Updated 06/13/14
Facts: Two co-tenants enter into a commercial lease on a nonresidential property. The lease agreement signed by both tenants makes them jointly and severally responsible for complying with the terms of the lease. The tenants later fail to pay rent and the landlord pursues the tenants for unpaid rent, but does not serve one of the co-tenants, dismissing them prior to judgment. The first tenant alone is ordered to pay rent to the landlord.
Claim: The landlord later seeks the same money losses awarded against the first tenant from the second tenant, claiming the second tenant is also responsible for paying the landlord the unpaid rent since the second tenant is jointly liable under the lease agreement.
Counter claim: The second tenant claims the landlord may not seek the same money losses from them, since the landlord already recovered from the first tenant.
Holding: A California court of appeals held the landlord may not pursue money losses from the second tenant since the landlord already recovered from the first tenant and may not levy the same claim against the co-tenant later in a separate case. [DKN Holdings LLC v. Faerber (April 9, 2014)_CA4th_]
Editor’s note – This ruling centered on the legal doctrine of res judicata, which bars a claim from being litigated again if a final judgment was already reached. In this case, the second tenant, as a co-tenant, maintained a legal interest in the initial case against the first tenant. Thus, the second tenant’s exclusion in the judgment against the first tenant settled the claim and prevented the landlord from bringing the same claim against them in a separate case.
