Mishkin v. Young, 03SC848.

• Decision Date: 28 February 2005
• Docket Number: No. 03SC848.,03SC848.
• Citation: 107 P.3d 393
• Parties: Marc P. MISHKIN, Petitioner, v. Dean YOUNG, Respondent.
• Court: Colorado Supreme Court

107 P.3d 393

Marc P. MISHKIN, Petitioner, v. Dean YOUNG, Respondent.

No. 03SC848.

Supreme Court of Colorado, En Banc.

February 28, 2005.

Fasing Law Firm, P.C., Gregory J. Fasing, Denver, for Petitioner.

Dean D. Young, Pro Se, Denver, for Respondent.

Colorado Legal Services, Manuel A. Ramos, David Bye, Jenifer Knight, Denver, Amicus Curiae for Colorado Legal Services.

Student Legal Services, Colorado State University, Kevin Daley, Kimi Jackson, Fort Collins, Amicus Curiae for Student Legal Services, Colorado State University.

University of Colorado Student Legal Services, Ned Jaeckle, Boulder, Amicus Curiae for University of Colorado Student Legal Services. MARTINEZ, Justice.

In this landlord-tenant action, we consider whether section 38-12-103(3)(a), C.R.S. (2004), permits a landlord to avoid treble damages by accounting for the retention of a security deposit within seven days following a tenant's notice of intent to commence legal proceedings. We hold that a landlord may not avoid treble damages by accounting for the retention of a security deposit during the seven-day period established by section 38-12-103(3)(a). The judgment of the district court is affirmed.

I. Facts and Proceedings Below

The relevant facts are not in dispute. On February 1, 1999, Marc Mishkin (landlord) and Dean Young (tenant) entered into a written residential lease agreement. By the terms of the lease, the tenant paid a total security deposit of $1,625.00 which was to be returned within forty-five days after the tenant surrendered the premises.

On August 3, 2001, the tenant vacated the property. During the course of the next forty-five days, the landlord neither returned the security deposit nor accounted for its retention. On September 20, 2001, forty-eight days after surrendering the premises, the tenant sent the landlord a demand notice for return of the security deposit pursuant to section 38-12-103(3)(a). The notice informed the landlord of the tenant's intention to commence legal proceedings seeking treble damages in seven days. Six days later, on September 26, 2001, the landlord responded by giving the tenant a detailed statement accounting for $1,574.60 worth of damage to the property and a check for $50.40 representing the balance of the security deposit.

The tenant filed suit in the county court seeking return of the security deposit and treble damages pursuant to section 38-12-103, C.R.S. (2004), of Colorado's Wrongful Withholding of Security Deposits Act (the Act). The Act requires a landlord to either return or account for a security deposit within one month of the tenant's surrender of the property unless the lease provides for a longer period not to exceed sixty days. The landlord counterclaimed for damages to the property. The county court found that the landlord failed to return or account for the security deposit within forty-five days as prescribed by the lease. The court also acknowledged that the landlord's failure to comply with section 38-12-103(1), C.R.S. (2004), worked a forfeiture of his right to withhold the deposit pursuant to section 38-12-103(2), C.R.S. (2004). Therefore, the court proceeded to assess whether treble damages were warranted under section 38-12-103(3)(a). The court found the landlord's retention willful because he deliberately failed to return the full amount of the security deposit within seven days after receiving the tenant's demand notice. Nevertheless, the court determined that this retention was not wrongful because the tenant caused $1,574.60 worth of damage to the property. The court made this determination notwithstanding its ruling that the landlord forfeited his right to retain the deposit under section 38-12-103(2). Consequently, the county court concluded the landlord was justified in withholding the retained portion of the security deposit and that treble damages were not available.

The tenant appealed and the district court reversed. The district court held that a landlord must either return a security deposit or provide an accounting for why the deposit had been retained prior to expiration of the statutory deadline set forth in section 38-12-103(1). Because the landlord here neither returned the deposit nor accounted for its retention within that time, the court held that under section 38-12-103(2), the landlord worked a complete forfeiture of his right to withhold the security deposit. Moreover, the district court held that pursuant to section 38-12-103(3)(a), the landlord was subject to treble damages, attorney fees, and costs.

In its endeavor to determine whether treble damages were warranted, the district court agreed with the county court that the landlord willfully retained the security deposit by failing to repay it within the seven-day period. However, unlike the county court, the district court determined that the landlord's retention was wrongful because he neither returned the security deposit nor accounted for its retention within the forty-five day retention period. Thus, where the county court's determination of wrongfulness turned on whether the deposit was retained in good faith, the district court's determination turned on whether the accounting was made before the statutory deadline of section 38-12-103(1). Because the landlord failed to account prior to this deadline, the district court reversed the county court judgment and directed the county court to award the tenant treble damages for the retained portion of the security deposit in the amount of $4,723.80, plus attorney fees and costs. The district court also allowed the landlord an offset for the amount of damages sustained to the property. Thereafter, the landlord petitioned for certiorari. We granted review and now affirm.

The question raised on review is whether a landlord may avoid treble damages by accounting for the retention of a security deposit within seven days after a tenant serves a demand notice.¹ The tenant argues that the Act clearly and unambiguously denies a landlord a second opportunity to make such an accounting. He argues that pursuant to section 38-12-103(1), a landlord must either return a security deposit or account for its retention within one month, but no more than sixty days following a tenant's surrender of the premises. He contends that a landlord who fails to meet this requirement forfeits all rights to withhold the security deposit under section 38-12-103(2). Moreover, the tenant argues that because a landlord's noncompliance with section 38-12-103(1) works a forfeiture of his right to retain the deposit under section 38-12-103(2), once a tenant serves a seven-day demand notice pursuant to section 38-12-103(3)(a), a landlord's sole option to avoid treble damages is to return the full amount of the security deposit within seven days.

The landlord disagrees. The landlord does not dispute that section 38-12-103(1) requires a landlord to return or account for a security deposit within one month, but no more than sixty days following a tenant's surrender of the premises. However, he contends that a landlord who fails to meet this requirement is afforded a second chance to either return the security deposit or account for its retention during the seven days following a tenant's demand notice. He argues that once a tenant serves a demand notice pursuant to section 38-12-103(3)(a), a landlord has one more opportunity to avoid treble damages not only by returning the security deposit within the seven days, but also by accounting for why it was retained. He acknowledges that an additional grace period does not comport with the statutory deadline established by section 38-12-103(1) or the forfeiture provision of section 38-12-103(2). However, the landlord reconciles the provisions by asserting that the Act is ambiguous because an absolute forfeiture under section 38-12-103(2) would render the remaining provisions of the Act meaningless.

II. Analysis

Our analysis begins with the Act itself. We review the proper construction of statutes de novo. Lobato v. Industrial Claim Appeals Office, 105 P.3d 220, 223 (Colo.2005). In construing a statute, our goal is to determine and give effect to the intent of the legislature and adopt the statutory construction that best effectuates the purposes of the legislative scheme. People v. Yascavage, 101 P.3d 1090, 1093 (Colo.2004). To reasonably effectuate the legislative intent, a statute must be read and considered as a whole and should be interpreted so as to give consistent, harmonious, and sensible effect to all its parts. State v. Nieto, 993 P.2d 493, 501 (Colo.2000). "We read words and phrases in context and construe them literally according to common usage unless they have acquired a technical meaning by legislative definition." Yascavage, 101 P.3d at 1093; § 2-4-212, C.R.S. (2004). We presume that the General Assembly intended the entire statute to be effective and intended a just and reasonable result. People v. Luther, 58 P.3d 1013, 1015 (Colo.2002); § 2-4-201(1)(b) and (c), C.R.S. (2004). Finally, if the statutory language unambiguously sets forth the legislative purpose, we need not apply additional rules of statutory construction to determine the statute's meaning. People v. Cooper, 27 P.3d 348, 354 (Colo.2001).

With these principles in mind, we turn to section 38-12-103. Subsection (1) of the Act expressly states that a landlord shall return a security deposit or provide the tenant with a list of reasons specifying why any portion of it was retained within one month, but not later than sixty days after termination of the lease or surrender of the premises:

(1) A landlord shall, within one month after the termination of a lease or surrender and acceptance of the premises, whichever occurs last, return to the tenant the full security deposit deposited with the landlord by the tenant, unless the lease agreement specifies a longer period of time, but not to exceed sixty days.... In the event that actual cause

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