BILL ANALYSIS Ó AB 2819 Page 1 ASSEMBLY THIRD READING AB 2819 (Chiu) As Amended May 2, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Judiciary |7-1 |Mark Stone, Alejo, |Wagner | | | |Chau, Chiu, Cristina | | | | |Garcia, Holden, Ting | | | | | | | | | | | | ------------------------------------------------------------------ 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. AB 2819 Page 2 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 AB 2819 Page 3 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." AB 2819 Page 4 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 AB 2819 Page 5 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 AB 2819 Page 6 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. AB 2819 Page 7 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 AB 2819 Page 8 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 AB 2819 Page 9