Allocation/Employment/Landlord-Tenant/Section 1717: Wild Landlord/Tenant And Minimum Wage Earner Battle Means All Fee Awards Had To Be Reversed

Rental Inhabitability Battles Are Contractual, Giving Rise to 1717 Fee Exposure, While Limited Success On Minimum Wage Mandatory Fee-Shifting Claims Requires Apportionment and Possible Reduction.

      This next case is hard to pigeonhole, because it involves cross-over issues in the Landlord/Tenant and Employment post sites. However, Staley v. Carlson, Case No. A133115 (1st Dist., Div. 1 Dec. 23, 2013) (unpublished) is worthy of discussion in the lease inhabitability and minimum wage areas, where contractual and statutory fee entitlement issues are at stake.

     This wild battle pitted a couple hired to be caretakers of a dog kennel property (tenants/employees) who were provided with mobile home rental housing by their employers (landlords), which rental was guaranteed by one of the tenant’s father.

     White House kennel keeper and woman with three airedales of Warren G. Harding.  Library of Congress.

     Eventually, tenants were evicted, losing an inhabitability defense and with guarantor father getting hit with some damages/fee exposure, though the latter is not relevant to our post. After the dust settled in quite a litigation between the parties, tenants/employees prevailed on minimum wage/hour claims, netting about $40,000 out of a requested $400,000 in a suit with lots of claims, and with landlords obviously prevailing in the eviction action. Both sides asked for fees, but only one side won: landlords did not get any fees for defeating the inhabitability claims, while tenants, in their status as employees, won $288,893.20 in fees for prevailing on the wage/hour Labor Code claims.

     On appeal, the fee orders were reversed, in an eloquent opinion which still had to comb through wild facts and disparate legal claims.

     Landlords were entitled to contractual Civil Code section 1717 fees under the lease against tenants. After all, even though both parties admitted that statutory inhabitability claims were not at issue, the inhabitability claims were nonetheless common law contractual–not just common law tort–claims entitled to 1717 fee entitlement. Erroneous to deny fees to landlords.

     Tenants/employees’ fee award was overturned, too. Because they were only entitled to mandatory fees under Labor Code section 1194(a), the minimum wage violations, employees could not garner fees for section 218.5 violations. Employees only had limited success, a factor which had to weighed when it came to apportioning fees and determining the amount that was right on the minimum wage/hour “successful” claims–notwithstanding the strong public policy in favor of 1194(a) fee awards.

     All was reversed and remanded for another potential free-for-all, although we can only hope this matter gets resolved. If not, we may be reporting on the sequel in the future, God (or spirits) willing.