Rent Board Told to Stop Awarding Refunds

A Los Angeles Superior Court judge has ordered West Hollywood’s rent control board to stop awarding refunds to tenants in cases where landlords have been collecting what the board considers to be excessive rents.

The ruling has raised doubts about whether excess-rent cases even fall under rent board jurisdiction or should be handled by the court system.

In a decision issued last week, Judge David M. Rothman said that the city’s Rent Stabilization Commission lacks “specific constitutional authority” to compel landlords to refund excess rent to tenants. In stating that the commission “may not award such damages,” Rothman granted a writ of prohibition sought by five West Hollywood landlords whose tenants had filed excess-rent cases with the city.

But the city’s attorneys and a lawyer for the landlords differed this week over whether the rent commission could continue to hear excess-rent cases.

David M. Shell, the landlords’ attorney, said he interpreted Rothman’s order to mean that the city would have to halt all excess-rent hearings. “They can’t hold any more hearings on excess rents,” Shell said. “It’s cut and dried.”

Excess Rent Payments

However, Rochelle Brown, an assistant city attorney for West Hollywood, insisted that the judge had prohibited the city only from forcing landlords to refund excess rent payments to tenants. “We are advising the city to continue holding its excess-rent hearings,” she said.

Both Brown and Shell said they expected to seek further clarification from Rothman late this week. “We will abide by the judge’s order,” Brown said.

Officials say excess-rents cases make up a minority of the cases going before the board.

Whatever the judge’s ruling, the final decision on the city’s authority to conduct hearings on excess-rent cases may come from the California Supreme Court. The court is considering an appeal by the Santa Monica Rent Control Board in a similar lawsuit filed in November, 1983, by a landlord there. Shell, who also represented the landlords in that case, said the Supreme Court is expected to announce its decision by June 10.

In the Santa Monica case, a Superior Court judge ruled against that city’s Rent Control Board, forcing it to halt all excess-rent hearings. Hadassa Gilbert, an attorney for the Santa Monica board, said that since the Superior Court ruling in 1983, many renters have had to file excess-rent cases in small claims or municipal courts. “From what we’ve seen, tenants have had a great deal of success in court,” she said.

Shell contends that tenants “get a speedier hearing in court than they do before rent boards. In small claims courts, you can get a judgment in 30 days. It takes a lot longer when you go before a rent board.”

But Brown said West Hollywood’s rent commission is justified in hearing excess-rent cases “to ensure that tenants pay only the maximum allowable rents. We think the provision is important in maintaining the integrity of the (rent control) ordinance.”

Brown said she did not know whether any landlords had actually refunded excess rent payments to tenants. “All we’re certain of right now is that refunds are no longer permitted,” she said.

In his arguments against the excess rent hearings, Shell said that the rent commission’s awards were tantamount to judicial orders. Rothman agreed, saying the rent commission failed to show that its awards are “either necessary in order to enforce its laws or a permissible exercise of power by a local agency.”

The lawsuit was brought against the rent commission on April 4 by landlords Arthur Lazer, Samuel Rotter, Sylvia Shames, Stanley Davis and Jordan Ostrow. According to Shell, Lazer had been ordered by a city rent hearing examiner to refund excess rent and had been appealing to the rent commission. The others, Shell said, still had cases before hearing examiners.