DADDY DIETRICH’S CHRISTMAS CONDO
(Reprinted from the December 1996 WAM)

There was once a time when the Holiday season was an opportunity for good children to receive wonderful presents while bad children received a lump of coal or nothing at all. Although I never met a kid who actually received a lump of coal, the general idea was that the best children received the best gifts. But things have changed. Now the baddest boys receive the best gifts, as demonstrated by the Story of Dietrich’s Christmas Condo.

Dietrich’s Condo was not actually a gift that was received or given to someone else. Dietrich bought the condo for himself nearly ten years ago but ended up giving his son $20,000 to move out of it so he could get it back. His son, known as “Obnoxious Arnold,” made Dennis the Menace look like teacher’s pet, as this Story demonstrates.

Dietrich became the owner of the two-bedroom condo in 1987 when that apartment was converted to a condominium unit under the “TORCA” law. Dietrich and “Obnoxious Arnold” were roommates at the time of the conversion. They originally became roommates in 1986 when Arnold was being evicted from the unit for not paying the rent. In response to his son’s call for help, Daddy Dietrich settled the eviction case, paid a new security deposit, became a tenant of the unit and made certain that the rent was paid from that time forward. Since he was never a Santa Monica landlord, he was unaware of the Santa Monica Landlord’s Golden Rule, “No good deed goes unpunished.”

After the building was converted to condominiums, Daddy Dietrich and Obnoxious Arnold entered into a written agreement in which they agreed that Dietrich would purchase the unit for his home and Arnold would receive $20,000 as relocation assistance. Relying upon the written agreement, Dietrich departed the United States in late January 1995 and worked diligently overseas to pay the purchase price of the unit plus the $20,000 of relocation fees. But when he returned home that following September, he discovered that his son had married, and then moved his new wife and her dog into the unit and claimed the residence exclusively as their home. Poor Dietrich was locked out.

Although locking a tenant out of his/her home is a serious offense in Santa Monica, locking an owner out of his home is not a problem, especially when a tenant hires City officials to represent him. In this case, Obnoxious Arnold hired attorney and Rent Board Commissar Lisa Burrito to defend his rights. As a result, Dietrich was soon to receive some serious Rent Control problems.

During the first quarter of 1996, Obnoxious Arnold and his wife informed Dietrich that they wanted to purchase the unit and that they had the means to do it, since Dietrich’s new daughter-in-law had a good job and had secured a loan of $160,000. Additionally, Arnold informed Dietrich that his acting career had taken a turn for the better. When Dietrich objected to being locked out of the unit and refused to sell it at a bargain basement price, Arnold improved his bargaining position by filing Rent Decrease petition D-2136 which demanded that expensive repairs be done to the unit.

Rent Decrease Petition D-2136 became a long and costly affair because Dietrich was deluged with letters from attorney Lisa Burrito which threatened criminal and civil penalties for “tenant harassment”. So Dietrich had to hire a property manager to get the repairs done and then contacted me for the purpose of filing a rent increase petition.

And so in the spring of 1996, we filed rent increase case I-1416 and went to two hearings where Arnold showed up late, unprepared and perfectly obnoxious. This behavior also drove up the operating expenses to such a point that once the hearing examiner finally rendered a decision it was determined that Dietrich was entitled to a rent increase of $201 per month. Although Dietrich was “entitled” a large rent increase, he would soon learn that there is a BIG difference between what landlords are “entitled” to receive compared to what they can actually collect.

Soon after the rent increase decision was issued, Arnold responded by filing an “Economic Hardship Application” claiming that paying the new rent level would result in “Severe Economic Hardship” and therefore the rent increase should be limited to 12% of the existing rent level. As a result, the rent increase of $210 per month would be limited to an actual rent increase of $74 per month.

Application of the rent limitation was not necessarily a foregone conclusion because the application that he first filed could not have succeeded. This was because the combined income of Arnold and his wife was too great to prove hardship under the Regulations. But fortunately, for Arnold, the first Application Form was not processed promptly and he was given assistance in amending his application which now told a new tale of woe.

Obnoxious Arnold’s new and improved Hardship Application claimed that he and his wife would be separating in the near future, and that his wife would no longer be contributing to the household income. As a result of this domestic disaster, Arnold claimed that his income was limited solely to the proceeds... “from an occasional bar tending job that rarely exceeds a gross amount of $250.00 per month. I stress that some months my sole income is from my credit card cash advances.”

Once Arnold wrote magic words that entitled him to a rent limitation, the Hearing Examiner promptly sent a letter which informed the parties that he was shifting the burden of proof to Dietrich to prove that Arnold would not suffer economic hardship as a result of the marital separation that was supposed to take place in the near future!?! Although this may seem bizarre, it was nothing compared to the hearing that followed.

By the time the hearing was held, Dietrich was out the country again earning money to buy a new home and Dietrich’s wife (who was not Arnold’s mother) was afraid to go to the hearing alone as a result of threatening phone calls she received from Arnold. And so we hired a private detective and brought him to the hearing.

On the morning of the hearing, Arnold failed to show up on time (as usual) and when the hearings department telephoned him at home, Arnold’s “estranged” wife answered the phone and announced that Arnold would be arriving shortly.

Once the hearing finally commenced, Arnold told amazing stories that only a biased Rent Board hearing Examiner could believe. These stories included the following; (1) Arnold’s wife did not live with him, she simply drove in from Chatsworth that morning so that Arnold could use her car to drive to the hearing,(2) Arnold needed transportation because his Porsche was not running, but would soon be fixed by a friend for free, (3) although it was late July, there were no income tax returns because Arnold and his wife could not afford to pay the accountant, (4) there were no legal papers as evidence of the separation because Arnold and his estranged wife could not afford the $185 filing fee, and (5) the additional income discovered by the private detective was simply the result of a mistake caused because Arnold forgot to list all sources of income.

But the best story of the day was the testimony about the custom Harley-Davidson motorcycle that Arnold was “building from the frame up.” According to Arnold, the custom “hog” was not for his own enjoyment, but would be sold in order to pay debts.

This story might have made some sense if Arnold was a skilled motorcycle mechanic, but Arnold claimed to be just learning the trade while “hanging-out” at his friend’s house. As a result of learning this new trade, he was unable to burden himself with a regular job. (For those of you who understand Harleys, the knuckle-head was building a shovel-head.)

After the hearing went on for five and one half hours, the hearing examiner continued the hearing so that Arnold could have more time to produce some evidence in support of his claim of “Severe Economic Hardship.” So while the hearing was delayed, Arnold finally filled out a tax return, which the hearing examiner reviewed in his decision at page 19 paragraph 5.

“Evidence of Arnold’s 1995 income provides support for the hardship claim in that his separate income for 1995 was quite low. In his 1995 tax returns, filed separately from those of his wife [name omitted here], Arnold reported a taxable income of only $3,554.67. “

The Hearing Examiner’s analysis above ignores the obvious. Of course, the income tax return declared low income. The income tax form was prepared for the rent limitation application hearing and only a complete fool would fill out an income tax form that declared income that was much greater than the amount stated in the limitation application. This was especially true since a review of the information at the Rent Board was a certainty while the chance of an IRS audit was only a mere possibility.

Additionally, by concentrating on what was written in the income tax form instead of analyzing the direct evidence, the hearing examiner was able to ignore the fact that during the first six months of 1996 a combined total of $29,500 went into the separate checking accounts for Arnold and his wife while Arnold’s credit card debt remained steady. But although the proof completely disproved the application, that was no obstacle for a hearing examiner who preferred to believe the allegation rather than the proof. (This is exactly the opposite of the way the rent increase petition was decided. In those hearings, no allegation was believed until proven!)
Of course I appealed the decision, but while the case was on appeal, the fighting between Arnold and his wife became so bad that the police were called and Obnoxious Arnold was hauled off to jail. Additionally, the other homeowners became so upset that they threatened to sue Dietrich unless Arnold was evicted. But none of this impressed the legal staff, which recommended that the Hearing Examiner’s rent limitation be upheld.

So it came to pass that by December 1996, Dietrich gave Arnold a $20,000 Christmas present just vacate the rental unit.

And that is the Story of how Santa Claus, who once rewarded all the good boys, has now been replaced by the Santa Claws Rent Board, which now rewards all the bad boys. It is a perfect example of how a government agency which is supposed to help the elderly and economically disadvantaged ends up rewarding a 33-year old, able bodied, white, male, actor who decides to keep his income low by accepting only part-time employment while he “hangs out” at his friend’s house building a custom Harley Davidson motorcycle from the frame up.

So, if you want to find out what the term “Severe Economic Hardship” means under Rent Board rules as applied to tenants, then go to the Board’s office and tell them that you want to read Rent Board Story I-1416. For rental property owners, it is always more blessed to give than to receive.