[DKN Holdings, LLC. v. Faerber___C4th___]

Facts: Two co-tenants rent a commercial space. The lease agreement signed by both tenants makes them jointly and severally responsible for complying with the terms of the lease. The co-tenants default on their rent payment and the landlord sues for unpaid rent against one of the co-tenants, but not the other tenant who was dismissed in a prior judgment. The landlord is awarded money losses in a settlement with the first co-tenant.

Claim: The landlord seeks the same money losses from the second co-tenant, claiming they are also responsible for paying the landlord the unpaid rent since the tenants were equally responsible for the lease and the second co-tenant was not included in the case against the first co-tenant.

Counter claim: The second co-tenant claims the landlord is barred from pursuing the same money losses against them since the landlord was awarded money losses in the case against the first co-tenant.

Holding: A California Supreme Court holds the landlord may seek money losses against the second co-tenant since the tenants were severally and jointly liable for the lease and the awarding of money losses from the first co-tenant does not bar the landlord from seeking money losses from the second co-tenant, who was not part of the case against the first co-tenant. [DKN Holdings, LLC. v. Faerber___C4th___]

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Editor’s note – This case was also tried at the appellate level where the opposite conclusion was reached. Upon further examination of the legal doctrine res judicata, the California Supreme Court determined it only barred claims between same parties. Since the second co-tenant was not part of the first case and entered into a jointly and severally liable lease, the landlord is permitted to seek money losses from them in a separate case. However, the landlord to be efficient, needed to include all tenants responsible for the rent in the first action to avoid a second action. The landlord may only collect money losses once — the complete amount from one co-tenant or the amount as divided among the two co-tenants.