Loeb Secures Substantial Settlement and Fee Recovery for Black Equities and ARKA Properties Group in Commercial Lease Dispute

Loeb & Loeb secured a favorable result for Black Equities and ARKA Properties Group in a commercial real estate dispute against Fitness International, LLC, involving a breached lease and an abandoned construction project during the COVID-19 pandemic at a property in Chatsworth, California. On Nov. 4, 2025, the County of Los Angeles Superior Court entered judgment confirming Black Equities and ARKA Properties Group as the prevailing parties and awarding more than $1.2 million in attorneys’ fees and costs.

Black Equities and ARKA Properties Group filed suit in response to Fitness International’s breach of its lease obligations, including its failure to complete demolition and construction of a new fitness facility, leaving the property in total disrepair. The dispute followed an earlier unlawful detainer action in which the court found that Fitness International had breached the lease and was not excused from its obligations to pay rent or construct during the pandemic—a ruling that was later upheld on appeal.

Following significant motion practice and key rulings in favor of our clients, the parties resolved the case through a settlement initiated by a statutory offer to compromise under California Code of Civil Procedure Section 998—a mechanism designed to encourage early resolution of disputes by shifting attorneys’ fees and costs. Under the agreement, Fitness International paid $2.7 million and agreed that our clients were entitled to recover their attorneys’ fees and costs.

When Fitness International later challenged Black Equities and ARKA Properties Group’s right to recover attorneys’ fees and costs on a technicality, the court rejected those arguments and ruled that the settlement and lease provisions supported a fee award. The court ultimately awarded more than $1.2 million in attorneys’ fees and costs, reinforcing the enforceability of Section 998 settlements and contractual fee-shifting provisions in commercial lease disputes.

The case is significant in that it is rare to see a plaintiff’s Section 998 offer that requires payment of damages, legal fees and a dismissal—and rarer still for such an offer to be accepted. In this instance, Fitness International accepted a $2.7 million demand, conjecturing it would defeat the fee provision on a technicality. After extensive briefing, the court was not persuaded and sided with Black Equities and ARKA Properties Group, resulting in a total recovery of $4 million for our clients.  

The Loeb team representing Black Equities and ARKA Properties Group in the matter is led by Litigation partner Thomas Lombardi and includes associate Todd Densen.