Ella
Hilder v. Stuart St. Peter and Patricia St. Peter
Supreme Court of Vermont
144 Vt. 150; 478 A.2d 202; 1984 Vt.
LEXIS 444
February 3, 1984, Opinion filed
The facts are uncontested. In October, 1974, plaintiff began occupying
an apartment at defendants' 10-12 Church Street apartment building in
Rutland with her three children and new-born grandson. Plaintiff
orally agreed to pay defendant Stuart St. Peter $ 140 a month and a
damage deposit of $ 50; plaintiff paid defendant the first month's rent
and the damage deposit prior to moving in. Plaintiff has paid all rent
due under her tenancy. Because the previous tenants had left behind
garbage and items of personal belongings, defendant offered to refund
plaintiff's damage deposit if she would clean the apartment herself
prior to taking possession. Plaintiff did clean the apartment, but
never received her deposit back because the defendant denied ever
receiving it. Upon moving into the apartment, plaintiff discovered a
broken kitchen window. Defendant promised to repair it, but after
waiting a week and fearing that her two year old child might cut
herself on the shards of glass, plaintiff repaired the window at her
own expense. Although defendant promised to provide a front door key,
he never did. For a period of time, whenever plaintiff left the
apartment, a member of her family would remain behind for security
reasons. Eventually, plaintiff purchased and installed a padlock, again
at her own expense. After moving in, plaintiff discovered that the
bathroom toilet was clogged with paper and feces and would flush only
by dumping pails of water into it. Although plaintiff repeatedly
complained about the toilet, and defendant promised to have it
repaired, the toilet remained clogged and mechanically inoperable
throughout the period of plaintiff's tenancy. In addition, the bathroom
light and wall outlet were inoperable. Again, the defendant agreed to
repair the fixtures, but never did. In order to have light in the
bathroom, plaintiff attached a fixture to the wall and connected it to
an extension cord that was plugged into an adjoining room. Plaintiff
also discovered that water leaked from the water pipes of the upstairs
apartment down the ceilings and walls of both her kitchen and back
bedroom. Again, defendant promised to fix the leakage, but never did.
As a result of this leakage, a large section of plaster fell from the
back bedroom ceiling onto her bed and her grandson's crib. Other
sections of plaster remained dangling from the ceiling. This condition
was brought to the attention of the defendant, but he never corrected
it. Fearing that the remaining plaster might fall when the room was
occupied, plaintiff moved her and her grandson's bedroom furniture into
the living room and ceased using the back bedroom. During the summer
months an odor of raw sewage permeated plaintiff's apartment. The odor
was so strong that the plaintiff was ashamed to have company in her
apartment. Responding to plaintiff's complaints, Rutland City workers
unearthed a broken sewer pipe in the basement of defendants' building.
Raw sewage littered the floor of the basement, but defendant failed to
clean it up. Plaintiff also discovered that the electric service for
her furnace was attached to her breaker box, although defendant had
agreed, at the commencement of plaintiff's tenancy, to furnish heat.
In its conclusions of law, the court held that the state of disrepair
of plaintiff's apartment, which was known to the defendants,
substantially reduced the value of the leasehold from the agreed rental
value, thus constituting a breach of the implied warranty of
habitability. The court based its award of damages on the breach of
this warranty and on breach of an express contract. Defendant argues
that the court misapplied the law of Vermont relating to habitability
because the plaintiff never abandoned the demised premises and,
therefore, it was error to award her the full amount of rent paid.
Plaintiff counters that, while never expressly recognized by this
Court, the trial court was correct in applying an implied warranty of
habitability and that under this warranty, abandonment of the premises
is not required. Plaintiff urges this Court to affirmatively adopt the
implied warranty of habitability.
Historically, relations between landlords and tenants have been defined
by the law of property. Under these traditional common law property
concepts, a lease was viewed as a conveyance of real property.
The relationship between landlord and tenant was
controlled by the doctrine of caveat lessee; that is, the tenant took
possession of the demised premises irrespective of their state of
disrepair. The landlord's only covenant was to deliver possession to
the tenant.
The tenant's obligation to pay rent existed independently of the
landlord's duty to deliver possession, so that as long as possession
remained in the tenant, the tenant remained liable for payment of rent.
The landlord was under no duty to render the premises habitable unless
there was an express covenant to repair in the written lease. The land,
not the dwelling, was
regarded as the essence of the conveyance.
An exception to the rule of caveat lessee was the doctrine of
constructive eviction. Here, if the landlord wrongfully interfered with
the
tenant's enjoyment of the demised premises, or failed to render a duty
to the tenant as expressly required under the terms of the lease, the
tenant could abandon the premises and cease paying rent.
Beginning in the 1960's, American courts began recognizing that this
approach to landlord and tenant relations, which had originated during
the Middle Ages, had become an anachronism in twentieth
century, urban society. Today's tenant enters into lease agreements,
not to obtain arable land, but to obtain safe, sanitary and comfortable
housing.
[They] seek a well known package of
goods and services -- a package
which includes not merely walls and ceilings, but also adequate heat,
light and ventilation, serviceable plumbing facilities, secure windows
and doors, proper sanitation, and proper maintenance. Javins v. First
National Realty Corp., 428 F.2d 1071, 1074 (D.C. Cir.) (1970).
Not only has the subject matter of today's lease changed, but the
characteristics of today's tenant have similarly evolved. The tenant of
the Middle Ages was a farmer, capable of making whatever repairs were
necessary to his primitive dwelling.
Additionally, "the common law courts assumed that an equal bargaining
position existed between landlord and tenant . . . ." Note, The Implied
Warranty of Habitability: A Dream Deferred, 48 UMKC L. Rev. 237, 238
(1980) (hereinafter cited as A Dream Deferred).
In sharp contrast, today's residential tenant, most commonly a city
dweller, is not experienced in performing maintenance work on urban,
complex living units. The landlord is more
familiar with the dwelling unit and mechanical equipment attached to
that unit, and is more financially able to "discover and cure" any
faults and breakdowns. Confronted with a recognized shortage of safe,
decent housing, today's tenant is in an inferior bargaining
position compared to that of the landlord. Tenants vying for this
limited housing are "virtually powerless to compel the performance of
essential services."
In light of these changes in the relationship between tenants and
landlords, it would be wrong for the law to continue to impose the
doctrine of caveat lessee on residential leases. The modern view favors
a new approach which recognizes that a lease is essentially a contract
between the landlord and the tenant wherein the landlord promises to
deliver and maintain the demised premises in habitable condition and
the tenant promises to pay rent for such habitable premises. These
promises constitute interdependent and mutual considerations. Thus, the
tenant's obligation to pay rent is predicated on the landlord's
obligation to deliver and maintain the premises in habitable condition.
Recognition of residential leases as contracts embodying the mutual
covenants of habitability and payment of rent does not represent an
abrupt change in Vermont law. Our case law has previously recognized
that contract remedies are available for breaches of lease agreements.
More significantly, our legislature, in establishing local housing
authorities,has officially recognized the need
for assuring the existence of adequate housing.
[Substandard] and decadent areas exist
in certain portions of the state
of Vermont and . . . there is not . . . an adequate supply of decent,
safe and sanitary housing for persons of low income and/or elderly
persons of low income, available for rents which such persons can
afford to pay . . . this situation tends to cause an increase and
spread of communicable and chronic disease . . . [and] constitutes a
menace to the health, safety, welfare and comfort of the inhabitants of
the state and is detrimental to property values in the localities in
which it exists . . . .24 V.S.A. § 4001(4).
In addition, this Court has assumed the
existence of an implied warranty of habitability in residential leases.
Therefore, we now hold expressly that in the rental of any residential
dwelling unit an implied warranty exists in the lease, whether oral or
written, that the landlord will deliver over and maintain, throughout
the period of the tenancy, premises that are safe, clean and fit for
human habitation. This warranty of habitability is implied in tenancies
for a specific period or at will. Additionally,
the implied warranty of habitability covers all latent and patent
defects in the essential facilities of the residential unit.
Essential facilities are "facilities vital to the use of the premises
for residential purposes . . . ." This means that a tenant who
enters into a lease
agreement with knowledge of any defect in the essential facilities
cannot be said to have assumed the risk, thereby losing the protection
of the warranty. Nor can this implied warranty of habitability be
waived by any written provision in the lease or by oral agreement.
In determining whether there has been a breach of the implied warranty
of habitability, the courts may first look to any relevant local or
municipal housing code; they may also make reference to the minimum
housing code standards enunciated in 24 V.S.A. §
5003(c)(1)-5003(c)(5). A substantial violation of an applicable housing
code shall constitute prima facie evidence that there has been a breach
of the warranty of habitability. "[One] or two minor violations
standing alone which do not affect" the health or safety of the tenant,
shall be considered de minimus and not a breach of the warranty. In
addition, the landlord will not be liable for defects
caused by the tenant.
However, these codes and standards merely provide a starting point in
determining whether there has been a breach. Not all towns and
municipalities have housing codes; where there are codes, the
particular problem complained of may not be addressed. In determining
whether
there has been a breach of the implied warranty of habitability, courts
should inquire whether the claimed defect has an impact on the safety
or health of the tenant.
In order to bring a cause of action for breach of the implied warranty
of habitability, the tenant must first show that he or she notified the
landlord "of the deficiency or defect not known to the landlord and
[allowed] a reasonable time for its correction."
Because we hold that the lease of a residential dwelling creates a
contractual relationship between the landlord and tenant, the standard
contract remedies of rescission, reformation and damages are available
to the tenant when suing for breach of the implied warranty of
habitability. The measure of damages shall be the difference between
the value
of the dwelling as warranted and the value of the dwelling as it exists
in its defective condition. In determining the fair rental value of the
dwelling as warranted, the court may look to the agreed upon rent as
evidence on this issue. The tenant will be liable only
for "the reasonable rental value [if any] of the property in its
imperfect condition during his period of occupancy."
We also find persuasive the reasoning of some commentators that damages
should be allowed for a tenant's discomfort and annoyance arising from
the landlord's breach of the implied warranty of habitability. Damages
for
annoyance and discomfort are reasonable in light of the fact that
the residential tenant who has suffered
a breach of the warranty . . .
cannot bathe as frequently as he would like or at
all if there is inadequate hot water; he must worry about rodents
harassing his children or spreading disease if the premises are
infested; or he must avoid certain rooms or worry about catching a cold
if there is inadequate weather protection or heat. Thus, discomfort and
annoyance are the common injuries caused by each breach and hence the
true nature of the general damages the tenant is claiming. Moskovitz, A
New Doctrine, supra, at 1470-71.
Damages for discomfort
and annoyance may be difficult to compute; however, "[the] trier [of
fact] is not to be deterred from this duty by the fact that the damages
are not susceptible of reduction to an exact money standard." Vermont
Electric Supply Co. v. Andrus, 132 Vt. 195
(1974).
Another remedy available to the tenant when there has been a breach of
the implied warranty of habitability is to withhold the payment of
future rent. n3 The burden
and expense of bringing suit will then be on the landlord who can
better afford to bring the action. In an action for ejectment for
nonpayment of rent, 12 V.S.A. § 4773, "[the] trier of fact, upon
evaluating the seriousness of the breach and the ramification of the
defect upon the health and safety of the tenant, will abate the rent at
the landlord's expense in accordance with its findings." A Dream
Deferred, supra, at 248. The tenant must show that: (1) the landlord
had notice of the previously unknown defect and failed, within a
reasonable time, to repair it; and (2) the defect, affecting
habitability, existed during the time for which rent was
withheld. Whether a portion,
all or none of the rent will be awarded to the landlord will depend on
the findings relative to the extent and duration of the breach. n4 Of
course, once the landlord corrects the defects, the tenant's obligation
to pay rent becomes due again.
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n3 Because we hold that the tenant's obligation to pay rent is
contingent on the landlord's duty to provide and maintain a habitable
dwelling, it is no longer necessary for the tenant to first abandon the
premises; thus, the doctrine of
constructive eviction is no longer a viable or needed defense in an
action by the landlord for unpaid rent.
n4 Some courts suggest that, during the period rent is withheld, the
tenant should pay the rent, as it becomes due, into legal custody. Such
a procedure assures the availability of that portion,
if any, of the rent which the court determines is due to the landlord.
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Additionally, we hold that when the landlord is notified of the defect
but fails to repair it within a reasonable amount of time, and the
tenant subsequently repairs the defect, the tenant may deduct the
expense of the repair from future rent.
In addition to general damages, we hold that punitive damages may be
available to a tenant in the appropriate case. Although punitive
damages are generally not recoverable in actions for breach of
contract, there are cases in which the breach is of such a willful and
wanton or fraudulent nature as to make appropriate the award of
exemplary damages. A willful and wanton or
fraudulent breach may be shown "by conduct manifesting personal ill
will, or carried out under circumstances of insult or oppression, or
even by conduct manifesting . . . a reckless or wanton disregard of
[one's] rights . . . ." Sparrow v. Vermont Savings Bank, 95 Vt. 29
(1921). When a landlord, after receiving notice of a
defect, fails to repair the facility that is essential to the health
and safety of his or her tenant, an award of punitive damages is
proper.
The purpose of punitive damages . . .
is to punish conduct which is
morally culpable . . . . Such an award serves to deter a wrongdoer . .
. from repetitions of the same or similar actions. And it tends to
encourage prosecution of a claim by a victim who might not otherwise
incur the expense or inconvenience of private action . . . . The public
benefit and a display of ethical indignation are among the ends of the
policy to grant punitive damages. Davis v. Williams, 92 Misc.2d 1051
(N.Y. Civ. Ct.
1977).
In the instant case, the trial court's award of damages, based in part
on a breach of the implied warranty of habitability, was not a
misapplication of the law relative to habitability. Because of our
holding in this case, the doctrine of constructive eviction, wherein
the tenant must abandon in order to escape liability for rent, is no
longer viable. When, as in the instant case, the tenant seeks, not to
escape rent liability, but to receive compensatory damages in the
amount of rent already paid, abandonment is similarly unnecessary.
Under our holding, when a
landlord breaches the implied warranty of habitability, the tenant may
withhold future rent, and may also seek damages in the amount of rent
previously paid.
In its conclusions of law the trial court stated that the defendants'
failure to make repairs was compensable by damages to the extent of
reimbursement of all rent paid and additional compensatory damages. The
court awarded plaintiff a total of $ 4,945.00; $ 3,445.00 represents
the entire amount of rent plaintiff paid, plus the $ 50.00 deposit.
This appears to leave $ 1500.00 as the "additional compensatory
damages." However, although the court made findings which clearly
demonstrate the appropriateness of an award of compensatory damages,
there is no indication as to how the court reached a figure of $
1500.00. It is "crucial that this Court and the parties be able to
determine what was decided and how the decision was reached."
Additionally, the court denied an award to plaintiff of punitive
damages on the ground that the evidence failed to support a finding of
willful and wanton or fraudulent conduct. The
facts in this case, which defendants do not contest, evince a pattern
of intentional conduct on the part of defendants for which the term
"slumlord" surely was coined. Defendants' conduct was culpable and
demeaning to plaintiff and clearly expressive of a wanton disregard of
plaintiff's rights. The trial court found that defendants were aware of
defects in the essential facilities of plaintiff's apartment, promised
plaintiff that repairs would be made, but never fulfilled those
promises. The court also found that plaintiff continued, throughout her
tenancy, to pay her rent, often in the face of verbal threats made by
defendant Stuart St. Peter. These findings point to the "bad spirit and
wrong intention" of the defendants, and would support a finding of
willful
and wanton or fraudulent conduct, contrary to the conclusions of law
and judgment of the trial judge. However, the plaintiff did not appeal
the court's denial of punitive damages, and issues not appealed and
briefed are waived.
Affirmed in part; reversed in part and remanded for hearing on
additional compensable damages, consistent with the views herein.