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Bisno v. Douglas Emmett Realty Fund (Cal. Ct. App. - June 19, 2009)

By Shaun Martin

This is a tough rule to apply in practice, if only because after litigating a case for a long while, lawyers often lose their objectivity and come to believe their own arguments. (I'm guilty of this sin as well, though I attempt to realize and compensate for it.) Because of this, especially when you've won big at trial, you often need to take a step back and say: But how will this victory look to a neutral panel on the Court of Appeal, who -- unlike me or the trial judge -- have never lived with this case for years? Will they really be as outraged and/or sympathetic as the court/jury was below? Or will their reaction, especially in light of the size of the victory, potentially be the opposite? Those are good questions to ask, because even after a huge win, it's often a good idea to give a healthy settlement discount to the other side. Ironically, the bigger the outrage below, the higher the discount one might offer to settle the case for on appeal.

I mention that lesson in light of this case. In which a rich individual "living" in a totally fancy rent-controlled apartment obtained a million-dollar-plus judgment at trial for allegedly having his rent wrongfully reset to market rates. Yes, there were surely some problems with what the defendants had done. Yes, one could make an argument that what was really going on was a relentless campaign to evict a troublemaker and raise the rent. And this argument was indeed successful in front of the jury, which awarded the plaintiff over $700,000 in punitive damages.

But, again. Humility. Rationality. Objectivity. You need to retain this stuff. And realize that you're not the most sympathetic plaintiff in the universe. That the judgment seems pretty big for what transpired. And that you face real exposure on appeal. As a result, maybe settling the case for a much, much smaller amount than what you obtained below makes sense. Standards of review and the like be darmned.

Ultimately, for whatever reason, the appeal goes though. And, of course, I have no idea what the settlement offers -- if any -- were on appeal. But once that happens, it's all on the line. And what can happen? Well, here, the plaintiff not only loses every penny of his judgment, but is also potentially (indeed, likely) responsible for hundreds of thousands of dollars of the other side's attorney's fees on remand.

Not what you want to hear if you're the plaintiff heading into what would otherwise be another nice relaxing weekend on the beaches of Santa Monica.

P.S. - Here's the apartment complex in question, which is right on the ocean. I used to live near there (albeit over the border in Venice). Trust me: It's an exceptionally nice place, and at a rent-controlled $1000/month, something to die for.

Full post as published by California Appellate Report on June 19, 2009 (boomark / email).