[Sustain] Corporate Personhood Takes A Jab On The Chin!

[Eric Brooks]

Hi all,

See below. This court decision could be an important new step on the 
road to eliminating 'corporate personhood' being used for capitalist gain.

http://www.beyondchron.org/articles/Predatory_Landlord_Scheme_Starts_To_Unravel_in_East_Palo_Alto_7314.html

Predatory Landlord Scheme Starts To Unravel in East Palo Alto

by Dean Preston of Tenants Together‚ Sep. 03‚ 2009

Court Grants Injunction Against Illegal Rent Increases

On September 1, San Mateo Superior Court Judge Steven Dylina granted 
plaintiff's motion for a preliminary injunction in the closely watched 
Oberle v. Page Mill Properties class action lawsuit. The injunction will 
bar Page Mill and its related companies from collecting or enforcing 
rent increases that do not comply with the limits of the East Palo Alto 
Rent Stabilization Ordinance. The ruling represents a major setback for 
Page Mill's plans in East Palo Alto.

After gobbling up more than half of the rent-controlled apartments in 
East Palo Alto, Page Mill Properties immediately began imposing huge 
rent increases and evicting tenants at unprecedented rates. The company 
has repeatedly sued the city over local laws protecting tenants and 
filed unsuccessful petitions to raise rents. Page Mill Properties has 
also invoked the controversial Ellis Act to evict outspoken tenant 
activists, prompting accusations that the evictions are retaliatory.

The Oberle litigation involves Page Mill's effort to exploit a 
"mom-and-pop" exemption from the local rent law. Under the exemption, 
owners of four or fewer units are not subject to the rent increase 
limitations of the RSO. Page Mill created numerous companies, each to 
own four or fewer units, and then these companies imposed huge rent 
increases claiming to be exempt from the ordinance.

The Court squarely rejected Page Mill's argument that each of its 
corporate entities was to be considered separately. Applying the alter 
ego doctrine, the court disregarded the corporate forms set up by Page 
Mill in evaluating whether these entities could qualify for the 
exemption as owners of less than five units. The Court found that the 
tenant plaintiffs had shown such a "unity of interest" that the separate 
corporate personalities "do not in reality exist," and that the multiple 
entities had been used as conduits for a single enterprise. The court 
determined that recognizing the corporate entities would lead to an 
inequitable result.

The hearing lasted the entire day on Tuesday. Plaintiffs' counsel, 
Robert Hawk and Ryan Marsh of the law firm Hogan & Hartson, successfully 
argued that Page Mill's companies inconsistently claimed to be a single 
entity when it served their purposes, but then claimed separateness when 
trying to evade tenant protections through the "mom-and-pop" exemption.

The most moving part of the hearing came near the end, when, after hours 
of technical legal arguments, Ryan Marsh went through the stories of 
individual tenants whose declarations had been submitted to the court. 
Marsh offered stories of tenants whose rent increased from 45% to 75% in 
a single year under Page Mill ownership. He noted individual tenants who 
are forced to work overtime to afford the rents, including one tenant 
who is paying 90% of his income to rent, another who had to stop taking 
heart medication due to lack of funds, and another who was forced to go 
to a food bank because of the rent increases.

On the same day as the hearing, the San Jose Mercury News reported that 
Page Mill is facing financing problems that could lead to foreclosure. 
According to the article, "ownership of more than 1,700 units in East 
Palo Alto is in question after the company failed to make a $50 million 
payment to Wells Fargo Bank last month." Page Mill is urging Wells Fargo 
to renegotiate the terms of the loan, but tenant advocates question why 
Wells Fargo should renegotiate with a property owner with Page Mill's 
track record. The article also notes maintenance problems at Page Mill 
buildings, with pools recently being shut down by city health officials 
(including one that is bright green with algae), raising further 
questions about why Page Mill should be allowed to continue managing the 
property.

"Page Mill's record is toxic. I can't imagine why any lender would want 
to be associated with this company at this point." noted Andy Blue, an 
organizer with the statewide tenant rights group Tenants Together.

Page Mill's activities in East Palo Alto have also received significant 
financing, to the tune of $100 million, from CalPERS, California's 
public employee pension fund. Tenant and labor advocates have criticized 
CalPERS' involvement, noting that the pension fund's members are 
effectively funding a scheme to displace CalPERS' members from their 
affordable homes. Tenants Together has urged CalPERS to intervene to 
protect EPA tenants, and to adopt "predator free" guidelines for real 
estate investments to make sure public employee pension funds are never 
again used to partner with a predatory landlord.

Chris Lund, a Page Mill resident and organizer with the EPA Fair Rent 
Coalition commented, "The judge's rulings are significant and 
unambiguous victories for East Palo Alto tenants. Page Mill's lender, 
Wells Fargo, and its partner, CalPERS, should take note."

The injunction in the Oberle case is expected to be issued at a hearing 
on September 28, prior to October rent being due for the tenants.

Dean Preston is the Executive Director of Tenants Together.

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-- 
"I am not a liberator. Liberators do not exist. The people liberate 
themselves." – Che Guevara