Slayton

Facts and Procedural Background Ruscha leased commercial space for an art studio from Slayton for approximately 25 years, promising among other things to keep and ultimately surrender the premises in a condition of good repair. Ruscha vacated the premise at the end of the lease term but failed to pay several months’ rent or repair substantial damage that had occurred over the course of the leasehold. Slayton sued Ruscha for breach of contract and waste, seeking unpaid rent and $635,038 in damages. Ruscha cross-complained for breach of contract, seeking the return of his $30,000 security deposit. On December 21, 2011, Ruscha paid Slayton $86,004.51 in satisfaction of the unpaid rent claim. On June 12, 2012, Ruscha, under Code of Civil Procedure section 998, offered to pay Slayton $100,000 and dismiss the cross-complaint as “satisfaction of all claims for damages, costs, expenses, attorney’s fees, interest and penalties.”1 Slayton, who by then had incurred $109,985 in attorney fees and costs, rejected the offer. Two months later, Slayton made a section 998 offer to dismiss his complaint in return for $345,000, each party to bear its own attorney fees and costs and Ruscha to dismiss…