# Petition for Writ of Certiorari — Granberry v. Islay Investments > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_2119%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1995 - **Citation:** 516 U.S. 866 ## Text supreme Court, 0.8. FILED 95 122 suL19 1% In The Supreme Court of the United States October Term, 1995 ’ LISA GRANBERRY, COSETTI JORDAN, ALICE GLASSPOOL, CHRISTOPHER GLASSPOOL, on behalf of themselves and all others similarly situated, Petitioners, ISLAY INVESTMENTS, A California Partnership, MARVIN TREVILLIAN, Respondents. * On Petition For A Writ Of Certiorari To The Supreme Court Of The State Of California + PETITION FOR A WRIT OF CERTIORARI + Davip H. ScHwartz Counsel of Record Of Counsel: Law OFFICES OF ERNEST L. GRAVES Davip H. ScHwaRTz 130 West Victoria Street 240 Stockton Street b CA 93101 San Francisco, CA 94108 Santa Barbara, (415) 362-2700 Counsel for Petitioners COCKLE LAW BRIEF PRINTING CO., (800) 225-6964 OR CALL COLLECT (402) 342-2831 QUESTIONS PRESENTED 1. Do Mullane v. Central Hanover Bank & Trust Co. and its progeny require that before a state court adjudicates a defendant’s individualized offset claims against absent members of a plaintiff class, reasonable and timely effort be made to provide each class member with actual notice of the specific offset claim, or, does it satisfy due process if the notice of pendency of class action contains a general statement that the defendant intends to assert offset claims against some class members if the class claim is successful? 2. Do Mullane v. Central Hanover Bank & Trust Co. and its progeny prohibit a state court from adjudicating offset claims against absent members of a plaintiff class based on notice by publication and/or mailing 14 years after the litigation commenced, when the party asserting those claims has failed to take reasonable Steps available to it to give the persons adversely affected actual notice of the claims in a timely manner? 3. Does the highest court of a state violate the Due Process Clause of the 14th Amendment and the Guaranty Clause of Art. IV, Sec. 4 of the United States Constitution by holding that a generalized statement in a notice of class action that the defendant intends to assert unspecified offset claims against some unspecified class members can serve as a substitute for individualized, specific, and prompt notice requirements enacted by the state’s legislature? ii TABLE OF CONTENTS Page QUESTIONS PRESENTED... 2 .snccvicccccsiteencanses i TABLE GP AUTHIORITIOS 2. cciccscessinvegeles eee iv CTI CIWS obi vc cece cscancienn teeueo ns teus 1 JURISDICTION ..... .2<..- PPP re ee TT eee ere 1 STATUTORY PROVISION INVOLVED.............. 1 STATING S .¢ os 5 sanvtneceassdcaedscuhawesmataeenaie 2 Proceedings Below Pertaining To The Presentation Of Thane Fecberel TOGO ac iscnckinacctaceunaicrewaes woes 5 REASONS FOR GRANTING THE WRIT ........... 13 I. THE WRIT SHOULD BE GRANTED TO PRE- VENT THE CALIFORNIA COURTS FROM ADJUDICATING RESPONDENTS’ OFFSET CLAIMS WITHOUT FIRST PROVIDING EACH AFFECTED CLASS MEMBER NOTICE REASON- ABLY CALCULATED TO APPRISE THE CLASS MEMBER OF THE SPECIFIC CLAIM BEING MADE, AND TO DETERMINE WHETHER AFTER A DELAY OF 14 YEARS FROM THE START OF LITIGATION, ANY FORM OF NOTICE CAN SATISFY THE REQUIREMENT OF MULLANE V. CENTRAL HANOVER BANK & TRUST CO. AND ITS PROGENY THAT THE CLASS MEMBER BE GIVEN A MEANINGFUL OPPORTUNITY TO PRESENT OBJECTIONS.... 13 A. Unless The Writ Is Granted The Trial Court Will Proceed To Adjudicate Offset Claims And Defenses To Them Without First Affording Due Process Notice To Absent Class Members, Most Of Whom Do Not Even Know Their Rights Are Being Adjudi- CHIOD 0 cancnsuesenek eens ee eene uae e 13 ili TABLE OF CONTENTS - Continued Page B. The California Supreme Court Decision Is In Conflict With The Principles Announced By This Court In Mullane v. Central Hanover Bank & Trust Co. And Its Progeny............... 16 C. Although Further Proceedings Will Take Place In The State Trial Court, This Case Meets The Finality Requirements For Grant Of Certiorari Under The Standards Set Forth In Cox Broadcasting Corp. v. Cohn, 420 USS. eS ae cha cha hake ws £6e kd 6 21 II. CALIFORNIA CIVIL CODE SECTION 1950.5 IS UNCONSTITUTIONAL AS CONSTRUED AND APPLIED BY THE CALIFORNIA SUPREME COURT: THE HOLDING THAT A GENER- ALIZED STATEMENT OF THE DEFENDANT’S INTENTION TO PURSUE OFFSET CLAIMS AGAINST CLASS MEMBERS IN THE NOTICE OF PENDENCY OF CLASS ACTIONS SATISFIES THE STATUTORY REQUIREMENT FOR PRO- VIDING INDIVIDUAL CLASS MEMBERS WITH TIMELY NOTICE AND A REASONABLE OPPORTUNITY TO DEFEND OFFENDS THE DUE PROCESS CLAUSE OF THE 14TH AMENDMENT, AND SO INVADES THE LEGIS- LATIVE POWER AS TO VIOLATE THE SEPARA- TION OF POWERS DOCTRINE, INCORPORATED IN ART. III, SEC. 3 OF THE CALIFORNIA CONSTITUTION, AND PRO- TECTED BY THE GUARANTEE CLAUSE OF ART. IV, SEC. 4 AS WELL AS THE DUE PRO- CESS CLAUSE OF THE 14TH AMENDMENT... 24 TE Ube aes O55 56 cae ss see oak eb ee ou eR 30 iv TABLE OF AUTHORITIES Page CASES Ancient Egyptian Arabic Order of Nobles etc. v. NECHENEE, 27S. Sc FOP Ch 806 6 eh Nec bscege ae nes 29 Barer 0. Caer, SOP Sia FG TI canes osc uwast ccees 29 California v. Superior Court of California, 449 U.S. DOD COI 5 iP a a SER eh 15 Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1975) 21, 22 Creswill v. Grand Lodge of Knights of Pythias, 225 aR Me Ee. . v2 Repent py ree rete eer tr Dany Coma 30 Eisen v. Carlisle & Jacqueline, 417 U.S. 156 (1974) PPO roe Pree er ate ee ee ee pee 18, 19, 21, 23 Granberry v. Islay Investments, 9 Cal.4th 738, 889 P.2d 970, 38 Cal.Rptr.2d 650 (1995) Piccneree LEE ess iced Wisin 5's pAb AA Aa ee 3, 40, 15 Granberry v. Islay Investments, 28 Cal.App.4th 1640, 23 Cal.Rptr.2d 420 (1993) (“Granberry II”) ........ 1, 8 Granberry v. Islay Investments, 161 Cal.App.3d 382, 207 Cal.Rptr. 652 (1984) (“Granberry I”) ....... Eo, 6 Greene v. Lindsey, 456 U.S. 444 (1982)................ 20 Martin v. Hunter’s Lessee, 1 Wheat. (14 U.S.) 304 CRBs 656.6 KRESS « Gad oo ae tee oe aa hin 29 McCullough v. Virginia, 172 U.S. 102 (1898) .......... 29 Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1 CLOFUD iors So hs cage a8 cae ead we 19 Mennonite Bd. of Missions v. Adams, 462 U.S. 791 CTS BEEN ia ii i i ae ce eke Oe een 17 Vv TABLE OF AUTHORITIES - Continued Page Minor v. Happersett, 21 Wall. (88 U.S.) 162 (1875) .... 29 Mullane v. Central Hanover Bank & Trust Co., 339 i SE aan hea pet ee a, passim Myers v. United States, 272 U.S. 52 (1926)............ 27 New York v. United States, 505 U.S. 144, 120 L.Ed.2d Sails BE Ps MY MPO: ok Gia 6's dh oven ck 28, 29 Plaut v. Spendthrift Farms, ___ U.S. __, 131 L.Ed.2d i Rae a OT Cac oa ok ka keds bk bokccan, 28, 29 Tulsa Collection Services v. Pope, 485 U.S. 478 (1988) 16, 27 Van Sickle v. Shanahan, 212 Kan. 426, 511 P.2d 223 CRUNE Gh Cea Sear ha en vied Ma ees ee 29 Ward v. Board of County Comm'rs, 253 U.S. 17 PEON kan ods wake uies's ph 2h ds aaa ahaa Deas ees; 29 Wayman v. Southward, 10 Wheat. (25 U.S.) 1 (1825) .... 27 CONSTITUTIONAL PROVISIONS California Constitution Art. III, Sec.3......... 12, 28, 29 Due Process Clause of the 14th Amendment to the United States Constitution.................... passim Guaranty Clause of Art. IV, sec.4 of the United ene © NR ho 12, 24, 25, 29 STATUTES AND RULES Federal Rules of Civil Procedure, Rule 23........... 18 California Civil Code Section 1950.5............. passim California Civil Code Section 1950.5, subdivision ETRE Crate aston cerepey (SMa en ity erect ONE enya at passim vi TABLE OF AUTHORITIES - Continued Page California Code of Civil Procedure Section 384...10, 15 California Code of Civil Procedure Section 583.250 ..... 7 California Code of Civil Procedure Section 1501.5.... 15 California Code of Civil Procedure Section 1519.5.... 15 California Code of Civil Procedure Section 1540..... 15 Lisa Granberry, Cosetti Jordan, Alice Glasspool and Christopher Glasspool, on behalf of themselves and ali others similarly situated, respectfully petition for a writ of certiorari to review the judgment of the Supreme Court of the State of California in this case. OPINIONS BELOW The opinion of the Supreme Court of California in Granberry v. Islay Investments is reported at 9 Cal.4th 738, 889 P.2d 970, 38 Cal.Rptr.2d 650 (1995) (App. 1). The opinion of the California Court of Appeals for the Second District, Division 6, in Granberry v. Islay Investments is reported at 23 Cal.Rptr.2d 420 (1993) (App. 38). JURISDICTION The decision of the California Supreme Court was entered on March 6, 1995. A timely request for rehearing was filed on March 21, 1995 and was denied on April 20, 1995. The jurisdiction of this Court is invoked under 28 U.S.C. § 1257. STATUTORY PROVISION INVOLVED California Civil Code Section 1950.5 regulates the manner in which a residential landlord in California may demand, hold, and make claims against security deposits paid by the tenant in addition to what the tenant Pays as legitimate rent. During the time period relevant to the proceedings in the state court, subsection (f) of California Civil Code Section 1950.5 read as follows: Within two weeks after the tenant has vacated the premises, the landlord shall furnish the ten- ant, by personal delivery or by first-class mail, 1 2 postage prepaid, a copy of an itemized state- ment indicating the basis for, and the amount of, any security received and the disposition of the security and shall return any remaining portion of the security to the tenant. STATEMENT Respondents own and/or operate a number of large scale residential apartment complexes in Santa Barbara, California. Petitioners are former tenants of respondents who represent a certified class of some 10,000 former tenants of respondents who vacated their apartment units after April, 1978. From 1973 through 1984, Respondents, pursuant to a uniform practice employing standardized rental agree- ments, charged each tenant an additional fixed amount of “rent” for the first month of the month-to-month tenancy. California Civil Code Section 1950.5 regulates the taking and refunding of security deposits by residential landlords. Under the statutory regulation, a landlord may not take money in addition to the “legitimate” rent unless the landlord treats it as a security deposit.} Under the statute, money taken as security must be refunded to the tenant at the termination of the tenancy unless the landlord notifies the tenant of its specific claims against the security promptly following the termi- nation of the tenancy. In April, 1981, Petitioners filed a class action suit in the Superior Court of the State of California, for the County of Santa Barbara. The suit sought a declaration 1 Granberry v. Islay, 161 Cal. App.3d 382, 388, 207 Cal.Rptr. 652 (1984), hereinafter (“Granberry I”). 3 that the additional fixed amount of “rent” charged for the first month of each tenancy was a security deposit which Respondents were required to refund to each tenant, an accounting of the deposits taken, and refund of the deposits to all class members. Following a trial in 1990, the Superior Court entered a judgment in favor of Peti- tioners holding that the extra “rent” charge was “secu- rity” within the meaning of Civil Code Section 1950.5 and refunds were due to all class members. That determina- tion was never appealed and is now final. In 1986 Respondents for the first time contended in the litigation that if the extra “rent” charge was deter- mined to be a security, they intended to pursue claims by way of cross-complaints and offsets against any tenant class member who sought to join the class and obtain a refund of the alleged security deposit. Respondents indi- cated the alleged claims would be for the types of occu- pancy claims allowed under Section 1950.5: rent defaults, cost of necessary cleaning of the apartment unit after the class member vacated, and cost of repair of alleged dam- age to the unit not the result of normal wear and tear. In late 1987 the notice of pendency of class action was mailed to the forwarding addresses for class mem- bers contained in Respondents’ files and was published in the local Santa Barbara newspaper. (App. 91-94) That notice contained the following statement concerning Respondents’ intention to pursue offset claims: Defendants also contend that any refund you might be entitled to must be reduced by the amount of any unpaid rent, costs necessary to clean and repair damage you caused to the apartment, in excess of ordinary wear and tear, and that such sums could exceed the amount of any refund or damage you might receive. 4 This statement is the only attempt to directly provide actual notice to any class member that Respondents were asking the Superior Court to adjudicate occupancy claims in order to defeat the class member’s right to a refund of the security deposit. Respondents had never acknowledged to any tenant that Respondents held the extra “rent” charge as a secu- rity deposit and they had never provided to their tenants any itemization of claims they might have had against the tenant as required by subdivision (f) of California Civil Code Section 1950.5. At the same time, respondents made no attempt to collect from their tenants for minor rent defaults, cleaning the apartments on termination, or any damage to the apartment unit, unless the Respondents considered the tenant to have committed acts of vandal- ism.? Prior to trial the Superior Court granted Petitioners’ motion for summary judgment dismissing Respondents’ offset claims on the ground that Respondents had never furnished the individual tenants with the personal notice of those claims required by California Civil Code § 1950.5(f). Following a jury trial the trial court entered a judgment declaring the extra “rent” charge was “secu- rity” under Civil Code Section 1950.5 and ordering a refund to each class member who came forward to make a claim. 2 Several years after the institution of Petitioners’ class action Respondents began taking a second charge which they denominated as a “security” and treated in accordance with the statute. * 5 ‘tespondents appealed the grant of summary judg- ment dismissing their offset claims but not the determina- tion that their charge had to be refunded. On appeal the California Supreme Court ruled that Respondent had no right to retain any of the security deposits under Califor- nia Civil Code Section 1950.5. due to their failure to comply with the subdivision (f) notice requirement. Nev- ertheless, the California Supreme Court, with one justice dissenting, authorized the trial court to proceed with the adjudication of Respondents’ offset claims without fur- ther notice to the absent class members affected. The California court dismissed as “unavailing” Petitioners’ objection that the absent class members were entitled to notice of the offset claims consistent with Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) and its progeny. No absent class member has ever received notice of the specific offset claim being made against him or her by Respondents, yet the California Supreme Court has ordered the trial court to proceed to litigate these offset claims without further notice to the class members. The trial court will be adjudicating the offset claims of class members who do not know that the class action is even pending. Most of these class members will never appear to defend these claims. Those who do appear will have to prepare and present a defense a decade or more after they vacated their apartment units. Proceedings Below Pertaining To The Presentation Of The Federal Issue The history of Respondents’ various extra charges to tenants is set forth in Granberry I, 161 Cal.App.3d 382, 207 6 Cal.Rptr. 652 (1984). In April of 1981 Petitioners com- menced the subject class action in the Superior Court of California for the County of Santa Barbara, seeking a declaration that the extra “rent” charged for the first 31 days was a “security” under California Civil Code Sec- tion 1950.5, along with an accounting and return of the improperly taken security money. In October, 1982, the Superior Court entered an order certifying a class of approximately 10,000 persons, defined as then current tenants and former tenants of Respondents who had vacated their apartment within three years of the filing of the action and had paid a higher amount of rent for the first month of the tenancy than for the second and subse- quent months. Immediately following the certification of the class, the Superior Court entered an order granting summary judgment to the Respondents on the ground that the charge was “rent” and not security as a matter of law. In Granberry I, 161 Cal. App.3d 382, 207 Cal.Rptr. 652 (1984) the California Court of Appeals reversed the summary judgment ruling and held that the issue of whether the extra charge for the first month was “legitimate rent” or a “security deposit” under the statute was a question of fact for the jury to determine. After the remand Respondents for the first time raised the issue of occupancy claims for unpaid rent, cleaning and damage and were permitted to amend their answer to allege an affirmative defense of equitable offset against some tenants. 3 In early 1987 Respondents were also permitted to file a cross-complaint alleging occupancy claims against some 6,200 class members as well as to amend their answer to allege, in 7 On December 28, 1987, notice of the pendency of the class action against the Respondents was published in the local paper and mailed to 5,438 absent tenants for whom some forwarding address was available. Of the notices mailed, 1756 were returned as undeliverable. The same class notice was published in the general circulation newspaper for the Santa Barbara area. The only reference to Respondents’ offset claims in the notice was the fol- lowing: Defendants also contend that any refund you might be entitled to must be reduced by the amount of any unpaid rent, costs necessary to clean and repair damage you caused to the apartment, in excess of ordinary wear and tear, and that such sums could exceed the amount of any refund or damage you might receive. (App. 92) This notice was published and mailed in December, 1987, some 6'/2 years after the commencement of the action and up to 9'/2 years after the earliest class mem- bers had left their tenancies. After the notice of class action, but before trial, the trial court granted Petitioners’ motion for summary judg- ment against Respondents’ offset claims on the ground general terms, that Respondents had individual offset claims against the class members which, in the aggregate, exceeded the amount of security deposits which Petitioners sought to recover. Respondents sought to serve the cross-complaint by delivery to Petitioners’ counsel, which service was quashed by the Superior Court. Respondents made no further attempt to serve the cross- complaints on any individual class member, and the cross-com- plaints were dismissed pursuant to California Code of Civil Procedure § 583.250 requiring mandatory dismissal of any com- plaint or cross-complaint not served within three years of filing. 8 that Respondents had failed to comply with the require- ments of subdivision (f) of California Civil Code Section 1950.5, and that non-compliance prevented Respondents from pursuing equitable offset claims against their former tenants. The Superior Court then conducted a jury trial on two issues: (1) Was the extra charge a security? and if so, (2) Was it taken in bad faith? The jury found the addi- tional amount charged as “rent” was a security under the statute; the jury further concluded that Respondents had not taken the charge in “bad faith.”4 Following the jury verdict the trial court entered judgment which, inter alia, required Respondents to refund the security money, but only to those tenants who could be found and who came forward to make a claim. All security money held by Respondents for class mem- bers who could not be found would remain with the Respondents. Both sides appealed from the judgment — Respon- dents did not appeal from the determination that the extra rent charge was security that they were required to refund, but only from the summary judgment denying them their offset claims. On appeal Petitioners chal- lenged, inter alia, the order for class relief limiting the refund order only to those class members who could be found a decade after the litigation commenced. The deci- sion of the California Court of Appeal in Granberry v. Islay Investments, 23 Cal.Rptr.2d 420 (1993) (“Granberry II”) sus- tained the judgment leaving all security money in the 4 Had the jury determined the Respondents had taken the security in “bad faith,” Respondents would then have been subject to additional statutory damages of up to $200 per tenant. EE tens < inert ciipinoiony 9 hands of Respondents until and unless claimed by the absent tenants and reversed the trial court’s dismissal of the offset claims for failure to give the notice required by subsection (f). In a Petition for Rehearing, Petitioners contended that to permit Respondents to pursue equitable offsets for tort or contract claims when Respondents both had failed to comply with the requirements for timely notice pro- vided for in California Civil Code Section 1950.5, subdivi- sion (f), and had never given any absent class member notice of the specific claim being made against them, violated the Due Process Clause of the 14th Amendment to the U.S. Constitution. (App. 60-64) On October 8, 1993, the Court of Appeals modified its opinion to clarify that the equitable offsets remained subject to equitable defenses and otherwise denied the petition for rehearing and reaffirmed the judgment. (App. 38) Petitioners then sought and were granted review in the California Supreme Court on three issues, including: (1) That it was an abuse of discretion to permit Respondents to retain all the security money belonging to absent class members except for money belonging to tenants who could be found and who presented claims; and (3) That it was a violation of the Due Process Clause of the 14th Amendment to the U.S. Con- stitution to permit Respondents to assert equita- ble offset claims in light of Respondents’ total non-compliance with the provisions of subdivi- sion (f) and the absence of any due process notice to class members in the litigation afford- ing the absent class members a reasonable opportunity to defend against the deprivation of their refund right. (App. 65-67) 10 Petitioners’ constitutional objections were repeated in their opening brief in the California Supreme Court. (App. 68-75) The California Supreme Court issued its decision on March 6, 1995, (Granberry v. Islay Investments, 9 Cal.4th 738, 889 P.2d 970, 38 Cal.Rptr.2d 650 (1995) (“Granberry III”). The majority opinion reversed the Court of Appeals decision affirming the trial court’s class action remedy without reaching the abuse-of-discretion issue, and instructed the Superior Court to follow the provisions of California Code of Civil Procedure Section 384.° All the justices agreed that Respondents had failed to supply the notice to the tenants as required by subdivi- sion (f), (App. 5-6 and 22) but sharply differed as to the statutory consequences of that failure. The majority opin- ion concluded that although a landlord who fails to com- ply with the personal notice requirements of California Civil Code Section 1950.5(f) loses his right to retain all or part of the security deposit and must return the entire deposit to the tenant, the landlord has not lost “all right” to claim damages for occupancy claims against the secu- rity because, as they construed and applied the statute, > California Code of Civil Procedure Section 384 requires the trial court to determine the total amount that will be payable to all class members if all class members are paid the amount to which they are entitled pursuant to the judgment. The trial court is then to order a report from the parties setting forth the amounts paid out to the class members and the amounts remaining. The trial court is then to amend the judgment “to direct the defendant to pay the sum of the unpaid residue, plus interest ..., in any manner the court determines is consistent with the objectives and purposes of the underlying cause of action...” ahaa net ee alte a et ee ne rere Preheat Asner ths 11 “...a good-faith failure to comply with section 1950.5, subdivision (f), does not bar a landlord from recovering damages for unpaid rent, repairs and cleaning, and we agree with the Court of Appeal to the extent it so held.” (App. 2): and applied this rule of good faith to Respondents: “ ... [despite non-compliance] defendants may set off amounts allegedly due for unpaid rent, repairs, and cleaning against money due plain- tiffs as a refund of their security deposits (App. 6) The decision held that since Respondents had raised their claims through the equitable defense of offset, the trial court must also determine whether those claims are barred by any of the generally applicable equitable defenses. (App. 16) The majority decision disposed of Petitioner’s con- tention that this construction and application of Section 1950.5 deprived tenants of timely notice and reasonable opportunity to defend against the landlord’s occupancy claims by referring to the original notice of pendency of class action (App. 91-94) and concluded, In light of this notice, plaintiffs’ contentions regarding estoppel and lack of notice are unavailing. (App. 15) Under the majority decision, the Court of Appeals was ordered to remand the cause to the trial court to conduct further proceedings “ . . . consistent with this opinion.” (App. 21) In her dissent, Justice Kennard asserted that the leg- islature had designed compliance with subdivision (f) of 12 the statute as the necessary prerequisite for a landlord to have access to the security deposits for his occupancy claims. Justice Kennard saw the majority opinion as ignoring and overriding the carefully balanced remedies selected by the state legislature. (App. 27 and 31-32) In a Petition for Rehearing Petitioners urgently argued that the court was unconstitutionally construing and applying California Civil Code Section 1950.5(f) by violating the “elementary and fundamental requirements of due process” — timely notice and a reasonable oppor- tunity to defend —- in that the notice of pendency of class action given up to 9'/2 years after the termination of the tenancies could not be substituted for specific notice of the individual claim and its basis to each tenant person- ally within two weeks of the termination of the tenancy as required by the statute. (App. 76-85) In the request for rehearing, Petitioners also argued that the decision (1) so changed the requirements for timely notice and a reasonable opportunity to defend provided by subdivision (f) that it violated the “elemen- tary and fundamental requirements of due process”, and (2) constituted an unacceptable judicial invasion of the legislative power repugnant to the Separation of Powers doctrine as contained in Art. III, Sec.3 of the California Constitution, and protected federally by the Guaranty Clause of Art. IV, sec.4. (App. 86-90) The petition for rehearing was denied on April 20, 1995; Justice Kennard voted in favor of granting a rehear- ing. a ARF a al EE aE eae NE id ek heh Noe AS 13 REASONS FOR GRANTING THE WRIT I. THE WRIT SHOULD BE GRANTED TO PREVENT THE CALIFORNIA COURTS FROM ADJUDICAT- ING RESPONDENTS’ OFFSET CLAIMS WITHOUT FIRST PROVIDING EACH AFFECTED CLASS MEMBER NOTICE REASONABLY CALCULATED TO APPRISE THE CLASS MEMBER OF THE SPEC- IFIC CLAIM BEING MADE, AND TO DETERMINE WHETHER AFTER A DELAY OF 14 YEARS FROM THE START OF LITIGATION, ANY FORM OF NOTICE CAN SATISFY THE REQUIREMENT OF MULLANE V. CENTRAL HANOVER BANK & TRUST CO. AND ITS PROGENY THAT THE CLASS MEM- BER BE GIVEN A MEANINGFUL OPPORTUNITY TO PRESENT OBJECTIONS. A. Unless The Writ Is Granted The Trial Court Will Proceed to Adjudicate Offset Claims And Defenses To Them Without First Affording Due Process Notice To Absent Class Members, Most Of Whom Do Not Even Know Their Rights Are Being Adjudicated. The trial court has previously determined that Respondents owe each of the 10,000 members of Peti- tioners’ class a refund of security in an amount ranging from $100 to $250 plus interest. This decision was never appealed by Respondents and is now final. Respondents seek to defeat this recovery by asserting that 6,200 or more of the members of the class owe Respondents money because each of these individual former tenants didn’t make the last rent payment, did not clean the apartment to Respondents’ satisfaction before the tenant vacated, or caused damage to the unit which Respon- dents seek to prove was not the result of normal wear and tear. 14 These 6,200 claims arise out of tenancies which were vacated anywhere from April of 1978 through 1987, i.e., from 8 to 17 years ago. Respondents admitted they never informed any individual tenant of the existence of any specific claim during or following the tenancy and the California Courts found Respondents failed to provide the statutory notice required under Civil Code Section 1950.5(f). (App. 5-6) Nor have Respondents during the course of the litigation ever given any notice to any specific class member of the claim Respondents are now asserting against that class member. The California Supreme Court has ordered the trial court to proceed to adjudicate the claims, has found that all due process requirements were satisfied by the notice of pendency of class action, and has implicitly (“conduct further proceedings consistent with this opinion” App. 21) told the trial court not to consider any due process implications in the failure to provide notice of any speci- fic claim to any class member during the fourteen years of litigation.® 6 Petitioners have explicitly contended below that the trial court could not adjudicate the offsets without first meeting federal due process notice requirements as set forth in Mullane v. Central Hanover Bank & Trust Co. and its progeny. The California Supreme Court opinion never uses the term “due process” with respect to the notice issue, but the opinion does state that in view of certain language in the notice of pendency of class action” . . . plaintiffs’ contentions regarding estoppei and lack of notice are unavailing.” (App. 15) In the discussion preceding this statement the Court in its opinion discussed “notice” not as a separate contention of plain- tiffs, but as a part of the detriment suffered by the change of position in the estoppel contention. Piss tien ‘ 15 Thus the trial court will now adjudicate the offset claims and the equitable defenses to them and must do so whether or not the absent class member comes forward to make a claim.” For each of the 6,200 claims where the trial Since this discussion is the only discussion in the decision that deals with the lack of “notice” issue, the California court held either (1) That the statement in the notice of class action against the landlord could substitute for the landlord’s non-compliance with the notice requirements of subdivision (f) and satisfied the notice requirement of federal due process; or the California court (2) Denied Petitioners’ due process “notice” contentions without any discussion or justification of them in the opinion, so that the mixing of the “notice” issue with the state estoppel issue was either inadvertent or a disingenuous attempt to enclose a federal “notice” issue in a state equity issue to avoid review by this Court. Petitioners believe the first interpretation is a fairer reading of the decision, i.e., that the California Supreme Court has squarely rejected Petitioner’s federal due process objections on federal grounds. However, if there is any doubt about the intent of the California Supreme Court to deny the federal due process claims, then this Court should grant certiorari and remand the case back to the California Supreme Court with a request that it clarify the basis for its ruling. California v. Superior Court of California, 449 U.S. 945, (1980) ” Under the decision of the California Supreme Court, the Respondent must refund whatever security deposit is due to each class member. See Granberry III, App. 17-19; California Code of Civil Procedure Section 384. Under California Code of Civil Procedure Section 1519.5, court ordered refunds which are not claimed by the persons to whom they are due within one year must be paid to the California State Controller, who has the permanent responsibility to locate the claimant as well as the obligation to pay the funds to the claimant in perpetuity. Cali- fornia Code of Civil Procedure §§ 1501.5, 1540. Thus, even though some class members may learn of the offset claims when 16 court finds no affirmative defense availing and Respon- dents’ evidence sufficient, the refund due to each affected class member will be reduced if not entirely eliminated. Based on the decision of the California Supreme Court, the determination of all offset claims can take place without any attempt at notice other than what was given in the notice of pendency of class action. However, even if the trial court were to order additional notice, the vast majority of absent class members can no longer be given actual notice through the mail, and hence could now receive only constructive notice by publication. The offset claims against these class members will be tried in absentia.8 Those who do happen to receive actual notice and come forward will be forced to defend a claim which they first learned about 8 to 17 years after it allegedly arose. B. The California Supreme Court Decision Is in Conflict with the Principles Announced by this Court in Mullane v. Central Hanover Bank & Trust Co. and Its Progeny. In a line of cases beginning with Mullane v. Central Hanover Bank & Trust Co. 339 U.S. 306 (1950) and extend- ing through Tulsa Collection Services v. Pope, 485 U.S. 478 they come forward to claim their money, the California Supreme Court has instructed the trial court to adjudicate in absentia offset claims for those class members who do not learn of their right to recover their security deposit within any claim period and who never appear before the Court. 8 As previously noted, the mailing of pendency of class action in 1987 reached only about a third of the class members. Eight years later the number will certainly be less. 17 (1988) this Court has required that actual notice be pro- vided to persons before they may be deprived of their property through state auspices. Thus, in Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 795 (1983) the Court stated: ‘ - + + prior to an action which will affect an interest in life, liberty, or Property protected by the Due Process Clause of the Fourteenth Amendment, a State must provide ‘notice rea- sonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’ ” In Tulsa Collection Services v. Pope, supra, 485 U.S. at 488, the Court stated plainly that even an inchoate cause of action constituted a “property interest” which had to be afforded the due process protections under Mullane, and that when the process of a state court is invoked to deprive a person of such a cause of action, state action is involved. There is no doubt that the absent class members represented by Petitioners in the California proceedings have a property interest in the security deposits held by Respondents. Moreover, the California Supreme Court has affirmed that Respondents have no right to retain those deposits any longer, except that they are subject to having the state trial court adjudicate Respondents’ alleged occupancy claims. Thus the only way the class members may be deprived of their property interest in the refund of the unlawfully held security deposits is if the state court proceeds to hear Respondents’ evidence on these inchoate claims and makes determinations that Respondents are entitled to retain the money due each individual class member. 18 This Court has also held that absent class members are entitled to notice of the pendency of the class litiga- tion which seeks to determine their respective legal rights, and that such notice must be given in a manner consistent with the principles set forth in Mullane. In Eisen v. Carlisle & Jacqueline, 417 U.S. 156 (1974) this Court held that Rule 23 of the Federal Rules of Civil Procedure required that the district courts were to give notice to absent class members of the pendency of the class action using the best notice practicable under the circum- stances, including individual notice to all members who can be identified through reasonable effort. We think the import of this language is unmistak- able. Individual notice must be sent to all class members whose names and addresses may be ascertained through reasonable effort. Eisen, supra, 417 U.S. at 173 (emphasis in original). The Court noted that the Advisory Committee had described subdivision (c)(2) as not merely discretionary, but mandatory, since it was designed to fulfill the requirements of due process set forth in Mullane to which the class action procedure is subject. Eisen, supra, 417 U.S. at 173-174. In the California litigation, the class members have received notice consistent with Mullane regarding the pendency of the claim to recover their security deposits, but they have never received notice consistent with Mul- lane regarding the Respondents’ intention to prove claims seeking to deprive the class members of those same deposits now that their right to the deposit has been finally established. This Court should grant the writ to determine whether federal due process considerations require state 19 courts to follow the dictates of Mullane and its progeny, including Eisen, when the state court seeks to adjudicate individual claims raised by the defendant in the plaintiff class action to defeat recovery by absent class members who are neither parties to the litigation nor have received actual notice of the defendant's claims. Petitioners submit that the notice of class action which the California Supreme Court held made Peti- tioners’ due process objections “unavailing” fails to sat- isfy each of the notice requirements of Mullane: 1. The class notice is not timely since it was neither published nor mailed until up to 91/2 years after the termination of the tenancies. When considered in the light of the dollar amount at issue, and the dilution of human memory by time and the dissipation of evidence, the untimeliness of the notice presumptively denies the class member a reasonable opportunity to defend. 2. The class notice does not inform any particular tenant of any particular claim, its basis or amount and thus fails “reasonably to convey the required informa- tion” within the terms of Mullane decision. 3. The class notice does not provide a reasonable opportunity to make an appearance since it provides no notice of when the class members should appear to pre- sent their objections to the offset claims. Although Justice Stevens, joined by Chief Justice Berger and Justice Rehn- quist, dissented in Memphis Light, Gas & Water Div. v. Craft, 436 U.S.1, 25-26 (1978) the dissent, nevertheless, noted an instance when satisfying the two basic require- ments of Mullane would be insufficient: 20 For example, if the notice describes a threatened loss which can only follow a prescheduled hear- ing, it must also inform the recipient of the time and place of the hearing. 4. The class notice violates due process for all class members who received constructive notice only through publication. For all those tenants who never received a mailing of the notice of class action against Respondents, the publication manifestly fails to meet the requirements of Mullane, particularly when, as in Mullane, “the notice does not even name those whose attention it is supposed to attract...” (Mullane, supra, 339 U.S. at 315) 5. The notice is not a reasonable choice since it is not likely under all the circumstances to inform any given tenant of any particular claim. (See Greene v. Lindsey, 456 U.S. 444 (1982): posting of notice on the tenant’s apart- ment door in a forcible entry and detainer action found wanting in Due Process.) The petition should also be granted to resolve whether a state court may carry out the adjudication of claims based on notice by publication when the party asserting those claims has delayed taking reasonable steps available to it to give the persons adversely affected by the claims actual notice of the claims until such time as those persons can no longer be located with reasonable effort. This Court has stated that The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. Mullane v. Central Hanover Bank & Trust Co., supra, 339 U.S. at 315. Petitioners submit that the conduct of Respondents in failing to give the statutory notice required by subdivision (f) of Civil Code Section 1950.5 21 and their 14 year (to date) delay in giving any individu- alized notice to the class members in the litigation dem- onstrates that they have not employed means such as one actually desirous of actually informing the class members would reasonably have adopted. Their delay has resulted in making the giving of actual notice no longer possible through “reasonable effort.” (Eisen, supra, 417 U.S. at 173) This Court should grant the writ to set forth the due process limitations on state and federal courts in permit- ting the adjudication of counterclaims against absent class members in circumstances where there is little or no likelihood that the absent class members will receive actual notice of the counterclaim and/or have a timely and reasonable opportunity to defend against it. C. Although Further Proceedings Will Take Place In The State Trial Court, This Case Meets the Finality Requirements for Grant of Certiorari Under The Standards Set Forth in Cox Broad- casting Corp. v. Cohn, 420 U.S. 469 (1975) Even though further proceedings are to be carried out in the California courts, under the criteria set forth in Cox Broadcasting Corp. v. Cohn, 420 U.S.469 (1975), there is nevertheless justification for immediate review of the federal question presented by the California Supreme Court’s decision. While it is possible that the trial court, when it pro- ceeds to adjudicate the offset claims, may determine that some or all of the offset claims are unmeritorious or subject to equitable defenses which preclude granting Respondents relief, absent class members will neverthe- less be having their property rights adjudicated in a proceeding without having been afforded due process 22 notice as required by the decisions of this Court interpret- ing the Fourteenth Amendment to the United States Con- stitution. Review of the federal due process notice issue by this Court is appropriate now under at least two of the four categories set forth in Cox. Under the third Cox category are cases “where the federal claim has been finally decided, with further proceedings in the state courts to come, but in which later review of the federal issue cannot be had, whatever the outcome of the case.” Cox Broadcasting Corp. v. Cohn, supra, 420 U.S. at 481. Were all of Respondents’ claims to be decided against Respondent on state law grounds, the issues raised by this Petition would be mooted since Respondents would have no standing to appeal the failure to provide notice to the prevailing absent class members. On the other hand, were Respondents to prevail on offset claims against various absent class members who never receive notice of the determination, Petitioners may be held by the state courts to be bound by the existing state supreme court decision and prevented from further litigating the issue. Unless this Court reviews the due process question now, the issue may be precluded from further review by this Court. The due process notice issue is also presently review- able under the fourth category described in Cox, i.e., where the petitioner could yet prevail in the state court on non-federal grounds but “where reversal of the state court on the federal issue would be preclusive of any further litigation on the relevant cause of action” and “a refusal immediately to review the state court decision might seriously erode federal policy . . . ” Cox Broadcast- ing Corp. v. Cohn, supra, 420 U.S. at 482-483. ae Ss Py ee 23 Reversal of the California Supreme Court's rejection of any due process objection to adjudicating Respon- dents’ occupancy claims without notice to absent class members will be preclusive of Respondents’ equitable offset causes of action because it is no longer possible to give due process notice to any, or at the least, the vast majority of class members at this late date. In addition to the obvious stare decisis effect of the unreviewed California Supreme Court decision, permit- ting the state trial court to proceed to adjudicate the substantive merits of some 6,200 claims against absent class members’ property without affording the affected parties due process notice will itself constitute a serious erosion of the principles set forth in Mullane and Eisen. The class members (or their statutory successor in inter- est — the State Controller) will either be deprived of their property permanently through unconstitutional proceed- ings, or will have return of their property subject to further significant delay while the trial court conducts constitutionally meaningless hearings. 24 II. CALIFORNIA CIVIL CODE SECTION 1950.5 IS UNCONSTITUTIONAL AS CONSTRUED AND APPLIED BY THE CALIFORNIA SUPREME COURT: THE HOLDING THAT A GENERALIZED STATEMENT OF THE DEFENDANT’S INTEN- TION TO PURSUE OFFSET CLAIMS AGAINST CLASS MEMBERS IN THE NOTICE OF PEN- DENCY OF CLASS ACTION SATISFIES THE STATUTORY REQUIREMENT FOR PROVIDING INDIVIDUAL CLASS MEMBERS WITH TIMELY NOTICE AND A REASONABLE OPPORTUNITY TO DEFEND OFFENDS THE DUE PROCESS CLAUSE OF THE 14TH AMENDMENT, AND SO INVADES THE LEGISLATIVE POWER AS TO VIOLATE THE SEPARATION OF POWERS DOC- TRINE, INCORPORATED IN ART. III, SEC. 3 OF THE CALIFORNIA CONSTITUTION, AND PRO- TECTED BY THE GUARANTEE CLAUSE OF ART. IV, SEC.4 AS WELL AS THE DUE PROCESS CLAUSE OF THE 14TH AMENDMENT. The California Supreme Court holding that the notice of pendency of class action was a sufficient substitute or alternative to the personal notice to the individual tenant required by California Civil Code Section 1950.5(f) con- strues and applies subsection (f) so as to deprive the citizens of California of protections which comport with the notice requirements of Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950), and replaces those subsection (f) notice protections with a notice which fun- damentally fails to provide meaningful notice as defined in Mullane. Petitioners submit that even if the Due Process Clause in the 14th Amendment to the United States Con- stitution would not, on its own, require the California courts to provide notice consistent with Mullane in the ——————————————————— 25 absence of a state statute which offered such protections, for the California Supreme Court to Strip the class mem- bers of due process protections comporting with Mullane which were afforded them by their state legislature con- stitutes an independent violation of federal due process and the Guarantee Clause protection of the separation of powers required for a republican form of state govern- ment. Petitioners submit that the California Supreme Court has construed all legislatively enacted due process requirements out of California Civil Code Section 1950.5 in order to accommodate a large landlord’s tardy asser- tion of occupancy claims and refusal to comply with the strict notice provision created by the legislature:9 1. The California court has eliminated the state leg- islative requirement for timely notice, since the statute Provides that notice of any claim was to be furnished to the individual tenant within two weeks of the termina- tion of the tenancy, but the California court has construed the statute so that the first notice of the claim may be given 91/2 years after the termination of a tenancy. ? Both the California Supreme Court and Respondents in their briefing to the California Court had emphasized that the jury found Respondents’ conduct was not in “bad faith” within the meaning of the California Civil Code provision. However, in interpreting the application of federal due process requirements to the states, this Court has never made the protections due to persons about to be deprived of property through state action contingent upon whether the party whose claim the state was seeking to enforce was making that claim in good or bad faith. Constitutional due process protections apply independently of the state of mind of the party who stands to benefit from their elimination. 26 2. The California court has eliminated the state leg- islative requirement that the notice inform the tenant of the specific nature of the claim. The statute required the landlord to “furnish” the tenant with a copy of an itemized statement showing the amount and basis of any claims, but the California court has construed the statute to permit the landlord to litigate the claim without telling any individual class member what claim is being made against him. 3. The California court has eliminated the state leg- islative requirement that the notice provide a reasonable opportunity to appear and object. The statutory require- ment for notice within two weeks, while the tenant may still be in the apartment or have an operative forwarding address, provides a reasonable opportunity for the tenant to object directly to the landlord or contend against the claims by seeking relief in the small claims court, but the California court has construed the statute to permit the landlord to first give notice years after the tenancy has ended, when it is unreasonable to make most tenants defend a claim for a few hundred dollars. 4. The California court has eliminated the state leg- islative requirement that the tenant receive actual notice of the claim. Subdivision (f) requires the landlord to “furnish” the notice to the tenant “by first class mail or personal delivery” at a point in time when giving actual notice will be practicable for virtually every tenant. The California court has construed the statute to hold that the landlord may wait years until the giving of actual notice through reasonable effort will no longer be practicable for most persons affected. 5. The California court has eliminated the state leg- islative requirement for a notice which was a reasonable res es 27 choice to actually inform the affected persons of the claims and has construed the statute to permit a notice which is not reasonably calculated to actually inform the class members. The challenged construction and application of Cali- fornia Civil Code Section 1950.5 by the California Supreme Court is state action for the purpose of the review sought here. Tulsa Professional Collection Services Inc. v. Pope, 485 U.S. 478, 487 (1988). If anything, it is the challenged construction given the statute by the State Supreme Court that takes it out of the set of self-execut- ing statutes. The three great departments of power in government, set out in separate articles in the Constitution of the United States and the Constitution of the State of Califor- nia, have different functions. According to Chief Justice Marshall, “[t]he difference between the departments is that the legislature makes, the executive executes and the judiciary construes the law.” Wayman v. Southward, 10 Wheat. (25 U.S.) 1, 46 (1825). In Myers v. United States, 272 US. 52 (1926), this Court noted that from our beginnings keeping the opera- tion and function of these departments separate from each other - the Separation of Powers principle —- is possibly the single most important principle or doctrine in our constitutional jurisprudence, and quoted Mad- ison’s comments from The Annals of Congress, to the following effect: If there is a principle in our constitution, indeed in any free constitution more sacred than another, it is that which separates the legislative, executive and judicial powers. Myers v. United States, supra, 272 U.S. at 116. 28 For over two centuries this Court has tended the beacon of this cardinal principle of our form of republi- can government; to the extent of stating, in 1992, that an “invasion” of the territory of one department by another could not be cured of constitutional impropriety by the consent of the department invaded, (New York v. United States, 505 U.S.144, 120 L.Ed.2d 120, 112 S.Ct. 2404 at 2431 (1992)). (And see Plaut v. Spendthrift Farms, __ U.S. __ 131 L.Ed.2d 328, 115 S.Ct. 1447 (1995) holding that Con- gress lacks the power to set aside a final judgment of a federal court.) Since 1879, the Separation of Powers principle has been an express protection of the republican form of government set forth in the California Constitution, now in Article III, Sec.3.: The powers of state government are legislative, executive and judicial. Persons charged with the exercise of one power may not exercise either of the other powers except as permitted by this Constitution. For the Supreme Court of California to hold that the notice of pendency of class action may substitute for the carefully delineated notice provision created by the state legislature is blatantly beyond the state court’s judicial function, as it, in effect, waives the detailed requirements of a statute and replaces it with one of the court’s own devise; one that holds the general may replace the partic- ular, the late the timely, and the amorphous the detailed, in informing tenants of the amount and basis of a land- lord’s occupancy claims against their property (security deposits). By this holding, the California Supreme Court is essentially enacting its own private view of what con- stitutes timely notice and a reasonable opportunity to 29 defend for landlords to replace that enacted by the Cali- fornia Legislature. This “invasion” of the legislative power by the Cali- fornia Supreme Court is offensive to the Separation of Powers principle in Art. III, Sec. 3 of the California Con- stitution as well as repugnant to Art. IV, sec. 4 of the United States Constitution. Minor v. Happersett, 88 U.S. 162 (1875); Baker v. Carr, 369 U.S. 186 (1962). If any principle of “republican” government is binding upon the states under the Guarantee Clause of the U.S. Constitu- tion, than certainly it must be that most sacred principle: the Separation of Powers doctrine. At least one state court has so held. Van Sickle v. Shanahan, 212 Kan. 426,511 P.2d 223 (1973). Although this Court in Plaut v. Spendthrift Farms, Inc. supra, restricted its decision to the narrower grounds of the Separation of Powers and chose not to rest the deci- sion on the broader grounds of a violation of Due Pro- cess, because of the possible application to state legislation under the 14th Amendment, (Plaut v. Spend- thrift Farms, __ US. ——. 131 L.Ed.2d 328, 115 S.Ct. 1447, at 1452) Petitioners’ submit that when the state has expressly placed its own version of the Separation of Powers principle into a constitution then the Due Process Clause of the Fourteenth Amendment picks up that prin- ciple and secures it to the citizens of that State, because it is then a part of law of that state secured by the Four- teenth Amendment to The United States Constitution. See: McCullough v. Virginia, 172 U.S.102 (1898); Martin v. Hunter’s Lessee, 1 Wheat. (14 U.S.) 304 (1816); Ancient Egyptian Arabic Order of Nobles etc. v. Michaux, 279 US. 737 (1929); Ward v. Board of County Comm'rs, 253 U.S. 17 30 (1930) and Creswill v. Grand Lodge of Knights of Pythias, 225 U.S. 246 (1912).1° CONCLUSION For the foregoing reasons the Petitioners respectfully request the Court grant the writ of certiorari to review the decision of the California Supreme Court in this liti- gation. Respectfully submitted, Davip H. SCHWARTZ Counsel of Record Law OFFICES OF Of Counsel: Davip H. SCHWARTZ Ernest L. Graves 240 Stockton Street cae haacyg ely seo San Francisco, CA 94108 anta barbara, (415) 362-2700 Counsel for Petitioners 10 This due process aspect of the separation issue was not asserted below. App. 1 Copr. (C) West 1995 No claim to orig. U.S. govt. works 38 Cal.Rptr.2d 650 (Cite as: 9 Cal.4th 738, 889 P2d 970, 38 Cal.Rptr.2d 650) Lisa GRANBERRY et al., Plaintiffs and Appellants, v. ISLAY INVESTMENTS et al., Defendants and Appellants. No. S035591. Supreme Court of California, In Bank. March 6, 1995. Rehearing Denied April 20, 1995. Hill, Schwartz & Stenson, David H. Schwartz, Mic- hael P. Guta and Ernest L. Graves, San Francisco, for plaintiffs and appellants. Daniel E. Lungren, Atty. Gen., Roderick E. Walston, Chief Asst. Atty. Gen., and Yeoryios C. Apallas, Deputy Atty. Gen., as amici curiae on behalf of plaintiffs and appellants. Diane M. Matsinger, Betty L. Jeppesen, Antonio R. Romasanta, Santa Barbara, Crahan, Javelera, Ver Halen & Aull and Marcus E. Crahan, Jr., Los Angeles, for defen- dants and appellants. MOSK, Justice. An important provision of our Statutory landlord- tenant law provides that within three weeks after the termination of tenancy a landlord must return the secu- rity deposit paid by a former tenant and provide a writ- ten accounting of any portion retained as compensation for unpaid rent, repairs, and cleaning. (Civ.Code, App. 2 § 1950.5, subd. (f).)! We granted review to determine whether a landlord who in good faith fails to comply with the requirements of this statute may nevertheless recover damages for unpaid rent, repairs, and cleaning in a subsequent judicial proceeding. We also consider whether the trial court abused its discretion by not requiring defendants to disgorge all security deposits received from the members of the plaintiff class and to pay this money into a fund. Finally, we consider whether the court abused its discretion by limiting the award of attorney fees and costs to 25 percent of the total class recovery. We conclude that a good faith failure to comply with section 1950.5, subdivision (f), does not bar a landlord from recovering damages for unpaid rent, repairs, and cleaning, and we agree with the Court of Appeal to the extent that it so held. We disagree with its view of the remaining issues, however, and hence reverse its judg- ment to permit the trial court to reconsider its choice of remedy and limitation on attorney fees. 1 At the time of the events in this case the statute allowed landlords only two weeks to act and the subdivision so provid- ing was designated subdivision (e). The amendment changing the statute into its present form took effect on January 1, 1994. (Stats.1993, ch. 755, § 1.) The amendment is not material to the issues presented by this case. All further statutory references are to the Civil Code unless otherwise specified. App. 3 FACTS Defendants own or operate between 1200 and 1500 residential rental units in the Santa Barbara area. During the period relevant to this case, April 27, 1978, to April 27, 1981, it was defendants’ practice to charge tenants an increased rental fee for the first 31 days of tenancy, but to charge a reduced fee for all subsequent months.2 Defen- dants never returned this fee in whole or in part; rather, they simply retained it as part of the rental payment for the first month. Approximately 10,000 tenants paid such fees during the relevant period, and the aggregate amount of such fees was approximately $1 million. Plaintiffs, a class of former tenants, sued for a refund of the amount by which the rent they had paid for the first 31 days of their tenancy exceeded the amount they paid in each of the following months. The court entered summary judgment in favor of defendants on the ground that the increased rent paid during the first month was in fact rent and not a security deposit within the meaning of section 1950.5, subdivision (b),3 and therefore plaintiffs * The first month’s rent exceeded the rent paid in subse- quent months by approximately $100. (Granberry v. Islay Invest- ments (1984) 161 Cal.App.3d 382, 385, fn. 4 [207 Cal.Rptr. 652].) + Section 1950.5, subdivision (b) provides: “As used in this section, ‘security’ means any payment, fee, deposit or charge, including, but not limited to, an advance payment of rent, used or to be used for any purpose, including, but not limited to, any of the following: “(1)_ The compensation of a landlord for a tenant’s default in the payment of rent. App. 4 were not entitled to a refund. In an earlier appeal the Court of Appeal reversed, holding that the character of the payment was a triable issue of fact. (Granberry v. Islay Investments, supra, 161 Cal.App.3d 382.) On remand, the court granted defendants leave to amend their answer to allege they were entitled to set off amounts owed to them for unpaid rent, repair, and cleaning if a jury were to find the increased rental payment was a refundable security deposit. Plaintiffs subsequently moved for summary judg- ment on the question whether defendants were entitled to a setoff in view of the fact that they had failed to comply with the requirements of section 1950.5, subdivision (f). The court granted the motion. A jury thereafter found that the excess rental payments were security deposits within the meaning of section 1950.5, subdivision (b), but that defendants had not retained them in bad faith. The court ruled that the excess fees must be refunded to the members of the class who made individual claims, but it did not require defendants to disgorge the aggregate ‘amount of the security deposits they wrongfully retained and to pay that money into a fund. The judgment also “(2) The repair of damages to the premises, exclusive of ordinary wear and tear, caused by the tenant or by a guest or licensee of the tenant. “(3) The cleaning of the premises upon termination of the tenancy. “(4) To remedy future defaults by the tenant in any obliga- tion under the rental agreement to restore, replace or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement.” App. 5 awarded costs and attorney fees to plaintiffs, but pro- vided that such items would be recovered from the agegre- gate amount paid by defendants and would not exceed 25 percent of the total amount claimed by the individual members of the class. In a second appeal the Court of Appeal held (1) the trial court erred in ruling that defendants were not enti- tled to a setoff, (2) the court did not abuse its discretion in granting refunds only to those class members who came forward to claim them, and (3) it was not an abuse of discretion to limit the award of attorney fees and costs to 25 percent of the total amount paid to the class. Although the Court of Appeal purported to reverse the judgment in its entirety, it in fact impliedly affirmed the judgment as to the second and third of these issues.4 I. During the three-year period relevant to this litiga- tion, plaintiffs vacated apartments rented from defen- dants but did not receive a written accounting of the basis for, or the amount of, the security deposits retained or the disposition of these security deposits. Nor did plaintiffs receive a refund of any portion of their security deposits. Accordingly, both the trial court and the Court of Appeal correctly concluded that defendants failed to * The Court of Appeal also held that the trial court erred in failing to award prejudgment interest to plaintiffs and that the jury instruction defining the words “bad faith” was not erro- neous. Because these holdings were not addressed in the peti- tion for review, we need not discuss them further. (Cal.Rules of Court, rule 29.3(c).) App. 6 comply with section 1950.5, subdivision (f). The issue now before us is whether, notwithstanding their good faith lack of compliance, defendants may set off amounts allegedly due for unpaid rent, repairs, and cleaning against money due plaintiffs as a refund of their security deposits. We conclude that defendants may do so. The English chancery courts allowed setoff to be raised as a defense as early as the 17th century. (Pruden- tial Reinsurance Co. v. Superior Court (1992) 3 Cal.4th 1118, 1124 [14 Cal.Rptr.2d 749, 842 P.2d 48]; 3 Story, Commen- taries on Equity Jurisprudence (14th ed. 1918) § 1867, pp. 468-469; see also Tigar, Automatic Extinction of Cross- Demands: Compensation from Rome to California (1965) 53 Cal.L.Rev. 224 [tracing the history of setoff to the Roman law concept of compensation].) It was founded on the equitable principle that “either party to a transaction involving mutual debts and credits can strike a balance, holding himself owing or entitled only to the net differ- ence, ... ” (Kruger v. Wells Fargo Bank (1974) 11 Cal.3d 352, 362 [113 Cal.Rptr. 449, 521 P.2d 441, 65 A.L.R.3d 1266].) Setoff, as it applies to this case, is now codified as section 431.70 of the Code of Civil Procedure, which provides in pertinent part: “Where cross-demands for money have existed between persons at any point in time when neither demand was barred by the statute of limita- tions, and an action is thereafter commenced by one such person, the other person may assert in the answer the defense of payment in that the two demands are compen- sated for so far as they equal each other, . . . ” The quoted statute, however, does not create a substantive right to raise setoff as a defense to a claim for monetary relief, but merely describes the procedures to be followed in raising App. 7 this defense. (Kruger v. Wells Fargo Bank, supra, 11 Cal.3d 352, 362 [113 Cal.Rptr. 449, 521 P.2d 441, 65 A.L.R.3d 1266] Hauger v. Gates (1954) 42 Cal.2d 752, 755 [269 P.2d 609].) To deter- mine whether setoff is available in this case, we must turn to section 1950.5. We first consider whether to allow a landlord to raise setoff even though he has failed to comply with the requirements of section 1950.5, subdivision (f), is consis- tent with the legislative intent underlying that statute. (See Prudential Reinsurance Co. v. Superior Court, supra, 3 Cal.4th 1118, 1125.) “In determining intent, we look first to the words themselves. [Citations.] When the language is clear and unambiguous, there is no need for construc- tion. [Citations.] When the language is susceptible of more than one reasonable interpretation, however, we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part. [Citations.]” (People v. Wood- head (1987) 43 Cal.3d 1002, 1007-1008 [239 Cal.Rptr. 656, 741 P.2d 154].) Section 1950.5, subdivision (e), allows a landlord to claim any portion of the security deposit reasonably nec- essary to compensate for unpaid rent, repairs, and clean- ing. Section 1950.5, subdivision (f), provides in pertinent part: “Within three weeks after the tenant has vacated the premises, the landlord shall furnish the tenant... a copy of an itemized statement indicating the basis for, and the amount of, any security received and the disposition of the security and shall return any remaining portion of the security to the tenant.” From the plain language of the App. 8 statute we conclude that a landlord (1) must return a tenant’s security deposit within the specified period after the termination of the tenancy, (2) may retain all or part of the security deposit as compensation for unpaid rent, repairs, and cleaning, and (3) must provide a written accounting of any amounts retained within the specified period. If, within the specified period, the landlord has not provided the tenant with a written accounting of the portion of the security deposit he plans to retain, the right to retain all or part of the security deposit under section 1950.5, subdivision (f), has not been perfected, and he must return the entire deposit to the tenant. Nevertheless, the mere fact that the landlord has lost the right to take advantage of the summary deduct-and- retain procedure of section 1950.5, subdivision (f), does not lead to the conclusion that he has lost all right to claim damages for unpaid rent, repair, and cleaning, whether through setoff or otherwise. The language of section 1950.5, subdivision (f), offers no clear guidance on this issue. Accordingly, we must look to the legislative history of section 1950.5 to determine the intent of the Legislature on this point. (People v. Woodhead, supra, 43 Cal.3d 1002, 1008 [239 Cal.Rptr. 656, 741 P.2d 154].) In 1970, the Legislature enacted section 1951, the predecessor of section 1950.5. Former section 1951, subdi- vision (c), provided: “The landlord may claim of such payment or deposit only such amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, or to clean such premises upon [the] termination of the tenancy, if the payment or deposit is made for any or all of those specific purposes. Any remaining portion App. 9 of such payment or deposit shall be returned to the tenant no later than two weeks after termination of his tenancy.” (Stats. 1970, ch. 1317, p. 2453.) Ostensibly, the Legislature enacted section 1951, subdivision (c), to pre- vent the misuse of security deposits, which one contem- porary commentator described as follows: “Theoretically, the security deposits are created to insure against the contingencies of unpaid rents, tenant-inflicted damages, and unclean premises at the termination of the lease. Any claim as to the retention of these funds by the landlord arises only at such time as there has been a breach of the tenant's obligation and an assessment of damage. How- ever, the security deposit in actuality has evolved into a bonus to be kept by the landlord upon termination of the lease agreement regardless of the damages actually sus- tained by the landlord. Landlords will retain security deposits after the departure of a tenant secure in the knowledge that a former tenant is severely inhibited from initiating legal action. This restraint is a product of a combination of factors including problems of proof, the relatively small sum of money at issue, the time factor, and the distance now separating the tenant from his former landlord. Where the reimbursement is forthcom- ing, usually the payments are delayed, the application of the retained amounts unitemized, and the interim reten- tion and use of the funds having been without cost to the landlord.” (Jory, The Residential Lease: Some Innovations for Improving the Landlord-Tenant Relationship (1971) 3 U.C.Davis L.Rev. 31, 38-39, fns. omitted; see also Boss- hardt, The Rental Security Deposit in California (1971) 22 Hastings L.J. 1373.) In 1972, the Legislature renumbered section 1951 as section 1950.5, but did not change the App. 10 wording of subdivision (c). Finally, in 1977, the Legisla- ture enacted the version of section 1950.5 in effect during the events of this case (now section 1950.5, subdivision (f)). From the foregoing history it is apparent that section 1950.5, subdivision (f), was enacted to ensure the speedy return of security deposits on the termination of tenancy and to prevent the improper retention of such deposits. However, like the Court of Appeal, we find no conclusive evidence in the legislative history of section 1950.5 regarding the specific issue we now address — namely, whether a landlord may recover damages for unpaid rent, repair, and cleaning even if he has failed in good faith to avail himself of the summary deduct-and-retain pro- cedure permitted under section 1950.5, subdivision (f). Defendants note that the original draft of a bill pro- posed in 1985 would have added language to section 1950.5 specifically denying offsets for landlords that fail to comply with section 1950.5, subdivision (f), but this language was deleted from the bill prior to enactment. They contend that this proves that the Legislature, at least in 1985, intended to allow offsets. In response, plain- tiffs note that defendants urged the passage of two bills, one in 1990 and another in 1991, but that these bills also failed. Again like the Court of Appeal, we find these arguments unpersuasive. As we have often observed, “Unpassed bills, as evidences of legislative intent, have little value.” (Dyna-Med, Inc. v. Fair Employment & Hous- ing Com. (1987) 43 Cal.3d 1379, 1396 [241 Cal.Rptr. 67, 743 P.2d 1323]; accord, Grupe Development Co. v. Superior Court (1993) 4 Cal.4th 911, 922-923 [16 Cal.Rptr.2d 226, 844 P.2d 545].) App. 11 Defendants also remind us that we should construe section 1950.5, subdivision (f), in a way that will give effect to section 1950.5 as a whole, leaving no part useless or deprived of meaning. (Gay Law Students Assn. v. Pacific Tel. & Tel. Co. (1979) 24 Cal.3d 458, 478 [156 Cal.Rptr. 14, 595 P.2d 592].) They draw our attention to section 1950.5, subdivision (k), which Provides in pertinent part: “The bad faith claim or retention by a landlord ... Of the security or any portion thereof, in violation of this section . . . , may subject the landlord . . . to statutory damages of up to six hundred dollars ($600), in addition to actual damages. . . . In any action under this section, the landlord . . . shall have the burden of proof as to the reasonableness of the amounts claimed... . "5 According to defendants, this Provision is “critical” for two reasons. First, they argue that if the Legislature had intended to bar all claims for damages for unpaid rent, repair, and cleaning other than those made in accordance with sec- tion 1950.5, subdivision (f), it would not have been neces- Sary to allocate the burden of Proof regarding reasonableness, because the matter would never be liti- gated. According to defendants, this Provision could only have meaning in cases in which the landlord has failed to comply with section 1950.5, subdivision (f), the tenant has sued for a refund, and the landlord seeks setoff. The argument misses the mark: the second sentence of section 1950.5, subdivision (k), would also apply in cases in which the tenant contests the accounting required under 5 Prior to the 1993 amendments (see fn. 1, ante) this subdivi- sion was designated subdivision (h), and the penalty for bad faith was $200 rather than $600. App. 12 section 1950.5, subdivision (f), and sues for a refund of all or part of the amount deducted and retained under that provision. Second, defendants contend that because the Legisla- ture provided a remedy only for bad faith retention of a security deposit, we can infer it did not intend to impose a penalty for good faith retention. They conclude that landlords like themselves that have retained security deposits in good faith should not be penalized by being barred from raising setoff. This argument is persuasive. “{I]t is well settled that ‘ “Courts will not impose penal- ties for noncompliance with statutory provisions in addi- tion to those that are provided expressly or by necessary implication.’ ” [Citations.]” (People ex rel. Van de Kamp v. American Art Enterprises, Inc. (1983) 33 Cal.3d 328, 334 [188 Cal.Rptr. 740, 656 P.2d 1170].) Because the Legisla- ture has not expressly stated that landlords that fail to comply with section 1950.5, subdivision (f), in good faith are barred from recovering for unpaid rent, repairs, and cleaning, we find that no such penalty was intended and we will not imply such a penalty. Plaintiffs vigorously contend this result is inconsis- tent with principles of equity and with public policy. (See Prudential Reinsurance Co. v. Superior Court, supra, 3 Cal.4th 1118, 1139, 14 Cal.Rptr.2d 749, 842 P.2d 48 [con- sidering principles of equity and public policy in deter- mining whether setoff was available].) They first urge that to allow landlords to raise setoff as a defense would be inconsistent with the equitable principle that an indi- vidual should not profit from his own wrong, because landlords may use this defense to keep all or part of the security deposits they retained in violation of section App. 13 1950.5, subdivision (f). While we recognize the impor- tance of this equitable Principle (see § 3517), and while we do not doubt that this principle may bar setoff on the Particular facts of many individual cases, it does not jus- tify an absolute bar to the right to a setoff in all cases. When enacting, interpreting, or applying a rule of law that regulates the interaction between individual citi- zens, the lawmaking body should consider carefully before creating absolute and invariable rules. Normally, such laws should be as flexible as the regulated interac- tions are varied, and they should leave the courts with some discretion to apply them justly given the facts of the case before them. (See Heriot, A Study in the Choice of Form: Statutes of Limitations and the Doctrine of Laches, 1992 B.Y.U.L.Rev. 917, 920 [“In promulgating any kind of law, one of the tasks a lawmaker must perform is to select the best formulation of that law — the one that delegates to the law administrator the level of discretion and author- ity that is just right.”].) Without some degree of flexibility, harsh and improper results may occur. (See id. at p. 937, fn. omitted [Comparing strict rules, like Statutes of limita- tions, to more flexible standards, like the doctrine of laches, and asserting that as lawmakers move toward more rigid rules, “there is an increasing potential for incorrect judgments -— judgments that would not reflect the lawmaker’s preferences had the lawmaker adjudi- cated the case personally on an all-things-considered basis. ... The rigidity of rules creates errors. [P]... [A] rulelike statute of limitations will always be both under- inclusive and overinclusive. . . . [and therefore] [i]t will never be a perfect reflection of its underlying policies.” ].) Such flexibility is particularly appropriate when applying App. 14 equitable doctrines, such as setoff. (See, e.g., Holmberg v. Armbrecht (1946) 327 U.S. 392, 396 [90 L.Ed. 743, 747, 66 S.Ct. 582, 162 A.L.R. 719] [“Equity eschews mechanical rules; it depends on flexibility.”].) In addition, a landlord that seeks setoff after good faith noncompliance with the procedures described in section 1950.5, subdivision (f), does not “profit from his own wrong,” because he cannot set off any damages he could not have recovered if he had complied with section 1950.5, subdivision (f). Indeed the landlord suffers a great deal if he delays, because he loses the opportunity to take advantage of the summary nonjudicial procedure allowed under that statute, and must instead prove in court by a preponderance of the evidence that he is entitled to dam- ages and that the amount claimed is reasonable. (§ 1950.5, subd. (k).) This burden of proof will become ever more difficult to sustain the longer the landlord delays, because the evidence supporting his claim may be lost with the passage of time. Second, plaintiffs contend that to allow defendants to raise setoff would violate the equitable principle that an individual may not change his position to the detriment of another. (See § 3512.) They note defendants originally claimed (1) the excess payments were rent, (2) they had never demanded or received security deposits from plain- tiffs, and (3) they, not plaintiffs, were to bear the cost of unpaid rent, repairs, and cleaning. Only after the excess payments were found to be security deposits did defen- dants claim they were entitled to a setoff. Plaintiffs argue this change of position worked to their detriment because they did not receive adequate notice of defendants’ claims. However, the original class notice contained the App. 15 following paragraph: “Defendants contend that any refund you might be entitled to recover must be reduced by the amount of any unpaid rent, costs reasonably nec- essary to clean and repair damage you caused to the apartment, in excess of ordinary wear and tear, and that such sum could exceed the amount of any refund or damages you might receive.” In light of this notice, plain- tiffs’ contentions regarding estoppel and lack of notice are unavailing. Finally, plaintiffs contend that to allow setoff would be inappropriate in class actions such as this because of numerous practical difficulties. They stress that (1) the class is comprised of approximately 10,000 individuals, many of whom may have moved to other parts of the state or country, (2) defendants have raised between 6,200 and 8,000 claims for setoff, which must be litigated indi- vidually, (3) because the security deposits in question are between $100 and $150, a relatively small amount of money, many class members may not appear to oppose defendants’ claims, and (4) if the class members do not appear, defendants will prevail by default on their claims for setoff, and may be unjustly enriched. Given these difficulties, plaintiffs ask us not only to bar defendants from raising setoff, but to reconsider our many earlier decisions holding setoff may be raised when the claims are not liquidated (see, e.g., Erlich v. Superior Court (1965) 63 Cal.2d 551, 555 [47 Cal.Rptr. 473, 407 P.2d 649]; Hauger v. Gates, supra, 42 Cal.2d 752, 755), at least in the context of class actions. We decline to do so for two reasons. First, it may well be possible on remand to shape a remedy that will avoid many of the problems plaintiffs have identi- fied. Second, it is inappropriate to deprive defendants of App. 16 their substantive rights merely because those rights are inconvenient in light of the litigation posture plaintiffs have chosen. (See City of San Jose v. Superior Court (1974) 12 Cal.3d 447, 462 [115 Cal.Rptr. 797, 525 P.2d 701, 76 A.L.R.3d 1223], fn. omitted [“Class actions are provided only as a means to enforce substantive law. Altering the substantive law to accommodate procedure would be to confuse the means with the ends - to sacrifice the goal for the going.” ].) For the reasons stated, we conclude that a landlord who has failed in good faith to take advantage of the summary nonjudicial deduct-and-retain procedure allowed under section 1950.5, subdivision (f), may recover damages for unpaid rent, repairs and cleaning (§ 1950.5, subd. (e)) in a subsequent judicial proceeding provided that he proves by a preponderance of the evi- dence that he has suffered such damages and that the amount claimed is reasonable (§ 1950.5, subd. (k)).© The trial court erred in ruling to the contrary, and that court must now hold an evidentiary hearing to determine whether defendants have sustained this burden. Because defendants have raised their claims through the equitable defense of setoff, the trial court must also determine whether defendants’ claims are barred by any of the generally applicable equitable affirmative defenses, including laches, unclean hands, and estoppel. 6 Because the jury did not find that defendants here acted in bad faith, we do not consider and therefore express no opin- ion regarding the rights of landlords who have acted in bad faith. App. 17 Il. Plaintiffs requested that judgment be entered on behalf of the entire class for the aggregate amount of the security deposits retained, and suggested that any amounts not ultimately claimed by individual class mem- bers should escheat to the state. The trial court rejected the request and entered judgment in favor of only those members of the class (excluding the named plaintiffs, whose claims were dealt with separately) who might actually come forward and file individual claims. In doing so, the court issued a memorandum of intended decision stating in pertinent part: “In certain consumer class actions Fluid Recovery may be the best method of compensating the class. The propriety of Fluid Recovery in a particular case depends upon its usefulness in fulfill- ing the purposes of the underlying cause of action. (See State v. Levi Strauss & Company [1986] 41 Cal.3d 460 [224 Cal.Rptr. 605, 715 P.2d 564].) We do not find that the Fluid Recovery method is necessary to fulfill the purposes of this case.”” Plaintiffs now contend that the trial court ? The term “fluid recovery” refers to the application of the equitable doctrine of cy pres in the context of a modern class action. (State of California v. Levi Strauss & Co. (1986) 41 Cal.3d 460, 472 [224 Cal.Rptr. 605, 715 P.2d 564].) “The implementation of fluid recovery involves three steps. [Citation.] First, the defendant’s total damage liability is paid over to a class fund. Second, individual class members are afforded an opportunity to collect their individual shares by proving their particular damages, usually according to a lowered standard of proof. Third, any residue remaining after individual claims have been paid is distributed by one of several practical procedures that have been developed by the courts.” (Id. at pp. 472-473.) App. 18 abused its discretion by denying the remedy they requested. “The class action is a product of the court of equity — codified in section 382 of the Code of Civil Procedure. It rests on considerations of necessity and convenience, adopted to prew +t a failure of justice.” (City of San Jose v. Superior Court, supra, 12 Cal.3d 447, 458.) In 1994 the Legislature amended Code of Civil Procedure section 384, providing guidelines for the courts to use in exercising their equitable discretion to shape class remedies. Subdi- vision (b) of this statute declares that unless the defen- dant is a public entity or public employee, “prior to the entry of judgment in a class action . . . the court shall determine the total amount that will be payable to all class members, if all class members are paid the amount to which they are entitled pursuant to the judgment. The court shall also set a date when the parties shall report to the court the total amount that was actually paid to the class members. After the report is received, the court shall amend the judgment to direct the defendant to pay the sum of the unpaid residue, plus interest on that sum at the legal rate of interest from the date of the entry of the initial judgment, in any manner the court determines is consistent- with the objectives and purposes of the underlying cause of action. ...” In subdivision (a) of Code of Civil Procedure section 384, the Legislature explains that its intent in enacting the foregoing statute was “to ensure that the unpaid residuals in class action litigation are distributed, to the extent possible, in a manner designed either to further the purposes of the underlying causes of action, or to promote justice for all Californians.” However, the Legislature makes it clear App. 19 that nothing in the statute “shall . . . be construed to abrogate any equitable cy pres remedy which may be available in any class action with regard to all or part of the residue.” (Id., subd. (d).) When the trial court chose the class remedy in this case, it had already held that defendants were not enti- tled to set off amounts owed for unpaid rent, repair, and cleaning. There can be little doubt that this prior ruling was among the more important factors that the trial court considered in deciding what remedy would be most equi- table given the circumstances as they then existed. How- ever, we now hold in part I of this opinion that the trial court's initial ruling was error, that defendants are not barred as a matter of law from seeking setoff, and that they are entitled to have the opportunity to prove their right to setoff at an evidentiary hearing. It follows that the equities in this case may well have changed, and the trial court must reconsider its choice of remedy in light of the result of the forthcoming evidentiary hearing on defendants’ claim of setoff. ITI. The judgment provided in part that “Plaintiffs shall recover legal costs in the amount of $___ [to be hereafter determined by the court]. Plaintiffs’ counsel shall recover reasonable attorneys’ fees in an amount to be hereafter determined by the Court. Such court costs and attorneys’ fees shall be paid out of and deducted from any aggre- gate amount of money paid by Islay under this judgment as the refund of rent for the first 31 days of a tenancy App. 20 (when compared with the rent for the second and subse- quent months of the tenancy). Pursuant to the notice given potential class members, such court costs together with such attorneys’ fees shall not exceed 25% of said aggregate amount.” Plaintiffs contend the 25 percent limitation on attor- ney fees was an abuse of discretion because the court failed to obtain and consider evidence regarding the number of hours class counsel devoted to the litigation, counsel’s normal hourly rates, counsel’s experience, or the quality of the legal services provided. This contention is premature because it is impossible to determine whether attorney fees in the amount of 25 percent of the “aggregate class recovery” are adequate, given that (1) the amount of defendants’ offsets, if any, have not yet been calculated, and it is therefore impossible to deter- mine what the total class recovery will be, if anything, and (2) this case is far from over, and it is therefore impossible to determine the total number of hours class counsel will devote to it prior to completion. We have held, and we remain convinced, that an “ ‘experienced trial judge is the best judge of the value of professional services rendered in his court... .’ ” (Serrano v. Priest (1977) 20 Cal.3d 25, 49 [141 Cal.Rptr. 315, 569 P.2d 1303].) Accordingly, the trial court must reconsider the question of attorney fees after the forthcoming evidenti- ary hearing on defendants’ claim of setoff. The judgment of the Court of Appeal is reversed insofar as it impliedly affirms (1) that portion of the judgment of the trial court which limits recovery to non- named class members who have not opted out and who App. 21 file claims, and (2) that portion of the judgment which limits the amount of the award of costs and attorney fees. The Court of Appeal shall remand the cause to the trial court with directions to conduct further proceedings con- sistent with this opinion. In all other respects the judg- ment of the Court of Appeal is affirmed. LUCAS, C_J., GEORGE, J., and WERDEGAR, J., con- curred. BAXTER, J. — I concur in the majority’s judgment and in its holding that a landlord’s good faith failure to com- ply with the requirement of Civil Code section 1950.5, subdivision (f) for an accounting and return of a former tenant’s security deposit does not bar the landlord from raising setoff as a defense in an action by a former tenant for the refund. (All further section references are to the Civil Code.) I respectfully disagree, though, with the majority’s premise that section 1950.5 is ambiguous on the question of whether setoff is allowed and that we therefore must construe the statute based on its legislative history. “ ‘If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature... . ’” (Delaney v. Superior Court (1990) 50 Cal.3d 785, 798 [268 Cal.Rptr. 753, 789 P.2d 934], quoting Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735 [248 Cal.Rptr. 115, 755 P.2d 299].) I believe section 1950.5 is not ambiguous and that we need not construe it. Section 1950.5, subdivision (k) provides the sole remedies for a landlord’s retention of a security deposit: “The bad faith claim or retention by a landlord or the landlord’s successors in interest of the security or any portion App. 22 thereof in violation of this section, or the bad faith demand of replacement security in violation of subdivi- sion (i), may subject the landlord or the landlord’s suc- cessors in interest to statutory damages of up to six hundred dollars ($600), in addition to actual damages. The court may award damages for bad faith whenever the facts warrant such an award, regardless of whether the injured party has specifically requested relief. In any action under this section, the landlord or the landlord’s successors in interest shall have the burden of proof as to the reasonableness of the amounts claimed or the author- ity pursuant to this section to demand additional security deposits.” Nothing in the statute states or even suggests that the landlord who has acted in good faith loses his right to assert a setoff. Because section 1950.5 provides the remedies for a landlord’s wrongful retention but does not even mention the loss of a landlord’s setoff, the statute necessarily does not deprive the landlord of the setoff. This is not ambiguous. ARABIAN, J., concurred. KENNARD, J., Dissenting. - The law requires that a landlord “shall” assert any claims against the security deposit of a tenant within a short period (formerly two, now three weeks) after the tenancy ends and “shall” within that period refund to the tenant any portion of the security that the landlord did not claim. (Civil Code, § 1950.5, former subd. (e), now subd. (f), italics added.) In breach of this statutory duty, the defendant landlord here illegally withheld more than $1 million in security depos- ited by over 10,000 residential tenants without asserting any claim against the security. Nonetheless, in the name of “equity” the majority holds that the landlord may now, App. 23 14 to 17 years after the tenancies have ended, assert claims against the tenants’ security for unpaid rent, clean- ing expenses, and repair costs that the statute required the landlord to assert within 2 weeks of the end of each tenancy. - In its haste to embark on its meanderings along the byways of equity jurisprudence, the majority fails to rec- ognize that the language and purpose of the statute pre- clude the result it reaches. The purpose of Civil Code section 1950.5’s carefully calibrated provisions is to com- pel landlords to refund security due tenants promptly without the necessity of legal action by the tenants. To ensure that this occurs, the Legislature imposed the requirement that landlords make their claims against the security within the statutory period. The inescapable cor- ollary of the landlord’s mandatory duty to assert any claims within the Statutory period is that after that period expires the landlord loses any further right to assert claims as setoff against the security. The majority, however, holds that landlords who vio- late section 1950.5’s requirement to set off and refund security within the statutory period may nonetheless later raise their claims as setoff against the security. I dissent because the majority’s holding ignores the statu- tory language, disrupts the Statutory scheme, and dis- serves the statute’s purpose. Section 1950.5 will now become a toothless remedy. Additionally, I would hold that the trial court abused its discretion in fashioning the class remedy. I agree with the majority, however, that the plaintiff class’s objections to the attorney fee order are premature. App. 24 I Plaintiffs Lisa Granberry et al. are a class of approx- imately 10,000 former tenants of defendants Islay Invest- ments and its managing partner Marvin Trevillian (hereafter collectively the landlord). The class members were tenants of the landlord between 1978 and 1981. The landlord charged the tenants on average approximately $100 more for the first month of the tenancy than for each succeeding month of the tenancy. Granberry filed this class action contending that the excess first month charge was a security payment within the meaning of Civil Code section 1950.5; the jury agreed. During the class period, class member tenants paid the landlord over $1 million in security in the form of excess first month charges, which the landlord never refunded or accounted for upon the termination of the tenancies. The landlord filed a cross-complaint against the class member tenants for amounts allegedly due for unpaid rent, cleaning, and repairs. The trial court dismissed the landlord’s cross-complaint because it was not properly served. The landlord also sought to assert these same claims as setoff to the security the landlord had received from the class member tenants. The trial court ruled that because the landlord had not complied with Civil Code section 1950.5, former subdivision (e)’s requirement of accounting for and refunding security within two weeks of the end of the tenancy, the landlord was not entitled to set off any claims against the security. After trial, the court entered judgment. The judgment limited the landlord’s liability to the amount of security PT Rr ayes mpeg App. 25 owed to those class members who might thereafter sub- mit a claim, rather than imposing liability for the full amount of the security withheld from the class as a whole. Reversing the trial court, the Court of Appeal held that the landlord was entitled to set off any claims against the security owed to the class member tenants. It also held that the trial court had not abused its discretion in fashioning a class remedy limiting the landlord’s liability to only the security due to those class members who might thereafter submit a claim. II At the times relevant to this action, Civil Code sec- tion 1950.5, former subdivision (e) provided: “The land- lord may claim of the security only such amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, exclusive of ordinary wear and tear, or to clean such premises, if necessary, upon termination of the tenancy. No later than two weeks after the tenant has vacated the premises, the landlord shall furnish the tenant with an itemized written statement of the basis for, and the amount of, any security received and the disposi- tion of such security and shall return any remaining portion of such security to the tenant.” (Civ.Code, § 1950.5, former subd. (e), italics added.)! This version of section 1950.5 subsection (e), applicable during the period ’ Unless otherwise noted, all further Statutory references are to the Civil Code. App. 26 from 1978 to 1981 relevant to this action, was enacted in 1977. (Stats. 1977, ch. 971, § 2, p. 2939.) Thereafter, the Legislature amended section 1950.5 several times, extend- ing the landlord’s compliance period from two to three weeks and redesignating as subdivision (f) the second sentence of subdivision (e) containing the setoff-and- refund provision. Accordingly, I will hereafter refer to the setoff-and-refund provision as section 1950.5(f). Section 1950.5 limits both the nature of the claims that a landlord may assert against the security and the time within which a landlord may assert those claims. Under the statute, within two weeks after a tenancy ends the landlord must assert any claims against the security and return any unclaimed amount. The majority holds that, despite the landlord’s statu- tory duty to assert any claim against the security and to refund the balance within two weeks of the end of the tenancy, a landlord who retains the entire security with- out complying with this duty may assert claims for the first time as setoff in a subsequent action by the tenant to recover the security. In my view, this holding is inconsis- tent with the language and purpose of section 1950.5(f). In analyzing statutory language, this court looks to “the object to be achieved and the evil to be prevented by the legislation.” (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1159 [278 Cal.Rptr. 614, 805 P.2d 873].) As the majority acknowledges, section 1950.5(f) was designed to address the evil of landlords who fail to promptly return security due the tenant at the end of the tenancy. (Maj. opn., ante, at p. 746.) Recognizing the obstacles facing a former tenant seeking to recover a App. 27 security deposit from a recalcitrant landlord and the for- mer tenant's lack of leverage over the landlord, the Legis- lature sought to level the playing field by in effect telling the landlord holding the security to “claim it or lose it.” The plain language of section 1950.5(f) requires a landlord within two weeks of the end of a tenancy to notify the tenant of any claims against the security and to return any portion of the security upon which the land- lord has no claim. By strictly limiting the time within which a landlord can assert a claim against the security, the Legislature has necessarily provided that the landlord forfeits any right to set off claims against the security if the landlord does not do so within the Statutory period. This reading of section 1950.5(f) accords with its pur- pose. Section 1950.5(f) was designed to compel landlords to routinely return security due the tenant without the necessity of legal action. In the words of the majority, section 1950.5(f) “was enacted to ensure the speedy return of security deposits on the termination of tenancy and to prevent the improper retention of such deposits.” (Maj. opn., ante, at p. 746.) This purpose is furthered by requiring landlords to assert their claims against the security promptly after the end of the tenancy or else lose the right to do so thereafter. Although a landlord loses all recourse against the security by failing to assert any claims within the statu- tory two-week period, this does not mean that the land- lord has lost all recourse against the tenant. Nothing in section 1950.5(f) suggests that, by losing the right to set off claims against the security, the landlord has also for- feited any causes of action against the tenant. A landlord App. 28 wishing to pursue those claims after allowing the statu- tory period to elapse may do so in an independent suit against the tenant. The landlord in this case did file a cross-complaint against the class members asserting claims for unpaid rent, cleaning costs, and repair costs; the cross-complaint was dismissed, however, when the landlord failed to properly serve it. Ill The majority hinges its conclusion that a landlord does not lose the right of setoff after the statutory period expires on the following reasoning. It first contends that to deny a continuing right of setoff to the landlord who fails to assert claims within the statutory period would impose a “penalty” on the landlord. It then contends that, because section 1950.5, subdivision (k) (hereafter section 1950.5(k)) authorizes $600 in statutory damages to be awarded against a landlord who in bad faith unlawfully retains security, the Legislature did not intend to “penal- ize” landlords who without bad faith unlawfully retain security by denying them the right of setoff.2 I disagree both with the majority’s characterization of the limita- tions period of the landlord’s setoff right as a “penalty” and with its conclusion that the bad-faith-damages provi- sion of section 1950.5(k) demonstrates an implicit inten- tion by the Legislature not to terminate the landlord’s right of setoff after the landlord has failed to assert any claims within the statutory period. 2 The amount of statutory damages available under section 1950.5 during the period relevant to this lawsuit was $200. (§ 1950.5, former subd. (h).) App. 29 The majority is wrong in characterizing the expira- tion of the section 1950.5(f) limitations period as a “pen- alty.” We do not commonly say that someone who has forfeited a claim by failing to bring it within the statute of limitations period has suffered a penalty. Under the majority’s reasoning, however, every statute of limita- tions would be a penalty. Nor is a limitations period for asserting claims (such as the limitation period of section 1950.5(f)) a “penalty” in the sense in which that word was used in the case on which the majority relies, People ex rel. Van de Kamp v. American Art Enterprises, Inc. (1983) 33 Cal.3d 328, 334 [188 Cal.Rptr. 740, 656 P2d 1170]. At issue there was a monetary fine, not a claims limitation period as is the case here. (See ibid.) Furthermore, even if the complete loss of a claim resulting from the running of a limitations period could properly be characterized as a penalty, it would still be incorrect to characterize the expiration of the landlord’s setoff right under section 1950.5(f) as a penalty. As explained above, the landlord whose setoff right under section 1950.5(f) lapses does not forfeit any claims against the tenant, which the landlord can still pursue in an independent action against the tenant, but only loses the right to satisfy the claims out of the security. Even assuming that the expiration of the landlord’s right to setoff could be characterized as a penalty, it is one that arises “ ‘ “by necessary implication” ’” (People ex rel. Van de Kamp v. American Art Enterprises, Inc., supra, 33 Cal.3d at p. 334 [188 Cal.Rptr. 740, 656 P.2d 1170]) from the language of section 1950.5(f). As described above, the App. 30 Legislature’s imposition on landlords of a mandatory duty to assert any claims against the security within two weeks of the end of the tenancy necessarily implies that if landlords fail to do so within that period, they cannot do so later. To hold otherwise would render meaningless the mandatory term “shall” that the Legislature used in sec- tion 1950.5(f). The majority is also wrong in concluding that, because section 1950.5(k) authorizes statutory damages for landlords who retain security in bad faith, the Legisla- ture must have intended that landlords who, without acting in bad faith, unlawfully breach their mandatory duty to account for any claims against the security and to refund any remaining security should not lose the right of setoff after the statutory period expires. Section 1950.5(k) provides: “The bad faith claim or retention by a landlord . . . of the security or any portion thereof in violation of this section, . . . may subject the land- lord .. . to statutory damages of up to six hundred dollars ($600), in addition to actual damages.” The Legislature’s decision to impose a special conse- quence — statutory damages - for retention of security that is accompanied by bad faith raises no logical infer- ence that the Legislature intended to impose no conse- quence whatever for retention of security in violation of section 1950.5(f) not accompanied by bad faith. There is nothing logically inconsistent about imposing separate consequences for these different types of conduct. To the contrary, in light of the legislative purpose — to secure the prompt return of tenant funds to which the landlord has no legitimate claim - it is perfectly rational and consistent for the Legislature to have imposed, as it did, loss of App. 31 setoff as the basic consequence for all retention of secu- rity beyond the statutory period, and to have imposed statutory damages as a second and additional conse- quence for a particularly aggravated form of statutory violation consisting of improper retention of security accompanied by bad faith. Nor, unlike People ex rel. Van de Kamp v. American Art Enterprises, Inc., supra, 33 Cal.3d 328, 334, on which the majority relies, is this a case in which, because the Legis- lature has provided certain penalties or consequences for a statutory violation, the issue is whether the Legislature intended those remedies to exclude other penalties or consequences. American Art was a nuisance action in which the trial court had imposed upon the defendants a $168,000 fine not expressly authorized by the nuisance statute. (Id. at p. 334.) Because the Legislature had expressly authorized injunctive relief and the sale of the offending property as remedies for a nuisance, it was unlikely that the Legislature had impliedly authorized monetary fines as an additional punishment for the same act. Here, however, in the majority’s view the Legislature has provided no consequence for a violation of the man- datory setoff-and-refund requirement not accompanied by bad faith. By permitting a landlord who has retained the entire security without timely asserting any claims to the tenant to nonetheless set off claims in an action by the tenant to recover the security, the majority’s holding will render section 1950.5(f) a flimsy barrier against the evil it is designed to address - landlords who do not promptiy account for any claims against the security and refund App. 32 whatever security is due their tenants without the neces- sity of legal action by the tenant. The statutory require- ments that the landlord “shall” assert claims against the security within two weeks by notifying the tenant and “shall” refund any remaining portion within two weeks are meaningless, and the purpose of the statute is frus- trated, if the landlord who fails to do so can nonetheless assert those claims as setoff years later in an action by the tenant to recover the security. The carefully balanced incentives of section 1950.5, designed to ensure that land- lords refund security routinely and without the necessity of court action, will accordingly be defeated. IV The trial court’s class action judgment required the landlord to refund only the security withheld from those class member tenants who might thereafter submit a claim against the landlord. The majority reverses the portion of the Court of Appeal’s judgment affirming the trial court’s class action remedy without reaching the issue of whether the trial court abused its discretion in fashioning that remedy. In order to provide guidance to the-trial court on remand, I would reach that issue and hold that the trial court abused its discretion in ordering a class remedy that permits the landlord to retain class damages that are not claimed by individual class mem- bers. The trial court’s decision to limit the landlord’s lia- bility to only the amounts owed to those class members who may come forward and submit individual claims, rather than imposing liability for the full amount of App. 33 unlawfully withheld security owed to the class as a whole, was an abuse of discretion, even assuming that the landlord should be permitted the right of setoff. In my view, allowing a wrongdoing defendant to retain all or part of the amount for which it is liable to the plaintiff class rarely is one of the options that a court should choose in deciding how to distribute the class recovery or dispose of the residual. Initially, the trial court failed to distinguish between the separate issues of the determination of the amount for which a defendant is liable to the plaintiff class and the method for distribution of that amount to the class. Code of Civil Procedure section 384, cited by the majority, makes clear the distinction between the amount of a defendant's liability to the class and the method of distri- bution of the class recovery (including the disposition of any unpaid residual). It first requires that “prior to the entry of any judgment in a class action . . . the court shall determine the total amount that will be payable to all class members. .. . ” (Code Civ.Proc., § 384, subd. (b), italics added.) Thereafter, “the parties shall report to the court the total amount that was actually paid to the class mem- bers. After the report is received, the court shall amend the judgment to direct the defendant to pay the sum of the unpaid residue . . . in any manner the court deter- mines is consistent with the objectives and purposes of the underlying cause of action. . . . ” (Ibid.) Thus, the proper measure of the class recovery is the injury caused to the class members, not the amounts that individual class members step forward to claim. The trial court erased the distinction between these two concepts by making the amount of the class recovery App. 34 turn on the effectiveness of the distribution method it selected. Using the trial court’s formula, by definition there would never be any unpaid residuals in class actions because defendants would never have any lia- bility for any amounts not claimed by class members. By making the landlord liable only for the security withheld from those class members who step forward to claim a refund and not for the security withheld from the class as a whole, the trial court in effect narrowed the class with- out notice after the trial had concluded and extinguished the causes of action of the nonclaiming class members. Instead, the trial court should have first determined the landlord’s total liability to the class as a whole and then developed a method for distributing that amount to the class members to the extent feasible and for dealing with any unclaimed residual. A trial court has several sources of guidance in dealing with the unclaimed residual of a class recovery. As the majority acknowledges, the class action is a creature of equity, and it is a first principle of equity that a wrongdoer should not be permitted to profit from its wrongs. (See § 3517 [“No one can take advantage of his own wrong.”]; see also Shepherd, Damage Distribu- tion in Class Actions: The Cy Pres Remedy (1972) 39 U.Chi.L.Rev. 448 [retention of unclaimed residue by the defendant results in “unjust enrichment of the defen- dant”].) Consequently, this court has previously held that the various methods of distributing the unpaid residual of a class recovery that go under the name of “fluid recovery” may be “essential to ensure that the policies of disgorgement or deterrence are realized” and should be utilized where appropriate to “fulfill[ ] the purposes of the underlying cause of action.” (State of California v. Levi App. 35 Strauss & Co. (1986) 41 Cal.3d 460, 472 [224 Cal.Rptr. 605, 715 P.2d 564].) The Legislature, in Code of Civil Procedure section 384, has expressly addressed the factors a trial court must consider in crafting a method for the disposition of the unclaimed residual of a class recovery. It has decided that “unpaid residuals in class action litigation [should be] distributed, to the extent possible, in a manner designed either to further the purposes of the underlying causes of action, or to promote justice for all Californians,” includ- ing distribution to child advocacy programs or to the California Legal Corps. (Code Civ.Proc., § 384, subd. (a).) Rarely will it further the purposes of the underlying action or promote justice to permit a wrongdoing defen- dant in a class action to simply retain for its own benefit the unpaid residual of the class recovery, and nothing in Code of Civil Procedure section 384 contemplates such a result. Accordingly, the trial court abused its discretion when it permitted the landlord to retain the unclaimed residual of the class recovery for the landlord’s own benefit. The trial court in this case made no findings and gave no reasons to support its conclusion that the land- lord should be permitted to retain the unpaid residual or that would explain why it was fair and just for the landlord to do so. Instead, the trial court simply made the conclusory assertion that “[w]e do not find that the Fluid Recovery method is necessary to fulfill the purpose of this case.” Given that it ordinarily does not further the purposes of the underlying action or promote justice to permit a defendant to retain the unpaid residual in a class App. 36 action, the trial court’s unexplained decision to the con- trary was an abuse of discretion. This is especially so because the landlord here had previously attempted to evade section 1950.5’s predecessor statute and to unlawfully retain security due its tenants by denominat- ing the security a “nonrefundable cleaning fee.” (See Bauman v. Islay Investments (1973) 30 Cal.App.3d 752 [106 Cal.Rptr. 889].) CONCLUSION The Legislature enacted section 1950.5 to protect ten- ants, not landlords. Section 1950.5(f) sets a clear limit on the landlord’s right to set off claims against the security by requiring a landlord to assert any claims against the security within two weeks of the end of the tenancy and then refund the balance. This furthers section 1950.5’s purpose of ensuring that landlords routinely refund secu- rity due their tenants without the necessity of legal action by their tenants. Repeatedly invoking its notion of equity, however, the majority ignores the language and purpose of section 1950.5(f) to hold that landlords do not lose their right of setoff after the expiration of the statutory period. I cannot agree with this attempt to rewrite section 1950.5(f) and eviscerate its purpose. Moreover, the Legis- lature intended that those tenants who are forced to bring a lawsuit to recover their security have a simple, swift, and certain legal remedy: section 1950.5 expressly autho- rizes actions brought under that section to be maintained in small claims court, limits the types of claims that can be asserted against the security, and puts on the landlord the burden of proof as to the reasonableness of any amount claimed against the security. (§ 1950.5, subds. (e), Te ee ee, ee App. 37 (k), (m).) In turn, section 1950.5(f), by cutting off the landlord’s right of setoff after the two-week statutory period, assures the tenant weighing whether to bring an action to recover security that he or she will not be met by a surprise claim of setoff never before raised by the landlord. The majority’s holding upsets this statutory scheme, for a tenant who brings an action to recover security now may be faced with unanticipated claims of setoff the landlord has never before asserted. The tenant’s action is made not only unpredictable but more complicated. Undoubtedly, in light of the majority’s creation of a land- lord’s right to setoff in actions to recover security, many tenants will now conclude that it is not worth the effort to bring such an action, just as they did before section 1950.5 - hardly the result the Legislature intended in enacting this consumer protection statute. For the foregoing reasons, I would reverse the por- tion of the judgment of the Court of Appeal holding that the landlord may set off its claims against the illegally withheld security and the portion of the judgment hold- ing that the trial court did not abuse its discretion in limiting the landlord’s liability to only the security due those class members who hereafter submit a claim. App. 38 Copr (C) West 1995 No claim to orig. U.S. govt. works 23 Cal.Rptr.2d 420 18 Cal.App.4th 885, 23 Cal.App.4th 648 (Cite as: 23 Cal.Rptr.2d 420) Lisa GRANBERRY et al., Plaintiffs and Appellants, v. ISLAY INVESTMENTS et al., Defendants and Appellants. No. B057796. Court of Appeal, Second District, Division 6. Sept. 9, 1993. As Modified on Denial of Rehearing Oct. 8, 1993. Review Granted Nov. 24, 1993. Hill, Schwartz, Stenson and David H. Schwartz, Mi- chael P. Guta and Ernest L. Graves, Law Offices of David H. Schwartz, San Francisco, for plaintiffs and appellants. Daniel E. Lungren, Atty. Gen., Roderick E. Walston, Chief Asst. Atty. Gen., Yeoryios C. Apallas, Deputy Atty. Gen. as amici curiae on behalf of plaintiffs and appel- lants. Crahan, Javelera, Ver Halen & Aull and Marcus Crahan, Jr., Los Angeles, Antonio R. Romasanta, Betty L. J [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_2119%3A1. Public record. Not legal advice.