy’s desired educational
environment “if students were given exclusive possession” without any codes
of conduct.
Postemski further testified that the Academy retains the right to move
students into different bed spaces in order to manage student conflicts. The
housing department enters units to conduct monthly health and safety
inspections. The housing department also cleans inside the rooms.
Gordon North, the Academy’s vice-president of operations, testified
students were moved into units of the Academy’s choice for COVID-19
quarantine or bed bug abatement. During intercession periods, students are
allowed to store personal property in the units, but the operations
department has the right to enter the units to complete maintenance without
notice to students. Students are not allowed to replace or bring their own
furniture into the units.
Plaintiff Bassler testified she understood her student housing was a
“dorm.” She was also aware when she signed the housing license agreement
she “was not signing a lease.”
At the conclusion of plaintiffs’ case-in-chief, the Academy brought a
motion for judgment pursuant to Code of Civil Procedure section 631.8 on the
grounds that plaintiffs presented no evidence they were tenants protected by
the Rent Ordinance. In a detailed order granting the Academy’s motion for
judgment, the court found that plaintiffs failed to carry their burden of proof
to establish they are tenants, as required for their cause of action, and thus
“as a matter of law they have no potential for tenant harassment” under the
Rent Ordinance.
In an equally comprehensive statement of decision, the court found in
favor of the Academy on the grounds that (1) plaintiffs lacked standing to
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pursue tenant harassment claims under the Rent Ordinance because they did
not qualify as tenants; and (2) the Academy had proven each element of its
claim preclusion affirmative defense, which barred the plaintiffs’ action in its
entirety. As we explain, because plaintiffs’ lack of standing is dispositive we
will address only whether they were tenants as defined in the Rent
Ordinance and affirm on that basis alone.
II. DISCUSSION
A. Standard of Review
Under Code of Civil Procedure section 631.8, the court “ ‘ “may enter
judgment in favor of the defendant if the court concludes that the plaintiff
failed to sustain its burden of proof. [Citation.] In making the ruling, the
trial court assesses witness credibility and resolves conflicts in the
evidence.” ’ ” (Plaza Home Mortgage, Inc. v. North American Title Co., Inc.
(2010) 184 Cal.App.4th 130, 135.) “ ‘ “The standard of review of a judgment
and its underlying findings entered pursuant to [Code of Civil Procedure]
section 631.8 is the same as a judgment granted after a trial in which
evidence was produced by both sides. In other words, the findings supporting
such a judgment ‘are entitled to the same respect on appeal as are any other
findings of a trial court, and are not erroneous if supported by substantial
evidence.’ ” ’ ” (Ibid.; see Fink v. Shemtov (2012) 210 Cal.App.4th 599, 608
[“An order granting a defense motion for judgment under Code of Civil
Procedure section 631.8 in a nonjury trial is reviewed under the substantial
evidence standard,” and “[w]e review the trial court’s express factual findings
in the statement of decision, and any implied findings, for substantial
evidence.”].) “But we are not bound by a trial court’s interpretation of the law
and independently review the application of the law to undisputed facts.”
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(People ex rel. Dept. of Motor Vehicles v. Cars 4 Causes (2006) 39 Cal.App.4th
1006, 1012.)
B. Analysis
Plaintiffs’ sole cause of action is for tenant harassment under
section 37.10B, subdivision (a)(5) of the Rent Ordinance, which requires them
to prove the following elements: (1) defendant is a landlord or its agents;
(2) defendant acted in bad faith; (3) plaintiff is a tenant; (4) plaintiff resides
in a rental housing unit; (5) defendant influences or attempts to influence
plaintiff to vacate a housing unit; and (6) defendant’s influence or attempted
influence is brought about by fraud, intimidation, or coercion. (See Rent
Ordinance, § 37.10B.)
The Rent Ordinance defines a landlord as “[a]n owner, lessor,
sublessor, who receives or is entitled to receive rent for the use and occupancy
of any residential rental unit or portion thereof in the City and County of San
Francisco, and the agent, representative or successor of any of the foregoing.”
(Rent Ordinance, § 37.2, subd. (h).) A tenant is defined as “[a] person entitled
by written or oral agreement, sub-tenancy approved by the landlord, or by
sufferance, to occupy a residential dwelling unit to the exclusion of others.”
(Id., § 37.2, subd. (t), italics added.)
Rental units are defined as “[a]ll residential dwelling units in the City
together with the land and appurtenant buildings thereto, and all housing
services, privileges, furnishings and facilities supplied in connection with the
use or occupancy thereof, including garage and parking facilities.” (Rent
Ordinance, § 37.2, subd. (r).) The term “Rental Units” expressly excludes
“[h]ousing accommodations . . . in dormitories owned and operated by an
institution of higher education, a high school, or an elementary school.” (Id.,
§ 37.2, subd. (r)(3).)
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The central issue in the bifurcated trial was whether plaintiffs were
“tenants” as defined in the Rent Ordinance. Despite the limited scope of the
issue before the trial court, plaintiffs present a lengthy argument on appeal
regarding the legality of the housing license agreement and the Academy’s
conversion of residential properties into student housing. According to
plaintiffs, the Academy’s alleged failure to obtain the necessary use permits
to convert its properties into student housing means that Academy housing
was subject to the Rent Ordinance. Therefore, the housing license agreement
was illegal, and plaintiffs should have been protected as tenants under the
Rent Ordinance. Plaintiffs, however, fail to cite any controlling authority
supporting this novel theory.
The legality of the Academy’s use of its properties as dormitories is
irrelevant to the question of whether plaintiffs were tenants within the
meaning of the Rent Ordinance.2 Clearly, the Rent Ordinance precludes
landlords from requiring tenants to waive their rights under the ordinance.
(Rent Ordinance, § 37.10B.) However, in order to enforce those rights,
plaintiffs must first establish they were tenants. Our review of the applicable
statutory language and related cases leads us to conclude plaintiffs failed to
meet their burden of establishing they were tenants within the meaning of
the Rent Ordinance.
Construing Rent Ordinance section 37.2, subdivision (t) according to its
plain language, a tenant is a person who is (1) entitled to occupy a residential
unit (2) to the exclusion of all others (3) pursuant to a written agreement,
oral agreement, subtenancy approved by the landlord, or sufferance.
2 The trial court expressly declined to make a finding on the lawfulness
of the Academy’s usage of its properties as dormitories.
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The right to occupy to the exclusion of others, a key characteristic of a
leasehold, is what distinguishes a tenancy from a mere license. (Spinks v.
Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1040
(Spinks).) “If the contract between the owner and the occupier gives
exclusive possession of the premises against all the world, including the
owner, it creates a tenancy; however, if the contract merely confers a
privilege to occupy the premises under the owner, it is a license.” (Chan v.
Antepenko (1988) 203 Cal.App.3d Supp. 21, 24 (Chan) [interpreting Rent
Ordinance, citing Von Goerlitz v. Turner (1944) 65 Cal.App.2d 425, 429
[“ ‘whether an agreement for the use of real estate is a license or a lease is
whether the contract gives exclusive possession of the premises against all
the world, including the owner, in which case it is a lease, or whether it
merely confers a privilege to occupy under the owner, in which case it is a
license’ ”].)
Here, under the express terms of the housing license agreement,
plaintiffs were licensees, not tenants. They did not have the exclusive use of
any room or portion thereof. The housing license agreement did not
guarantee a specific building, room, rate, number of roommates or choice of
roommates. Students also could not exclude their roommates from the
premises. The housing license agreement gave the Academy the right to
change room assignments, assign a new roommate, or reassign a current
student to any available bed space at any time. Students could not exclude or
preclude entry by the Academy. The housing license agreement limited
students’ ability to invite guests or to cohabitate, to use alcohol, and to have
parties or social gatherings. The Academy’s housing department did nothing
to contradict the language of the housing license agreement that could have
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given students the impression that they possessed anything other than a
license.
Plaintiffs presented no evidence of a lease or any other facts that would
show they had “the right to exclusive possession as against the whole world,
including the landowner.” (Spinks, supra, 171 Cal.App.4th at p. 1040.)
Rather, the evidence presented at trial, including the language of the housing
license agreement and witness testimony, all support the conclusion plaintiffs
did not have exclusive possession of their living spaces, and thus did not
qualify as tenants as defined by the Rent Ordinance. (See Tappe v.
Lieberman (1983) 145 Cal.App.3d Supp. 19, 24 [Rent Ordinance “seeks to
protect renters who live in dwelling units”; it does not protect licensees];
Chan, supra, 203 Cal.App.3d at p. Supp. 25 [“As a licensee [defendant] is not
entitled to protection of the Rent Ordinance.”].)
Despite the plain language in section 37.2, subdivision (t) of the Rent
Ordinance requiring exclusive use to be considered a tenant, plaintiffs suggest
they should qualify as tenants simply because they occupied housing units
and paid for them. Nothing in the Rent Ordinance or case authority cited by
plaintiffs supports this position.
The plaintiffs’ payment to the Academy for housing and housing-
related services did not transform the relationship into a landlord and tenant
relationship. None of the sections of the Rent Ordinance cited by plaintiffs
purport to expand or modify the definition of a tenant. (Cf. Rent Ordinance,
§ 37.2, subds. (g) [defining “Housing Services”], (h) [defining “Landlord”] & (p)
[defining “Rent”].)
The cases cited by plaintiffs do not further their position. For example,
Danger Panda, LLC v. Launiu (2017) 10 Cal.App.5th 502, 514–515,
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rejected the theory that all lawful occupants are tenants. There, defendants
alleged their minor son was entitled to relocation assistance under the Ellis
Act3 (see Rent Ordinance, §§ 37.9A, subd. (e)(3), 37.9, subd. (a)(13)) because
he was a lawful occupant of the rental unit, thus qualifying him as a “tenant”
under the Rent Ordinance. (Danger Panda, at p. 512.) Our colleagues in
Division Four of this judicial district disagreed and held “lawful occupant”
and “tenant” were not interchangeable terms. (Id. at p. 514.) Rather, “a
tenant is a lawful occupant who acquired the right to exclusive occupancy
. . . .” (Ibid.)
Similarly, Cobb v. San Francisco Rent Stabilization & Arbitration Bd.
(2002) 98 Cal.App.4th 345 does not purport to hold lawful occupancy alone
establishes tenancy under section 37, subdivision (t) of the Rent Ordinance.
Rather, the issue in Cobb was whether a landlord could raise the rent on an
apartment under the Costa-Hawkins Rental Housing Act (Civ. Code,
§ 1954.50 et seq.; Costa-Hawkins Act), which permits an owner to “increase
the rent by any amount allowed by [law] to a lawful sublessee or assignee”
(Civ. Code, § 1954.53, subd. (d)(2)). In Cobb, the original tenant lived in a
rent-controlled apartment with her son and grandson. When the original
tenant moved out for medical reasons, the son began paying rent directly to
the landlord. (Id. at pp. 348–349.) The Cobb court affirmed the San
Francisco rent board’s finding the Costa-Hawkins Act was inapplicable
because there was no evidence the son became the mother’s sublessee. (Cobb,
at pp. 349, 352–353.) Rather, the son became the landlord’s tenant when the
landlord began accepting rent directly from the son. (Id. at pp. 352–353.)
Equally unpersuasive is Lara v. Menchini (2021) 70 Cal.App.5th Supp.
1, 3, which involved an unlawful detainer action against subtenants in a San
3 (Gov. Code, § 7060 et seq.)
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Francisco rent-controlled apartment. There, the landlord refused to accept
rent from the subtenants to cure the tenant’s default. (Id. at pp. Supp. 3, 8.)
Affirming the unlawful detainer action in favor of the landlord, the court
explained that a rent-controlled apartment cannot be passed freely among
friends and families. (Id. at p. Supp. 8.) Rather, subtenants are protected
only when a new tenancy is established. (Id. at pp. Supp. 8–9.) The court
expressly rejected the subtenants’ argument that lawful occupancy alone
established a tenancy within the meaning of the Rent Ordinance, such that
the landlord was required to accept rent from them. (Lara, at p. Supp. 8.)
So too here, we conclude plaintiffs’ occupancy of the student housing
offered by the Academy did not create a tenancy within the meaning of the
Rent Ordinance. Neither the facts nor the applicable law demonstrate
plaintiffs were entitled to occupy a residential dwelling unit to the exclusion
of others. (Rent Ordinance, § 37.2, subd. (t).)
By failing to establish they were tenants within the meaning of the
Rent Ordinance, plaintiffs lacked standing to pursue their claim for tenant
harassment under § 37.10B. The trial court did not err in granting the
Academy’s motion for judgment.
III. DISPOSITION
The judgment is affirmed. The Academy is entitled to its costs on
appeal.
SIGGINS, J.*
* Retired Presiding Justice of the Court of Appeal, First Appellate
District, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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WE CONCUR:
HUMES, P. J.
BANKE, J.
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