BILL ANALYSIS                                                                                                                                                                                                    



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          ASSEMBLY THIRD READING


          AB  
          2819 (Chiu)


          As Amended  May 2, 2016


          Majority vote


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          |Committee       |Votes|Ayes                  |Noes                |
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          |                |     |                      |                    |
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          |----------------+-----+----------------------+--------------------|
          |Judiciary       |7-1  |Mark Stone, Alejo,    |Wagner              |
          |                |     |Chau, Chiu, Cristina  |                    |
          |                |     |Garcia, Holden, Ting  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Keeps court records in eviction lawsuits from becoming  
          public unless the landlord prevails within 60 days of having  
          filed the lawsuit.  Specifically, this bill:


          1)Provides that, in unlawful detainer cases, the court clerk  
            shall allow access to civil case records to any person 60 days  
            after the complaint has been filed if the plaintiff prevails  
            in the action within 60 days of the filing of the complaint,  
            in which case the clerk shall allow access to any court  
            records in the action.









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          2)Provides that if a default or default judgment is set aside  
            more than 60 days after the complaint has been filed, the  
            above timekeeping rule shall apply as if the complaint has  
            been filed on the date the default or default judgment is set  
            aside.


          3)Clarifies that these provisions do not prohibit the court from  
            issuing an order that bars access to the court record in an  
            unlawful detainer case if the parties to the action so  
            stipulate.


          4)Revises the definition of "good cause" to include the  
            gathering of evidence by a party to an unlawful detainer  
            action solely for the purpose of making a request for judicial  
            notice pursuant to Evidence Code Section 452 subdivision (d)  
            (i.e. judicial notice of an abusive litigant.)


          5)Clarifies that nothing in this act alters any provision of the  
            Evidence Code.


          6)Allows the court to dismiss the action without prejudice if 60  
            days elapse after the complaint is filed and no proof of  
            service of the summons has been filed.


          FISCAL EFFECT:  None


          COMMENTS:  This bill seeks to keep court records in eviction  
          lawsuits private unless the landlord prevails within 60 days of  
          having filed the lawsuit.  The author wishes to find a balance  
          that allows landlords and others sufficient access to court  
          records, but that better protects innocent tenants who may be  
          unfairly shut out of a difficult housing market because of an  








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          undeserved black mark on their credit report.


          According to the author:  "The recent economic and foreclosure  
          crises have only exacerbated the challenges that low-income  
          households face in securing affordable housing.  The difficulty  
          of securing affordable housing in competitive rental markets is  
          worsened by the existing law governing access to civil case  
          records in unlawful detainer proceedings.  Specifically, once  
          unlawful detainer civil case records become public, tenant  
          screening companies and credit reporting agencies capture and  
          publish personal identifying information regarding tenants named  
          as defendants in those records.  This information appears in  
          published lists, known as unlawful detainer registries, and on  
          tenants' credit reports.  So long as it is accurate, the fact  
          that a tenant was once sued for unlawful detainer is publicly  
          available for up to seven years and cannot be challenged under  
          federal or state laws governing consumer credit reporting.  The  
          names of thousands of innocent tenants whose cases are resolved  
          only after the 60-day deadline appear on unlawful detainer  
          registries.  Many of these tenants successfully settle, secure a  
          dismissal, or win at trial, and would have escaped negative  
          credit reporting if only they had prevailed before the deadline.  
           In other instances, unlawful detainer complaints are filed  
          against tenants but never served.  Because these complaints are  
          never dismissed, the tenant's name is publicly released after 60  
          days and negative credit reporting ensues.  Because landlords,  
          who are attempting to decide between numerous applicants for  
          scarce rental housing, rely on unlawful detainer registries and  
          on credit reports, landlords often choose not to rent to tenants  
          who appear on these registries, even if the tenants were  
          eventually found innocent of unlawful detainer.  As a result,  
          given the statewide housing shortage, these tenants may be shut  
          out of rental markets for up to seven years through no fault of  
          their own.  This bill seeks to protect the credit and reputation  
          of innocent tenants by requiring that civil case records in  
          unlawful detainer proceedings remain sealed unless landlords  
          prevail in eviction lawsuits within 60 days of filing."









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          Existing law allows the court record of the filing of an  
          eviction to potentially jeopardize a tenant's credit report or  
          rental history.  This bill seeks to address the potential damage  
          to an innocent tenant's credit record that can occur even when a  
          tenant prevails in an unlawful detainer filed against him or  
          her, but it happens more than 60 days after the date the  
          complaint was filed.  Under Code of Civil Procedure Section  
          1161.2, court unlawful detainer records are withheld from public  
          access (or "masked") by the court clerk for 60 days after the  
          date when the complaint is filed.  At the end of the 60-day  
          masking period, unless the tenant has already prevailed in the  
          eviction, the record becomes public and is available to credit  
          reporting agencies, landlord registries, and others.  Unless  
          access is withheld by the court, the fact that an eviction was  
          filed against the tenant may very well end up reflected in  
          landlord registry records compiled by specialized credit  
          reporting agencies whose services are often used by landlords  
          for a fee, even if the tenant ultimately prevails in the case.   
          In such cases, innocent tenants can suffer damage to their  
          credit histories simply by virtue of the fact that eviction  
          complaints were filed against them, without any regard to the  
          outcome of the cases.  As the author explains, landlords who  
          rely on this information, unable to distinguish between  
          problematic and innocent tenants, are prone to end up screening  
          out meritorious applicants.  These unfortunate prospective  
          tenants may find their credit records cause them to be rejected  
          over and over for rental housing, particularly in competitive  
          rental markets where there are multiple applicants for each  
          property listing.


          According to Western Center and California Rural Legal  
          Assistance (CRLA), the sponsors of the bill, there are three  
          groups of tenants who are most at risk for suffering damage to  
          their credit reports under the current rules: 


          1)Those who are named in eviction lawsuits but are never served  








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            with a copy of the complaint because the landlord decides not  
            to pursue the case.  Landlords are reluctant to pay attorneys  
            to dismiss such cases.  As a result, these tenants find  
            themselves blacklisted for lawsuits they never even knew  
            about.


          2)Those that raise meritorious defenses to eviction, such as  
            habitability or retaliation, and successfully settle or win at  
            trial, but only after the 60-day period has expired.  Despite  
            their victories, these unlucky individuals find themselves  
            unable to rent new housing.


          3)Those that would have raised meritorious defenses, but were  
            too afraid of crossing the 60-day threshold and ruining their  
            credit for seven years.  These tenants are wrongly deprived of  
            both their housing and their day in court, and their  
            successors in the unit will likely face the same hardships.


          The author believes that such tenants deserve stronger  
          protection of their credit reports and rental histories.  In the  
          case of low and fixed-income tenants, this protection is crucial  
          to help them find replacement housing when they are forced to  
          move.  This bill would aid such tenants by keeping court records  
          of eviction proceedings private unless the landlord, rather than  
          the tenant, prevails in the case within 60 days of the lawsuit  
          being filed.


          As discussed above, the existing rule that provides for release  
          of court records unless the tenant prevails within 60 days after  
          filing of the complaint creates many problems for innocent  
          tenants and potentially threatens credit reporting profiles for  
          years.  According to the author, the proposed new rule, which  
          flips the standard around and keeps these court records private  
          unless the landlord prevails within 60 days, is an attempt to  
          balance competing concerns while still allowing landlords  








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          sufficient access to relevant court records.


          The bill also establishes a 60-day masking period measured from  
          the date when a default or default judgment is set aside any  
          time after the expiration of the first 60-day period.  This  
          essentially ensures that the 60-day timeline is set back to zero  
          whenever the tenant is successful in getting a default or  
          default judgment set aside and the case basically becomes an  
          active case again.  Without this provision, it would be a hollow  
          victory in the relatively rare occurrence where the tenant  
          successfully argues to get the default judgment set aside  
          because the 60-day period from the filing of the complaint would  
          surely have passed.  This bill allows the tenant who prevails on  
          a motion to set aside the default to argue the underlying case  
          with a clean slate, instead of being in a position where the 60+  
          day old record of the initial filing of the eviction threatens  
          to damage the tenant's credit record, even as he or she is  
          defending the underlying case in court for the first time.


          The bill is opposed by a number of apartment associations who  
          believe that the proposed changes go too far in shielding  
          records of eviction proceedings from the public.  They write:


               The problem is that tenants can default, never pay, but  
               never make it to trial.  The default still occurs, but  
               no record of it will ever be made public.  No other  
               type of financial default is treated this way.  It puts  
               landlords at risk of renting to serial defaulters.   
               Public access to court records in [unlawful detainer]  
               UD cases not only serves to encourage people to pay  
               their rent on-time, property owners have the right to  
               know whether a prospective tenant is a serial rent  
               defaulter or vexatious litigant. (This bill) unfairly  
               keeps rental property owners in the dark and from  
               knowing the truth about prospective tenants.









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          Supporters of the bill contend, in response, that the bill does  
          little to put landlords at risk of renting to serial defaulters,  
          as claimed.  In order for a "serial defaulter" to repeat a  
          pattern of defaulting on rent shielded from public access over  
          and over again, this person would have to somehow repeatedly get  
          each case of default past the 60-day timeline without the  
          landlord ever prevailing either at trial, or at summary judgment  
          - a task that could realistically only be accomplished with  
          legal representation.  Only at that point would this bill  
          prevent those records, indicating repeated default of rent, from  
          being made public after 60 days.  Supporters contend the  
          likelihood of the opponent's hypothetical example occurring is  
          minimal because statistics confirm the vast majority of tenants  
          in UD cases are unrepresented, and legal aid attorneys would not  
          realistically represent a person with a repeated history of  
          defaulting on rent who had no legitimate defenses.


          With respect to opponents' concern about not being able to know  
          whether a prospective tenant is a vexatious litigant, the author  
          has recently amended the bill to clarify the definition of "good  
          cause" for the purpose of facilitating the release of records  
          for the purpose of making a request for judicial notice of a  
          vexatious litigant under Evidence Code Section 452 (d).  This  
          amendment should address opponents' concerns by ensuring access  
          to those records to take notice of a vexatious litigant.  The  
          author also notes, for reasons laid out in the extensive  
          findings and declarations of the bill, that he takes seriously  
          the task of finding a balanced approach to ensuring open access  
          to public records and protecting the credit of innocent tenants,  
          but believes this legislation is needed to respond to an ongoing  
          crisis of affordable housing in the state.


          With respect to opponents' contentions that this bill keeps  
          rental property owners in the dark about prospective tenants, it  
          should be noted that there is nothing in existing law or in this  
          bill that prevents landlords from simply requesting references  








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          from a prospective tenant's previous landlords and making a  
          phone call to find out if the person is a good tenant who pays  
          rent on time, or is perhaps a "serial defaulter" instead.  It is  
          not known why this direct, common-sense practice of calling  
          references is not sufficient to produce the information that a  
          landlord needs to "find out the truth" about a prospective  
          tenant, unless landlords do not routinely share truthful  
          information with other landlords about past tenants.  In any  
          case, as the author has argued, the notation on a credit report  
          that an eviction lawsuit was filed against a person on a certain  
          date in the past, without any other information about the  
          resolution of that case, can hardly be said to convey "the  
          truth" about a prospective tenant.


          Legal aid organizations who support the bill report having many  
          clients whose credit records were affected by so-called "zombie  
          UDs" - eviction lawsuits that were filed but never pursued  
          further, yet continue to wreak havoc with the credit records of  
          tenants because they were never dismissed by the landlord or  
          otherwise resolved.  After discussions with the Judicial Council  
          and several superior courts, recent amendments to the bill  
          authorize courts to dismiss such actions if 60 days have elapsed  
          since the complaint was filed and no proof of service of the  
          summons has been filed.  This authority is discretionary and  
          simply authorizes but does not require any court to dismiss a  
          case.


          Analysis Prepared by:                   Anthony Lew / JUD. /  
          (916) 319-2334   FN: 0002845
















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