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San Francisco Tenant Who Faced $6,755 Rent Hike Scores $400,000 Payout

But will unscrupulous landlords get the message?

SLIDESHOW

Deb Follingstad in October 2015, dressed as a greedy landlord for Halloween. 

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Follingstad with friends in 2016, a week before beginning cancer treatment.

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Post-treatment, with leopard spots.

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Deb Follingstad, the Bernal Heights tenant whose out-of-the-blue 315 percent rent increase outraged the Internet back in 2015, won a settlement of $400,000 from her former landlord, Nadia Lama, in a deal finalized on Friday. The big payout ends nearly a year and a half of litigation, which began in September 2015 when Follingstad sued Lama for what amounts to a wrongful eviction. According to the suit, the landlord illegally jacked up the rent—from $2,145 to $8,900—to force her tenant out and take over the apartment herself, in a kind of cheapskate owner-move-in eviction. (An above-board owner move-in would have triggered a relocation payment of around $9,250.) The settlement became official just over a week before the trial was set to begin, saving the case from going before a jury. “I think a jury was not going to like her,” Joseph Tobener, Follingstad's attorney, says of Lama.

For the landlord, $400,000 is quite the comeuppance—that missing relocation payment has now been multiplied 40-fold. "It's hopefully a warning to landlords who want to be greedy," says Follingstad, 48, who works as a practitioner of Chinese medicine. "The reason that it is that much is because she wanted to go around the law." According to the suit, Lama attempted to get around rent-control laws by ripping the bathroom out of the in-law unit beneath Follingstad's apartment and effectively turning the property into a single-family home—thus exempting it from rent control. The upshot: Follingstad was out and emptyhanded, without the relocation assistance she was entitled to. "I've never been under that kind of stress in my entire life," she says.

Lama's attorney, Paul Sheng of the firm Clapp Moroney, contests Tobener and Follingstad's account. "The parties agreed to settle disputed claims, with no admission or acknowledgment of any liability or wrongdoing by any party," he says via email. Of Lama's work on the lower unit, Sheng says that it "was performed by a licensed contractor, with all appropriate permits, and was approved by the San Francisco Department of Building Inspection." Property records for the building, 355 Bocana Street, show a permit for capping the plumbing in the other unit, but not for demolishing it—that is, taking the unit out of the housing stock. The records do contain a complaint that a unit was removed without a permit. DBI never verified that claim; by the time an inspector got inside the building, he or she found "no illegal unit observed." That entry is dated May 8, 2015, nearly two months after the initial complaint, and after Follingstad had already moved out.   

After she left, Lama moved in. Follingstad spent the next year bouncing from place to place, house-sitting and staying with friends. As an independent contractor, she had a hard time applying for apartments, because she lacked the paystubs landlords frequently ask for. The places she could rent easily were too much of a compromise. "I was looking at efficiencies with no kitchen, just a hot plate," she says. And sometimes her story followed her: "I had landlords be like, when they found out who I was, they hated me. They’d never even met me, but I represented this class of person who got evicted. It was weird, the way they looked at me." 

Last May, a year after her displacement, Follingstad was diagnosed with breast cancer. In July she moved in with her boyfriend. She went through months of litigation while undergoing radiation treatments. "I looked like the Michelin tire man, I had so many coats on, and drinking hot tea," she says. "I was there because I had to be, but I was basically curled up in an office chair, in these meetings that went on for, like, eight hours." Last month, she finished her radiation treatments. Her hair is coming back, and she's styling it to look like leopard spots.

Tobener counts $400,000 as a big win. "It's the highest amount we've ever settled a case [of this type]," he says. Cases like Follingstad's, which don't involve eviction notices, are known as constructive evictions by rent increase. (Paul Sheng, Lama's attorney, maintains that this claim has not been proven—which is true, given that the case did not go to trial.)

Why such a big payout? Why 40 times the required relocation payment, and not, say, 10? It all goes back to the damages a jury could award, says Tobener. Tenants who unfairly lose rent-controlled tenancies get compensated for the rent savings they would have accrued over some number of years. Then there are damages awarded for emotional distress, if the tenant's side can show that the landlord had a reckless disregard for the tenant's rights. And this is the real doozy: Rent damages are automatically tripled under San Francisco's Rent Ordinance. Emotional distress damages, if they are awarded, get tripled too. "Part of the reason wrongful eviction cases tend to settle is that emotional distress damages are unpredictable," says Tobener.

Follingstad won't see all $400,000, of course. After the attorney takes a cut—typically at least 30 percent—that will leave about $280,000, which will then be taxed. "Unfortunately, a lot of it’s going to go to my medical bills," she says. If she has money left over, she wants to put it toward a place of her own. "I would like to be able to buy something that can be a home," she says. "I probably will forever have PTSD about losing my house. As long as you're a renter, that's always something that could happen." 

 

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