Request for Publication of Ellis Act Appeal Granted
September 7th, 2023
Contributor: Emily L. Brough
As first reported on July 18, 2023, Zacks & Freedman’s client prevailed in the Court of Appeal in 640 Octavia, LLC v. Pieper et al. (“640 Octavia”), which affirmed important rights for owners facing a challenge to an Ellis Act invocation. The Court of Appeal’s opinion in 640 Octavia was initially issued as “unpublished,” however, following an amici letter requesting publication, the Court reversed course, publishing the case.
Why is publication important? When a case is published, it becomes citable authority, officially shaping the legal terrain for future advocacy. Publication allows advocates to rely on and cite to the case’s legal findings and principles in court. As discussed previously, the Court in 640 Octavia confirmed that even if a landlord has a retaliatory motive in invoking the Ellis Act, if they also prove a bona fide intent to take the property off the rental market, the tenant’s defense of retaliation is overcome. As well as confirming principles related to an owner’s “bona fide intent,” the Court’s opinion also discussed other key issues of Ellis Act procedure.
In addition to challenging Z&F’s client’s bona fide intent to leave the business, the tenants in 640 Octavia also challenged the following two aspects of the owner’s service of the Ellis Act withdrawal notice at the property: (1) service of the notice on all tenants at the property, and (2) service of the first half of the required relocation payments. When withdrawing a property under the Ellis Act, an owner must serve written notice on all tenants at the property, and include the first half of the tenants’ relocation payments with that notice. Failing to strictly comply with either requirement can render an Ellis Act withdrawal notice defective, necessitating a do-over of the entire process.
Here, Z&F’s client’s principal occupied one unit at the property, and a nonpaying family friend occupied another unit. Because these were not tenancies under the law—but rather licenses to occupy the property— Z&F’s client did not serve these units with the Ellis Act withdrawal notice. The tenants at the property claimed that these occupancies should be considered tenancies, and thus the owner’s failure to serve these units allegedly rendered the notice defective. The tenants also claimed that the owner’s service of the relocation payments was defective because the tenants never “received” the payments. The evidence showed that the payments were served, however, “returned to sender” due to the tenants’ mailbox being full. The owner then forwarded the relocation payments to the tenants’ attorney, explaining what had happened. The tenants claimed that their attorney did not have the authority to receive these payments on their behalf, and because they had not received them, the notice should be rendered defective.
The Court of Appeal disagreed on both points. The Court first set forth the legal framework for creation of a tenancy, and carefully distinguished the occupancies at issue. The Court also found that the owner’s “concurrent service” of the payments with the notice complied with the statutory requirements, and proof of receipt was not necessary. Because the Court determined the occupancies at issue were not tenancies, and the relocation payments had been properly served, the notice was not defective as a matter of law. Now that 640 Octavia has been published, the Court of Appeal’s analysis and application of these Ellis Act legal standards may now be used to all owners’ advantage when such challenges arise in the future.
Zacks & Freedman, PC is a law firm dedicated to advocating for the rights of property owners. With experience and knowledge in rent control issues, zoning, permitting, transactional disputes and other real estate matters, Zacks & Freedman, PC has successfully advocated its clients’ positions before local administrative tribunals and at all levels of the State and Federal courts, including the U.S. Supreme Court. For more information, contact us or visit www.zfplaw.com.