IN THE SUPREME COURT OF CALIFORNIA
CITY OF SANTA MONICA,
S145571
Plaintiff and Respondent,
Ct.App. 2/1 B182104, B184549
v.
Los Angeles County
GUILLERMO GONZALEZ,
Super. Ct. No. SS013071
)
Defendant and Appellant.
GUILLERMO GONZALEZ,
Petitioner,
v.
Ct.App. 2/1 B184127
LOS ANGELES COUNTY
Los Angeles County
SUPERIOR COURT,
Super. Ct. No. SS013071
Respondent;
CITY OF SANTA MONICA,
Real Party in Interest
Sections 17980.6 and 17980.7 of the Health and Safety Code1 compose a
statutory scheme providing certain remedies to address substandard residential
housing that is unsafe to occupy. Pursuant to section 17980.6, an enforcement
1
Unless otherwise indicated, all further statutory references are to this code.
1
agency may issue a notice to an owner to repair or abate property conditions that
violate state or local building standards and substantially endanger the health and
safety of residents or the public. Section 17980.7 provides that, if the owner fails
to comply with the notice despite having been afforded a reasonable opportunity to
do so, the enforcement agency may seek judicial appointment of a receiver to
assume control over the property and remediate the violations or take other
appropriate action. We granted review in this matter to address issues regarding
the construction and application of these statutory provisions.
Examination of the legislative intent underlying these statutes leads us to
conclude that an enforcement agency’s failure to fully comply with the
requirements specified in section 17980.6 does not necessarily invalidate a
receiver’s appointment under section 17980.7, and that the particular instances of
noncompliance here did not invalidate the receivership orders on appeal. We also
find that, in view of all the circumstances presented, the trial court below acted
well within its discretion in authorizing the receiver to forgo rehabilitation of the
substandard property at issue and to instead contract for demolition. Accordingly,
we affirm the judgment of the Court of Appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The relevant facts, as stated in the Court of Appeal opinion and ascertained
from our own review of the record, are as follows.
Guillermo Gonzalez is the owner of the real property located at 2438 Ocean
Park Boulevard in Santa Monica, California. The property consists of a two-story
house and a garage that has been converted into a separate dwelling unit.
Gonzalez lives with his family on the first floor of the house, and he rents to
tenants who occupy the garage and to various others who pay to use bunk beds on
the house’s second floor. The area under the staircase landing also is rented out as
a separate living space.
2
For more than 15 years, the property has been in an extremely unsafe and
unsanitary condition that endangers its occupants and neighbors. In August 1989,
the City of Santa Monica (the City) filed a civil nuisance lawsuit against Gonzalez,
alleging violations of the uniform building, fire, mechanical, plumbing, and
electrical codes. The City obtained a default judgment requiring Gonzalez to
demolish certain structures built without permits. The judgment authorized the
City to do the demolition work itself if Gonzalez did not do so within 45 days. In
January 1991, the City did the demolition work at a cost of $21,939.93. The City
recorded a lien against the property and recovered that cost when Gonzalez
refinanced the property.
In May 1997, the City filed an 85-count misdemeanor criminal complaint
against Gonzalez for violations of the building, fire, housing, plumbing, and
electrical codes. Gonzalez pled guilty to 15 of the counts. The court placed him
on probation and ordered him to correct all code violations within 30 days. He
failed to do so, and the court repeatedly found him in contempt and sentenced him
to serve jail time. In 1998, Gonzalez was taken into custody and spent a total of
280 days in jail for refusing to correct the code violations on his property.
After receiving information from its fire department, the City again
inspected the property in January 2001 and found numerous continuing code
violations. In May 2001, the City filed a second criminal complaint against
Gonzalez. This complaint contained 32 misdemeanor counts for code violations,
many of which were identical to those in the first criminal case. Gonzalez pled
nolo contendere to six of the counts, and was ordered to correct all code violations
on the property by May 15, 2002. The court’s order authorized the City to enter
the property and abate the violations if Gonzalez did not do so, and specified that
any violations remaining uncorrected after 30 days would be deemed a public
3
nuisance without the necessity of further hearing, order, or action by the City. The
court placed Gonzalez on probation until April 2005.
On May 15, 2002, representatives from the City’s building and safety
department inspected the property pursuant to the trial court order. Once again
they found numerous continuing code violations. On May 23, 2002, the City
personally served Gonzalez with a “Notice and Order to Comply,” dated May 21,
2002 (hereafter sometimes the May 21, 2002 Notice). This document listed all the
outstanding violations and stated that Gonzalez was “hereby directed to obtain the
required permits from the Building and Safety Division, and make the necessary
repairs. A re-inspection will be conducted on June 20, 2002, to ensure
compliance with this notice. [¶] Pursuant to . . . Court Order, if you fail[] to
comply with this notice the City of Santa Monica will take actions to make the
necessary corrections to eliminate the described deficiencies, and any other that
may exist at the property.”
Two years later, on June 21, 2004, city inspectors conducted a followup
inspection of the property and found that none of the code violations in the May
21, 2002 Notice had been corrected. On June 30, 2004, the city attorney filed a
declaration of probation violation based on Gonzalez’s failure to correct the code
violations. On November 17, 2004, the court found Gonzalez in violation of his
probation.
Pursuant to section 17980.7, subdivision (c) (section 17980.7(c)), on
December 6, 2004, the City filed the instant “Petition for Appointment of Receiver
and Other Relief.” The petition alleged that numerous serious code violations on
the property presented a substantial threat to the health and safety of the residents
and the nearby community. These included: accumulation of combustible debris
and rubbish in the exterior of the property (U. Fire Code, § 1103.2.1); use of
temporary extension cords in place of permanent approved wiring (id., § 8506.1;
4
Nat. Electrical Code, § 400-8); no heating in the units (Cal. Building Standards
Code, § 310.11; see Cal. Code Regs., tit. 24); renting out multiple beds on the
second floor in violation of permissible occupancy rules and prior court orders
(Cal. Building Standards Code, § 310.1; Santa Monica Mun. Code, § 8.08.030);
accumulation of litter and debris and failure to maintain the property in a safe and
sanitary condition (Health & Saf. Code, § 17920.3, subd. (j); Santa Monica Mun.
Code, § 7.48.070); failure to have operable and proper windows in all sleeping
rooms (Cal. Building Standards Code, § 310.4); nonoperational and unregistered
vehicles parked in the backyard (Santa Monica Mun. Code, § 8.96.220); and
maintaining an attractive nuisance (§ 17920.3, subd. (c); Santa Monica Mun.
Code, § 8.96.050). The petition alleged that all previous efforts to compel
Gonzalez to correct the violations had failed and that a receiver was necessary to
abate the serious code violations. Concurrent with its petition, the City filed an ex
parte application for a temporary restraining order to enjoin Gonzalez from
encumbering or transferring the property pending a hearing on the City’s
separately filed notice and motion for appointment of a receiver to take
possession.2
On December 6, 2004, the trial court issued the temporary restraining order
and set the City’s motion for appointment of a receiver for a hearing on January 6,
2005. On December 9, Gonzales was personally served with notice of this motion,
in which the City contended it was “likely” the receiver and the court might order
“complete demolition of the structures” on the property due to their “extreme and
2
On December 2, 2004, the City personally served Gonzalez with notice and
a copy of the petition, and gave him telephonic notice of its ex parte application
for the temporary restraining order.
5
chronic unsafe conditions” and the comparative costs of rehabilitation and
demolition.
Gonzalez appeared at the scheduled January 6, 2005 hearing without an
attorney and without having filed an opposition to the petition and motion. He
claimed: “My attorney was supposed to be here. But, apparently, he had some
other things to do.” The court stated for the record that it had not heard from the
attorney, and proceeded with the hearing in his absence. The court then explained
to Gonzalez that due to his continued refusal to remedy the code violations despite
the two previous criminal actions and the numerous civil citations, and as a last
resort, the City was seeking to take over and sell his property. Once the property
was sold, and the encumbrances paid off, Gonzalez would get whatever was left.3
The court then issued an order appointing David J. Pasternak as receiver,
with full powers granted receivers under section 568 of the Code of Civil
Procedure and section 17980.7(c) of the Health and Safety Code, including the
power to “rehabilitate or demolish” the property consistent with plans submitted to
the court. The order included findings that (1) Gonzalez’s property was
“substandard and a public nuisance” and “maintained in a manner that violates the
state building standards and the Santa Monica Municipal Code”; (2) the violations
were so extensive and of such a nature that the health and safety of the property’s
occupants, neighboring residents, and the general public were substantially
endangered; (3) the City, as a local enforcement agency, properly issued a notice
3
Downey Savings and Loan Association, F.A. (Downey Savings), held an
interest in the property as the first priority lienholder, and also was served with the
City’s petition. Although Downey Savings opposed the petition primarily on the
ground that receiver certificates should not be senior in priority to its existing
secured loan, it expressed support for demolition of the property.
6
to repair and abatement order to Gonzalez; (4) Gonzalez failed to comply with the
City’s notice within a reasonable time after its issuance and had been afforded a
reasonable opportunity to correct the conditions cited therein; (5) the substandard
conditions of the property would likely persist unless the court appointed a
receiver to take possession of the property and to undertake responsibility for its
rehabilitation; and (6) Gonzales was properly served and given notice prior to the
filing of the petition for appointment of receiver.
Thereafter, Gonzalez substituted in private counsel and moved for
reconsideration of the order appointing a receiver. His motion made several
assertions: (1) it would cost only $27,400 to bring the property up to code; (2) the
nonoperational vehicles and the operational kitchen appliances had been removed
from outside the property; (3) the City had not sought such a drastic remedy for
code violations in 15 years; and (4) the substantial costs of a receivership were
unwarranted because Gonzalez now had the “guidance of professional counsel.”
The City contended reconsideration should be denied because the only new
fact Gonzalez presented was that two vehicles and some debris had been removed
from the property’s backyard after the January 6 hearing. In his reply, Gonzalez
asserted for the first time that he had been denied procedural due process by the
City’s failure to issue an order or notice to repair or abate and failure to provide a
reasonable opportunity to respond before a receiver was appointed.
The court denied the reconsideration motion, concluding the newly
proffered facts and law could have been presented at the original January 6, 2005
hearing. The court additionally found that, while the City’s May 21, 2002 Notice
did not “fully comply” with section 17980.6, “[t]his is an egregious case where
[Gonzalez] has been involved in criminal matters and numerous civil matters
regarding the conduct and condition of this property. He certainly had more than
ample notice of the building code violations and the other safety code violations
7
that are existent on his property. [¶] So, under the circumstances, the court does
not find that there is any lack of notice on behalf of [Gonzalez]. I think he clearly
knew what was going on. This is an ongoing process.”
Over a month later, the receiver filed an application for issuance of an order
authorizing him to take specified actions, including: (1) entering into a loan
commitment agreement and borrowing funds; (2) entering into a contract to
demolish the structure on the property; (3) paying relocation benefits to the tenants
on the property; and (4) paying Gonzalez $2,000 per month for living expenses as
long as he does not interfere with the receivership. Based on bids the receiver
obtained, the application represented that rehabilitation of the structure would cost
approximately $145,000, which would yield a property worth $450,000 and result
in equity of approximately $305,000. Alternatively, demolition of the current
structure would cost $54,000, which would yield a lot worth $509,000 and result
in equity of $455,000. Thus, the property would be worth $59,000 more as a
vacant lot ($509,000) than with its existing structures after correction of the code
violations ($450,000), and the equity in the property after demolition ($455,000)
would be nearly 50 percent higher than the equity if the structures were repaired
($305,000). In presenting this information, the receiver cautioned the court it was
“more likely that the estimated rehabilitation cost will increase significantly as
additional problems are discovered as the work progresses, and it would result in
significantly greater costs of administration for this receivership because both the
extent of the work and the time to complete that work would be greater than the
alternative of demolishing the structure.”4
4
The City also provided evidence indicating that rehabilitation would cost
more than the bid amount of $145,000. Specifically, the City’s senior code
compliance officer estimated it would cost $350,000 to bring the property into
(footnote continued on next page)
8
The City did not take a position on the receiver’s application to pursue
demolition. Gonzalez, however, filed an opposition that simply expressed his
“fervent wish” to remain living at the property with his family and to spare the
residence from demolition. He claimed he should be permitted to make that
choice, even though it “may not necessarily be ‘the best investment.’ ” Gonzalez
did not make any showing regarding his ability to pay for the repairs or
management of the property in the future. Previously, however, he had filed a
declaration in the action stating he was unemployed and had no other assets or
income apart from rental income from the property.
On May 2, 2005, the court held a hearing and considered the parties’
evidence and arguments. The court granted the receiver’s application for
authorization to take the specified actions, determining that the property “[was]
uninhabitable in its current position and that it [was] not economically feasible to
rehabilitate the structure.” On Gonzalez’s application, the court waived the appeal
bond and temporarily stayed the May 2, 2005 order.
Thereafter, Gonzalez applied to the Court of Appeal for a stay of all trial
court proceedings and appealed both the January 6, 2005 order appointing the
receiver and the May 2, 2005 order granting the receiver’s application. He also
petitioned for a writ of mandate/prohibition to invalidate the order appointing the
receiver and all subsequent orders. As relevant here, Gonzalez contended the
order of appointment violated his due process rights and was void because the City
(footnote continued from previous page)
code compliance; this figure was $200,000 higher than the bid obtained by the
receiver and did not include the cost of preparing plans or permitting fees.
Additionally, the receiver’s equity estimates did not appear to take into account
the balance remaining on the Downey Savings loan. (See ante, fn. 3.)
9
failed to issue an order or notice to repair or abate in conformance with sections
17980.6 and 17980.7. Because the appointment order was void, he argued, the
subsequent order authorizing the receiver to contract for demolition also was void,
and even if not void, such authorization constituted an abuse of discretion.
The Court of Appeal ordered all proceedings in the trial court stayed and
agreed to consider Gonzalez’s writ petition concurrently with his appeals. The
court unanimously affirmed the receiver’s appointment, finding the City
sufficiently complied with sections 17980.6 and 17980.7 to protect Gonzalez’s due
process rights. The justices, however, disagreed on the issue of demolition. The
majority determined the trial court did not abuse its discretion in approving the
less expensive and more profitable option of demolishing and selling the property,
rather than the more expensive and less profitable option of rehabilitation.
Conversely, the dissenting justice concluded the court’s approval of demolition
over Gonzalez’s objection was arbitrary and unreasonable because there was
ample equity in the property to pay for correction of all code violations. In his
view, accepting the economic consequence of rehabilitation — which would leave
$150,000 less in equity than demolition and sale — was a decision properly left to
Gonzalez, so long as the property was made safe and sanitary. The Court of
Appeal affirmed both orders, denied the writ petition, and vacated the stay.
We granted Gonzalez’s petition for review and stayed all proceedings in the
trial court pending further order by this court.
DISCUSSION
Gonzalez contends the trial court acted without jurisdiction and in error
when it appointed a receiver and then authorized the receiver to contract for
demolition of his property over his objection. He bases these contentions on the
City’s alleged failure to comply with sections 17980.6 and 17980.7 and on the
10
circumstance that his property has sufficient equity to pay for correction of all
code violations.
A. Sections 17980.6 and 17980.7
Gonzalez’s claims regarding the City’s alleged noncompliance with
sections 17980.6 and 17980.7 fall into the two general categories below.
1. Notice of Potential Receivership
Gonzalez first contends that, under sections 17980.6 and 17980.7, the City
was required to provide notice that receivership was a potential consequence of
failure to correct the substandard condition of his property. In his view, the City’s
noncompliance on this point violated his due process rights and deprived the trial
court of jurisdiction to appoint a receiver or to authorize receiver action.
Whether these statutes require the type of notice claimed, and whether the
City’s purported noncompliance invalidates the trial court’s orders, are issues that
must be resolved by ascertaining the legislative intent. When construing statutes,
our goal is “ ‘to ascertain the intent of the enacting legislative body so that we may
adopt the construction that best effectuates the purpose of the law.’ ” (Gattuso v.
Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 567 (Gattuso), quoting Hassan
v. Mercy American River Hospital (2003) 31 Cal.4th 709, 715.) We first examine
the words of the statute, “giving them their ordinary and usual meaning and
viewing them in their statutory context, because the statutory language is usually
the most reliable indicator of legislative intent.” (Gattuso, supra, 42 Cal.4th at p.
567.) If the statutory language is ambiguous and susceptible of differing
constructions, we may reasonably infer that the legislators intended an
interpretation producing practical and workable results rather than one resulting in
mischief or absurdity. (See In re Reeves (2005) 35 Cal.4th 765, 771, fn. 9, and
cases cited.) It is a fundamental tenet of statutory construction that we must give
11
the statute a reasonable construction conforming to legislative intent. (Gattuso,
supra, 42 Cal.4th at p. 567.) With these principles in mind, we turn first to the
language of sections 17980.6 and 17980.7.
Section 17980.6 provides in full: “If any building is maintained in a
manner that violates any provisions of this part, the building standards published
in the State Building Standards Code relating to the provisions of this part, any
other rule or regulation adopted pursuant to the provisions of this part, or any
provision in a local ordinance that is similar to a provision in this part, and the
violations are so extensive and of such a nature that the health and safety of
residents or the public is substantially endangered, the enforcement agency may
issue an order or notice to repair or abate pursuant to this part. Any order or notice
pursuant to this subdivision shall be provided either by both posting a copy of the
order or notice in a conspicuous place on the property and by first-class mail to
each affected residential unit, or by posting a copy of the order or notice in a
conspicuous place on the property and in a prominent place on each affected
residential unit. The order or notice shall include, but is not limited to, all of the
following: [¶] (a) The name, address, and telephone number of the agency that
issued the notice or order. [¶] (b) The date, time, and location of any public
hearing or proceeding concerning the order or notice. [¶] (c) Information that the
lessor cannot retaliate against a lessee pursuant to Section 1942.5 of the Civil
Code.”
Given its ordinary and usual meaning, the first sentence of section 17980.6
plainly contemplates that, where, as here, a residential building is maintained in a
manner that violates local ordinance provisions similar to statutory and regulatory
residential building standards, and the violations are so extensive that they
substantially endanger public health and safety, a local enforcement agency such
as the City may issue an order or notice demanding that the property owner correct
12
the violations listed. The second sentence of section 17980.6 provides that copies
of the order or notice (hereafter sometimes the notice to repair) “shall be” posted
in a conspicuous place on the property and either (1) served by first-class mail to
each affected residential unit; or (2) posted in a prominent place on each affected
residential unit.
Section 17980.7 picks up where section 17980.6 leaves off, providing in
relevant part: “If the owner fails to comply within a reasonable time with the
terms of the order or notice issued pursuant to Section 17980.6, the following
provisions shall apply: [¶] . . . [¶] (c) The enforcement agency, tenant, or tenant
association or organization may seek and the court may order, the appointment of
a receiver for the substandard building pursuant to this subdivision. In its petition
to the court, the enforcement agency, tenant, or tenant association or organization
shall include proof that notice of the petition was served not less than three days
prior to filing the petition . . . to all persons with a recorded interest in the real
property upon which the substandard building exists. . . .” (§ 17980.7(c).) In
deciding whether to appoint a receiver, “the court shall consider whether the
owner has been afforded a reasonable opportunity to correct the conditions cited in
the notice of violation.” (§ 17980.7(c)(1).)
By its terms, section 17980.7 contemplates that two different types of
notice must be given to the property owner before a receiver may be appointed.
The first type of notice, reflected in the introductory clause of section 17980.7,
refers to the enforcement agency’s notice to repair issued pursuant to section
17980.6. This clause makes clear that if the owner fails to comply with the notice
to repair within a reasonable time, an enforcement agency, a tenant, or a tenant
association or organization may seek an order from the trial court appointing a
receiver. (§ 17980.7(c).) This clause also serves as a predicate for other judicial
13
remedies, such as an order for statutory penalties (§ 17980.7, subd. (a)) and an
order affecting state tax deductions and benefits (§ 17980.7, subd. (b)(1), (2)).
The second type of notice, reflected in section 17980.7(c), addresses the
particular notice required when a receivership is sought: the party seeking
appointment of a receiver “shall include proof [in the petition] that notice of the
petition was served not less than three days prior to filing the petition” to all
persons with a recorded interest in the property. (§ 17980.7(c).) Given its
ordinary and usual meaning, this statutory language is reasonably understood as
meaning that an enforcement agency such as the City cannot commence a
receivership proceeding unless it demonstrates that it gave the property owner at
least three days’ notice of the receivership petition.
Whether viewed separately or together, the terms of section 17980.6 and
section 17980.7 do not require the notice to repair to inform the property owner
that receivership is a potential consequence of failure to correct or abate the
identified violations. Section 17980.6 authorizes an enforcement agency to issue a
notice to repair, but it makes no specific reference to receivers or receivership
proceedings, or to any of the other judicial remedies made available in section
17980.7. Section 17980.7, on the other hand, expressly authorizes an enforcement
agency and others to seek a receivership when an owner fails to comply with a
section 17980.6 notice to repair, but the notice it requires is simply notice that the
receivership petition be served on all persons with a recorded interest in the
property at least three days before the petition is filed. (§ 17980.7(c).) Thus,
while Gonzalez was statutorily entitled to notice that failure to correct the
substandard condition of his property might result in the appointment of a
14
receiver, the City duly afforded that notice when it served Gonzalez in accordance
with section 17980.7(c).5
2. Notice and Content Requirements of Section 17980.6
Gonzalez next argues the trial court’s appointment of a receiver on January
6, 2005, was improperly predicated on the City’s May 21, 2002 Notice, which he
claims did not meet the notice and content requirements of section 17980.6 in the
following particulars. First, the May 21, 2002 document bore the caption “Notice
and Order to Comply,” instead of “Order or Notice to Repair or Abate.” Second,
the document did not identify either section 17980.6 or section 17980.7 among the
numerous claimed code violations, and did not contain information explaining that
the lessor cannot retaliate against a lessee pursuant to Civil Code section 1942.5
(§ 17980.6, subd. (c)). Third, the City did not comply with section 17980.6’s
provisions for conspicuous posting and/or first-class mailing of the document.
Fourth, the May 21, 2002 Notice made no reference to the City’s intent to seek a
receivership in 2004, or to the January 6, 2005 receivership hearing, or to any code
or ordinance violations existing on his property at any point in time between June
21, 2004 (when the City returned to inspect his property for compliance with the
May 21, 2002 Notice), and the subsequent receivership hearing.6
5
Gonzalez does not challenge his three-day notice pursuant to section
17980.7(c).
6
Gonzalez also complains the notice did not include the date, time, or
location of any public hearing or proceeding concerning its subject matter, as
required by section 17980.6, subdivision (b). We note, however, there was no
hearing or proceeding scheduled at the time the City served the May 21, 2002
Notice. The document did state that a “re-inspection” would be conducted on June
20, 2002, to verify compliance with the notice.
15
Three of the foregoing contentions fail because the perceived requirements
do not exist. As already discussed, section 17980.6 does not require a notice to
repair to inform the property owner that receivership is a potential consequence of
failure to correct or abate the identified violations. Nor does the statute call for
disclosure of intent to seek a receivership at some point in the future.
Moreover, while it might have been better practice for the City’s May 21,
2002 Notice to have identified its statutory basis, and we would encourage
enforcement agencies to have their notices to repair do so henceforth, the terms of
section 17980.6 do not specify such a requirement.
Finally, section 17980.6 does not mandate the specific caption “Order or
Notice to Repair or Abate.” True, section 17980.6 expressly states that an
“enforcement agency may issue an order or notice to repair or abate pursuant to
this part.” (Italics added.) But the phrase appears to have no particular talismanic
significance. Indeed, the provisions of section 17980.7 do not even employ the
phrase, but instead use other descriptive terms for purposes of reference, such as
the “order or notice to correct the condition that caused the violation pursuant to
Section 17980.6” (§ 17980.7, subd. (b)(2)) and the “notice of violation”
(§ 17980.7, subd. (c)(1), (4)(C), (D), (F) & (G), (9)).
Viewed in context, section 17980.6 contemplates that, when a residential
property is in violation of state or local building codes, and the violations are so
extensive that they pose a serious health and safety risk, the enforcement agency
may serve a notice to the owner to correct the violations and bring the property
into code compliance within a reasonable time. This is exactly what the City’s
May 21, 2002 Notice and Order to Comply did: it informed Gonzalez in
unambiguous terms that (1) his property violated numerous identified building
standards and code sections; and (2) he was directed to obtain the required permits
and to make the necessary repairs by June 20, 2002.
16
Gonzalez’s remaining contentions require more extensive analysis. As
Gonzalez points out, section 17980.6 states that any order or notice pursuant to its
terms “shall be provided” by posting a copy of the order or notice in a
conspicuous place on the property, and also by either first-class mail delivery to
each affected residential unit or posting a copy in a prominent place on each
affected residential unit. (Italics added.) Section 17980.6 further provides that the
order or notice “shall include” information explaining the lessor cannot retaliate
against a lessee. (§ 17980.6, subd. (c), italics added.) It is undisputed that the
May 21, 2002 Notice was neither conspicuously posted nor mailed, and that it
omitted mention of the retaliation prohibition. Gonzalez argues these deficiencies
invalidate the trial court’s orders appointing the receiver and authorizing
demolition of his property.
“Traditionally, the question of whether a public official’s failure to comply
with a statutory procedure should have the effect of invalidating a subsequent
governmental action has been characterized as a question of whether the statute
should be accorded ‘mandatory’ or ‘directory’ effect. If the failure is determined
to have an invalidating effect, the statute is said to be mandatory; if the failure is
determined not to invalidate subsequent action, the statute is said to be directory.”
(People v. McGee (1977) 19 Cal.3d 948, 958 (McGee).)
The “mandatory-directory” dichotomy is linguistically similar but
analytically distinct from the “mandatory-permissive” (or “obligatory-
permissive”) dichotomy. (McGee, supra, 19 Cal.3d at pp. 958-959.) For purposes
of the mandatory-permissive dichotomy, the word “mandatory” refers to an
obligatory procedure that a governmental entity is required to follow, as opposed
to a permissive procedure that the entity may follow or not, as it chooses. (Ibid.)
Here, the City appears to acknowledge that section 17980.6 is obligatory to the
17
extent it calls for posting and/or mailing of a notice to repair and reference to the
retaliation prohibition.
In the mandatory-directory context, however, the “mandatory” or
“directory” designation does not refer to whether a particular statutory requirement
is obligatory or permissive, but instead denotes “ ‘whether the failure to comply
with a particular procedural step will or will not have the effect of invalidating the
governmental action to which the procedural requirement relates.’ ” (McGee,
supra, 19 Cal.3d at p. 959.) In California, it is not uncommon for obligatory
statutory provisions to be accorded only directory effect. (Morris v. County of
Marin (1977) 18 Cal.3d 901, 908-909, fn. 4 (Morris).)
Courts determine whether an obligatory statutory provision should be given
mandatory or directory effect by ascertaining the legislative intent. (McGee,
supra, 19 Cal.3d at p. 962, citing Morris, supra, 18 Cal.3d at pp. 909-910.) Of
course, when the Legislature imposes particular statutory requirements, it
generally does not intend for them to be disregarded. (Cox v. California Highway
Patrol (1997) 51 Cal.App.4th 1580, 1587.) But where, as here, “ ‘the
consequences of not obeying them in every particular are not prescribed, the
courts must judicially determine them.’ ” (Ibid., quoting 3 Sutherland, Statutory
Construction (5th ed. 1992) § 57.01, p. 2.)
There is “ ‘no simple, mechanical test’ ” for making this determination.
(McGee, supra, 19 Cal.3d at pp. 961-962.) Invariably, “courts look to the
procedure’s purpose or function. If the procedure is essential to promote the
statutory design, it is ‘mandatory’ and noncompliance has an invalidating effect.
If not, it is directory.” (Cal-Air Conditioning, Inc. v. Auburn Union School Dist.
(1993) 21 Cal.App.4th 655, 673.) In this regard, “ ‘ “the construction of particular
provisions must be left for determination in such light as the obvious purpose they
were intended to accomplish may afford. . . . No one should be at liberty to plant
18
himself upon the nonfeasances or misfeasances of officers . . . which in no way
concern himself, and make them the excuse for a failure on his part to perform his
own duty. On the other hand, he ought always to be at liberty to insist that
directions which the law has given to its officers for his benefit shall be
observed.” ’ ” (McGee, supra, 19 Cal.3d at p. 962, first italics added; see, e.g.,
People v. Gonzales (1986) 188 Cal.App.3d 586, 590 [because negotiated plea
statutes were designed to benefit the public and not criminal defendants, the
defendant lacked standing to raise the issue of statutory noncompliance].)
The question here is whether Gonzalez may invoke the statutory
requirements for posting and/or mailing and inclusion of the retaliation prohibition
as a basis for invalidating the receivership orders. Under the foregoing authorities,
we must ascertain whether these statutory provisions are intended for his benefit or
protection as a property owner, or instead are designed to serve some other
purpose.
By requiring that any order or notice pursuant to its terms be posted “in a
conspicuous place on the property,” section 17980.6 provides for notice
reasonably calculated to apprise the owner and others that the property has been
found by the applicable enforcement agency to be in violation of specified
building standards and that repair or abatement of the violations is demanded.
Because it would be unreasonable and a violation of due process to hold an owner
accountable for building code violations and repair demands without providing
adequate notice of such matters, it stands to reason that the conspicuous-posting
requirement is an essential component of section 17980.6 (and, by implication, of
section 17980.7), intended primarily for the protection of the owner. In this case,
however, the City substantially complied with this requirement — fully satisfying
its essential purpose and objective — by personally serving Gonzalez with the
May 21, 2002 Notice. (See Cal-Air Conditioning, Inc. v. Auburn Union School
19
Dist., supra, 21 Cal.App.4th at pp. 667-671 [finding substantial compliance
doctrine applicable to two-day written notice requirement specified in public
contracting statute].) Where, as here, an enforcement agency personally serves a
property owner with a notice to repair, the agency’s failure to conspicuously post
the same notice provides the owner no basis for relief. (Cf. Mullane v. Central
Hanover Tr. Co. (1950) 339 U.S. 306, 313 [“[p]ersonal service of written notice
within the jurisdiction is the classic form of notice always adequate in any type of
proceeding”].)
We next turn to the statutory requirements for (1) first-class mailing to, or
conspicuous posting on, each affected residential unit and (2) explaining that
lessors are prohibited from retaliating. On their face, these requirements appear
directed toward benefiting the tenants who occupy a substandard building. This
understanding is confirmed by the history of the 1999 legislative amendment that
added these requirements to section 17980.6. The basis for the legislation was
explained as follows: “When property owners don’t maintain residential
buildings, local building officials enforce building code and health and safety code
violations. In some cases, the buildings are substandard and unsafe to occupy, and
local building officials may be in the process of requiring the building to be
abandoned. But the tenants are not aware of the building conditions and not aware
that they may have to vacate their homes. In areas of the state where affordable
housing is not available, tenants have a difficult time finding another place to live.
This bill improves the noticing requirements to tenants who may have to vacate
their home.” (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis
of Assem. Bill No. 942 (1999-2000 Reg. Sess.) as amended Aug. 23, 1999, pp. 2-
3.)
Meanwhile, the legislative history of section 17980.6 as originally enacted
discloses the Legislature’s substantial concern over the “inadequate enforcement
20
of State Building Codes in regard to substandard housing” and its intent to provide
“new enforcement measures to rehabilitate and maintain existing housing that
currently endangers the health and safety of residents or the public.” (Sen. Rules
Com., Off. of Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 2799
(1987-1988 Reg. Sess.) as amended Aug. 29, 1988, p. 3; see Assem. Com. on
Housing and Community Development, Analysis of Sen. Bill No. 2799 (1987-
1988 Reg. Sess.) as amended June 27, 1988, p. 3.) Hence, the present version of
section 17980.6 serves to enhance the ability of local enforcement agencies to
require owners to remediate substandard housing conditions that pose an
immediate health and safety threat and to improve the notice given to tenants
regarding matters that may directly affect them.
The foregoing history undermines any contention that the provisions
requiring notice to each affected unit and reference to the retaliation prohibition
exist to protect property owners such as Gonzalez. Because these provisions are
intended for the informational benefit of tenants, Gonzalez is in no position to rely
on them as a basis for invalidating the receivership orders. (McGee, supra, 19
Cal.3d at p. 962; People v. Gonzales, supra, 188 Cal.App.3d at p. 590.)7
Furthermore, we remain mindful that sections 17980.6 and 17980.7 were enacted
to provide meaningful enforcement mechanisms in situations where the
7
Gonzalez has made no attempt to show how the City’s noncompliance on
these points disadvantaged him or prejudiced his interests. Nor does any prejudice
to Gonzalez’s tenants appear. There is no allegation in this case that Gonzalez
illegally retaliated against any tenant. Moreover, the record reflects that,
consistent with his obligations under a local relocation assistance ordinance and
section 17980.7, subdivision (c)(6), the receiver acted to protect the tenants’
interests by seeking court authorization to pay $5,500 in relocation benefits to the
tenants renting the garage unit and $5,500 to the tenants renting the bunk beds on
the second floor of the home.
21
substandard condition of a residential building is found to substantially endanger
the health and safety of the occupants or the public. It would be an absurd
application of these sections if owners could invoke the tenant-related notice
requirements as the basis for invalidating agency efforts to abate the serious code
violations that directly threaten tenant health and safety.
Nonetheless, the statutory scheme clearly seeks to ensure that property
owners are afforded due process before judicial appointment of a receiver. As
section 17980.7 declares, “[n]othing in this section shall be construed to deprive
an owner of a substandard building of all procedural due process rights guaranteed
by the California Constitution and the United States Constitution, including, but
not limited to, receipt of notice of the violation claimed and an adequate and
reasonable period of time to comply with any orders which are issued by the
enforcement agency or the court.” (§ 17980.7, subd. (c)(14).) There is thus no
question an owner may contest a section 17980.7 receivership if fair notice of a
claimed substandard condition was lacking or if a reasonable opportunity to
correct the cited condition was not afforded. (§ 17980.7, subd. (c)(1), (14).)
Gonzalez relies on Jones v. Flowers (2006) 547 U.S. 220 (Jones) to argue
that due process requires the government to apprise the property owner of the
potential consequence that a court will appoint a receiver for his property, or
otherwise deprive him of his property, if he should fail to take the necessary steps
to correct substandard conditions.
Generally, due process requires that “the government provide notice and an
opportunity to be heard before it deprives a person of property.” (Customer Co. v.
City of Sacramento (1995) 10 Cal.4th 368, 400; see Matera v. McLeod (2006) 145
Cal.App.4th 44, 60.) But Jones, supra, 547 U.S. 220, cannot be read as
compelling the government to provide advance notice of all possible civil
22
remedies that might be pursued in the event of noncompliance with a legal
obligation.
Jones, supra, 547 U.S. 220, arose in the context of a tax sale to recoup
delinquent property taxes. In addressing the issue of notice, Jones acknowledged
that “[d]ue process does not require that a property owner receive actual notice
before the government may take his property.” (Id. at p. 226.) Jones concluded,
however, that when a mailed notice of a tax sale was returned unclaimed, due
process required the state to take additional reasonable steps to attempt to provide
the property owner notice and an opportunity to be heard before selling his
property to satisfy a tax debt, if it was practicable to do so. (Id. at p. 225.) Thus,
the issue in Jones was not whether the state was obligated to give advance warning
to an owner that future nonpayment of property taxes might result in the seizure
and sale of the property to satisfy the tax debt, but whether the state made
sufficient additional efforts to provide an owner with notice of an impending tax
sale after it became aware that its prior attempt in mailing notice had failed. (Id. at
pp. 226-227.)
Here, the record discloses the following undisputed facts. A representative
of the City personally served Gonzalez on May 23, 2002, with a written Notice
and Order to Comply dated May 21, 2002. That notice identified numerous
building code violations on Gonzalez’s property and directed him to obtain the
required permits and make the necessary repairs. It further informed Gonzalez
that an inspection would occur on June 20, 2002, “to ensure compliance” with the
notice and that, in the event of noncompliance, the City would “take actions to
make the necessary corrections to eliminate the described deficiencies, and any
other that may exist at the property.” The City eventually conducted the followup
inspection on June 21, 2004, and at that time ascertained the property was “still
being maintained in a substandard condition and all of the same Code violations
23
described [in the May 21, 2002 Notice] still exist[ed].” On December 2, 2004, the
City personally served Gonzalez and Downey Savings with a copy of its petition
for appointment of a receiver. The City then filed its petition on December 6,
2004.
Based on this record, it is fair to conclude that the May 21, 2002 Notice put
Gonzalez on ample notice of the claimed violations and that the City ultimately
afforded Gonzalez more than an adequate and reasonable period of time to correct
them. There also is no question that Gonzalez received timely notice of the City’s
receivership petition and motion, and that he in fact exercised his right to be heard
on the receivership matter. Although Gonzalez complains the City waited a full
two years to inspect his property for compliance with the May 21, 2002 Notice,
there was no unfairness resulting from the delayed inspection because Gonzalez
remained on probation and accountable for the same code violations. Moreover,
there is nothing to indicate that the delay in this case was prejudicial.8 In view of
all the circumstances, we cannot say the trial court appointed the receiver in
derogation of Gonzalez’s due process rights or in violation of the due process
principles articulated in Jones, supra, 547 U.S. 220.
Gonzalez also relies on D & M Financial Corp. v. City of Long Beach
(2006) 136 Cal.App.4th 165 (D & M Financial), in which the plaintiff trust deed
holder prevailed in an inverse condemnation action after a city demolished a
substandard apartment building. Prior to the time the plaintiff had acquired its
interest in the property, the city had determined the building was a public nuisance
and served all then interested parties with a notice of hearing that included an
8
For example, Gonzalez made no attempt to show or even argue that any or
all of the violations listed in the May 21, 2002 Notice had been corrected at some
point in time before the City returned to inspect his property on June 21, 2004.
24
order that the owner demolish or rehabilitate the building. This notice was not
recorded, and repairs made to the property were insufficient. The following year,
the city was made aware that a change in ownership had occurred and that the
plaintiff had acquired an interest in the property. Despite this knowledge, the city
did not send the plaintiff a 10-day notice of intent to demolish the building, and
the notice it did provide did not reach the plaintiff until the day before (or the day
of) the demolition.9 Under these circumstances, the Court of Appeal affirmed the
trial court judgment, holding the city violated the plaintiff’s due process rights by
failing to provide adequate notice prior to the demolition. In so holding, the court
concluded that a “Declaration of Substandard Property,” which the city had
recorded the previous year with the county recorder, did not provide adequate
notice because it made no reference to demolition and did not advise that
demolition would occur or was even contemplated if the public nuisance were not
abated. (Id. at pp. 178-179.)
D & M Financial is inapposite and does not alter our conclusion. Among
other things, that case did not involve a receivership proceeding under section
17980.7, but rather a city demolition authorized by ordinance. Moreover, the
plaintiff in that case had no prior notice that demolition of the substandard
property was sought: “From the time it acquired its interest in the . . . property on
February 15, 2001, until it received the 48-hour notice and the inspection warrant
on August 13, 2001 [the day before demolition began], D & M Financial received
no notice from the City that the City had commenced any proceeding to demolish
the property.” (D & M Financial, supra, 136 Cal.App.4th at p. 173.)
9
The opinion initially suggests the plaintiff received notice the day before
demolition began (D & M Financial, supra, 136 Cal.App.4th at p. 173), but later
indicates notice was received on the day demolition occurred (id. at p. 182).
25
Gonzalez, of course, had been on notice for years that his property was
uninhabitable and in violation of building, fire, housing, plumbing, and electrical
codes. His steadfast refusal to obey orders to correct these violations resulted in
criminal convictions and contempt citations, and landed him in jail for a number of
months. Indeed, at all relevant times beginning with the date the City personally
served its May 21, 2002 Notice and Order to Comply, Gonzalez was on probation
for the same code violations. After Gonzalez did not comply with the May 21,
2002 Notice, the City timely served him with its petition for appointment of a
receiver and with notice and motion for appointment of a receiver to be heard on
January 6, 2005. The motion papers served on Gonzalez on December 9, 2004,
made clear that the City contemplated “complete demolition of the structures” on
the property in view of “the extreme and chronic unsafe conditions,” with
Gonzalez receiving the net proceeds available after demolition and sale. The trial
court appointed a receiver on January 6, 2005, and thereafter the receiver provided
Gonzalez timely notice of a hearing on his application for an order to contract for
demolition of the property. Unlike the situation in D & M Financial, no violation
of due process appears in this case because Gonzalez was provided “with notice,
with the opportunity to be heard, and with the opportunity to correct or repair the
defect before demolition.” (D & M Financial, supra, 136 Cal.App.4th at p.
174.)10
10
It follows from our analysis that neither Jones, supra, 547 U.S. 220, nor D
& M Financial, supra, 136 Cal.App.4th 165, supports Gonzalez’s related
contention that, in order to preserve the constitutionality of sections 17980.6 and
17980.7, they must be construed as implicitly requiring notice that receivership is
a potential consequence of failure to correct the condition of substandard property.
26
B. Order Authorizing Contract for Demolition
Gonzalez contends that, in any event, the trial court’s order authorizing the
receiver to contract for demolition was not supported by the law and must be
reversed. In addressing this contention, it is helpful to review a few basic
principles relating to receiverships.
It has long been recognized that a receiver is an agent and officer of the
appointing court. (People v. Stark (2005) 131 Cal.App.4th 184, 204 (Stark); see
Lesser & Son v. Seymour (1950) 35 Cal.2d 494, 499 (Lesser & Son).) As an
officer of the court, a receiver is not an agent of any particular party to the action,
but represents all persons interested in the property. (Security Pacific National
Bank v. Geernaert (1988) 199 Cal.App.3d 1425, 1432.) Property in receivership
remains under the court’s control and continuous supervision, and the importance
of such supervision cannot be understated. (Stark, supra, 131 Cal.App.4th at p.
204.)
Generally, the functions and powers of a receiver are controlled by statute,
by the order of appointment, and by the court’s subsequent orders. (Cal-American
Income Property Fund VII v. Brown Development Corp. (1982) 138 Cal.App.3d
268, 273 (Cal-American); see generally 55 Cal.Jur.3d (2004) Receivers, § 55, p.
68, and cases cited.) As relevant here, section 17980.7 provides that, unless the
court otherwise permits, the appointed receiver has the power and the duty to “take
full and complete control of the substandard property” (id., subd. (c)(4)(A)) and to
take a number of actions, including managing the substandard building and paying
taxes and expenses (id., subd. (c)(4)(B)), dealing and contracting with a licensed
contractor as necessary to correct the conditions cited in a notice of violation (id.,
subd. (c)(4)(C), (D)), and collecting and using rents and income, or borrowing
funds, to pay for the cost of necessary rehabilitation and repairs (id., subd.
(c)(4)(E), (F) & (G)). Section 17980.7 also empowers the receiver to sell the
27
property or to take any other action respecting the property as the court may
authorize. (Id., subd. (c)(4)(H); Code Civ. Proc., §§ 568, 568.5.)11 In its order
appointing the receiver, the trial court specifically granted these powers, and
additionally authorized the receiver to investigate and recommend the alternative
of demolition if appropriate.
We have found no published California decision articulating a specific
standard for reviewing a trial court’s approval of a receiver’s application to
demolish a building. Typically, however, court rulings on receivership matters are
afforded considerable deference on review. (E.g., Lesser & Son, supra, 35 Cal.2d
at p. 503 [confirmation of receiver’s sale of partnership assets and real property];
Golden State Glass Corp. v. Superior Ct. (1939) 13 Cal.2d 384, 393 [appointing or
refusing to appoint a receiver]; People v. Riverside University (1973) 35
Cal.App.3d 572, 582 [confirmation of receiver’s sale of university furniture and
equipment].) Such deference is the rule, even where the court confirms
extraordinary action by the receiver, such as a sale of real property. (E.g., Lesser
& Son, supra, 35 Cal.2d at p. 503; Stark, supra, 131 Cal.App.4th at pp. 199, 207-
208 [dealership assets and real estate].) Because the highly deferential standard is
appropriate for court decisions that are drastic enough to extinguish an owner’s
11
Pursuant to section 17980.7, subdivision (c)(4)(H), the receiver may
exercise the powers granted to receivers under Code of Civil Procedure section
568, which provides: “The receiver has, under the control of the Court, power to
bring and defend actions in his own name, as receiver; to take and keep possession
of the property, to receive rents, collect debts, to compound for and compromise
the same, to make transfers, and generally to do such acts respecting the property
as the Court may authorize.” (Italics added.) Section 568.5 provides that a
receiver may, pursuant to an order of the court and subject to court confirmation,
sell real or personal property upon the notice and in the manner prescribed by law.
28
interest in property, we find it equally appropriate for decisions pertaining to the
demolition of substandard structures that pose a substantial health and safety risk.
We therefore adopt the following standard for reviewing the trial court’s
decision here. The order authorizing the receiver to contract for demolition rests
upon the court’s “sound discretion exercised in view of all the surrounding facts
and circumstances and in the interest of fairness, justice and the rights of the
respective parties. [Citation.] The proper exercise of discretion requires the court
to consider all material facts and evidence and to apply legal principles essential to
an informed, intelligent, and just decision. [Citation.] Our view of the facts must
be in the light most favorable to the order and we must refrain from exercising our
judgment retrospectively.” (Cal-American, supra, 138 Cal.App.3d at p. 274; see
People v. Riverside University, supra, 35 Cal.App.3d at p. 582.) Where there is no
evidence of fraud, unfairness, or oppression, the court has wide direction in
approving the receiver’s proposed actions. (See Lesser & Son, supra, 35 Cal.2d at
p. 503; People v. Riverside University, supra, 35 Cal.App.3d at p. 582.)
In the proceedings below, a majority of the Court of Appeal determined
that, under the circumstances, the trial court did not abuse its discretion in
approving the less expensive and more profitable demolition and sale of the
property (which would leave equity of $455,000), over the more expensive and
less profitable rehabilitation of the property (which would leave equity of
$305,000). The dissenting justice, however, concluded it should be Gonzalez’s
decision as the owner to forgo the additional equity ($150,000) and to keep the
property even though it would be less profitable.
Unlike the Court of Appeal, we do not view this case as presenting the
question whether a trial court abuses its discretion when it fails to defer to the
owner’s wishes as between two “profitable” options for dealing with substandard
property. Rather, the issue is whether the trial court abused its discretion in
29
authorizing the receiver to contract for demolition upon finding that the property
was uninhabitable and that rehabilitation was “not economically feasible.”
Here, the circumstances surrounding the receivership demonstrated the
challenges both the receiver and the trial court faced in addressing the substandard
and uninhabitable condition of Gonzalez’s property. First, the trial court heard
evidence of the property’s deteriorating and dilapidated state. A number of
serious building, fire, housing, plumbing, and electrical code violations existed on
the property, including the accumulation of combustible debris and rubbish; the
use of extension cords in place of permanent electrical wiring; the absence of
heating and operable windows in the units; the failure to maintain the property in a
safe and sanitary condition; and the maintaining of an attractive nuisance.
Gonzales was renting out multiple beds on the second floor in violation of
permissible occupancy rules. Moreover, the property attracted the criminal
element, as exemplified by evidence of 32 calls to police between October 2003
and October 2004 reporting alleged criminal activity there.
Second, the receiver presented evidence that he had investigated two
alternative solutions for the property: (1) repairing and rehabilitating the existing
structure; and (2) demolishing it. The bids the receiver solicited for each
alternative reflected that rehabilitation would cost approximately $145,000 and
yield a real property worth $450,000 (thus resulting in equity of approximately
$305,000), while demolition would cost $54,000 and yield a lot worth $509,000
(resulting in equity of $455,000). Thus, a sale of the property would yield $59,000
more after demolition than after rehabilitation.
The receiver indicated, however, that the foregoing figures were not certain.
Although the bid for correcting the known code violations amounted to $145,000,
the receiver advised that, based on his experience as a receiver in prior similar
cases, it was likely that rehabilitation costs would increase significantly as
30
additional problems were discovered during progress of the work, and that
consequently the costs of administering the receivership would also likely
increase.12 Based on these considerations, the receiver was not the only one in
favor of demolition: Downey Savings, the lender and first priority lienholder, also
expressed support for demolition.
Third, there was evidence the City had tried unsuccessfully for many, many
years to compel Gonzalez to repair or abate the serious building, fire, housing,
plumbing, and electrical code violations that existed on his property. Despite a
previous civil lawsuit that culminated in the City’s demolition of a structure on the
property, and despite two criminal prosecutions that resulted in various contempt
orders and jailing for over nine months, Gonzalez was persistent in his refusal to
rehabilitate the property.
Fourth, Gonzalez himself informed the court that he opposed demolition
and that it was his “fervent wish” to be permitted to continue inhabiting the
property with his family. As for his financial condition, Gonzalez was on record
as representing that, apart from the rents received from the property, he was
unemployed and had no other income or assets.
When we apply the highly deferential standard of review, and take into
account all the surrounding facts and circumstances presented, we cannot conclude
the trial court abused its discretion in authorizing the receiver to contract for
demolition. The evidence presented to the court amply demonstrated that the
nature of the known code violations were extensive and supported its
determination that the property was uninhabitable. The circumstances brought to
12
A significantly higher cost figure would be more consistent with the City’s
estimate that it would cost at least $350,000 to bring the property into code
compliance. (See ante, fn. 4.)
31
the court’s attention also supported its conclusion that rehabilitation was not
economically feasible. Although the information provided by the receiver
indicated there was enough equity in the property to secure financing for the
rehabilitation bid of $145,000, the court could reasonably agree with the receiver
that the costs of both rehabilitation and receivership administration would likely
increase significantly as additional problems surfaced during the course of the
corrective work. Moreover, regardless of the equity available for securing
financing, Gonzalez made no showing or contention that he could qualify for a
loan to finance the necessary repairs or that he had the ability to repay such a loan
were he to retain ownership and regain possession of the property. To the
contrary, he represented he was unemployed and had no financial resources apart
from the property (and its illegal rental units). Finally, there is nothing to suggest
the court approved a fraudulent, unfair, or oppressive course of action. (See
Lesser & Son, supra, 35 Cal.2d at p. 503; People v. Riverside University, supra,
35 Cal.App.3d at p. 582.) On this record, the trial court did not abuse its
discretion in authorizing the receiver to contract for demolition of the unsafe and
uninhabitable structure on the property.
Gonzalez contends owners have a statutory right under section 17980,
subdivision (b)(1), to choose whether to repair or to demolish a building that is
substandard or a nuisance. That provision does not aid him in this case because it
is part of a different, albeit related, statutory scheme that authorizes enforcement
agencies to take actions concerning substandard buildings without involvement of
a receiver. In any event, in requiring that a property owner be given “the choice of
repairing or demolishing,” section 17980, subdivision (b)(1), merely prohibits an
enforcement agency from ordering an owner to demolish a substandard building
without first affording the owner the choice and a reasonable opportunity to repair
the building instead. (See, e.g., Hawthorne Savings & Loan Assn. v. City of Signal
32
Hill (1993) 19 Cal.App.4th 148, 158-161 [although city had engaged in
unsuccessful efforts to get former owners to repair certain substandard buildings,
city did not make such efforts with the new owner and simply served it with a
notice and order to demolish the buildings within 120 days without allowing an
opportunity to choose repair over demolition].)
While we do not intend to suggest that section 17980, subdivision (b)(1),
applies here, this case does not involve a demolition that was ordered without an
opportunity to repair. (E.g., Hawthorne Savings & Loan Assn. v. City of Signal
Hill, supra, 19 Cal.App.4th 148.) Here, the trial court specifically found, in
connection with its order appointing the receiver, that Gonzalez “has been
afforded a reasonable opportunity to correct the conditions” cited in the City’s
May 21, 2002 Notice. The record fully supports this finding, which undermines
any notion that the type of choice guaranteed in section 17980, subdivision (b)(1),
was denied here.
With regard to Gonzalez’s wish to repair the property and to continue living
there with his family, we accept this was a legitimate factor for the trial court to
consider. Nonetheless, we find this factor did not mandate judicial disapproval of
the demolition alternative, especially in view of the economic information
presented. Moreover, Gonzalez had a long and undisputed history of
demonstrating he was unable or unwilling to maintain his property in a habitable
condition, despite the various civil and criminal actions, contempt and probation
violation hearings, and resulting jail terms. Thus, even if the property were
rehabilitated and returned to Gonzalez’s control, the uncontroverted facts
presented an overwhelming inference that Gonzalez did not have the economic
means and the moral resolve to function as a responsible property owner so as to
33
avoid once again endangering the health and safety of his family, potential tenants,
and neighbors.13 Considering all these circumstances, we hold the court acted
well within its broad discretion, and clearly in the interest of fairness, justice and
the rights of the respective parties and the public, in authorizing the receiver’s
pursuit of the demolition alternative. (Cal-American, supra, 138 Cal.App.3d at p.
274.)
DISPOSITION
The judgment of the Court of Appeal is affirmed.
BAXTER, J.
WE CONCUR:
GEORGE, C.J.
KENNARD, J.
WERDEGAR, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.
13
In an urban area such as Santa Monica, “conditions in one building can and
do affect the residents of the buildings next door.” (City and County of San
Francisco v. Jen (2005) 135 Cal.App.4th 305, 311.)
34
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. Name of Opinion City of Santa Monica v. Gonzalez
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 140 Cal.App.4th 1134
Rehearing Granted
__________________________________________________________________________________
Opinion No.
S145571Date Filed: May 19, 2008
__________________________________________________________________________________
Court:
SuperiorCounty: Los Angeles
Judge: Lisa Hart Cole
__________________________________________________________________________________
Attorneys for Appellant:
The Law Office of Stan Stern and Stan Stern for Defendant and Appellant and for Petitioner.__________________________________________________________________________________
Attorneys for Respondent:
Marsha Jones Moutrie, City Attorney, and Adam Radinsky, Deputy City Attorney, for Plaintiff andRespondent and for Real Party in Interest.
Mark S. Adams as Amicus Curiae on behalf of Plaintiff and Respondent and Real Party in Interest.
Gibson, Dunn & Crutcher, Scott A. Edelman, Brett H. Oberst, Michael E. Byerts, Karmen C. Schmid,
Michael Anthony Brown; Michelle Williams Court, Mitchell A. Kamin, Wendy Marantz Levine, Elissa
Barrett; Betsy Handler; Toby J. Rothschild, T. E. Glenn; Steve Arredondo, Naeli Jeon; David S. Pallack,
Stephanie E. Haffner; Daniel Grunfeld, Lisa Jaskol; Gary B. McGaha, Kenneth W. Babock and Alexis A.
Penn-Loya for Bet Tzedek Legal Services, Coalition for Economic Survival, Inner City Law Center,
Inquilinos Unidos, Legal Aid Foundation of Los Angeles, Los Angeles Center for Law and Justice,
Neighborhood Legal Services of Los Angeles County, Public Counsel, Public Law Center and SAJE as
Amici Curiae on behalf of Plaintiff and Respondent and Real Party in Interest.
No appearance for Respondent Superior Court.
David J. Pasternak as Receiver and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Stan SternThe Law Office of Stan Stern
2941 Main Street, Suite 200-E
Santa Monica, CA 90405
(310) 459-5468
Adam Radinsky
Deputy City Attorney
1685 Main Street, Room 310
Santa Monica, CA 90401
(310) 458-8336
Petition for review after the Court of Appeal affirmed orders in a civil action and denied a petition for peremptory writ of mandate or prohibition. This case presents the following issues: (1) Does appointment of a receiver for a substandard building under Health and Safety Code section 17980.7, subdivision (c), require service of an "order or notice to repair or abate" on the property owner as detailed in section 17980.6? (2) Is substantial compliance with the requirement of first serving a section 17980.6 order or notice to repair or abate sufficient to permit the appointment of a receiver? (3) Did the trial court abuse its discretion in approving the receiver's recommendation to demolish the residence at issue in this case where the owner objected and there was ample equity in the property to pay an independent contractor to correct all code violations?
Date: | Citation: | Docket Number: | Category: | Status: |
Mon, 05/19/2008 | 43 Cal. 4th 905, 182 P.3d 1027, 76 Cal. Rptr. 3d 483 | S145571 | Review - Civil Original Proceeding | closed; remittitur issued |
1 | Gonzalez, Guillermo (Defendant and Appellant) Represented by Stan Stern Attorney at Law 2941 Main Street, Suite 200-E Santa Monica, CA |
2 | City Of Santa Monica (Plaintiff and Respondent) Represented by Adam Radinsky Office of the City Attorney 1685 Main Street, Room 310 Santa Monica, CA |
3 | Superior Court Of Los Angeles County (Respondent) attn: Hon. Lisa Hart Cole 9355 Burton Way Beverly Hills, CA 90210 |
4 | Adams, Mark S. (Amicus curiae) Represented by Mark S. Adams Attorney at Law 3435 Ocean Park Boulevard, Suite 112 Santa Monica, CA |
5 | Bet Tzedek Legal Services (Amicus curiae) Represented by Michael Anthony Brown Gibson Dunn & Crutcher 333 S. Grand Avenue Los Angeles, CA |
Disposition | |
May 19 2008 | Opinion: Affirmed |
Dockets | |
Aug 4 2006 | Petition for review with request for stay filed (civil) Guillermo Gonzalez, appellant Stan Stern, counsel |
Aug 4 2006 | Record requested |
Aug 4 2006 | Received Court of Appeal record |
Aug 4 2006 | Forma pauperis application filed |
Aug 21 2006 | Received: Errata to the petition for review from counsel for appellant. |
Aug 24 2006 | Answer to petition for review filed City of Santa Monica, respondent [faxed to SF] |
Sep 1 2006 | Reply to answer to petition filed Appellant Guillermo Gonzalez |
Sep 13 2006 | Received: Errata to Reply to Answer Guillermo Gonzalez, appellant Attorney Stan Stern |
Sep 13 2006 | Petition for review granted (civil case) Petition for review GRANTED. Pending further order of this court, all trial court proceedings are stayed in this matter, including but not limited to, the May 2, 2005 order granting the application of receiver David J. Pasternak for issuance of order authorizing receiver to take specified actions, including the contract to demolish the structure on the property which is the subject of this action. Votes: George, C.J., Kennard, Baxter, Werdegar, Chin, Moreno, and Corrigan, JJ. |
Sep 25 2006 | Certification of interested entities or persons filed counsel for aplt. |
Sep 25 2006 | Certification of interested entities or persons filed by counsel for resp. |
Oct 13 2006 | Opening brief on the merits filed appellant. Guillermo Gonzalez attorney Stan Stern, retained. |
Oct 19 2006 | Filed: counsel for aplt. Errata to Brief on the Merits. |
Oct 19 2006 | Request for extension of time filed to file answer brief/merits to January 11, 2007 respondents City of Santa Monica |
Oct 27 2006 | Extension of time granted Respondent's time to serve and file the answer brief on the merits is extended to and including January 11, 2007. No further extensions of time are contemplated. |
Nov 13 2006 | Filed: by counsel for aplt. (2nd Errata to Opening Brief on the Merits) |
Dec 1 2006 | Received: document entitled: "Receiver's Brief" attorney David J. Pasternak, receiver. |
Dec 6 2006 | 2nd record request remaining records on case # B184127 |
Dec 6 2006 | Received Court of Appeal record |
Dec 14 2006 | 2nd record request additional records B184549 (Overnight Mail) |
Jan 5 2007 | Order filed On December 1, 2006, David J. Pasternak, the appointed receiver in the above-captioned matter, submitted a brief to this court responding to the opening brief on the merits of petitioner Guillermo Gonzalez. The receiver is deemed a respondent in this matter, and the submitted brief is deemed an answer brief on the merits. Good cause appearing, relief from default for the late submission of this brief otherwise due on November 13, 2006 (see Cal. Rules of Court, rules 8.60(d), 8.520(a)(2), former rules 29.1(a)(2), 45(e)), is ordered on the court's own motion. The brief is ordered filed, nunc pro tunc, as of December 1, 2006. Petitioner may file a single reply brief on the merits, addressing all answer briefs, within 20 days after respondent City of Santa Monica files its answer brief on the merits. |
Jan 11 2007 | Answer brief on the merits filed City of Santa Monica, Respondent by Adam Radinsky, counsel |
Jan 11 2007 | Request for judicial notice filed (granted case) City of Santa Monica, Respondent by Adam Radinsky, counsel |
Jan 31 2007 | Reply brief filed (case fully briefed) Appellants, Guillermo Gonzalez Attorney Stan Stern |
Mar 2 2007 | Received application to file Amicus Curiae Brief and brief of Bet Tzedek Legal Services, Coalition for Economic Survival, Inner City Law Center, Inquilinos Unidos, Legal Aid Foundation of Los Angeles, Los Angeles Center for Law and Justice, Neighborhood Legal Services of Los Angeles County, Public Counsel, Public Law Center, and Saje [app/brief under same cover and no support designated] Attorney Michael Anthony Brown |
Mar 2 2007 | Received: Request for Judicial Notice [vols. 1,2 and3] submitted concurent with a.c. brief of Bet Tzedek Legal Services, et al., Attorney Michael Anthony Brown |
Mar 5 2007 | Received application to file Amicus Curiae Brief Mark S. Adams in support of respondent (non-party) CRC 8.25 (b)) |
Mar 12 2007 | Permission to file amicus curiae brief granted Mark S. Adams in support of respondent. (non-party) |
Mar 12 2007 | Amicus curiae brief filed The application of Mark Adams for permisison to file an amicus curiae brief in support of respondent is hereby granted. An answer thereto may be served and filed by any party within twenty days of the filing of the brief. |
Mar 13 2007 | Permission to file amicus curiae brief granted Bet Tzed Legal Services, et al. with request for judicial notice. |
Mar 13 2007 | Amicus curiae brief filed The application of Bet Tzedek Legal Services et al., for permission to file an amicus curiae with a request for judicial notice is hereby granted. An answer thereto may be served and filed by any party within 20 days of the filing of the brief. |
Mar 13 2007 | Request for judicial notice filed (granted case) Bet Tzedek Legal Services, et al. (non-party) |
Mar 19 2007 | Filed: by counsel for petnr and aplt. (Gonzalez), Application to file Consolidated Answer to Amicus Curiae Briefs of Mark S. Adams, City of Santa Monica and Bet Tzedek Legal Services, etc. |
Mar 22 2007 | Order filed The application of appellant for permission to file consolidated answer to amicus briefs filed by Mark S. Adams and Bet Tzedek Legal Services is hereby granted. |
Mar 26 2007 | Response to amicus curiae brief filed Appellant Guillermo Gonzalez consolidated response to amicus briefs. |
Apr 2 2007 | Received: from counsel for aplt. (Gonzalez) Table of Contents and page 3 correction to response to amicus curiae brief. |
Feb 6 2008 | Case ordered on calendar to be argued Thursday, March 6, 2008, at 9:00 a.m., in San Francisco |
Feb 21 2008 | Request for judicial notice granted The request of Respondent and Real Party in Interest City of Santa Monica for judicial notice of four documents (exhibits A through D) is granted in part and denied in part, as follows. The request for judicial notice of exhibits A and B is granted. The request for judicial notice of exhibits C and D is denied. |
Feb 21 2008 | Request for judicial notice granted The request of Amicus Curiae Bet Tzedek Legal Services and others for judicial notice of 11 documents (exhibits A through K) is granted in part and denied in part, as follows. The request for judicial notice of exhibit K is granted. The request for judicial notice of exhibits A through J is denied. |
Feb 25 2008 | Received: counsel for petnr. (Gonzalez) Errata to petition for review, correction to Page 7, |
Feb 27 2008 | Received: from counsel for petnr. Errata to List of Additional Authorities. |
Mar 4 2008 | Received: counsel for petnr. Second Errata to List of Additional Authors. |
Mar 4 2008 | Received: counsel for petnr. Errata to Opening Brief on the merits. |
Mar 6 2008 | Cause argued and submitted |
May 16 2008 | Notice of forthcoming opinion posted |
May 19 2008 | Opinion filed: Judgment affirmed in full OPINION BY: Baxter, J. --- joined by: George, C.J., Kennard, Werdegar, Chin, Moreno, and Corrigan, JJ. |
Jun 2 2008 | Rehearing petition filed Attorney Frear Stephen Schmid, (non-party) |
Jun 9 2008 | Time extended to consider modification or rehearing The time for granting or denying rehearing in the above-entitled case is hereby extended to and including August 15, 2008, or the date upon which rehearing is either granted or denied, whichever occurs first. |
Jul 9 2008 | Rehearing denied |
Jul 9 2008 | Remittitur issued (civil case) |
Jul 18 2008 | Received: Receipt of Remittitur from C/A 4/1 on July 18, 2008. |
Briefs | |
Oct 13 2006 | Opening brief on the merits filed |
Jan 11 2007 | Answer brief on the merits filed |
Jan 31 2007 | Reply brief filed (case fully briefed) |
Mar 12 2007 | Amicus curiae brief filed |
Mar 13 2007 | Amicus curiae brief filed |
Mar 26 2007 | Response to amicus curiae brief filed |