Defendants in a lawsuit filed by six former residents of a Hollywood apartment complex are asking the court to dismiss the suit.

The apartments, located at 1332-1334 N. Formosa Ave., were demolished in January, despite a stop work order issued at the behest of Councilman David Ryu, 4th District, to verify the legality of the demolition. The demolition permit was reinstated 10 days later by the city’s Housing and Community Investment Department.

The building’s residents had been evicted in 2016 under the Ellis Act, which was meant to allow landlords a way to leave the rental business if they were losing money. But local residents and city officials have said the act has been exploited by larger developers looking to replace more affordable units with luxury housing.

The units at 1332-1334 N. Formosa Ave. were demolished in January.
(photo courtesy of Richard Koehler)

In the lawsuit, the tenants allege that Wiseman Residential, which manages the property, and Belmond Homes LP, which has owned it since last year, re-rented their vacated units via Airbnb. The suit therefore alleges a violation of the city’s rent stabilization ordinance. It further alleges that Wiseman and Belmond “colluded to defraud plaintiffs of their long-term tenancies,” while “misrepresenting to the plaintiffs that they had to vacate their homes because the property was being withdrawn from the rental market in order to be developed.” They then tried to “reap higher profits by re-renting the units through Airbnb,” the suit alleges.

Benjamin Cohanzad, a representative of Wiseman Residential, which manages the property, has repeatedly denied that the units were rented on Airbnb after the tenants’ evictions.

Belmond Homes LP, which owns the property, and Wiseman Residential filed a demurrer in February. A demurrer argues that a complaint lacks enough legal basis to prevail, regardless of the validity of the allegations.

“While defendants were finally able to demolish the property on Jan. 31, plaintiffs have chosen to maintain this meritless litigation,” according to Par Hendifar, an attorney representing Belmond and Wiseman, in a Feb. 6 filing.

It continues, “non-residential use of the property, rental or otherwise, does not establish a violation of the Ellis Act, and does not confer any rights on former tenants.”

Hendifar mentioned a recent case between the San Francisco Apartment Association and the city and county of San Francisco. The ruling by a California Court of Appeals invalidated a local law requiring a 10-year waiting period for a landlord to pursue a residential merger of a unit that had been vacated through the Ellis Act. Likewise, Los Angeles city officials should not be able to augment the Ellis Act with local legislation, or stop work orders, the demurrer argues. The Los Angeles City Council has passed laws, such as a Tenant Buyout Notification Program that went into effect in January, and motions seeking legislation designed to protect residents from Ellis Act evictions.

Airbnb, also listed as a defendant, filed its own demurrer on March 8. The company argues that the plaintiffs “have not alleged that Airbnb knew that the other defendants were even potentially violating the [rent stabilization ordinance],” undermining its liability as an aider and abettor.

“There is no allegation that Airbnb played any role in the eviction of plaintiffs,” according to the company’s court filing. “Instead, the complaint alleges that Airbnb acted as an agent or joint venturer of the owner defendants by allowing them to post listings and accept bookings through Airbnb’s online platform.”

Ryu introduced a motion last month in an effort to prevent future demolition of buildings if their owners face questions about Ellis Act compliance. But if the court rules in favor of the demurrers, it would validate the premise that local legislation cannot supersede components of the Ellis Act.

Estevan Montemayor, a spokesman for Ryu, said “while our office has no firsthand knowledge of a lawsuit, we will monitor the situation as it develops.”

Hearings for the demurrers are scheduled for Aug. 1 and 8.