Traditionally when a landlord files an unlawful detainer action to evict a tenant for nonpayment of rent the landlord will seek possession of the premises and payment of the overdue rent in the same lawsuit. If additional rents were due or became due after judgment is rendered, or the landlord only seeks possession of the premises in the unlawful detainer action, it was uncertain in California whether another suit could be brought against the tenant for the amounts due. That uncertainty was removed on February 13, 2018, when California Court of Appeals for the First Appellate District issued its opinion in Hong Sang Market Inc. v. Penn.
In Penn the Landlord brought an unlawful detainer action against a tenant to obtain possession of the premises due to the tenant’s failure to pay rent. The Landlord limited its prayer for damages to one month’s rent but expressly reserved its right to seek to recover unpaid rent for other periods in a separate lawsuit. Landlord then filed a separate lawsuit against the tenant for recovery of unpaid rent for other time periods. In the second action the tenant claimed the Landlord was barred from recovery alleging the Landlord was collaterally estopped from such recovery due to the entry of judgment in the unlawful detainer action where such additional recovery was not pursued and was expressly reserved by the Landlord.
The trial court rejected the tenant’s argument and the Court of Appeals affirmed. Both Courts determined that the unlawful detainer judgment did not bar a subsequent action by the Landlord for rents other than those sought in the unlawful detainer action. The Courts opined that unlawful detainer actions have limited res judicata effect since the doctrine of claim preclusion only applies to matters raised or that could have been raised in the prior litigation. Since, here, the Landlord’s three-day notice to the Tenant only raised failure to pay one month’s rent, the Landlord could not have litigated or recovered rent for other periods not alleged in the three-day notice. In addition, the Court of Appeals observed that a landlord is not required to litigate back-due rent in an unlawful detainer action. Thus, a landlord may seek to recover possession only, and later sue the tenant for back due rent in a separate lawsuit.
To preserve the expediency of regaining possession in many cases it makes sense to merely seek to oust the delinquent tenant and not seek back rent or damages in an unlawful detainer action. It may be that the delinquent tenant appears to be without substantial assets that would make collection of a monetary judgment improbable. It may be that accounting for unpaid rent, such as in a percentage rent lease, is complicated and the Landlord wants to reobtain the premises as soon as possible to re-rent them. Now, it is possible to seek to remove the tenant and then consider a separate lawsuit to collect overdue rent and damages. It is, thus, imperative for landlords to retain qualified legal counsel to assure that a cohesive, strategic litigation plan is in place when delinquent tenants are sued for possession.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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