Landlord’s Rejection of Equipment Transfer Settlement Offer Did Not Impact Fee Recovery, Because Equipment Transfer Worth Less Than Rental Damages.
In Via Montana, LLC v. Pearson Realty, Inc., Case No. F061975 (5th Dist. Nov. 6, 2012) (unpublished), landlord won a little over $202,411 for unpaid rent and restaurant tenants won $3,550 for a conversion claim. Based on a fees clause in the lease between the parties, prevailing party landlord requested fees of $314,456.50 (smartly reducing its total requested expenditures by 25%), and the trial court awarded most of them–$313,424.45. Tenants then appealed the fee award.
The Fifth District affirmed in a comprehensive opinion authored by Presiding Justice Hill.
Tenant first (and primarily) argued that landlord’s fees could have been avoided had it accepted a settlement offer to transfer equipment, based on a case where fees were limited where a party provided a reasonable settlement offer that was rejected by the other side. (See Mesiter v. Regents of University of California, 67 Cal.App.4th 437 (1998).) The problem here was that landlord had unpaid rent of over $200,000, and the equipment transfer offer was worth somewhere between $87,000-$150,000, so the settlement offer was not more favorable than the unpaid rental damages.
Tenant next complained about unsuccessful, meritless, or repetitive motions, but the appellate court observed that compensation is ordinarily warranted even for unsuccessful forays by an overall prevailing party. (City of Sacramento v. Drew, 207 Cal.App.3d 1287, 1303 (1989).)
The excessive fees argument did not persuade because, after all, landlord did voluntarily reduce its request by 25% at the outset, and the experienced trial judge is the best referee as to amount of fees awardable.