LANDLORD’S BAD FAITH IN REJECTING RENT CHECK THAT IS ONE PENNY SHORT IS A DEFENSE TO AN UNLAWFUL DETAINER ACTION

In J.S. BAWA v Terhune, decided by the Appellate Division of the Superior Court of California for the County of Los Angeles on January 30, 2019, a landlord filed an unlawful detainer action against a tenant of a rent-controlled unit because the tenant’s rent payment was one penny short. The tenant owed $507.61 for the month of June 2017 consisting of monthly rent in the amount of $504 and a City of Los Angeles Systematic Code Enforcement (SCEP) fee in the amount of $3.61. The tenant mailed a check to the landlord for $507.60 (one penny short). The landlord returned the check with a letter stating “we are returning your check…since the rent amount is incorrect.” On June 13, 2017, the landlord served  the tenant with a Three-Day Notice to Pay Rent or Quit for $507.61. After expiration of the notice, the tenant sent the landlord two checks, one dated June 20, 2017 in the amount of $507.61 and one dated June 25, 2017 in the amount of $519.86. The landlord did not deposit the checks. Instead, the landlord proceeded with an unlawful detainer action. After a jury trial, the court entered judgment for the tenant. The landlord appealed. The Appellate Division of the Los Angeles Superior Court affirmed the jury verdict citing the principal that a “trivial” or “de minimis” breach of a rental obligation is not sufficient ground for termination of a tenancy. In that regard, the court stated “[W]hen a landlord refuses to accept rent that is one penny short of the required amount, without any legitimate intent other than the manufacture a default in order to evict a tenant, a tenant may assert the landlord’s bad faith as an unlawful detainer defense.”

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