This article was posted on Saturday, Sep 15, 2012

[Editor’s Note:  Landlord Law & Multi-Housing Report includes expert analysis of the latest legal developments in the rental housing sector as well as news about the multi-housing market, landlord-tenant relations and successful management strategies.  Rental housing laws vary from state to state and some may not be applicable to California; however, most cases contain valuable lessons for housing providers.]

Ohio.  An appellate court reverses a trial court’s decision to limit the attorneys’ fees awarded to a tenant who prevailed in a security deposit case and the trial court is ordered to increase the attorneys’ fees owed the tenant.
The tenant rented a house from his landlord in 1999 and gave the landlord a $1,290 security deposit when he moved in. In 2005 the tenant gave a 30-day notice to his landlord informing him that he was moving out.  The tenant moved out on time and provided his landlord with a forwarding address.
The landlord sent the tenant an itemized statement informing him that he was withholding the tenant’s entire security deposit and applying it to the $2,444.50 in late fees the tenant owed him and to the $229.50 in damages the tenant caused to the property during his tenancy.
The tenant was unhappy with the landlord’s decision and sued him for failing to return his security deposit under the state’s landlord and tenant statutes. The tenant claimed in his lawsuit he paid his rent on time except for two or three months when he was late with his rental payment.  But the tenant claimed he also paid the late fee each month when he paid his rent late.
The tenant asked the trial court to award him his $1,290 security deposit plus 5% interest on his deposit and attorneys’ fees as permitted by state law and double damages.

The landlord filed a counter claim against his tenant for the amount of late fees and damages which exceeded the tenant’s $1,290 security deposit.  The landlord claimed that after application of the security deposit to the amounts owed by the tenant, the tenant owed him an additional $1,177.
The case proceeded to trial and the trial court ruled that the landlord waived his claim for late fees by continuing to accept the tenant’s rent after he defaulted. The trial court also held that the landlord’s testimony about the damages caused by the tenant during his tenancy was not credible.  The court also said the landlord should have produced receipts to support his claim the tenant caused some damages.
The trial court found in favor of the tenant and dismissed the landlord’s counterclaim.  The court awarded the tenant $2,980 — double the amount of his security deposit and interest. The court also agreed the tenant was entitled to his attorneys’ fees for prevailing on his claim and set a hearing date to determine how much to award the tenant.
The tenant’s attorney requested $3,135 in fees, representing almost 21 hours of time he spent working on the tenant’s case at $150 per hour.

The trial court said the tenant was entitled to attorneys’ fees, but ruled the tenant was only entitled to one-half of the fees requested because he could not recover for the time his attorney spent working on the tenant’s defense to the counter claim brought by the landlord.  The trial court said the tenant’s attorney was not entitled to any fees for defending against the counter claim and the tenant appealed the decision to reduce his attorneys’ fees award by one-half.
The appellate court reverses the trial court and says the trial court should not have reduced the fees awarded to the tenant.  The case is remanded back to the trial court to reconsider the amount of attorneys’ fees to award the tenant for prevailing in his claim for his deposit and for successfully defending against the related claim brought by his landlord.
The appellate court says that if the work performed by the tenant’s attorney in support of the claim for double damages under the security deposit statute and the work completed by the tenant’s attorney in defending the related case brought by the landlord were “indivisible,”  the trial court could have awarded the tenant all of the attorneys’ fees incurred in pursuing the claim and defending against the counterclaim.
Info: Thomas Jerels, et al., Appellants, v. Roger Begue, Appellee. 2010 Ohio App.

Lesson: The landlord waived his right to seek late fees by continuing to accept rent without a reservation of rights notice and failed to prove the tenant caused any damages and as a result had no reason to retain the security deposit.  The decision to keep approximately $1,400 will cost the landlord at least $5,000 not counting his own attorney’s fees.  Security deposits should be returned if the damages are questionable or cannot be proven.

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