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Court of Appeal, First District, Division 2, California.

Vickey KRAUS, et al., Plaintiffs and Respondents, v. TRINITY MANAGEMENT SERVICES, INC., et al., Defendants and Appellants.

Nos. A070864, A071375.

Decided: August 28, 1997

William B. Boone, Mukesh Advani, Richard M. Sangster, San Francisco, for Appellants. Susan M. Popik, William B. Chapman, Mark B. White, Stephen L. Collier, San Francisco, for Respondents.


Defendants Trinity Management Services, Inc., Angelo and Yvonne Sangiacomo, doing business as Trinity Properties, and Rosetta Sangiacomo (collectively referred to as defendants) appeal a judgment rendered following a court trial ordering them to disgorge monies collected as a result of certain illegal rental practices.   The court found that these practices violated Civil Code sections 1950.5 and 1671 1 and constituted an unfair business practice under Business and Professions Code section 17200.

Defendants contend that plaintiffs Vickey Kraus, Edelwina Balingit, Francisco Balingit, May Pan, Antonio De Los Santos and Evangelina De Los Santos (collectively referred to as plaintiffs) are collaterally estopped from raising claims under section 1950.5 and, even if collateral estoppel does not foreclose these claims, defendants assert that their practice of charging a nonrefundable $100 “TIER” fee does not violate section 1950.5.   Defendants also challenge the court's finding that a liquidated damages provision contained in Trinity Properties' form lease violated section 1671.

In addition to raising issues regarding the court's finding of liability, defendants contend (1) the trial court was not authorized to order that defendants disgorge illegally obtained monies into a “fluid fund;” (2) they were improperly denied an offset against the disgorgement award;  (3) the amounts awarded by the court were not supported by substantial evidence;  and (4) the court failed to properly calculate prejudgment interest.   With the exception of this final point regarding the calculation of prejudgment interest, we affirm the judgment.

Defendants also raise issues regarding the propriety of the court's award of attorney's fees to plaintiffs under Code of Civil Procedure section 1021.5.  We affirm this award.


A. The Parties

Defendants own approximately 50 apartment buildings in San Francisco containing over 2,000 rental units.   Defendant Trinity Management Services, Inc. manages these units under a written contract with Angelo, Yvonne and Rosetta Sangiacomo (the Management Agreement).   Plaintiffs, former tenants of Trinity Properties, challenge a number of rental practices of Trinity Properties and Trinity Management Services.   These practices are described below.

B. The TIER Fee

Trinity Management assesses and collects a $100 nonrefundable fee from every new tenant of Trinity Properties.   This fee is referred to by the parties as the “TIER” fee.2  Tenants of Trinity Properties pay the TIER fee generally at the time they sign a standard form lease (the Lease).   Their obligation to do so is documented in paragraph 33 of the Lease.3  A separate document entitled “Receipt and Agreement for Tenancy Initiation Expense Reimbursement,” acknowledges receipt by “Landlord” of this fee from the tenant.

C. The Liquidated Damages Clause

The Lease also contains a liquidated damages clause, which reads as follows:  “It is the understanding of the parties that liquidated damages will be assessed equaling one month's rent of ($[amount] ) of said rental unit in order to secure written permission by owner to terminate prior to the lease expiration date.   Tenant will also be responsible for all rent until unit is rented.”   The amount of liquidated damages is set without negotiation with the tenant.   Should a tenant terminate his or her tenancy before the expiration of the lease term, Trinity Properties assesses a “liquidated damages” charge equal to the amount specified in the Lease.   The average amount of this charge is $700.   Every tenant is required to pay a “security deposit” in an amount generally equal to one month's rent.   This “security deposit” is routinely used to secure payment of the liquidated damages amount.

D. Procedural History

Plaintiffs sued defendants on April 6, 1994.   Their complaint alleged that the TIER fee was imposed in violation of section 1950.5 and sought a declaration that the liquidated damages provision was void under section 1671.   The complaint also alleged that the practices of charging the TIER and liquidated damages fees were unfair business practices under Business and Professions Code section 17200.   Plaintiffs sought, among other things, either restitution or disgorgement of the illegally assessed TIER fees and liquidated damages and an order enjoining defendants from collecting these amounts in the future.   Finally, plaintiffs sought attorney's fees and costs.

Defendants demurred to the complaint, arguing that plaintiffs were collaterally estopped from asserting their section 1950.5 claim.   This argument was based on a judgment obtained by defendants in an earlier action (the 1983 Judgment).   The 1983 Judgment concluded that the TIER fee did not violate section 1950.5.   Defendants' collateral estoppel argument did not prevail and, in July 1994, an order was entered overruling the demurrer.

Defendants answered the complaint and asserted as an affirmative defense that to the “extent plaintiffs are entitled to any recovery against these answering defendants ․ defendants are entitled to an offset pursuant to Code of Civil Procedure § 431.70, in an amount to be determined at trial, by reason of defendants' subsequently filed cross-demand for money, more particularly set forth in the cross-complaint to be filed by defendants.”   Defendants did not, however, file a cross-complaint seeking an offset.

The parties each brought motions for summary adjudication on the issue of whether the TIER fee violated section 1950.5.   An order was issued in favor of plaintiffs summarily adjudicating defendants' liability on the section 1950.5 claim.   The parties then tried the remaining claims to the court.   All of these claims were resolved in favor of plaintiffs.

E. The Judgment

Following trial, the court entered a judgment which decreed the TIER fee an illegal security within the meaning of section 1950.5 and its assessment and collection an unfair business practice under section 17200.   The court also found the liquidated damages clause void under section 1671 and the assessment, collection and retention by defendants of a security deposit which was routinely used to secure defendants' liquidated damages claim an unfair business practice under section 17200.   The court ordered Angelo, Yvonne and Rosetta Sangiacomo, doing business as Trinity Properties, to disgorge liquidated damages in the amount of $448,000 and ordered Trinity Management Services to disgorge TIER fees in the amount of $447,700.   The court assessed prejudgment interest on the illegally retained TIER fees at the rate of 10% per annum.   The trial court also ordered defendants to make what it characterized as “restitution/disgorgement” to the individual plaintiffs for the amount of the TIER fees and security deposits collected from them by defendants.

Defendants moved for a new trial and, after this motion was denied, filed this timely appeal.

The court also awarded plaintiffs attorney's fees under Code of Civil Procedure section 1021.5 in the amount of $269,695 and expenses not otherwise allowable as costs in the amount of $14,702.   Defendants have also appealed this award.


A. Violation of Civil Code Section 1950.51. Collateral Estoppel Effect of 1983 Judgment

 Defendants argue that plaintiffs are estopped from litigating the issue of defendants' compliance with section 1950.5 because this issue was determined by the 1983 Judgment.   Although a party may not relitigate an issue that it fully and fairly litigated on a previous judgment, “relitigation of the issue in a subsequent action between the parties is not precluded” when “[t]he issue is one of law and ․ a new determination is warranted in order to take account of an intervening change in the applicable legal context․”  (Rest.2d Judgments, § 28, subd. (2)(b), p. 273;  see also Bliler v. Covenant Control Com. (1988) 205 Cal.App.3d 18, 28, 252 Cal.Rptr. 50 [no collateral estoppel effect given to prior judgment following intervening change in law].)

Section 1950.5, subdivision (i), prohibits a landlord from making a security deposit “nonrefundable.”  Section 1950.5, subdivision (e), prohibits a landlord from keeping any portion of a “security” fee for purposes not authorized under the statute.  Section 1950.5, subdivision (b), defines a “security” as “any payment, fee, deposit or charge, including, but not limited to, an advance payment of rent, used or to be used for any purpose, including, but not limited to, any of the following:  [¶] (1) The compensation of a landlord for a tenant's default in the payment of rent.  [¶] (2) The repair of damages to the premises caused by the tenant.  [¶] (3) The cleaning of the premises upon termination of the tenancy.  [¶] (4) To remedy future defaults by the tenant in any obligation under the rental agreement to restore, replace, or return personal property or appurtenances, exclusive of ordinary wear and tear, if the security deposit is authorized to be applied thereto by the rental agreement.”

 In 1983 the court (Judge Ollie Marie-Victoire) found that the TIER fee charged by defendants was not a “security.”   It reasoned that “despite the language of coverage in the statute, there are still some payments, fees or charges, having nothing to do with security, which cannot be subject to the non-refundable provision.”   Characterizing the TIER fee as “reimbursement for expenses incurred prior to the commencement of the lease or rental period [which does] not secure the landlord against potential damages resulting from the tenant's failure to enter into the agreement or to perform in accordance with the terms thereof,” the 1983 Judgment excepted the fee from the coverage of section 1950.5.

 Plaintiffs argue that a subsequent appellate court interpretation of the section and a legislative amendment evidence an “intervening change in the applicable legal context.”   We agree.4  Five years after the 1983 Judgment was rendered, Division Five of this court ruled that a fee similar to the TIER fee was a “security” under section 1950.5.  (People ex rel. Smith v. Parkmerced Co. (1988) 198 Cal.App.3d 683, 244 Cal.Rptr. 22 (Parkmerced ).)

In Parkmerced, the owner and operator of an apartment complex added a $65 increment to every tenant's first month's rent.   The $65 increment was not additional rent, but was intended by the Parkmerced Company to “recover some of the ‘front-end’ costs of moving in a new tenant ․ such as cleaning, advertising and showing the apartment, checking credit references, and the like.”  (Parkmerced, supra, 198 Cal.App.3d at pp. 689-690, 244 Cal.Rptr. 22.)   The court held that this charge was a “security” which was subject to section 1950.5.   Because the Parkmerced Company had not imposed it for any of the permissible uses set out in section 1950.5, subdivision (b), it was required to refund the fee.  (Id. at pp. 690-691, 244 Cal.Rptr. 22.)   Thus, the Parkmerced decision directly contradicts Judge Marie-Victoire's conclusion in the 1983 Judgment and, as such, constitutes “an intervening change in legal principles.”  (See, e.g., Brock v. Williams Enterprises of Georgia, Inc. (11th Cir.1987) 832 F.2d 567, 574.)

Plaintiffs also argue that a legislative amendment to the statute in 1986 evidences a “change in the intervening legal context.” 5  In 1986, the Legislature revised section 1950.5, subdivision (e).  (Stats.1986, ch. 564, § 1.) The section now reads as follows:  “The landlord may claim of the security only those amounts as are reasonably necessary for the purposes specified in subdivision (b).”  The earlier version of section 1950.5, subdivision (e), on which Judge Marie-Victoire based her decision, read as follows:  “The landlord may claim of the security only those amounts as are reasonably necessary to remedy tenant defaults in the payment of rent, to repair damages to the premises caused by the tenant, exclusive of ordinary wear and tear, or to claim the premises if necessary, upon termination of the tenancy.”  (Former § 1950.5, subd. (e).)

As can be seen from the original language of section 1950.5, subdivision (e), the Legislature initially indicated that a landlord could make a claim against the security only for those purposes specifically set out in section 1950.5, subdivision (b).   The 1986 amendment clarifies that the examples of a “security” set out in section 1950.5, subdivision (b)(1)-(4), are not exclusive.   In making this clarification, the Legislature has indicated that the definition of security is not limited to the four examples set out in section 1950.5, subdivision (b)(1)-(4).   This change, therefore, evidences a legislative intent that “security” be broadly defined, contrary to Judge Marie-Victoire's narrower construction of the term.   As such, it also represents “an intervening change in the applicable legal context.”   For these reasons, therefore, we will not give collateral estoppel effect to the 1983 Judgment.

Neither Zeppi v. State of California (1962) 203 Cal.App.2d 386, 21 Cal.Rptr. 534 (Zeppi) nor Pacific Mut. Life Ins. Co. v. McConnell (1955) 44 Cal.2d 715, 725, 285 P.2d 636 (McConnell ) contradict this conclusion.   In Zeppi, the plaintiff filed a personal injury action against the State of California.   The state successfully demurred on the ground that the claim was barred by the doctrine of governmental immunity.   The plaintiff appealed and the judgment was affirmed.   A year later, the California Supreme Court abrogated the doctrine and the plaintiff attempted to have the judgment of dismissal as to the state vacated and the demurrer overruled.  (Zeppi, supra, 203 Cal.App.2d at p. 387, 21 Cal.Rptr. 534.)   The Court of Appeal rejected this attempt as contrary to the principles of res judicata:  “Our courts have repeatedly refused to treat the self-evident hardship occasioned by a change in the law as a reason to revive dead actions․”  (Id. at pp. 388-389, 21 Cal.Rptr. 534.)   Here, however, plaintiffs' claim is not an attempt to revive the action on which the 1983 Judgment was based.   Instead, plaintiffs' action is based on subsequent charges of the TIER fee.6  As such, it is factually dissimilar from Zeppi and not barred by the principles of collateral estoppel.  McConnell, like Zeppi, stands for the general proposition that a “prior determination of an issue is conclusive in a subsequent suit between the same parties as to that issue and every matter which might have been urged to sustain or defeat its determination.”   (McConnell, supra, 44 Cal.2d at pp. 724-725, 285 P.2d 636.)   This case does not, however, involve a subsequent transaction between the parties and is, therefore, factually inapposite.  (See also Commissioner of Internal Revenue v. Sunnen (1948) 333 U.S. 591, 68 S.Ct. 715, 92 L.Ed. 898 [second action between same parties challenging imposition of tax during subsequent tax year not barred by collateral estoppel].) 7

2. Defendants' TIER Fee Violates Section 1950.5

The trial court held that the TIER fee “constitutes a ‘security’ within the meaning and scope of Civil Code section 1950.5, and its collection is made unlawful by that statute, both because it is assessed for a purpose unauthorized by subsections (b) and (e) and because it is nonrefundable as prohibited by subsection (1).”   Defendants challenge this ruling on the following grounds:  (1) defendant Trinity Management Services, Inc. is a “rental agency” and thus not subject to section 1950.5;  (2) section 1950.5 is unconstitutionally vague;  and (3) the subsequent enactment of section 1950.6 indicates the Legislature did not intend to include fees such as the TIER fee in the definition of “security.”   We find none of these arguments convincing.

(a) Trinity Management Services Falls within the Scope of Section 1950.5

 Defendants argue that section 1950.5 applies only to “security” collected by landlords.   Defendants contend that Trinity Management Services is a rental agency rather than a landlord and, therefore, not subject to section 1950.5.   Plaintiffs established at trial that Trinity Management Services collected the TIER fee on behalf of the landowner, Trinity Properties.  Section 1950.5 does not focus on who collects the security and does not, as defendants suggest, create any exception for entities who are not landlords.   Rather, so long as a fee collected from a tenant constitutes a security, the statute would then apply to anyone who collects the security.   Here, there is no question that the TIER fee is a “security.”   Whether this security is collected by Trinity Management Services or Trinity Properties does not alter its identity as a security. Furthermore, the fact that Trinity Management Services retains the full amount of the TIER fee is irrelevant.   The fee collected from tenants of Trinity Properties is a “security” under section 1950.5.   The ultimate disposition Trinity Properties makes of this fee (here, it is paid to Trinity Management Services) does not alter its original character as a “security” or the applicability of section 1950.5.

(b) Section 1950.5 is not Unconstitutionally Vague

The Parkmerced court considered and rejected the contention that section 1950.5 is unconstitutionally vague.  (People ex rel. Smith v. Parkmerced Co., supra, 198 Cal.App.3d at pp. 691-692, 244 Cal.Rptr. 22.)   We agree.

(c) Nothing About Section 1950.6 Suggests that the Tier Fee is not a “Security” Under Section 1950.5

In supplemental briefing, defendants argue that the recent enactment of section 1950.6 has some bearing on the proper interpretation of section 1950.5.   Section 1950.6 generally permits a landlord to charge an “application screening fee” to all prospective tenants. (§ 1950.6, subd. (a).)  The statute expressly limits the amount of this fee to the actual out of pocket costs involved in conducting this screening and sets a ceiling of $30 per applicant in the event that these costs are greater than $30. (§ 1950.6, subd. (b).)  The statute also provides that the application screening fee does not constitute a “security” under section 1950.5. (§ 1950.6, subd. (j).)

Defendants first contend that, on its face, section 1950.6 establishes that the TIER fee is not a “security” under section 1950.5.   We do not agree.   Section 1950.6 establishes a limited exception to the definition of “security” in the case of an “application screening fee.”   The TIER fee is not, as defendants themselves acknowledge, an application screening fee and therefore it does not fall within the exception set out by section 1950.6.8

Defendants also argue that the legislative history of section 1950.6 indicates that the TIER fee is not a “security” under section 1950.5.   This raises the threshold question of whether the legislative history of section 1950.6 may be considered in construing the meaning of “security” under section 1950.5.  In Stockton Sav. & Loan Bank v. Massanet (1941) 18 Cal.2d 200, 204, 114 P.2d 592, the court noted that when subsequent legislation interprets another statute, it “does not change the meaning;  it merely supplies an indication of the legislative intent which may be considered together with other factors in arriving at the true intent existing at the time the legislation was enacted.”   Plaintiffs, however, contend that because the plain meaning of section 1950.6 is clear, there is no need to look to its legislative history.   This argument misses the point.   We are not here construing the meaning of section 1950.6, but rather considering whether that section casts any light on the meaning of “security” under section 1950.5.

 Although the legislative history of section 1950.6 is available to assist us in construing section 1950.5, it does not indicate, as defendants suggest, that the TIER fee falls outside the definition of “security.”   Section 1950.6 creates an exception to the definition of security.   This exception, as defendants concede, does not encompass the TIER fee.   The mere creation of an exception to the definition of “security” in the case of an application screening fee does not indicate that other types of fees might also be considered exceptions to section 1950.5.   As plaintiffs note, it is a rule of statutory construction that “ ‘[w]e are not authorized to add exceptions where the Legislature has spoken clearly to prescribe a rule and narrowly limit the exceptions thereto.’ ”  (Creutz v. Superior Court (1996) 49 Cal.App.4th 822, 829, 56 Cal.Rptr.2d 870, quoting Courtesy Ambulance Service v. Superior Court (1992) 8 Cal.App.4th 1504, 1514, 11 Cal.Rptr.2d 161.)   In sum, nothing in our review of section 1950.6 and its legislative history contradicts our reading of section 1950.5's definition of “security” as encompassing defendants' TIER charge.

B. Liquidated Damages Violation

Defendants argue that the evidence does not support the trial court's finding that a liquidated damages provision contained in Trinity Properties' form lease violates section 1671.   As explained below, we do not agree.

The liquidated damages clause provides as follows:  “It is the understanding of the parties that liquidated damages will be assessed equaling one months rent of ($[amount] ) of said rental unit in order to secure written permission by owner to terminate prior to the lease expiration date.   Tenant will also be responsible for all rent until unit is rented.”   Plaintiffs and defendants do not dispute that the liquidated damages provision in the form lease is subject to section 1671, subdivision (d), which provides that a liquidated damages provision is void “except that the parties to such a contract may agree therein upon an amount which shall be presumed to be the amount of damage sustained by a breach thereof, when, from the nature of the case, it would be impracticable or extremely difficult to fix the actual damage.”

Defendants claim that the liquidated damages provision was designed to recoup actual damages due to a tenant's breach.   In addition to lost rents, a landlord is entitled to recover from a breaching tenant “[a]ny other amount necessary to compensate the lessor for all the detriment proximately caused by the lessee's failure to perform his obligations under the lease or which in the ordinary course of things would be likely to result therefrom.” (§ 1951.2, subd (a)(4).)   However, defendants separately charged tenants for the majority of such losses (items such as rent due for the remaining term of the lease, for example, were collected from tenants separately).   The three items of actual damages attributable to a breach of lease which defendants claim are collected through the liquidated damages provision are (1) “costs of collection”;  (2) “lost rent differential” 9 and (3) “legal fees.”

 As this court recently explained, “[f]or liquidated damages to be valid under subdivision (d) of Civil Code section 1671, it must have been ‘impracticable or extremely difficult to fix the actual damage.’  [Citation.]   Further, the amount of liquidated damages ‘must represent the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.’ ”  (Hitz v. First Interstate Bank (1995) 38 Cal.App.4th 274, 288, 44 Cal.Rptr.2d 890, quoting Garrett v. Coast & Southern Fed. Sav. & Loan Assn. (1973) 9 Cal.3d 731, 739, 108 Cal.Rptr. 845, 511 P.2d 1197.)   We will disturb the trial court's ruling on this issue only if, on the record as a whole, it is unsupported by substantial evidence.  (Hitz v. First Interstate Bank, supra, 38 Cal.App.4th at p. 290, 44 Cal.Rptr.2d 890.)   Here, there is substantial evidence that actual damages as a result of a breach of a lease were neither (1) “ ‘impracticable or extremely difficult to fix’ ” or (2) “ ‘the result of a reasonable endeavor by the parties to estimate a fair average compensation for any loss that may be sustained.’ ”  (Id. at p. 289, 44 Cal.Rptr.2d 890.)

Neither attorney's fees nor collection costs are impossible or even difficult to compute.   In Greenbach Bros., Inc. v. Burns (1966) 245 Cal.App.2d 767, 771, 54 Cal.Rptr. 143, the court specifically noted that “[a]ttorney's fees do not fall within the exceptional kind of damages described in section 1671.  [Citations.]   Moreover, it is a matter of common knowledge that courts regularly fix reasonable attorney's fees for services rendered, and have no difficulty in doing so.”   Collection costs, like attorney's fees, are an item of damages that may be computed with the same ease.

It is also evident from the record that the trial court had ample evidence upon which to conclude that defendants did not make a reasonable effort to estimate a fair amount of its potential losses.   Without consulting tenants or any representative of tenants, defendants simply chose one-month's rent as an appropriate amount of liquidated damages.   Given that defendants already collect lost rents from tenants, this number does not bear any reasonable relationship to the other damages defendants claim to incur when one of their leases is breached.   Moreover, although the absence of discussion between the parties does not, by itself, indicate that the liquidated damages provision runs afoul of section 1950.5, it does signal that the number may well have been arrived at arbitrarily.  (See Greenbach Bros., Inc. v. Burns, supra, 245 Cal.App.2d at pp. 772-773, 54 Cal.Rptr. 143[“[I]t is the reasonable endeavor to ascertain in advance the loss which may result from a possible breach that distinguishes a provision for liquidated damages from one that is in the nature of a penalty, since the characteristic feature of a penalty is its lack of any proportionate relation to actual damages that may arise upon breach.”].) Defendants bore the burden of showing such a reasonable endeavor occurred, and the trial court had, on the state of the record before us, substantial evidence that such an endeavor was not made.   The trial court, therefore, properly concluded that the liquidated damages provision contained in defendants' Lease violated section 1671.

C. The Remedies Fashioned by the Trial Court were Appropriate

1. The Court was Authorized to Order Defendants Disgorge all Illegally Obtained Monies into a “Fluid Fund”

 The trial court found that defendants engaged in unfair and unlawful business practices by imposing the $100 TIER fee in violation of section 1950.5 and in assessing liquidated damages in violation of section 1671.   In addition to awarding what it characterized as “restitution/disgorgement” to the six named plaintiffs, the court also ordered defendants to disgorge into a “fluid recovery fund” the amounts they had obtained from their tenants while engaging in these unlawful practices.   This fund was to be “organized and administered as a trust fund for the purpose of providing financial assistance for the advancement of legal rights and interests of residential tenants in the City and County of San Francisco.”

There is ample authority permitting the court to establish a “fluid fund” to administer monies disgorged under Business & Professions Code section 17203.  Section 17203 provides that “[a]ny person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction.   The court may make such orders or judgment ․ as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.”   In Fletcher v. Security Pacific National Bank (1979) 23 Cal.3d 442, 450, 153 Cal.Rptr. 28, 591 P.2d 51 (Fletcher ), the court, in construing the analogous Business & Professions Code section 17535, observed that “[t]he requirement that a wrongdoing entity disgorge improperly obtained moneys surely serves as the prescribed strong deterrent” underlying section 17200.  (See also People v. Thomas Shelton Powers, M.D., Inc. (1992) 2 Cal.App.4th 330, 341, 3 Cal.Rptr.2d 34 [“It is ․ abundantly clear that as a general rule a trial court, ruling on an unfair trade practice, has the power to order disgorgement and/or restitution as a form of relief ancillary to an injunction.”] and Parkmerced, supra, 198 Cal.App.3d at p. 693, 244 Cal.Rptr. 22 [approving order requiring defendant to disgorge monies to third party].)

Defendants argue, however, that a fluid recovery fund is only permitted in a class action and, because plaintiffs' claims were tried as a representative action under section 17200, the trial court erred in ordering this remedy.   As the foregoing authorities make clear, this argument is patently incorrect.   Disgorgement of moneys into a “fluid recovery fund” is permissible under the broad equitable powers granted the trial court by section 17203.  (People v. Thomas Shelton Powers, M.D., Inc., supra, 2 Cal.App.4th at pp. 343-344, 3 Cal.Rptr.2d 34.)   Moreover, we know of no authority for the proposition that a trial court may never exercise these equitable powers in the absence of a class action.   Indeed, in Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 454, 153 Cal.Rptr. 28, 591 P.2d 51, our Supreme Court made clear that a trial court has the discretion to determine whether a claim under the analogous section 17535 would better be prosecuted as a class or an individual action:  “[T]he trial court must carefully weigh both the advantages and disadvantages of an individual action against the burdens and benefits of a class proceeding for the underlying suit.”   The Fletcher court also remarked that an individual action “may frequently be a preferable procedure to a class action.”  (Ibid.) This observation, although dictum, nevertheless points to the obvious conclusion that an action under section 17200 may, at the discretion of the trial court, proceed either as an individual or a class action.   Certainly, however, a class action is not mandated in every situation.

 Defendants proffer no authority for the proposition that a trial court's authority to order disgorgement into a fluid recovery fund is any different in cases brought under section 17200 by private parties rather than a district attorney or the Attorney General.   It is well settled that both private parties and public entities are permitted to bring actions under section 17200.   Both do so “on behalf of the public.”  (Consumers Union of United States, Inc. v. Fisher Development, Inc. (1989) 208 Cal.App.3d 1433, 1440, 257 Cal.Rptr. 151.)

We next turn to the question of whether plaintiffs' claims in this action should have been brought on behalf of a class.   In Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758, 259 Cal.Rptr. 789 (Dean Witter), we held that a trial court's decision to permit a consumer's section 17200 claim to proceed as a class action constituted an abuse of discretion.   In Dean Witter, plaintiff, a Dean Witter customer, argued that the financial institution's practice of charging a $50 “account termination fee” and a $20 “annual fee” violated section 17200's prohibition against unlawful business practices.  (Id. at p. 763, 259 Cal.Rptr. 789.)   The plaintiff successfully obtained class certification and Dean Witter appealed, contending that, “because class treatment was not shown to be demonstrably superior to an individual action,” the trial court abused its discretion in certifying the class.  (Id. at p. 772, 259 Cal.Rptr. 789.)

We agreed.  Section 17200 represents the Legislature's express decision to set up a “streamlined procedure” to challenge unfair business practices.   In contrast, and as we observed in Dean Witter, “the management of a class action is ‘a difficult legal and administrative task.’  [Citation.]   Its only apparent advantage to victims of an unlawful business practice, vis-a-vis an individual action under the unfair competition statute, is that it may theoretically afford them a better opportunity to protect their interests.  [Citation.]   Nothing in the record before the trial court, however, gave substance to this abstract possibility in the context of the present case.   Absent persons generally are not bound by a judgment unless they were in privity with a party and the adjudication of their rights comports with due process.  [Citation.]   The possibility that such persons will pursue their own remedies may pose some threat to the defendant;  here, however, the defendant opposes class certification and will presumably not be heard to complain later if it suffers adverse consequences as a result.”  (Dean Witter, supra, 211 Cal.App.3d at pp. 773-774, 259 Cal.Rptr. 789.)

We recognize, however, that in certain situations a class action will be superior to an individual action.  Bronco Wine Co. v. Frank A. Logoluso Farms (1989) 214 Cal.App.3d 699, 718-719, 262 Cal.Rptr. 899 (Bronco Wine), presents one such situation.   In that case, Frank Logoluso Farms, a grape grower, brought an action under section 17200 challenging certain practices by Bronco Wine Co., a bulk winemaker, which led to underpayments for the grower's grapes.   Bronco Wine, unlike the defendant in Dean Witter, sought class certification, arguing that other grape growers should be included as parties.   Apparently not all growers were similarly offended by Bronco Wine's actions.   For example, a not insignificant number of these growers were willing to settle their claims and at least one grower simply did not believe he was entitled to any relief.   Although the trial court did not grant relief to nonparty growers who expressly released Bronco Wine from liability, it did award “restitution damages totaling $457,005 plus interest to 27 nonparty growers.”  (Id. at p. 717, 262 Cal.Rptr. 899.)

In this context, the Bronco Wine court held that Frank Logoluso Farms' individual action should have been brought on behalf of a class of grape growers and the trial court's failure to certify such a class constituted an abuse of discretion.   In reaching this conclusion, the Bronco Wine court expressly distinguished between the claims raised in Dean Witter and Fletcher, claims of the sort it agreed need not proceed by way of class action, and the claims of the growers, which it held could not proceed absent class certification.   In Dean Witter, as opposed to Bronco Wine, the “only issue in controversy is the legality of the termination fee.   The amount of restitution for each person is identical․  [¶] Furthermore, the amount of restitution per person in actions like Fletcher and Dean Witter is nominal.   The need for strict adherence to the principles of procedural due process to protect the interests of nonparties, though not unimportant, is less compelling.”   In contrast, the Bronco Wine court characterized the plaintiff's claim as involving a “far more complex factual issue” and observed that the “potential amount of restitution ․ is far greater than in Fletcher or Dean Witter Reynolds.”  (Bronco Wine, supra, 214 Cal.App.3d at p. 720, 262 Cal.Rptr. 899.)

It is also useful to think of the differences between Dean Witter and Bronco Wine in terms of the differences between a typical consumer action and claims which might arise between two businesses:  “[i]n cases such as Fletcher and Dean Witter, the representative actions were brought for the benefit of consumers not business entities.   Those actions were not used as vehicles for deciding complicated questions of fact establishing different amounts of restitution due each nonparty.   Instead ․ the focus of these actions was to determine whether a generally uniform practice of the defendant was an unfair business practice․”  (McCall, et al., Greater Representation for California Consumers-Fluid Recovery, Consumer Trust Funds, and Representative Actions (1995) 46 Hastings L.J. 797, 838.)

We have little difficulty in placing plaintiffs' action squarely in the same arena as Fletcher and Dean Witter rather than Bronco Wine. Plaintiffs' claims involved relatively small amounts of money-defendants' TIER fee, for example, was a uniform $100 per tenant.   Defendants also routinely assessed one month's rent as liquidated damages.   Despite the fact that different tenants may have paid different monthly rents (and thus different liquidated damages), these amounts did not vary so greatly and were not so large as to preclude the trial court from ascertaining them without the benefit of a certified class.   Certainly, this case did not involve the sort of complex factual issues with which the Bronco Wine court wrestled in determining appropriate restitution to the individual grape growers.  (See Bronco Wine, supra, 214 Cal.App.3d at pp. 716-717, 262 Cal.Rptr. 899.)   In light of the factual differences between Dean Witter and Bronco Wine, we conclude that the trial court was not required to certify a class before ordering that defendants disgorge into a fluid recovery fund monies it had obtained through its illegal TIER and liquidated damages charges.10

2. Defendants' Offset Claim

Citing Granberry v. Islay Investments (1995) 9 Cal.4th 738, 38 Cal.Rptr.2d 650, 889 P.2d 970 (Granberry), defendants contend that the trial court erred in not permitting them to setoff against the court's disgorgement award amounts allegedly due from tenants for unpaid rent, repairs and cleaning.   In Granberry, a class of tenants successfully argued that a landlord had unlawfully collected nonrefundable deposits from them in violation of section 1950.5, subdivision (f).   The trial court awarded the tenants damages in the amount of the unlawfully collected security and ruled that the landlord was not entitled to a setoff.   Our Supreme Court, however, held that the landlord was entitled to “set off amounts allegedly due for unpaid rent, repairs, and cleaning against money due plaintiffs as a refund of their security deposits.”  (Id. at p. 743, 38 Cal.Rptr.2d 650, 889 P.2d 970.)

 Plaintiffs argue that defendants have waived this claim.   The record amply supports this contention.   In their answer to plaintiffs' complaint, defendants asserted the following affirmative defense:  “to the extent plaintiffs are entitled to any recovery against these answering defendants ․ defendants are entitled to an offset pursuant to Code of Civil Procedure § 431.70 in an amount to be determined at trial, by reason of defendants' subsequently filed cross-demand for money, more particularly set forth in the cross-complaint to be filed by defendants.”   Several months before trial and shortly before the discovery cutoff date, defendants sought leave to file a cross-complaint asserting an offset right against three of the plaintiffs and “Roes 1 through 2000.”   Plaintiffs opposed this motion on the ground that it would difficult to challenge the sufficiency of the cross-complaint and take adequate discovery prior to the trial date.   In the alternative, plaintiffs sought to have the trial date continued in order to permit them to respond to the cross-complaint and conduct additional discovery.   In their reply, defendants argued that no continuance was necessary but, “if the court is inclined to grant the instant motion on the condition that the trial date be continued, defendants will withdraw the motion and file a separate action for damages against plaintiffs.”   The court, did, in fact, impose such a condition and defendants withdrew their motion.

At trial, defendants did not present evidence regarding their affirmative defense, nor did defendants request the court to consider the issue of offset prior to trial.11  In fact, it was not until the court issued a proposed statement of decision and judgment that defendants raised the issue of their entitlement to an offset.   Defendants did so, however, only “as to the named plaintiffs” and not as to any other tenants.

Although, under Granberry, defendants may well be entitled to such an offset, their failure to present evidence on this issue at trial, combined with earlier statements of their intention to do so through a separate damages action, constitutes a waiver of this claim on appeal.  (Fortman v. Hemco, Inc. (1989) 211 Cal.App.3d 241, 264, 259 Cal.Rptr. 311 [defendants' failure to seek offset in trial court “precludes it from doing so on appeal”].)

3. The Amounts Awarded by the Court were Supported by Substantial Evidence

(a) Violation of Section 1950.5

 The trial court found that “[f]or the period within the four year statute of limitations applicable here, i.e., from April 6, 1990, to February 28, 1995, the number of Leases signed is approximately $4,447.00 [sic].12  Each of the $4,447 tenants in this period paid the illegal $100 TIER fee and were also required to make illegal security deposits of at least one month's rent.  [¶] Defendants must disgorge illegally collected TIER fees and illegal security deposits/liquidated damages.   The amount of TIER fees unlawfully collected by defendants is reasonably determinable from the record as $447,700.00 and TMSI is liable for disgorgement of that amount.”

Defendants argue that this award is excessive because 1684 of the 4447 tenants are current tenants and therefore not entitled to a return of the TIER fee until termination of their tenancies.   Alternatively, defendants argue that if these tenants are in fact entitled to a refund, then the judgment is excessive because it includes persons who were tenants on April 6, 1990, and, thus, includes claims barred by the four-year statute of limitations.

Both of these arguments are meritless.   The nonrefundable TIER fee is imposed in violation of section 1950.5 regardless of whether it is imposed on current or past tenants.   The trial court properly ordered defendants to disgorge these fees.   Furthermore, the trial court's order clearly states that damages were based on the number of leases signed during the four-year statute of limitations period applicable to plaintiffs' claims.   Plaintiffs complaint was filed on April 6, 1994, and the court calculated the number of tenants from that date.   No error exists.

(b) Violation of Section 1671

 Defendants also contend that the trial court's order that they disgorge $448,000 in unlawfully collected liquidated damages is not supported by substantial evidence.   We disagree.   The trial court found that “it is not possible from the record to (specifically) identify by name all or even most of the tenants who were unlawfully assessed security deposits and/or liquidated damages nor to determine the precise amount of those assessments improperly collected and for which no accounting was made.   Accordingly, the Court will make its own best determination from the evidence and hereby finds that it is reasonable to conclude that, on average, former tenants were charged security deposits and/or liquidated damages in an average amount of $700 per tenant up through February 1995.   Disgorgement of those amounts will be ordered accordingly.”   The trial court calculated that 640 tenants were assessed unlawful liquidated damages and ordered defendants to disgorge $448,000.

The trial court had substantial evidence on which to base this award.   Jim Sangiacomo, president of Trinity Management, testified that almost all accounts referred to collection agencies involved a claim for liquidated damages.13  Defendants' own records established that approximately 640 accounts were referred to collection agencies during the four-year period covered by plaintiffs' complaint.   Finally, Cris Adair, the head of Trinity Management's rental department, testified that the majority of broken leases involved apartments with a rental rate averaging between $650 to $700 per month.   The trial court's award was based on substantial evidence and we accordingly decline to disturb it.

D. Prejudgment Interest

 The trial court awarded plaintiffs prejudgment interest at 10er annum on the TIER fee awards.   Defendants challenge this award on a number of grounds.   First, defendants argue that the award of prejudgment interest is inappropriate because defendants charged the TIER fee in reliance on the 1983 Judgment.   Defendants also argue that the award of prejudgment interest does not “comply with the policy of compensating the injured party, because the award is paid into a fluid recovery fund rather than to the individual tenants who paid the TIER fee.”   Defendants further argue that the trial court was required to, but did not, make “specific findings as to the date from which prejudgment interest commenced.”   Finally, defendants assert that the proper interest rate should have been seven, rather than ten percent.   Our review of the record indicates that, although the trial court properly determined that prejudgment interest was appropriate in this matter, it failed to compute the amount correctly.

The trial court was authorized to award prejudgment interest under section 3287, subdivision (a).   Plaintiffs' claim is based on defendants' violation of a statute-in this case, section 1950.5.   In Tripp v. Swoap (1976) 17 Cal.3d 671, 681-682, 131 Cal.Rptr. 789, 552 P.2d 749, overruled on other grounds in Frink v. Prod (1982) 31 Cal.3d 166, 180, 181 Cal.Rptr. 893, 643 P.2d 476, the court, noting that section 3287 is not “limited to contract actions and actions sounding in tort,” upheld a prejudgment interest award which was based on a statutory violation.   Here, the court properly awarded prejudgment interest based on damages for defendants' violation of section 1950.5 which are “certain, or capable of being made certain by calculation, where the right to recover has vested [in the plaintiff] on a particular day.”

 Defendants have provided no authority for the proposition that they are shielded against an award of prejudgment interest because they charged the illegal TIER fee purportedly in reliance on the 1983 Judgment.   In awarding prejudgment interest, the trial court is not required to consider whether defendants' wrongful actions were in good or bad faith.   To hold otherwise would be to impose an impermissible burden on the trial court's exercise of its discretion.

We are similarly unpersuaded by defendants' argument that prejudgment interest cannot be awarded in conjunction with an order that defendants disgorge illegally assessed TIER fees into a fluid recovery fund.   Prejudgment interest is designed both to return a plaintiff to the position he was in before defendant's wrong as well as to prevent a defendant from benefiting in any way from the wrongful withholding of a plaintiff's money.  (See, e.g., Canavin v. Pacific Southwest Airlines (1983) 148 Cal.App.3d 512, 526-527, 196 Cal.Rptr. 82, quoting Greater Westchester Homeowners Assn. v. City of Los Angeles (1979) 26 Cal.3d 86, 102-103, 160 Cal.Rptr. 733, 603 P.2d 1329 [“ ‘[a]nindividual who must litigate to recover damages should be placed in the same position, when he recovers, as the individual who recovered the day he suffered an injury.   Otherwise, the tortfeasor benefits from denying liability and continuing to litigate, while he retains the use of money to which the plaintiff is entitled, and the plaintiff is deprived of the benefit he should have derived from an immediate recovery.’ ”].) Here, the award of prejudgment interest promotes this policy by preventing defendants from benefiting in any way from the wrongful collection of TIER fees.

 However, the trial court applied the incorrect interest rate and did not properly compute the amount of interest due.   First, the interest rate to which plaintiffs were entitled is 7% rather than the 10% applied by the trial court.   As defendants correctly point out, the legal rate of interest on any noncontractual obligation is 7% rather than 10%.  (Los Angeles National Bank v. Bank of Canton (1995) 31 Cal.App.4th 726, 734, 37 Cal.Rptr.2d 389.)   Although plaintiffs attempt to argue that the statutory violation of section 1950.5 also constitutes a breach of every tenant's lease under section 1953, subdivision (a)(1), we find this argument without merit.   Section 1953, subdivision (a)(1), provides that “Any provision of a lease or rental agreement of a dwelling by which the lessee agrees to modify or waive any of the following rights shall be void as contrary to public policy:  [¶] (1) His rights or remedies under Section 1950.5 or 1954.”   Although the Lease makes the payment of the TIER fee a condition of tenancy, it does not provide for any “modification or waiver” of a tenant's rights under section 1950.5 and, therefore, does not violate section 1953.

 In addition, under section 3287, subdivision (a), damages for the wrongful collection of the TIER fee accrued on a date certain.   In this case, plaintiffs introduced at trial defendants' accounting records which indicate the total amount of TIER fees collected each month.   The time of collection represents the date certain on which plaintiffs' claims for violation of section 1950.5 accrued.   Therefore, the trial court was required to, but did not, compute prejudgment interest beginning in the month the TIER fee was collected.   Instead, the trial court incorrectly calculated the total TIER fees collected each year and then applied interest to that yearly amount.   This method does not comport with the requirements of section 3287, subdivision (a).

E. Attorney's Fees Award not an Abuse of Discretion

1. Standard of Review

 The trial court awarded plaintiffs attorney's fees under Code of Civil Procedure section 1021.5 in the amount of $269,695 as well as $14,702 in expenses not otherwise recoverable as costs.   We reverse such an award only upon a showing that the trial court abused its discretion.  (Baggett v. Gates (1982) 32 Cal.3d 128, 142-143, 185 Cal.Rptr. 232, 649 P.2d 874.)

Section 1021.5 provides that attorney's fees may be awarded to “a successful party ․ in any action which has resulted in the enforcement of an important right affecting the public interest if:  (a) a significant benefit ․ has been conferred on the general public or of a large class of persons, (b) the necessity and financial burden of private enforcement or enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.”

 Defendants argue that the trial court abused its discretion in awarding fees because (1) “private enforcement” by plaintiffs was unnecessary;  (2) plaintiffs' action did not result in a public benefit;  and (3) fees should have been paid out of the fluid recovery fund.   Defendants also argue that because the San Francisco District Attorney was collaterally estopped from challenging the TIER fee, plaintiffs are not entitled to a “private attorney general” award under section 1021.5.   For the reasons discussed below, we find these arguments unpersuasive and uphold the trial court's attorney's fees award.

2. Necessity of Private Enforcement

In Committee to Defend Reproductive Rights v. A Free Pregnancy Center (1991) 229 Cal.App.3d 633, 642, 280 Cal.Rptr. 329 (Pregnancy Center), this court considered a request for fees under section 1021.5 in “that relatively rare minority of cases where relief and concomitant private attorney general fees are sought to be recovered from a private defendant also sued by a public entity.”   In Pregnancy Center, as here, “[i]mportant factors the trial court should address in determining if the services of the private party were necessary, so as to support that ultimate finding, are these:  (1) Did the private party advance significant factual or legal theories adopted by the court, thereby providing a material non de minimis contribution to its judgment, which were nonduplicative of those advanced by the governmental entity?  (2) Did the private party produce substantial evidence significantly contributing to the court's judgment which was not produced by the governmental entity, and which was neither duplicative of nor merely cumulative to the evidence produced by the governmental entity?”  (Id. at pp. 642-643, 280 Cal.Rptr. 329.)

Here, plaintiffs' efforts were not only “nonduplicative” of the District Attorney's but, in fact, were, as plaintiffs point out, the only mechanism for addressing the illegality of defendants' TIER fees.   Although the San Francisco District Attorney's office brought an action challenging defendants' practice of charging the TIER fee, defendants successfully moved to strike this claim.   Defendants did not answer the complaint in the District Attorney's action until two days after trial began in this matter.   Trial of the District Attorney's action was continued and, on defendants' application, ordered stayed pending this appeal.   Thus, plaintiffs alone prosecuted this action while the District Attorney action was held in abeyance.   In this context, the trial court did not abuse its discretion in finding that plaintiffs' action was “necessary.”

3. Public Benefit

Similarly, we see no abuse of discretion in the trial court's finding that plaintiffs' action conferred a “significant benefit” on the general public or a large class of persons.   Defendants argue that, because the court ordered defendants to disgorge monies into a fluid recovery fund, the judgment “describes no discernible class of persons who would benefit” from the award.   However, as plaintiffs point out, the judgment also directs defendants to make restitution to present and former Trinity tenants who can be located and permanently enjoins defendants from charging either liquidated damages or the TIER fee.   Plaintiffs established at trial that defendant Trinity Properties is one of the largest rental landlords in San Francisco and the number of tenants affected by the judgment certainly represents a “large class of persons.”

Defendants' claim that the judgment does not confer a benefit because it eliminates “rental agencies” is nothing more than a rehash of an argument more properly directed to the merits of its defense rather than the propriety of the attorney's fees award.   Similarly, defendants' argument regarding the liquidated damages provision is directed not to the benefit conferred by the elimination of this provision but to the merits of the trial court's decision on this issue.   As such, it adds nothing to defendants' argument regarding attorney's fees.

4. Payment of Fees Outside Fluid Recovery Fund

The trial court acted well within its discretionary powers in determining that the fee award should be assessed separately from the amounts it determined were subject to restitution or disgorgement.   In People v. Thomas Shelton Powers, M.D., Inc., supra, 2 Cal.App.4th at pp. 330, 340-341, 3 Cal.Rptr.2d 34, the court held that such a separate award is consistent with the deterrent purposes of Business and Professions Code section 17203.   The same purposes are met here.

5. Collateral Estoppel

Defendant also appears to argue that the trial court was not authorized to award attorney's fees under section 1021.5 because the District Attorney's claims under section 1950.5 were stricken.   Plaintiffs, however, were not barred from bringing this action.   As discussed ante, the trial court properly awarded plaintiffs attorney's fees under section 1021.5, a decision which is not affected by the fate of the District Attorney's action.


With the exception of that portion of the judgment awarding prejudgment interest, which is remanded for further proceedings consistent with this opinion, both the Judgment and the Order Granting Plaintiffs' Motion for Award of Attorney's Fees and Costs are affirmed.


1.   Unless otherwise noted, all further statutory references are to the Civil Code.

2.   “TIER” is an acronym for “Tenant Initiation Expense Reimbursement.”

3.   Paragraph 33 consists of a list of amounts tenants will pay “before occupying or taking possession of the premises.”   Among these enumerated charges is a “T.I.E.R” in the amount of $100.

4.   The parties also proffer additional reasons why collateral estoppel effect should or should not be afforded the 1983 Judgment.   We do not address these issues because we find that collateral estoppel does not apply where, as here, an intervening change in law has occurred.

5.   As one commentator has noted, “[T]he mere fact that the legislature enacts an amendment indicates that it thereby intended to change the original act by creating a new right or withdrawing an existing one.   Therefore, any material change in the language of the original act is presumed to indicate a change in legal rights.”  (1A Sutherland, Statutory Construction (4th ed.1973) § 22.30, p. 178.)

6.   In the early 1980s, appellants' TIER fee was challenged by the San Francisco District Attorney and a private party intervenor on behalf of himself and a class of then-current and former tenants of defendants who had paid the fee.   In 1982, the parties entered into a “Stipulation Re Partial Settlement.”   This stipulation identified issues that would be tried at the earliest possible date and set up a class consisting of then-current and former tenants subject to the fee who elected in writing to join the action.   The stipulation also provided that any judgment could not be res judicata as to any person not covered by the agreement.   The parties also agreed that they would not appeal the trial court's decision.   Our reading of this stipulation tells us to conclude that plaintiffs' action, which was filed on April 6, 1994 and challenges defendants' TIER and liquidated damages practices beginning in 1990, involves not only different parties but also subsequent transactions.

7.   Just prior to oral argument, defendants cited Castro v. Higaki (1994) 31 Cal.App.4th 350, 37 Cal.Rptr.2d 84 in support of their collateral estoppel argument.   This case is similar to Zeppi and McConnell in that it involved a situation in which a plaintiff brought an action, lost and then attempted to resurrect the same claim after a favorable change in the law occurred.   However, Castro is of no assistance to defendants because it, like Zeppi and McConnell, involved the same claim and the same parties and is, therefore, factually distinguishable.

8.   Defendants' supplemental letter brief states that “[t]he TIER fee was not charged by the landlord, Trinity Properties, as authorized by section 1950.6[sic], nor were the services covered by the fee limited to credit screening․   The fee covered not only tenant screening and related start up costs, including preparation of leases, but also included costs such as chauffeuring prospective tenants to properties and giving personal tours of properties.”   We note, too that the parties have stipulated that defendants are not enjoined from collecting application screening fees pursuant to section 1950.6.

9.   Defendants routinely charged more rent for leases with a six month term than they did for leases with a one-year term.   Defendants argue, therefore, that one loss they suffer when a tenant breaches a one-year lease is the additional rent defendants would have charged a tenant who entered into a six month lease.   However, the only authority cited by defendants for this novel proposition is Powis v. Moore Machinery Co. (1945) 72 Cal.App.2d 344, 354, 164 P.2d 822, which does not address the question of whether such damages are permissible.   In fact, we do not see how this sort of speculative “lost opportunity” damage could be “proximately caused” by a tenant's breach.

10.   Although here we conclude that plaintiffs' claim need not have proceeded as a class action, we are nevertheless mindful that the Unfair Competition Act leaves unaddressed important issues regarding the res judicata effect of judgments obtained in unlawful business practice actions.   One commentator puts it this way:  “The law is unclear as to when an action by a public or private litigant purporting to represent all consumers has res judicata effect.   But ․ there are unacceptable problems whether [a judgment] is given effect, or whether it is not.   If the action does bar others from an identical suit, there is no mechanism to assure that the remedy legitimately satisfies the claims at issue or represents the ‘general public’ interests being litigated.   But if it is not res judicata, then the defendant is subject to an unlimited number of lawsuits from future litigants over the same alleged practice.  [¶] The current arrangement of ‘let everyone in’ without criteria or limitation does not provide a structure for finality.   The perceived lack of finality by defendants leads them to eschew settlements they would otherwise accept.   And if finality were to be granted under current procedures, it might be based on which plaintiff reaches the courthouse door first, or (more likely) on who the defendant settles with first, which effectively gives the selection of who represents the ‘general public’ to the defendant-not the ideal party to make such a decision.”  (Fellmeth, Unfair Competition Act Enforcement by Agencies, Prosecutors, and Private Litigants:  Who's on First?  (1995) 15:1 Cal. Reg. L. Rep. 1, 8.) However, and as Professor Fellmeth suggests, these concerns should be addressed to the Legislature.

11.   Although, in objections to the trial court's proposed statement of decision and judgment, defendants state that they “did prove that two of the three relevant plaintiffs have not paid for these actual damages [i.e., setoff amounts] to the owner,” defendants have provided this court no citations to evidence of such “proof.”   The record does not indicate that defendants established an entitlement to any offset against the plaintiffs or even made an offer of proof on this subject.

12.   The trial court is apparently referring here not to a dollar amount, but to a number-in this case the 4,447 persons who entered into leases with defendants.

13.   Although other employees of Trinity Management testified that the number of breaching tenants was smaller than that established by Mr. Sangiacomo's testimony, the trial court was entitled to disregard this conflicting testimony, particularly since these witnesses had no independent evidence with which to substantiate their claims.

HAERLE, Asssociate Justice.

KLINE, P.J., and RUVOLO, J., concur.

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Docket No: Nos. A070864, A071375.

Decided: August 28, 1997

Court: Court of Appeal, First District, Division 2, California.

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