High court sides with landlords, bans Oakland penalty system

A file photo of a multi-unit housing along International Blvd. in the San Antonio neighborhood of Oakland. The city' system of penalizing landlords for bad conditions in their buildings was dealt a final blow by the state Supreme Court on Wednesday. less A file photo of a multi-unit housing along International Blvd. in the San Antonio neighborhood of Oakland. The city' system of penalizing landlords for bad conditions in their buildings was dealt a final ... more Photo: Michael Macor, The Chronicle Buy photo Photo: Michael Macor, The Chronicle Image 1 of / 1 Caption Close High court sides with landlords, bans Oakland penalty system 1 / 1 Back to Gallery

Oakland’s system of penalizing landlords for bad conditions in their buildings, in which appeals of penalties are reviewed by an appointee of the same city agency that imposed the original penalty, was dealt a final blow by the state Supreme Court on Wednesday in a case that could affect other cities in California.

The justices unanimously denied review of a January ruling by a state appeals court that said Oakland was violating California law. The state law, enacted in 2010, requires cities to set up independent appeals boards to hear property owners’ challenges to their penalties, or let their City Council itself hear the appeals.

An Oakland landlord who challenges a fine must instead appeal to a hearing officer appointed by the city’s Building Services Division, whose inspector has already decided that the building violates safety standards.

The challenge was filed by Thomas Lippman, owner of a three-unit apartment building in the Harrington neighborhood, east of downtown Oakland. An inspector found violations in 2010 that included cracked ceiling paint and a water heater installed without a permit, and fined Harrington $9,500. A hearing officer then upheld the fines and also found Lippman responsible for damage that the landlord had blamed on a tenant facing eviction.

Oakland had established the appeal process after an Alameda County grand jury criticized the city for allowing a building inspector’s supervisor to hear a landlord’s challenges to the inspector’s findings. The First District Court of Appeal in San Francisco said the change wasn’t enough.

The state law was intended to direct a property owner’s appeals “outside the enforcing agency” rather than having them heard by an officer chosen by “the very enforcing agency whose decision is being appealed,” the court said in a 3-0 ruling. It was written by John Kennedy, a Contra Costa County Superior Court judge temporarily assigned to the appeals court.

Oakland argued that state law should not override its decisions as a charter city on local housing policy. But Kennedy said protections for “the basic rights of property owners” are “a matter of statewide concern.”

The ruling will have a statewide impact because “there are a number (of cities) who believe they can modify state law rules because they are charter cities,” said attorney Frank Busch, who filed arguments with the court on behalf of a property owner in Vallejo.

The case is Lippman vs. Oakland, S247380.

Bob Egelko is a San Francisco Chronicle staff writer. Email: begelko@sfchronicle.com Twitter:@BobEgelko