Zuleta v. Housing and Community etc. CA2/1

Filed 2/26/21 Zuleta v. Housing and Community etc. CA2/1
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
LUIS ZULETA et al., B302939
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BS175319)
v.
HOUSING AND COMMUNITY
INVESTMENT DEPARTMENT OF
LOS ANGELES et al.,
Defendants and Respondents;
ELIZA KIM et al.,
Real Parties in Interest and
Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, James C. Chalfant, Judge. Affirmed.
Los Angeles Center for Community Law and Action, Noah
Grynberg, Tyler Anderson, Gina Hong, and Sarah Walkowicz for
Plaintiffs and Appellants.
Michael N. Feuer, City Attorney, Kathleen A. Kenealy,
Chief Deputy City Attorney, Scott Marcus, Assisting City Attorney,
Blithe S. Bock, Managing Assistant City Attorney, Matthew A.
Scherb and Shaun Dabby Jacobs, Deputy City Attorneys for
Defendants and Respondents.
No appearance for Real Parties in Interest and Respondents.
_________________________
Eliza Kim and Michael Marzouk own separate residential
rental properties in Los Angeles. Luis Zuleta and Jose Luis
Moreno Rios are tenants of Kim. Juan De Dios Garcia is a tenant
of Marzouk.
Kim and Marzouk separately applied to the Los Angeles
Housing and Community Investment Department (the Department)
for a “just and reasonable” increase of the rents they may charge
their tenants. Department hearing officers granted the applications
in part and their decisions were approved by an appeals board of
the Los Angeles Rent Adjustment Commission (the Commission).
Zuleta, Rios, and Garcia filed a petition for writ of
administrative mandamus in the superior court challenging the
Department’s and the Commission’s rulings. In November 2019,
the court denied the petition. This appeal followed.
Zuleta and Rios contend that the Department and the
Commission erroneously determined that Kim’s “base year” is
1984 for purposes of determining whether Kim is eligible for a rent
increase and the Commission failed to account for income Kim had
received from short term rentals through Airbnb. Garcia contends
that the Department and the Commission erred in determining that
Marzouk’s base year is 2011. We affirm.
2
LEGAL AND REGULATORY BACKGROUND
The Rent Stabilization Ordinance of the City of Los Angeles
(LARSO) regulates the ability of landlords to increase the rent
charged to tenants. (L.A. Mun. Code, § 151.04, subd. (A).) A
landlord may apply to the Department for a rent increase greater
than that ordinarily permitted under the LARSO on the ground
that the increase is necessary to provide the landlord with a “just
and reasonable return” on the rental property. (L.A. Mun. Code,
§§ 151.01, 151.07, subd. (B)(1); see Birkenfeld v. City of Berkeley
(1976) 17 Cal.3d 129, 165 [rent control ordinance must provide
landlords with a “just and reasonable return on their property”];
Palos Verdes Shores Mobile Estates, Ltd. v. City of Los Angeles
(1983) 142 Cal.App.3d 362, 368 [LARSO upheld against
constitutional challenge because it ensures “ ‘a just and reasonable
return’ ” for landlords].)
The LARSO established the Commission, which has issued
“Just and Reasonable Guidelines” (the Guidelines) for Department
hearing officers to use in determining a just and reasonable return.
(L.A. Mun. Code, § 151.03, subd. (A); L.A. Housing & Community
Investment Dept., Rent Adjustment Commission, Just and
Reasonable Guidelines (Sept. 1, 2005) § 240.00 et seq. (Guidelines).)
Under the Guidelines, the hearing officer calculates and
compares “Net Operating Income” for the “Current Year” with
the “Net Operating Income” for the “Base Year,” adjusted for price
inflation. (Guidelines, supra, §§ 242.05–243.03.) For our purposes,
net operating income is, generally, the income received from
dwelling units minus certain expenses, such as management and
administrative expenses, maintenance expenses, taxes, insurance,
and operating expenses such as electricity, water, sewer, and gas.
(Guidelines, supra, §§ 240.00, 241.00–241.19.)
3
The “Current Year” is the most recent calendar or fiscal year
prior to the date of the landlord’s application. (Guidelines, supra,
§ 240.00.)
The “Base Year shall be 1977 when the financial information
for that year is available.” (Guidelines, supra, § 242.01.)1 If the
landlord did not own the property in 1977 and records for that
year “are not available from a previous landlord, the present
landlord may, when the unavailability of the 1977 records can
be substantiated by clear and convincing evidence, substitute
as a Base Year the first year following 1977 for which a previous
landlord’s records are available.” (Guidelines, supra, § 243.02.)
If the current year net operating income is less than the
inflation-adjusted base year net operating income, the landlord
is eligible for a rent increase. (Guidelines, supra, § 243.07.) The
increase is allocated equally among the rental units. (Guidelines,
supra, § 245.02.)
The Department must give notice of the landlord’s application
to the tenants and set an evidentiary hearing. (L.A. Mun. Code,
§ 151.07, subd. (B)(3)(b) & (c); Guidelines, supra, §§ 247.01–247.05.)
1 The rationale for a 1977 base year is explained in the
Guidelines: “In most cases the automatic increases allowed
by the [LARSO] and the property tax savings resulting from
Proposition 13 provide sufficient additional operating income to
landlords to maintain at least the same net operating income they
experienced in 1977 adjusted by an inflation factor. However[,]
in some cases landlords may have incurred reasonable operating
expenses which exceed the rent increases allowed by the [LARSO]
and the tax savings resulting from Proposition 13. Therefore,
landlords who have had such reasonable increased operating
expenses shall be able to maintain the same level of net operating
income as they experienced in 1977, plus a Price Level Adjustment
as determined by the [Commission] from time to time.” (Guidelines,
supra, § 240.03.)
4
The hearing officer must issue a “determination with written
findings in support thereof,” and may grant an application for a
rent increase less than the amount requested. (L.A. Mun. Code,
§ 151.07, subd. (B)(3)(d); Guidelines, supra, § 247.09.)
The landlord or the tenant may appeal the hearing officer’s
decision to the Commission on the grounds that “there was an error
or abuse of discretion by the hearing officer.” (L.A. Mun. Code,
§ 151.07, subd. (B)(4)(a); see also Guidelines, supra, § 248.02.)
The appellant may rely “on new, relevant information which
was not submitted to the hearing officer at the time of the
initial determination due to mistake, surprise, inadvertence, or
excusable neglect, and which information would have affected
the determination of the hearing officer if it had been submitted
earlier.” (L.A. Mun. Code, § 151.07, subd. (B)(4)(a); see also
Guidelines, supra, § 248.02(C).) The appeals board may affirm,
modify, or reverse the decision of the hearing officer. (L.A. Mun.
Code, § 151.07, subd. (B)(4)(d); Guidelines, supra, § 248.16.)
FACTUAL AND PROCEDURAL SUMMARY
A. Kim’s Application for a Just and Reasonable
Rent Increase
Kim owns a four-unit apartment building in Los Angeles
(the Kim property). In January 2016, Kim inherited the building
from her father, who purchased it in July 2006 from Yasutake
Takushi.
In 2016, Kim lived in one unit and rented the other three
units. Zuleta and Rios rent one of the units. In October 2018,
Zuleta and Rios were paying rent of $1,169.11 per month.
On October 18, 2017, Kim submitted to the Department
an application for a just and reasonable rent increase, seeking
an increase in the amount of $1,247.74 per unit per month. The
5
application is supported by a comparison of a “base year” of 1984
with a “current year” of 2016.
Kim explained that she selected 1984 as the base year based
on the following. She found among her “father’s boxes” a lease
containing Takushi’s address and then drove to the address.
Takushi had died several years earlier and his son was then living
in the residence. She explained to the son why she needed records
regarding the property and “earnestly asked him to look for all
papers,” including “the earliest he could find.” The son initially
told her “there was no chance” of finding such records. Eventually,
however, he provided Kim with a 1984 tax return schedule
regarding the property and, a few days later, called Kim to tell
her he had found an amended schedule for that tax year. Kim
explained to the Department, “I could not get 1977 tax forms
because I did not get that from Mr. Takushi’s son. I did not want
to bother him anymore.”
Kim also supported the application with a property report and
copies of deeds indicating that Takushi transferred the property to
Kim’s father in 2006, and Kim’s father transferred the property to
Kim in 2016. The report also indicates a transfer of the property in
September 1982, presumably to Takushi.
On January 18, 2018, the Department staff issued its analysis
and recommendation regarding Kim’s application, which concluded
that Kim was “not receiving a just and reasonable return on the
property and is entitled to a monthly rent increase of $543.72 per
unit per month.” The staff ’s analysis was based on a base year of
1984 and a current year of 2016. The staff reduced the amount of
the requested rent increase in part because it divided the total rent
increase for the building among four units, including the unit Kim
lived in, instead of the three units rented to tenants.
6
On February 9, 2018, a Department hearing officer held
a hearing on Kim’s application. Zuleta and Rios did not appear
at the hearing personally or through counsel.
On March 23, 2018, the hearing officer issued his decision
approving Kim’s application as modified in accordance with
the Department’s recommendation. Regarding the base year
determination, the hearing officer stated that Kim “provided
documentary evidence to the Department indicating that 1984
was the first year for which a full record of income and expenses
was available from the previous landlord. Accordingly, for this
application the base year was deemed to be 1984 and the current
year is 2016.”
Zuleta and Rios filed an appeal to the Commission.
Zuleta and Rios moved to augment the record in the appeal to
the Commission to include documents showing that Kim had rented
the unit she had been living in to third parties through Airbnb and
that she had converted a garage on the property and was living
in that unit. They also submitted their declarations stating that
the building has four apartment units and that Kim is living in a
separate garage unit “so that she could rent out” the unit she had
been living in.2
Prior to the hearing on the appeal, the Department submitted
a report stating that Kim began renting her unit through Airbnb
in March 2017 and, because the “current year” for purposes of the
application is 2016, the Airbnb income is irrelevant.
At the hearing before the Commission, Zuleta and Rios,
through counsel, argued, among other arguments, that the
2 Our record does not disclose whether the Commission
appeals board granted the motion to augment the record. Its ruling
on the appeal, however, implies that it considered the additional
evidence.
7
Department and the hearing officer improperly failed to consider
the undisclosed Airbnb income. They also asserted that the rent
increase for the building should be divided among five apartments,
not four, because Kim was living in the converted garage unit on
the property.
In a written decision issued on July 6, 2018, the Commission
appeals board affirmed the hearing officer’s decision to grant in part
Kim’s requested rent increase. The panel rejected the argument
that the rent increase should be divided among five units because
the alleged fifth unit was based on hearsay. The panel deemed
evidence of Airbnb rental income to be immaterial because there
was no evidence of such income in 2016. The panel concluded
that there was “no reason to reverse the Hearing Officer’s decision
because there is insufficient evidence that the Hearing Officer
abused [his] discretion or made an error.”
B. Marzouk’s Application for a Just and Reasonable
Rent Increase
In October 2017, Marzouk acquired a four-unit apartment
building in Los Angeles. He rents three of the units and lives in
the fourth. Garcia is one of Marzouk’s tenants.
On November 14, 2017, Marzouk submitted an application
to the Department for a “just and reasonable” increase in the rent.
The Department determined that the application was incomplete
and requested further information. Marzouk filed a new
application on February 5, 2018, seeking increases of $1,153.59
per unit. At the time of the application, Garcia’s rent was $645.30.
Marzouk’s application was based on a base year of 2011 and
a current year of 2017. He initially supported the 2011 base year
claim with evidence that he acquired the property from his father
or an entity (Mar Mena Properties, LLC) in which his father is
a partner or principal. His father submitted a statement that his
8
company had purchased the property in 2009 “as a foreclosure,” and
that the foreclosing bank did not provide him with any documents.
According to Marzouk, his father “did not keep proper records for
2010 as it was his first year owning real estate,” and his father
“could only provide [him] information dating back to 2011.” In a
subsequent writing, Marzouk stated that there is no data available
prior to 2011 “due to multiple foreclosures/short sales and not being
able to track down the current addresses of previous owners.”
The Department staff issued a report, which accepted 2011
as the base year and recommended that Marzouk be granted a rent
increase of $364.55 per unit per month.
Prior to the hearing on the application, Marzouk obtained
a title report for the property and copies of deeds concerning the
property. These documents showed that the property was owned
by Karl and Louise Duus in 2001, who transferred the property
that year to Mei and Effendi Fendi. In 2006, the Fendis deeded
the property to Mariano Galvan, who transferred it to Marzouk’s
parents and uncle in 2009.
At the hearing before the Department hearing officer in June
2018, Marzouk testified that the only address he had for Galvan
(the owner from 2006 to 2009) was the apartment building that
is the subject of this proceeding, and Marzouk “couldn’t track
him down.” Marzouk obtained an address for the Fendis (the
owners from 2001 to 2006), and mailed them a letter, which was
returned to him undelivered. He then drove to the address in
South Pasadena, but no one answered his knock on the door. A
neighbor on that street informed him that the Fendis no longer
lived at that address.
Marzouk further testified that, although his parents and
uncle bought the property in August 2009, they “didn’t have the
books in order” and did not prepare the tax form used for reporting
9
rental real estate income and loss in 2010. 2011 was the first year
for which he had such a form.
The hearing officer issued his decision on July 6, 2018. He
found that “the previous owners’ records were available beginning
in 2011. Accordingly, the base year was deemed to be 2011 because
it was the earliest possible year of record that could be secured
from the previous owner.” The hearing officer agreed with the
Department’s recommendation and approved Marzouk’s application
as modified.
Garcia appealed to the Commission.
At the hearing before the Commission appeals board
in September 2018, a Department representative explained
that although the Department “request[s] clear and convincing
evidence, . . . it’s impossible for owners to [prove] a negative.
Therefore, we have to go with evidence submitted to show that
they’ve made their best effort. And having documentation of the
title report going to the last known address of a previous owner
that wasn’t listed as the property address and taking a picture
that he actually went there, I don’t see how much else he could
have done.”
Upon further inquiry from the appeals board panel, Marzouk
testified that he had found online the obituaries of the Duuses,
who owned the property from 1954 until they transferred it to
the Fendis in 2001. According to the title company he retained to
prepare the title report, “there was no address on record” for the
Duuses. The Department representative added: “I don’t see what
else [Marzouk] could have done beyond spending thousands of
dollars for a private investigator to investigate records that don’t
exist because the county said they don’t have them.”
On September 26, 2018, the Commission’s appeals board
affirmed the hearing officer’s decision, stating that “there was
10
insufficient evidence that the Hearing Officer abused [his]
discretion or made an error.”
C. Proceedings in the Superior Court
In October 2018, Zuleta, Rios, and Garcia filed a petition
for writ of administrative mandamus, among other relief, against
the Department and the Commission. The court severed the
individual’s claims for trial, but maintained a single case number
and issued a single judgment denying the petitions. Zuleta, Rios,
and Garcia appealed.
DISCUSSION
A. Standards of Review
When, as here, the underlying petition for writ of
administrative mandamus does not involve fundamental rights,
our review of a denial of the petition is identical to the trial court’s
review of the administrative ruling. (Hoag Memorial Hospital
Presbyterian v. Kent (2019) 36 Cal.App.5th 413, 421.) We review
the record of the administrative proceeding to determine whether
the agency “proceeded without, or in excess of, jurisdiction; whether
there was a fair trial; and whether there was any prejudicial abuse
of discretion. Abuse of discretion is established if the [agency] has
not proceeded in the manner required by law, the order or decision
is not supported by the findings, or the findings are not supported
by substantial evidence.” (Code Civ. Proc., § 1094.5, subd. (b).) We
review legal issues and conclusions of law de novo. (Hoag Memorial
Hospital Presbyterian, supra, at p. 421.)
11
B. Zuleta and Rios’s Challenge to Kim’s Just and
Reasonable Rental Increase
1. Clear and Convincing Standard Regarding
Unavailable Documents in Determining the
1984 Base Year
Zuleta and Rios contend that the hearing officer erred by
failing to properly apply a clear and convincing evidence standard
to Kim’s evidence that pre-1984 financial records concerning the
property were unavailable to her. We disagree.
Under Guidelines, supra, section 243.02, a landlord who did
not own the property in 1977 may “substitute as a Base Year the
first year following 1977 for which a previous landlord’s records
are available” “when the unavailability of the 1977 records can be
substantiated by clear and convincing evidence.”
A clear and convincing evidence standard of proof
“demands a degree of certainty greater than that involved with
the preponderance standard, but less than what is required by the
standard of proof beyond a reasonable doubt. This intermediate
standard ‘requires a finding of high probability.’ ” (Conservatorship
of O.B. (2020) 9 Cal.5th 989, 998.) Where clear and convincing
proof is required, the party bearing that burden of proof “ ‘must
do more than show that the facts are probably true’ ”; he or she
must convince the trier of fact “ ‘that it is highly probable that the
facts . . . are true.’ ” (Id. at pp. 998–999.)
In the context in which that standard is to be applied here,
the question for the hearing officer is whether Kim has shown that
it is highly probable that the records necessary to calculate the net
operating income of the property for years between 1977 and 1984
are unavailable to her.
Zuleta and Rios contend that the hearing officer failed to
apply the clear and convincing standard. They point out correctly
that the hearing officer did not explicitly refer to this standard in
12
his written ruling. He stated that Kim “provided documentary
evidence to the Department indicating that 1984 was the first year
for which a full record of income and expenses was available from
the previous landlord. Accordingly, for this application the base
year was deemed to be 1984 and the current year is 2016.”
Although the hearing officer did not explicitly recite the
clear and convincing standard in his ruling, he did introduce
his discussion of the issue by referring to the applicability of
section 243.02 of the Guidelines, which mandates the clear and
convincing evidence standard. The reference to that guideline
implies that the hearing officer applied that standard. Further,
the hearing officer did not indicate that he had applied a different
standard of proof and neither the Guidelines nor the LARSO
require the hearing officer to recite the clear and convincing
standard in the officer’s ruling. In the absence of a contrary
indication in the record, we presume that the hearing officer
regularly performed his duty (see Evid. Code, § 664) and that he
“ ‘applied the correct standard of proof.’ [Citation.]” (Saraswati v.
County of San Diego (2011) 202 Cal.App.4th 917, 929.) We
therefore reject the argument that the hearing officer failed to
apply the correct standard.
Zuleta and Rios further assert that the hearing officer
incorrectly applied a clear and convincing evidence standard
to them. They refer to the following statements in the hearing
officer’s decision: “After due consideration of the testimony and
documentation submitted by all parties, the Hearing Officer hereby
finds that the income and expenses claimed by the owners for
the base and current years are supported by clear and convincing
evidence. Although the tenants and their attorney expressed some
subjective concerns about the amount of the proposed rent increase
and voiced their objections to same, they failed to proffer any clear
and convincing evidence to rebut the owner’s claims or demonstrate
13
that the income or expenses reported in the application lacked
credibility in any way.” These statements relate solely to issues
concerning Kim’s evidence of income and expenses, not to her
selection of the base year. Zuleta and Rios have not, however,
challenged on appeal the hearing officer’s determination regarding
income and expenses (other than the Airbnb income discussed
below) and nothing in the hearing officer’s ruling suggests that he
required the tenants to make any showing, by clear and convincing
evidence or otherwise, as to the base year issue.
Zuleta and Rios next contend that, even if the hearing officer
applied the clear and convincing standard, he did so erroneously.3
The challenge is to the sufficiency of the evidence supporting
the hearing officer’s implied finding. Our Supreme Court has
recently clarified that, “when presented with a challenge to the
sufficiency of the evidence associated with a finding requiring
clear and convincing evidence, the court must determine whether
the record, viewed as a whole, contains substantial evidence from
which a reasonable trier of fact could have made the finding of high
probability demanded by this standard of proof.” (Conservatorship
of O.B., supra, 9 Cal.5th at p. 1005.)
Zuleta and Rios argue that the only evidence Kim presented
to support her selection of 1984 as the base year is the tax form
supplied by Takushi’s son and her statement regarding her efforts
to locate the son and her request that he provide her with “the
earliest” records he could find. Because Takushi appears to have
3The Department and the Commission argue that Zuleta and
Rios waived this argument by failing to raise it below. As Zuleta
and Rios point out, however, they raised the issue in their motion
to augment before the appeals board and the issue was addressed
by the Department’s representative, the appeals board panel,
and counsel for Zuleta and Rios. We therefore reject the waiver
argument.
14
owned the property since 1982, such evidence, Zuleta and Rios
argue, “did not establish anything about the availability of financial
records between 1977 and 1982, or even who owned the [Kim]
[p]roperty between those dates.”
Even in the absence of evidence that Kim attempted to locate
the person who owned the property prior to Takushi, we cannot
conclude that the hearing officer erred in determining, implicitly,
that it was highly probable that earlier records would not be
available to Kim. At the time of Kim’s application, it had been
35 years since someone other than Kim, her father, and Takushi
owned the property. That passage of time is itself a fact that
weighs heavily on the probability that the necessary documents
would never be available to Kim. In evaluating that probability,
the hearing officer could reasonably consider that the former owner
of the property or other custodian of the owner’s records, if still
living and locatable, had probably long since discarded any records
concerning the rental income and operating expenses for the
property. Even if the necessary records still exist and could be
found, the likelihood that the owner or other custodian would
decline to turn them over to Kim further reduces the probability
of their availability to her. Kim would have no ability to compel
production of the records and would need to resort, as she did in
this case, to “earnestly ask[ing]” the former owner or custodian for
such records. Although Kim was fortunate that Takushi’s son was
willing to search for and provide her with his father’s records from
1984, the kindness of strangers cannot be assumed, particularly
when that kindness involves turning over one’s financial, property,
or tax records.
We do not suggest that a landlord never needs to attempt
to track down those who owned the property many years earlier.
But here, the question is whether there was sufficient evidence,
including the passage of 35 years, for the hearing officer to
15
reasonably conclude that it was highly probable that pre-1984
records were unavailable to Kim. For the foregoing reasons, we
conclude that there was sufficient evidence.
2. Failure to Adjust Current Year Income Based
on Airbnb Income
Zuleta and Rios contend that the appeals board erred by
failing to adjust upward the current year’s income by the income
Kim received from Airbnb rentals. We reject the argument.
In determining whether Kim was eligible for a just and
reasonable rent increase, the Guidelines direct the hearing officer
to compare the base year net operating income with the current
year net operating income. (Guidelines, supra, § 243.07.) The
current year is defined as “[t]he most recent calendar or fiscal
year prior to the date of the Just and Reasonable application.”
(Guidelines, supra, § 240.00.) Kim submitted her application in
October 2017. The current year was therefore 2016.
The evidence Zuleta and Rios submitted regarding Kim’s
Airbnb rentals indicates that such rentals occurred in 2017. This
is consistent with Kim’s statement that she began Airbnb rentals
in March 2017. Because only income received in 2016 is relevant
to Kim’s application, the evidence of 2017 Airbnb rental income is
irrelevant.
Zuleta and Rios rely on Kim’s testimony at the appeals board
hearing where she stated: “I’m a full-time student at Los Angeles
City College. I don’t know how much time I have, but I’m trying to
make the means—the mortgage means [sic]. That’s all and I can’t
even remodify it because my income doesn’t meet and I can’t even
lower the payments because I’m a student and nobody would talk
to me. And I have records of people who try to help me. . . . After
this, after we bought it I—I have so many things to do, but I’m
very happy that I got up to here. Very grateful. I have no family,
16
no boyfriend. . . . It’s like two, three bedrooms. I mean, it’s—
and I knew this would take like six—five months and it did take
six months and I couldn’t meet the mortgage so I had Airbnb.”
Zuleta and Rios argue that the last sentence of this testimony
shows that Kim “turned to Airbnb” six months from the date she
acquired the property in January 2016. This statement is at best
ambiguous about when Kim turned to Airbnb. Thus, the appeals
board was free to adopt an interpretation in favor of the evidence
of Kim’s unambiguous statement to Department personnel that
she began using Airbnb in 2017. We therefore reject the tenants’
argument.
C. Garcia’s Challenge to Marzouk’s Just and
Reasonable Rental Increase
Garcia contends that the hearing officer and appeals board
erred in applying the clear and convincing evidence standard in
determining that the base year for Marzouk’s application is 2011.
In ruling on Marzouk’s application, the hearing officer stated
that “the previous owners’ records were available beginning in
2011. Accordingly, the base year was deemed to be 2011 because
it was the earliest possible year of record that could be secured
from the previous owner.” As with the ruling on Kim’s application,
the hearing officer referred to section 243.02 of the Guidelines,
which requires the application of the clear and convincing standard,
but failed to explicitly state that he was applying the clear and
convincing standard to the question whether earlier property
records were unavailable. As we explained above, however, the
failure to refer to that standard is not error and we presume that
the hearing officer was aware of and applied the correct standard.
As discussed above, the clear and convincing evidence
standard in this context requires Marzouk, as the proponent of
the fact that financial records of the property prior to 2011 were
17
unavailable, to establish that the unavailability of such records
is highly probable. (Conservatorship of O.B., supra, 9 Cal.5th
at pp. 998–999.) On review, we must determine whether there is
substantial evidence in the record from which the hearing officer
could have made that finding of high probability. (Id. at p. 1005.)
Here, Marzouk obtained the earliest records available from
the prior owner—his father’s company. He obtained from a title
company a title report and copies of deeds reflecting ownership of
the property since 1954. Through online research, he determined
that the couple who owned the property until 2001, the Duuses,
had passed away. Marzouk attempted to contact the couple that
owned the property from 2001 to 2006, the Fendis, but learned that
they had moved from the only address he had for them.
Garcia focuses his argument on the lack of evidence regarding
Marzouk’s efforts to locate Galvan, the individual who owned the
property between the Fendis and Garcia’s father’s company.
According to Garcia, Marzouk did no more than observe that
Galvan listed the subject property as his address on the 2006 deed
to the property and thereby concluded that he was unreachable.
Marzouk did produce the deed to Galvan showing the subject
property as Galvan’s address, but Marzouk did not state that
he stopped there. He explained in a writing in support of his
application that he was “not . . . able to track down the current
addresses of previous owners,” and that he “attempted to reach out
to the previous banks” but “they would not release the names of the
previous owners nor contact information.” He also testified before
the hearing officer that he “couldn’t track [Galvan] down.” He later
explained to the appeals board that he asked the city and his escrow
agent how to contact prior owners and was advised to obtain a title
report. He did so and used the information the report provided; but,
“[w]ithout a phone number and an email address [he did not] know
what other methods are really out there.”
18
Although our record is not clear as to what, precisely,
Marzouk did to “track down” Galvan, his statements imply some
action beyond merely reading Galvan’s deed. His attempt to “reach
out to the previous banks,” for example, implies that he contacted
Galvan’s lender or lenders, who would have been disclosed on deeds
of trust identified in the title report Marzouk obtained. Together
with the evidence of his efforts to locate the Fendis and the passing
of the Duuses, the hearing officer could reasonably conclude that
there was a high probability that financial records concerning
the property earlier than 2011 were unavailable to Marzouk.
DISPOSITION
The judgment is affirmed.
NOT TO BE PUBLISHED.
ROTHSCHILD, P. J.
We concur.
BENDIX, J.
FEDERMAN, J.*
*Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
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