Santa Monica landlords won the first test of a new state law that would allow them to evict their tenants and go out of the rental business.
Superior Court Judge David M. Rothman on Wednesday refused to issue an injunction halting evictions permitted under the Ellis Act.
The city and its Rent Control Board filed suit in September challenging the constitutionality of the law, which went into effect July 1. The city sued landlords Henry Yarmark, Bernard Appelbaum and later Luigi DeLucia, claiming that the Ellis Act violated the state Constitution. The three apartment owners had declared their intentions to go out of business and had begun eviction proceedings against their tenants.
Rothman said "there are serious questions as to whether the legislative scheme of the Ellis Act is constitutional." But nevertheless he said he believes the Ellis Act ultimately will be upheld. He said he would not issue the injunction because he did not feel the city could win its lawsuit.
"We are not happy," Barry A. Rosenbaum, a deputy city attorney, said after the ruling. "We wanted a preliminary injunction and we're entitled to it because, as the court said, there are clear questions of constitutionality regarding the Ellis Act."
Hadassa K. Gilbert, an attorney with the rent board, said the city and the rent board plan to appeal Rothman's ruling. The city will seek a stay of the denial of the injunction which, if granted, would prevent any evictions at least until the appeal is heard.
The Ellis Act guarantees landlords the right to go out of business. And according to Yarmark attorney Gordon P. Gitlen, landlords cannot go out of business under the act unless they also have the right to evict their tenants.
Before Ellis went into effect, a Santa Monica landlord could evict all the tenants in a building only if the Rent Control Board found that the building was uninhabitable and beyond repair.
The Ellis Act grew out of a lawsuit brought by Santa Monica landlord Jerome J. Nash, who claimed that the city's rent control law violated his right to go out of business after Santa Monica denied his request to evict his tenants and demolish a six-unit apartment building.
Nash won in Superior Court but the ruling was reversed in the state Supreme Court. In March, 1985, the U.S. Supreme Court refused to hear the case.
As a result, state Sen. Jim Ellis (R-San Diego) introduced a bill that prevents governments from compelling landlords to stay in the rental business.
In response, the city passed an ordinance last June establishing relocation benefits of $2,000 to $4,000, depending on the size of the unit and the circumstances of the evicted tenants.
But on Sept. 24 the city of Santa Monica and the Rent Control Board filed suit on behalf of the tenants of five buildings owned by Yarmark or co-owned by Yarmark and Appelbaum. Their tenants faced eviction under the Ellis Act. The city later added DeLucia to its lawsuit.
Santa Monica has contended that although landlords have the right to go out of business, they do not have the right to evict their tenants for that reason. Landlords can still go out of business by selling their buildings or waiting for all the tenants to voluntarily leave.
The city has said that even if Ellis does allow evictions, the law is unconstitutional because it violates a provision in the state Constitution that gives cities the power to legislate municipal affairs. Santa Monica also claims that Ellis violates a doctrine of California case law that requires the Legislature to regulate any area it takes away from municipalities.
Landlord attorneys contended that Ellis allows for evictions and is constitutional because the state Legislature included rules for enforcing the law. And Ellis does not violate the home rule powers given to municipalities by the Constitution because the state has the right to take away areas which have been left to cities to regulate in order to pass laws of statewide interest, according to Gitlen.
"The judge evaluated all our claims and agreed with 90% of them," Gitlen said. "We feel Ellis is constitutional. Tenants should avail themselves of the relocation money offered and locate other housing as soon as possible."
The buildings in the city's suit that are solely owned by Yarmark are the Tour Inn motel, 1719 Wilshire Blvd., with 14 empty units and four occupied apartments, and a building at 1142 18th St. with one occupied and four empty apartments. The tenants living in those buildings as well as the three tenants living in the 14-unit building at 519 California Ave. owned by DeLucia face imminent eviction, Gitlen said.