Bisson v. Ward

BISSON_V_WARD.92-426; 160 Vt. 343; 628 A.2d 1256


 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                    No. 92-426


 Eugene and Cobelena Bisson                   Supreme Court

                                              On Appeal from
      v.                                      Rutland Superior Court

 Kelly Ward                                   March Term, 1993

 Arthur J. O'Dea, J.

 Timothy W. Shanley, Montpelier, for plaintiffs-appellees
 

 Mary C. Welford and Gail Sophrin, Vermont Legal Aid, Inc., Rutland, for
 defendant-appellant

 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

GIBSON, J.   Tenant Kelly Ward appeals from a superior court decision, which
 held that landlords Eugene and Cobelena Bisson had violated the statutory
 warranty of habitability.  Tenant claims the court erred by failing to award
 her attorney's fees under the Vermont Residential Rental Agreements Act, 9
 V.S.A. {{ 4451-4468, and by concluding that landlords had not violated the
 Vermont Consumer Fraud Act, 9 V.S.A. {{ 2451-2462.  We agree and reverse.

 In the spring of 1991, the Department of Labor and Industry inspected an
 apartment owned by landlords and reported several violations of state building
 and health codes.  The Department directed landlords to correct these
 conditions.  Soon after the inspection, tenant looked at the apartment.
 Although it had a number of defects, the manager and the maintenance worker
 promised to make necessary repairs.  Tenant made a $300 deposit and moved in
 with her child on May 1, 1991.  Landlords had not received a certificate of
 occupancy at the time that tenant moved in.

 With the assistance of the maintenance worker, tenant prepared a list of the
 repairs that needed to be made.  The maintenance worker told her he would
 forward the list to the owners.  At various times during the next few months,
 tenant requested that the repairs be made but was told that the owners had not
 provided any funds.  Tenant continued to pay the rent for June, July and
 August of 1991, but thereafter withheld payment.

 In October 1991, the Department of Labor and Industry again reported to
 landlords in writing a number of fire and safety hazards, including many
 structural and mechanical deficiencies, and inadequate heating and plumbing
 systems.  The Department also noted that the second-floor bedroom was
 uninhabitable and that there was no smoke detector.  At times during the fall
 and winter, tenant had no hot water and no heat.  The shower leaked
 excessively and could not be used.  Tenant and her daughter used the bathroom
 facilities of neighbors and, when it became too cold to remain in the
 apartment, made arrangements to stay elsewhere.

 Landlords brought an action for possession in October 1991 and moved that
 tenant be ordered to pay rent into the court.  As an affirmative defense,
 tenant asserted a right to withhold rent pursuant to 9 V.S.A. { 4458(a)(1).
 She maintained that she had reported several defects in the apartment and that
 landlords were aware of the condition of the premises but had not made
 repairs.  Tenant also counterclaimed for breach of warranty of habitability
 and for violations of the Vermont Consumer Fraud Act, requesting all rent paid
 to landlords, damages, equitable relief, attorney's fees, and exemplary
 damages.

 The court held that landlords had violated the warranty of habitability as
 provided in 9 V.S.A. { 4457(a).(FN1)  Because tenant had provided notice of
 noncompliance and landlords had failed to make repairs, the court ruled that
 tenant's lease could not be terminated for withholding the rent.  The court
 also ordered landlords to return all rent monies paid, with interest, and
 dismissed the action for possession.  The court denied tenant's request for
 attorney's fees, however, and found that the evidence did not establish her
 counterclaim under the Consumer Fraud Act.  Tenant appeals the rulings on
 attorney's fees and consumer fraud.

                                    I.

 Tenant argues that, under the Vermont Residential Rental Agreement Act, the
 court must award the tenant attorney's fees when it finds that the landlord
 has violated the obligation to maintain habitable premises. Although the trial
 court found that landlords had breached the implied warranty of habitability
 as well as the statutory warranty of habitability, it concluded, in a separate
 ruling, that attorney's fees were not warranted here because tenant had
 received rent-free housing for a substantial period of time and because its
 decision had already provided ample reasons for these landlords and others to
 comply with their obligation to provide clean, safe housing.  Tenant maintains
 that the statute does not give the court discretion in awarding fees; rather,
 she contends that such an award is mandatory.

 Generally, parties are required to bear their own costs of litigation,
 including attorney's fees.  Gramatan Home Investors Corp. v. Starling, 143 Vt.
 527, 535, 470 A.2d 1157, 1162 (1983).  This general rule may, however, be
 modified by statute or contract.  Id.  The Vermont Residential Rental
 Agreement Act provides:

 If the landlord fails to comply with the landlord's obligation for
 habitability, the tenant shall give the landlord actual notice of the
 noncompliance.  If the landlord fails to make repairs within a reasonable time
 and the noncompliance materially affects health and safety, the tenant may:
 (1) withhold the payment of rent for the period of the noncompliance; (2)
 obtain injunctive relief; (3) recover damages, costs and reasonable attorney's
 fees; and (4) terminate the rental agreement on reasonable notice.

 9 V.S.A. { 4458(a) (emphasis added).  Tenant contends that this statutory
 language entitles her to recover attorney's fees because she prevailed on the
 habitability claims.  We agree.

 In Gramatan, we held that the Vermont Consumer Fraud Act mandates an award of
 attorney's fees upon a finding of consumer fraud.  143 Vt. at 535- 36, 470 A.2d  at 1162.  Section 2461(b) of that Act provides that the "consumer . . .
 may sue and recover . . . reasonable attorney's fees."  We held that the
 express language of the statute entitled the consumer to an award of
 attorney's fees.  Moreover, we noted that the Legislature had fashioned the
 relief available to a consumer victimized by unfair or deceptive commercial
 practices "to promote and encourage prosecution of individual consumer fraud
 claims."  Gramatan, 143 Vt. at 536, 470 A.2d  at 1162.  We concluded further
 that consumers were best protected by shifting the expense of consumer fraud
 litigation to those who committed the unfair or fraudulent commercial acts.
 Id.

 As in Gramatan, the statutory language of 9 V.S.A. { 4458 -- tenant may
 recover -- entitles tenants to attorney's fees where the landlord has breached
 the warranty of habitability.  Courts in other jurisdictions have also
 determined that the language "tenant may recover" creates a right to elect the
 relief provided in the statute.  See, e.g., Prevatte v. Asbury Arms, 396 S.E.2d 642, 643-44 (S.C. Ct. App. 1990) ("tenant may recover reasonable
 attorney fees" creates right to fees where landlord does not comply with
 statute); see also Love v. Monarch Apartments, 771 P.2d 79, 82- 83 (Kan. Ct.
 App. 1989) ("tenant may recover damages" creates right to damages); Beckett v.
 Olson, 707 P.2d 635, 637 (Or. Ct. App. 1985) (same).

 Landlords argue that by using the word "may," the Legislature intended to
 give the court discretion in awarding attorney's fees.  They contend that the
 Legislature would have stated "shall" had it intended the award of attorney's
 fees to be mandatory.  This is the same argument that landlords advanced in
 Prevatte, Love, and Beckett, but, as the courts in those cases recognized, the
 word "may" refers to the tenant, not the judge or the court. Prevatte, 396 S.E.2d  at 643.  "To the extent that the word 'may' connotes discretion, it is
 discretion vested in the tenant to elect his remedies, not in the court to
 deny a remedy clearly provided by the statute."  Id.

 Important policy considerations also support our conclusion that tenants are
 entitled to attorney's fees under the Vermont Residential Rental Agreements
 Act.  We believe that the Legislature intended to provide attorney's fees to
 prevailing tenants in order to encourage tenants, who are usually at a
 financial disadvantage, to pursue claims under the Act, thus promoting safe
 and clean rental housing in Vermont.  Indeed, there would be little incentive
 to bring a claim for breach of the implied warranty of habitability in many
 cases because attorney's fees are often likely to exceed the recovery.  Here,
 tenant recovered damages of $1,700 with interest, but invested over $2,400 in
 attorney time before even beginning the appeal process.  As in Gramatan, it is
 in the public interest to shift the burden of the expense to those responsible
 for the litigation, i.e., landlords who rent premises in violation of our
 safety and health standards.

 Landlords also argue that, because tenant was represented by Vermont Legal
 Aid, she incurred no expenses and cannot "recover" attorney's fees under the
 terms of the statute.  Generally, where attorney's fees are authorized by
 statute, courts have ruled that nonprofit legal services organizations are
 entitled to such an award.  Darmetko v. Boston Housing Authority, 393 N.E.2d 395, 399 (Mass. 1979); see also Blum v. Stenson, 465 U.S. 886, 895 (1984)
 (award of reasonable fees is calculated according to prevailing market rates
 whether plaintiff is represented by private or nonprofit counsel).  In Torres
 v. Attorney General, 460 N.E.2d 1032, 1039-40 (Mass. 1984), the court held
 that the legal services organization that represented the plaintiff was
 entitled to receive an award of attorney's fees although the statute
 authorized an award of attorney fees "incurred" in the action.  The court
 reasoned that this construction is consistent with the legislative goals of
 encouraging private enforcement of the law and compliance with the law.  Id.
 at 1040.

 We agree with the Torres court, and the other cases cited therein, that it
 would defeat the legislative purposes of the statute to deny an award of
 attorney's fees in cases in which nonprofit legal services organizations
 represented the prevailing party.  Indeed, it would be unreasonable to allow
 noncomplying landlords to avoid paying enforcement costs where the tenant is
 financially unable to hire a private attorney.  See Smith v. Town of St.
 Johnsbury, 150 Vt. 351, 355, 554 A.2d 233, 237 (1988) (Court assumes
 Legislature did not intend unreasonable result).  We therefore hold that
 tenant is entitled to an award of attorney's fees although she is represented
 by Vermont Legal Aid at no cost to her.

                                    II.

 Tenant argues that the trial court erred in concluding that the evidence did
 not establish her counterclaim for consumer fraud.  She maintains that the
 court's findings show consumer fraud as a matter of law. Landlords contend
 that the Consumer Fraud Act does not apply to the landlord-tenant relationship
 and that, even if it applies, the court's finding that the evidence did not
 establish a claim under the Act was not clearly erroneous.

 Our primary objective in construing a statute is to effectuate the intent of
 the Legislature.  Burlington Elec. Dep't v. Vermont Dep't of Taxes, 154 Vt.
 332, 335, 576 A.2d 450, 452 (1990).  Generally, we presume the Legislature
 intended the plain meaning of the statutory language.  Id. The Consumer Fraud
 Act provides that "[u]nfair methods of competition in commerce, and unfair or
 deceptive acts or practices in commerce, are hereby declared unlawful."  9
 V.S.A. { 2453(a).  The purpose of the Act is to protect the public from unfair
 and deceptive business practices and to encourage fair and honest competition.
 9 V.S.A. { 2451; Gramatan, 143 Vt. at 536, 470 A.2d  at 1162.

 Consistent with its broad remedial purpose, the Act allows "[a]ny consumer
 who contracts for goods or services in reliance upon false or fraudulent
 representations or practices prohibited by [9 V.S.A. { 2453]" to bring suit
 against the violator and recover damages, reasonable attorney's fees, and
 "exemplary damages not exceeding three times the value of the consideration
 given by the consumer."  9 V.S.A. { 2461.  "Consumer" is defined by the Act
 as:

 any person who purchases, leases, contracts for, or otherwise agrees to pay
 consideration for goods or services not for resale in the ordinary course of
 his trade or business but for his use  or benefit or the use or benefit of a
 member of his household or in connection with the operation of his household .
 . . .

 9 V.S.A. { 2451a(a) (emphasis added).  "Goods or services" include: "any
 objects, wares, goods, commodities, work, labor, intangibles, courses of
 instruction or training, securities, bonds, debentures, stocks, real estate,
 or other property or services of any kind."  9 V.S.A. { 2451a(b) (emphasis
 added).  The plain meaning of the statutory language indicates that the Act
 applies to real estate leases, which includes residential rental agreements.

 Landlords argue that, because the Residential Rental Agreements Act
 specifically regulates the landlord-tenant relationship, it precludes applying
 the more general Consumer Fraud Act.  "When two contemporaneous statutory
 provisions conflict, the more specific provision is given effect over the more
 general one."  Oxx v. Vermont Dep't of Taxes, 3 Vt. L.W. 322, 323 (Oct. 23,
 1992).  Further, landlords claim that "if two statutes deal with the same
 subject matter, the more recent legislative enactment will control."  Lomberg
 v. Crowley, 138 Vt. 420, 423, 415 A.2d 1324, 1326 (1980). Here, we find no
 conflict, however.  See 49 Prospect Street Tenants Ass'n v. Sheva Gardens,
 Inc., 547 A.2d 1134, 1143 (N.J. Super. Ct. App. Div. 1988) ("the Consumer
 Fraud Act does not conflict with the various special statutes involving the
 landlord-tenant relationship").

 The Residential Rental Agreements Act does not deal with the same subject
 matter as the Consumer Fraud Act.  Tenant's claim under the Residential Rental
 Agreements Act is for breach of a warranty based on landlords' failure to keep
 the premises safe and clean.  See 9 V.S.A. {{ 4457 & 4458.  Her claim under
 the Consumer Fraud Act is for unfair or deceptive acts in commerce.  See 9
 V.S.A. { 2453.  These are separate and distinct claims.  There is no
 indication that by enacting the Residential Rental Agreement Act, the
 Legislature intended to deny tenants the additional protections provided by
 the Consumer Fraud Act.  See 49 Prospect Street, 547 A.2d  at 1141 (reversing
 trial court, which held specific landlord-tenant statutes precluded claim
 under general consumer fraud law); see also McGrath v. Mishara, 434 N.E.2d 1215, 1221 (Mass. 1982) ("mere fact that these statutes contain some
 overlapping prohibitions and remedies does not establish a legislative intent
 to preclude their concurrent application").  Because the Residential Rental
 Agreements Act does not govern all aspects of the landlord-tenant
 relationship, it does not preclude other claims between tenants and landlords.

 Courts in other jurisdictions have also concluded that their consumer
 protection statutes apply to the landlord-tenant relationship.  See, e.g.,
 Carter v. Mueller, 457 N.E.2d 1335, 1342 (Ill. Ct. App. 1983); Love v. Amsler,
 441 N.W.2d 555, 559 (Minn. Ct. App. 1989) and cases cited at 558 n.1; 49
 Prospect Street, 547 A.2d at 1141-42; Commonwealth v. Monumental Properties,
 Inc., 329 A.2d 812, 820 (Pa. 1974); but see Heritage Hills, Ltd. v. Deacon,
 551 N.E.2d 125, 127-28 (Ohio 1990) (consumer sales practices law does not
 apply to leases of real property because this definition of "consumer
 transaction" was specifically rejected by the legislature).  We hold that the
 Consumer Fraud Act applies to landlord-tenant transactions.

 Tenant argues that the court's findings establish that landlords' acts were
 unfair and deceptive as a matter of law.  Ordinarily, the conclusions of the
 trial court are upheld where they are supported by the findings; however,
 conclusions that are not supported by the findings cannot stand. Dartmouth
 Savings Bank v. F.O.S. Assoc., 145 Vt. 62, 66, 486 A.2d 623, 625 (1984).(FN2)
 Under the Consumer Fraud Act, a "deceptive act or practice" is a material
 representation, practice or omission likely to mislead a reasonable consumer.
 Peabody v. P.J.'s Auto Village, Inc. 153 Vt. 55, 57, 569 A.2d 460, 462 (1989).
 A representation with the capacity or tendency to deceive is sufficient to
 establish the claim.  Id.  By renting the apartment, landlords impliedly
 represented to tenant that the apartment was in compliance with the law.
 Landlords knew, however, at that time, that the apartment was in violation of
 health and safety codes and that they had not obtained a certificate of
 occupancy.  This misrepresentation was material because the information would
 reasonably have affected tenant's decision to rent the apartment.  See id. at
 58, 569 A.2d  at 462.  Landlords committed a deceptive act by renting an
 apartment that was in violation of law.  See Conaway v. Prestia, 464 A.2d 847,
 851 (Conn. 1983) (landlords violated consumer protection law by renting
 housing without obtaining certificates of occupancy).

 Further, the court found that tenant "entered into possession of the demised
 premises without knowledge of the full extent of the deficiencies which were
 found later to exist.  The only deficiencies she knew of were those which she
 was falsely assured would be corrected."  Landlords knew of the additional
 deficiencies, yet failed to inform tenant.  It was reasonable for tenant to
 believe that there were no other deficiencies and that repairs promised would
 be made.  We agree with tenant that the court's findings establish a violation
 of 9 V.S.A. { 2461(b) as a matter of law.  Moreover, because she prevailed on
 the consumer fraud claim, she is entitled to an award of attorney's fees on
 this claim.  Gramatan, 143 Vt. at 536, 470 A.2d  at 1162.

 Tenant also claims that she is entitled to exemplary damages because she has
 shown that landlords acted with malice, ill will, or wanton dis- regard for
 her health and safety.  Where there has been a violation of 9 V.S.A. {
 2461(b), the court must award exemplary damages if landlords' acts were
 committed with malice, ill will, or wanton disregard for tenant's rights and
 interests.  See Bruntaeger v. Zeller, 147 Vt. 247, 252, 515 A.2d 123, 127
 (1986).  Because the trial court did not reach this issue, we must remand for
 its consideration in the first instance.

 Reversed and remanded.  On remand, the court shall consider whether tenant is
 entitled to exemplary damages and shall award attorney's fees.


FN1.    9 V.S.A. { 4457(a) provides:  "In any residential rental agreement,
 the landlord shall be deemed to covenant and warrant to deliver over and
 maintain, throughout the period of the tenancy, premises that are safe, clean
 and fit for human habitation and which comply with the requirements of
 applicable building, housing and health regulations.

FN2.    Landlords' contention that the court's finding is not clearly
 erroneous mischaracterizes tenant's claim.  She does not challenge the court's
 findings, and therefore the clearly erroneous standard is not applicable.  See
 V.R.C.P. 52(a)(2) (findings of fact not set aside unless clearly erroneous).