Wins

A group of tenants filed habitability and tort claims against their landlord, along with GMSR’s client—a shareholder in the property’s management company and a limited partner in a related entity.

Before trial, the trial court ruled that the client was bound to factual findings rendered in related Santa Monica Rent Control Board proceedings, even though he had never appeared in those proceedings and was not a party to them.  The jury found for the tenants on every tort, contract, and statutory claim, and the trial court entered judgment against the client for $5.79 million in compensatory damages, and $9 million in punitive damages.  The court awarded $3.2 million in prevailing party attorney’s fees to the tenants.

On appeal, GMSR challenged the pretrial preclusion ruling.  The Court of Appeal agreed, holding that the findings were not binding.  Although GMSR’s client had a financial stake in the outcome, only the landlord had the requisite control over the Board proceedings to be bound by its findings.

On the merits, the Court of Appeal reversed the judgment and attorney’s fees award, ordered a limited retrial of four tort claims based on instructional error, and directed entry of judgment against the tenants on the remaining six claims.  The court canceled the punitive damages award, agreeing with GMSR that the client never owned the property, he held no lease with the tenants, and he did not act with malice or intent as required to support punitive damages under Civil Code section 3294.

Click here to read the Court of Appeal’s opinion:  (Lackey et al. v. Zohoury et al. (July 28, 2026, No. B343870) 2026 WL 2166158 [Second District, Division One].)