If the named plaintiff in the small claims court lawsuit is a corporation, LLC, partnership or other entity, the maximum recoverable in California small claims court is $5,000.
If the named plaintiff is a natural person (i.e., an individual), the maximum recoverable is $10,000.
The best approach for settlement depends upon the strength of the evidence. Are you able to subpoena the owner to testify at the trial? If not, you won't be able to "cross-exam" the owner on the oral agreement that you did not have to pay after you moved out.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult with your own attorney.
Neither crying nor coming on strong is the best approach. The best approach is calm and friendly and businesslike.
Nicely call up the plaintiff and ask them if they will accept $2,000 in settlement. If they will not, ask if they have a counter-offer. You might try discussing the case with them and pointing out the weaknesses of their case, but before you do that, acknowledge the strengths of their case. That way they know you are truly analyzing the situation.
If they won't settle for an amount you can live with, subpoena the owner to court. If the owner testifies that he gave you permission to break the lease, the case is over--you win.
In addition to the good advice of my colleagues you may point out that a judgment is not the same as collecting the judgment, and money today may be preferable to a "chase" tomorrow.
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
An assignee is not permitted to bring an action in Small Claims Court. Review your original agreement. Was the agreement with the property owner or with the rental agency? If the agency was only an agent of the owner, the Small Claims lawsuit must be brought by the owner.
If the owner told you, before you broke the lease, that you did not have to pay, and if you relied upon that conversation, you have a defense. Any emails?
At Small Claims Court, the judge will ask you to talk settlement before your case is heard. Also, if you lose, you will have a second change. A losing plaintiff has the right to a new trial in Superior Court; a losing defendant does not.
One more issue is "damages." Was the unit rented to someone else after you moved out. They are not entitled to recover from you if the received rent from someone else. They must show that they diligently attempted to re-rent the unit.