Boston LLC v. Juarez
245 Cal. App. 4th 75
| Cal. Ct. App. | 2016Background
- Juarez rented a Los Angeles Rent Stabilization Ordinance (LARSO) unit from Boston for ~15 years under a written lease that required tenant-obtained renter’s insurance.
- The lease contained a broad forfeiture clause: any failure of compliance by renter would allow owner to forfeit the agreement and terminate possession.
- Juarez did not have renter’s insurance for 15 years. Boston served a three-day perform-or-quit notice on a Friday before a three-day holiday weekend; Juarez obtained insurance shortly after the three-day period expired.
- Boston sued for unlawful detainer under Code Civ. Proc. § 1161(3). Trial court and the appellate division enforced forfeiture without deciding materiality, barring Juarez from some defenses.
- The Court of Appeal granted review to decide whether a tenant’s breach must be material to justify lease forfeiture, particularly in a LARSO residential lease.
Issues
| Issue | Plaintiff's Argument (Boston) | Defendant's Argument (Juarez) | Held |
|---|---|---|---|
| Whether a landlord may forfeit a residential lease for any breach despite materiality | Forfeiture clause and §1161(3) permit termination for any breach after proper notice | Law requires a breach be material to justify forfeiture; tenant should be allowed to show immateriality and raise defenses | A breach must be material to justify forfeiture; immaterial breach here did not permit termination |
| Whether §1161(3) creates a substantive right to automatic forfeiture | §1161(3) authorizes forfeiture as a statutory substantive right | §1161(3) is procedural; substantive limits (materiality) come from case law and public policy | §1161(3) is procedural; materiality limitation is a substantive rule from case law that applies to §1161(3) actions |
Key Cases Cited
- Keating v. Preston, 42 Cal.App.2d 110 (lease termination requires substantial breach)
- Randol v. Scott, 110 Cal. 590 (forfeiture clause does not permit termination for trivial breaches)
- Medico-Dental etc. Co. v. Horton & Converse, 21 Cal.2d 411 (trivial breaches do not justify rescission)
- NIVO 1 LLC v. Antunez, 217 Cal.App.4th Supp. 1 (failure to obtain renter’s insurance held immaterial under LARSO context)
- Green v. Superior Court, 10 Cal.3d 616 (urban residential leases implicate unequal bargaining power; limits on freedom to contract)