A. The Lawsuit and Judgment
Nash and O’Connor filed this lawsuit against Aprea in
August 2021. Their complaint alleged causes of action for breach
of written contract, breach of oral contract, breach of the
covenant of good faith and fair dealing, and bad faith retention of
a security deposit in violation of Civil Code section 1950.5. As
alleged, Nash and O’Connor entered into a written residential
lease agreement (lease) with Aprea to rent her Los Angeles home
for six months beginning in August 2020 for $8,000 per month,
and they paid her $64,000 ($48,000 in rent plus a $16,000
security deposit). During their tenancy they discovered mold on
the premises, and they reached an agreement with Aprea to
receive an $8,000 credit. However, after they vacated the home
in February 2021, Aprea did not pay the credit, return their
security deposit, or identify claimed deductions from the deposit.
Nor did Aprea respond to a June 2021 demand letter seeking the
credit and deposit.
The complaint attached and incorporated the lease.
Paragraph 36 of the lease, which utilized a form published by the
California Association of Realtors, was titled “Attorney Fees” and
stated, “In any action or proceeding arising out of this
Agreement, the prevailing party between Landlord and Tenant
shall be entitled to reasonable attorney fees and costs, collectively
not to exceed $1,000 . . . .” Nash and O’Connor’s prayer for relief
sought compensatory damages of at least $24,000, statutory