If you own, operate, or invest in a hotel or extended-stay property in California, you have probably heard of the “28-day shuffle.” The playbook is familiar: require all guests to check out before they hit 30 consecutive days of occupancy, make them stay away for a few days, and then let them re-register. The goal is to keep guests in “transient occupancy” status indefinitely, which means no tenant protections, no eviction proceedings, and no obligations that come with a landlord-tenant relationship. Some operators have been running this policy for years under the assumption that as long as every guest gets the same treatment, the legal exposure is manageable.

A California Court of Appeal decision issued this month suggests that assumption deserves a second look.

The Hotel and the Policy

The defendants in Aerni v. RR San Dimas, L.P. (Cal. Ct. App., 2nd Dist., Apr. 16, 2026) own the Red Roof Inn in San Dimas, a 134-room economy hotel that has enforced a maximum 28-day stay policy for at least the past several years. The policy applies to every guest without exception. At check-in, guests are told verbally and in writing that their stay cannot exceed 28 consecutive days, and they are required to initial an acknowledgment of that limit. Anyone who reaches day 28 must vacate the property completely for at least three days before reregistering.

The hotel advertised itself on Craigslist as an “extended stay” property in the “apartments, housing for rent” section, with weekly rates of $427. Some guests had lived there for more than five years. Some listed the hotel address as their primary residence on their registration cards, a practice the hotel did not prohibit. A hotel principal testified, candidly, that the 28-day policy was designed in part to avoid lengthy eviction proceedings.

The two named plaintiffs stayed at the hotel in overlapping 28-day increments from June through November 2022. Each time they hit day 28, they left for the required three days, typically to their vehicle or another motel, then returned and reregistered. In November 2022, they filed a putative class action under Civil Code section 1940.1, the statute that prohibits the 28-day shuffle.

What the Statute Actually Says, and What It Does Not

Civil Code section 1940.1 was enacted to give residential hotel occupants a path to tenant protections once they have been in continuous occupancy for 30 days. The statute creates a private right of action for guests who can show three things: that they occupied a “residential hotel,” that the hotel required them to move out or re-register before 30 days, and that the purpose of that requirement was to keep them in transient occupancy status.

The definition of “residential hotel” comes from the Health and Safety Code, and it is where the litigation turned. A residential hotel is, roughly speaking, a multi-unit building used as guests’ primary residence, unless the building is primarily used by transient guests who have other primary residences.

The defendants moved to defeat class certification on the ground that each class member would need to prove individually that the hotel was their personal primary residence. The trial court agreed. Because the statute uses the phrase “primary residence” in defining what a residential hotel is, the court reasoned that liability required an individualized showing from each plaintiff about their own residential situation. That kind of individualized inquiry, the court held, prevents common issues from predominating, which kills class certification.

Where the Trial Court Got It Wrong

The Court of Appeal reversed. The error, the court explained, was treating a hotel-wide question as though it were a plaintiff-by-plaintiff one.

“Residential hotel” is a characteristic of the building, not of any individual guest. The statute asks whether the hotel as a whole is used as guests’ primary residence and whether it is primarily used by transient guests who have other homes. Those are questions about the property, answerable through occupancy data, duration-of-stay statistics, advertising practices, and the hotel’s own policies. They do not require the court to interrogate each of the potentially 1,700 class members about their personal living arrangements.

The court was careful to distinguish the only individualized element the statute actually contains: whether that specific plaintiff was required to check out before 30 days for the purpose of keeping them in transient status. That inquiry is individual. But the threshold question of whether this is a residential hotel to begin with is not. And because the trial court denied class certification on the basis of that threshold question alone, the denial was grounded in an erroneous legal assumption. That kind of legal error, regardless of whether there might otherwise be evidence to support the outcome, is grounds for reversal.

The court also acknowledged that the statute has real ambiguities, including what percentage of non-transient guests makes a building “residential,” and how to assess a hotel’s status if its occupancy patterns change over time. It was candid enough to tell the Legislature to fix those gaps. For now, those questions go to the merits of the claims, not to whether a class should be certified. They will be litigated another day.

What This Means for Property Owners and Investors

The practical implications extend beyond the Red Roof Inn in San Dimas.

Any California hotel or extended-stay property that systematically enforces sub-30-day checkout policies should treat this decision as a signal to audit its exposure. The fact that a policy applies uniformly to all guests is not a shield against class treatment. If anything, a written, uniform policy applied to hundreds of guests over multiple years is precisely the kind of common evidence that makes class certification possible. The hotel’s own testimony that the policy was designed to avoid tenant relationships, combined with advertising that targeted long-term occupants, will not look favorable when the case goes back to the trial court.

For buyers and lenders evaluating hospitality or extended-stay assets, this decision adds a diligence item that has not always appeared on the checklist. If a property has a history of 28-day checkout cycles, if it markets itself to long-term guests, and if its occupancy data shows a meaningful proportion of stays that cluster just below 30 days, the exposure under section 1940.1 is real and, after Aerni, potentially certifiable as a class action. That is the kind of contingent liability that belongs in a purchase agreement representation, not a post-closing surprise.

For operators who are currently running variations of the 28-day policy, the decision counsels caution. The statute’s ambiguities remain unresolved, and the trial court has yet to decide the merits of the underlying claims. But the class certification hurdle, which defendants in these cases have historically used as an effective early exit, just became harder to clear.

The Bottom Line

The 28-day shuffle has always been legally questionable. What Aerni adds is a practical reality: the legal theory behind it is now more easily litigated as a class action. Hotel operators who rely on uniform checkout policies to avoid tenant relationships may find that the uniformity of the policy is exactly what allows a class to be certified against them. The case goes back to the trial court, the merits are still live, and the statute’s ambiguities are genuinely unresolved. But the path to a certified class of displaced guests, potentially numbering in the thousands, is now open, and property owners should be thinking carefully about what their records, their testimony, and their advertising will look like when that litigation arrives.

Real estate litigation involving landlord-tenant disputes, habitability claims, and property owner liability is a core part of Horst Legal Counsel’s practice. If you have questions about how Aerni affects your property or portfolio, we are glad to talk through it. Contact us here.

The post The “28-Day Shuffle” Just Got a Lot More Dangerous for California Hotel Operators appeared first on Horst Legal Counsel.

Horst Legal Counsel | April 2026

Someone torpedoes your deal. You spend north of a million dollars in court forcing the sale through. You win. Then you sue the people who caused the mess in the first place, and you win again. But the second lawsuit cost you another $841,000 in legal fees. Can you recover those fees too?

The First District Court of Appeal just said no. In Guinnane Construction Co., Inc. v. Chess, the court confirmed that California’s “tort of another” doctrine covers the attorney fees a business is forced to spend litigating against an innocent third party because of someone else’s wrongful conduct. It does not cover the fees spent going after the wrongdoer directly. That distinction sounds technical, but for any business that has been dragged into layered litigation by a bad actor, it is the difference between full recovery and absorbing six figures in legal costs.

What Happened in Guinnane

The dispute started with an 80-acre parcel of land in Livermore. Guinnane Construction held the right to purchase a 50 percent interest in the property through an assigned right of first refusal. Edmund Jin, a prospective buyer, and his real estate agent Stephen Chess knew about that right. They pursued the deal anyway, ultimately convincing the sellers to breach their agreement and sell to Jin for $1.5 million.

Guinnane sued the sellers for specific performance. That case was fully litigated for over a year, culminating in a bench trial. Guinnane prevailed, obtaining a court order directing conveyance of the property interest in exchange for $1.2 million.

Guinnane then turned to the people who had caused the problem. It filed a separate action against Jin and Chess for inducing breach of contract and intentional interference with contractual relations. After years of litigation, including a meritless anti-SLAPP motion by the defendants that this same appellate court had already rejected, the trial court entered judgment in Guinnane’s favor. The compensatory damages totaled $1,798,994, consisting of the attorney fees Guinnane had incurred prosecuting the specific performance action plus prejudgment interest.

So far, the tort of another doctrine was working exactly as designed. The fees Guinnane spent suing the sellers were recoverable as damages against the people whose interference made that lawsuit necessary. The question was what came next.

The Fee Request the Court Denied

After judgment, Guinnane moved for an additional $841,133 in attorney fees: the cost of prosecuting the tort of another action against Jin and Chess. Guinnane argued that without recovering those fees, its judgment would be significantly diluted. It had spent over $800,000 just to collect the damages the defendants’ own conduct caused. If the doctrine existed to make Guinnane whole, shouldn’t it cover the full cost of getting there?

The trial court denied the motion, and the Court of Appeal affirmed. Presiding Justice Stewart, writing for a unanimous panel, traced the doctrine from its 19th-century English common law origins through the California Supreme Court’s foundational decisions in Prentice v. North American Title Guaranty Corp. and Gray v. Don Miller & Associates. The through line was consistent: the tort of another doctrine allows a plaintiff to recover fees spent in litigation with a third party that the defendant’s tortious conduct made necessary. It does not extend to the fees incurred in the action against the tortfeasor.

Why the Court Drew the Line

The court’s reasoning rested on the structural relationship between the tort of another doctrine and the American Rule, codified in Code of Civil Procedure section 1021, which requires each party to bear its own attorney fees absent a statute or contract providing otherwise. The tort of another doctrine is not a general fee-shifting rule. It is a narrow equitable exception that treats certain attorney fees as consequential damages, specifically, the fees a plaintiff was forced to spend because of the defendant’s wrong. Those fees are recoverable as damages “like any other damages,” but the key phrase is “in the action against the third party.”

Gray itself made this distinction. The Supreme Court there remanded for an apportionment of attorney fees, directing the trial court to award only the portion “attributable to [the plaintiff’s] action against the sellers,” not the fees incurred in the fraud action against the broker. Subsequent decisions reinforced the boundary. In Lewis v. Edmonds, this same court rejected a tort of another claim for fees incurred suing the tortfeasor, noting the doctrine “arguably would support a recovery from [the defendant] for the attorney fees incurred in [plaintiffs’] defense of the foreclosure proceeding” but not fees from “the ordinary two-party action” against the wrongdoer. Third Eye Blind, Inc. v. Near North Entertainment drew the same line, distinguishing fees recoverable under the doctrine from “attorney’s fees qua attorney’s fees” incurred in suing the tortfeasor defendant.

Guinnane tried an alternative argument: that “fees on fees” are recoverable under the private attorney general doctrine (Code of Civil Procedure section 1021.5), and the same logic should apply here. The court rejected the analogy. The private attorney general doctrine exists to incentivize enforcement of important public policies. Without fee recovery, such litigation would often be impracticable, and statutory rights would go unenforced. The tort of another doctrine serves a different function. It compensates a plaintiff for a specific economic injury. It does not aim to encourage litigation or deter bad conduct. Those are fundamentally different engines, and extending “fees on fees” from one to the other would require the kind of policy decision that belongs to the Legislature.

The court acknowledged the practical unfairness. Guinnane spent over $841,000 to collect damages that the defendants’ own tortious interference had caused, and the defendants’ aggressive litigation tactics, including a meritless anti-SLAPP motion, made the case more expensive than it needed to be. The opinion closes by noting that sanctions for frivolous litigation tactics exist as a potential remedy, but the bar is high. As for changing the underlying rule, the court said plainly: “this court is not at liberty to depart from current law.”

What This Means for California Businesses

For companies involved in real estate transactions, commercial contracts, or any business relationship where a third party’s interference might trigger cascading litigation, Guinnane offers three practical lessons.

First, budget for the full cost of enforcement. If you are the victim of tortious interference and need to sue both the breaching party and the interfering party, the tort of another doctrine will help you recover the fees from the first lawsuit. It will not help you recover the fees from the second. That reality should inform how you structure your litigation strategy, how you allocate resources, and how you evaluate settlement offers.

Second, look for contractual and statutory fee provisions early. The American Rule applies by default, but contracts can change the calculus. If your agreements include attorney fee provisions that cover disputes arising from interference or breach, you may have an independent basis for fee recovery that the tort of another doctrine does not provide. Review your contracts with this gap in mind.

Third, consider injunctive relief and other early intervention strategies. The cheapest way to deal with cascading litigation is to prevent it. When a third party is actively interfering with a deal, tools like lis pendens, temporary restraining orders, and preliminary injunctions can stop the interference before it metastasizes into years of multi-front litigation. The earlier you involve litigation counsel, the more options you have.

Guinnane Construction v. Chess is a well-reasoned opinion that confirms what practitioners have long suspected about the boundaries of the tort of another doctrine. It is also a reminder that winning on the merits does not always mean recovering every dollar you spent getting there.

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