Filed 9/17/18




                              CERTIFIED FOR PUBLICATION
                      APPELLATE DIVISION OF THE SUPERIOR COURT
                     STATE OF CALIFORNIA, COUNTY OF LOS ANGELES


DLI PROPERTIES LLC,                                 )   No. BV 032016
                                                    )
          Plaintiff and Respondent,                 )   Lancaster Trial Court
                                                    )
                v.                                  )   No. 16UA0882
                                                    )
CHEROKEE HILL,                                      )
                                                    )
          Defendant and Appellant.                  )   OPINION
                                                    )
        Appeal from an order of the Superior Court of Los Angeles County, Lancaster, Trial
Judge Paul A. Bacigalupo. Affirmed.
        BASTA, Inc., Daniel J. Bramzon, Kevin Hermansen, Ross T. Kutach and Eric M. Post,
for Defendant and Appellant.
        Nussbaum, Brandon S. Dimond and Lane M. Nussbaum, for Plaintiff and Respondent.


                                      *        *            *




                                               1
                                             INTRODUCTION
       Plaintiff DLI Properties, LLC filed an unlawful detainer action against defendant
Cherokee Hill after she failed to pay rent and defaulted on the parties’ lease agreement.
Defendant raised as an affirmative defense plaintiff’s failure to comply with Civil Code
section 1962’s1 disclosure requirements. On appeal, defendant contends section 1962,
subdivision (c), bars a “successor owner” from instituting eviction proceedings based on
nonpayment of rent during the period of statutory noncompliance and, in her case, plaintiff did
not make the required disclosures in the rental agreement. We determine that plaintiff was not
a successor owner for purposes of subdivision (c) and affirm.
                                             BACKGROUND2
       Defendant moved into the subject property in 2011, when she entered into a rental
agreement with the owners, Prince E. Cullum, Sr. and Bernice Leola Cullum. The Cullums lost
the home to foreclosure, and the property was sold to plaintiff on September 8, 2015.
       Plaintiff hired Strategic Property Management, Inc. (Strategic) to manage the property.
On the date of the sale, Strategic and defendant executed a new rental agreement for the
premises. In the written month-to-month rental agreement, “Strategic Property Management
Inc.” was listed as “Landlord.” Defendant was directed to pay rent to “DLI Properties LLC” at
“P.O. Box 1029 Agoura Hills, Ca 91376” (¶ 3). Regarding service of notices, defendant was
directed to send notices to “Landlord: Strategic Property Management Inc [¶] P.O. Box 1029
[¶] Agoura Hills, Ca 91376” (¶ 36).
       At the trial, Olinka Morales testified she was employed by Strategic to manage the
property. She identified the rental lease agreement between Strategic and defendant noted
above. During cross-examination, Morales stated that Fabiola Mendoza and Beverly Jacobo
were also authorized to manage the property. She testified the business address for Strategic
was not the post office box address listed in the rental agreement, but rather a street address.

       1
           All further statutory references are to the Civil Code unless otherwise indicated.
       2
        The facts pertaining to defendant’s default under the lease and failure to comply with the three-
day notice are omitted as irrelevant to the issues on appeal.

                                                       2
         Outside the presence of the jury, defendant moved for nonsuit, claiming the action was
barred under section 1962, subdivision (c). Defendant argued section 1962 required the rental
agreement to disclose certain information for effecting personal service, and the evidence
presented in plaintiff’s case-in-chief established lack of compliance. Plaintiff countered that
section 1962 did not apply to the circumstances of this case. The court denied the motion.
         Defendant testified Strategic became the “new landlord” in September 2015, and she had
contacts and communications with it concerning habitability issues pertaining to the property.
After the parties rested, defendant moved for a directed verdict based on plaintiff’s failure to
comply with section 1962. As before, plaintiff maintained the statute did not apply because it
only implicated “successor owners” and, in this instance, the parties had executed a new lease.
The court denied defendant’s motion.
         The jury returned a verdict in favor of plaintiff, finding plaintiff served a valid three-day
notice and did not breach the warranty of habitability. Thereafter, defendant moved for
judgment notwithstanding the verdict (JNOV), once again arguing plaintiff had not complied
with section 1962. The trial court denied the motion, stating, “The court finds that the owner,
plaintiff, through its management agent complied with the Code under 1962 for purposes of
notice.”
                                            DISCUSSION
         Defendant contends the court should have granted a nonsuit or issued a directed verdict
in her favor, and the court erred in denying her JNOV motion. (Code Civ. Proc., §§ 581c, 630,
629.)3
Motions for Nonsuit, Directed Verdict, and Judgment Notwithstanding the Verdict
         “While made at different times, the three motions are analytically the same and governed
by the same rules. [Citation.] The function of these motions is to prevent the moving
defendant from the necessity of undergoing any further exposure to legal liability when there is
insufficient evidence for an adverse verdict. [Citation.] Put another way, the purpose of

         3
       Denial of a motion for nonsuit or directed verdict may be reviewed on appeal from the
judgment. (Adams v. City of Fremont (1998) 68 Cal.App.4th 243, 263.)

                                                   3
motions for nonsuit, directed verdicts and jnovs is to allow a party to prevail as a matter of law
where the relevant evidence is already in.” (Fountain Valley Chateau Blanc Homeowner’s
Assn. v. Dept. of Veterans Affairs (1998) 67 Cal.App.4th 743, 750, italics omitted.)
       A trial court may grant these motions “only if it appears from the evidence, viewed in
the light most favorable to the party securing the verdict, that there is no substantial evidence to
support it. [Citation.]” (Gonzales v. City of Atwater (2016) 6 Cal.App.5th 929, 946; Adams v.
City of Fremont, supra, 68 Cal.App.4th at p. 262.) In reviewing the denial of these motions,
the appellate court, like the trial court, must evaluate the evidence in the light most favorable to
the plaintiff. (Id. at p. 263.) Where, as here, the motions “raise[] legal issues, such as the
application of law to undisputed facts or the interpretation of a statute, we review the trial
court’s ruling ‘under a de novo standard of review.’ [Citations.]” (Gonzales v. City of Atwater,
supra, 6 Cal.App.5th at pp. 946-947.)
Statutory Interpretation
       We are tasked to determine whether the rental agreement at issue conformed to the
requirements of section 1962, subdivision (a), and whether subdivision (c)’s prohibition applied
to plaintiff. This appeal then involves resolving questions of law based on undisputed facts,
and we review the trial court’s ruling de novo. (Krechuniak v. Noorzoy (2017) 11 Cal.App.5th
713, 723.)
       In construing section 1962, we must “‘“‘“ascertain the intent of the lawmakers so as to
effectuate the purpose of the statute.”’”’” (De Vries v. Regents of the University of California
(2016) 6 Cal.App.5th 574, 593.) We begin, as always, with the statute’s actual words, the
“most reliable indicator” of legislative intent, “assigning them their usual and ordinary
meanings, and construing them in context. If the words themselves are not ambiguous, we
presume the Legislature meant what it said, and the statute’s plain meaning governs. On the
other hand, if the language allows more than one reasonable construction, we may look to such
aids as the legislative history of the measure and maxims of statutory construction. In cases of
uncertain meaning, we may also consider the consequences of a particular interpretation,
including its impact on public policy. [Citations.]” (Wells v. One2One Learning Foundation


                                                 4
(2006) 39 Cal.4th 1164, 1190.)
Civil Code Section 1962, Subdivisions (a) and (b)
         Subdivision (a) provides, in pertinent part, “Any owner of a dwelling structure specified
in Section 1961 or a party signing a rental agreement or lease on behalf of the owner shall do
all of the following: [¶] (1) Disclose therein the name, telephone number, and usual street
address at which personal service may be effected of each person who is: [¶] (A) Authorized to
manage the premises. [¶] (B) An owner of the premises or a person who is authorized to act for
and on behalf of the owner for the purpose of service of process and for the purpose of
receiving and receipting for all notices and demands. [¶] (2) Disclose therein the name,
telephone number, and address of the person or entity to whom rent payments shall be made.”
         Subdivision (c) provides, “The information required by this section shall be kept current
and this section shall extend to and be enforceable against any successor owner or manager,
who shall comply with this section within 15 days of succeeding the previous owner or
manager. A successor owner or manager shall not serve a notice pursuant to paragraph (2) of
Section 1161 of the Code of Civil Procedure or otherwise evict a tenant for nonpayment of rent
that accrued during the period of noncompliance by a successor owner or manager with this
subdivision. Nothing in this subdivision shall relieve the tenant of any liability for unpaid
rent.”
Plain language
         It is clear from the plain terms of the statute that the requirement to disclose pertinent
information applies to two distinct entities—“owners” and “successor owners.” Subdivision (a)
expressly states it applies to “[a]ny owner . . . or a party signing a rental agreement or lease on
behalf of the owner” and requires the disclosure of specified information. Subdivision (c)
states the disclosure requirements “shall extend to and be enforceable against any successor
owner or manager.” Subdivision (c) further provides that if a successor owner or manager fails
to provide the specified information, the prohibition against eviction applies. There is no
similar penalty for an owner or its agent who fails to comply with disclosure requirements
under either subdivision (a) or (c).


                                                   5
       The undisputed evidence presented at trial established plaintiff’s noncompliance with
disclosure requirements. Defendant points out the rental agreement identified “SPM” as the
“Landlord” but did not identify or designate an owner or an agent who was authorized to act on
the owner’s behalf for service of process. The lease also did not disclose the “usual street
address” of such persons or entities, a valid telephone number, or the contact information for
any of the persons authorized to manage the premises.
       Based on these omissions, defendant contends the trial court erred in finding plaintiff
complied with the requirements. We agree the evidence established a lack of strict compliance.
Nevertheless, as we explain below, based on our conclusion that subdivision (c) did not apply
to plaintiff, we affirm the judgment and the court’s denials of defendant’s motions. (Leyla v.
Crockett & Co., Inc. (2017) 7 Cal.App.5th 1105, 1108 [“‘We are not bound by the issues
actually decided by the trial court. “The appellate court should affirm the judgment of the trial
court if it is correct on any theory of law applicable to the case”’”].)
Ambiguity
       Defendant contends that, under the statute, “if a new owner assumes a previously signed
lease agreement . . . that successor-owner must still provide . . . disclosures.” She does not
respond, however, to plaintiff’s argument that a new owner who does not assume the existing
lease, but instead executes a separate new lease with the tenant, is an owner and not a successor
owner for purposes of subdivision (c)’s bar against evictions.
       The question then becomes whether plaintiff qualifies as a successor owner to which
subdivision (c) applies. Because section 1962 does not define “owner” or “successor owner,”
and it is silent as to whether a new owner who executes a separate new lease with the tenant is
an “owner,” there is a legitimate ambiguity in the statute.
       After a property is sold or transferred, the transferee takes subject to the existing lease;
this new owner steps into the landlord’s shoes and becomes the successor landlord, assuming
the terms and conditions of the lease the tenant had with the prior owner. (See Kirk Corp. v.
First American Title Co. (1990) 220 Cal.App.3d 785, 809.) The same is true when the property
is sold through foreclosure, as was the case here. (See Nativi v. Deutsche Bank National


                                                  6
Trust Co. (2014) 223 Cal.App.4th 261, 275.)
       Plaintiff argues the term “successor owner” “clearly refers to an owner who acquired a
property . . . during the tenancy” and succeeded to ownership and assumed the existing lease.
Black’s Law Dictionary defines “Successor” as: “One that succeeds or follows; one who takes
the place that another has left, and sustains the like part or character; . . .” (Black’s Law Dict.
(6th ed. 1990) p. 1431, col. 2, emphasis added.) Notably, the Legislature chose to use the
phrase “successor owner or manager” rather than “successor in interest,” which has a more
restrictive definition—“One who follows another in ownership . . . of property.” (Ibid.) This
seems to suggest that the applicability of subdivision (c) is not dependent on whether a person
or entity succeeds in “ownership” of the subject property, and it supports our conclusion that
the term “successor owner” or “successor . . . manager” is referring to the rights and duties, not
in the property, but rather with respect to the existing lease. (See River Garden Retirement
Home v. Franchise Tax Bd. (2010) 186 Cal.App.4th 922, 954 [“every word and phrase has
significance and was chosen for a purpose”].)
       In this case, after plaintiff purchased the subject property, it did not assume the existing
lease and its terms and conditions. Rather, it’s management company, Strategic, executed a
new and separate lease with defendant. Defendant’s tenancy and the rights and obligations of
the parties were, therefore, controlled by this new lease. As a consequence, plaintiff was not
succeeding to the rights and obligations of the prior owners (the Cullums) under the prior rental
agreement.
       For purposes of this appeal, we agree with plaintiff that there is an important
distinction to be made between an owner whose identity may not be known following a
sale of the property and an owner (or owner’s manager) whose identity is made known
because a new lease is executed. When an owner, successor owner, manager, or agent fails to
comply with section 1962’s requirements to disclose and keep current specified information,
the tenant, under section 1962.7, is excused from effecting personal service on them, and he is
permitted to effect service of process by mail. There is no other penalty imposed on the owner
for its failure to comply. However, when a successor owner or manager fails to provide the


                                                  7
specified information, it also is prohibited from evicting the tenant based on unpaid rent
accruing during the period of noncompliance.
       This disparate treatment of owner and successor owner/manager for the same dereliction
of their statutory duty indicates the prohibition is meant to specifically target successor owners
and their managers to address a danger posed by the change in ownership. There is a greater
likelihood a tenant would not be aware of relevant information concerning a successor
owner/manager rather than an owner with which he enters into a lease agreement. Therefore,
the prohibition against evictions encourages and incentivizes a successor owner/manager to
disclose such information.
       Our interpretation is informed and bolstered by the legislative history and analysis of
Assembly Bill No. 1953, which added subdivision (c) to section 1962 in 2012.
       The key issue before the Assembly Committee on Judiciary was whether tenants should
“be protected from eviction by a successor owner of the rental property for nonpayment of rent
that could have otherwise been paid and received if that owner had complied with existing law
requiring prompt notice of where to pay rent.” (Assem. Com. on Judiciary, analysis on
Assem. Bill No. 1953 (2011-2012 Reg. Sess.) May 1, 2012 [proposed amendment] p. 1.)
       The bill’s author explained the need for additional law: “Purchasers or rental properties,
especially foreclosed homes, are increasingly allowing months to go by without notifying
tenants where to pay rent. When a new owner fails to timely inform the tenant to whom rent
should be paid, but then months later serve [sic] a three-day notice demanding all of the
accumulated rent, many low-income tenants no longer have the money to pay and keep their
homes. Good tenants end up losing their housing because their landlord failed to comply with
the law, unnecessarily creating nonpayment situations. This bill will help prevent unnecessary
evictions after ownership changes.” (Assem. Com. on Judiciary, analysis of Assem. Bill
No. 1953 (2011-2012 Reg. Sess.) May 1, 2012 [proposed amendment], p. 4.)
       Tenants Together, a sponsor of the bill, noted that “some tenants have received three day
pay-or-quit notices from their landlord for failure to pay rent when such failure occurred only
because the tenant had not been properly notified by the new owner of the property where to


                                                 8
send the rent payment. With accounts of rental scams increasingly in the news . . . , supporters
contend that it is reasonable for tenants to refrain from sending rent to the person they know to
be the former owner, or other unknown persons, unless they have received proper notice from
the new owner were to send rent, as required by law. As acknowledged by the California
Apartment Association, ‘It is logical to assume that if a new owner doesn’t provide notice to a
tenant about change in ownership, the new owner cannot expect to receive the rent timely.’”
(Assem. Analyses, 3d reading analysis of Assem. Bill No. 1953 (2011-2012 Reg. Sess.) as
amended May 9, 2012, p. 3.)
         The bill’s author also noted the abuse “[i]n rent control jurisdictions,” where “new
owners in some cases delay notifying tenants where to send rent, allow rent to build up, and
then after many months evict for nonpayment in order to vacate homes of low-rent tenants. In
addition, the failure of new owners to timely notify tenants where to pay rent can lead to
particular problems for tenants who receive benefits such as SSI, as these tenants risk losing
their benefits if they accumulate too much money in their bank accounts.” (Sen. Com. on
Judiciary, Analysis of Assem. Bill No. 1953 (2011-2012 Reg. Sess.) as amended May 9, 2012,
p. 3.)
         Thus, the legislative history makes clear the primary purpose for adding subdivision (c)
to section 1962 was to ensure successor owners and/or their managers would notify their
tenants where they were to send rent payments so as to avoid evictions based on nonpayment of
rent. The instant case did not involve any of the scenarios for which the legislature had
expressed concern and which prompted the addition of subdivision (c). In fact, any concern
about successor owner abuse along those lines was effectively addressed by the execution of a
new lease between plaintiff’s manager and defendant on the day plaintiff became the owner of
the property.
         Where, as here, an owner or its manager enters into a new lease with an existing tenant,
the owner or its manager is not a “successor” owner or manager for purposes of section 1962,
subdivision (c), and subdivision (c) does not apply to bar an unlawful detainer action. As such,
any deficiencies in the information disclosed in the new lease are addressed by operation of


                                                  9
section 1962.7. Our conclusion is supported by a common sense interpretation of section 1962
and the legislative history relating to the addition of subdivision (c).4
                                            DISPOSITION
       The judgment is affirmed. Plaintiff to recover costs on appeal.

                                                            _________________________
                                                            Richardson, J.
       We concur:



       _________________________                            _________________________
       P. McKay, P. J.                                      Ricciardulli, J.




       4
        Contrary to defendant’s argument, our interpretation does not render subdivision (c) a nullity
because it still applies to new owners who assume an existing lease with the tenant.

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