Pet fee is refundable as it is part of the security deposit
This might be too late but I found this thread from a google search when looking into this exact pet fee issue in southern California.
A pet fee must be refundable as it is part of the deposit. Keep reading for specifics and proof.
California Housing Rental Laws Concerning Pets | Home Guides | SF Gate
"Landlords can adopt additional pet policies, the Nolo legal website states. They can reserve the right to approve each proposed pet individually, and require proper identification, licensing and proof of vaccination. In some states they can charge a "pet fee" in addition to a damage deposit; California damage-deposit law doesn't permit that."
www.dca.ca.gov/publications/landlordbook/catenant.pdf
"the security deposit may be called last
month’s rent, security deposit, pet deposit, key
fee, or cleaning fee. the security deposit may be
a combination, for example, of the last month’s
rent plus a specific amount for security. no
matter what these payments or fees are called,
the law considers them all, as well as any other
deposit or charge, to be part of the security
deposit. 89"
The only exceptions are Application screening fee and New tenant processing fee.
Page 25 of the CA Tenant pdf is where you can read it all.