Facts

Plaintiffs are 69 San Diego-based residents of Terrace View Mobile Home Estates, a mobile home park wholly owned by defendant Terrace View Partners LP. Defendants Thomas Tatum and Jeffrey Kaplan are partners in the limited partnership, and own the management company, defendant Mobile Community Management Co. Plaintiffs filed suit against the defendants in connection to its business practices, and for claims relating to conditions at the Park and claims that the Park was being closed in violation of statute.

This first phase of trial involved only 16 of the 69 homeowners.

PLAINTIFFS' CONTENTIONS:
Plaintiffs challenged defendants' predatory leasing practices and unreasonable rent levels. At the time of trial, plaintiffs' average rent levels exceeded rent at nearby comparable parks by nearly 67 percent. In addition to yearly rent increases, long-term lease residents' rent increased to the average of the three highest rents in the Park near the end of the lease term. To receive a reduced rent increase, defendants required plaintiffs to sign a number of documents that the court later ruled were unlawful.

Plaintiffs also contended that when a person tried to sell and leave, defendants required their buyers to pay the same unreasonable rent. However, when defendants sold a home, the rent was much less. This made plaintiffs' homes unsalable. As a result, 61 out of the 205 spaces were vacant lots and 40 vacant mobile homes were park-owned. The park-owned homes were allowed to sit for years as abandoned homes giving the Park a rundown appearance.

Plaintiffs asserted claims for failing to maintain the park and park-owned homes, interfering with their property rights, and breaching the duty of good faith and fair dealing, among other things.

DEFENDANTS' CONTENTIONS:
Defendants contended that the Park was well maintained and that since the Park is not within a rent-controlled jurisdiction they were permitted as a matter of law to set their own rent rates. Defendants also contended they were not closing the Park, and that there were no plans to do so. Defendants contended that the leases were legal and enforceable, and that the inconsistent rent rates at the Park were the result of certain residents having taken advantage of previous rent reduction offers, while others had not.

Result

Plaintiffs' verdict for $58,289,000, which included $1,289,000 in compensatory damages, and $57,000,000 in punitive damages. The court granted defendants' motion for non-suit on the breach of statute/closure of Park cause of action. The jury found that defendants were not liable for alleged failure to maintain conditions in the Park, and not liable for claims of elder abuse. The court also ruled that several provisions of defendants' leases violated the Mobilehome Residency Law and were procedurally and substantively unconscionable. There was no finding by either jury or court that rent rates at the Park were unfair or unreasonable. The court ruled that three provisions in the lease agreement violated the Mobilehome Residency Law, and severed them accordingly. One provision of the lease was later deemed unconscionable and severed.

Other Information

The remaining 53 plaintiffs' cases will be tried in subsequent phases. According to defense, after sixty days the court has still not entered final judgment in this case. Due to the remarkably high punitive damages award, which does not appear to be in line with constitutional limits. Defendants intend to file post-trial motions when the judgment is finally entered, should the court not unilaterally reduce the damages award. FILING DATE: July 12, 2013.

Deliberation

three days

Length

13 days