Bisson v. Ward

• Citation: 628 A.2d 1256,160 Vt. 343
• Decision Date: 11 June 1993
• Docket Number: No. 92-426,92-426
• Parties: Eugene and Cobelena BISSON v. Kelly WARD.
• Court: United States State Supreme Court of Vermont

Page 1256

628 A.2d 1256

160 Vt. 343

Eugene and Cobelena BISSON v. Kelly WARD.

No. 92-426.

Supreme Court of Vermont.

June 11, 1993.

Timothy W. Shanley, Montpelier, for plaintiffs-appellees.

Mary C. Welford and Gail Sophrin, Vermont Legal Aid, Inc., Rutland, for defendant-appellant.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

GIBSON, Justice.

Tenant Kelly Ward appeals from a superior court decision, which held that landlords Eugene and Cobelena Bisson had violated the statutory warranty of habitability. Tenant claims the court erred by failing to award her attorney's fees under the Vermont Residential Rental Agreements Act, 9 V.S.A. §§ 4451-4468, and by concluding that landlords had not violated the Vermont Consumer Fraud Act, 9 V.S.A. §§ 2451-2462. We agree and reverse.

In the spring of 1991, the Department of Labor and Industry inspected an apartment owned by landlords and reported several violations of state building and health codes. The Department directed landlords to correct these conditions. Soon after the inspection, tenant looked at the apartment. Although it had a number of defects, the manager and the maintenance worker promised to make necessary repairs. Tenant made a $300 deposit and moved in with her child on May 1, 1991. Landlords had not received a certificate of occupancy at the time that tenant moved in.

With the assistance of the maintenance worker, tenant prepared a list of the repairs that needed to be made. The maintenance worker told her he would forward the list to the owners. At various times during the next few months, tenant requested that the repairs be made but was told that the owners had not provided any funds. Tenant continued to pay the rent for June, July and August of 1991, but thereafter withheld payment.

In October 1991, the Department of Labor and Industry again reported to landlords in writing a number of fire and safety hazards, including many structural and mechanical deficiencies, and inadequate heating and plumbing systems. The Department also noted that the second-floor bedroom was uninhabitable and that there was no smoke detector. At times during the fall and winter, tenant had no hot water and no heat. The shower leaked excessively and could not be used. Tenant and her daughter used the bathroom facilities of neighbors and, when it became too cold to remain in the apartment, made arrangements to stay elsewhere.

Landlords brought an action for possession in October 1991 and moved that tenant be ordered to pay rent into the court. As an affirmative defense, tenant asserted a right to withhold rent pursuant to 9 V.S.A. § 4458(a)(1). She maintained that she had reported several defects in the apartment and that landlords were aware of the condition of the premises but had not made repairs. Tenant also counterclaimed for breach of warranty of habitability and for violations of the Vermont Consumer Fraud Act, requesting all rent paid to landlords, damages, equitable relief, attorney's fees, and exemplary damages.

The court held that landlords had violated the warranty of habitability as provided in 9 V.S.A. § 4457(a). ¹ Because tenant had provided notice of noncompliance and landlords had failed to make repairs, the court ruled that tenant's lease could not be terminated for withholding the rent. The court also ordered landlords to return all rent monies paid, with interest, and dismissed the action for possession. The court denied tenant's request for attorney's fees, however, and found that the evidence did not establish her counterclaim under the Consumer Fraud Act. Tenant appeals the rulings on attorney's fees and consumer fraud.

I.

Tenant argues that, under the Vermont Residential Rental Agreement Act, the court must award the tenant attorney's fees when it finds that the landlord has violated the obligation to maintain habitable premises. Although the trial court found that landlords had breached the implied warranty of habitability as well as the statutory warranty of habitability, it concluded, in a separate ruling, that attorney's fees were not warranted here because tenant had received rent-free housing for a substantial period of time and because its decision had already provided ample reasons for these landlords and others to comply with their obligation to provide clean, safe housing. Tenant maintains that the statute does not give the court discretion in awarding fees; rather, she contends that such an award is mandatory.

Generally, parties are required to bear their own costs of litigation, including attorney's fees. Gramatan Home Investors Corp. v. Starling, 143 Vt. 527, 535, 470 A.2d 1157, 1162 (1983). This general rule may, however, be modified by statute or contract. Id. The Vermont Residential Rental Agreements Act provides:

If the landlord fails to comply with the landlord's obligations for habitability, the tenant shall give the landlord actual notice of the noncompliance. If the landlord fails to make repairs within a reasonable time and the noncompliance materially affects health and safety, the tenant may:

(1) withhold the payment of rent for the period of the noncompliance;

(2) obtain injunctive relief;

(3) recover damages, costs and reasonable attorney's fees; and

(4) terminate the rental agreement on reasonable notice.

9 V.S.A. § 4458(a) (emphasis added). Tenant contends that this statutory language entitles her to recover attorney's fees because she prevailed on the habitability claims. We agree.

In Gramatan, we held that the Vermont Consumer Fraud Act mandates an award of attorney's fees upon a finding of consumer fraud. 143 Vt. at 535-36, 470 A.2d at 1162. Section 2461(b) of that Act provides that the "consumer ... may sue and recover ... reasonable attorney's fees." We held that the express language of the statute entitled the consumer to an award of attorney's fees. Moreover, we noted that the Legislature had fashioned the relief available to a consumer victimized by unfair or deceptive commercial practices "to promote and encourage prosecution of individual consumer fraud claims." Gramatan, 143 Vt. at 536, 470 A.2d at 1162. We concluded further that consumers were best protected by shifting the expense of consumer fraud litigation to those who committed the unfair or fraudulent commercial acts. Id.

As in Gramatan, the statutory language of 9 V.S.A. § 4458--tenant may recover--entitles tenants to attorney's fees where the landlord has breached the warranty of habitability. Courts in other jurisdictions have also determined that the language "tenant may recover" creates a right to elect the relief provided in the statute. See, e.g., Prevatte v. Asbury Arms, 302 S.C. 413, 396 S.E.2d 642, 643-44 (Ct.App.1990) ("tenant may recover reasonable attorney fees" creates right to fees where landlord does not comply with statute); see also Love v. Monarch Apartments, 13 Kan.App.2d 341, 771 P.2d 79, 82-83 (1989) ("tenant may recover damages" creates right to damages); Beckett v. Olson, 75 Or.App. 610, 707 P.2d 635, 637 (1985) (same).

Landlords argue that by using the word "may" the Legislature intended to give the court discretion in awarding attorney's fees. They contend that the Legislature would have stated "shall" had it intended the award of attorney's fees to be mandatory. This is the same argument that landlords advanced in Prevatte, Love, and Beckett, but, as the courts in those cases recognized, the word "may" refers to the tenant, not the judge or the court. Prevatte, 396 S.E.2d at 643. "To the extent that the word 'may' connotes discretion, it is a discretion vested in the tenant to elect his remedies, not in the court to deny a remedy clearly provided by the statute." Id.

Important policy considerations also support our conclusion that tenants are entitled to attorney's fees under the Vermont Residential Rental Agreements Act. We believe that the Legislature intended to provide attorney's fees to prevailing tenants in order to encourage tenants, who are usually at a financial disadvantage, to pursue claims under the Act, thus promoting safe and clean rental housing in Vermont. Indeed, there would be little incentive to bring a claim for breach of the implied warranty of habitability in many cases because attorney's fees are often likely to exceed the recovery. Here, tenant recovered damages of $1,700 with interest, but invested over $2,400 in attorney time before even beginning the appeal process. As in Gramatan, it is in the public interest to shift the burden of the expense to those responsible for the litigation, i.e., landlords who rent premises in violation of our safety and health standards.

Landlords also argue that, because tenant was represented by Vermont Legal Aid, she incurred no expenses and cannot "recover" attorney's fees under the terms of the statute. Generally, where attorney's fees are authorized by statute, courts have ruled that nonprofit legal services organizations are entitled to such an award. Darmetko v. Boston Housing Authority, 378 Mass. 758, 393 N.E.2d 395, 399 (1979); see also Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 1547 (1984) (award of reasonable fees is calculated according to prevailing market rates whether plaintiff is represented by private or nonprofit counsel). In Torres v. Attorney General, 391 Mass. 1, 460 N.E.2d 1032, 1039-40 (1984), the court held that the legal services organization that represented the plaintiff was entitled to receive an award of attorney's fees although the statute authorized an award of attorney fees "incurred" in the action. The court reasoned that this construction is consistent with the legislative goals of encouraging private enforcement of the law and compliance with the law. Id. 460 N.E.2d at 1040.

We agree with the Torres court, and the other cases cited therein, that it would defeat the legislative purposes of the statute to deny an award of attorney's fees in cases in which nonprofit legal services...