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California Commercial Lease Eviction – If It Is Overruled On Appeal, The Tenant/Lessee Has A Claim against the Landlord – Lessor For Breach of Contract

One aspect of California commercial property evictions you seldom see is the unlawful detainer judgment being overturned on appeal. It can happen. While it is established that the lessor is not liable for forcible entry and detainer or wrongful eviction in such a case, a court recently ruled on a claim for breach of contract.

In Munoz v. MacMillan the landlord obtained a judgment for possession of commercial property. The tenant appealed and won. Meanwhile the landlord had leased the property to someone else. The tenant then sued for breach of contract. The trial judge threw the suit out, finding that the landlord had “proceeded in accordance with orderly judicial processes.” The decision was based on the principal that legitimate, non-fraudulent use of the judicial process, protects the lessor from tort claims. A tort involves breach of a civil duty (as opposed to a contractual duty) which can be redressed by damages. Of course, if the landlord proceeds fraudulently in obtaining the judgment -for example, lying about receipt of rent, or communications between the parties, or notices given- they are not protected.

The appeals court overturned the decision, finding that the breach of contract claim is viable. It noted that whenever an order is reversed, the court may direct that the parties be returned as far as possible to the positions they occupied before the enforcement of the order. This includes restitution of all property and rights, or money compensation for those that cannot be restored. This is the principal of restitution.

A 1917 California Supreme Court decision (Black v. Knight) points out that a lessor may not oust the lessee under an unlawful detainer judgment without making themselves liable for damages in the event the judgment is reversed. The landlord is not required to oust th4e tenant immediately, but can wait until the time for appeal has passed. An experienced Sacramento leasing attorney would advise the landlord to consider the risks of losing on appeal, the value of the lost leasehold, and the ability of the evicted tenant to fund an appeal in calculating the risk in not waiting.