Friday, May 02, 2008

And The Spin Begins

If you were watching the news last week, you might have noticed a story on a pair of landlords who were arrested. They are alleged to have been doing some very naughty things to their tenants. This includes: breaking into their apartments and stealing from them, trying to convince a city inspector to red tag their building to get rid of their tenants, and cutting out support beams from underneath the floors of their tenants apartments.

So of course, you know what their defense is. Say it with me, "Its All The Tenant's Fault". According to their attorney, Lisa Dewberry, the landlords are simple, good folk who own a building and have been beset with one problematic tenant who is a "vexatious litigant".

Say the word vexatious litigant to a judge and suddenly they have the image of another Patty Sue in their mind. Add in to the fact that the alleged Patty Sue is, horror, a tenant of their landlords, and suddenly Judge Wong, hearing the bail motion today, said,

he found it "disturbing" that one of the complaining tenants in the case may have previously sued past property owners with similar allegations, as DewBerry alleged today.
"This is a new revelation," Wong said, allowing that he could consider a renewed bail motion at a later date, if defense attorneys can offer written proof of such a claim.
So... if you are a tenant, stand up for your rights, and then have them egregiously violated by your landlord, you have less credibility? Goes back to my theory that tenants have no rights in California.

By the way, the tenant that complained is named Scott Morrow. A review of the San Francisco Superior Court's docket reveals that he has been involved in litigation over the years. By my count, been a party to 3 restraining order proceedings (two as plaintiff and one as defendant), the plaintiff in 3 other unlimited civil jurisdiction cases (all three as a plaintiff) , one probate matter, and 2 unlawful detainer actions (both as defendants at the Clementina Street address).

Now, sounds like a lot of paper flying back and forth. But then take a step and consider that most of it interacts with each other. For example, in 2000, the former owners of the building tried to evict Morrow. He fought and won the case at the summary judgment stage (which is fairly impressive when you consider that judges do not like to grant summary judgment motions, and the system is set up to make it, rightly, hard to get a summary judgement in one's favor). As a result of the attempt to unlawfully evict , Morrow apparently turned around and filed a wrongful eviction suit in 2001. Looking at the docket, it appears that a settlement was reached. There is also a 2003 personal injury case that does not involve the property.

Between 2001 and 2006, it appears that all was quiet on the "vexatious litigant" front. Then, the new owners of the property, Dana Street LLC (the Nevada-based LLC of the Macy's... would it be wrong to suggest that they were trying to avoid paying corporate taxes to the State of California by cynically setting one up out of their vacation home?). Then suddenly litigation started again. Why? Judging by the unlawful detainer filed in the case, the Macy's... I'm sorry ...Dana Street LLC had decided to Ellis Act the building.

Now in San Francisco, when one has a multiple unit building and one wants to maximize their return on the investment, what does a building owner do? Well, the TIC and/or condo convert it. Why not keep renting it out? Well, simple economics will give you that answer. Looking at the prices of real estate, especially in the smaller multi-unit buildings, I would hazard a guess that it is almost impossible to make a profit in the short term, especially if there are long-term tenants in the building. If one is prepared to be a landlord for a few years, the profit will come. However, with two unit buildings going for well over a million dollars (and in some neighborhoods going for two million), it is almost impossible to get tenants who will be able to afford the rent necessary to pay for the inflated prices. But, if you sell it off as individuals, you too can contribute to the price inflation by getting close to million (if not more) for each unit as a TIC (more if you win the condo lottery).

(This then contributes to the prices being high, TIC owners being ticked, and affordable housing for median income earning San Franciscans from being destroyed.)

But, instead of simply going quiet into that goodnight, Morrow fought back. And from the looks of it, had the Unlawful Detainer case fought to a grinding standstill. Mr. Morrow was probably going to lose.

And then, as they say, something happened.

First, on the heels of winning summary adjudication on some issues, the attorneys for Macy's and Dana Street LLC,the firm of Zacks, Utrecht, and Leadbetter LLP, made a motion to be removed as counsel for the plaintiffs. Now this is kind of odd, one would think. Sometimes, attorneys have falling outs with their clients. Sometimes the clients do not pay the bills on time (or ever). But with the filing of the 2007 complaint, it seems more than likely that something else was going on and Zacks and his firm had to remove themselves from the case.

Apparently, not happy with the progress that Zacks' firm was achieving for them legally, they started to play hardball. According to the complaint, this included trying to have the police remove Mr. Morrow as a squatter, shutting off his utilities, and sending out threatening messages to both Mr. Morrow's attorneys and the attorney's for Dana Street LLC. This included one message to attorney Andrew Zacks which, according to the Chronicle story, stated, "One day you are going to come home to the Victorian house ... and find (your three children) missing. Then each day a package will arrive with a piece of them. You are f- with the wrong person." Other emails which went out included a pair firing Morrow's attorney. It would have been harder to disprove, except for the fact that Morrow is apparently an elderly, disabled tenant, who does not have an email account (Yes, Luddites do exist, even in San Francisco).

I am sure that if you compare the date of that email, alleged in the 2007 complaint, you will find it corresponds to the flurry of restraining order hearings which involved Mr. Morrow in 2006.

Unfortunately, as the saying goes, a lie will be around the world before the truth gets its boots on. And in this case, the Macy's seem to have found an attorney who is not in the least bit shy about throwing mud on the victims of this case.

Fortunately, Judge Wong issued a gag order. Let's see how well that will be respected by the defendants.

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