Multani v. Knight (2018): Second District Court of Appeal Takes Expansive Approach To Discharging Landlord’s Obligations Following Expiration of Rent Demand Notice

Knight argues, and the trial court agreed, that Salima became a tenant at sufferance no later than when Knight filed the unlawful detainer action against her; therefore, she had only the right of “naked possession,” i.e., the right not to be forcibly evicted without legal process. Salima argues that despite her nonpayment of rent, she retained all legal rights as a month-to-month tenant until she was dispossessed following the conclusion of the unlawful detainer action.

In Multani v. Knight, a commercial tenant (Multani) leased a commercial space from Knight, to use as a medical clinic. As she was winding down her practice, her sons contracted to sell to another physician. However, because of medical issues, Multani stopped maintaining the business. Landlord Knight served a three-day rent demand notice, filed an unlawful detainer when it went uncured, and took possession by default.

In the meantime, plumbing problems lead to water damage to the personal property/medical equipment in the clinic. After the default judgment for possession, Multani sued for conversion of the personal property/fixtures, breach of the covenant of quiet enjoyment (later re-characterized as “constructive eviction” from a commercial tenancy), interference with contract, and a handful of other claims. Knight cross-complained for the unpaid rent.

Knight filed for summary judgment, arguing that Multani, “could not prevail on any of her claims because she was unlawfully on the premises at all times after July 1, 2011, and was illegally on the premises after December 9, 2011”. This argument, adopted by the trial court, became the architecture for an aggressive published appellate opinion about when the law discharges a landlord’s obligations to a defaulting tenant.

The court observed general state law about periodic tenancies: Section 1945 of the Civil Code renews a tenancy on the same terms as an expired lease, upon regular payment and acceptance of rent. Multani maintained all contractual rights so long as she continued to pay rent. The court observed that Section 1946 terminates a periodic tenancy when one party gives 30 days’ notice to the other. The court concluded that, when she stopped paying in July of 2011, there was nothing for the landlord to accept. The tenancy impliedly terminated.

The court went on to find that payment of rent was material to the contract, the material breach of one party allows the other to terminate, and Knight had elected this option by serving the rent demand notice. From this premise, the court found that Multani was merely a holdover tenant at sufferance “no later than when Knight initiated the unlawful detainer action after Salima failed to comply with the three-day notice to pay rent or quit”.

The Court of Appeal adopted the trial court’s rejection of the quiet enjoyment/constructive eviction theory, on the same premise. Section 1927 of the Civil Code affords “quiet enjoyment and possession of the premises during the continuation of the term“. (The term “ended”, therefore no covenant was breached.) This is the jurisprudential leap that could lead to unintended consequences. The entire point of the unlawful detainer statutes is to provide a statutory, summary remedy to recover property so that landlords to not resort to “self help”. The landlord is not restored to possession until after entry of judgment.

The record showed that Knight first became aware of the plumbing problem – in March of 2012 – when neighbors were complaining, and she sent her property manager to investigate. At this point, Knight had filed the unlawful detainer action, but hadn’t yet recovered possession. Multani was not available, and Knight didn’t have keys, so Knights property manager basically broke into the property to address the plumbing problem. While landlords may enter in an emergency (per Section 1954 of the Civil Code), the determined that (1) this was not a tenancy, but that (2) Multani still had a “naked right to possession”. The rationale for condoning lock-breaking access to a property (and discharging other obligations related to possession) during the pendency of an unlawful detainer action is not clear from the opinion.

That said, this case took on several issues of first impression with some concerning glosses over longstanding law. Whether or not a tenancy is terminated, state law affords tenants the opportunity to recover personal property. In fact, 2012 legislation added language Section 1946 about this opportunity to recover personal property and the landlord’s obligations to safeguard it. The court cavalierly ignored the statutory right to recover on the basis that Multani didn’t explore the concept enough in her opening brief.

All of which is to say that, while the landlord practitioner’s eyes may widen at the possibilities presented by this opinion, the discharges of statutory and common law duties should be taken with caution, at least until this opinion finds its way outside of the Second District. The stakes of these actions are too high to rely on a rule established by these easily distinguishable facts.