CHALK UP ANOTHER ONE FOR LANDLORDS (September 2025)

A very recent case, Gogal v. Deng, is very helpful to landlords whose leases waive, either altogether or by limiting the maximum amount, the recovery of litigation costs by the prevailing party.  By statute (Code of Civil Procedure section 1032), the prevailing party in litigation is automatically entitled to an award of certain enumerated litigation costs against the losing party.  Many leases either eliminate the recovery of litigation costs, or limit the maximum amount recoverable, on the theory that when tenants default in the payment of rent, they most likely do not have the financial resources from which a prevailing landlord could recover litigation costs, transforming the right to recover costs from mutual to one-sided (against the landlord).

The statute provides, “Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.”  There is no statute that allows a waiver of this right, leaving the question of whether a contractual provision, in a lease or other contract, waiving the right is enforceable.  The courts had not addressed this question before Gogal v. Deng.  The court in Gogal v. Deng held that there is nothing in the statute that prohibits the parties to a contract from agreeing to waive or limit the recovery of costs.  The court found that the statute establishes only a default rule that the contracting parties are free to alter as they see fit.  Now landlords have legal authority for enforcing lease provisions that waive or limit the right to recover costs.