Why defining 'going out of business' has implications far beyond one mass eviction of rent-controlled apartments

In one of the city’s largest and most high-profile eviction cases in decades, a judge has to answer a question that will decide the future of more than 100 Los Angeles renters: What exactly does it mean for a landlord to “go out of business”?

The evictions are playing out at Barrington Plaza, a 712-unit high-rise complex in West L.A. where many tenants pay below market-rate rents due to the city’s rent stabilization ordinance. Corporate landlord Douglas Emmett filed evictions against all of the property’s tenants in May 2023 with the goal of installing a new fire sprinkler system.

Many renters have already left. But about 100 units are still occupied, with tenants now suing the landlord over what they argue is an abuse of California’s Ellis Act.

“The Ellis Act cannot be used for renovations,” said Monique Gomez, one of the leaders of the Barrington Plaza Tenant Association. “If they get away with it in this lawsuit, I believe that there's going to be a lot of other people and a lot of corporate landlords doing the same thing.”

What the Ellis Act says

Landlords invoke the Ellis Act, passed by state lawmakers in 1985, when they want to vacate properties and take them off the market. The text of the law states its purpose is “to permit landlords to go out of business.” Sometimes that means completely demolishing an apartment building. In other cases it means converting rental units into for-sale condos.

This case is more complicated. At various points, Douglas Emmett representatives have said they plan to keep renting out Barrington Plaza apartments in the future. They argue the Ellis Act gives them the “unfettered right” to temporarily stop renting units in order to carry out extensive fire safety upgrades.

The property was built at a time when the city did not require fire sprinklers in high-rise buildings. Two large fires have damaged Barrington Plaza in recent years. The most recent fire in 2020 resulted in the death of a 19-year-old resident.

“Two fires in seven years. A life lost,” John Gibson, an attorney for Douglas Emmett, said during closing arguments on Monday. “It’s time to vacate the buildings in Barrington Plaza.”

People stand outside Barrington Plaza after a damaging fire on Jan. 29, 2020.

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Frederic J. Brown

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Going out of business… but for how long?

Gibson argued the Ellis Act does not require landlords to “permanently” go out of business in order to evict tenants, nor does it state a specific amount of time landlords must halt operations.

“You can go out of business temporarily,” Gibson said.

Frances Campbell, the attorney for the Barrington Plaza Tenants Association, said that goes against the plain meaning of the law. When customers see a sign for a “going out of business” sale, Campbell argued, they understand that to mean the business will soon cease to exist.

“They are simply remodeling with the intent to re-rent,” Campbell said during closing arguments. “[The Ellis Act] gives them the unfettered right to stop being landlords. That is not what’s happening here.”

Campbell said Douglas Emmett has always had the option of installing sprinklers without resorting to evictions. They could have temporarily relocated tenants through the city’s Tenant Habitability Program, she said. Tenants argue they’ve never opposed fire safety upgrades.

“Our fight is actually not going against fire sprinklers,” said Gomez with the tenant association, who notes that the landlord allowed her to move in after the deadly 2020 fire. “Our fight is being able to leave our units, do the work you need to do and then bring us back.”

The Barrington Plaza wrongful eviction case is being carried out at the L.A. County Superior Courthouse in Santa Monica.

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Douglas Emmett representatives have said installing sprinklers in stages is not feasible, and neither is paying to relocate hundreds of tenants for work that could take years.

Tenants say they’re fighting for the whole city

Barrington Plaza represents one of the largest mass evictions in L.A.’s history. It has become a political flashpoint — in part because the building’s age makes it subject to the city’s rent stabilization ordinance. City council members have condemned the decision to evict long-term tenants paying below market rates in the middle of a housing crisis. The fight has spilled into election politics, with Douglas Emmett spending $400,000 on an unsuccessful campaign to oust the council’s housing committee chair, Nithya Raman.

Some long-term tenants say the cost of finding a comparable unit on L.A.’s Westside is prohibitive. Pischy Izady moved in just about six years ago. She said if she’s forced to leave, a similar apartment nearby could cost double what she’s paying now. She said many tenants have lived at Barrington much longer than her, and some simply cannot afford to move.

“They have been here for 30 years, 20 years,” Izady said. “They’re paying these low rents. And they are older. They cannot go get a second job or a third job. I really want us to win this case. Not for me personally — I would move out tomorrow if I have to — but to set a precedent for the city of Los Angeles, and for the other tenants that are really in need of these rent controlled places.”

Barrington Plaza tenant Pischy Izady stands in front of the Santa Monica courthouse just after closing arguments in a case she says could impact renters across the city of L.A.

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What’s next?

During closing arguments, L.A. County Superior Court Judge H. Jay Ford III repeatedly pressed attorneys on both sides about their interpretation of what it means for a landlord to “go out of business.”

Near the end of the hearing, Ford said figuring out the answer to that deceptively simple question won’t be easy.

“I’ve got my work cut out for me,” he said.

Ford said he expects to issue a ruling sometime in the next two weeks.