McGrath v. Mishara

• Decision Date: 03 May 1982
• Citation: 386 Mass. 74,434 N.E.2d 1215
• Parties: Deborah McGRATH et al. 1 v. Elliott I. MISHARA et al. 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1215

434 N.E.2d 1215

386 Mass. 74

Deborah McGRATH et al. ¹ v. Elliott I. MISHARA et al. ²

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Jan. 4, 1982.

Decided May 3, 1982.

Elliott I. Mishara, Cambridge, for defendants.

Roy J. Watson, Jr., Boston, for plaintiffs.

Before HENNESSEY, C. J., and WILKINS, LYNCH and O'CONNOR, JJ.

LYNCH, Justice.

This appeal from a decision of the Housing Court Department of the Trial Court raises issues with respect to the scope of a landlord's liability to a tenant in a rent-controlled apartment for improper demands for rent and unlawful retention of a security deposit.

The following facts found by the Housing Court judge are material to the issues on appeal. From January 15, 1974, until June 30, 1976, the plaintiffs (tenants) rented an apartment in the Allston section of Boston from the defendant Arashim Company (landlord). The apartment was subject to rent control under the provisions of the Boston Rent Control Ordinance (City of Boston Code, Ordinances, Title 10, c. 3 (1975) ). The parties entered into a written lease for a term of seven and one-half months, beginning January 15, 1974, and ending August 31, 1974, and continuing from year to year thereafter unless either party gave written notice on or before June 1st of a particular year of intent to terminate the lease on the following August 31. The tenants gave the landlord a security deposit of $330. The rent under the lease was set at $165 a month. Under another provision of the lease, if an increase in rent was authorized by the rent control administration the tenants would be required to pay the increased rent "commencing with the effective date of such authorization ...."

In a decision dated March 28, 1975, the Boston rent control administration granted the landlord a rent increase of $45 a month for the apartment occupied by the tenants. The decision contained the following language: "The new maximum rent is established as of the date of this decision. However the new maximum rent may not be charged until the expiration of any lease or tenancy existing on the date of this decision or unless the tenant is given the option of terminating the tenancy under a provision of the lease agreement." The Housing Court judge found that under the lease between the tenants and the landlord, the landlord could not lawfully demand the increased rent until September 1, 1975. ³ Nonetheless, the defendant Mishara, as general partner of the landlord, wrote to the tenants on April 7, 1975, stating that the rent for their apartment would be $210 a month as of June 1, 1975. The tenants responded by sending a check for $165 for the June, 1975, rent. In an accompanying letter they informed the landlord that they were not obligated to pay the increased rent until September 1, 1975, but were willing to pay it beginning on that date. They further advised the landlord that the rent control board hearing officer who had signed the decision authorizing the increased rental was willing to answer any questions the landlord might have.

The landlord then sent the tenants a fourteen days' notice to quit (see G.L. c. 186, § 11), dated June 18, 1975, citing the tenants' failure to pay the $45 increase for June. A second fourteen days' notice to quit was sent September 23, 1975, citing an arrearage of $90 and a third notice, which purported to be a corrected version of the September 23 notice, was sent September 24, citing an arrearage of $135 in the rent for the months of June, July, and August. In each of these months the tenants paid the landlord the original lease rent of $165. The judge found that when it sent the three notices to quit and the April 7 letter "the landlord was aware of or should have been aware that (it) was not entitled to demand the rent increase prior to September 1, 1975." The landlord took no action to evict the tenants and they remained in the apartment and paid the increased rent of $210 from September, 1975, until June, 1976.

The judge found that in May, 1976, the plaintiff McGrath entered into an agreement with the landlord (which was apparently never reduced to writing) under which McGrath would vacate the apartment on June 30, 1976, and become a tenant in another apartment owned by the landlord in the same building. As part of this agreement the landlord promised to apply $210 of the tenants' security deposit to the June rent for the original apartment and to refund the balance to the tenants. In these discussions with McGrath, the landlord did not mention its claim to additional rent for the months of June, July, and August, 1975.

On July 16, 1976, the landlord sent the tenants an itemized list of certain deductions it had made from their $330 security deposit together with a check for $10.50. The list indicated a deduction of $135 for rent allegedly owed from the previous summer. In addition, the judge found that the tenants were not credited with the full amount of interest owed to them under G.L. c. 186, § 15B. The judge concluded that a total of $143.32 had been unlawfully withheld from the tenants' security deposit. The tenants made several unsuccessful attempts to obtain this sum from the landlord in the fall of 1976. Finally, on January 17, 1977, they sent the landlord a demand letter under G.L. c. 93A, § 9(3), to which no response was received. The tenants then filed this action.

1. The tenants' complaint and the Housing Court judgment. The tenants allege that the landlord's conduct entitles them to multiple damages under four different statutes as well as attorney's fees. Their complaint, in four counts, alleged violations of Boston's Rent Control Ordinance; G.L. c. 93, § 49(c); G.L. c. 186, § 15B; and G.L. c. 93A. They sought total damages in excess of $8,000 plus attorney's fees. In the Housing Court the judge entered judgment for the landlord on the c. 93, § 49(c), count and judgment for the tenants on the remaining three counts in a total amount of $1,118.60 plus costs and interest. He also awarded the tenants attorney's fees of $2,950 under the c. 93A count. All parties have appealed, the landlord claiming the judgment is an award of cumulative damages and the tenants claiming that the damage award should have been larger and that the judge erred in calculating attorney's fees.

We turn first to the question whether the landlord violated the various statutory provisions at issue. We then discuss the cumulative damages issues raised by the judgment. Finally, we review the judge's award of attorney's fees. We affirm in part and reverse in part.

2. The statutory causes of action.

(a) Violation of G.L. c. 93, § 49(c). The judge agreed with the tenants that the three notices to quit constituted an unfair, deceptive, or unreasonable attempt to collect a debt under G.L. c. 93, § 49, in that they were "threats of ... action(s) which the creditor (landlord) in the usual course of business does not in fact take" (§ 49(c) ). He noted, though, that the final paragraph of § 49 expressly provides that a failure to comply with the provisions of the section constitutes an unfair or deceptive act or practice under G.L. c. 93A. Thus, plaintiffs seeking to recover for violations of c. 93, § 49, must satisfy the requirements for recovery under c. 93A. Baldassari v. Public Fin. Trust, 369 Mass. 33, 45, 337 N.E.2d 701 (1975). H. J. Alperin & R. F. Chase, Consumer Rights and Remedies, § 296, at 588 (1979). At the time the tenants' cause of action arose, recovery under c. 93A was limited to consumers who suffered a "loss of money or property, real or personal." G.L. c. 93A, § 9(1), as found in St.1971, § 241. This court has interpreted the word "property" as meaning "the kind of property that is purchased or leased, not such intangibles as a right to a sense of security, to peace of mind, or to personal liberty." Baldassari v. Public Fin. Trust, supra. See also Wolfberg v. Hunter, 385 Mass. 390, 396, 432 N.E.2d 467 (1982). The tenants did not suffer any such loss of money or property as a result of the landlord's violation of G.L. c. 93, § 49(c), ⁴ and the judge therefore correctly found that no recovery was possible under G.L. c. 93A as it then read.

b. Violation of G.L. c. 186, § 15B. The judge found that the landlord violated G.L. c. 186, § 15B, by improperly withholding $143.32 from the tenants' security deposit. He awarded the tenants $286.64 plus interest under the double damage provision of c. 186, § 15B, as in effect in 1976. See St.1970, c. 666, § 1, as amended by St.1972, c. 639, § 1. ⁵

The landlord does not seriously dispute the judge's finding that it was not entitled to the $135 which it deducted from the security deposit for back rent allegedly owed. It contends, however, that the deduction of $135 was made in good faith and points to language in the statute permitting a deduction for "unpaid rent." The landlord argues that it should not be held liable under § 15B merely because a court later found the deduction improper.

The problem with the landlord's argument is that it overlooks the judge's express finding that the landlord knew or should have known that rent was not in fact due. At a minimum, a landlord must have a reasonable, good faith belief that it is entitled to an amount deducted as "unpaid rent" under § 15B. Cf. Goes v. Feldman, 8 Mass.App. 84, 91-92, 391 N.E.2d 943 (1979). We note that the statute allows a landlord to deduct from a tenant's security deposit only unpaid rent and the amount of any damage caused by the tenant or the tenant's guests. As to this latter type of deduction the statute requires the landlord to "itemiz(e) ... (the damage) with particularity indicating the nature of the repair necessary to correct any damage and the actual or estimated cost thereof." G.L. c. 186, § 15B, as amended through St.1975, c. 154. This requirement has the effect of ensuring that landlords do not make spurious and unfounded deductions for damage. When the permitted...