The owner of a Santa Monica apartment complex has agreed to pay the Santa Monica Rent Control Board $100,000 to settle a lawsuit alleging that the owner violated the state Ellis Act.

The Santa Monica Rent Control Board filed the lawsuit against the owner of the Ocean Apartments, located at 423-429 Ocean Ave. in Santa Monica, alleging that the owner was in violation of the Ellis Act, which permits landlords to go out of the rental business.

The property owner, S.M. Ocean Star, LLC, withdrew one of the three residential rental buildings on the property from the rental market in July 2004, relying on the state Ellis Act, according to the Santa Monica Rent Control Board general counsel. Tenants in four units at the complex were evicted.

The lawsuit alleged that the property owner then re-rented some of the units within two years of withdrawing them from the market.

The Ellis Act states that landlords have the unconditional right to evict tenants in order to go out of the rental business by removing all the units in the building from the rental market.

Under the Ellis Act, the Rent Control Board is authorized to bring an action for exemplary damages against the owner for allegedly re-renting the units, according to Rent Control Board counsel.

The purpose of the exemplary damages is to penalize the landlord for allegedly abusing the Ellis Act, and to serve as an example to other landlords that such abuses will not be tolerated, said Michaelyn Jones, general counsel for the Rent Control Board.

“The Rent Control Board is serious about pursuing landlords who abuse the Ellis Act,” Jones said.

The property owner has denied liability in the case, but rather than face further litigation on the allegations and the expense of litigation, the owner opted to settle the matter, Jones said.

Three of the evicted tenants are pursuing separate actions against the owner.

Share