Klotz v. Hoyt
| Decision Date | 22 January 2009 |
| Docket Number | No. 18S02-0807-CV-391.,18S02-0807-CV-391. |
| Citation | 900 N.E.2d 1 |
| Parties | Stan KLOTZ, Appellant/Plaintiff, v. Sarah HOYT, Chrissy Kornmann, Appellees/Defendants. |
| Court | Indiana Supreme Court |
David J. Karnes, Dennis, Wenger & Abrell, P.C., Muncie, IN, Attorney for Appellant.
Alan K. Wilson, Muncie, IN, Attorney for Appellee Hoyt.
Appellee Kornmann Proceeding Without Attorney.
On Transfer from the Indiana Court of Appeals, No. 18A02-0707-CV-556
This landlord-tenant dispute centers on Indiana's rental agreement deposit statute. We hold that a landlord's untimely or inadequate statutory damage notice to a tenant precludes only the landlord's claims for physical damage to the premises and does not bar the landlord from recovery of unpaid rent and other losses.
The facts are largely undisputed. The parties signed a residential rental agreement, commencing July 1, 2006 and ending June 30, 2007. The tenants gave the landlord a $600 deposit and paid $600 for the rent for July 2006 and half of the rent for August 2006, but made no further rent payments. The tenants apparently ceased residing in the premises in August or September 2006, but did not notify the landlord of their departure and did not remove all of their furniture and personal belongings. In November 2006, the landlord sent a letter to the tenants informing them of his intent to begin eviction proceedings because of their non-payment of rent. Receiving no response, the landlord filed an action in small claims court against the tenants in January 2007. The trial court ordered eviction on February 20, 2007, and set a hearing on the damages for March 16, 2007. The landlord had not mailed any notice of damages nor remitted any portion of the tenants' damage deposit, but at the hearing presented in evidence an exhibit detailing the unpaid rent ($6,300.00) and late fees ($4,440.00) through the end of the tenancy and listing damages to the premises ($2,848.94) and attorney fees ($500.00), altogether totaling $11,918.94. The landlord sought a judgment of $6,000, the jurisdictional limit applicable in the small claims proceeding. Following the hearing, the trial court entered judgment against the landlord and ordered the return of the tenants' security deposit.
The landlord brought this appeal, asserting (a) that he established all the requisite elements of his claim for back rent, late fees, damages to the premises, and attorney fees; and (b) that he was not required to return the tenant's damage deposit or provide a notice of damages until the tenants provided him with notice of their new mailing address, and that within forty-five days of the tenants' surrender of possession on February 20, 2007, he provided an itemized summary of damages to the tenants at the trial of the case on March 16, 2007. The tenants admit to breaching the agreement by failing to pay rent after August 2006. See Tr. at 40, 53.
On appeal, only one of the tenants, Sarah Holt, has responded, alternatively arguing that the landlord terminated the lease on November 8, 2006, and that the landlord failed to provide a notice of damages within forty-five days as required by statute, or that if the lease terminated on February 20, 2007, the landlord's trial exhibit itemizing damages should not be deemed sufficient to satisfy the security deposit statute. The Court of Appeals reversed and remanded for the entry of a $6,000 judgment in the landlord's favor. Klotz v. Hoyt, 880 N.E.2d 1234, 1235 (Ind. Ct.App.2008). We granted transfer.
Central to the resolution of this appeal are the following pertinent provisions from Indiana Code § 32-31-3 related to rental agreement security deposits:
Sec. 12. Return of deposits; deductions; liability
(a) Upon termination of a rental agreement, a landlord shall return to the tenant the security deposit minus any amount applied to:
(1) the payment of accrued rent;
(2) the amount of damages that the landlord has suffered or will reasonably suffer by reason of the tenant's noncompliance with law or the rental agreement; and
(3) unpaid utility or sewer charges that the tenant is obligated to pay under the rental agreement;
all as itemized by the landlord with the amount due in a written notice that is delivered to the tenant not more than forty-five (45) days after termination of the rental agreement and delivery of possession. The landlord is not liable under this chapter until the tenant supplies the landlord in writing with a mailing address to which to deliver the notice and amount prescribed by this subsection. Unless otherwise agreed, a tenant is not entitled to apply a security deposit to rent.
(b) If a landlord fails to comply with subsection (a), a tenant may recover all of the security deposit due the tenant and reasonable attorney's fees.
(c) This section does not preclude the landlord or tenant from recovering other damages to which either is entitled.
(d) The owner of the dwelling unit at the time of the termination of the rental agreement is bound by this section.
Sec. 13. Use of deposits. A security deposit may be used only for the following purposes:
(1) To reimburse the landlord for actual damages to the rental unit or any ancillary facility that are not the result of ordinary wear and tear.
(2) To pay the landlord for:
(A) all rent in arrearage under the rental agreement; and
(B) rent due for premature termination of the rental agreement by the tenant.
(3) To pay for the last payment period of a residential rental agreement if a written agreement between the landlord and the tenant stipulates that the security deposit will serve as the last payment of rent due.
(4) To reimburse the landlord for utility or sewer charges paid by the landlord that are:
(A) the obligation of the tenant under the rental agreement; and
(B) unpaid by the tenant.
Sec. 14. Notice of damages; refund of remaining deposits. Not more than forty-five (45) days after the termination of occupancy, a landlord shall mail to a tenant an itemized list of damages claimed for which the security deposit may be used under section 13 of this chapter. The list must set forth:
(1) the estimated cost of repair for each damaged item; and
(2) the amounts and lease on which the landlord intends to assess the tenant.
The landlord shall include with the list a check or money order for the difference between the damages claimed and the amount of the security deposit held by the landlord.
Sec. 15. Remittance of full deposit. Failure by a landlord to provide notice of damages under section 14 of this chapter constitutes agreement by the landlord that no damages are due, and the landlord must remit to the tenant immediately the full security deposit.
Sec. 16. Liability for withheld deposits. A landlord who fails to comply with sections 14 and 15 of this chapter is liable to the tenant in an amount equal to the part of the deposit withheld by the landlord plus reasonable attorney's fees and court costs.
Ind.Code § 32-31-3-12 to 16 (emphasis added).
Part 1. The Notice of Damages and Claims for Unpaid Rent and Other Damages
In reversing the trial court and entering a $6,000 judgment in the landlord's favor, the Court of Appeals concluded that the tenants were contractually obligated to the landlord, that the landlord "was not required to comply with the forty-five-day timeframe to be entitled to back due rent payments and that, for the purpose of damages and the security deposit, he did comply with the relevant statutes." Klotz, 880 N.E.2d at 1235. Noting other case authority to the contrary, the Court of Appeals construed the deposit statute provisions to conclude "the statute in no way affects or hampers the landlord's ability and right to sue the tenants for the rent that they are contractually obligated to pay." Id. at 1236. We granted transfer to resolve conflicting precedent. See, e.g., Starks v. Village Green Apartments, 854 N.E.2d 411, 417-18 (Ind.Ct.App.2006), trans. not sought; Durf v. Molter, 839 N.E.2d 1208, 1210-11 (Ind.Ct.App.2005), trans. not sought; Hill v. Davis, 832 N.E.2d 544, 554-55 (Ind.Ct.App.2005), reh'g granted, subsequent appeal at 850 N.E.2d 993, 997-98 (Ind.Ct.App.2006) (); Deckard Realty & Dev. v. Lykins, 688 N.E.2d 1319, 1321 (Ind.Ct.App.1997), trans. denied; Duchon v. Ross, 599 N.E.2d 621, 624-25 (Ind.Ct.App.1992), trans. not sought; Skiver v. Brighton Meadows, 585 N.E.2d 1345, 1347 (Ind.Ct.App. 1992), trans. not sought.
The tenant argues that the "no damages are due" language in Section 15 means that in the event of a landlord's failure to timely provide the tenants with an adequate notice, the landlord may not recover unpaid rent or other damages and that such failure also requires remittance of the full security deposit and reasonable attorney fees.
Questions of statutory interpretation are questions of law, which are reviewed on a de novo basis by appellate courts. Porter Dev., LLC v. First Nat'l Bank, 866 N.E.2d 775, 778 (Ind.2007); Brown v. State, 677 N.E.2d 517, 518 (Ind. 1997). When faced with two conflicting statutory provisions, we seek first to harmonize the two. State v. Universal Outdoor, Inc., 880 N.E.2d 1188, 1191 (Ind. 2008). If the two statutes "can be read in harmony with one another, we presume that the Legislature intended for them both to have effect." Burd Mgmt., LLC v. State, 831 N.E.2d 104, 108 (Ind.2005). Statutes relating to the same general subject matter "are in pari materia [on the same subject] and should be construed together so as to produce a harmonious statutory scheme." Sanders v. State, 466 N.E.2d 424, 428 (Ind.1984); see also Cochran v. State, 859 N.E.2d 727, 729 (Ind.Ct. App.2007), trans. not sought; Ross v. Harris, 860 N.E.2d 602, 607 (Ind.Ct.App.2006), trans. denied; Appolon v. Faught, 796 N.E.2d 297, 300 (Ind.Ct.App.2003), trans. not sought.
If applied as urged by the tenant to preclude the landlord from recovery of all unpaid rent and other damages, the ...
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