Help! Tenant suing 4 Million for negligence

Investor · Oakland, CA · Member since 2015 · 18 posts · 7 votes

I have a tenant who is suing myself and my property manager for claims of negligence and inhabitability. She has played a clever game of never asking us directly for repairs, bringing in code enforcement to cite me and then denying me access to make the repairs despite agreed upon appointments and written notifications. The suit is pretty ridiculous for 2 Million against me and 2 million against my property manager.

I have personal umbrella policy but that only represents me. I'm assuming my property manager will have to get their own legal representation. Any advice or lessons learned on how to handle the situation to stay on the same page with my property manager. We have a good relationship and I want to stay a united front but I know when things get stressful people panic.

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JD MartinBusiness Member

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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

I would worry Zero about this. I would turn it over to my insurance company and let them figure it out from there. If your property manager doesn't have insurance, they're not very smart. Even at that, I imagine the suit goes absolutely nowhere. Anyone can file suit against anyone for anything. Whether or not it goes anywhere is a whole different story. I have been sued once as an agent of my organization and twice individually. My total costs were less than $1,000, and $500 of that was just to settle one of them without admission of anything because that was cheaper than paying my lawyer another $2k to begin preps for trial.

Your liability insurance should really be kicking in first. Your PUP would only kick in once you are beyond your liability limits. I don't know what kind of limits you carry but I like $1 mil incident/$2 mil total, with a PUP on top of it.

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Doug Woodville
El Cerrito, CA · Member since 2015 · 257 posts · 129 votes
9y
Hopefully you have all your documentation to back up what you're saying! That sounds like a PITA. I hope it works out well for you.
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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
9y
Ugly situation. Good luck.
Be careful. The State of California's laws are written to favor this parasite and not you.
First, I would stay in lock step with your insurance company. With your umbrella policy, they are more in the crosshairs than you.
Next, I would get my own representation, someone with experience in these matters. A huge nightmare for you is if the insurance company tries to find some "bad boy clause" to invalidate your liability umbrella. Better know what to say / not say. Keep your insurance company as your shield.
Finally, document everything and retain those documents some place safe.
Let us know how it goes.
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Matt K.
Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
9y
Wouldn't the PM legal representation be able to defend both of you rather easily? I mean really your defense will basically be the same as the PM since you've hired them to do the work.

I'm guessing someone's looking for a out of court settlement...
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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y
I would worry Zero about this. I would turn it over to my insurance company and let them figure it out from there. If your property manager doesn't have insurance, they're not very smart. Even at that, I imagine the suit goes absolutely nowhere. Anyone can file suit against anyone for anything. Whether or not it goes anywhere is a whole different story. I have been sued once as an agent of my organization and twice individually. My total costs were less than $1,000, and $500 of that was just to settle one of them without admission of anything because that was cheaper than paying my lawyer another $2k to begin preps for trial.
Your liability insurance should really be kicking in first. Your PUP would only kick in once you are beyond your liability limits. I don't know what kind of limits you carry but I like $1 mil incident/$2 mil total, with a PUP on top of it.
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OP
Investor · Oakland, CA · Member since 2015 · 18 posts · 7 votes
9y
Thanks guys! The liability coverage from my insurance is primary on the case and like @JD Martin said umbrella kicks in only after the standard coverage of $300K is exhausted. My primary insurance said the lawsuit was very sloppy full of mistakes and very little facts or details. He thinks they just want to see if they can get some kind of settlement being sue happy CA. But even SF with rent control issue dont sue for such ridiculous amounts.
If I'm covered the insurance will award me legal coverage. Should I trust their legal counsel or get my own?
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Bettina F.
Investor · Post Falls, ID · Member since 2016 · 606 posts · 699 votes
9y
Make it easy for your attorney to defend you. Gather all your documentation. Does your PM require written maintenance requests? Do you have texts or emails with the tenant? Print out any texts/ emails with the tenant and with your PM, and any code enforcement notices and place in a binder in chronological order. Document your best recollection of any phone conversations you had with either the tenant, the PM, any handymen refused entry, etc. Write out a timeline to give to your attorney. It is very important that you have a clear, cogent, non-emotional explanation to give your attorney. Practice if you need to. This was the strategy I used when I successfully sued the my state government on behalf of my disabled son.
Your ex-tenant needs to prove that she was injured, and that your actions were a "proximate cause" of her injuries, and that the amount she is suing for is reasonable in light of her presumed injuries. Anything evidence you have that counters her story helps -- for instance the times your handyman tried to correct the defect, and she refused entry -- strengthens your case and weakens her case. If, for example, she is claiming mold caused asthma, the times she would not let the handyman in to fix the leak (causing the mold) could be interpreted that she is the cause of her own asthma, or at least mitigate her damages.
Take a deep breath. The law requires reasonable actions on the part of people -- you do not have to be perfect. People are allowed to make innocent mistakes. Show that you and your PM acted reasonably. Good luck and keep us informed on the outcome.
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Rick T.
Investor · Columbia, SC · Member since 2017 · 36 posts · 7 votes
9y
According to Landlord Tenant Act, tenant has to give you repair request in "writing". If you do not fix it or make serious effort to try to fix it in 14 days then tenant can withhold rent to make repairs. You need to fight this with code enforcement that tenant never gave you written notice per Landlord Tenant Act. Since you know of complaint now, you are happy to make any repairs. Document, take pictures when you go to tenant's apartment and they do not let you in. They can not sue you for something, tenant is not allowing you to fix.
Not sure of Landlord Tenant Act in your state but look into that.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y
Don't get your own. Legal counsel is one of the main things you are paying for with insurance. Believe me, the insurance company has no desire to pay out anything on your behalf, so if there's nothing there and it can't be settled for pennies they are going to mount a vigorous defense.
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Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
9y
Wtf are their claimed damages specifically? Your worrying too much about your insurance limits when obviously their case is a farce. Listen to JD and turn it over to your insurance. Unless someone was maimed or died these numbers are unserious.
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OP
Investor · Oakland, CA · Member since 2015 · 18 posts · 7 votes
9y
@Steve B. Oh it would be hilarious if it wasn't an actual lawsuit. They are suing for lose toilet, no screen on a window, non-working outlet in bathroom, pests, hall light not working (light bulb needed to be replaced) and non-functioning smoke alarm (they never replaced the batteries). The numbers are silly but living in CA with very tenant friendly courts I might still have to pay money.
@JD Martin Thanks JD. I figured as much but is good to hear someone else second that it is in the insurance's best interest so I can trust the lawyers to take care of it.
@Bettina F. All good points Bettina. I have all my documentation and I doubt they have any. I'm just making sure I havent missed anything that could trip me up. Remembering to breathe is prob best advice of all!!
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Chuy Gonzalez
Investor · Long Beach, CA · Member since 2012 · 313 posts · 190 votes
9y
You have a professional tenant that is going to get free rent from you for as long as they can. I'm in socal, and I have been pleasantly surprised with the judges i have stood before.
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Glenn Treadwell
Investor · Grovetown, GA · Member since 2016 · 13 posts · 8 votes
9y
If your insurance company believes it is a good idea you could setup a joint visit with code enforcement to tenants rental to assess complaint allegations. Tenant would probably comply since it would probably hurt their case if they didn't. If code enforcement won't do that then perhaps you could visit code enforcement office and request to see all of the records related to the complaint including photos, emails, investigation reports. Hope this all works out for you and suit is dropped!!!
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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
9y
@Account Closed Due to the amount of money the tenant is seeking, this obviously wasn't filed in small claims court. Does the tenant have an attorney then? And does your lease agreement have a clause requiring mediation before litigation and/or address attorney fees (i.e. the prevailing party shall be entitled to attorney fees)? If so, that could help in your favor given the frivolous-sounding nature of the lawsuit.
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Rick T.
Investor · Columbia, SC · Member since 2017 · 36 posts · 7 votes
9y
Originally posted by @Kyle J.:

@Account Closed Due to the amount of money the tenant is seeking, this obviously wasn't filed in small claims court. Does the tenant have an attorney then? And does your lease agreement have a clause requiring mediation before litigation and/or address attorney fees (i.e. the prevailing party shall be entitled to attorney fees)? If so, that could help in your favor given the frivolous-sounding nature of the lawsuit.
Clause regarding mediation before litigation sounds interesting. If you don't mind, could you share that clause from your lease?
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Jennifer A.
Sun Prairie, WI · Member since 2013 · 150 posts · 69 votes
9y
Tenant believes they were damaged to the tune of 2 million for a loose toilet, missing screen, burnt out lightbulb, nonworking outlet and dead batteries in a smoke alarm? Riiiiiiiiiiight. Good luck to them. What could their damages possibly be to get them even $1. I know you said pests too, what pests? How could a pest result in $2 million in damages? I predict it will be laughed out of court. The sad things is that it will cost someone some money to get to that point.
1 Reply
Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
9y
is the tenent gone?
Did an Atty being the law suit or the tenent themselves?
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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
9y
Originally posted by @Rick T.:

Originally posted by @Kyle J.:
@Account Closed Due to the amount of money the tenant is seeking, this obviously wasn't filed in small claims court. Does the tenant have an attorney then? And does your lease agreement have a clause requiring mediation before litigation and/or address attorney fees (i.e. the prevailing party shall be entitled to attorney fees)? If so, that could help in your favor given the frivolous-sounding nature of the lawsuit.
Clause regarding mediation before litigation sounds interesting. If you don't mind, could you share that clause from your lease?
Here you go Rick: Landlord and Tenant agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to court action. Mediation fees, if any, shall be divided equally among the parties involved. If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.
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Rick T.
Investor · Columbia, SC · Member since 2017 · 36 posts · 7 votes
9y
Originally posted by @Kyle J.:

Originally posted by @Rick T.:
Originally posted by @Kyle J.:

@Account Closed Due to the amount of money the tenant is seeking, this obviously wasn't filed in small claims court. Does the tenant have an attorney then? And does your lease agreement have a clause requiring mediation before litigation and/or address attorney fees (i.e. the prevailing party shall be entitled to attorney fees)? If so, that could help in your favor given the frivolous-sounding nature of the lawsuit.
Clause regarding mediation before litigation sounds interesting. If you don't mind, could you share that clause from your lease?
Here you go Rick: Landlord and Tenant agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to court action. Mediation fees, if any, shall be divided equally among the parties involved. If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.
Thank You so much!
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Dan Schwartz
Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
9y
@Jennifer A. What pests? For $2 million, one can only assume Mothra moved in and brought Godzilla and all of their other radioactive friends with them. Good luck to the OP!
6 Reply
Account Closed
Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes
9y
@Account Closed I am guessing this was filed by the tenant and not a lawyer.
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Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
9y
@Account Closed As long as you follow the laws and document everything, you should be fine. Be sure you're in communication with your property manager. They should be aware of the laws as well. Any type of communication with your tenant from now on should be in writing. Good luck!
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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
9y
@Account Closed I am just curious what types of claims is she making?
I am also wondering how is she denying you access? Is she just saying no or is she refusing to let you in the door? Is it possible in California to just give notice and enter without agreement? Or if she is denying entry, how about having a witness come with you and video record the tenant refusing entry?
Have you explained to code enforcement that she refused entry and if so what is their advice? (not that they are your advocate, but curious what they said)
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Mary White
Rental Property Investor · Klamath Falls, OR · Member since 2016 · 146 posts · 213 votes
9y
I keep a journal for each unit and property where I jot down all interactions in quick, dated notation form. We recently had a neighbor dog bite a tenant and I made sure to tell them that I'd make a note of it. Definitely dig up anything you can that shows the relationship between the tenant and yourself/the management company.
I learned the note-taking trick from a school teacher who protects himself from any potential child/parent accusations with journals on each child. Stand your ground! I'm sorry this happened, some people suck.
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Shelley F.
Real Estate Investor · Plumas county, CA · Member since 2011 · 150 posts · 88 votes
9y
Im a landlord in California and have had two 'professional ' tenants. The demands your tenant is making do not fit the 'habitability' codes...be sure to document what you have...give it to your insurance company, and take a deep breath. This sounds like a 'professional' tenant got ahold of an 'ambulance chaser' and just wants to shake you down for whatever they can get...ten grand?//twenty grand???they will go for it. Although California is considered 'tenant' friendly I have seen courts come down hard on these folks. Follow the rules, document, hold your pm up to the task.
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Shelley F.
Real Estate Investor · Plumas county, CA · Member since 2011 · 150 posts · 88 votes
9y
Originally posted by @Chuy Gonzalez:

You have a professional tenant that is going to get free rent from you for as long as they can. I'm in socal, and I have been pleasantly surprised with the judges i have stood before.
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