Hallowell v. Citaramanis

• Decision Date: 01 September 1990
• Docket Number: No. 1060,1060
• Citation: 88 Md.App. 160,594 A.2d 591
• Parties: Eustace HALLOWELL, et ux. v. Tammy CITARAMANIS, et vir
• Court: Court of Special Appeals of Maryland

Page 160

88 Md.App. 160

594 A.2d 591

Eustace HALLOWELL, et ux. v. Tammy CITARAMANIS, et vir.

No. 1060 Sept. Term, 1990.

Court of Special Appeals of Maryland.

Aug. 28, 1991.

Certiorari Granted December 27, 1991.

Daniel H. Scherr (Beth A. Jackson and Reese & Carney, on the brief), Columbia, for appellants.

Mary Beth McNamara, Columbia, for appellees.

Argued before MOYLAN, GARRITY and CATHELL, JJ.

GARRITY, Judge.

This unusual landlord-tenant dispute arose when the tenants, Tammy and Michael CitaraManis, sued their former landlords, Eustace and Portia Hallowell, under the Maryland Consumer Protection Act (CPA) for restitution of all rent paid during their eighteen-month tenancy.

Confronted with the CPA in the residential lease context, the Circuit Court for Howard County (Dudley, J.) granted the CitaraManises' motion for summary judgment and awarded them restitution for $15,450, 100 percent of the rent they had paid during the tenancy. Appealing from the judgment, the Hallowells present the following issues for our review:

1. Whether the Maryland Consumer Protection Act entitles a tenant to restitution of all rents paid under a lease of residential property for the sole reason that the landlord did not inform the tenant that the property was not licensed for occupancy.

2. Whether the Howard County Housing Code requiring operators of rental property to obtain a license to let premises is a regulatory statute.

3. Whether the tenants are entitled to restitution for rent payments made pursuant to an alleged illegal contract.

Statement of Facts

On October 28, 1987, the CitaraManises responded to an advertisement placed by the Hallowells in the Columbia Flyer, a local newspaper in the Howard County area. In their advertisement, the Hallowells offered for rent a duplex home at 7217 Carved Stone in Columbia, Maryland, a pleasant suburban neighborhood. In responding to the advertisement, the CitaraManises visited and viewed the home. Shortly thereafter, the CitaraManises and the Hallowells entered a one-year lease agreement providing that the CitaraManises would pay $850.00 per month in rent from November 1, 1987 until October 31, 1988, as well as a security deposit of one month's rent.

The one-year tenancy passed without incident. The record reflects that the condition of the house was acceptable to the CitaraManises and that the Hallowells made minor repairs as they were needed. ¹ When the one-year lease had expired, the parties orally agreed to extend the lease for an additional six months, on a month-to-month basis, at an increased rent of $875.00 per month.

On March 1, 1989, Tammy CitaraManis informed Portia Hallowell that the CitaraManises intended to vacate the premises on May 1, 1989. Approximately one month after having told the Hallowells that they planned to move, the CitaraManises learned from a representative of the Howard County Office of Licensing and Permits that Howard County had not licensed the premises at 7217 Carved Stone as rental property. This discovery had no effect on the CitaraManises' moving plans; on April 30, 1989 they turned out the lights at 7217 Carved Stone for the last time.

Approximately two months after they had moved out, the CitaraManises filed suit, alleging that the Hallowells had violated the Consumer Protection Act, Md.Com. Law Code Ann. (CL) § 13-301 et seq. (1988 Repl.Vol.) by engaging in unfair and deceptive practices. According to the CitaraManises, the circumstances giving rise to the alleged violations consisted of the Hallowells having advertised the unlicensed rental property, and their failure to disclose the lack of licensure to the CitaraManises. Asserting that they sustained actual damage within the meaning of § 13-408(a) of the CPA, the CitaraManises prevailed on a motion for summary judgment, arguing that the lack of licensure and the Hallowells' failure to inform the CitaraManises of the lack of licensure, in itself, justified restitution of the eighteen months rent they had paid to the Hallowells. In ruling on the parties' cross-motions for summary judgment, the lower court found that the Hallowells had violated the CPA and awarded the CitaraManises $15,450.00, 100 per cent of the rent they had paid during their tenancy. In applying the CPA, the court stated:

The Baltimore City Code and the Howard County Code make it unlawful for persons to lease property that's not inspected and licensed. Indisputably this property was not inspected and licensed for rental. Now, the court said [in Golt v. Phillips, 308 Md. 1, 517 A.2d 328 (1986) ] when a person is not told that the property is not inspected and licensed, which the government does for the protection of the public, then that person is entering into an illegal lease; that they're not being afforded an opportunity to refrain from engaging in; and therefore, the rent paid is a benefit to the landlord, the wrongdoer. And in order to insure that forever after landlords have their properties inspected and licensed, we have to take away from the landlords any benefits that they might make in doing it unlawfully. And therefore, by definition, you sustain a damage when you pay rent for an unlicensed place. And therefore the conclusion here was simple. Now, this makes a much stronger case. Golt. Communal bathroom and, uh, other significant housing violations. But Howard County Code makes it unlawful for me to rent my house when I move to Florida unless I've had it inspected and licensed for rental.

Analysis

The Hallowells contend that their failure to inform the CitaraManises of the fact that 7217 Carved Stone was not licensed with the Department of Public Works did not, in itself, cause the CitaraManises to suffer actual damage for the purposes of recovery under CL § 13-408(a) of the Consumer Protection Act. We agree.

Piloted by its recognition that the doctrine of caveat emptor had outlived its social utility, the Maryland General Assembly enacted the Consumer Protection Act (CPA) to equalize the balance of power between consumers and providers of consumer goods and services. CL § 13-102(a). ² To clarify the types of practices prohibited by the Act, the CPA provides a non-exhaustive list of unfair and deceptive trade practices:

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.

CL § 13-301.

Animating the legislative will to "take strong protective and preventive steps to investigate [all] unlawful consumer practices," the CPA arms an aggrieved consumer with two nonexclusive avenues of relief by way of a private right of action as well as a public enforcement action. CL § 13-408(a) (private action), § 13-401 et seq. (public action). ³

Although a public action does not preclude a private action, the elements of a private right of action are distinct from those of a public action. To establish a private action, a consumer must demonstrate "injury or loss sustained ... as the result of a practice prohibited by this title." CL § 13-408(a) (emphasis added). A public action, by way of contrast, does not necessarily require a consumer to prove damage: "Any practice prohibited by this title is a violation ... whether or not any consumer in fact has been misled, deceived, or damaged as a result of that practice." CL § 13-302 (emphasis added).

Protecting the CitaraManises, and all residential tenants in Maryland, the CPA specifically prohibits any person from engaging in unfair and deceptive procedures in renting consumer realty and in offering it for rent. CL § 13-303(1) and (2). Prior to the instant case, the judicial gloss given to this section has been limited to Golt v. Phillips, 308 Md. 1, 517 A.2d 328 (1986), where the Court of Appeals was confronted with a private action brought by a residential tenant alleging that his landlord violated the CPA by failing to license the premises, as was required by the applicable housing code. In holding that renting an unlicensed dwelling constitutes an unfair and deceptive trade practice under the CPA, the court reasoned that any advertisement and rental of a dwelling unit carries the implicit representation that leasing the unit is lawful. Id. at 9, 517 A.2d 328. The applicable housing code in Golt expressly prohibited operating a multiple family dwelling without a license; thus, a fortiori, the landlord could not provide the right to possession during the lease term. Id. By advertising and renting an apartment to which the landlord could not give the right of possession, the representations made to the tenant were necessarily misleading and violated § 13-301(1) of the CPA. Id. In holding that the landlord also had violated subsection (2), the court reasoned that proper licensing is a fundamental prerequisite to any lease agreement and therefore is implied in the agreement. Id. Consequently, the subsection was violated even though the landlord had not made any express representations that the apartment was properly licensed. Id. Finally, in determining the landlord's liability for violating subsection (3), the court reasoned that lack of proper licensing is a material fact which the landlord was required to disclose, and that failure to disclose had a tendency to deceive consumers. Id. at 10, 517 A.2d 328.

Interpreting § 13-408(a), which sets forth the elements of a private action, the Court in Golt stated that "Golt's actual loss is comprised of restitutionary and consequential damages. He is entitled to restitution for the three months of rent paid for the unlicensed apartment, $405.00." Id. at 13-14, 517 A.2d 328....