Tag Archives: Attorneys Fees

Landlord & Tenant Law

Attorneys’ Fees Provisions in Rental Agreements

The California Court of Appeal recently found that provisions in a residential lease that allow for attorneys’ fees may be recovered in the case of a declaratory relief and intentional interference with prospective economic advantage claim. Burien LLC v. James A. Wiley provides some insight on the recovery of attorney’s fees in accordance with rent control in Los Angeles. This case actually stems from the same case I discussed several months ago that involved raising the rent on a condominium conversion that can be found here. The issue that the Court had to review was not the substance of whether a landlord could raise the rent; rather, it was whether a tenant could seek attorneys’ fees in the action.

In 1981, James W. Wiley (“Tenant”) had leased a unit in a building subject to the Los Angeles Rent Stabilization Ordinance (“LARSO”). In 2011, the Landlord purchased the property where the Tenant lived and sent a notice to the tenants that the rent would increase from $1,401 to $3,000 a month. If the building was not subject to the LARSO, the Landlord could have been within his rights to raise the rent to that level; however, the LARSO controls how much a Landlord can raise the rent on a tenant annually.

First, the Los Angeles Housing Department (“LAHD”) sent a letter to the Landlord stating that the rent increase violated the Los Angeles Rent Stabilization Ordinance (LARSO). Ignoring this letter, the Landlord filed a complaint in the instant action against the Tenant for declaratory relief and intentional interference with prospective economic advantage. The Complaint alleged that the two parties were having a dispute on the correct rental rate and sought resolution as to the amount of rent that could be charged.

The Landlord believed that his rental rate increase did not violate the LARSO, while the Tenant believed that it did in fact violate the LARSO. The Landlord also wanted to recover costs of the suit, compensatory damages, and further relief as the court deemed fit. In response, the Tenant sought a dismissal of the action with prejudice, recovery of the cost of suit and recovery of attorneys’ fees. The trial court found in favor of the Tenant due to the property not being an exempt from the LARSO, and thereafter the Landlord appealed. The appellate court also found in favor of the Tenant and affirmed the judgment.

After winning on appeal, the Tenant filed a motion seeking the recovery of the attorney’s fees of about $17,000 on the basis of the attorney fees provision in his rental agreement. Upon examination of the rental agreement the trial court found for the Landlord stating that the attorney fees provision was too broad.

On appeal it was found that the rental agreement entailed recovery for attorney fees if the Landlord brings action on the account of the lessee’s failure to pay the rent. When the Landlord increased the rent, believing that his increase would not be affected by the LARSO, and the Tenant failed to pay, the collection of the rent was Burien’s cause for action. The action brought for declaratory relief was brought to enforce the payment of the increase in the rent and for the damages caused.

The Court concluded that the attorney fees provision in the rental agreement applied to the instant action and the matter was remanded for the Tenant to be reimbursed for the attorney fees. The Court relied upon Civil Code Section 1717 which states, “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

Civil Code Section 1717 can be applied when the recovery sought in the action was declaratory and as long as the action had a contract involved.

Attorneys’ fees provisions in rental agreements are an important tool for landlords and tenants. They are important to review to determine and there may be reasons why a landlord may or may not want an attorneys’ fee provision in a rental agreement. Further, there are methods to cap attorneys’ fees to avoid the outcome of this case where the Landlord was required to pay over $17,000 in attorneys’ fees for the tenant’s attorney.

Please contact Attorney Anthony Marinaccio at 818-839-5220 for more information regarding these issues on landlord-tenant matters.

Real Estate

Do I Need to Mediate My Dispute?

There are many times when a real estate contract is in dispute. Parties think that the only way to resolve their dispute will be through the courts and litigation; however, many real estate contracts require mediation in order for a prevailing party to recover attorneys’ fees. It is important for parties to recognize this requirement if they are looking to recovery attorneys’ fees.

A case in the California Court of Appeals exemplifies why it is important to thoroughly understand the contact you are entering into and to follow the requirements of the contract when in a dispute. In Cullen v. Corwin, Plaintiffs had purchased real estate from Defendants. Plaintiffs discovered a defective condition in the garage roof after the purchase of the real estate. Plaintiffs filed a lawsuit against Defendants for failing to disclose the defective condition.

The parties to the real estate purchase entered into a “standard form” purchase agreement that provided the prevailing party in a legal dispute to recover attorneys’ fees. However, as part of this “standard form” purchase agreement, a prevailing party was prohibited from recovering attorneys’ fees if he or she did not attempt to resolve the dispute through mediation or refused to mediate after another party requested medation.

The Sellers of the property prevailed in the lawsuit after succeeding on their Motion for Summary Judgment because the statute of limitations had passed for the buyers to file their lawsuit. The Sellers prevailed on their Motion for Attorneys’ Fees for $16,500 in legal fees. The Buyers appealed the trial court’s decision because they argued that the Sellers had refused to mediate their dispute.

After the Complaint was filed, the Buyers requested mediation twice; however, the Sellers refused to go to mediation. The Sellers argued that they wanted to pursue some written discovery and depositions in order to file a Motion for Summary Judgment, which they believed they could prevail and save some cost in not having a mediation. Sellers believed that a mediation without any discovery would be a waste of time and argued that mediation was never brought up before the filing of the lawsuit.

On appeal, the Court found that the Sellers had breached the purchase contract when they refused to mediate their dispute. The purchase agreement’s provision for mediation was intended to settle a dispute early on and did not allow for excuses to refuse mediation. It found that particularly because discovery can become costly, the provision to mediate a dispute was in the purchase agreement in order to lower attorneys’ fees and settle disputes earlier rather than later.

This case provides an important warning for parties to a real estate contract that contains this sort of provision. These provisions are very common in real estate contracts and tend to require mediation early on in order to avoid costly legal bills. For example, the current California Association of Realtors Income Property Purchase Agreement has a similar requirement for mediation in Paragraph 35. However, each real estate contract may have a differently worded provision, so it is important to note what your real estate contracts says.

If you are in a dispute over a real estate agreement, please consult Attorney Anthony Marinaccio at (818) 839-5220. Anthony offers a free initial consultation to discuss your matter.