Citaramanis v. Hallowell

Decision Date01 September 1991
Docket NumberNo. 120,120
Citation613 A.2d 964,328 Md. 142
PartiesTammy CITARAMANIS et vir. v. Eustace HALLOWELL et ux. ,
CourtMaryland Court of Appeals

Mary Beth McNamara, Columbia, for petitioners/cross respondents.

Janet E. LaBella, Annapolis, as amicus curiae (Charles H. Dorsey, Jr., Stuart R. Cohen, Barbara A. Samuels, Baltimore, Mary Helen McNeal, Towson), for Legal Aid Bureau, Inc.

Daniel H. Scherr (Beth A. Jackson, Reese and Carney, all on brief), Columbia, for respondents/cross petitioners.

Alvin C. Monshower, Jr., Michael L. Jennings, Richard L. Miller, McGuire, Woods, Battle & Boothe, Baltimore, amicus curiae, for The Maryland Ass'n of Realtors, Inc.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, McAULIFFE, CHASANOW, KARWACKI and ROBERT M. BELL, JJ.

KARWACKI, Judge.

This case presents two important questions for our consideration: (1) whether in a private action under the Maryland Consumer Protection Act, a tenant may obtain restitution of rent paid for premises that are not licensed as required by a local housing code upon proof of no more than lack of licensure; and (2) whether a tenant is entitled to restitution of voluntary rent payments made on an unenforceable lease.

I.

Responding to an advertisement in the Columbia Flyer, a newspaper circulated in Howard County, Tammy and Michael CitaraManis (the CitaraManises or tenants) inspected a duplex house at 7217 Carved Stone in Columbia which Eustace and Portia Hallowell (the Hallowells or landlords) offered for rent. Thereafter, the CitaraManises and the Hallowells entered into a one-year lease agreement, which provided that the CitaraManises would pay $850.00 per month in rent for the period from November 1, 1987 until October 31, 1988, as well as a security deposit of one month's rent.

During that one year tenancy the condition of the house was acceptable to the CitaraManises, and the Hallowells made minor repairs as needed. When the one-year lease expired, the parties orally agreed to extend the lease on a month to month basis, at an increased monthly rent of $875.00. This increased amount was paid by the tenants to the landlords until the CitaraManises vacated the premises at the end of April 1989.

Several days after the tenants informed the landlords of their intention to vacate the property on April 30, 1989, the CitaraManises learned that the premises at 7217 Carved Stone were not licensed during their tenancy as rental property by Howard County. On April 30, 1989 the couple moved out of 7217 Carved Stone.

Approximately three months later, the CitaraManises filed suit for damages in the Circuit Court for Howard County against their former landlords, alleging that the Hallowells had engaged in unfair and deceptive trade practices prohibited by the Maryland Consumer Protection Act, Maryland Code (1975, 1983 Repl.Vol., 1988 Cum.Supp.) §§ 13-301 through 13-501 of the Commercial Law Article (the CPA). Asserting in their Complaint that the lack of licensure and the Hallowell's failure to inform them of the lack of licensure constituted such unfair and deceptive trade practices, the CitaraManises sought restitution of the eighteen months rent they had paid to the Hallowells.

The Hallowells admitted in their Answer that at no time during the CitaraManises' tenancy was their house at 7217 Carved Stone licensed as rental property, as required by Howard County Code (1977, 1985 REV.) § 131.102, and conceded that they failed to inform the CitaraManises that the required rental license had not been obtained.

Agreeing that no material facts were in dispute, the parties filed cross motions for summary judgment. Following a hearing, the Circuit Court for Howard County granted the tenants' motion for summary judgment and denied the landlords' cross-motion. The trial court reasoned that this result was mandated by this Court's decision in Golt v. Phillips, 308 Md. 1, 517 A.2d 328 (1986). On February 2, 1990, judgment in the amount of $15,450.00, representing all of the rent that the CitaraManises had paid during their tenancy, was entered in favor of the CitaraManises. A timely appeal to the Court of Special Appeals was noted by the Hallowells. The intermediate appellate court reversed the judgment of the trial court and held that because the CitaraManises had not demonstrated that any condition of the premises during their tenancy constituted a "substantial housing code violation" within the meaning of the rent escrow statute, Md.Code (1974, 1988 Repl.Vol.) § 8-211 of the Real Property Article, or that the lack of licensure had caused a diminution in the rental value of the property, they had not incurred actual damages, a prerequisite to recovery in a private action under the Consumer Protection Act. Hallowell v. CitaraManis, 88 Md.App. 160, 594 A.2d 591 (1991).

We granted the CitaraManises' petition for certiorari to determine whether a tenant who brings a private action under the CPA may be awarded restitution of rent paid for an unlicensed dwelling upon proving lack of licensure alone. The Hallowells' conditional cross-petition for certiorari also was granted in part to review the question of the right to restitution of voluntary payments made under an illegal contract.

II.

In Golt v. Phillips, supra, John Golt, an elderly, disabled retiree, responded to an advertisement placed by Phillips Brothers and Associates for a furnished, multi-family, rental apartment. When Mr. Golt inspected the premises, he found that it needed cleaning and repairs. Mr. Golt was assured that the repairs would be made; however, Phillips Brothers failed to make the promised repairs. Consequently, Golt filed a complaint with the Baltimore City Department of Housing and Community Development regarding the condition of the apartment. During an inspection undertaken pursuant to the complaint, the housing inspector discovered that the unit was not licensed as required by the Baltimore City Code for multi-family rental use and that there were numerous housing code violations. These included the lack of the most basic health and safety measures: no toilet in Mr. Golt's apartment, no fire doors, defective door locks, and no fire exits.

Violation notices were sent to Phillips Brothers by the Department of Housing ordering them to repair the violations and either to obtain the proper license or to discontinue renting the apartment. Rather than correct the violations and obtain the proper license, Phillips Brothers evicted Mr. Golt during the lease term. Mr. Golt was forced to find another apartment and incurred moving expenses. The rent for his new apartment was $99.00 more per month than his original rent of $135.00.

Under these facts, we held that Phillips Brothers had engaged in unfair and deceptive practices in the rental of consumer realty. Id. 308 Md. at 11, 517 A.2d at 333. Specifically, we held that Phillips Brothers advertisement and rental of an unlicensed apartment was a prohibited unfair and deceptive practice expressly prohibited by the CPA which in § 13-301 states in pertinent part:

"Unfair or deceptive trade practices include any:

(1) False, falsely disparaging, or misleading oral or written statement, visual description, or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumers;

(2) Representation that:

(i) Consumer ... realty ... have a sponsorship, approval, accessory, characteristic ... which they do not have....

(3) Failure to state a material fact if the failure deceives or tends to deceive...."

We then addressed the damages which Golt was entitled to recover. We observed:

"Section 13-408 of the CPA sets forth the private remedy created by the act: 'any person may bring an action to recover for injury or loss sustained by him as the result of a practice prohibited by this title.' This private remedy is purely compensatory; it contains no punitive component. Indeed, any punitive assessment under the CPA is accomplished by an imposition of a civil penalty recoverable by the State under § 13-410, as well as by criminal penalties imposed under § 13-411. Thus, in determining the damages due the consumer, we must look only to his actual loss or injury caused by the unfair or deceptive trade practices."

Id. at 12, 517 A.2d at 333 (emphasis added). Accordingly, we held that Golt was entitled to compensatory damages consisting of restitution of the rent which he had paid for three months for the uninhabitable apartment and consequential damages, such as the cost of moving from the premises and the additional cost of substitute housing for the remainder of the term of the lease which he had entered with Phillips Brothers.

The facts in Golt stand in stark contrast with those of the case sub judice. The CitaraManises do not allege that the house they rented was unclean, unsafe, uninhabitable or unsuitable in any regard. To the contrary, during argument before the trial judge, the CitaraManises' counsel explicitly argued that the condition of the property was irrelevant because the basis of their cause of action is misrepresentation regarding the failure to license, not the condition of the property. 2 Indeed, the CitaraManises elected to extend their tenancy and remain on the premises for another six months after the termination of the original lease at a higher rent. 3

In support of their argument that the condition of the leased premises is irrelevant to their claim for restitution of the rent paid, the CitaraManises rely on the following language in our opinioin in Golt. "It is evident that the [multiple family dwelling] license fee is charged to support the cost of inspections, and not to raise revenue. Therefore, Phillips Brothers may not retain any benefits from the unlicensed lease, and Golt may recover his full damages."

Id. at 13, 517 A.2d at 334. Because of the obvious actual loss and damage suffered by the tenant in Golt who paid rent for what proved to be an...

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