Crossroads Mgmt. v. Ridgway
| Decision Date | 07 September 2022 |
| Docket Number | 55641-3-II |
| Parties | CROSSROADS MANAGEMENT, LLC,Plaintiff, v. LACY K. RIDGWAY (formerly LACY CALDWELL) and MATTHEW RIDGWAY, husband and wife,Respondent/Cross-Appellant,CARL and SUZAN LEWIS, husband and wife,Appellant/Cross-Respondent. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
After tenants Carl and Suzan Lewis moved out of a rental property owned by Lacy and Matthew Ridgway, the parties disagreed about the amount of security deposit that should be returned to the Lewises. Because the Lewises demanded a full refund of their deposit and the Ridgways insisted that most of the deposit be put toward repairing damage to the property, the property management company, Crossroads Management LLC, filed an interpleader action and placed the $1,695 security deposit in the court's registry.
The Lewises filed a cross claim against the Ridgways, arguing in part that they were entitled to attorney fees and double damages under RCW 59.18.280(2) because the Ridgways intentionally withheld the full refund due in violation of RCW 59.18.280(1). The Ridgways filed a motion for partial summary judgment on this issue, arguing RCW 59.18.280(1) only requires the landlord to mail a statement of damages and/or a refund within 21 days and they complied with this requirement. The trial court agreed that RCW 59.18.280 requires timely communication, not necessarily an accurate return of the deposit owed, and granted the partial summary judgment motion. We denied a motion for discretionary review of this decision.
The Ridgways made multiple settlement offers, including one that exceeded the amount of the full security deposit by over $1,000. The Lewises refused all offers of settlement, and the parties proceeded to mandatory arbitration under chapter 7.06 RCW. The arbitrator awarded the Lewises their full $1,695 security deposit but awarded the Ridgways $14,386 in attorney fees under chapter 4.84 RCW, which establishes a risk-shifting mechanism for cases with under $10,000 in controversy where the defendant offered more to settle the case than the plaintiff ultimately recovered.
The Lewises then filed a request for trial de novo. The Ridgways moved to strike the request because it was not signed by the Lewises themselves, as required by RCW 7.60.050(1) and SCCAR 7.1(b). The trial court found that the Lewises had substantially complied with statutory and court rule requirements and denied the Ridgways' motion, as well as a motion for reconsideration.
At the trial de novo, a jury determined that the Lewises were entitled to a full refund of their security deposit. But the trial court maintained the $14,386 attorney fee award from the arbitrator and awarded the Ridgways an additional approximately $13,000 in attorney fees based on the Lewises' failure to improve their position on the trial de novo.
The Lewises appeal the trial court's order granting the Ridgways' motion for partial summary judgment and the attorney fee awards. They also appeal an order disbursing the funds held in the court registry to the Ridgways. The Ridgways appeal the trial court order denying their motion to strike the trial de novo request and the order denying their motion for reconsideration.
We hold the trial court erred when it found that the Lewises substantially complied with the requirements for requesting trial de novo and denied the Ridgways' motions to strike and for reconsideration. Following Division One, we conclude the plain language of both RCW 7.60.050(1) and SCCAR 7.1(b) required the aggrieved party's signature on the request for trial de novo. The Lewises failed to meet this requirement.
We therefore reverse the trial court's order denying the Ridgways' motion to strike the Lewises' trial de novo request, affirm the amended arbitration award, and remand for further proceedings consistent with this opinion. Because review of adverse rulings in mandatory arbitration proceedings must occur by trial de novo, the failure to properly seek trial de novo should have ended the proceeding and we do not review the merits of the Lewises' claims on appeal. On remand, the trial court must determine the proper amount of attorney fees to be awarded to the Ridgways for proceedings in the trial court in light of this opinion. We award the Ridgways reasonable attorney fees on appeal in an amount to be determined by a commissioner of this court.
The Lewises moved into a single family home owned by the Ridgways in May 2015. They paid a refundable security deposit of $1,695 and completed a checklist noting the condition of the property when they moved in. The lease stated that after "deductions for cleaning and repairs necessary to restore the premises to its original condition (less allowance for reasonable wear and tear), . . . the balance of the security fee shall be refunded," provided there is no evidence of unapproved pets or unauthorized smoking and "all grounds are cleared." Clerk's Papers (CP) at 16. The Lewises were permitted to have pets.
Crossroads managed the Ridgways' rental property. As part of its responsibilities, Crossroads was required to manage security deposits. It held the Lewises' $1,695 deposit in a trust account.
On May 22, 2018, the Lewises moved out. Carl Lewis did a final walk-through of the property with a representative from Crossroads, Calvin Smith, who remarked that the condition of the property was the same as when the Lewises moved in, except for one issue with light fixtures. Smith noted this on a copy of the move-in checklist, and both he and Carl Lewis signed the checklist. The carpets had just been cleaned, and there were no odors of smoke or stains. Suzan Lewis took pictures upon moving out of the home, which are in our record and which show newly cleaned carpets. The Lewises handed over their keys, and Smith told them their full security deposit would be returned. He classified any issues with the wall paint as "normal wear-and-tear." CP at 240.
A few days later, on May 26, the Ridgways visited the property and alleged that they discovered "a heavy lingering smell of cigarette smoke," "a few cigarette butts . . . inside on the floor," "smoke stains on the walls and animal urine stains on the carpets, which did not appear to have been cleaned." CP at 66. Lacy Ridgway said the Lewises were "openly admitted smokers" and had two dogs. CP at 279. Ridgway also complained that the Lewises tore a toilet paper holder from the wall, installed satellite dishes and failed to remove them, and left the yard overgrown and with garbage in it. And "the move-out checklist did not reflect any of these issues." Id.
The Ridgways also took pictures, which are in our record. Their pictures show damage to a baseboard and a carpet stain, damage to a toilet paper holder, and pictures of the condition of the yard. On June 10, the Ridgways sent Crossroads detailed accounts of these damages and others, reported that the repairs would cost $1,536.01 (including repainting and yard work), and asked Crossroads to promptly inform the Lewises that most of their deposit was being withheld to cover these costs.
In response, Crossroads asked the Ridgways whether anybody else could have been in the home after the Lewises moved out. Smith insisted, CP at 32. However, Smith did notice the smell when he returned to show the house to new tenants.
As for the carpet stains, Smith stated that the carpets were "cleaned when the tenants left" but acknowledged that they "were very dirty the next time [he] came to the house." Id. Lacy Ridgway said "a dog was in the house that soiled a few spots on the floor," which Smith thought happened after the Lewises moved out. Id. According to Smith, the pictures of the damages from the Ridgways did not match the condition of the home when the Lewises moved out. He advised the Ridgways to return the full security deposit and told them, "Just a warning: if you believe the past tenants should be charged for somebody else's carelessness, you could be in for a lawsuit from the past tenant." CP at 33.
Nevertheless, Crossroads complied with the Ridgways' request and issued a check for $158.99 to Carl Lewis on June 12, along with the summary of damages and itemization of the cost of repairs provided by the Ridgways.
On June 26, the Lewises returned this check and demanded a full refund of their deposit, noting that they did not timely receive the full breakdown of the alleged damages and that during the final walk-through, Smith "stated that everything was good and that [the Lewises] would get [their] deposit back." CP at 40.
Crossroads filed a complaint in interpleader, depositing the $1,695 from its trust account into the court's registry and asking the court to determine who was entitled to it.
The Lewises filed a cross claim against the Ridgways, alleging that the damages listed were "either cleared on final inspection or not addressed in the initial inspection and therefore not a proper basis for charge." CP at 45. The Lewises asserted they were entitled to the full amount of the security deposit, as well as attorney fees and double damages, because the Ridgways intentionally and wrongfully withheld the deposit that was due to them under RCW 59.18.280.
In early November 2018, the Ridgways sent a letter to counsel for the Lewises, stating they were advised by an attorney to pay the Lewises the full security deposit and move to dismiss the case with prejudice. They never received a response.
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