Aleti v. Metro. Balt., LLC

• Decision Date: 06 July 2021
• Docket Number: No. 459, Sept. Term, 2020,459, Sept. Term, 2020
• Citation: 251 Md.App. 482,254 A.3d 533
• Parties: Karunaker ALETI, et ux. v. METROPOLITAN BALTIMORE, LLC, et al.
• Court: Court of Special Appeals of Maryland

251 Md.App. 482

254 A.3d 533

Karunaker ALETI, et ux.

v.METROPOLITAN BALTIMORE, LLC, et al.

No. 459, Sept. Term, 2020

Court of Special Appeals of Maryland.

July 6, 2021

Argued by: E. David Hoskins (Law Offices of E. David Hoskins, LLC), Baltimore, MD, for Appellant.

Argued by: Eric Pelletier (Offit, Kurman, P.A.), Bethesda, MD, for Appellee.

Panel: Fader, C.J., Shaw Geter, Robert A. Zarnoch (Senior Judge, Specially Assigned), JJ.

Fader, C.J.

Subsection 5-4(a)(1) of Article 13 of the Baltimore City Code prohibits any person from renting or offering to rent a dwelling "without a currently effective license to do so from the Housing Commissioner[.]" Subsection 5-4(a)(2) of that article prohibits any person from charging, accepting, retaining, or seeking to collect rent for a rental dwelling unless the person was properly licensed at the time of both the offer to provide the dwelling and the occupancy. In this appeal, we must determine whether subsection (a)(2) provides tenants a private right of action to collect a refund of rent and other fees already paid to a landlord who was unlicensed during a portion of a rental term, but who otherwise complied fully with the rental agreement for the dwelling. Relying on well-established principles of statutory interpretation, contract law, and equity, we conclude that subsection (a)(2) does not provide such a right with respect to rent and related fees. Accordingly, we will affirm the judgment of the Circuit Court for Baltimore City to the extent that court held that the tenant plaintiffs did not have a right to recover rent already paid to the landlord defendants.

We will, however, reverse two aspects of the circuit court's judgment: (1) its entry of judgment in favor of the landlords on the common law count of money had and received, to the extent that the tenants seek to recover legal fees attributable to the landlords’ attempts, while unlicensed, to use the courts to collect rental fees; and (2) its dismissal of the tenants’ request for a declaratory judgment. We will remand for further proceedings consistent with this opinion.¹

BACKGROUND

Karunaker and Chandana Aleti (the "Aletis"), the appellants, brought this action in the Circuit Court for Baltimore City against the appellees, Metropolitan Baltimore, LLC, the owner of 10 Light Street, an apartment building located in Baltimore City, and Gables Residential Services, Inc., the property manager for 10 Light Street. For ease of reference, we will refer to both entities collectively as "Metropolitan." The Aletis alleged that for a period of approximately ten months while they were tenants of 10 Light Street, Metropolitan did not hold an active rental license for the property as required by Article 13, § 5-4(a)(1) of the Baltimore City Code. The Aletis, unaware of the lack of licensure, paid rental and other fees to Metropolitan, which they then sought to recover through this action. The Aletis also sought (1) certification as a class action to pursue recovery of rental and other fees that similarly situated tenants paid to Metropolitan during the same period, and (2) a declaratory judgment that Metropolitan could not collect unpaid rent and other fees that accrued during the time it was unlicensed. We will begin by exploring the statutory scheme on which the Aletis’ claim is based.

The Statutory Scheme: Article 13 of the Baltimore City Code

Article 13 of the Baltimore City Code is "a comprehensive statutory scheme aimed at ‘establish[ing] minimum standards governing the condition, use, operation, occupancy, and maintenance of dwellings ... in order to make dwellings safe, sanitary, and fit for human habitation.’ "² Brooks v. Lewin Realty III, Inc. , 378 Md. 70, 81, 835 A.2d 616 (2003) (alteration and omission in original) (quoting Baltimore City Code (2000), Art. 13, § 103(a)(2)), abrogated on other grounds by Ruffin Hotel Corp. of Md. v. Gasper , 418 Md. 594, 17 A.3d 676 (2011). Section 2-1, which states determinations and declarations of the Baltimore City Council supporting its adoption of Article 13 and establishment of the City's Department of Housing and Community Development, identifies a broad focus on the City and its residents generally. In relevant part, § 2-1 states:

(a) Determinations.

It is hereby found and determined:

(1) that there exist within the City of Baltimore slum, blighted, deteriorated, or deteriorating areas, which constitute a serious and growing menace, injurious and inimical to the public health, safety, morals and general welfare of the residents of the City of Baltimore;

(2) that the existence of such areas and the growth and spread thereof and the deterioration or threatened deterioration of other areas:

(i) contribute substantially and increasingly to the spread of disease and crime, and to losses by fire and accident;

(ii) necessitate excessive and disproportionate expenditures of public funds for the preservation of the public health and safety, for crime prevention, correction, prosecution, and punishment, for the treatment of juvenile delinquency, for the maintenance of adequate police, fire, and accident protection, and for other public services and facilities;

(iii) constitute an economic and social liability;

(iv) substantially impair or arrest the sound growth of the community;

(v) retard the provision of decent, safe, and sanitary housing accommodations;

(vi) aggravate traffic problems ...;

(vii) depreciate assessable values;

(viii) cause an abnormal exodus of families from the city; and

(ix) are detrimental to the health, the well-being and the dignity of many of the residents of the City of Baltimore;

(3) that such areas cannot be dealt with effectively by the ordinary operations of private enterprise without the aids herein provided;

(4) that the rehabilitation or elimination, in whole or in part, of slum, blighted, deteriorated, and deteriorating areas ... are public uses and purposes requiring the exercise of the governmental powers of the City of Baltimore in the public interest.

(b) Declarations.

(1) It is further found and declared that ... areas not yet deteriorated or deteriorating, or portions thereof, may be conserved so that the conditions and evils hereinbefore enumerated may be prevented from spreading thereto or arising therein; and that all such areas within the boundaries of the City of Baltimore may be benefitted through the enforcement of applicable regulatory codes relating to buildings, housing, sanitation or safety, the rendering of services to community organizations or through a combination of other means provided in this ordinance.

(2) It is further found and declared that the elimination, correction, and prevention of the conditions and evils hereinbefore enumerated must be undertaken through the use of a comprehensive and integrated program; that this program should involve whatever range of municipal powers and resources is required to enable the City of Baltimore to act affirmatively in fulfilling its responsibilities to its citizens; that this program requires a suitable administrative structure to undertake adequately a coordinated and purposeful attack on urban slums and blight and the prevention of new areas of slums and blight; and that a comprehensive program should be undertaken within the boundaries of the City of Baltimore.

(3) It is further found and declared that the powers conferred by this ordinance {subtitle} are for public uses and purposes for which public money may be expended and the power of eminent domain exercised and that the necessity in the public interest for the provisions herein enacted is hereby declared and determined.

This appeal most directly concerns Subtitle 5 of Article 13, which governs the licensing of rental dwellings. Section 5-4(a), as it applied at the time relevant to this appeal,³ provides:

§ 5-4. License required.

(a) In general.

Except as provided in subsection (b) of this section,^{[4 ]} no person may:

(1) rent or offer to rent to another all or any part of any rental dwelling without a currently effective license to do so from the Housing Commissioner; or

(2) charge, accept, retain, or seek to collect any rental payment or other compensation for providing to another the occupancy of all or any part of any rental dwelling unless the person was licensed under this subtitle at both the time of offering to provide and the time of providing this occupancy.

Section 5-5 requires owners and managers of a rental dwelling to apply for new and renewal licenses, the prerequisites for which are set forth in § 5-6. Those prerequisites include that all dwelling and rooming units must be properly registered; all registration fees must be paid; and the premises must have passed inspection, be in compliance with all laws and regulations pertaining to lead paint, and not be subject to any unabated violation notices or orders under the City's building, fire, or related codes. Id. § 5-6.⁵

Subtitle 5 also contains enforcement provisions. Section 5-17 permits the Housing Commissioner to require that an unlicensed rental dwelling be vacated within 24 hours if "vacating the premises is necessary for the public health, safety, and welfare." Under § 5-25, issuance of an environmental citation is an available, non-exclusive remedy to enforce the ordinance. Section 5-26 makes any violation of the subtitle a misdemeanor subject to punishment by "a fine of not more than $1,000 for each offense," with each day a violation continues constituting a separate offense.

The Lease

On May 31, 2019, the Aletis entered a lease agreement with Metropolitan to rent an apartment on the 16th floor of 10 Light Street for a one-month term beginning on June 1, 2019 and expiring on June 30, 2019, subject to automatic renewals on a monthly basis (the "Lease"). Pursuant to the Lease, the Aletis were obligated to pay monthly rent of $1,435.00, subject to a late fee of $71.75 if not paid by the fifth day of the month due. The Lease also contains a utility and services addendum providing...