Landlord/Tenant: 1/4 DCA Affirms $44,736.50 Attorney Fees Award To Landlord For Trial Court And Appellate Work In Enforcing Settlement Agreement With Attorney Fees Provision

Tenants Had Waived Their Right To Appeal, And Failed To Support Their Claim That The Settlement Agreement As A Whole Was Unenforceable Due To Violations Of Civ. Code §§ 1942.1 and 1953.

            In Park Lane Associates, LP v. Alioto, Case No. A155781 (1^st Dist., Div. 4 March 5, 2021) (unpublished), plaintiff landlord and defendant tenant couple entered into a settlement agreement with a stipulation for entry of future judgment, in the event of breach of the agreement, following a dispute regarding disruptive construction in the penthouse above defendant tenants’ apartment.  The settlement agreement – which included an attorney fees provision – forgave one month of defendants’ arrearages in rent and reduced their rent by $1,000 for 11 months.  In return, defendants agreed to hold plaintiff harmless for any inconveniences resulting out of all past, current and future construction occurring in or around the building.  Additionally, defendants waived their right to appeal should judgment be entered.  Four months later, defendants withheld their rent and joined other tenants in a lawsuit against plaintiff seeking damages and injunctive relief as a result of the ongoing construction work in the penthouse.

            Plaintiff then moved to enforce the agreement – contending defendants breached the agreement.  The trial court entered judgment pursuant to the terms of the agreement, but stayed the judgment on the condition that defendants reimburse plaintiff for its attorney fees in bringing the motion.  After the trial court lifted the stay, defendants unsuccessfully appealed – claiming the trial court abused its discretion in lifting the stay and declining to relieve defendants of their obligation to pay plaintiff’s attorney fees.

            Afterward, plaintiff moved post-judgment for $56,393.50 in fees it incurred in the trial court and on appeal.  After some deductions for entries unrelated to enforcement of the settlement agreement, the trial court awarded plaintiff $44,736.50 pursuant to the fee provision in the agreement. 

            Defendants appealed, claiming the fees provision was invalid as the agreement violated Civ. Code §§ 1942.1 and 1953, and was as a whole unenforceable as against public policy because a tenant’s rights to a tenable and habitable dwelling cannot be waived by agreement. 

            The 1/4 DCA affirmed – finding no substantial injustice in enforcing the agreement.  Defendants had entered into the agreement when they were facing termination of their tenancy under the Ellis Act – acknowledging that construction in the penthouse would continue, and agreeing that forgiveness of the one month of arrearages and a reduction in 11 months of rent was sufficient compensation for the disruptions related to the construction.  Additionally, defendants failed to show that their apartment substantially lacked the standard characteristics set forth in section 1941.1.  As to section 1953 – which prevents tenants from waiving certain procedural rights in a residential lease agreement – the panel found no substantial injustice in allowing parties to waive claims in settling litigation.  “[T]enants and landlords [can], however, waive or modify procedural rights in an agreement entirely independent of the rental agreement.” (Williams v. 3620 W. 102nd Street, Inc., 53 Cal.App.5th 1087, 1092 (2020), citing Jaramillo v. JH Real Estate Partners, Inc. 111 Cal.App.4^th 394, 404 (2003).