Existing law requires a defendant who appears and demurs to the plaintiffs complaint in a summary proceeding for obtaining possession of real property to serve and file all moving and supporting papers at least 16 court days before the hearing, except as specified.

This bill would provide that in a summary proceeding for obtaining possession of real property, if a tenant in a commercial real property, as defined, demurs to the complaint, the notice of hearing on the demurrer must designate a hearing date not more than 20 court days following the filing of the demurrer. The bill would also make a technical, nonsubstantive change.

Existing law requires a defendant who appears and demurs to the plaintiffs complaint in a summary proceeding for obtaining possession of real property to serve and file all moving and supporting papers at least 16 court days before the hearing, except as specified.

This bill would provide that in a summary proceeding for obtaining possession of real property, if a tenant in a commercial real property, as defined, demurs to the complaint, the notice of hearing on the demurrer must designate a hearing date not more than 20 days following the filing of the demurrer.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 3196 (Stephanie Nguyen) - Summary proceedings for obtaining possession of real property: demurrers

Bill Summary:

Requires demurrers in unlawful detainer proceedings for commercial property to be heard within 20 court days of the filing of the demurrer.

Fiscal Impact:

Judicial Council indicates unknown, potentially moderate workload cost pressures (General Fund, Trial Court Trust Fund) to the courts for the increased staff workload associated with implementing this bill. While the superior courts are not funded on a workload basis, an increase in workload could result in delayed court services and would put pressure on the General Fund to increase the amount appropriated to backfill for trial court operations. For illustrative purposes, the Governor’s 2024-25 state budget proposes $83.1 million ongoing General Fund to continue to backfill the Trial Court Trust Fund for expected revenue declines. (See Staff Comments)

Background:

Existing law does not include a specific timeline for hearing a demurrer. However, the California Rules of Court provide that demurrers must be set for a hearing within 35 days of the filing of the demurrer, or on the first date available to the court thereafter. (Cal. Rules of Court 3.1320(d).) That rule also provides that, for good cause shown, the court may order the hearing on the demurrer to be held either earlier or later than the date set for the hearing, and it provides for exceptions and delays for good cause. This rule is not rigid and provides both courts and litigant flexibility in setting a hearing on the demurrer. Additionally, under existing law, a landlord can file an ex parte motion requesting that the hearing be advanced.

Proposed Law:

This bill requires a court, if a tenant in a commercial real property demurs to an unlawful detainer complaint, to set the hearing date not more than 20 court days following the filing of the demurrer.

Staff Comments:

According to Judicial Council, this bill could result in moderate staff workload impacts associated with ensuring the bill’s calendaring requirements are met in court, likely at the expense of other civil cases that have already been calendared. Judicial Council notes that there are currently other calendar preferences given to civil matters such as CEQA, protective orders, and motions to strike, as well as cases where certain personal conditions are met. Continuing to add to the expedited cases list requires clerks to make a determination on which cases take preference over others and then move hearings around, as deemed necessary. Creating preferences for certain civil case types creates an access to justice issue for all court users whose hearings will be postponed in order to meet the bill’s requirements. Accordingly, AB 3196’s effect would be to provide courts less flexibility by prioritizing commercial unlawful detainer demurrer hearings.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 3196 (Author:Stephanie Nguyen)

Version: April 11, 2024

Hearing Date: June 11, 2024

Fiscal: No

Urgency: No

Consultant: ID

SUBJECT

Summary proceedings for obtaining possession of real property: demurrers

DIGEST

This bill requires demurrers in unlawful detainer proceedings relating to commercial property to be heard within 20 court days of the filing of the demurrer.

EXECUTIVE SUMMARY

Unlawful detainer proceedings are streamlined, summary proceedings meant to balance a tenant’s rights and ability to be heard before being evicted with a landlord’s interests in promptly resolving the dispute. Law prescribes a specific process for an unlawful detainer proceeding that utilizes expedited timelines, including that a hearing on an unlawful detainer complaint must be held within 20 days of a request for a trial. However, when a defendant tenant demurs to the unlawful detainer complaint, in which they challenge the legal sufficiency of the complaint, the statutory provisions outlining the unlawful detainer process are silent on when a hearing on the demurrer must be held. Instead, California Rules of Court specify that such hearings must be held within 35 days of the filing of the demurrer, unless extended by request of both parties or for good cause shown. AB 3196 proposes to create a statutory timeline for hearing demurrers that aligns with the timeline for hearings on the unlawful detainer complaint itself, for cases involving tenants of commercial real property. The timeline created by AB 3196 would specify that a hearing on the demurrer must take place within 20 days of the filing of the demurrer.

AB 3196 is sponsored by the California Business Properties Association, and the Committee has received no other timely support or opposition.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Provides that, on or before the day fixed for their appearance, a defendant in an unlawful detainer action may appear and answer or demur. (Code of Civ. Proc. § 1170.)
2. Provides that all moving and supporting papers shall be served and filed at least 16 court days before a hearing, and that the moving and supporting papers served shall be a copy of the papers filed or to be filed with the court. (Code of Civ. Proc. § 1005 (b).)
3. Establishes summary civil proceedings by which landlords may seek a court order for the eviction of tenants from their rental property, for specified reasons. (Code of Civ. Proc. § 1159 et seq.)
4. Provides that a tenant is guilty of an unlawful detainer when the tenant remains in possession of the leased property after the service and expiration of a three day notice demanding that the tenant pay past due rent. (Code of Civ. Proc. § 1161 (2).)
5. Provides that a tenant is guilty of an unlawful detainer when the tenant remains in possession of the lease property after the service and expiration of a three day notice demanding that the tenant correct the violation of a material lease term. (Code of Civ. Proc. § 1161 (3).)
6. Requires that a defendant’s response in a summary proceeding to obtain real property must be filed within five days, excluding Saturdays and Sundays and other judicial holidays, after the complaint is served upon the defendant. (Code of Civ. Proc. § 1167 (a).)
7. Provides that, if a defendant in an unlawful detainer proceeding appears, and a request to set the case for trial is made, the trial of the proceeding must be held within 20 days of the date of the request for a hearing. Provides that the judge may extend the period for trial upon the agreement of all of the parties. (Code of Civ. Proc. § 1170.5.)
8. Specifies that a motion for summary judgment may be made at any time after the answer is filed, upon giving five days’ notice. Summary judgment shall be granted or denied on the same basis as a motion under Code of Civil Procedure Section 437. (Code of Civ. Proc. § 1170.7.)
9. Defines “commercial real property” as any unit that is not: (1) used as a home, residence, or sleeping place; (2) a hotel where 20 percent or more of the occupants live permanently; or (3) any space or dwelling in a mobilehome park. (Civ. Code § 1954.26 (d).)
10. Establishes that a “tenant” includes a lessee, subtenant, and sublessee. (Civ. Code § 1954.26 (g).)

This bill:

1. Provides that, notwithstanding the 16-day requirement for service of all motions and filings, if a tenant of a commercial real property, as defined, demurs to an unlawful detainer complaint, the notice of hearing on a demurrer must designate a hearing date within 20 court days of the filing of the demurrer.

COMMENTS

1. Author’s statement

According to the author:

AB 3196 seeks to simply align the timelines for demurrer hearings with the expedited timeframe for unlawful detainers to ensure a more streamlined, predictable, and equitable legal process. This alignment is essential for reducing procedural disparities, and ensuring fair treatment across the board to support the economic vitality of our communities and all stakeholders involved. AB 3196 bolsters the legal framework in a way that supports our community's emerging businesses and property owners, paving the way for continued growth and success.

1. Tenant’s rights and the unlawful detainer process

In order to ensure that a tenant’s rights are respected and they have an opportunity to be heard before being forced out of the property which they rent, California law closely prescribes when a landlord may evict a tenant and the process that must be followed to do so. Landlords may only evict tenants for specified reasons, including for when a tenant defaults on payment of rent, violates a term of the rental agreement without correcting within three days of notice, and committing waste on the premises. (Code of Civ. Proc. § 1161.) Almost all forced evictions in the residential and commercial context must take place through a judicial process, called an unlawful detainer. The unlawful detainer process is governed by Code of Civil Procedure Sections 1159 to 1179. These sets of laws and procedures recognize the importance of housing to tenants, and the significant disruption that eviction poses to both residential and commercial tenants. However, to balance these interests with the interests of landlords to be able to promptly re-rent their properties if the current tenant is not paying rent or subject to eviction, the unlawful detainer process is also a summary proceeding, meaning that it is a streamlined, fast-tracked judicial proceeding.

In order to evict a tenant, a landlord must file an unlawful detainer action and request a judicial order that the tenant be evicted. An unlawful detainer proceeding is very similar to standard civil proceedings, though with significantly shortened timelines. A defendant must file a response to the unlawful detainer complaint within five court days of being served with the complaint, for example, while in standard civil proceedings, the defendant is provided 30 days to respond to a complaint. (Code of Civ. Proc. § 1167 and 1167.3; 412.20; 430.40; 471.5.) Generally, a defendant may either answer the complaint, by conceding or contesting the allegations in the complaint, or they can demur. (Code of Civ. Proc. § 1170.) A demurrer alleges that the complaint is legally deficient, such as by failing to state a cognizable claim, rather than challenging the factual allegations in the complaint. A demurrer may be sustained with leave to amend, such that the plaintiff can re-file their complaint stating sufficient facts to state a claim, or it be sustained without leave to amend, in which case the case is dismissed. If a defendant answers the landlord’s complaint, and requests a trial, the trial must be held within 20 days of the request for a trial, unless extended by agreement of the parties. (Code of Civ. Proc. § 1170.5.) Parties in unlawful detainer proceedings also may file motions for summary judgement, make motions for discovery, and conduct depositions. (Code of Civ. Proc. §§ 1170.7, 1170.8.) In each of these contexts, the timelines for notice are also shortened. Lastly, unlawful detainers are meant to take precedence in courts’ civil docket, so that all unlawful detainer actions are quickly heard and determined. (Code of Civ. Proc. § 1179a.)

If the judge or the jury rules for the landlord, the court will issue a writ of possession, and the sheriff will notify the tenant that they have five days to vacate the premises before being forcibly removed. If the tenant wins the case, they will be allowed to remain in the premises, and may even be owed money from the landlord.

1. AB 3196 establishes a streamlined process for hearings on demurrers in unlawful detainer proceedings in the commercial property context

AB 3196 proposes to amend the laws relating to unlawful detainer for commercial real property to specify an expedited timeline for demurrers. It provides that, if a defendant demurs to an unlawful detainer complaint, the notice of hearing for the demurrer must designate a hearing date within 20 court days of the filing of the demurrer. The timeline set by AB 3196 only applies to tenancies of commercial property, and does not change any other process or timeline for commercial property unlawful detainer proceedings. AB 3196 includes a clause that specifies that its 20-day timeline is to take precedence over the 16-day requirement for filing a notice of hearing on the other party contained in Code of Civil Procedure Section 1005, should they conflict.

The author asserts that AB 3196 is necessary to align the demurrer process with the expedited timeline for unlawful detainer proceedings, and to ensure fair treatment of unlawful detainer proceedings. The author asserts that an absence of an explicit timeline in the Code of Civil Procedure provisions for hearings on a demurrer has resulted in delays and inconsistences when a defendant files a demurrer. They cite examples of commercial unlawful detainer cases where hearings on the demurrer are not scheduled for two, four, five, and seven months after the filing of the demurrer.

While it is true that the current rules for unlawful detainers do not include a specific timeline for hearing a demurrer, the courts’ own rules include further guidance on demurrers. The California Rules of Court provide that demurrers must be set for a hearing within 35 days of the filing of the demurrer, or on the first date available to the court thereafter. (Cal. Rules of Court 3.1320(d).) That rule also provides that, for good cause shown, the court may order the hearing on the demurrer to be held either earlier or later than the date set for the hearing. This rule is not as streamlined as the timeline required by AB 3196, and it provides for exceptions and delays for good cause. It also is an administrative rule, subject to change, and not a statutory requirement. However, considering that AB 3196’s timeline provides for 20 court days, which are essentially business days less court holidays, and the California Rules of Court 3.1320 does not specify that its 35-day deadline be court days, the timelines under both rules would be fairly similar – there would be about a week difference in most circumstances. Thus, the most significant aspect of AB 3196 is that it provides a strict timeline requirement that courts must follow without exceptions. While this would provide certainty for defendants and plaintiffs in commercial unlawful detainer proceedings, it would not provide flexibility to the courts and judges presiding over commercial unlawful detainer cases. Additionally, under the current laws, if a court sets a hearing on a demurrer too far into the future, the landlord may always file an ex parte motion requesting that the hearing be advanced. Accordingly, AB 3196’s most significant effect would be to provide courts less flexibility in scheduling demurrer hearings, and to save plaintiffs the need to request hearings be advanced when they are scheduled too far into the future, and it conforms the hearing timeline for a demurrer with the timeline required for hearings on unlawful detainer complaints.

1. Arguments in support

According to the California Business Properties Association, which is the sponsor of AB 3196:

Currently, the lack of clear timelines for demurrer hearings in § 1170 contrasts sharply with other sections, such as §§ 1167, 1167.3, and 1170.5-1170.8, that emphasize rapid proceedings from the filing of responses to the setting of trials, aiming to mitigate the financial and emotional strain on both property owners and tenants. However, the lack of defined timelines for demurrer hearings in § 1170 disrupts this streamlined approach, leading to inconsistent case handling and delays that detract from the statutes' intent to facilitate quick dispute resolution.

AB 3196 aims to bring consistency and efficiency to these proceedings, aligning with the statute's intent to expedite dispute resolution. This improvement is crucial for the fair and timely adjudication of rights in commercial tenancies, without affecting residential tenancies.

SUPPORT

California Business Properties Association (sponsor)

OPPOSITION

None received

RELATED LEGISLATION

Pending Legislation:

SB 395 (Wahab, 2023) requires a landlord to file with the office of the Secretary of State a copy of any notice of termination or notice of rent increase within 10 days of serving the notice on the tenant, and makes failure to do so an affirmative defense to an unlawful detainer. SB 395 was held by the Senate Appropriations Committee.

SB 1103 (Menjivar, 2024) applies various tenant protections for residential tenants to commercial, small business tenants, as defined, and creates transparency requirements for operating costs fees charged to such tenants. SB 1103 is currently at the Assembly Desk.

Prior Legislation: None known

PRIOR VOTES:

Assembly Floor (Ayes 68, Noes 0)

Assembly Judiciary Committee (Ayes 12, Noes 0)

**************

Date of Hearing: April 16, 2024

ASSEMBLY COMMITTEE ON JUDICIARY

Ash Kalra, Chair

ABPCA Bill Id:AB 3196

Author:(Stephanie Nguyen) – As Introduced Ver: April 11, 2024

PROPOSED CONSENT

SUBJECT: Summary proceedings for obtaining possession of real property: demurrers

KEY ISSUE: should the timeline for hearing demurrers in commercial unlawful detainer cases be established with a date certain, so it is better aligned with other summary procedures in existing law that specify dates certain for hearings?

SYNOPSIS

This bill, sponsored by the California Business Properties Association, clarifies the timeline for demurrer hearings in commercial unlawful detainer actions. In California, both residential and commercial evictions are handled through court proceedings known as unlawful detainers. In many respects, unlawful detainer actions are just fast-tracked versions of other standard civil proceedings, with all of the usual pleadings, motions, discovery, trial, and opportunities to appeal. Despite the fact that unlawful detainer cases are already prioritized by the courts and handled as an expedited summary proceeding, according to the author, many commercial property owners find that the time it takes to resolve unlawful detainer cases going to trial is still too long, adversely affecting operational planning and stifling local economic growth. AB 3196 seeks to solve this problem by aligning the timelines for demurrer hearings with the expedited timeframe for unlawful detainer actions.

The bill establishes that a demurrer hearing must be set for a date within 20 court days of filing of the demurrer in commercial unlawful detainer actions. According to the author, this minor legislative fix of adding a time certain to hear demurrers will ensure a more streamlined, predictable, and equitable legal process. This measure is narrowly tailored to commercial real property only; it leaves the unlawful detainer process in the residential context untouched. It has no known opposition.

SUMMARY: Establishes that where a tenant in a commercial real property demurs to an unlawful detainer complaint, a hearing must be set no more than 20 court days following the filing of the demurrer.

EXISTING LAW:

1. Provides that on or before the day fixed for their appearance, a defendant in an unlawful detainer action may appear and answer or demur. (Code of Civil Procedure Section 1170. All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.)
2. Provides that all moving and supporting papers shall be served and filed at least 16 court days before a hearing and that the moving and supporting papers served shall be a copy of the papers filed or to be filed with the court. (Section 1005 (b).)
3. Establishes summary civil proceedings by which landlords may seek a court order for the eviction of tenants from their rental property. (Section 1159 et seq.)
4. Provides that a tenant is guilty of an unlawful detainer when the tenant remains in possession of the leased property after the service and expiration of a three day notice demanding that the tenant pay past due rent. (Section 1161 (2).)
5. Provides that a tenant is guilty of an unlawful detainer when the tenant remains in possession of the lease property after the service and expiration of a three day notice demanding that the tenant correct the violation of a material lease term. (Section 1161 (3).)
6. Requires that a defendant’s response in a summary proceeding to obtain real property shall be filed within five days, excluding Saturdays and Sundays and other judicial holidays, after the complaint is served upon the defendant. (Section 1167 (a).)
7. Specifies that a motion for summary judgment may be made at any time after the answer is filed upon giving five days’ notice. Summary judgment shall be granted or denied on the same basis as a motion under Section 437. (Section 1170.7.)
8. Defines “commercial real property” as any unit that is not: (1) used as a home, residence, or sleeping place; (2) a hotel where 20 percent or more of the occupants live permanently; or (3) any space or dwelling in a mobilehome park. (Civil Code Section 1954.26 (d).)
9. Establishes that “tenant” include a lessee, subtenant, and sublessee. (Civil Code Section 1954.26 (g).)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: AB 3196 is tailored to streamline the unlawful detainer process within commercial tenancies by clarifying the precise time when a demurrer hearing must be set. Existing law establishes expedited timelines for virtually all aspects of unlawful detainer actions, but is silent on the time by when a demurrer must be heard. According to the author and the bill’s sponsors, this gap in the statutory scheme leads to delays and inconsistencies in how cases are handled across different jurisdictions.

The author details the need for the bill, and the impact the gap in existing law has had on small business owners in her district:

AB 3196 is tailored to streamline the process within commercial tenancies by introducing a precise schedule for demurrer hearings. This change is set to bring them in line with the swift timelines already established for handling unlawful detainers, thereby aiming to curtail the protracted litigation or negotiation periods that disproportionately impact small property owners and emerging businesses. Such entities often find themselves entangled in time-sensitive transactions where delays translate directly into financial strain.

AB 3196 is an important piece of legislation for our state particularly my district as we are a vibrant hub where minority property owners have disproportionately suffered due to the exploitation of the demurrer process in commercial real estate dealings. The district's experience highlights how some commercial tenants have manipulated the demurrer process, extending court cases beyond their fair scope and thereby occupying properties without upholding their rent responsibilities. This not only places undue financial strain on property owners, many of whom are minorities leasing to small businesses, but it also poses broader community challenges.

Such exploitation of the demurrer process causes unwarranted delays in commercial transactions, draining resources, complicating dispute resolutions and contractual negotiations, and ultimately stalling the entry of new small businesses into the market. This not only affects operational planning but also stifles local economic growth potential. AB 3196, therefore, stands as a critical measure to eliminate these barriers, promoting a conducive environment for the prosperity of small businesses and property owners alike, with a particular emphasis on empowering the minority communities in my district.

In conclusion, AB 3196 seeks to simply align the timelines for demurrer hearings with the expedited timeframe for unlawful detainer to ensure a more streamlined, predictable, and equitable legal process. This alignment is essential for reducing procedural disparities, ensuring fair treatment across the board, and supporting the economic vitality of all stakeholders involved, particularly in districts like mine where the impact is most profound. Through AB 3196, we aim to bolster the legal framework in a way that supports our community's small businesses and property owners, paving the way for continued growth and success.

Unlawful detainers generally. In California, almost all involuntary residential and commercial evictions must take place through the judicial process. Landlords may not simply kick a tenant out on their own. (Civil Code Section 789.3.) Instead, landlords must request an order from a judge. If, after giving the tenant an opportunity to respond, the judge agrees that the landlord is entitled to reclaim the rental property, the judge will issue a writ of possession in the landlord’s favor. Sheriff’s deputies then execute the writ of possession. First, they post a notice giving the tenants five days’ advance warning of the impending lockout. Then, on the appointed day, the sheriff deputies will physically remove the tenants from the property, if they have not left already, and standby while the locks are changed. These judicial proceedings are known as unlawful detainers and they are governed by their own special statutes, Code of Civil Procedure Sections 1159 to 1179 (a).

Unlawful detainers and the judicial process. In order to get an order from a judge, a landlord seeking to evict a tenant from their property must file an unlawful detainer action. In many respects, unlawful detainer actions are just fast-tracked versions of other standard civil proceedings, with all of the usual pleadings, motions, discovery, trial, and opportunities to appeal. For example, in unlawful detainer cases, a defendant must file a response to an unlawful detainer complaint within five court days after service. (Sections 1167 and 1167.3.) That is significantly shorter than the customary 30 days for response normally permitted in non-unlawful detainer civil cases. (Sections 412.20, 430.40, 471.5.) Similarly, protracted timelines apply to summary judgment and discovery motions (Sections 1170.7, 1170.8), deadline for discovery responses (Sections 2030.260, 2033.250, 2031.260), and deposition and trial setting (Sections 2025.270, 1170.5, 1179a). “The unlawful detainer statutes were, … enacted to provide an adequate expeditious and summary procedure for regaining possession of real property wrongfully withheld by a tenant. The rights and remedies afforded a landlord by the statutory provisions are given in lieu of his common law rights and remedies which included the right to enter and expel the tenant by force.” (Mobil Oil Corp. v. Superior Court (1978) 79 Cal.App.3d 486, 494.)

Gap in the law. The author brings this measure to address a gap in the statutory scheme regarding unlawful detainer timelines. Under existing law, there is no prescribed statutory deadline by when a demurrer hearing must be set. The California Rules of Court, administrative rules issued by the Judicial Council, provide that “[d]emurrers must be set for hearing not more than 35 days following the filing of the demurrer or on the first date available to the court thereafter. For good cause shown, the court may order the hearing held on an earlier or later day on notice prescribed by the court.” (California Rule of Court 3.1320 (d).) This rule applies to civil cases in general, and there is no specificity in the Code of Civil Procedure or the California Rules of Court about the timing of hearing a demurrer in an unlawful detainer case. The result, especially with our crowded courts, and despite the overarching mandate for summary resolution of unlawful detainer actions, is that a demurrer hearing might be set months after the defendant filed a demurrer, or even after a trial date has been set.

This bill would establish a time certain for hearing demurrers in commercial eviction cases. This measure establishes that a demurrer hearing date must be set on a date no more than 20 court days following the filing of the demurrer. The bill establishes this timeline only for commercial unlawful detainer actions, leaving the procedures for residential unlawful detainer actions untouched. Importantly, this measure does not lengthen or shorten the time period for commercial unlawful proceedings—the deadline to file a demurrer, file a motion for summary judgment, or set a trial remains in place; the measure is meant to provide certainty and consistency to the existing statutory timeline for demurrers.

ARGUMENTS IN SUPPORT: The California Business Property Association, the sponsors of this bill explain:

Currently, the lack of clear timelines for demurrer hearings in § 1170 contrasts sharply with other sections such as §§ 1167, 1167.3, and 1170.5-1170.8 emphasizes rapid proceedings from the filing of responses to the setting of trials, aiming to mitigate the financial and emotional strain on both property owners and tenants. However, the lack of defined timelines for demurrer hearings in § 1170 disrupts this streamlined approach, leading to inconsistent case handling and delays that detract from the statutes' intent to facilitate quick dispute resolution.

AB 3196 aims to bring consistency and efficiency to these proceedings, aligning with the statute's intent to expedite dispute resolution. This improvement is crucial for the fair and timely adjudication of rights in commercial tenancies, without affecting residential tenancies.

REGISTERED SUPPORT / OPPOSITION:

Support

California Business Properties Association (sponsor)

Opposition

None on file

Analysis Prepared by: Shiran Zohar / JUD. / (916) 319-2334