from the Iowa District Court for Johnson County, Patrick R.
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.
W. Affeldt and Nicholas J. Kilburg of Elderkin & Pirnie,
P.L.C., Cedar Rapids, until withdrawal, and then Stephen J.
Holtman and Lisa A. Stephenson of Simmons Perrine Moyer
Bergman, PLC, Cedar Rapids, for appellant.
Christopher Warnock of The Iowa Tenants' Project, Iowa
City, and Christine Boyer of The Iowa Tenants' Project,
Iowa City, for appellees.
H. Walton and Matthew R. Eslick of Nyemaster Goode, P.C., Des
Moines, for amici curiae Landlords of Iowa, Inc. and Greater
Iowa Apartment Association.
tenants brought this action against their landlord after
their leases expired. The tenants, alleging they represent a
class of similarly situated residential tenants, claim the
landlord is liable for damages under the Iowa Uniform
Residential Landlord and Tenant Act (the Act) because the
landlord's leases included several provisions known by
the landlord to be prohibited provisions. The district court
granted summary judgment in favor of the tenants, declaring
that the challenged lease provisions violate the Act and
certifying a class of tenants. On interlocutory appeal, the
landlord contends (1) the lease provisions are not prohibited
under the Act; (2) the tenants have no claim for damages
because even if the lease provisions are prohibited, the
landlord did not enforce them; and (3) the district court
erred in certifying the class of tenants. Upon review, we
conclude some, but not all, of the challenged lease
provisions are prohibited under the Act, and we find no abuse
of discretion in the district court's certification of a
class of plaintiff tenants.
Background Facts and Proceedings.
Kline, Frank Sories, and Amaris McCann are former residential
tenants of properties owned or managed by SouthGate Property
Management, LLC. Kline and Sories entered into a rental
agreement with SouthGate on July 27, 2012, for a lease term
that ended on July 28, 2013. McCann entered into a
residential agreement with SouthGate on August 1, 2012, for a
lease term that ended on July 28, 2014.
leases included provisions imposing fees, charges, and
liquidated damages against the tenants in the event of
various occurrences. Paragraph 3 prescribed a charge of $25
if a tenant's check was returned for insufficient funds.
Paragraph 4 established a charge of $50 per month for each
new tenant added after the term of the lease began. Paragraph
9 assessed a handling fee of $50 for each utility bill
received or paid by SouthGate as a consequence of a
tenant's failure to take responsibility for the
obligation and established a $50 utility reconnection charge
in the event the tenant's delinquency precipitated a
termination of utility service. Paragraph 12 set a charge for
maintenance calls caused by a tenant's negligence at the
"current rate per hour plus trip charge" as
determined by SouthGate. A liquidated damage assessment of
$500 was prescribed in paragraph 15 for keeping an
unauthorized pet on the premises. An administrative fee of
$300 was imposed in paragraph 19 if a tenant assigned or
sublet the premises. Paragraph 22 of the lease established a
daily rate of $300 per day for tenants holding over and also
required the tenants to pay "any damages" resulting
from the holdover. An acceleration clause in paragraph 27
provided the tenant would immediately owe rent for the entire
term of the lease in the event of an early termination.
fees were prescribed by SouthGate's Building and Property
Rules. Rule 10 charged tenants for
"lockout service calls" at the rate of $45 per call
during business hours and $85 per call at other times. Rule
11 established a fee of $15 for replacement keys and rule 12
imposed a charge of $25 for each violation of the lease or
the building and property rules.
leases also limited a tenant's remedies in the event
SouthGate was unable to deliver possession on the first day
of the lease term. Paragraph 11 provided as follows:
Subject to other remedies at law, if Landlord, after making a
good faith effort, is unable to give Tenant possession at the
beginning of the term, the rent shall be abated on a pro rata
basis until possession can be given. The rebated rent shall
be accepted by Tenant as full settlement of all damages
occasioned by the delay, and if possession cannot be
delivered within ten (10) days of the beginning of the term,
this Rental Agreement may be terminated by either party given
five (5) days written notice.
subject of carpet cleaning was also addressed in
SouthGate's leases. Property rule 9 provided as follows:
All carpets are professionally cleaned at the end of each
tenancy. The departing tenant had professionally cleaned
carpet at move-in and the tenant will be charged for
professionally cleaned carpet at termination. Any extra
painting or carpet cleaning needed to be done will be
deducted from Tenant's Rental Deposit.
30 of the lease established a checklist detailing the
condition of the dwelling at the commencement of the lease.
This provision provided,
Within three (3) days of the commencement of occupancy,
Tenant shall complete and return to Landlord the Apartment
Inspection Checklist, Smoke Alarm and Fire Extinguisher
checklists (if applicable). If tenant does not within three
(3) days complete and return those checklists, Tenant shall
be presumed as acknowledging that there are no defects or
damages in the Dwelling Unit. Landlord agrees to review the
checklists and notify Tenant of any objections within seven
(7) days of receipt of completed checklists. If Landlord does
not notify Tenant of Landlord's objections within seven
(7) days of receipt of completed checklists, Tenant's
evaluation shall be deemed accepted by Landlord. These
checklists and objections (if any) shall be retained by
tenants filed this action against SouthGate seeking a
declaration that each of the lease provisions mentioned above
violated the Act. The tenants' petition requested actual
and punitive damages, injunctive relief, and attorney fees.
SouthGate's answer denied the leases' provisions
violate the Act and raised the statute of limitations as an
Motion for Partial Summary and Declaratory Judgment.
tenants 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 SouthGate can recover only actual damages from
tenants under the Act. The tenants urged the court for the
same reason to enter summary judgment declaring that the
lease provision imposing an automatic carpet-cleaning charge
violates the Act. The tenants further urged the court to
enter judgment declaring paragraphs 11 and 30 of the lease
violate section 562A.11(1) of the Act because they purport to
waive tenants' rights or remedies pertaining to
possession and to a clean, sanitary, and habitable dwelling.
In addition, the tenants' motion sought a determination
that they did not have to prove the landlord actually
attempted to enforce these provisions against them.
resistance to the tenants' motion for partial summary
judgment, SouthGate contended the contested provisions are
not prohibited under the Act. In the alternative, SouthGate
asserted that even if the challenged provisions are
prohibited under the Act, the tenants suffered no damages
because the provisions were not enforced against them. The
landlord further asserted it did not willfully use any
prohibited lease provision in violation of section 562A.11(2)
because it had no knowledge of the claimed prohibition prior
to the execution of the leases at issue in this case. Based
on these assertions, SouthGate's resistance to the motion
asserted that the tenants' petition presented no
justiciable controversy supporting a declaratory judgment.
also filed a motion for summary judgment. It urged dismissal
of the petition because all of the challenged lease
provisions are compatible with the Act and the tenants
therefore suffered no compensable injury as a matter of law.
Motion for Class Certification.
tenants also filed a motion requesting they be certified as
representatives of a class consisting of all tenants who
signed a substantially similar version of SouthGate's
standard lease. They requested the court adjudicate for the
entire class (1) whether the challenged provisions of
SouthGate's standard lease are prohibited by the Act, and
(2) whether SouthGate willfully used the lease knowing it
contained prohibited provisions. SouthGate resisted the
certification of the proposed class of tenants, contending
the named plaintiffs are not proper representatives of the
class because the challenged lease provisions were not
enforced against them and individual questions of fact
dominate over common questions across the proposed class.
District Court's Summary Judgment Ruling.
district court granted the tenants' motion for partial
summary judgment. The court declared that the three
categories of lease provisions challenged by the tenants are
prohibited under the Act. The court further concluded the
lease provisions imposing the fees and charges detailed above
were prohibited under the Act because they were set
"without any consideration of what [SouthGate's]
actual damages and fees would be in each situation." The
court also decided SouthGate's carpet-cleaning provision
was prohibited under the Act because it automatically imposed
a fee on tenants without regard to whether the carpet was
clean at the end of the lease term and authorized SouthGate
to withhold the expense from the tenants' security
deposit without proof that such cleaning was necessary to
restore the dwelling unit to its condition at the
commencement of the tenancy, ordinary wear and tear excepted.
district court's summary judgment ruling also concluded
two other lease provisions challenged by the tenants are
prohibited under Iowa Code section 562A.11 (2015). First, the
court concluded paragraph 11-the rule limiting the
tenants' remedy to a pro rata abatement of rent in the
event of a delay of possession at the beginning of the lease
term- was a prohibited term under section
562A.11(1)(d). Second, the court determined
paragraph 30-the rule waiving the tenants' claims of
defects in the condition of the dwelling not identified on an
apartment-condition checklist and delivered to SouthGate
within three days of move-in- constituted a waiver of the
tenants' rights prohibited under section
562A.11(1)(a). The court reasoned that these two
lease provisions violated the Act because they purported to
limit SouthGate's obligations under section 562A.14
(landlord's obligation to supply possession of dwelling
unit) and section 562A.15 (landlord's obligation to
maintain fit premises). The court also concluded paragraph 30
of the lease was prohibited under the Act because it was
calculated to limit SouthGate's liability under the
common law for failing to satisfy its duty to protect tenants
from reasonably foreseeable harm. The court certified a class of plaintiffs
consisting of all of SouthGate's tenants with the same or
substantially similar standard leases and lease rules.
reaching its summary judgment conclusions, the district court
relied on an unpublished decision of our court of appeals in
Staley v. Barkalow, No. 12-1031, 2013 WL 2368825
(Iowa Ct. App. May 30, 2013). In Staley, the
plaintiffs were tenants who alleged their landlord used
several lease provisions prohibited under Iowa Code section
562A.11(1). Staley, 2013 WL 2368825, at *2. The
tenants challenged the lease provisions on the grounds they
constituted illegal indemnity and exculpatory clauses,
required tenants to pay rent even if the landlord failed to
deliver possession of the premises at the commencement of the
lease term, and illegally required tenants to pay for
maintenance and repair of the premises, carpet cleaning, and
property damages caused by third-party vandals. Id.
at *2-3. The defendant landlord contended it had no liability
to the tenants under chapter 562A for lease provisions that
were included in the lease but not enforced. Id. at
*4-5. The district court denied the Staley
tenants' motion for partial summary judgment, concluding
the landlord had no liability to the tenants under section
562A.11(2) for including any lease provisions that were not
enforced against them, and denied a motion to certify a class
of similarly situated plaintiffs. Id. at *5-6. Our
court of appeals reversed, concluding a landlord
"willfully uses" a lease provision prohibited under
the Act by willfully including it in a lease. Id. at
*8. The court of appeals also found the district court abused
its discretion in refusing to certify the class of tenants.
Id. at *12.
granted SouthGate's application for interlocutory review.
Scope and Standards of Review.
our standard of review for a declaratory judgment ruling
depends on whether the action was tried at law or in equity
in the district court. When we review a declaratory ruling
entered on summary judgment, however, our scope of review is
for correction of errors at law. Shelby Cty. Cookers,
L.L.C. v. Util. Consultants Int'l., Inc., 857 N.W.2d
186, 189 (Iowa 2014). Summary judgment rulings based on
statutory interpretation are reviewed for correction of
errors at law. Estate of McFarlin v. State, 881
N.W.2d 51, 56 (Iowa 2016).
review a district court's rulings on certification of a
class for an abuse of discretion. Kragnes v. City of Des
Moines, 810 N.W.2d 492, 498 (Iowa 2012). The district
court "enjoys broad discretion in the certification of
class action lawsuits." Legg v. W. Bank, 873
N.W.2d 756, 758 (Iowa 2016) (quoting Vos v. Farm Bureau
Life Ins., 667 N.W.2d 36, 44 (Iowa 2003)). Iowa's
"class-action rules are remedial in nature and should be
liberally construed to favor the maintenance of class
actions." Anderson Contracting, Inc. v. DSM
Copolymers, Inc., 776 N.W.2d 846, 848 (Iowa 2009)
(quoting Comes v. Microsoft Corp., 696 ...