California Partial Security Deposit Refund Form by tij15535

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									Filed 8/28/97

                               CERTIFIED FOR PUBLICATION


                                 FIRST APPELLATE DISTRICT

                                           DIVISION TWO


        Plaintiffs and Respondents,

v.                                                            A070864/A071375

TRINITY MANAGEMENT SERVICES,                                  (San Francisco County
INC., et al.,                                                 Super. Ct. No. 959982)

        Defendants and Appellants.

                                      I.      INTRODUCTION
        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 16711 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

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

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
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

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

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
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
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 (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.

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.

          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
          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
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.
                                    III. DISCUSSION
A.     Violation of Civil Code Section 1950.5
       1.     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 [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 (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.) 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

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.

permissible uses set out in section 1950.5, subdivision (b), it was required to refund the
fee. (Id. at pp. 690-691.) 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

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.)

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 (Zeppi) nor
Pacific Mut. Life Ins. Co. v. McConnell (1955) 44 Cal.2d 715, 725 (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.) 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.) 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.) This case does not,
however, involve a subsequent transaction between the parties and is, therefore, factually

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.

inapposite. (See also Commissioner of Internal Revenue v. Sunnen (1948) 333 U.S. 591
[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

7       Just prior to oral argument, defendants cited Castro v. Higaki (1994) 31 Cal.App.4th 350 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.

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.) 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
        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, 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.

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.

Superior Court (1996) 49 Cal.App.4th 822, 829, quoting Courtesy Ambulance Service v.
Superior Court (1992) 8 Cal.App.4th 1504, 1514.) 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, quoting Garrett v. Coast & Southern Fed. Sav. & Loan
Assn. (1973) 9 Cal.3d 731, 739.) 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.) 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.)
        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, 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

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, 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.

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 [“[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). 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 (Fletcher), the court, in construing the analogous Business & Professions
Code section 17535 (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 [“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 [approving order requiring defendant to disgorge monies to third
       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.) 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, 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.)
        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 (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.)
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.

       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.)
       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 (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.)

       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.)
       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.) 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 (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,

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.

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.)
        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,

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.

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 [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.

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.

        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

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.

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 10% per 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, overruled on
other grounds in Frink v. Prod (1982) 31 Cal.3d 166, 180, 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, quoting Greater Westchester Homeowners Assn. v. City of Los Angeles (1979)
26 Cal.3d 86, 102-103 [“„[a]n individual 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.)
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 (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.)
       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
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 (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.)
       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, 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.
                                    IV. DISPOSITION
       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.

                                             Haerle, J.

We concur:

Kline, P.J.

Ruvolo, J.

A070864/A071375, Kraus v. Trinity Management Services, Inc.

Trial Court: Superior Court of San Francisco County

Trial Judge: Hon. Roy L. Norman

Attorneys for Appellants                       William B. Boone
                                               Mukesh Advani
                                               Richard M. Sangster

Attorneys for Respondents                      Susan M. Popik
                                               William B. Chapman
                                               Mark B. White
                                               Stephen L. Collier

A070864        Vickey Kraus v. Trinity Management Services, Inc.


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