Appellate Division of the District Court: Southern Division
November 15, 2010
Docket No: 09-ADMS-40028
Tenant-Landlord, Security Deposit, Housing Assistance Corporation
Brendan Lopes and Tiffany Mendes ("landlords") brought a summary process action to evict their tenant Tonia Williams ("tenant"). While the issue of possession was rendered moot at trial because tenant had already vacated the premises, the issues for the trial judge were limited to tenant's counterclaim for breach of warranty of habitability, breach of the covenant of quiet enjoyment, and violations of the security deposit law, G.L. c. 186, sec. 15B. The trial judge found in favor of the landlords in the issues of security deposit, habitability, and quiet enjoyment and against the landlords in any other claim they had against tenant in the action. The trial judge issued a memorandum of decision outlining his finding on the security deposit claims and justified his decision in the other matters as "I find no other claims or counterclaims for either party."
The tenant appeals and argues that only $1,465.00 of her payments to the landlord should be viewed as security deposit funds, the judge erred in awarding damages to her based upon how the landlords handled her security deposit, and objects to the judge's failure to rule specifically on her request for rulings on her counterclaims.
The Appellate Division affirms the trial judge's determination that tenant's security deposit was limited to $1465.00; vacates the trial court's decision on the tenant's security deposit claims and orders judgment for the tenant in the amount of $4,395.00; returns the case to the trial court for a determination of attorney's fee's; and orders a new trial on the tenant's counterclaims for breach of warranty of habitability, failure to provide utilities, and breach of covenant of quiet enjoyment.
Facts
In 2007, tenant signed a one-year lease with the landlords for a property with the monthly rent of $1,465.00. Of this $1,465.00, tenant was responsible for only $272.00 per month due to the Housing Assistance Corporation ("HAC") being responsible for the remaining $1,193.00. In addition to the rental obligation, the landlords also required the tenant to provide them with a security deposit of $1,465.00, although they first requested $1,565.00 as the security deposit. In her first four monthly payments, tenant kept her rent current and also included payment of $1,565.00 above the amount of her rent, meaning for it to be allocated to her security deposit obligation. Eight days after tenant signed the lease, the landlords opened an interest-bearing personal savings account in the name of Tiffany Mendes, into which they deposited $900.00 of tenant's total security deposit payments. It is undisputed that the landlords did not provide any documentation or notice to the tenant as to the location of the savings account or the total deposited.
A year and half after the signing of he lease the landlords served tenant with a summary process summons and complaint, alleging that she was in arrears on “rent/security” in the amount of $2,050.00. After filing a timely answer, the tenant vacated the property, paid her required share of the rent in full. The landlords did not return the tenant’s security deposit, or any part of it, within 30 days of the termination of her tenancy.
Issue 1: Was the trial court correct in determining the amount of the security deposit?
Tenant’s first argument is that the trial court incorrectly determined that she paid a security deposit of $1,465.00 instead of $1,535.00. The Appellate Division agreed with the trial court’s determination because both the terms of the lease and G.L. c. 186, sec. 15B(1)(b)(iii) limit a security deposit to the amount of a single month’s rent.
Issue 2: Did the trial court err in denying tenant any damages under G.L. c. 186, sec. 15B, the security deposit law?
Tenant argues that the failure of the landlords to follow the security deposit law requirements entitle her to damages of three times the amount of the deposit, plus interest and reasonable attorney’s fees. The Appellate Division makes it clear that despite any amount of good faith or misunderstanding by a landlord, the requirements of the security deposit law must be strictly followed. While the landlords in this case were inexperienced and did attempt to put some money into an interest bearing account, the fact remains that they failed to establish the required escrow account, completely separate from their personal accounts, and failed to give their tenant notice of the money’s location, account number, and receipt of the transaction. Furthermore, landlords failed to return the money to their tenant within 30 days of her termination of the tenancy. The landlords lost any entitlement to the security deposit money through the multiple failures of following the applicable law.
Due to the failure of the landlords to hold the security deposit money properly and their failure to return the security deposit money within 30 days of the tenancy’s termination, subsection (7) of the statute awards the tenant damages equal to three times the amount of the security deposit. The Appellate Division makes it clear once again that good faith does not matter and thus, the tenant is entitled to this amount of damages.
Issue 3: Does the tenant owe any unpaid rent to the landlords?
The Appellate Division determined that the tenant owes no other rent to the landlords because she paid her portion of the last month’s rent in full, despite the fact that the HAC did not pay the amount they were obligated to pay. The court looks at the contract between the landlords and the HAC, which states that the tenant is not responsible for paying the rent to owner that is supposed to be paid by the HAC. Therefore, the contract language controls and the tenant cannot be forced to pay that rent.
Issue 4: Did the trial judge err in not specifically addressing the ruling of each of tenant’s counterclaims?
The Appellate Division recognizes that while a trial judge’s denial of the parties’ claim may be a reflection of her determination that neither side had sufficient evidence to sustain their burdens, in this particular situation the court can “hypothesize other reasons for [the trial judge’s] denial of those counterclaims.” Since parties are entitled to a clearer identification of a judge’s reasoning, the Appellate Division returned the case to the trial judge for a new trial on the counterclaims for breach of habitability, for failure to provide utilities, and for breaches of the covenant of quiet enjoyment.
Judgments affirmed in the part and remanded in part.
Prepared by AAO
