Ellis v. Doe

• Decision Date: 06 March 2019
• Docket Number: A17-1611
• Citation: 924 N.W.2d 258
• Parties: Andrew ELLIS, Appellant, v. John DOE, Respondent.
• Court: Minnesota Supreme Court

924 N.W.2d 258

Andrew ELLIS, Appellant,

v.John DOE, Respondent.

A17-1611

Supreme Court of Minnesota.

Filed: March 6, 2019

OPINION

CHUTICH, Justice.

Appellant Andrew Ellis initiated eviction proceedings against his tenant, John Doe, for nonpayment of rent.¹ The tenant raised a common-law habitability defense, asserting that Ellis had breached the covenants of habitability. The district court found for the tenant and ordered retroactive and prospective rent abatement until the habitability violations were fixed. The court of appeals affirmed the district court’s decision.

Ellis now asks us to reverse, asserting that the tenant did not follow the procedures for a rent-escrow action under Minnesota Statutes section 504B.385 (2018), which require written notice to the landlord before initiating an action for breach of the covenants of habitability. We conclude that a tenant asserting a common-law habitability defense in an eviction proceeding is not required to follow the procedures for an action under the rent-escrow statute. Accordingly, we affirm the decision of the court of appeals.

FACTS

Ellis is the owner and landlord of a duplex in Minneapolis. The tenant rented a unit in the duplex in February 2016 under a written month-to-month lease. The apartment had ongoing repair issues, and the tenant later testified in an eviction action that he contacted Ellis about those issues "on several occasions"—enough times that Ellis got tired of him calling. He further testified that he sent Ellis "a letter in regards to the different issues that we had."

After five months passed without Ellis making repairs, the tenant called the city inspector. When the inspector came to inspect the apartment in October 2016, the tenant met with him and discussed several issues, including damage to the bathroom floor, kitchen cabinets, and bedroom ceiling from a water leak; cracks in the walls; peeling paint; broken window seals; and windows that were painted or glued shut. While the inspector was there, the tenant and the inspector could hear an animal running through the ceiling and scratching at the walls. The tenant also pointed out the front door entrance to the duplex, which did not lock and barely closed. He showed the inspector the back stairs, which were held together by a cord, and the side rail on the front stairs, which was weakly attached to the stairs.

In October 2016, the city inspector sent Ellis a notice of ordinance code violations, which required Ellis to make numerous repairs within the next month. Specifically, the notice required Ellis to (1) repair the windows that were painted shut and the windows that would not stay open; (2) repair or replace the handrail for the front stairs; (3) repair the front entry door; (4) identify and fix the source of the moisture problem, as well as repair all water-damaged surfaces; (5) repair the peeling paint in the kitchen; (6) replace the non-functioning smoke and carbon monoxide detectors; (7) repair the rear exterior stairs, which were in unstable condition and lacked a useable handrail; (8) replace a torn window screen; and (9) replace two broken window panes and one missing pane.

In March 2017, Ellis filed an eviction action under Minnesota Statutes section 504B.291 (2018), alleging nonpayment of $3,581 in rent. The tenant acknowledged that he had withheld rent for the month of March and deposited the unpaid rent for the months of March and April 2017 with the court administrator. On March 20, 2017, the tenant filed an answer denying Ellis’s allegations and raising the common-law defense of breach of the statutory covenants of habitability. See Minn. Stat. § 504B.161, subds. 1, 4 (2018).

The parties appeared before the housing court referee. Both parties submitted exhibits and testimony. Both parties also testified, and so did the tenant’s mother. The referee found the testimony of the tenant and his mother to be more credible than Ellis’s testimony. In evaluating Ellis’s nonpayment-of-rent claim, the referee found that the tenant had actually overpaid his rent for 2016 and only owed rent in the amount of $67.64 as of February 2017.

The referee then turned to the tenant’s habitability defense. Based on the tenant’s testimony, the photographs of the unit offered as exhibits, and the city inspector’s report, the court found that "the condition of the premises violated the statutory covenants of habitability." Although Ellis testified that he had addressed all of the issues in the city inspector’s letter, the referee found Ellis’s testimony "untrustworthy" and noted that he "was unable to answer very basic questions about the interactions of the parties." The referee found that the tenant was entitled to retroactive and prospective rent abatement in the amount of $250 per month until Ellis completed all outstanding repairs listed in the notice sent by the city.

Ellis sought district court review of the referee’s decision, arguing that the referee committed legal error. In his motion, Ellis argued, among other things, that a tenant must give written notice to a landlord specifying any violations of the covenants of habitability, as required by the rent-escrow statute. See Minn. Stat. § 504B.385, subd. 1(c). The district court found that the tenant had offered ample evidence demonstrating that the covenants of habitability were violated, the tenant had provided notice of the violations, and the violations had not been corrected. The district court noted that the tenant testified that he had sent Ellis a letter about the violations and further noted that the referee found the tenant’s testimony to be "exceedingly more credible" than Ellis’s testimony. Accordingly, the district court denied Ellis’s motion and affirmed the referee’s order.

Ellis appealed. The question before the court of appeals was whether the tenant was required to follow the statutory procedures, including written notice, for a rent-escrow action under section 504B.385 before asserting a common-law habitability defense to Ellis’s eviction action. In a published decision, the court of appeals held that the tenant was not required to do so. Ellis v. Doe , 915 N.W.2d 24, 28 (Minn. App. 2018). The court of appeals distinguished between a common-law habitability defense in an eviction action brought by a landlord , and a statutory rent-escrow action brought by a tenant for breach of the covenants of habitability. Id. at 28. We granted Ellis’s petition for review to clarify the requirements for asserting a habitability defense to an eviction action.²

ANALYSIS

The covenants of habitability, made a part of every lease in this state, are codified at section 504B.161, which states that landlords covenant, among other things:

(1) that the premises and all common areas are fit for the use intended by the parties;

(2) to keep the premises in reasonable repair during the term of the lease or license ...; [and]

(4) to maintain the premises in compliance with the applicable health and safety laws of the state, and of the local units of government ....

Minn. Stat. § 504B.161, subd. 1(a)(1)–(2), (4). The statute states that "[t]he parties to a lease or license of residential premises may not waive or modify the covenants imposed by this section." Id. , subd. 1(b). The statute further requires that "[t]his section shall be liberally construed," id. , subd. 3, and that "[t]he covenants contained in this section are in addition to any covenants or conditions imposed by law or ordinance or by the terms of the lease or license." Id. , subd. 4 (emphasis added).

In Fritz v. Warthen , we held that a tenant has a common-law right to assert a violation of the covenants of habitability as a defense to an eviction action. 298 Minn. 54, 213 N.W.2d 339, 343 (1973). Based on the statutory directive to liberally construe the covenants, we concluded that the "covenants of habitability and the covenant for payment of rent are mutually dependent rather than independent." Id. at 341. Because the two covenants are mutually dependent, "the rent, or at least part of it, is not due under the terms of the lease when the landlord has breached the statutory covenants." Id. at 342. We noted that "[t]hree possible alternative remedies are available to enforce the statutory covenants." Id. at 341. The first was for the tenant to raise the landlord’s breach as a defense to an eviction action; the second was for the tenant to bring an action against the landlord; and the third was for the tenant to raise the landlord’s breach as a defense after vacating the premises and suspending rent payments. Id.

About 15 years after we decided Fritz , the Legislature enacted a statute authorizing a rent-escrow action. Act of June 2, 1989, ch. 328, § 15, 1989 Minn. Laws 2350, 2367–70 (codified as amended at Minn. Stat. § 504B.385 ). Under the statute, a tenant may initiate an action against a landlord to enforce the covenants of habitability. Minn. Stat. § 504B.385, subd. 1(c). A tenant may bring a rent-escrow action "[i]f a violation exists in a residential building" by depositing the rent due to the landlord with the court administrator. Id. , subd. 1(a). For a violation of city codes, the residential tenant may deposit the rent due "along with a copy of the written notice of the code violation[s]." Id. , subd. 1(b). For a violation of the covenants of habitability or a violation of the lease, the tenant must "give written notice to the landlord specifying the violation." Id. , subd. 1(c). If the landlord does not correct the violation within 14 days, the tenant may deposit rent with the court administrator. Id.

We interpret statutory language to "ascertain and effectuate" the Legislature’s intent. Minn. Stat. § 645.16 (2018). "When the words of a law in their application to an existing situation are clear and free from all ambiguity," id. , our role "is to enforce the language of the statute and not explore the spirit or purpose of the law." Caldas v. Affordable Granite & Stone, Inc. , 820...