According to plaintiff attorney Steve McDonald, "The defendant had a business plan when he purchased the apartment building where the tenants lived. And this plan included forcing the tenants out so he could raise rents and increase the property value. The plan was that he would push for this huge rent increase. He would subject the tenants to living in a construction zone. He would mismanage the property while doing so. And he would implement an unfair dog policy."
According to McDonald, the landlord was an experienced real estate developer and investor who managed apartments himself. Cox allegedly purchased three apartment buildings at the same time. Two of the buildings were financed with low-interest 30-year loans. But for the third property, the Monte Cresta apartments, Cox allegedly obtained a two-year loan at 10.5% interest, which would allow him to raise the rents due to a debt service increase.
Said McDonald, "The plan was to use his 10.5% loan as a pretext to increase the tenants rents. A debt service increase would be far greater borrowing from a hard money lender than if he went to a traditional lender or hot a different loan with a lower interest rate. Defendant's plan also included that he was going to refinance the short-term loan in two years -- after he passed on the suddent, drastic rent increases to the tenants."
Defense attorney Kurt Bridgman, of Low, Ball, and Lynch, said that "Mr. Cox was an extraordinary man. He followed the Oakland rent law as written. He followed all the Housing Codes. He fixed up a property that had suffered 40 years of deferred maintenance. And that really is the sin in the plaintiffs' eyes -- that he fixed a property that they all had complained about for years and years."
Bridgman said that Cox had put over $1M into fixing up this property. The work was done by licensed contractors, and was permitted by the City of Oakland. The Oakland rent board approved that there was a need for the improvements and the amount spent.
Morever, said Bridgman, no one ever paid the proposed $381 rent increase. The only amount ever paid was the amount provided by the Oakland rent board. Nor was there any physical injury or emotional distress. Bridgman characterized some of the plaintiffs' evidence as "weak, tepid, suspicious, and potentially manipulative."