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  • May 13, 2020 05:08:20 PM
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Real estate, business and bankruptcy law in California. Call for a free consultation. 951-888-3300.

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Cost of Partition Action in California

How Much Does a Partition Action Cost in California? The post Cost of Partition Action in California appeared first on Talkov Law.

Partition Attorney Lawyer California Riverside Inland Empire Law

How Much Does a Partition Action Cost in California?

As partition attorneys in California, we are often asked about the cost of a partition action. Since attorneys are the largest cost, the real question is how much are the attorney’s fees for a partition lawsuit in California?
The definition of a partition action (see California Code of Civil Procedure Section 872.210) is a lawsuit to divide real estate fairly among its co-owners. Since these cases usually involve a single family home or other improved properties, the division is of the equity in the property, which means that the property is sold to a third-party or refinanced by one of the co-owners.
In California, the cost of a partition action and attorneys fees can vary depending on the complexity of the dispute. Attorney’s fees can range from $4,000 to $8,000 for the plaintiff or defendant. However, some attorneys, including those at Talkov Law in Riverside, are able to handle certain partition disputes on a contingency basis where there is equity in the property, meaning you do not pay attorney’s fees until you win, which is when the property is sold or refinanced.

This average range of costs for a partition, based on dozens of partition lawsuits handled by the attorneys at Talkov Law, include the drafting of a complaint, a cover letter to be served with the complaint explaining that attorney’s fees can be recovered in a partition for non-cooperation by a co-owner, simple negotiation with the co-owner usually relating to offsets allowed in a partition action, communication with a real estate broker who will list and sell the property, and drafting an agreement to sell the property with certain offsets. This would be a normal case for which the hourly rate multiplied by the hours involved would probably be around $4,000 to $8,000 from the beginning to the end of a partition lawsuit. Sometimes this only involves a threatened partition lawsuit whereby the attorney sends a draft complaint that causes cooperation by the co-owner.

However, supposing the co-owner does not cooperate, but also does not litigate. In such cases, the matter goes to a default because the co-owner does not respond when served with the summons and complaint. In those cases, the attorney would be required to prepare paperwork appointing a referee, who is usually a real estate broker, to list and sell the property. Even though the word “sell” is used, the buyer is often one of the co-owners, even if the property is sold by the court. The drafting of such interlocutory orders to appoint a referee and confirm the sale, in addition to the hearings on such matters, might add another $4,000 or so, bringing the range closer to $8,000 to $12,000 in total for the plaintiff.

However, there are times where a lawsuit is filed, but the defendant resists the partition efforts. These complications would increase the cost of a partition of real property action beyond the estimated range. Examples of such complications increasing the cost of a partition action are follows:

  1. Drafting discovery to the co-owner(s) or third parties;
  2. Responding to discovery from the co-owner(s);
  3. Discovery disputes, including motions to compel discovery responses;
  4. Motions and disputes over the appointment of a referee;
  5. Non-cooperation with the referee and/or real estate broker appointed to list and sell the real property;
  6. Disputed liens on the property that appear on a preliminary title report, including judgments, mechanic’s liens, tax liens, etc.;
  7. Negotiating cash for keys for any occupants of the property;
  8. Disagreements about the list or sale price of the property;
  9. Disagreement, motions and trials relating to offsets claimed by one party against the interest of a co-owner;
  10. Disputes as to ownership, e.g., whether a particular party is only a legal owner on title, but holds no equitable ownership of the property;
  11. Related cases or legal issues, such as a trust and estate dispute or family law litigation, all of which will add complexity; and
  12. Difficulties in locating any defendants in the case, thereby requiring a potential application to serve by publication;

Note that this estimate is only related to the attorney’s fees. Court costs are usually fairly minimal. However, additional costs include the fees for a court-appointed referee, as well as normal costs of sale, such as a broker’s commission.

Keep in mind that the right to partition is absolute for all co-owners in California, so it is important to work with an experienced partition attorney to end a co-ownership relationship that has caused numerous problems. Our attorneys have litigated partition cases throughout the State of California, including Riverside, Los Angeles, Orange and San Bernardino counties. Call the experienced real estate attorneys at Talkov Law at (951) 888-3300 or contact us online for a free consultation about your case.

The post Cost of Partition Action in California appeared first on Talkov Law.


Contract Termination Complaint Due to Coronavirus Pandemic [Free Draft Lease Cancellation Lawsuit Template Example]

Are you are trying to get out of your lease or otherwise breach and terminate a contract due to the Coronavirus (COVID-19) pandemic without damaging your credit score? The post Contract Termination Complaint Due to Coronavirus Pandemic [Free Draft Lease Cancellation Lawsuit Template Example] appeared first on Talkov...

Contract-Termination-Complaint-Due-to-Coronavirus-Pandemic-free-template-scaled

Complaint for Cancellation of Lease / Contract Due to Coronavirus Pandemic

Are you are trying to get out of your lease or otherwise breach and terminate a contract due to the Coronavirus (COVID-19) pandemic without damaging your credit score? Fortunately, the Coronavirus pandemic has created a seemingly unforeseeable situation that may be deemed by courts to be a force majeure (sometimes called an act of God), a frustration of purpose, or to give rise to an impossibility or impracticability of performance, thereby allowing the lease or contract to be terminated.

If our force majeure letter requesting termination of contract due to the Coronavirus pandemic does not have the desired effect, the next step is a lawsuit seeking to cancel (terminate) the contract or lease at issue. Indeed, walking away from a contract creates the uncertainty of whether the other party to the contract, such as a landlord, may file a lawsuit, send you to collections, which may damage your credit rating. To avoid this risk, it is best to obtain a written agreement that the other party to the contract has released you in full from your obligations upon conditions deemed acceptable to them. However, if they will not do so, your next best option may be a lawsuit requesting that the court cancel the contract so that your actions are not considered a breach of contract.

It is always import to contact a lawyer to assist you before attempting to file a lawsuit, particularly where the attorney’s fee clause in the contract allows the other party to the contract to recover attorney’s fees if they prevail.

Free Coronavirus Force Majeure Contract / Lease Termination Contract Example Template:

[NAME]

[ADDRESS]

[TELEPHONE NUMBER]

[EMAIL]

Plaintiff, [entity], alleges herein as follows:

INTRODUCTION

  1. This is an action for termination of a commercial lease due to impracticability of performance, force majeure and frustration of purpose for a commercial warehouse located at [insert property address/APN]. The unforeseeable events transpiring from the Coronavirus pandemic have made performance impracticable for Plaintiff by means of inability to procure the goods it stores and distributes from the premises in addition to the lack of demand for those goods due to the Coronavirus pandemic and resulting governmentally-ordered shutdown of the vast majority of the economy, meaning performance would be at an extreme financial loss. Plaintiff began reaching out to the landlord-Defendant on [insert date] due to these issues, which were only exacerbated by Governor Newsom’s mandatory, statewide shelter-at-home order dated March 19, 2020. There is no foreseeable improvement for Plaintiff’s business such that termination of the lease, dissolution of its corporate existence, liquidation of its minimal assets with limited wholesale value and nominal, pro-rata payment to its numerous, unsecured creditors is the only viable option.

THE PREMISES

  1. The subject of this action is certain real property comprised of a commercial

warehouse within the [insert property address/APN] (the “Premises”).

PARTIES

  1. Plaintiff is a California [entity] (“Plaintiff” or “Plaintiff”) doing business within the State of California from the commercial space located at [insert property address/APN]. Plaintiff’s business consists of importation of goods for resale.
  2. Defendant [insert Defendant entity name] is a [insert entity type] (“Defendant”) doing business in the [insert county and state], and is presently the owner(s) of the commercial space located at [insert property address/APN].
  3. Plaintiff does not know the true names and capacities of the defendants sued as Does 1 through 10, inclusive, and therefore sues these defendants by such fictitious names. Plaintiff will amend its complaint to add the true names and capacities of these defendants when they are ascertained. Each of the fictitiously named Doe defendants is responsible for Plaintiff’s damages and/or the subject premises.

JURISDICTION

  1. This Court has jurisdiction over this matter for the reason that the amount in question exceeds the jurisdictional minimum of the Court, exclusive of costs and interest.

VENUE

  1. Venue is proper in the [insert county and state] because the real property that is the subject of this action is located in [insert county]. Furthermore, the contract which was signed by the parties was to be performed within the [insert county and state].

GENERAL ALLEGATIONS

  1. On or around [insert date lease was entered into], a lease agreement was made between Plaintiff and Defendant, a true and correct copy of which is attached as Exhibit 1 (the “Lease”), relating to the Premises. [If applicable, insert additional information about the Premises i.e. square feet, unique leasehold modifications etc.].
  2. The Lease provides [insert the term of the Lease and payment terms].
  3. [Insert relevant Lease section, paragraph etc.] Lease provides that the permitted uses of the Premises are [insert quoted section from Lease regarding permitted uses of the Premises].
  4. [Insert relevant Lease section, paragraph etc.] of the Lease provides that [insert quoted section from Lease regarding permitted uses of the Premises].
  5. [If applicable, insert relevant Lease sections that Defendant landlord may be in breach of].      A. In November 2019, the Novel Coronavirus (COVID-19) Begins to Infect a Portion of the Chinese Population, Ultimately Spreading Throughout the World
  1. On or around November 30, 2019, a novel coronavirus, hereafter referred to as the “Coronavirus” began to infect a portion of the Chinese population near and around the city of Wuhan, China. This virus was particularly devastating and, unlike the flu to which the Coronavirus has been frequently compared, it had a much higher mortality and transmission rate.
  2. The virus quickly began to spread outside the city of Wuhan to neighboring Chinese cities. In a matter of weeks, the virus had spread outside of mainland China and began to seriously impact other nations, including the United States, which as of the time of this complaint has the highest recorded number of cases and over 91,000 deaths, over a quarter of the world’s death total.
  3. The World Health Organization declared the Coronavirus a Global Pandemic in Mid-March of 2020. As a result, many nations enacted strict quarantines to curb the growth rate i.e. “flatten the curve”. As expected, the effect of these protective measures on businesses was immediate. Some businesses were labeled as essential and could continue operating while others were able to adapt to remote working, utilizing video-conferencing platforms such as Zoom, Google Hangouts, and various other forms of communication technology.
  4. However, the majority of businesses were not deemed essential and many employees did not have the luxury of working from home. Factory workers for example, were largely deemed non-essential and were required to remain at home, essentially eliminating factory production in certain areas of the world altogether for extended periods of time, severely effecting Plaintiff’s ability to acquire necessary goods.
  5. At present the Coronavirus is not globally contained and continues to grow, infecting more people at an exponential rate despite the global communities’ best efforts to contain its spread.                                                                                                                                                               B. The Coronavirus Has Effectively Shut Down Plaintiff’s Business
  1. Plaintiff’s business relies on imported goods stored on the Premises for distribution to its customers. In the weeks following the discovery of the Coronavirus, [specify how the Coronavirus pandemic and subsequent preventative measures impacted your business i.e. shutdown of factories, disruption of supply chain, etc.].
  2. [Insert specific facts regarding how acquiring substitute goods/identical goods from other sources has also been impacted by the worldwide spread of the Coronavirus pandemic].           C. The Effect of the Coronavirus Pandemic Has Frustrated the Commercial Purpose of the Lease and Made Performance Impracticable
  3. Further, the Coronavirus has frustrated the purpose of the Lease, which is limited under [insert quoted section from Lease regarding permitted uses of the Premises].
  4. “Frustration is a question of fact resolved in its favor by the trial court. The excuse of frustration, however, like that of impossibility, is a conclusion of law drawn by the court from the facts of a given case” Mitchell v. Ceazan Tires, Ltd. (1944) 25 Cal.2d 45, 48.
  5. Mitchell is cited by the Judicial Council of California Civil Jury Instructions for a breach of contract, providing that, “certain defenses are decided as questions of law, not as questions of fact. These defenses include frustration of purpose, impossibility, and impracticability.” CACI 300 (citing Mitchell, surpa; Autry v. Republic Productions, Inc. (1947) 30 Cal.2d 144, 157; Oosten v. Hay Haulers Dairy Employees and Helpers Union (1955) 45 Cal.2d 784, 788; and Glen Falls Indemnity Co. v. Perscallo (1950) 96 Cal.App.2d 799, 802).
  6. “Impracticability does not require literal impossibility but applies when performance would require excessive and unreasonable expense. Where performance remains possible, but the reason the parties entered the agreement has been frustrated by a supervening circumstance that was not anticipated, such that the value of performance by the party standing on the contract is substantially destroyed, the doctrine of commercial frustration applies to excuse performance.” Habitat Tr. for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App. 4th 1306, 1336.
  7. Courts have also held “performance may be so difficult and expensive that it is described as ‘impracticable,’ and enforcement may be denied on the ground of impossibility.”  City of Vernon v. City of Los Angeles (1955) 45 Cal. 2d 710, 719; see Habitat, supra, 175 Cal.App. 4th 1306.
  8. When performance under a contract is only possible at excessive and unreasonable costs, Courts in have held that if “performance may be so difficult and expensive that it is described as ‘impracticable,’ and enforcement may be denied on the ground of impossibility.” City of Vernon v. City of Los Angeles (1955) 45 Cal. 2d 710, 719.
  9. The inability for Plaintiff to procure goods has made it a near impossibility for Plaintiff to perform its duties under the Lease.
  10. Accordingly, Plaintiff hereby alleges that it is, and has been for some time, practically unable to procure the goods required to operate its business. Further, Plaintiff alleges that the commercial purpose of the Lease has been frustrated by the Coronavirus Pandemic and subsequent governmental measures, resulting in Plaintiff inability to perform under the Lease.                                                                                                                                                              D. The Effect of the Coronavirus Pandemic Constitutes Supervening, Unforeseeable Event Under the Force Majeure Clause in the Lease, Thereby Entitling Plaintiff to Cancellation of the Lease
  11. Force majeure as an excuse for non-performance is set forth in California Civil Code § 1511(2), which expresses the legislature’s intent that several causes excuse performance as follows: “The want of performance of an obligation, or of an offer of performance, in whole or in part, or any delay therein, is excused by the following causes, to the extent to which they operate:… When it is prevented or delayed by an irresistible, superhuman cause,… unless the parties have expressly agreed to the contrary.”
  12. [Insert force majeure clause section in the Lease], in relevant part, that:

If either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lock-outs, labor troubles, inability to procure materials, failure of power, governmental moratorium … insurrection, war, terrorism, bioterrorism, fire, earthquake, inclement weather including rain, flood or other natural disaster or other reason of a like nature not the fault of the party delaying in performing work or doing acts required under the terms of this Lease… performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such Force Majeure Delay.                                                                                                                                             (hereinafter referred to as the “Force Majeure Clause”).

  1. Indeed: “‘Force majeure,’ . . . is not necessarily limited to the equivalent of an act of God. The test is whether under the particular circumstances there was such an insuperable interference occurring without the party’s intervention as could not have been prevented by the exercise of prudence, diligence and care.” Pacific Vegetable Oil Corporation v. C. S. T., Ltd. (1946) 29 Cal.2d 228; see e.g. Squillante v. California Lands (1935) 5 Cal. App. 2d 89 (grower of grapes held not liable on contract to deliver quality of specific variety of grapes due to extraordinary heat conditions affecting vineyards).
  2. The Coronavirus pandemic is a supervening unforeseeable event, akin to an act of god, or biological attack, which has delayed, hindered, and prevented performance under the Lease.
  3. Due to the Coronavirus pandemic, Plaintiff hereby alleges that it is, and has been for some time, practically unable to procure the goods required to operate its business.
  4. Plaintiff alleges that it has been materially delayed, hindered, and prevented from the economically feasible performance of its business because of the Coronavirus pandemic, which was not the fault of Plaintiff, and thereby Plaintiff alleges it should be released from the Lease Agreement due to the unforeseeable events which transpired because under the Force Majeure clause in the Lease.

FIRST CAUSE OF ACTION

(Cancellation of Contract (Lease) Due to Frustration of Purpose, Commercial Impracticability, and/or Force Majeure – Against All Defendants)

  1. Plaintiff repeats and realleges the allegations set forth above as though fully set forth herein.
  2. The global effects of the Coronavirus have made Plaintiff’s obligations under the contract impracticable, thereby entitling Plaintiff to suspend any and all performance under the contract.
  3. In case at hand, Plaintiff requires [insert specific facts that have prevented performance i.e. inability of suppliers to procure goods]. The production, shipment, and distribution of goods have all been materially affected by the Coronavirus, limiting not only the amount of goods but also the manner in which they can be procured. [Insert additional specific facts that have prevented performance i.e. inability of suppliers to procure goods]. By being unable to secure the goods, Plaintiff was materially harmed by the unforeseeable events of the Coronavirus, from which recovery will not be financially practical.
  4. The Coronavirus and subsequent global effects were an unforeseeable event in which was beyond the control of Plaintiff, and no amount of skill, good diligence or good faith could have prevented or even mitigated. Additionally, neither Plaintiff nor Defendant could have reasonably foreseen or anticipated at the time they signed the Lease that a global pandemic would effectively shut down the global production of goods for the foreseeable future. As a matter of law, the Coronavirus pandemic was a supervening circumstance which was not anticipated and made performance impracticable.
  5. Given the facts which have transpired since the origination of the Coronavirus, it is evident that Plaintiff performance under the Lease agreement have become legally and factually impracticable thereby frustrating the purpose of the Lease and, therefore, Plaintiff’s performance of making lease payments under the original Lease are excused.
  6. Even further, the Coronavirus pandemic constitutes a force majeure event entitling Plaintiff to termination of the Lease.
  7. Plaintiff requests a judgment cancelling the Lease effective [insert last date that Lease payments were made].

SECOND CAUSE OF ACTION

(Declaratory Relief re: Cancelation of Contract (Lease) Due to Frustration of Purpose, Commercial Impracticability, and/or Force Majeure – Against All Defendants)

  1. Plaintiff repeats and realleges the allegations set forth above as though fully set forth herein.
  2. Under Code of Civil Procedure 1060: “Any person interested under a written instrument . . . or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.”
  3. In the above-captioned matter, an actual controversy has arisen and now exists between Plaintiff, on one hand, and Defendants, on the other hand, concerning their respective rights and duties with regard to whether further sums are owed under the Lease.
  4. Specifically, Plaintiff contends that no further sums are owed under the Lease due to the affirmative defenses to contract as a result of the Coronavirus pandemic.
  5. However, Defendants contend that Plaintiff continues to owe rent under the Lease despite the Coronavirus pandemic.
  6. A judicial declaration is necessary and appropriate at this time under the circumstances in order that Plaintiff may ascertain its rights and duties with relation to the Lease.
  7. Plaintiff request a judgment declaring that the Lease terminated effective [insert last date that Lease payments were made].

WHEREFORE, Plaintiff prays for judgment against all Defendants as follows:

  1. For termination of the Lease effective [insert last date that Lease payments were made];
  2. For a declaration that the Lease is terminated effective [insert last date that Lease payments were made];
  3. For costs of suit incurred herein;
  4. For such other and further relief that the court may deem just and proper.

DATED:

___________________

Attorney for Plaintiff

Contract Termination Complaint-Due-to-Coronavirus-Pandemic-free-template.docx

Contract Termination Complaint-Due-to-Coronavirus-Pandemic-free-template.pdf

Notice: Please contact an attorney to advise you of your rights upon an assessment of the facts in your case before using this letter. If you are trying to terminate a contract where the amount still owed is significant (e.g., more than $25,000), it is strongly advised that you contact a business attorney or bankruptcy lawyer to consider all of your options. 

The post Contract Termination Complaint Due to Coronavirus Pandemic [Free Draft Lease Cancellation Lawsuit Template Example] appeared first on Talkov Law.


Talkov Law Prevails for Commercial Tenant: Court of Appeal Affirms Demurrer Sustained Without Leave to Amend Landlord’s Complaint

Continuing Nuisance Claims are Subject to Issue and Claim Preclusion The post Talkov Law Prevails for Commercial Tenant: Court of Appeal Affirms Demurrer Sustained Without Leave to Amend Landlord’s Complaint appeared first on Talkov Law.

Court of Appeal - California

Court Rules that Continuing Nuisance Claims are Subject to Issue and Claim Preclusion From Prior Litigation

Talkov Law, a preeminent real estate and business law firm based in Riverside, California, has prevailed at the appellate court in affirming the trial court ruling sustaining a demurrer to a complaint without leave to amend. This ruling means that the lawsuit has come to an end with the plaintiff paying the attorney’s fees of the defendant at the trial court and on appeal under the attorney’s fees provision of the lease.

The case involved a litigious landlord who has filed dozens of lawsuits relating to the same vacant, commercial property located in Pomona, California leased more than a decade ago to a commercial tenant. In 2010, the landlord filed suit alleging waste, among other causes of action, as a result of the commercial tenant parking trucks on the vacant property and adding “uncertified” fill dirt to level the vacant land. In response, the tenant filed a motion for summary adjudication on the negligence and waste cause of action, which the court granted in finding that the landlord could not establish that the tenant had caused any harm on the property.

In 2018, the landlord filed suit once again, this time alleging that the tenant had committed a continuing nuisance, claiming that a new cause of action arises every time that the nuisance, alleged to have occurred in 2009, causes damage to the landlord’s property. The landlord believed that there was no hurdle from the summary judgment ruling in the prior case finding that alleged damage from 2009 never occurred.

However, the Los Angeles County Superior Court – Pomona Division found that the landlord was wrong to believe that 2018 continuing nuisance complaint could proceed in light of the summary judgment ruling in the prior case. According, the state court sustained the demurrer filed by Scott Talkov and Chris Kiernan without leave to amend to the complaint filed by the landlord. This was despite general judicial lenience allowing a plaintiff leave to amend. The trial court’s ruling was based on issue and claim preclusion from the prior litigation.

Scott Talkov AttorneyThe landlord was not satisfied with the result, deciding to appeal the decision. However, the court of appeal once again sided with the commercial tenant represented by Talkov Law, issuing its appellate decision on May 18, 2020 affirming the trial court’s ruling.

The Court of Appeal explained that: “Bayati argues the first and second lawsuits do not involve identical issues of harm. We disagree. His first lawsuit raised issues of harm related to the alleged contamination of the properties by Town Square’s leaking vehicles and machinery and the use of uncertified fill dirt. The court in the first lawsuit found no triable issue on causation; there was no evidence from which a trier of fact could conclude Town Square had caused any contamination of Bayati’s properties. Hence, Bayati could not prove his negligence and waste causes of action.”

Chris Kiernan Attorney CaliforniaUltimately, the Court of Appeal ruled that: “Even though Bayati contends the contaminants have migrated, the issue of causation in the second lawsuit is identical because the first judgment established Town Square did not cause the contamination in the first place.” Unfortunately for the landlord, the lease contains an attorney’s fee provision allowing the commercial tenant to recover their fees as the prevailing party.

Scott Talkov, President of Talkov Law Corp., described this ruling as “a dream result for any defendant.” Talkov explained that “the case never got out of the starting gate, but now the plaintiff will be required to pay the defendant’s legal fees. Every defendant wishes they could have such an impressive result.”

About Talkov Law

Talkov Law is one of Southern California’s preeminent law firms for real estate, business and bankruptcy litigation, disputes, trials and appeals. Talkov Law’s President, Scott Talkov, has been named a Rising Star by Super Lawyers magazine eight consecutive years. Based in Riverside, California, the Firm has helped clients of local, regional, and national prominence.

This blog post describes the ruling in Kahtan B. Bayati, Trustee of Kahtan Bayati Living v. Town Square M. Properties, LLC, California Court of Appeal Case No. B295426, which arose from Los Angeles County Superior Court Case No. KC069904 (consolidated with KC069113).

The post Talkov Law Prevails for Commercial Tenant: Court of Appeal Affirms Demurrer Sustained Without Leave to Amend Landlord’s Complaint appeared first on Talkov Law.


Frustration of Purpose Due to Coronavirus? [Doctrine Cases Definition Example Defense California]

What is Frustration of Purpose Under California Law? The post Frustration of Purpose Due to Coronavirus? [Doctrine Cases Definition Example Defense California] appeared first on Talkov Law.

Breach of Contract Attorney California Riverside

What is Frustration of Purpose Under California Law?

Has the Coronavirus pandemic created a frustration of purpose to a contract?

The Coronavirus (COVID-19) pandemic has caused many contracting parties in California and elsewhere, including landlords, tenants, property owners and property managers, to ask if frustration of purpose may allow parties to avoid liability in part or in full.

As Rutter explains: “This defense applies when performance is not impossible or impracticable, but has become pointless—i.e., the main purpose of a contract has become frustrated. [See La Cumbre Golf & Country Club v. Santa Barbara Hotel Co. (1928) 205 C 422, 425-426, 271 P 476, 477—hotel agreed to pay monthly amount to golf course for use by guests, but hotel burned down].” Cal. Prac. Guide Civ. Pro. Trial Claims and Def. Ch. 9(I)-C.

As the leading case on frustration of purpose explains: “Although the doctrine of frustration is akin to the doctrine of impossibility of performance since both have developed from the commercial necessity of excusing performance in cases of extreme hardship, frustration is not a form of impossibility even under the modern definition of that term, which includes not only cases of physical impossibility but also cases of extreme impracticability of performance. Performance remains possible but the expected value of performance to the party seeking to be excused has been destroyed by a fortuitous event, which supervenes to cause an actual but not literal failure of consideration. The question in cases involving frustration is whether the equities of the case, considered in the light of sound public policy, require placing the risk of a disruption or complete destruction of the contract equilibrium on defendant or plaintiff under the circumstances of a given case.” Lloyd v. Murphy (1994) 25 Cal. 2d 48, 53–54.

With respect to landlords and tenants disputing these issues as they relate to leases, Lloyd explained that: “Even more clearly with respect to leases than in regard to ordinary contracts the applicability of the doctrine of frustration depends on the total or nearly total destruction of the purpose for which, in the contemplation of both parties, the transaction was entered into.”

Lloyd placed further limits on the application of frustration of purpose as follows: “The doctrine of frustration has been limited to cases of extreme hardship so that businessmen, who must make their arrangements in advance, can rely with certainty on their contracts. The courts have required a promisor seeking to excuse himself from performance of his obligations to prove that the risk of the frustrating event was not reasonably foreseeable and that the value of counterperformance is totally or nearly totally destroyed, for frustration is no defense if it was foreseeable or controllable by the promisor, or if counterperformance remains valuable.”

The leading treatise on California real estate law, Miller & Starr, explains that, “in some cases, when the lease specifies and restricts the use of the premises to a specific purpose, the tenant may be given the right to terminate the lease under the doctrine of “commercial frustration” if it cannot use the premises for that purpose.” Commercial frustration, 10 Cal. Real Est. § 34:166 (4th ed.) (citing Industrial Development & Land Co. v. Goldschmidt (1992) 56 Cal. App. 507, 509–510).

As it relates to the Coronavirus pandemic, tenants may be wise to argue that a complete governmental shutdown that impacted their industry was not reasonably foreseeable. A tenant may also need to show that the value of the landlord’s provision of the leased space has been totally or nearly totally destroyed by the governmental prohibition on the operation of their business. Articles in the National Law Review and elsewhere on this legal doctrine of frustration of purpose reflect how the pandemic has impacted many industries. Related doctrines include impossibility of performance, impracticability of performance and force majeure.

If you are facing contractual dispute issues, contact a business attorney or real estate attorney in California to understand your rights.

The post Frustration of Purpose Due to Coronavirus? [Doctrine Cases Definition Example Defense California] appeared first on Talkov Law.


Coronavirus Eviction for Health & Safety – Three-Day Notice to Quit [Free Form Template Letter]

How To Evict a Tenant During the Coronavirus Pandemic For Violations of Public Health & Safety Under California Law While evictions for failure to pay rent are on hold during the Coronavirus (COVID-19) pandemic, unlawful detainers are still being heard in California courts when “necessary to protect public health and safety.” This rule under Rules […] The post Coronavirus Eviction for Health & Safety – Three-Day Notice to Quit [Free Form Template Letter] appeared...

Coronavirus Eviction for Health & Safety - Three-Day Notice to Quit [Free Form Template Letter]

How To Evict a Tenant During the Coronavirus Pandemic For Violations of Public Health & Safety Under California Law

While evictions for failure to pay rent are on hold during the Coronavirus (COVID-19) pandemic, unlawful detainers are still being heard in California courts when “necessary to protect public health and safety.”

This rule under Rules of Court, Appendix 1, Emergency Rules related to COVID-19, Emergency Rule 1(b) (Unlawful Detainers) became effective in March 2020. That rule provides that: “A court may not issue a summons on a complaint for unlawful detainer unless the court finds, in its discretion and on the record, that the action is necessary to protect public health and safety.” If there is no summons in an unlawful detainer case, that means there is no need for the tenant to respond to a complaint, which means that the court cannot lock-out the tenant. Practically speaking, this rule shifts the balance of power to tenants and away from landlords as non-payment of rent will not allow the landlord to recover possession.

However, landlords are not without a remedy when the tenant violates public health and safety. The letter below has been drafted by Scott Talkov at Talkov Law Corp., a law firm assisting clients with expertise as a real estate attorney in Riverside, California.

Free Coronavirus Eviction for Health & Safety – Three-Day Notice to Quit Form Template Letter

[Sender’s Name]

[Sender’s Address, Phone Number and Email]

[Date]

 

VIA POSTING AT PROPERTY, U.S.P.S. CERTIFIED MAIL AND EMAIL

[Recipient Name]

[Recipient Address]

Phone: [Recipient’s Phone]

Facsimile: [Recipient’s Fax Number]

[Recipient’s Email Address]

Re:      Three-Day Notice to Quit – Violation of Public Health & Safety

Premises: [Premises Address]

Landlord: [Landlord Name]

Tenant(s): [Tenant Name(s)]

Dear [Mr/Ms.] [Tenant(s)]:

This office represents your landlord, [Landlord Name], as owner of your apartment [Apartment Address]. Please be advised that this letter serves as the Three-Day Notice to Quit pursuant to California Code of Civil Procedure section 1161(3). Unfortunately, the breach specified below of your [specific violation of Public Health & Safety] is incurable, which is why the landlord regrets that it must terminate your tenancy. We hope that you understand that the landlord wishes you well in finding a new residence that is more suitable for your needs.

THREE DAY NOTICE TO QUIT – VIOLATION OF PUBLIC HEALTH AND SAFETY

  1. Tenant(s): [Tenant Name(s)]

 

  1. Lease Agreement: You are Tenants under a rental agreement, dated [date of the rental agreement], relating to [premises address] entered into by [names of tenant(s)] as the Tenant(s), on one hand, and [name of landlord], on the other hand.

 

  1. Notice of Breach of Public Health and Safety: [Insert specific facts of the incident that is a violation of the public health and safety, i.e. who, what, where, when, how]

Please understand that unlawful detainers are still being heard by the [County] Superior Court when “necessary to protect public health and safety” under Rules of Court, Appendix 1, Emergency Rules related to COVID-19, Emergency Rule 1(b) (Unlawful Detainers).

California Civil Code section 1946.2 provides that the owner of residential real property may terminate a tenancy of over 12 months if there is “just cause.” Just cause includes, [if the violation of public health and safety relates to any of the at-fault just causes found in California Civil Code section 1946.2(1)(A)-(K), quote the section]

Further, paragraph [specify paragraph] of the Lease provides that the [if the violation of public health and safety is also a violation of any of the lease provisions then quote the relevant portions of the lease provision]

The tenant(s) actions have undermined public health and safety at the Property, thereby necessitating this action.

  1. Termination of Lease Due to Violation of Public Health and Safety: Due to the foregoing, within three (3) days after service of this notice, you are required to vacate and deliver possession of the premises to the Landlord located at [landlord address]. If you fail to vacate and deliver possession of the premises within three (3) days, legal proceedings may be initiated to regain possession of the premises and to recover the rent owed, treble damages, costs, and attorney fees.

Further, Landlord hereby elects to declare a forfeiture of the Lease.

While the Landlord is entitled to pursue collection of any future rental losses allowed by Civil Code § 1951.2, and hereby reserves this right, the Landlord has offers to waive this right provided that all Tenants turnover possession of the premises no later than [insert three-day notice deadline pursuant  to Cal. Civ. Proc. Code § 1161(1-3). The code was amended in September 2019 to exclude Saturdays, Sundays, and other judicial holidays for counting the three-day notice deadline.]

Further, to the extent, the Tenants turnover possession no later than [insert three-day notice deadline], [specify offer if the Tenant(s) vacate the premises prior to the deadline e.g. full refund of the security deposit, rent credit etc.]

If you would like to discuss the above offer or have any questions, I can be reached at [your phone number] and at [your email address].

Very truly yours,

/s/ [Sender’s Signature]

[Sender’s Name]

Notice: Please contact an attorney to advise you of your rights upon an assessment of the facts in your case before using this letter. In the event that the tenant does not vacate the premises or if this matter relates to a case with significant monetary risk or damage, particularly in the commercial leasing context, it is strongly advised that you contact a commercial landlord tenant attorney to consider all of your options. 

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Lange v. Schilling – Refusal to Mediate Before Litigation Sacrifices Right to Attorney’s Fees in CAR Contracts

Lange v. Schilling (2008) 163 Cal.App.4th 1412 – Refusal to Mediate Before Litigation Sacrifices Right to Attorney’s Fees Under California Association of Realtors (CAR) Form Lease and Purchase and Sale Agreement Buyers, sellers, tenants and landlords should beware of filing a lawsuit before attempting to mediate under the CAR form purchase and sale and lease agreements. […] The post Lange v. Schilling – Refusal to Mediate Before Litigation Sacrifices Right to...

Real Estate Lawyer Attorney California Riverside Inland Empire

Lange v. Schilling (2008) 163 Cal.App.4th 1412 – Refusal to Mediate Before Litigation Sacrifices Right to Attorney’s Fees Under California Association of Realtors (CAR) Form Lease and Purchase and Sale Agreement

Buyers, sellers, tenants and landlords should beware of filing a lawsuit before attempting to mediate under the CAR form purchase and sale and lease agreements. Racing to the courthouse may mean that the plaintiff cannot be awarded attorney’s fees if they prevail. This may be a costly mistake for the party and their attorneys, and may be a mistake that cannot be undone.

This is because Lange v. Schilling (2008) 163 Cal.App.4th 1412 found that attorney’s fees cannot be awarded when a plaintiff files suit before attempting mediation under the terms of a standard California purchase and sale agreement containing the same language found in the California Association Realtors forms at issue in many cases filed in California.

Lange found that a “Plaintiff had a clear and simple way to retain the right to attorney fees. All he had to do was attempt to mediate with sellers before he filed suit. Instead, he filed first and offered mediation later. Paragraph 17A bars recovery of any attorney fees by a prevailing party who does not first attempt mediation. This provision ‘means what it says and will be enforced.’ The [attorney] fee award must be reversed.”

In Lange, the “Defendants challenge[d] the court’s award of attorney fees” on the basis that “the clear language of the agreement precludes an award of attorney fees if a party does not attempt mediation before commencing litigation. Because plaintiff filed his lawsuit before offering mediation, they argue, there was no basis to award fees and the court’s order must be reversed. We agree.”

The court in Lange noted that: “While paragraph 22 of the agreement authorizes attorney fees to the prevailing party in a dispute between a buyer and seller, that right is contingent on compliance with paragraph 17A. Again, this provision states: ‘If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.’ Plaintiff filed his complaint first and only later offered mediation. His failure to meet the condition precedent required by paragraph 17A precludes any award of fees.”

Lange also found that “[t]he doctrine of substantial compliance is not applicable in this situation. Paragraph 17A sets forth a clear and unambiguous condition precedent that must be met in order for attorney fees to be awarded: the party must attempt mediation before commencing litigation. By filing his complaint before attempting mediation, plaintiff lost any right to attorney fees. Paragraph 17A is designed to encourage mediation at the earliest possible time. This provision would become meaningless if a party were allowed to recover attorney fees by making a request for mediation after litigation has begun and then claiming substantial compliance.”

In conclusion, Lange found that “Plaintiff had a clear and simple way to retain the right to attorney fees. All he had to do was attempt to mediate with sellers before he filed suit. Instead, he filed first and offered mediation later. Paragraph 17A bars recovery of any attorney fees by a prevailing party who does not first attempt mediation. This provision ‘means what it says and will be enforced.’ The fee award must be reversed.” Id. (quoting Frei v. Davey (2004) 124 Cal.App.4th 1506, 1517).

Lange cited a case reaching the same conclusion where it was found that: “It was Johnson, however, who filed an action without first attempting to resolve the matter through mediation. By filing the action, Johnson forfeited his right to recover attorney fees.” Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1101.

So far, only one published case has cited Lange, doing so with approval in finding that: “The parties’ standard form purchase agreement provides for the prevailing party in any dispute to recover legal fees. However, this right is subject to a condition precedent,” quoting Lange. Cullen v. Corwin (2012) 206 Cal.App.4th 1074, 1077. In Cullen, plaintiff sought to overturn the trial court’s award of defendant’s attorney’s fees. Plaintiffs argued that defendants should be barred from an attorney’s fees award because defendants failed to agree to mediation, which was a condition precedent under the purchase agreement for recovery of legal fees. Nevertheless, the trial court awarded defendants attorney’s fees. In the plaintiffs’ appeal, the award of attorney’s fees was reversed for failure to mediate, finding that: “The Corwins consequently are not entitled to recover their legal fees.”

Lange also noted the inefficiency of the courts when compared to mediation, finding that the “plaintiff spent more than $113,000 in attorney fees to recover a $13,000 judgment. The economic inefficiency of this result may have been avoided if, prior to judicial proceedings, a disinterested mediator had explained to the parties the costs of litigating the dispute through to a judgment or a final resolution by an appellate court.”

Lange cited Leamon v. Krajkiewcz (2003) 107 Cal.App.4th 424, 433, which found that “the public policy of promoting mediation as a preferable alternative to judicial proceedings is served by requiring the party commencing litigation to seek mediation as a condition precedent to the recovery of attorney fees. In this case, had the parties resorted to mediation, their dispute may have been resolved in a much less expensive and time-consuming manner. Instead, in a dispute that entered the court system as a small claims action for $5,000 in damages for breach of contract, Leamon spent over $27,000 in attorney fees and, as a result of her victory, avoided an order for specific performance that would have required her to accept $82,000 in exchange for the Property. The economic inefficiency of this result may have been avoided if, prior to judicial proceedings, a disinterested mediator had explained to Leamon and the Krajkiewczes the costs of litigating the dispute through to a judgment or a final resolution by an appellate court.”

Indeed, the California Association of Realtors Residential Lease After Sale provides in Paragraph 37 that: “In any action or proceeding arising out of this Agreement, the prevailing Landlord and Tenant shall be entitled to reasonable attorney fees and costs from the non-prevailing Landlord or Tenant, except as provided in paragraph 36A agreed by the parties.”

In turn, Paragraph 36A of many CAR lease agreements provide that “Landlord and Tenant agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to court action. Mediation fees, if any, shall be divided equally among the parties involved. If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.

Even further, the California Association of Realtors purchase and sale agreement often provides in Paragraph 25 that: “In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller, except as provided in paragraph 22A.”

In turn, Paragraph 22 of the purchase and sale agreement (PSA) provides that: “The Parties agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action through the C.A.R. Real Estate Mediation Center for Consumers (consumermediation.org) or through any other mediation provider or service mutually agreed to by the Parties….If, for any dispute or claim to which this paragraph applies, any Party (i) commences an action without first attempting to resolve the matter through mediation or (ii) before commencement of an action, refuses to mediate after a request has been made, then that Party shall not be entitled to recover attorney’s fees, even if they would otherwise be available to that Party in any such action.”

In California, buyers, sellers, landlords, tenants, their agents and their attorneys should pay very close attention to the terms of the contract to make sure they do not cause a costly error for their clients. Before filing suit, contact an experienced real estate attorney in California to discuss your best strategy to make sure the defendant does not take advantage of your mistake.

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