Key Points

  • The First District, Division Two, affirmed a stipulated judgment awarding USPA City Center $1,219,015 in future rent and $350,677 in back rent, holdover and other damages against Law Offices of Jason W. Estavillo, P.C.
  • Substantial evidence, including broker testimony that the downtown Oakland office market was dire and vacancy data for comparable suites, supported three years of future rent under Civil Code section 1951.2, and the tenant offered no evidence that the loss could have been reasonably avoided.
  • The expert's opinion did not violate Sargon because it rested on decades of market experience and comparable vacancy data, and a trial judge's early oral remark about a 15-month mean could not undermine the written findings.
  • The settlement stipulation for future rent was not an unenforceable penalty under Civil Code section 1671 because it did not raise damages above what the lease and the Civil Code allowed, distinguishing Vitatech and Sybron.
  • The tenant's double-recovery argument based on rent paid under a stay order was raised for the first time in the reply brief and was not considered.

A California appeals court has upheld a judgment ordering a law firm to pay its landlord $1,219,015 in future rent on a downtown Oakland office lease the firm defaulted on. The court held that testimony about a collapsed office market supported the award and that the firm offered no evidence the loss could have been avoided.

A three-justice panel of the First District Court of Appeal, Division Two, rejected all three arguments raised by Law Offices of Jason W. Estavillo, P.C., and affirmed the Alameda County Superior Court judgment for USPA City Center, LLC, which also awards $350,677 in back rent, holdover and other damages. Richman wrote the opinion, and Stewart and Miller concurred.

The panel filed the opinion as nonpublished on Sept. 21 and ordered it published on Oct. 19. The decision addresses how a landlord proves future rent under Civil Code section 1951.2, which governs a lessor's damages after a tenant's breach. It also holds that a settlement stipulation calling for future rent is not an unenforceable penalty when it tracks what the lease and the statute allow.

Estavillo signed a 66-month lease in December 2023 for 7,755 square feet at 555 12th Street, at a starting rent of $30,333.33 a month. The lease let the landlord recover future rent beyond any rental loss the "Tenant proves could have been reasonably avoided." The firm's security-deposit check was returned for insufficient funds, and by June 2024 the firm owed $107,618 in unpaid rent.

The landlord then filed an unlawful detainer action, and the parties settled. Estavillo signed a stipulation for judgment, an agreement letting the landlord obtain judgment for possession, unpaid rent and future rent through the end of the lease if the firm missed its settlement payments. The landlord's brief asserted, and the firm did not dispute, that Estavillo "bounced thirteen payments."

At a July 2025 hearing on mitigation, the landlord called John Dolby, an executive vice president at the brokerage Cushman and Wakefield. Dolby testified that the market was "dire," with Class A vacancy at 35 to 36 percent and about 200,000 square feet of demand against 4,000,000 square feet of available space. He likened the Estavillo suite, which could not practically be subdivided, to a "Ford Pinto station wagon; nobody wants it right now because nobody's looking for that."

Jenna Hattersley, director of operations for the property manager, testified that the building's occupancy had fallen to about 55 percent and that its largest tenant, Matson Navigation, was leaving a year before its lease ended. Estavillo called no witnesses and offered no expert testimony, data or broker opinions of its own.

Dolby opined that the landlord was unlikely to find a replacement tenant before the lease ended in August 2029. The trial judge, Chad A. Stegeman, noted an "inconsistency in the expert's position" and awarded three years of future rent reduced to present value, rather than the four years the landlord sought.

On appeal, Estavillo called the landlord's evidence "exceptionally thin" and stressed Dolby's testimony that the suite had not been marketed since the firm moved in. Richman wrote that the brief's account of that testimony was "most misleading" because "the lessor had no reason to advertise a space it could not deliver, not with Estavillo still there and refusing to leave." The panel held that the brief violated a court rule requiring an opening brief to summarize the significant facts.

"To the contrary: there was plenty of evidence," Richman wrote, citing the vacancy data and a comparable space marketed for 69 months. The panel dismissed the firm's reliance on a comment by the trial judge about "a mean somewhere around 15 months," calling it "an early off-hand remark, totally belied by the court's actual findings."

The panel rejected the firm's argument that Dolby's opinion was unreliable under Sargon Enterprises, Inc. v. University of Southern California, a 2012 California Supreme Court decision requiring trial courts to exclude expert testimony that rests on speculation. "There was no 'analytical gap' here," Richman wrote, citing Dolby's 40 years in the Oakland market. The trial court, the opinion said, "exercised its function under Sargon with notable care" by questioning Dolby and discounting the outer end of his range.

On the penalty argument, Estavillo invoked Civil Code section 1671. The firm relied on two Court of Appeal decisions, Vitatech and Sybron, that held stipulated judgments to be penalties. "Here, by contrast, the stipulation did not escalate damages above what the lease—and the Civil Code—allowed," Richman wrote. The future rent, the opinion said, "was the actual, ongoing contractual obligation Estavillo assumed when it signed a 66-month lease."

Estavillo's last argument was that the judgment awarded a double recovery. After the judgment, the firm obtained an order staying the writ of possession and the judgment pending appeal on conditions that included paying monthly rent. Its counsel told the panel at oral argument that the firm still occupies the suite and has paid more than $400,000. The firm's reply brief called the overlap between those payments and the judgment "a double recovery in progress."

The panel held that the argument came too late because the firm first raised it in the reply brief. The opinion added that "the situation Estavillo finds itself in is of its own making."

Lawyers for Estavillo on appeal included Kent Tierney of Tierny Law Group. USPA City Center was represented by Bryan S. Silverman of Lubin Olson & Niewiadomski.

The stay Estavillo obtained was granted pending resolution of the appeal, and the opinion states that the judgment "is subject to enforcement." "If Estavillo claims it has a basis to assert an offset or some other credit to that judgment, it can take further steps as it sees fit," Richman wrote. The panel also awarded USPA its costs on appeal.