Pretext; Equity; Eviction; What Do You Think?

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Today, we write about the use of pretext. We’ll explain. First, here’s a story from a recent California appellate court decision.

A tenant (residential, but for our purposes, that’s of little consequence) only sent its check to cover part of its monthly rent. Its landlord returned the “rent check without cashing it.” [Now, we will digress (surprise). The quoted words come from the decision itself. If you wonder what “without cashing it” adds to the facts, you are not alone. If you read the actual decision, which can be seen by clicking: HERE, you will be able to analyze the court’s writing abilities in greater detail. Likely, you’ll find more of the same as in: “without cashing it.”]

Consistent with California law, the landlord served a three-day notice on its tenant. The notice said that “there was ‘unpaid and delinquent rent’ of $507.61 for June 2107.” It also said that if the tenant didn’t pay the delinquent rent within three days, the landlord “does hereby elect to declare a forfeiture of the subject lease … and will institute legal proceedings for the lawful detainer … to recover possession of the premises ….” After what appears to be a week or so after the end of the 3- day period, the tenant sent its check for the full amount and also included a second check as early payment of July’s rent. By that time, the landlord had sued to evict its tenant.

In what was a surprise to us, there was a jury trial. The jury’s found that the tenant HAD paid the rent. Presumably (according to the appellate court) this was because the jury decided that the landlord had prevented the payment by returning the check. In response to an appeal by the landlord, the appellate court held that the jury had clearly erred. In its view, although the tenant had tendered a deficient rent payment, the landlord had not accepted the check and, consequently, the rent was, in fact, NOT paid. Under the relevant statute, if a tenant is in default in the payment of rent after a three-day notice is served, it may be evicted.

[Another digression: The appellate court noted that the word, “default” was not defined in the statute. So, “[t]o ascertain the common meaning of a word, ‘a court typically looks to dictionaries.’” In this case, the judges looked at the Oxford Dictionary’s online version, and used this definition for “default”: “failure to do something required by duty or law.” Shocked as some readers might be, this translated to: the tenant was in “default” because it didn’t pay the required rent. As to defining more interesting words, and how “dictionaries may differ,” take a look at this blog posting from long ago by clicking: HERE. Now, we return to our regular programming.]

In the original trial, the jury below was asked to answer more than just whether the rent had been paid. It was asked to make findings as to whether: (a) the landlord had breached the warranty of habitability; (b) the landlord was retaliating against its tenant because the tenant had previously asserted some legal rights; (c) the landlord had violated the implied covenant of good faith and fair dealing; and (d) the breach was material enough to support a forfeiture (i.e., eviction). But, once the jury ruled that the rent had been paid, it never got to those questions.

Here’s a little pointer about evictions, a particular class of “forfeiture.” As Ruminations has written many times, a lease is a two-headed creature. It is a document of “conveyance” in that a property-owning landlord is giving its tenant an “interest in real property,’ that being exclusive possession of the leased space (and that is real property) for a period of time. It is also a contract defining the non-conveyance rights and duties of the parties, such as who fixes what. Generally speaking, contractual terms are strictly enforced. [Pay attention to our use of “generally.” There isn’t enough time left in life to explore all the facets of “generally.”] What the non-breaching party almost always gets are monetary damages. On the other hand – no, he didn’t wear a glove – the remedy for breach of a “conveyance” obligation is an “equitable” one. The basic “conveyance” obligations are: Tenant pays its rent; landlord gives tenant the right of exclusive possession. Breach one, and the other party can seek a judicial, equitable remedy, not monetary damages.

So, the appellate court, having ruled that the jury had no legitimate basis to find that the tenant had actually paid the rent, sent the matter back to the lower court for another (presumably) jury trial so that finding could be made as to (a) through (d) above.

Fair enough, readers will say. If the jury was wrong and the rent was, in fact, unpaid, there was no choice but to send the matter back. After all, appellate courts rarely, rarely make factual determinations. Trial courts do that. Therefore, we haven’t learned much more than if a tenant doesn’t pay its rent, it can be evicted. So, why has Ruminations wasted your time? Here’s why.

The monthly rent was $507.61. The rent check was a penny short.

Way back at the top, did we say that we would cover the concept of “pretext”? We just did.

Two jury trials and one visit (so far) to an appellate court: the landlord will need that extra penny to pay its legal bills. The tenant might be paying as well. Perhaps the lease includes an attorneys fee provision; perhaps, not.

We don’t recommend that you read the appellate court’s decision. We don’t think it is well written. But, if you insist, ask yourself why didn’t the court rule on the issue of the equity of this particular eviction once it accepted, as a fact, that the check was a penny short.

A pretext is expensive and hardly ever hidden. We think landlords and tenants should confront each other directly. Yet, others disagree and that includes some of our readers. We don’t know how many. As to those, let’s just agree to disagree without being disagreeable. What is more, we’d feel good if we heard that there were attorneys who turned this case away.

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  1. Tim Scott says:

    The opinion’s first sentence said all that was needed (in Cali). “Bad faith”. Tenant won b/c the jury decided it had paid the rent, but it wasn’t instructed on the defenses of bad faith & materiality of breach (your (c) and (d) above). The appellate court overturned b/c the jury’s factual finding was wrong (technically correct), but reiterated that unlawful detainer is an equitable remedy and it outlined the equitable defenses (c & d) – essentially prejudging the retrial in favor of the tenant.
    Trial judge blew it on instructions. Appellate Court made a big thing out ordering a retrial in order to establish the proper foundation for no difference in result.
    Zero chance a Cali LL could win unless tenant put up no fight and quietly left. Good Cali. counsel would have laughed out loud at LL when asked to prosecute on these facts – and would have argued forcefully against appeal, even with the misguided factual finding.
    The appellate court could have said the jury had found any shortfall to be de minimus thus establishing the equitable defenses and ending the matter, without a retrial. It could have left the decision unpublished to avoid any precedent.
    What a colossal waste of resources for the foolishness of LL in using the worst pretext I’ve ever heard of. And yet the lawyers get blamed.

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