J&M Sec., LLC v. Kennedy
| Decision Date | 28 December 2021 |
| Docket Number | ED 109593 |
| Citation | 648 S.W.3d 122 |
| Parties | J&M SECURITIES, LLC, Appellant, v. Nikki M. KENNEDY, Respondent. |
| Court | Missouri Court of Appeals |
FOR APPELLANT: Lucas G. Guard, Guard Law, PO Box 430008, St. Louis, Missouri 63143.
FOR RESPONDENT: Nikki M. Kennedy, Pro Se.
J&M Securities ("Appellant" or "J&M"), as assignee of The Century Group, Inc. ("Century"), filed suit against Nikki Kennedy ("Kennedy") in the Circuit Court of St. Louis County to recover certain amounts allegedly owed to it pursuant to the residential lease agreement entered into by and between Century and Kennedy, which agreement Century had assigned to J&M for collection purposes only. In her answer to the Petition, Kennedy generally denied any liability to Century, and asserted a counterclaim for breach of the warranty of habitability, failure to return her security deposit, and set-off; Kennedy also asserted a similar affirmative defense of set-off. Although the circuit court found that Kennedy owed certain amounts to J&M for terminating the lease early, the circuit court also found that J&M owed a slightly greater amount to Kennedy pursuant to her set-off affirmative defense and counterclaim, and thus entered a money judgment in favor of Kennedy. J&M appeals the portion of the money judgment entered against it and in favor of Kennedy, but does not appeal the other parts of the circuit court's judgment.
J&M raises three points on appeal relating to the money judgment entered against it. In its first point, J&M argues that the circuit court erroneously declared the law in entering a money judgment against it in that Missouri law does not allow recovery against the assignee of a lease agreement for a claim of overpayment to the assignor of the lease agreement. In its second point, J&M argues that the circuit court erroneously applied the law in entering the money judgment against it for the same reason asserted in its first point. In its third point, J&M argues that the circuit court's money judgment against it was not supported by substantial evidence of any overpayment by Kennedy to J&M or any other transaction with J&M, which J&M maintains is necessary in order for a money judgment to be entered against an assignee in this situation.
We reverse and remand.
As Kennedy did not file a brief in connection with this appeal, we only have J&M's version of the relevant factual background. Regardless, it appears that the factual background would be largely undisputed. The following is a summary of the relevant factual and procedural history in this case based on our review of the record before us:
On or about October 19, 2018, Century, as landlord, and Kennedy, as tenant, entered into an ordinary residential lease agreement (the "Lease") for an apartment located in St. Louis County (the "Leased Premises"). The Lease commenced on October 19, 2018, and was scheduled to terminate on October 31, 2019 (the "Termination Date"). The base monthly rent under the Lease was $605.00 per month, and the Lease called for a security deposit of $400.00, which Kennedy paid to Century at the commencement of the Lease.
The Lease also had a provision whereby it would automatically renew at the then-current market rental rate if Kennedy did not notify Century, in writing, of her intent not to renew the Lease at least two full calendar months before the Termination Date. This provision also provided that Century may "withhold all or any portion of the security deposit as compensation to Lessor for actual damages sustained as result [sic] of Tenant's failure to give adequate written notice to terminate tenancy."
According to Century, it sent two letters to Kennedy (dated August 1, 2019, and August 22, 2019), which reminded her that the Lease was coming up for renewal, and both letters specifically requested that she notify them whether she intended to renew her lease no later than August 31, 2019. The second notice also reminded Kennedy that if she did not notify Century of her intent to renew or vacate on or before August 31, 2019, the Lease would automatically renew "for a like term at the current market rate." However, Kennedy failed to notify Century of her intent not to renew the Lease by August 31, 2019, and so the Lease automatically renewed, effective November 1, 2019, at the then-current market rental rate of $620.00 per month. Century also sent Kennedy a letter, dated September 15, 2019, informing her that the Lease automatically renewed for another 1-year term on November 1, 2019.
Despite the Lease automatically renewing for another 1-year term on November 1, 2019, Kennedy vacated the Leased Premises on or before October 31, 2019. Century withdrew $605.00 from Kennedy's account on November 4, 2019, pursuant to an ACH agreement it had with Kennedy. However, Century did not become aware that Kennedy had vacated the Lease Premises until shortly thereafter, and conducted a routine inspection on November 7, 2019.
Century then sent a letter to Kennedy, dated November 11, 2019, summarizing the total amount due upon her termination of the Lease on October 31, 2019 (the "Inspection Summary"), which included several components. First, the Inspection Summary included the various charges Century assessed for damage to the Lease Premises, which totaled $193.00. Next, the Inspection Summary reflected the following two charges: (a) $620.00 as one month's rent for "No Notice Given" to terminate the lease; and (b) $2,170.00 as a contractual charge under Section 28(B)(2) of the Lease called "Contract Part Performance settlement," which was 3.5 times the monthly rental amount (the "CPPS Provision"), and was assessed for terminating the Lease early. Finally, the Inspection Summary reflected the following two credits to Kennedy: (a) $400.00 for the security deposit; and (b) $605.00 for the amount it had automatically deducted from Kennedy's account on November 4, 2019. Thus, Century claimed a total amount due from Kennedy of $1,978.00.
On June 23, 2020, J&M filed suit against Kennedy for breach of the Lease, seeking the amounts set forth in the Inspection Summary (i.e., $1,978.00), plus pre-judgment interest from November 12, 2019, plus post-judgment interest at the lesser of 18% or the maximum annual rate allowed by law, as well as Century's attorney's fees and costs (the "Petition"). J&M specifically alleged that the "present claim" had been assigned to it by Century pursuant to § 425.300 RSMo. (1994) (the "Assignment"), and further alleged that it was "the real party in interest for purposes of collection." J&M attached a copy of the Assignment to the Petition as an exhibit thereto.1
In her answer to the Petition, Kennedy generally denied any liability to J&M, and asserted a counterclaim for breach of the warranty of habitability, failure to return her Security Deposit, and set-off. Specifically, in her set-off claim, Kennedy asked the circuit court to subtract her damages caused by Century's "failure to provide a decent, safe and clean place to live" from any rent the circuit court determined was unpaid and then-owing, as well as requested a refund of her $400.00 security deposit and the $605.00 withdrawn from her account. In her answer, Kennedy also asserted an affirmative defense of set-off on the same basis as the counterclaim.
The matter was called for trial on December 15, 2020, at which time J&M presented evidence in support of its claim against Kennedy. Although Kennedy appeared, pro se , and briefly cross-examined J&M's witness, she did not present any evidence in support of her affirmative defense to the claim in the Petition or in support of her counterclaims against J&M. At trial, a representative of Century acknowledged that the Leased Premises had been leased to a new tenant by November 30, 2019, meaning that it was only vacant for the month of November 2019.
By "Order and Judgment" entered on January 19, 2021 (the "Final Judgment"), the circuit court entered judgment on the parties’ claims. First, the circuit court found in favor of J&M on its claim against Kennedy for the amounts requested in the Inspection Summary, except for the $2,170.00 sought pursuant to the CPPS Provision2 , totaling $813.00. Next, the circuit court found that Century held a security deposit of $400.00, as well as the $605.00 withdrawn from Kennedy's account on November 4, 2019, totaling $1,005.00. Finally, the circuit court found in favor of J&M on Kennedy's counterclaim for beach of the warranty of habitability and failure to return the security deposit, finding it was "consumed by the assessment of damages [to the Leased Premises] and one month's rent."3 Thus, the circuit court found that after the assessment, Kennedy is entitled to a refund of $192.00 from J&M. Accordingly, the circuit court ordered and adjudged that Kennedy "shall have and recover from plaintiff, J&M securities, the amount of $192.00."
Although not necessary in order to preserve these issues for appeal (because this was a court-tried case), J&M nonetheless filed a motion for new trial and a motion to amend the Final Judgment, both of which essentially argued that the circuit court could not enter a judgment against it for the amount that Kennedy's counterclaim for set-off exceeded its own claim against Kennedy—$192.00. However, by order dated March 1, 2021, the circuit court denied both motions. In its order, the circuit court noted that J&M complains that the court entered judgment "dismissing" its contract claim, finding in favor of Kennedy on her counterclaims, and entering judgment against it for $192.00. In response, the circuit court directed J&M to re-read the Final Judgment, noting that it found for J&M on its contract claim in the amount of $813.00, but further noted that because J&M already held $1,005.00 of Kennedy's funds, Kennedy was entitled to a refund of $192.00.4 J&M timely filed its notice of appeal, and...
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