Renting a residential property is a two-way street. The tenant agrees to pay rent and, in most cases, the landlord promises to maintain the property in good repair.
Commonly, when the landlord fails to keep the residential property in good repair, the worst thing that happens is that the tenant can break the lease and not be held responsible for a portion of the rent which would have otherwise been due under the lease. In extreme circumstances, however, the situation could get a lot worse for a defaulting landlord.
In Nexus Real Estate v. Erickson, 2017 Pa. Super. LEXIS 427 (June 12), the Superior Court of Pennsylvania recently upheld a verdict for treble (triple) damages in favor of a tenant and against his landlord and the landlord's property manager stemming from a string of broken promises to promptly fix the issues plaguing the leased residential property.
Beginning in July 2002, John Erickson rented an apartment unit in a 47-unit apartment building located in the Squirrel Hill neighborhood of Pittsburgh, the opinion said.
In late 2014, JLB Retasa Shady purchased the apartment building, the opinion said.
Soon thereafter, a portion of Erickson's bathroom ceiling fell into his bathtub and the heat in the apartment unit began not operating, the opinion said.
At around the same time, JLB, through its property manager, Nexus Real Estate, contacted Erickson and some of the other tenants in the apartment building, demanding that they either sign a new lease with the new landlord, JLB, to continue renting their apartment unit or vacate from their apartment unit by the end of that month, the opinion said.
Prior to signing a new lease, Erickson met with a representative from Nexus and was assured that the hole in his bathroom ceiling and the failing heat would be remedied promptly, the opinion said.
During the year after the lease was signed, the hole in his bathroom ceiling was not repaired promptly or in a workmanlike manner, despite repeated assurances to the contrary, and there was a lack of functioning heat and air conditioning system during different periods of time which caused Erickson to vacate from the apartment unit for significant periods of time.
Furthermore, as soon as the lease was signed, JLB began major outdoor construction which made access to the apartment building very difficult for Erickson and the other tenants residing in the apartment building, the construction noise repeatedly commenced as early as 6:30 a.m. and, as the project neared conclusion, persisted for seven days per week, and water to the apartment building was shut off on at least 25 occasions during the course of the construction project.
Erickson ultimately refused to pay the rent which would have otherwise been due under the lease to JLB and elected to vacate from his apartment unit.
The situation caused the parties to file separate lawsuits against each other in magisterial district justice court.
JLB claimed that Erickson breached the lease by failing to make timely rent payments.
On the other hand, Erickson sought monetary damages against JLB, Nexus, and others, alleging breach of the warranty of habitability and violations of the Pennsylvania's Unfair Trade Protection and Consumer Protection Law (UTPCPL), 73 P.S. Section 201-1, et seq.
These lawsuits eventually made their way to the Allegheny County Court of Common Pleas and, by the consent of the parties, the lawsuits were consolidated.
At the conclusion of the bench trial which took place, an award in favor of Erickson was entered on JLB's breach of contract claim and Erickson prevailed on his claims against JLB and Nexus and, in doing so, the trial court tripled the $9,750 in rent paid by Erickson under the lease as a result of the violations of the UTPCPL for a total of $29,250, plus it awarded attorney fees of $2,900, for a total verdict of $32,150.
Through a series of post-trial motions, the trial court reduced the verdict to $23,150, primarily to account for the rent that Erickson retained in escrow.
JLB and Nexus appealed the trial court's ruling to the Superior Court.
On appeal, the Superior Court addressed whether the trial court committed an error of law or abused its discretion in awarding treble damages pursuant to the UTPCPL.
While JLB and Nexus acknowledged that the UTPCPL applies to landlord-tenant cases, they argued that an award of treble damages is reserved only for the most egregious cases where the landlord's conduct is deemed deceitful and illegal.
In doing so, they partially relied upon an unpublished, nonprecedential memorandum in Pierre v. MP Cloverly Partners, 133 A.3d 64 (Pa. Super. Ct. 2015).
After chastising them for relying upon such an unpublished, nonprecedential memorandum in violation of court rules, the Superior Court, in a footnote, noted that the Superior Court in Pierre found no violation of the UTPCPL that would support any damages and, thus, did not reach the issue of treble damages.
Additionally, the Superior Court was unpersuaded by JLB's and Nexus' reliance upon its previous rulings in Pikunse v. Kopchinski, 631 A.2d 1049 (Pa. Super. Ct. 1993), where the landlord discarded furniture and appliances in retaliation for the tenant's failure to pay rent, and Wallace v. Pastore, 742 A.2d 1090 (Pa. Super. Ct. 1999), where the landlord withheld the tenant's security deposit and misrepresented the existence and extent of property damage, as examples of the types of egregious conduct that would merit treble damages.
Rather, agreeing with Erickson, the Superior Court applied the standard enunciated by the Supreme Court in Schwartz v. Rockey, 932 A.2d 885 (Pa. 2007), and, therefore, rejected the claim that egregious conduct was required to support an award of treble damages.
In Schwartz, the Supreme Court discussed the role of a trial court in assessing treble damages pursuant to the UTPCPL: "the statute, on its plain terms, does not provide any standard pursuant to which a trial court may award treble damages. In construing its terms, we find particularly relevant the principles of statutory construction authorizing consideration of the occasion and necessity for the statute, the mischief to be remedied, the object to be attained, and the consequences of a particular interpretation."
"Recognizing that the UTPCPL's treble damages provision had 'both punitive and remedial aspects,' the Supreme Court in Schwartz concluded that the trial court's discretion 'should not be closely constrained by the common-law requirements associated with the award of punitive damages'" and instead the trial court "should focus on the presence of intentional or reckless, wrongful conduct, as to which an award of treble damages would be consistent with, and in furtherance of, the remedial purposes of the UTPCPL."
The Superior Court in Erickson concluded that the trial court applied the correct legal standard in making its determination and correctly found multiple instances of intentional or reckless, wrongful conduct on the part of JLB and Nexus, such as unmet assurances of reasonably remediating the issues with Erickson's ceiling as well as the heat and air conditioning to the apartment unit.
The Superior Court agreed with the trial court's assessment that Nexus could have devoted the necessary resources to immediately repair "Erickson's ceiling, heat, and air conditioning ..., but 'deliberately delayed both in responding and in devoting the resources necessary for the repairs." In doing so, the Superior Court, agreeing with the trial court, found "Nexus's false promises and inaction was 'cruel and callous behavior,' and the type of intentional or reckless, wrongful conduct that warranted treble damages under Schwartz."
