M.A.G.D. Properties v. We're No. 1 Inc.
Published: Jul. 29, 2000 | Result Date: Mar. 7, 2000 | Filing Date: Jan. 1, 1900 |Case number: LC040909 Verdict – $18,131
Judge
Court
L.A. Superior Van Nuys
Attorneys
Plaintiff
Defendant
Facts
Plaintiff landlord sought to recover unpaid rent and the tenant cross-complained for excessive charges under the lease. The plaintiff was M.A.G.D. Properties, a California general partnership. The defendant/tenant was We're #1 Inc., a California corporation dba Century 21/Vic Harvey Realtors. Plaintiff, the landlord of a 20,000 square foot commercial shopping center, leased 43,500 square feet of space to We're #1, a residential brokerage firm, for the payment of rent and additional rent defined in the lease to include the tenant's proportionate share of common area maintenance, shopping center property taxes and the landlord's administration and supervision charges. Under the additional rent provision, the landlord collected from the tenant a proportionate share of property taxes assessed against the shopping center and a landlord supervision and administration fee of 10 percent on all the charges and expenses of the center. This was paid monthly based on an estimated charge, with an accounting and calculation of a debit or credit for each tenant to be completed by March 1 for the previous year's monthly payouts with respect to the shopping center. The landlord collected the anticipated property tax charges monthly, retained the money and did not pay the property taxes assessed against the center form 1992 through 1998 when its first trust deed lender paid the taxes and initated foreclosure proceedings under its deed of trust. The tenant had been seeking an accounting, believing an entitlement to a credit for excessive common area maintenance chages for severaly years but had been stonewalled by the landlord plaintiff. Once the tenant received notice of default and the foreclosure proceedings, it stopped paying rent and commenced the search for alternative space. it vacated shortly before an unlawful detainer was about the come to trial. This unlawful detainer trial was then converted to a landlord's damage action for rent and the tenant cross-complained against the landlord and its general partners. Plaintiff's claim was for breach of the lease and the failure to pay rent and additional rent as defined in the lease. Plaintiff landlord argued that it had no obligation under the lease to actually pay the taxes and the defendant suffered no interruption in its services because of the landlord's delayed payment of taxes. The landlord argued that it had effectively paid the property taxes in 1998 when it sold the shopping center on the eve of foreclosure to a buyer who then paid, as part of its purchase, the reimbursement of the proerty taxes to the lender. The tenant defended and cross-complained against plaintiff landlord and its four general partners, claiming breach of the lease agreement and seeking an accounting. it claimed that the landlord was obligated to either pay the taxes for which it collected the tax contribution from the tenant or credit and refund the excessive schedule monthly payment to the tenant within a reasonable time after the due date of the property taxes and that the charge of the landlor supervision fee on unpaid expenses was also a breach of the lease.
Settlement Discussions
The plaintiff made a demand for $35,000. The defendant made a C.C.P. Section 998 offer of $1,000.
Other Information
The court found in favor of the tenant on both of its contentions. Finding for the tenant on its cross-complaint, the court implied a covenant of good faith and fair dealing requiring the landlord to pay the property taxes with the sums collected from its tenant within a reasonable time of the obligation for payment of taxes becoming due or to refund or credit the tenant with its "unused" payments. While the court found the elements of unclean hands asserted by defneant and cross-complainant against the landlord to be present, the court declined to apply the doctrine so as to preclude any recovery for rent by the landlord.
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