De Stefano v. Apts. Downtown, Inc.
| Decision Date | 06 May 2016 |
| Docket Number | No. 14–0820.,14–0820. |
| Citation | 879 N.W.2d 155 |
| Parties | Elyse DE STEFANO, Appellant, v. APTS. DOWNTOWN, INC., Appellee. |
| Court | Iowa Supreme Court |
Christopher S. Warnock and Christine E. Boyer of Iowa Tenants' Project, Iowa City, for appellant.
Robert M. Hogg and James W. Affeldt of Elderkin & Pirnie, P.L.C., Cedar Rapids, and C. Joseph Holland, Iowa City, for appellee.
APPEL
, Justice.
This case is a landlord-tenant dispute that was initially tried as a small claims matter. The case presents a preliminary question of first impression, namely, whether an award of attorneys' fees should be considered as part of the “amount in controversy” for purposes of determining the jurisdiction of the small claims court. If there is subject matter jurisdiction, the case includes several important issues under the Iowa Uniform Residential Landlord and Tenant Act (IURLTA), including (1) whether a landlord may enter into a contract with a tenant that requires the tenant to assume the cost of making repairs necessary to maintain the premises in a fit and habitable condition, (2) whether a landlord can refuse to approve a sublease based upon the refusal of the tenant to assume the cost of maintaining the premises in a fit and habitable condition, (3) whether a landlord may automatically deduct a fee for carpet cleaning at the conclusion of the lease term, and (4) whether statutory punitive damages are available for willful violation of the IURLTA in this case.
The landlord rented a four-bedroom home to four students in the college community of Iowa City. An exterior door and door lock to the premises were damaged due to third-party vandalism, requiring repair in order to maintain a fit and habitable premises. When the landlord was informed of the damaged door, the landlord repaired it but billed the tenants for the cost. The tenants refused to pay. When the tenants subsequently sought to sublease the apartment for two summer months, the landlord refused to approve the sublease on the ground that the tenants had failed to pay for the repairs and the penalties assessed for nonpayment. The tenants still refused to pay. As a result, the landlord refused to approve the sublease, and the premises was vacant for the last two months of the lease term.
At the conclusion of the lease term, the landlord then withheld the tenants' rental deposit. The landlord withheld the rental deposit by asserting that (1) the tenants owed the landlord for the cost of repairing the damaged door, (2) the tenants incurred penalties under the lease for failing to timely pay for the damaged door, (3) the tenants were automatically obligated to pay the landlord for the cost of cleaning the carpet upon their surrender of the premises at the end of the lease term regardless of the condition of the carpet, and (4) the tenants owed the landlord various other relatively minor fees and costs of no relevance to this appeal.
One of the tenants, Elyse De Stefano, sued in small claims court, claiming that the landlord improperly withheld the rental deposit. The magistrate held for the tenant on most issues and awarded damages of $4720. The magistrate did not award attorneys' fees to De Stefano because no attorney fee affidavits were filed. The landlord appealed to district court.
On appeal, the district court upheld some but not all of the magistrate's decision. The district court concluded that under the terms of the lease, the landlord could charge the tenant for the replacement of the exterior door that had been vandalized by a person or persons unknown. The district court also found the landlord properly refused to allow the proposed sublease in light of the tenant's refusal to pay for the exterior door. As a result, the tenant was liable to the landlord for rent during the two summer months when the premises was vacant. The district court found, however, that the landlord's automatic deduction from the rental deposit for carpet cleaning violated the IURLTA and that certain late fees imposed by the landlord were improper. In the end, the district court awarded De Stefano $651.54 for the balance of the deposit improperly withheld and $200 in statutory punitive damages.
After trial, the attorneys for De Stefano sought fees under the terms of the IURLTA and submitted two separate fee affidavits supporting the fee claims. The district court awarded $1160 in attorneys' fees, the sum claimed in a fee affidavit submitted by attorney Christine Boyer. The district court declined to award attorneys' fees claimed in a fee affidavit submitted by attorney Christopher Warnock for $5466.
Both parties appealed, and we granted discretionary review. For the reasons that follow, we affirm in part and reverse in part the decision of the district court on the tenant's appeal. We affirm in part and reverse in part the district court's ruling on the landlord's cross-appeal. We reverse and remand the case to the district court.
In July 2010, four University of Iowa students—Elyse De Stefano, Hillary Block, Meghan Crotty, and Jennifer Connelly—rented a four-bedroom home in Iowa City from Apts. Downtown, Inc., (Apartments Downtown) under a written lease agreement. The period of the lease was from July 31, 2010, to July 26, 2011. The collective rent was $1635 per month, and the tenants paid a rental deposit of one month's rent.
The preprinted lease contained seventy tightly-spaced paragraphs featuring many subparts and considerable detail. In paragraph 30 the lease provided, “Tenants agree to pay for all damages to the apartment windows, screens, and doors, including exterior unit doors (including random acts of vandalism).” The lease also provided in paragraph 33, “Unless the Landlord is negligent, Tenants are responsible for the cost of all damages/repairs to windows, screens, doors, carpet, and walls, regardless of whether such damage is caused by residents, guests or others.” Additionally, the lease contained a $452–$690 estimated cost for the repair or replacement of a prehung entry door.
The lease further provided that Iowa City Maintenance would perform all repairs “unless written authorization is secured from [the] Landlord.” It stated that Iowa City Maintenance charges $70 per hour during regular business hours and $90 per hour during nights and weekends, with a minimum of one hour per service call. Iowa City Maintenance is an alter ego of Apartments Downtown.
Furthermore, the lease included an automatic charge for carpet cleaning at the conclusion of the lease term. Specifically, the lease stated as follows:
The carpets throughout the building are professionally cleaned each time apartments turn over occupancy. Tenants agree to a charge starting at $95 (efficiency) not to exceed $225 (6+ bedrooms) being deducted from the deposit for professional cleaning at the expiration of the Lease.
The four student tenants, including De Stefano, took possession and paid the regular rent on a monthly basis for the duration of the lease, including for the months of June and July, 2011 after failing to receive Apartments Downtown's approval for a sublease.
On August 25, 2011, the student tenant whose forwarding address had been provided to the landlord received a “Security Deposit Statement 2011”1 from Apartments Downtown detailing the following charges to the tenants' rental account:
The past-due rent and fees in the amount of $1308.45 consisted of charges of $210 for lawn care in June 2011; $598.46, the total cost for a replacement exterior door; $150 of late fees for failure to timely pay for the replacement door; and $349.99, the cost of replacing a refrigerator gasket and two broken screens found during a June 2011 maintenance inspection. The statement instructed the tenants to pay the $503.45 due on the account within thirty days.
The door replacement charge and the subsequent late fees stemmed from a burglary that occurred at De Stefano's residence in October 2010. De Stefano and the other tenants filed a police report with the Iowa City Police Department. The report stated that the burglary had left the exterior doorframe damaged and the door lock broken.2 Apartments Downtown was called to repair the door on October 11. It arranged for Iowa City Maintenance, its in-house maintenance group, to replace the kicked-in door, and the charges were billed to De Stefano and her roommates. The total cost of the repair and replacement was $598.46, which included $318.46 for the replacement door and $280 for four hours of labor. Upon receipt of this charge, one of De Stefano's cotenants sent a letter dated November 2 to Apartments Downtown, contesting the charge and advising that the damage was not caused by any of the tenants and the police investigation was ongoing. The student tenant, in a letter apparently written with the advice of counsel, referenced paragraph 30 of the lease agreement which stated: “Tenants agree to pay all damages to the apartment windows, screens, and doors, including exterior unit doors (including random acts of vandalism).” The tenant said she believed this lease provision to be unconscionable and thus unenforceable by a court.
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