SB 939 Proposes Moratorium On Unlawful Detainer Actions For Commercial Tenants And Allows Tenants Who Can't Renegotiate Their Lease In Good Faith To Terminate Their Lease Without Liability
June 01, 2020 —
Rhonda Kreger – Newmeyer DillionSB 939 is currently working its way through the Senate Judiciary Committee. The legislation would impose new obligations on landlords, and provide protections for commercial tenants who meet specified criteria. SB 939 would impose a moratorium on eviction of those qualified commercial tenants while emergency COVID-19 orders are in effect. Any eviction actions commenced after the date of the emergency COVID-19 order, but before the adoption of SB 939, would be void and unenforceable. The Senate Judiciary Committee has scheduled a hearing for SB 939 on May 22, 2020, at 9:00 a.m.
Who qualifies as a commercial tenant under SB 939?
To qualify under this legislation, a commercial tenant must be a business that operates primarily in California. The commercial tenant must be a small business, nonprofit, an eating or drinking establishment, place of entertainment, or performance venue. Publicly traded companies or any company owned by, or affiliated with a publicly traded company, do not qualify. The commercial tenant must have experienced a decline of at least 40 percent monthly revenue, either as compared to two months before the emergency COVID-19 order, or other local government shelter-in-place orders took effect, or as compared to the same month in 2019. If the commercial tenant is an eating or drinking establishment, place of entertainment, or performance venue, the commercial tenant must also show a decline of 25 percent or more in capacity due to social or physical distancing orders or safety concerns, and show that it is subject to regulations to prevent the spread of COVID-19 that will financially impair the business when compared to the period before the emergency COVID-19 order or other local shelter-in-place orders took effect.
What eviction actions are prohibited while emergency COVID-19 orders are in effect?
If adopted, SB 939 would add Section 1951.9 to the Civil Code. This section would make it unlawful to terminate a tenancy, serve notice to terminate a tenancy, use lockout or utility shutoff actions to terminate a tenancy or otherwise evict a tenant of commercial real property, including a business or nonprofit, during the pendency of the COVID-19 emergency order proclaimed by Governor Newsome on March 4, 2020. Exceptions apply if a tenant poses a threat to the property, other tenants or a person, business or other entity. Any violations of this eviction prohibition would be against public policy and unenforceable.
Any eviction started after proclamation of the state of emergency but before the effective date is deemed void, against public policy and is unenforceable.
Does SB 939 impose new penalties or remedies?
Any landlord who harasses, mistreats or retaliates against a commercial tenant to force the tenant to abrogate the lease would be subject to a fine of $2,000 for each violation. Further, any such violation would be an unlawful business practice and an act of unfair competition under Section 17200 of the Business and Professions Code and would be subject to all available remedies or penalties for those actions under state law.
When is a commercial tenant required to pay unpaid rent due to COVID-19?
If a commercial tenant fails to pay rent during the emergency COVID-19 order, the sum total of the past due rent must be paid within 12 months following the date of the end of the emergency proclamation, unless the commercial tenant has successfully negotiated an agreement with its landlord to pay the outstanding rent at a later date. Nonpayment of rent during the state of emergency cannot be used as grounds for eviction. Notwithstanding lease terms to the contrary, landlords may not impose late charges for rent that became due during the state of emergency.
Are landlords required to provide notice of protections adopted under SB 939?
Landlords would be required to provide notice to commercial tenants of the protections offered under SB 939 within 30 days of the effective date. SB 939 does not preempt local legislation or ordinances restricting the same or similar conduct which impose a more severe penalty for the same conduct. Local legislation or ordinances may impose additional notice requirements.
Does SB 939 impose new protections for commercial tenants when negotiating lease modifications?
If enacted, SB 939 would permit commercial tenants to open negotiations for new lease terms, and provide commercial tenants the ability to terminate the lease if those negotiations fail. A commercial tenant who wishes to modify its commercial lease, may engage in good faith negotiations with its landlord to modify any rent or economic requirement regardless of the term remaining on the lease. The commercial tenant must serve a notice on the landlord certifying that it meets the required criteria, along with the desired modifications.
If the commercial tenant and landlord do not reach a mutually satisfactory agreement within 30 days, then within 10 days, the commercial tenant may terminate the lease without any liability for future rent, fees, or costs that otherwise may have been due under the lease by providing a written termination notice to the landlord. The commercial tenant would be required to pay previously due rent, in an amount no greater than the sum of the following: (1) the actual rent due during the emergency COVID-19 order, or a maximum of three months of the past due rent during that period, and (2) all rent incurred and unpaid during a time unrelated to the emergency COVID-19 order through the date of the termination notice. The payment is due within 12 months from date of the termination notice. The commercial tenant would be required to vacate the premises within 14 days of the landlord's receipt of the termination notice. Upon service of the notice, any lease, and any third party guaranties of the lease would terminate. If the landlord and commercial tenant reach an agreement to modify the lease, the commercial tenant would not have the option to later terminate the lease under this provision.
When is the next Senate Judiciary Committee Meeting for SB 939?
The Senate Judiciary Committee set a hearing for SB 939 on May 22, 2020 at 9:00 a.m. The Senate will livestream the hearing on its website at www.sen.ca.gov. Public comments or testimony may be submitted in writing to the Judiciary Committee by emailing Erica.porter@sen.ca.gov. Alternatively, the public may participate via telephone during the public comment period. Any changes to the Judicial Committee schedule may be found at: https://www.senate.ca.gov/calendar.
Newmeyer Dillion continues to follow COVID-19 and its impact on your business and our communities. Feel free to reach out to us at NDcovid19response@ndlf.com or visit us at www.newmeyerdillion.com/covid-19-multidisciplinary-task-force/.
Rhonda Kreger is Senior Counsel on Newmeyer Dillion's transactional team at our Newport Beach office. Her practice focuses on all aspects of commercial real estate law, with a particular emphasis on the representation of residential developers, merchant builders and institutional investors. You can reach Rhonda at rhonda.kreger@ndlf.com.
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Beverly Hills Voters Reject Plan for Enclave's Tallest Building
November 10, 2016 —
James Nash – BloombergA costly battle over development in Beverly Hills, California, ended with voters rejecting a hotel owner’s proposal to combine two planned condominium towers into a single building that would have loomed over the wealthy Southern California enclave.
With 44 percent in support and 56 percent against, Beverly Hills voters turned down plans by Beny Alagem, who owns the Beverly Hilton and is building an adjacent 170-room Waldorf Astoria, to develop a single 26-story tower next to the hotels, instead of eight- and 18-story buildings that were approved by the city council and a voter referendum in 2008. Alagem’s plan sets aside the remaining 1.7 acres (0.7 hectares) for a public park and gardens.
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James Nash, Bloomberg
Product Defect Allegations Trigger Duty To Defend in Pennsylvania
August 31, 2020 —
Stacy M. Manobianca - Saxe Doernberger & VitaThe Third Circuit Court of Appeals recently concluded, in Nautilus Insurance Co. v. 200 Christian Street Partners, LLC., that a duty to defend is triggered when product-related allegations are pled in connection with a claim for defective construction.
In Nautilus, the coverage dispute arose out of two independent underlying lawsuits in which homeowners alleged that the homes built by 200 Christian Street Partners (“Christian Street”) were defectively constructed. Christian Street tendered the claim to its insurer, Nautilus Insurance Co. (“Nautilus”), for defense and indemnity.1
Nautilus filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania, seeking a declaration that it was not obligated to defend Christian Street in the underlying actions.2 Specifically, Nautilus asserted that it was not required to provide a defense in the underlying actions because Pennsylvania law does not consider faulty workmanship to constitute an “occurrence” and, therefore, to trigger the policy’s insuring agreement and the insurer’s duty to defend.3
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Stacy M. Manobianca, Saxe Doernberger & VitaMs. Manobianca may be contacted at
smm@sdvlaw.com
The ARC and The Covenants
May 30, 2018 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome back Mike Collignon. Mike is a co-founder of the Green Builder Coalition. The Green Builder® Coalition amplifies the voice of green builders and professionals to drive advocacy and education for more sustainable building practices.
As we start to see signs of a housing recovery, slow as it may be, I feel the industry is in a great position. All the effort put in by so many to improve our energy codes, green building programs & rating systems will finally be able to bear fruit. We can start to build homes that are much more environmentally responsible. Sure, we can have a lengthy debate about implementation and adoption rates, but you’ve got to walk before you can run. Unfortunately, I can see that progress getting shackled by an unexpected impediment: the architectural review committee (ARC; sometimes called “architectural committee” or “architectural control authority”) and the covenants of a homeowners’ association.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Gordie Howe Bridge Project Team Looks for a Third Period Comeback
September 26, 2022 —
Jeff Yoders - Engineering News-RecordThe late Detroit Red Wings hockey great Gordie Howe was beloved in his native Canada and in his adopted U.S. home. A new international bridge connecting both places is trying to create similar goodwill for border traffic, but the project’s public-private partnership team and the Canadian government authority it is working for will have to join together to shift lines and mount a comeback in the third period of its construction.
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Jeff Yoders, Engineering News-Record
Mr. Yoders may be contacted at yodersj@enr.com
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Is the Sky Actually Falling (on Green Building)?
November 03, 2016 —
Christopher G. Hill – Construction Law MusingsI have spoken on many occasions here at Construction Law Musings and elsewhere about the risks and rewards for contractors found in sustainable construction. The rewards were fairly apparent. New markets, government incentives and the desires of owners to be “green” clearly point toward a need for contractors to get into the sustainable building game.
However, when I was first writing my Eeyore like thoughts most of the thoughts of all us construction attorneys were speculative. Whether because wholesale “green” construction was relatively new or because the court process was relatively slow, there were not many ways to test if our, shall we say “less optimistic,” predictions were going to come to pass.
For better or worse, several of the more dire predictions have come true. One major green construction debacle is the Destiny USA litigation. I cannot possibly set out all of the various issues as well as my friend and colleague Chris Cheatham does in his e-book about the project and its aftermath. I highly recommend this e-book and the posts found at Chris’ Green Building Law Update blog for those of you interested in how the IRS, the USGBC and the Green Bonds Program interact to cause many a pitfall for construction and design professionals.
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Christopher G. Hill, The Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
ASCE and Accelerator for America Release Map to Showcase Projects from Bipartisan Infrastructure Law
November 15, 2022 —
The American Society of Civil EngineersRESTON, Va. – The American Society of Civil Engineers (ASCE) in partnership with Accelerator for America today announced the release of a new map which features projects that are getting underway with funding from the Infrastructure Investment and Jobs Act (IIJA), otherwise known as the Bipartisan Infrastructure Law (BIL). As the one year anniversary of the BIL approaches on November 15th, funding has been steadily making its way to state and local agencies across the nation, and now it is possible to track how communities are benefiting from investments.
The Bipartisan Infrastructure Law invests in all 17 of the infrastructure categories included in ASCE's 2021 Report Card for America's Infrastructure, which was released eight months before official passage of the law and had assigned our nation's infrastructure a cumulative grade of 'C-'. Communities are now benefiting from replaced lead service lines, safer roads and bridges, and new transit connections.
To view the map, please visit https://infrastructurereportcard.org/bil-project-map/.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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Claimants’ Demand for Superfluous Wording In Release Does Not Excuse Insurer’s Failure to Accept Policy Limit Offer Within Time Specified
September 15, 2016 —
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLPIn Barickman v. Mercury Casualty Co. (No. B260833, filed 7/25/16, ord. pub. 8/15/16) a California appeals court affirmed a $3 million bad faith award against Mercury Casualty Co. based upon its failure to accept a policy limit demand within the time provided, finding that wording inserted by the claimants’ counsel into the release did not affect the insured’s rights such that the refusal to agree to the wording was unreasonable and in bad faith, exposing the insurer to liability for the insured’s stipulated judgment.
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Christopher Kendrick, Haight Brown & Bonesteel LLP and
Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com
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