April 2017 Update
Transient Occupancy and Short-Term Rentals. Common interest communities may be subject to either covenants, conditions and restrictions (CC&Rs) or later enacted rules and regulations that place limits on the use of units for short-term or vacation renting. See, e.g., Almanor Lakeside Villas Owners Ass'n v Carson (2016) 246 CA4th 761.
Under Bus & P C §§22590–22594, any operator of a commercial Internet website, online service, or hosting platform must provide a specific notice to an occupant listing a residence, including a mobilehome, for short-term rental. New requirements are that the notice must also warn the tenant to review any restrictions on coverage in the tenant's renters' insurance policy related to short-term rentals to ensure that there is coverage in the event that (1) a person sustains an injury or loss for which the tenant is responsible; (2) a person damages or causes loss to personal property; or (3) a claim or lawsuit is made against the tenant or otherwise arises out of activities related to the hosting platform. See §§4.50F, 6.102, 8.68A.
Leasing Disclosures, Lease Provisions, and Insurance. Residential landlords must inform prospective tenants of any death (and the manner of death) occurring in a unit within the past 3 years. CC §1710.2(a)(1). (The statute does not define "manner of death"; case law has not as yet interpreted that phrase.) Landlords are not, however, required to disclose either (1) that a death (or manner of death) occurred in a unit more than 3 years before the tenant's offer to rent or (2) that a previous occupant was afflicted with human immunodeficiency virus (HIV) or died from AIDS-related complications for any period of time preceding the tenant's offer to rent. Such facts "are not material." CC §1710.2(a)(1). But a landlord is not immunized from liability arising from an intentional misrepresentation "in response to a direct inquiry" concerning deaths on the property. CC §1710.2(d). See §1.40.
In 2016, CC §2079.13 was amended to include transactions governed by CC §2079.7. This means that if the consumer information booklet entitled Residential Environmental Hazards: A Guide for Homeowners, Homebuyers, Landlords and Tenants is delivered to a lessee in connection with the transfer of real property, including property that is leased for more than 1 year, then the lessor or broker "is not required to provide additional information concerning, and the information shall be deemed to be adequate to inform the lessee regarding, common environmental hazards," as provided in CC §2079.7. See §1.40.
Under a new law, the landlord must not show, rent, or lease a residential unit that the landlord knows has bed bugs. Even if no infestation is present, the landlord has the right to inspect and must give a statutory bed bug notice to new residential tenants on and after July 1, 2017, and to existing tenants by January 1, 2018. See §§1.40, 3.2, 4.16F.
A landlord may prohibit smoking on the premises in the lease. Effective June 9, 2016, CC §1942.5 was amended to adopt the definitions of "smoking" and "tobacco product" in Bus & P C §22950.5. Both include the smoking of e-cigarettes and the inhalation of vaporized liquids. A landlord may also expressly prohibit the smoking of marijuana. On the federal level, the Department of Housing and Urban Development issued regulations that ban smoking in all public housing developments throughout the country in 24 CFR §§965.651–965.655, 966.4(f)(12). See §§1.58, 3.7B, 3.65, 4.44C, 4.50B, 5.18G.
Landlords must consider insurance needs from numerous perspectives. Primarily, as owners, landlords must decide what type of insurance coverage to purchase for protecting themselves from various risks, damages, and claims, and whether a requirement in the lease that the tenant purchase insurance is enforceable. See newly added §4.49B.
Fair Housing. If the grounds for lease termination involve criminal activity or material noncompliance with the lease or state landlord-tenant laws, tenants in HUD-assisted and project-based Section 8 units must be served with a notice according to state law and the rental agreement. This usually means a 3-day notice for tenants in most HUD-assisted programs but a 30-day notice for tenants in Section 202 or Section 811 programs. See Long Beach Brethren Manor, Inc. v Leverett (2015) 239 CA4th Supp 24. See §2.8.
Some California communities have adopted local ordinances that prohibit certain forms of discrimination against existing, and sometimes potential, tenants holding Section 8 certificates or vouchers or other kinds of tenant-based rental assistance. In November 2016, for example, Marin County enacted Marin County Mun C §5.53.010, which prohibits housing discrimination on the basis of "all lawful sources of income" including a "rental assistance program, homeless assistance program, security deposit assistance program or housing subsidy program." See §2.9B.
Land use decisions that have a disparate impact on a protected class are actionable under fair housing laws. See Avenue 6E Invs., LLC v City of Yuma (9th Cir 2016) 818 F3d 493 (impact on Hispanic citizens of rezoning denial that precluded development of affordable housing); Joint Statement of the Department of Housing and Urban Development and the Department of Justice on State and Local Land Use Laws and Practices and the Application of the Fair Housing Act (Nov. 10, 2016), discussed in §§2.19, 2.27J, 2.63, 2.65.
Housing providers should exercise caution when a tenant requests the delay of an eviction as a reasonable accommodation under fair housing law. See Brookside Apartments Realty v Heilman (Pa Sup 2015) 135 A3d 650 (request for accommodation by stay of eviction action was unreasonable because it would impose undue financial or administrative burden on housing provider; dealing with tenants' recurring housekeeping violations, noncooperation with housing maintenance by management, and repeated late payment of rent posed continuing and serious difficulties for manager of apartment complex), cited in §§2.27F, 12.39.
In the design, construction, or improvement of multifamily dwellings, "discrimination" includes the failure to design and construct the dwelling in a manner that allows access to and use by disabled persons, including required features such as the installation of accessible routes and utility systems, wide doorways, special kitchen and bathroom modifications, and elevators for specific types of buildings under the California Fair Employment and Housing Act. See §2.27E.
It is not necessary to pay or attempt to pay a discriminatory fee in order to establish standing to sue under the Unruh Act if a disabled person or those associated with the disabled person have personally experienced discriminatory treatment by a business. Plaintiffs who were required to pay a $300 nonrefundable cleaning fee for a service dog for a disabled person, and who were then turned away from the hotel when they did not do so, had standing to sue under CC §51.5. Osborne v Yasmeh (2016) 1 CA5th 1118. See §§2.20, 2.60, 5.7.
A business may validly treat different age groups differently if the pricing policy provides a social benefit to the recipient group, the recipient group is disadvantaged economically compared to other groups paying full price, and there is no invidious discrimination. Javorsky v Western Athletic Clubs, Inc. (2015) 242 CA4th 1386. See §§2.25, 5.7.
In 2016, regulations implementing the ADA Amendments Act of 2008 were substantially amended to provide that the term "disability" be interpreted broadly; whether an individual's impairment is a disability need not demand extensive analysis. The revised regulations further expand the definition of "major life activity" by providing a nonexhaustive list of such activities that specifically includes the operation of major bodily functions. See 28 CFR §§35.101, 35.108, 36.105; 81 Fed Reg 53204 (Aug. 11, 2016), cited in §2.26.
A city may amend an already existing municipal code section that regulates private homes as short-term vacation rentals to increase the minimum age of a responsible person for the rental from 21 years of age to 30 years of age. Such a change is not barred by the Unruh Act. Harrison v City of Rancho Mirage (2015) 243 CA4th 162. See §§2.57A, 7.62, 8.68A, 8.117.
The Fair Housing Act prohibits the use of criminal history by providers or operators of housing and real estate-related transactions when such use has a disparate impact on protected classes. On April 4, 2016, HUD issued guidance on how discriminatory effects and disparate treatment methods of proof apply when a provider justifies an adverse housing action—such as a refusal to rent or renew a lease—on the basis of an individual's criminal history. See §§2.5B, 2.8.
Although individuals who have limited English proficiency (LEP) are not a protected class under the Fair Housing Act, the Act prohibits housing providers from using LEP selectively based on a protected class or as a pretext for discrimination or in a way that causes an unjustified discriminatory effect. On September 15, 2016, HUD issued guidance addressing how disparate treatment and discriminatory effects methods of proof apply when a provider bases an adverse housing action—such as a refusal to rent or renew a lease—on an individual's limited ability to read, write, speak, or understand English. See §§2.5C, 2.11.
On September 21, 2016, HUD issued regulations entitled "Equal Access in Accordance With an Individual's Gender Identity in Community Planning and Development Programs." See 81 Fed Reg 64763 (Sept. 21, 2016), amending definition of "gender identity," so that it currently is defined as "the gender with which a person identifies, regardless of the sex assigned to that person at birth and regardless of the person's perceived gender identity." The 2016 amendments conform the HUD definition of "sexual orientation" in 24 CFR §5.100 to the Office of Personnel Management's current definition, which is "one's emotional or physical attraction to the same and/or opposite sex (e.g., homosexuality, heterosexuality, or bisexuality)." See §2.12A.
On September 13, 2016, HUD issued Guidance on Application of Fair Housing Act Standards to the Enforcement of Local Nuisance and Crime-Free Housing Ordinances Against Victims of Domestic Violence, Other Crime Victims, and Others Who Require Police or Emergency Services. The Guidance states there may be issues with local nuisance ordinances that define nuisance as failure to maintain property, conduct that disturbs neighbors or is criminal, "excessive" calls for emergency or police services, and domestic violence incidents without regard for whether the resident is the victim or perpetrator. See §2.27J.
On October 5, 2016, HUD issued Application of the Fair Housing Act's Discriminatory Effects Standard to Insurance at 81 Fed Reg 69012 (Oct. 5, 2016), in which HUD stated that "categorical exemptions or safe harbors for insurance practices are unworkable and inconsistent with the broad fair housing objectives and obligations embodied in the Act. HUD continues to believe that the commenters' concerns regarding application of the discriminatory effects standard to insurance practices can and should be addressed on a case-by-case basis." See §2.27L.
Although discriminatory harassment is most identified with conduct directed at a person on the basis of sex, it also includes discriminatory conduct directed against all protected classes. In 2016, HUD issued amendments to its fair housing regulations to formalize standards for use in investigations and adjudications involving allegations of harassment on the basis of race, color, religion, national origin, sex, familial status, or disability. See 81 Fed Reg 63054 (Sept. 14, 2016). These amendments are intended to clarify existing law on the subject of quid pro quo and hostile environment harassment applicable to all protected categories, because such conduct can be far more intrusive, violative, and threatening than harassment in the more public environment of one's workplace. Title 24 CFR §100.7(a)(1)(iii) makes a person directly liable for "failing to take prompt action to correct and end a discriminatory housing practice by a third-party" when the person knew or should have known of the conduct and had the power to correct it. See §§2.27M, 2.68.
Rights and Obligations During and After Tenancy. To encourage the conservation of water in multifamily residential rental buildings, the legislature enacted Stats 2016, ch 623, §2, operative January 1, 2018. It applies when a landlord uses a submeter to charge a tenant separately for water service to an individual dwelling unit and imposes requirements on landlords. Under CC §1954(a)(5), a landlord may enter a dwelling unit for specified purposes relating to a submeter or water fixture if certain requirements are met. See §§3.2, 4.50G.
Attorney fees are recoverable on causes of action for constructive eviction and for breach of the covenant of quiet enjoyment and of the warranty of habitability, which are actions "on the contract" for purposes of CC §1717, as long as the lease contains an attorney fee clause. Hjelm v Prometheus Real Estate Group (2016) 3 CA5th 1155. See §§3.7, 3.15, 3.41, 13.25, 13.40.
A new checklist, "Tenant Causes of Action and Remedies for Habitability Violations and Nuisances," was added to §3.48B.
Under Pen C §396(b), landlords are prohibited from raising rent prices more than 10 percent on "housing" for 30 days after a declared state of emergency resulting from an earthquake, flood, fire, riot, storm, natural or manmade disaster, drought, or plant or animal infestation or disease. See §3.66C.
When the lease requires the tenant to purchase liability insurance, the landlord should require that it be named as an additional insured; when there might be more than one concurrent cause for an injury or damage claim, the insurance coverage issues are complex. See, e.g., Morlin Asset Mgmt. LP v Murachanian (2016) 2 CA5th 184, cited in §3.71.
Public entity landlords are not always bound by the same law as private landlords. For example, a tenant who rented from a city was injured by a fire resulting from the city's negligent failure to replace a fire extinguisher, but the court held that Gov C §850.2 immunized the city from the tenant's suit. Puskar v City & County of San Francisco (2015) 239 CA4th 1248. See §§3.71, 5.13.
In Garcia v Holt (2015) 242 CA4th 600, a landowner was not liable to a landscaper injured by explosives brought onto the property by the tenant because the owner did not know of the dangerous condition. See §3.72.
There is increasing use of social media and Internet websites that collect and publish online information about individuals and consumer reviews of businesses. Landlord attorneys who encounter an acrimonious client should cautiously remind the client that defamation suits do happen even if such postings are published under an alias. See, e.g., Kinda v Carpenter (2016) 247 CA4th 1268, cited in §4.13.
Recreational use of marijuana in California was legalized beginning November 9, 2016, by Proposition 64, commonly known as the Adult Use of Marijuana Act. It allows persons who are 21 years of age and older to (1) possess, process, transport, purchase, obtain, or give away (without compensation) up to 28.5 grams of nonconcentrated cannabis and up to 8 grams of concentrated cannabis and (2) possess, plant, cultivate, harvest, dry, or process up to 6 living plants. See §4.44F. The new law builds on and utilizes many aspects of the comprehensive regulatory structure for commercial medical cannabis. California anticipates a likely rise of marijuana use at residential properties statewide; creating procedures and policies to minimize nuisance allegations and to respond to resident complaints will be important to consider and will be similar to those issues landlord face in response to medical marijuana, discussed in §§4.44B–4.44E.
A checklist was added to §5.17A listing the reasons allowed under CC §1954 and other statutes for a landlord's entry into a "dwelling unit" occupied by a tenant.
A government agency, such as a local rent board, may alternatively comply with a request for public records by posting the records on its Internet website, but if the requesting party wants a copy of the record because of an inability to access or reproduce it from the agency's website, the agency must promptly provide a copy of the record under Govt C §6253(f). See §5.35.
Anti-SLAPP Motions. The supreme court resolved a court of appeal split and held that if a cause of action includes allegations of both unprotected activity and protected conduct under CCP §425.16, the trial court may strike the protected activity claims within a cause of action while allowing the unprotected claims to remain. Baral v Schnitt (2016) 1 C5th 376. See §§5.18A–5.18B, 7.78B.
An attorney's actions will be considered to arise out of protected activity under §425.16 when the only actions the attorney took were communicative acts in representing clients for pending or threatened litigation; such acts are "unquestionably protected activities" under §425.16. Contreras v Dowling (2016) 5 CA5th 394. See §5.18A.
On recovering attorney fees in anti-SLAPP motions, see Mountjoy v Bank of America (2016) 245 CA4th 266 (court of appeal held that trial court may not simply engage in across-the-board reduction of hours but must consider number of hours actually included in flawed entries). See §§5.18A, 10.30, 13.29, 13.40A.
Mobilehome Park Tenancies. Many parks require that the resident signing the rental agreement be the registered owner of the mobilehome and that at least one occupant be a registered owner. But many mobilehome owners are not the registered owners, often because registering requires a new owner to certify compliance with certain safety items and to pay significant arrearages of registration fees, personal property taxes, interest, and penalties. To address this, California established a partial fee and tax waiver program for new registrations between January 1, 2016, and December 31, 2019. See §§6.12–6.13.
In Rancho de Calistoga v City of Calistoga (9th Cir 2015) 800 F3d 1083, the court rejected all of petitioner's constitutional claims against the rent control ordinance. The court also rejected a creative "private taking" assertion, finding that it was really just a facial challenge, stating it could not be used as an independent means to challenge an alleged regulatory taking since the facial challenge was time-barred. See §§6.16, 7.11, 7.13–7.14.
The Mobilehome Park Rehabilitation and Purchase Fund was amended in 2016 to clarify that the loans could be used for specified mobilehome repairs and replacements, including accessibility-related upgrades. See §6.17.
In Schermer v Tatum (2016) 245 CA4th 912, homeowners filed a class action against the defendants, who owned and operated 18 mobilehome parks, claiming damages for alleged unconscionable lease agreements and practices in their parks, including lease agreements that directly violated the MRL. The merits were not litigated because the trial court, affirmed by the court of appeals, dismissed the lawsuit without leave to amend because of the lack of a community of interest necessary for class certification. See §6.23.
Effective July 1, 2016, the legislature amended the existing sign and open house restrictions in the MRL, allowing one open house sign, specifying the type of standard holding it, and allowing park management to enforce reasonable rules governing an open house. CC §798.70(a) (operative July 1, 2016; see Stats 2015, ch 288, §2). See §6.59.
Effective July 1, 2016, CC §798.74(a) provides that mobilehome park management may reject an applicant for reasons based on fraud, deceit, or concealment of material facts by the applicant. See §6.61.
According to amendments in 2015 and 2016, if park management acquires a mobilehome at a warehouse lien sale and intends to salvage it, management may permanently dispose of the mobilehome without payment of fees or taxes if it complies with extensive procedures specified in CC §798.56a(e)(2), including the filing of a notice of disposal with HCD "no less than 30 days after the date of sale to enforce the lien." See §§6.91–6.92.
In Penilla v Westmont Corp. (2016) 3 CA5th 205, plaintiffs sued the park owner and its management, alleging contract, tort, and statutory violations. The trial court denied defendants' motion to compel arbitration, finding that arbitration provisions in the rental agreements were unconscionable. The appellate court affirmed, holding that the arbitration provisions were both procedurally and substantively unconscionable. See §6.98.
The Mobilehome Residency Law establishes the rights and responsibilities of residents and park management. It requires park owners to give notice under CC §798.15(i) to residents as part of the rental agreement and again to provide the notice personally or by USPS mail to all homeowners each year before February 1; in 2016, the notice was substantially revised. See §6.152.
Local Eviction Controls and Constitutional Issues. San Francisco Rent Board Rules and Regulations §12.20, which prohibits evictions for violations of unilateral changes to lease agreements, is not preempted by CC §827, the statute that requires 30 days' prior notice for unilateral changes to rental agreements. The Rent Board did not exceed its authority in promulgating Rule 12.20, as the Board has the power to promulgate regulations to effectuate the purposes of the rent ordinance. Foster v Britton (2015) 242 CA4th 920. See §§7.25, 7.53, 7.57.
Retroactively applicable as of January 1, 2016, CC §1947.8(i)(2) removes the rent registration requirement for any tenancy entered into after January 1, 1999, for which the owner of residential property may establish the initial rent under the Costa-Hawkins Rental Housing Act. In addition, CC §1947.8(i)(2) provides that for any tenancy commencing on or after January 1, 1999, if a property owner has provided the local agency with the tenancy's initial rent in compliance with that agency's registration requirements in a writing signed under penalty of perjury, there is a rebuttable presumption that the statement of the initial rent is correct. See §7.45.
A city may not impose a 10-year waiting period between an Ellis Act eviction and a merger of two residential rental units into one unit. San Francisco Apartment Ass'n v City & County of San Francisco (2016) 3 CA5th 463. See §§7.64, 7.64B, 7.64H.
Terminating Tenancies and Eviction Actions. In Taylor v Nu Digital Mktg., Inc. (2016) 245 CA4th 283, the court found that a real property sales contract, which included monthly payments that were not credited to the purchase price of the property but were in fact "rent," operated like a lease; when the defendant ceased making such payments, the landlord was able to use an unlawful detainer action to regain possession. See §§1.9, 9.3, 9.36, 10.11, 10.12, 10.20.
Although the Ninth Circuit has not yet addressed this issue, a district court in Dickman v Kimball, Tirey & St. John, LLP (SD Cal 2013) 982 F Supp 2d 1157 held that a law firm's conduct to enforce rent obligations, by sending pay rent or quit and other notices to a tenant before filing an unlawful detainer action, was subject to fair debt collection laws. See §8.33.
Ordinarily, the remedy for squatting is an action in trespass or nuisance because there is no underlying landlord-tenant relationship. A summary remedy to eject squatters (CCP §§527.11–527.12) was enacted (effective January 1, 2015, and only until January 1, 2018), but it applies only to residences of up to four units in the cities of Palmdale and Lancaster in Los Angeles County and the City of Ukiah in Mendocino County. See §§8.7A, 9.10.
Under a temporarily amended version of CCP §472(a), a landlord may amend its filed complaint once without court permission (1) at any time before the tenant's answer or demurrer is filed or (2) after the demurrer is filed but before the demurrer is heard as long as the amended complaint is filed and served no later than the date for filing opposing papers to the demurrer (in effect only until January 1, 2021). See §§9.43, 10.21.
Under CCP §1167.1, effective January 1, 2017, if the landlord does not file with the court a proof of service of the summons within 60 days of filing the complaint, the court may dismiss the action without prejudice. See §§9.45, 9.55A.
The supreme court in deSaulles v Community Hosp. (2016) 62 C4th 1140 held that when a settlement agreement on a litigation matter is silent regarding costs, the defendant's payment of money to the plaintiff also triggers mandatory payment of costs under CCP §1032(a)(4) because the plaintiff obtained a "net monetary recovery." See §§9.18B, 13.21.
The California Supreme Court accepted for review Shaw v Superior Court (review granted Nov. 12, 2014, S221530; superseded opinion at 229 CA4th 12) because there is uncertainty about whether a party may get immediate review of the denial of a request for a jury trial by way of a writ of mandate or instead must wait until after a bench trial to appeal the issue. See §11.53.
In North 7th St. Assocs. v Constante (2016) 7 CA5th Supp 1 (Constante II), the tenant prevailed on a defensive summary judgment motion in an unlawful detainer action, in which he had contended that the unit lacked a building permit and a certificate of occupancy, the landlord could not enforce any rental obligations for the unlawful unit, and therefore the 3-day notice to pay or quit was defective. On appeal, the appellate division of the superior court agreed. See §§3.11E, 8.46, 10.54, 12.22.
An order denying a peremptory challenge is not appealable and may only be reviewed by way of a petition for a writ of mandate. CCP §170.3(d); People v Superior Court (Tejeda) (2016) 1 CA5th 892. See §12.5.
When a plaintiff voluntarily dismisses the lawsuit, usually no attorney fees may be awarded to the defendant under CC §1717, which allows attorney fees when a contract provides for them. But attorney fees may be awarded to the defendant when a statute or ordinance (such as the Los Angeles rent escrow ordinance) provides for attorney fees to the "prevailing party." Intelligent Invs. Corp. v Gonzales (2016) 1 CA5th Supp 1. See §§3.41, 13.27, 13.40B.
Although all courts agree that mandatory relief from default under CCP §473(b) is not available when the error causing the default is the client's alone, the courts are divided on whether it is available when the error is partly the client's and partly the attorney's. See Martin Potts & Assocs. v Corsair, LLC (2016) 244 CA4th 432. See §13.8.
An amendment to CCP §1033.5 provides that fees for electronic filing or service of documents through a provider if a court requires or orders electronic filing or service of documents are recoverable as costs. See §13.22.
To protect the privacy of tenants, beginning January 1, 2017, CC §1161.2(a)(1)(F) provides that court-filed unlawful detainer records will remain sealed, unless the landlord prevails within the first 60 days, or unless access is otherwise authorized under CC §1161.2(a)(1)(A)–(E). Under §1161.2(a)(1)(F), if a default judgment is set aside more than 60 days after the unlawful detainer complaint was filed, the court file access restrictions apply as if the complaint were filed on the date the default was set aside. See §§4.5, 5.24A, 5.25–5.25A, 13.16A, 13.35.
If a tenant is evicted under a writ of possession issued on an unlawful detainer judgment and then prevails on appeal, the tenant need not file a cross-complaint seeking restitution of possession to obtain that relief. Beach Break Equities, LLC v Lowell (2016) 6 CA5th 847 (noting that trial court has discretion to grant or deny restitution, even if appellate court directed it to provide tenant with appropriate restitution hearing and to restore tenant as far as possible to position occupied before eviction). See §13.61.
California law governs the process for the enforcement of money judgments and authorizes a registered process server (RPS) to levy under a writ of attachment and a writ of execution on certain designated property of the debtor. In addition, an RPS can garnish wages by serving an earnings withholding order on an employer. All three procedures require the RPS to deposit specified documents with the levying officer and pay a specified fee, but they were amended in 2016 to provide that the required documents and fee could be delivered to the levying officer by someone other than the RPS. See §13.74.
Tenant Bankruptcies and Stay Relief to Complete Eviction. While not directly ruling on whether CCP §715.050 was preempted by the Bankruptcy Code, the Ninth Circuit held that a debtor (the former property owner) had no legal or equitable interest in the real property after issuance of state court's unlawful detainer judgment and writ of possession following a foreclosure; thus, the automatic stay created by the debtor's subsequent bankruptcy was not violated by the eviction. Eden Place, LLC v Perl (In re Perl) (9th Cir 2016) 811 F3d 1120. See §§14.9, 14.16–14.19, 14.21.
A debtor-tenant in a Chapter 7 bankruptcy successfully argued under New York law that the debtor's interest in her rent-stabilized lease (in a rent-controlled city) was exempt from her bankruptcy estate as a "local public assistance benefit." See In re Santiago-Monteverde (2014) 998 NYS2d 144, 147, 22 NE3d 1012, discussed in §§14.19, 14.33.
A state court judgment against a debtor on a fraudulent misrepresentation claim can preclude the debtor from contesting the issue in a subsequent proceeding to declare the debt to be nondischargeable under 11 USC §523(a). See, e.g., Kondapalli v DeMasi (In re DeMasi) (MD Fla 2016) 551 BR 653 (because state court judgment against debtor addressed all elements of §523(a), it was given collateral estoppel effect to support summary judgment for creditor in later nondischargeability action, and related unliquidated claim for attorney fees were nondischargeable as well). See §14.20.
Some debtors try to avoid the dismissal of the bankruptcy on the creditor's or the court's motion by attempting to voluntarily dismiss the case before the hearing. This is not allowed in the Ninth Circuit if the debtor had filed the bankruptcy in bad faith; further, the court can convert a Chapter 13 case on finding the debtor acted in bad faith and deny the debtor's motion to dismiss. In re Brown (Bankr SD Cal 2016) 547 BR 846. See §§14.32, 14.56.
Attorney fees are not be recoverable in stay relief litigation, which is not considered to be an action on the contract for purposes of fee recovery. See Green Tree Servicing v Giusto (ND Cal 2016) 553 BR 778. See §§14.32, 14.51.
Debtors must remain current on postpetition rent arising under nonresidential real property leases pending assumption or rejection. 11 USC §365(d)(3). If a lease is deemed terminated and expired before the bankruptcy, the debtor would not be obligated to make immediate payment of postpetition rent under §365(d)(3) because that section only applies to unexpired leases, but the landlord may have an administrative claim for holdover rent and related charges. See In re Art & Architecture Books of the 21st Century (Bankr CD Cal, Mar. 21, 2016, No. 2:13–bk–14135–RK, Chapter 11) 2016 Bankr Lexis 878. See §14.45.
The reciprocal right to attorney fees under CC §1717 presents risk to creditors in bankruptcy litigation, since a losing debtor may not have resources to pay fees, but may be allowed to recover fees against a losing creditor that is solvent. See, e.g., Cardenas v Shannon (In re Shannon) (BAP 9th Cir 2016) 553 BR 380 (debtors' right to attorney fees for defeating nondischargeability action depends on whether litigation involved state law issues rather than federal nondischargeability issues). But if the issues in the nondischargeability action do not involve enforcing a contractual right, fees are not recoverable. See Bos v Board of Trustees (9th Cir 2016) 818 F3d 486. See §14.51.
The Bankruptcy Code's cap on the amount of a landlord's unsecured claim for damages resulting from the rejection of a lease applies to all damages resulting from lease termination. But the cap does not apply to damages that do not result from termination; hence, even if a landlord obtained a damage award before the bankruptcy, attorney fees and costs in such an award should be apportioned, and only those amounts resulting from termination would be subject to the cap. Kupfer v Salma (In re Kupfer) (9th Cir, Dec. 29, 2016, No. 14–16697) 2016 US App Lexis 23385. See §14.55D.
Although courts in the Ninth Circuit have limited the debtor's right to dismiss because of the debtor's bad faith, debtors have not been denied the right to claim allowable exemptions on that basis. See Elliot v Weil (In re Elliot) (BAP 9th Cir 2014) 523 BR 188 (Elliott I) (bankruptcy court may not deny Chapter 7 debtor's exemption claim on basis of bad faith or prejudice to creditors, absent other statutory grounds for denial) and In re Lua (Bankr CD Cal 2015) 529 BR 766 (error to deny Chapter 7 debtor leave to amend exemption schedule on basis of debtor's alleged bad faith). But bankruptcy courts have the authority to find other grounds for denying the exemption. See, e.g., Elliot v Weil (In re Elliot) (BAP 9th Cir 2016) 544 BR 421 (Elliott III) (debtor violated 11 USC §522(g)(1)). See §14.56.