Lower Court’s Support of Baker Case Overturned : Rent Control Law Wins on Appeal

The major legal challenge to rent control in Santa Monica, a complex and far-reaching case that has traveled through the court system for more than seven years, has been unanimously rejected by a state Court of Appeal.

The three-member court panel ruled that Santa Monica’s rent control law does not violate property owners’ rights. It overturned a lower court decision upholding the Baker case, named for Santa Monica landlord James W. Baker.

Rent control supporters hailed last week’s ruling. Joel Levy, lead attorney for the city’s Rent Control Board, said the decision represents a “total victory” for rent control. City Atty. Robert M. Myers said the ruling proves that Santa Monica’s rent control law is sound and constitutional.

“The Baker case is clearly the landlords’ major challenge to rent control,” said Myers, who authored the law while working as a legal aid attorney. “This resolves many major issues . . . and confirms the status of the law.”

Baker said that the Apartment Assn. of Greater Los Angeles, which already has spent about $650,000 on the case, will appeal to the state Supreme Court. He charged that the appeal court’s decision was biased.

“The decision doesn’t surprise us at all,” said Baker, an outspoken landlord who gave the apartment association permission to attach his name to the suit. “It was obvious to almost everyone that this particular appeal court had already made up its mind. You could tell by their questions.”

Baker and other Santa Monica landlords have single-mindedly attacked rent control in the courts and the Legislature since its inception seven years ago. Hundreds of lawsuits have been filed during that time, but the Baker case is by far the best known. It was taken to court in April, 1979, less than 24 hours after voters approved the tough and controversial housing law.

Initially, the suit challenged nearly every facet of the law. Apartment owners later focused their case on two major areas: They said the rent control law denied a property owner his right to a fair rate of return, and they challenged the city’s control over the demolition of rental property.

Landlords failed to get an immediate injunction against the law, as they had hoped. But in December, 1980, Los Angeles Superior Court Judge Richard A. Lavine agreed to hear the merits of the suit.

The trial, divided into four segments, lasted more than two years. When the case ended in July, 1983, Lavine sided with the landlords. He ruled that a constitutional mandate guarantees owners an appreciation on property, and said laws that prohibit landlords from demolishing buildings were unfair.

The city appealed the decision and won a delay in the court order pending the appeal court decision. After hearing oral arguments on the case last month, the court issued a 33-page ruling last week in support of the city.

In the opinion, written by Justice Billy Mills, the panel ruled that Lavine had mistakenly concluded that apartment owners should be guaranteed a certain financial return on their holdings. The court also said that Lavine had erred in his judgment that the city’s restrictions on demolitions were unfair.

“The basic question on this appeal is: Did the trial court apply the proper constitutional standards in its analysis of the rent ceiling and removal restrictions of the Santa Monica rent control provisions?” the appeal court panel stated. “We determine here that it did not.”

Validity Verified

City Atty. Myers said the decision, coupled with others in recent years, verifies the “validity” of Santa Monica’s rent control law, which is among the nation’s toughest. Because of court decisions on other rent control cases, Myers said he doubts that the state Supreme Court will hear the Baker case.

Myers predicted that rent control opponents will now try to persuade the state Legislature to remove or soften local controls over rents.

“The history of rent control in this country is a history of landlords trying to undermine the rights of tenants,” Myers said. “When landlords are unsuccessful in the courts . . . they try to buy the Legislature.” Baker said the appeal court decision strengthened the resolve of apartment owners. He said the 1,600 landlords who have helped pay the legal expenses for the Baker case, about half from Santa Monica, assumed that the case would go to the state Supreme Court. They remain confident of victory, Baker added.

History of the Baker Suit

In April, 1979, the suit was taken to court, less than 24 hours after Santa Monica voters approved a rent control law.

In December 1980, Los Angeles Superior Court Judge Richard A. Lavine agreed to hear the suit.

In July, 1983, Lavine sided with the landlords, citing constitutional guarantees regarding property rights.

Last week the state Court of Appeal ruled in support of a city appeal, citing errors in the earlier ruling.