William BOICOURT et al., Plaintiffs and Appellants, v. KONA KAI MOBILE HOME ESTATES et al., Defendants and Respondents.
Here we hold that the Mobilehome Residency Law (Civ.Code, § 798, et seq.) distinguishes between a homeowner and a prospective homeowner.1 Thus, section 798.18, subdivision (a), requiring a mobilehome park to offer a homeowner a lease of 12 months or less applies only to current tenants. The park could require plaintiffs, as prospective homeowners, to execute five year leases as a condition of residency in the park. We also hold that the public utilities law does not prohibit the park owner from requiring each tenant to pay a monthly service charge for gas.
[[/]] *** We affirm.
The essential facts are not in dispute. Kona Kai is a mobilehome park in Oxnard. The City of Oxnard has a rent control ordinance for mobilehome parks. The ordinance exempts, however, leases for more than one year. J.R. Phillips Company has managed Kona Kai since 1974. In 1989 Phillips implemented a policy that requires persons desiring to move into the park to sign five year leases. In contrast, current tenants have the option of signing a one year, a month to month, or a five year lease.
Plaintiffs [[/]] *** moved into the park between 1989 and 1992. Pursuant to the park's policy, they executed five year leases. The park manager testified it was her policy to provide a copy of the lease to each prospective tenant, to have a face to face meeting with each prospective tenant and to give each tenant 72 hours after signing the lease to change his or her mind. The park had a sign warning persons interested in purchasing mobile homes to contact park management first.
Plaintiffs are being charged more rent than that which would be allowed if covered by the Oxnard rent control ordinance. In addition, plaintiffs' leases allow Kona Kai to adjust the rent to cover an increase in property taxes, an increase in the cost of services required by government, an increase in insurance, uninsured losses, capital improvements and capital replacements. The Oxnard rent control ordinance would prevent Kona Kai from passing through those costs to plaintiffs.
Kona Kai replaced the streets in the park and increased rents to cover the cost. But Kona Kai has not attempted to pass through any other costs.
Plaintiffs brought this action under the Mobilehome Residency Law and the Oxnard rent control ordinance requesting damages and declaratory relief. The trial court gave judgment to Kona Kai.
Plaintiffs contend the five year lease required by Kona Kai violates section 798.18, subdivision (a). That subdivision provides: “A homeowner shall be offered a rental agreement for (1) a term of 12 months, or (2) a lesser period as the homeowner may request, or (3) a longer period as mutually agreed upon by both the homeowner and management.”
Plaintiffs argue that the term homeowner includes a prospective homeowner.
Kona Kai responds that section 798.9 defines homeowner as “a person who has a tenancy in a mobilehome park under a rental agreement.” Kona Kai points out that at the time plaintiffs executed the five year leases they had no tenancy in the park and were only prospective homeowners.
Kona Kai believes the Legislature intended section 798.18 to protect those who had already made an investment in a mobilehome, not those who were about to. Thus, Kona Kai believes it can require a lease of any duration for a prospective homeowner, and it is only when the original lease expires that a homeowner can insist on a lease of 12 months or less.
There is merit to Kona Kai's argument. Plaintiffs did not come within the definition of homeowners at the time they executed their leases. Moreover, although the term “prospective homeowner” is nowhere defined, it is used in the Mobilehome Residency Law. Thus, section 798.72 prohibits management from charging a “prospective homeowner” a fee as a condition of approval for residency, and section 798.74 requires management to inform a “prospective homeowner” of the information management will require in determining acceptability as a resident of the park.
Plaintiffs assert that “prospective homeowner” is used in the Mobilehome Residency Law only where a person who may become an actual homeowner has some rights. But the point is that the Legislature recognized a distinction between a homeowner and a prospective homeowner. Had the Legislature intended section 798.18 to apply to a prospective homeowner, we presume it would have said so. “[W]hen a statute omits a specific matter from its coverage, the inclusion of such matter in another statute on a related subject demonstrates an intent to omit the matter from the coverage of the statute in which it is not mentioned.” (California Coastal Com. v. Quanta Investment Corp. (1980) 113 Cal.App.3d 579, 599, 170 Cal.Rptr. 263.)
The legislative history of section 798.17 is helpful. The section provides that certain leases for longer than 12 months are exempt from local rent control. Subdivision (c) gives a homeowner the right to reject or rescind an exempt lease. Upon rejection or rescission of the exempt lease, the homeowner has the right to demand a non-exempt lease of 12 months or less pursuant to section 798.18. Prior to 1990 the section did not mention prospective homeowners. In 1990 the section was amended (Stats.1990, ch. 1046, § 2 [S.B. 2009].) to give a “prospective homeowner” the right to reject or rescind a rent control exempt lease. Unlike the homeowner, however, the rejection or rescission gave the prospective homeowner no right to demand a shorter lease under section 798.18.
Section 798.17 was again amended in 1991 to delete the reference to prospective homeowners. (Stats.1991, ch. 24, § 1, [S.B. 132].) The Governor's message upon signing the 1991 amendment stated that the 1990 amendment was repealed because it was being misinterpreted as preempting local control over leases with prospective tenants. If the Legislature had intended “homeowner” to include “prospective homeowner” it would not have amended section 798.17.
It is true as plaintiffs point out, in some sections of the Mobilehome Residency Law the use of the word “homeowner” means “prospective homeowner.” Section 798.37 for example states that a homeowner shall not be charged a fee for entry, hookup or landscaping as a condition of tenancy. Obviously, the word “homeowner” in that section applies to “prospective homeowners.” Its language compels such a conclusion. The language of section 798.18, however, does not.
Plaintiffs argue the Legislature intended to limit mobilehome parks from writing leases exempt from local rent control. The law does in fact so limit mobilehome park owners in their ability to write leases for renewing homeowners. (§§ 798.17; 798.18, subd. (a).) For our purposes here we need not decide whether the Mobilehome Residency Law also limits that ability as it concerns prospective homeowners.2
Plaintiffs claim that if the term “homeowner” excludes “prospective homeowner,” absurd and unjust results will follow. We agree it would be absurd to interpret section 798.18 as allowing the park to require a prospective homeowner to sign a five year lease, but requiring the park to offer a 12 month lease the instant the original lease is signed. The absurd result can be avoided, however, simply by applying common sense to the construction of the statute. A statute must be construed to render it reasonable and the literal meaning of its words must give way to avoid absurd consequences. (Kinney v. Vaccari (1980) 27 Cal.3d 348, 357, 165 Cal.Rptr. 787, 612 P.2d 877.) Common sense dictates that the statute be interpreted as requiring the park to offer a 12 month lease only upon the expiration of the original lease.
Plaintiffs also point out that section 798.15, subdivision (c) provides that a copy of the text of the Mobilehome Residency Law shall be attached to the rental agreement and incorporated by reference. Plaintiffs claim it is absurd to require section 798.18 to be incorporated into a lease signed by a prospective tenant if it does not apply. But it is hardly absurd to incorporate by reference a provision giving a prospective homeowner certain rights upon expiration of the current lease.
Plaintiffs assert that requiring them to sign a lease charging rents in excess of that allowed under rent control violates sections 798.72, subdivision (b), and 798.31. Section 798.72, subdivision (b) prohibits a park from charging a fee as a condition for approval for residency. Section 798.31 prohibits charging a fee for a lease more than one year except where the fee is mutually agreed on. Sections 798.72, subdivision (b), and 798.31 obviously refer to fees charged in addition to rent.
Plaintiffs claim the court's refusal in People v. Mel Mack Company (1975) 53 Cal.App.3d 621, 126 Cal.Rptr. 505 to distinguish between brokers and non-brokers by implication rejects the notion that there is a distinction between homeowners and prospective homeowners. Plaintiffs' reliance on Mel Mack is misplaced. There the question was whether former section 789.8 (now section 798.72, subd. (b)) prohibited park management from charging a broker a transfer fee. The section stated: “There shall be no entry charge as a condition of tenancy in a mobilehome park, nor shall there be any transfer or selling fee as a condition of sale of a mobilehome within a mobilehome park, even if such mobilehome is to remain within the park, if the park management performs no service in the sale of the mobilehome.” (People v. Mel Mack Company, supra, 53 Cal.App.3d 621, 626, 126 Cal.Rptr. 505.) The court held the statute prohibited charging any person, including a broker, a transfer fee. (Id., at p. 628, 126 Cal.Rptr. 505.)
The statute in Mel Mack clearly imposed a blanket prohibition on charging anyone a transfer fee. Here, in contrast, section 798.18, by its terms only applies to homeowners. The term “homeowner” is defined in the Mobilehome Residency Law in such a way that prospective homeowners are excluded.
Plaintiffs ask rhetorically why the Legislature would give greater protection to existing homeowners than it gives to prospective homeowners. The answer is that the prospective homeowner may examine a lease and decide whether to take it or leave it. In contrast, the existing homeowner, who ordinarily has a substantial investment in a mobilehome, may have no economic choice but to take whatever lease the landlord may offer.
Plaintiffs contend that Kona Kai is not authorized to charge each tenant a monthly service charge for gas service.
At some mobilehome parks the gas company services and bills each homeowner directly. In such cases the gas company maintains gas lines leading to each mobilehome. At Kona Kai, however, the gas company simply services a “master meter” for the entire park. Kona Kai in turn provides and maintains individually metered service to the mobilehomes. Only Kona Kai is billed directly by the gas company. Individual homeowners are billed by Kona Kai. The gas company charges Kona Kai a monthly customer service charge of approximately $3.00. The problem is that Kona Kai does not simply pass the $3.00 through to its homeowners, but bills each homeowner for a $3.00 customer service charge. Thus Kona Kai realizes a gain of approximately $500 per month on the service charge.
Public Utilities Code section 739.5 provides in part that, “the master-meter customer shall charge each user of the service at the same rate which would be applicable if the user were receiving gas or electricity ․ directly from the gas or electric corporation.” Section 739.5 of the Public Utilities Code further requires the gas company to provide service to the master-meter customer at a discount sufficient “to cover the reasonable average costs to master-meter customers of providing submeter service․”
Kona Kai's expert witness testified that the customer service charge was authorized by the Public Utilities Commission, and that Kona Kai's homeowners were being charged the same amount as the gas company would charge them. There is no dispute the gas company would include a $3.00 customer service charge for each homeowner if the homeowners were billed directly.
Plaintiffs argue the statutory provision that they be charged at the same “rate” as they would if they were billed directly, refers to the rate charged per unit of gas and does not include a customer service charge. Plaintiffs also argue that the gas company discount received by the master meter customer covers all costs, and thus the customer service charge imposed by Kona Kai is simply unearned profit.
Plaintiffs cite no authority for the proposition that “rate” as used in Public Utilities Code section 739.5 refers only to the charge for gas. The statute protects homeowners by ensuring they are charged the same amount as users billed directly by the gas company. Here the homeowners do not contest that they are charged the same; they have no right to be charged less. The statutory provision for a discount sale to the master meter customer is for the benefit of the park owner who must provide the gas at the same price as the gas company. As long as the homeowners receive gas at the same price charged by the gas company, they have no standing to complain about Kona Kai's profits.
Nor are plaintiffs helped by section 798.41, subdivision (a).3 The section does not purport to limit the charge allowable under Public Utilities Code section 739.5. The purpose of the section is to allow landlords who had previously included utilities in the rent to charge separately for utilities, provided the rent is reduced by an amount equivalent to the charge separately billed.
The judgment is affirmed. Costs are awarded to respondents.
1. All statutory references are to the Civil Code unless otherwise stated.
FOOTNOTE. See footnote *, ante.
2. Recently mobilehome park owners claimed that section 798.17 preempted local control over rental agreements in excess of 12 months signed by prospective homeowners, but abandoned the issue on appeal. (Mobilepark West Homeowners Ass'n. v. Escondido Mobilepark West (1995) 35 Cal.App.4th 32, 39, 41 Cal.Rptr.2d 393.)
FOOTNOTE. See footnote *, ante.
3. Section 798.41, subdivision (a) provides in part: “(a) Where a rental agreement ․ does not specifically provide otherwise, the park management may elect to bill a homeowner separately for utility service fees and charges assessed by the utility for services provided to or for spaces in the park. Any separately billed utility fees and charges shall not be deemed to be included in the rent charged for those spaces under the rental agreement, and shall not be deemed to be rent or a rent increase for purposes of any ordinance ․ enforced by any local governmental entity which establishes a maximum amount that a landlord may charge a tenant for rent, provided that at the time of the initial separate billing of any utility fees and charges the rent chargeable under the rental agreement or the base rent chargeable under the terms of a local rent control provision is simultaneously reduced by an amount equal to the fees and charges separately billed.”
GILBERT, Associate Justice.
STEVEN J. STONE, P.J., and YEGAN, J., concur.