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Walton v. Gaffey

Supreme Court of Iowa

May 19, 2017

JOAN WALTON, Appellee,
v.
MARTIN GAFFEY, Appellant.

         Appeal from the Iowa District Court for Johnson County, Patrick R. Grady, Judge.

         A landlord appeals a district court's ruling on summary judgment that certain lease provisions are prohibited under the Iowa Uniform Residential Landlord and Tenant Act and that certified a class of tenants.

          James W. Affeldt and Nicholas J. Kilburg of Elderkin & Pirnie, P.L.C., Cedar Rapids, for appellant.

          Christopher Warnock of The Iowa Tenants' Project, Iowa City, and Christine Boyer of The Iowa Tenants' Project, Iowa City, for appellee.

          HECHT, JUSTICE.

         A tenant brought this action alleging her lease included several provisions known by the landlord to be prohibited under the Iowa Uniform Residential Landlord and Tenant Act (the Act). Claiming status as an appropriate representative of other similarly situated residential tenants, the tenant requested certification of a class. On interlocutory appeal challenging a summary judgment in favor of the tenant and an order certifying a class of tenants, the landlord contends (1) the lease provisions are not prohibited under the Act; (2) the tenant has no claim for damages because even if the lease provisions are prohibited under the Act, the landlord did not enforce them against the tenant; and (3) the district court erred in certifying the class. Upon review, we conclude some, but not all, of the challenged lease provisions are prohibited under the Act and we reverse and remand on class certification.

         I. Background Facts and Proceedings.

         Tenant Joan Walton entered into a rental agreement with landlord Martin Gaffey on March 14, 2014, for a lease term that ended on July 29, 2015. The agreement included provisions imposing fees, charges, and liquidated damages in the event of various occurrences. Paragraph 7 prescribed a charge of $35 if the tenant's check was returned for insufficient funds. Paragraph 8 imposed a "processing administrative fee" of $35 for "issue and service of each 3-DAY NOTICE TO PAY UNPAID RENT." Paragraph 12 established an administrative fee of $40 if the tenant failed to register utilities in her name. Paragraphs 13 and 27 prescribed a fee in the same amount in the event the tenant failed to keep the utilities registered in her name until the end of the lease term. A fine of $500 was imposed under paragraph 22 of the agreement if the tenant was "caught smoking in [the] dwelling unit or interior common area" of the property. Service calls precipitated by noise complaints, trash removal, parking violations, unauthorized pets, or posting notices to the tenant would result in a "minimum trip charge" of $50 payable by the tenant under paragraph 24 of the agreement. A minimum service charge of $50 was established in paragraph 25 in the event the tenant was locked out of the abode and requested the landlord's assistance in regaining access after normal working hours. An administrative fee of $40 for each new approved occupant and a fee of $100 for each unapproved new occupant were prescribed in paragraph 26. A fee of $200 was charged in paragraph 27 in the event the tenant should sublease the unit. A fee of $500 for keeping an unauthorized animal in the unit was established under paragraph 28 of the agreement. A fee of $100 was imposed in paragraph 37 for each inspection attempted by the landlord as a result of the tenant's failure to vacate the premise after termination of the agreement.

         The agreement also included provisions purporting to limit the landlord's liability or exculpate him entirely for some types of damages or losses. For example, paragraph 16 provided as follows:

Subject to other remedies at law, if LANDLORD is unable to give TENANT possession at the beginning of the term, the rent shall be rebated on a pro rata basis until possession can be given, which rebated rent shall be accepted by TENANT as full settlement of all damages occasioned by said delay, and if possession can not be delivered within ten days of the beginning of said term, this lease may be terminated by giving prior written notice of such termination.

         Paragraph 20(e) addressed the landlord's liability for appliance failures. This provision provided in relevant part:

In the event of the failure of an appliance that is furnished by LANDLORD under this rental agreement, LANDLORD'S sole responsibility shall be the repair or replacement of the appliance at the LANDLORD'S sole discretion. In no event or circumstance will LANDLORD be responsible for any loss of use or consequential damages caused by said appliance failure.

         Paragraph 23 of the agreement further provided that "LANDLORD shall not be liable for damage or loss of any of the TENANT'S personal property for any cause whatsoever."

         The agreement also addressed the subject of carpet cleaning. Paragraph 29 provided in relevant part that "LANDLORD shall have all carpeting professionally shampooed, paid out of tenants security deposit."[1]

         Walton filed this action against Gaffey seeking a declaration that each of the lease provisions mentioned above violated the Act. In particular, Walton alleged the provisions imposing fees, charges, and liquidated damages in the event of various occurrences violated Iowa Code sections 562A.11(1), 562A.27, and 562A.32 (2015) because a landlord may recover only actual damages under the Act. Walton's petition further asserted the various provisions limiting or exculpating Gaffey's liability violated section 562A.11(1). In addition, the petition alleged the lease provisions allocating to her the cost of carpet cleaning are prohibited under the Act because they purport to impose the cost of carpet cleaning whether or not cleaning was necessary to restore the dwelling to its condition at the commencement of the lease, ordinary wear and tear excepted, and because they authorized withholding the cost of such cleaning from the security deposit.[2] The petition sought judgment for actual and punitive damages, injunctive relief, and attorney fees. Gaffey's answer denied the agreement's provisions violate the Act and urged dismissal of the action.

         A. Motion for Partial Summary and Declaratory Judgment.

         Walton filed a motion for partial summary and declaratory judgment. The motion sought a declaration that the above-mentioned lease provisions imposing charges, fines, penalties, liquidated damages, or other fees are prohibited because, Walton contended, a landlord can recover only actual damages from tenants under the Act. Walton further urged the court to enter summary judgment declaring that the lease provision imposing an automatic carpet-cleaning charge and withholding it from her security deposit violates the Act.[3] Walton's motion also sought a summary declaration that paragraphs 20 and 23 of the lease violate section 562A.11(1)(d) of the Act because they purport to limit or exculpate Gaffey's liability arising under law. In addition, Walton urged the court to declare that Gaffey is liable under the Act as a matter of law for willfully using the prohibited lease provisions even if he did not attempt to enforce them against her.

         In his resistance to the tenant's motion for partial summary judgment, Gaffey contended the contested provisions are neither prohibited under Iowa Code section 562A.11(1) nor unconscionable under section 562A.7(1)(a). In the alternative, Gaffey asserted that Walton has asserted no claim that is ripe for adjudication because the challenged provisions were not enforced against her.[4] The landlord further asserted that even if any of the challenged provisions is determined to be prohibited under the Act, the record does not support a ...


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