Not Negotiating Renewal Rent Increase Doesn’t Make Landlord Guilty of “Unclean Hands”

What Happened: A shopping center sent an email asking a restaurant tenant to renew its lease at an increased rent. The tenant signed the attached amended lease without reading it. Five years later, it vacated the property and stopped paying rent. The landlord served the tenant with a notice of abandonment and sued for unpaid rent. The tenant, a gentleman from Asia who considered the landlord to be “a person of trust,” claimed he had been taken advantage of. When I signed the renewal, I just assumed it was on the same terms as the original lease, he argued. Ordering a tenant to sign a renewal without explaining or negotiating the new terms was an abuse of trust, the tenant claimed, asking the court to invoke the equitable rule of “unclean hands.”

Ruling: The California appeals court upheld the lower court’s ruling rejecting the tenant’s “unclean hands” defense.

Reasoning: The “unclean hands” doctrine is designed to promote justice by barring plaintiffs from benefiting from their own wrongdoing. But nothing that the tenant accused the landlord of doing in this case rose to the level of misconduct necessary to invoke the defense. Not negotiating the terms of a lease amendment isn’t unclean hands, especially when the tenant didn’t try to negotiate, either. The tenant cites, and we are aware of, no law that requires a “landlord to discuss terms before presenting a lease to the renter to sign,” the court noted. For the same reason, the tenant also failed to make out a defense for “equitable estoppel,” which protects a party that reasonably and detrimentally relies on a promise or representation of another, even if that promise or representation isn’t legally binding.

• Roic Cypress W., LLC v. Xiao Feng Lu, 2023 Cal. App. Unpub. LEXIS 6903, 2023 WL 8014504