Hello everybody. We live in a litigious society. Californians are “suit happy” and Southern Californians are particularly “suit happy.” Certainly there is no shortage of litigation filed by tenants against their former or existing landlords.
My column this month will discuss the 26 main “Affirmative Defenses” available to a landlord to defend against tenants’ causes of action, the importance of filing a Cross-Complaint, and provide a brief update on payment of minimum wages to apartment managers.
1) Offset: This defense allows a landlord to offset from any amount of money which the landlord may owe to the tenant by the amount of money which the tenant owes to the landlord (such as unpaid rent).
2) Unclean Hands: If the tenant has not acted fairly, he may be said to have “unclean hands,” and thereby be barred from the relief he is seeking.
3) Waiver: If a tenant has previously waived a claim or allegation against a tenant, then the defense of waiver may bar further litigation of that claim.
4) Estoppel: If the tenant represents certain things to the landlord, which the landlord then relies upon to his detriment, the tenant is estopped from denying the truth of the representations.
5) Failure to Mitigate Damages: A tenant is required to attempt to mitigate (i.e., lessen) his damages. If he fails to do so, the landlord may avoid liability to the extent that the damages could have been reduced had the tenant acted reasonably.
6) Excuse: If the tenant has excused the landlord of any required performance, then the tenant cannot later hold the landlord liable for failing to perform what was previously excused.
7) Material Breach Excusing Performance: If the tenant has breached the lease or other contract in a material way, the landlord’s performance under the agreement might be excused.
8) Parole Evidence Rule: This defense bars a tenant from relying on an alleged oral agreement which is inconsistent with the written lease or other written contract between the landlord and tenant.
9) Statute of Frauds: This defense requires that a lease which is longer than one year be in writing to be enforceable. It also requires that a tenant’s option to buy or right of first refusal to purchase be in writing.
10) Discharge of Duties: If the landlord has fully performed any duty or obligation on his part to be performed, then he is discharged of any further performance.
11) Lack of Proximate Cause: If the acts or omissions of the landlord did not cause the injuries allegedly suffered by the tenant, then this defense applies.
12) Release: If the tenant has released the landlord of an obligation or performance, then the landlord cannot be in breach for not thereafter performing it.
13) Extinguishment: Sometimes an obligation by a landlord may be terminated under certain facts, in which event “extinguishment” is an appropriate defense.
14) Failure of Consideration: If the landlord did not receive any consideration from a tenant arising in a contractual arrangement, the landlord might escape liability for any type of promise he made.
15) Untimely Rescission: If a tenant seeks to rescind an agreement (i.e., cancel it as of its inception) with the landlord, any delay in that rescission which results in substantial prejudice to the landlord will bar the tenant’s claim for rescission.
16) Statute of Limitations: Generally a tenant must file an action for breach of contract within two years following the breach if the contract is verbal and four years if the contract is written. Failure to file within that time period bars the tenant’s cause of action.
Incidentally, the statute of limitations for a resident manager suing for nonpayment of the minimum wage, is three years. That means that counting back from the date that the manager files the lawsuit, he/she is only entitled to recover unpaid wages for the preceding three years. If the resident manager additionally sues for “unfair business practices” for his/her wages, then the statute of limitations extends to four years.
17) Laches: This is similar to the statute of limitations, but laches may bar the tenant’s cause of action even if the statute of limitations has not expired. This occurs where the tenant has unreasonably delayed in filing the litigation to the landlord’s prejudice.
18) Assumption of Risk: If the tenant, with full knowledge of the matters, voluntarily agrees to assume the risks, hazards or perils involved, the landlord might avoid liability for the tenant’s injuries or damages on the basis that the tenant has “assumed the risk.”
19) Accord and Satisfaction: If the landlord and tenant entered into a new agreement subsequent to the original lease, and the landlord performed the landlord’s obligations under the agreement, then any further liability by the landlord may be barred by the doctrine of accord and satisfaction.
20) Adequate Remedy at Law: If the tenant is seeking equitable relief, such as a restraining order or injunction, the defense of “adequate remedy at law” (i.e., money damages would adequately compensate the tenant) might defeat the tenant’s claim.
21) Fictitious Names: With a commercial tenant, if the lease references the tenant’s fictitious business name, the lessee must have filed and published that name in accordance with the statutes that regulate fictitious names prior to filing suit against the landlord. Failure to do so will stay (i.e., postpone) the litigation until the tenant has properly complied.
22) Spoliation of Evidence: If the tenant intentionally destroys relevant evidence prior to or during the litigation, his lawsuit may be barred or his recovery diminished because of those acts.
23) Res Judicata: If a judgment has already been entered in a prior case between the same two parties over the same controversy, the tenant will be barred from again litigating it, even if the tenant lost the first action.
24) Splitting Causes of Action: A tenant is not allowed to sue under a primary right in a first litigation, and then sue under a different theory involving the same right in a second litigation. Splitting causes of action in such a manner bars the second suit. In general, a tenant must assert all claims he may have in a single lawsuit.
25) Comparative Negligence: If the tenant is partially at fault for the injuries he sustained, then the defense of comparative negligence will hold that the landlord is only liable to the tenant for the proportionate amount that the landlord is at fault, rather than for the entire amount of damages.
Putting the Defenses in Perspective
I recognize that most landlords defend a lawsuit with the assistance of an attorney. It is the lawyer, not the landlord, who typically determines which affirmative defenses should be included in the landlord’s Answer to the Complaint. Nevertheless, counsel may from time to time overlook important defenses because he/she was unaware of the facts which would support those defenses.
Accordingly, I encourage each landlord (and each employer of a resident manager) who is sued to carefully go over each of the foregoing Affirmative Defenses with his/her attorney to ascertain whether there exist any facts upon which the defenses could be based. While a lawyer should not assert a defense for which he does not believe that facts do or could exist which support it, on the other hand, the attorney might overlook a potential defense unless the landlord carefully discusses all facts with his counsel.
File a Cross-Complaint
It is said that “The best defense is a good offense.” In that regard, a landlord who has been sued by a tenant should discuss with his counsel the propriety of filing a Cross-Complaint against the tenant. Potential Causes of Action are: Damages for Breach of Contract, Recovery of Unpaid Rent, Recovery of Damages for Damage to the Apartment Building, Damages for Intentional Infliction of Emotional Distress and Damages for Negligent Infliction of Emotional Distress, among many others.
Also, if no facts exist upon which an attorney or the litigant might believe that the tenant’s causes of action have merit, the landlord (or the landlord’s counsel) should notify the attorney (or the litigant) that following the conclusion of the case, the landlord will sue the litigant and/or the attorney for Malicious Prosecution.
Malicious Prosecution may only be filed after the tenant’s case has ended. Also the litigation must terminate in the landlord’s favor before the landlord is allowed to sue the tenant or the tenant’s attorney for Malicious Prosecution.
Nevertheless, a strong threat of malicious prosecution made by the landlord’s attorney to the pro-per tenant or the tenant’s counsel during the pendency of the case might so frighten them as to cause them to dismiss the action.
Update on Resident Manager Wages
California’s minimum wage during 2016 is $10.00 per hour. However, some local governments have raised that minimum wage effective July 1, 2016. Most notably, the City of Los Angeles increases the minimum wage to $10.50 per hour beginning July 1, 2016 for apartment managers who reside in the City and are hired by owners or management companies that employ at least 25 other people. If the employer does not employ more than 25 people collectively, then the increase to $10.50 per hour is deferred until July 1, 2017.
The County of Los Angeles, which regulates the minimum wage in unincorporated portions of Los Angeles County, has enacted the same minimum wage increases as the City of Los Angeles.
Owners and management companies with properties in either the City or unincorporated areas of the County of Los Angeles should review their resident manager agreements to be certain that they are consistent with those new increases. Employers with buildings in cities outside of Los Angeles should check with their own local governments to determine what is the current hourly minimum wage.
Also, owners and management companies should review their agreements to ensure that they cover compensation for “sick leave” pursuant to recently enacted legislation. If the employment agreement does not provide for sick leave compensation, the contract should be revised or completely rewritten.
Dale Alberstone is a prominent litigation and transactional real estate attorney who has specialized in real property law for the past 39 years. He has been appointed to periodically serve as a judge pro tem of the Los Angeles Superior Court and is a former arbitrator for the American Arbitration Association. He also testifies as an expert witness for and against other attorneys who have been accused of legal malpractice.
Mr. Alberstone has been awarded an AV rating from Martindale-Hubbell. An AV rating reflects an attorney who has reached the heights of professional excellence and is recognized for the highest levels of skill and integrity. You may Google “Dale S. Alberstone” for further background.
The foregoing article was authored in June 2016. It is intended as a general overview of the law and may not apply to the reader’s particular case. Readers are cautioned to consult an advisor of their own selection with respect to any particular situation.
Questions of a general nature are warmly invited. Address correspondence to Dale S. Alberstone, Esq., ALBERSTONE & ALBERSTONE, 1900 Avenue of the Stars, Suite 650, Los Angeles, California 90067. Phone: (310) 277-7300.