The Court of Appeal just confirmed that a landlord is not barred from recovering rent owed by a tenant in a civil action for breach of contract, even after obtaining a judgment for unlawful detainer against the tenant, so long as the landlord did not seek to recover the same rent in the unlawful detainer action.
In Hong Sang Market, Inc. v. Vivien Peng, Peng (the tenant) failed to pay rent for the period September 2009 through February 2011, as well as for the month of May 2011. Hong Sang (the landlord) filed an unlawful detainer lawsuit (UD) against Peng pursuant to a 3-day notice to pay rent or quit that was based on Peng’s failure to pay rent for the month of May 2011. Hong Sang obtained summary judgment against Peng in the UD and was awarded $4,725 in back-due rent for the month of May 2011.
Hong Sang filed a separate lawsuit for breach of contract based on Peng’s failure to pay rent for the period September 2009 through February 2011. The breach of contract lawsuit sought
a damages in the amount of $85,040 for back-due rent. Before trial, Peng asked the court to dismiss the lawsuit on the grounds that it was barred by the doctrine of res judicata and collateral estoppel.
Peng claimed that the UD judgment awarding Hong Sang back-due rent for the month of May 2011 precluded Hong Sang from recovering in a separate lawsuit, the rent owed for the period September 2009 through February 2011. The trial court ruled in favor of Hong Sang, and Peng appealed.
The Court of Appeal affirmed the trial court’s ruling, holding that the UD judgment did not bar Hong Sang from seeking additional damages in a separate civil action on a number of grounds.
Among other reasons, the Court found that an UD judgment has limited res judicata effect “because the claim preclusion aspect of the res judicata doctrine applies only to matters that were raised or could have been raised, in the earlier action on matters that were litigated or litigable.” Since Hong Sang’s UD was based on a 3-day notice to pay or quit for the month of May 2011 only, Hong Sang’s recovery of back-due rent in the UD was limited to the month of May 2011 – he could not have litigated or recovered rent for the period September 2009 through February 2011 in the UD action.
In addition, the Court of Appeal confirmed that a landlord is not required to litigate back-due rent in an UD action. Rather, when a landlord files a UD based on a 3-day notice to pay rent or quit, the landlord may seek to recover possession only, and later sue the tenant for the back-due rent in a separate civil action.
While the holding in Hong Sang is not novel, it confirms that a landlord has a number of options when it comes to recovering possession of its property and obtaining damages resulting from the breach of a lease.