Opinion
15-P-952
03-31-2016
BRIAN MOR & others v. TONY ZHAO.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendant landlord, Tony Zhao, appeals from a decision and order of the Appellate Division of the District Court (Appellate Division) affirming a judgment in favor of Zhao's former tenants, plaintiffs Brian Mor, Jennifer Stacy, and Matthew Stacy. We affirm.
Background. For about eight months during 2009 and 2010, the plaintiffs rented an apartment from Zhao pursuant to a one-year lease agreement. After a dispute arose over property repairs, the plaintiffs withheld one month's rent and sent Zhao a demand letter pursuant to G. L. c. 93A. Unsatisfied with Zhao's response, the plaintiffs brought this action, alleging violation of the security deposit statute, G. L. c. 186, § 15B, breach of the covenant of quiet enjoyment and the implied warranty of habitability, failure to provide hot water (a wrongful act under G. L. c. 186, § 14), violation of G. L. c. 93A, breach of contract, and unlawful retaliation. Zhao answered with a counterclaim alleging breach of contract. Prior to trial, summary judgment entered for the plaintiffs on their claim that Zhao had violated the security deposit statute. The defendant's motion for summary judgment on the remaining counts of the complaint was denied.
The shower door and the back door lock were not functioning properly despite the plaintiffs' numerous requests for repair. Other issues included a lack of light in the back staircase and electrical problems, which resulted in a "significant shock" to one of the plaintiffs.
Following a three-day jury-waived trial, judgment entered in favor of the plaintiffs on their claims of breach of the covenant of quiet enjoyment, the implied warranty of habitability, and violation of G. L. c. 93A. The plaintiffs also prevailed on Zhao's breach of contract counterclaim, which alleged the plaintiffs violated the lease agreement by failing to pay rent for the month of March, 2010. On the plaintiffs' claims alleging unlawful retaliation and breach of contract, however, judgment entered for Zhao. The Appellate Division reversed the judgment on the retaliation claim and remanded the case for assessment of damages. After a final judgment was entered consistent with the order of the Appellate Division, Zhao again appealed to the Appellate Division, which affirmed the final judgment in its entirety. Zhao appeals from the second decision and order of the Appellate Division, claiming that the judge erred in denying his motion for summary judgment and in allowing the plaintiffs' motion for partial summary judgment on their security deposit claim. He also claims that there was insufficient evidence to support the judgment against him on the plaintiffs' claim of breach of the covenant of quiet enjoyment.
The judge ruled that the plaintiffs' claim of failure to provide hot water was duplicative of the claim under the implied warranty of habitability and, accordingly, no damages were awarded.
The Appellate Division vacated damages with respect to the breach of the implied warranty, finding that they were duplicative of the c. 93A damages. The judge's assessment of attorney's fees for the plaintiffs was also vacated and remanded for insufficient findings.
1. Zhao's motion for summary judgment. Zhao first argues that the Appellate Division failed to review the denial of his motion for summary judgment. This argument is unavailing if only because the motion for summary judgment and the trial involved overlapping issues, thus the rule barring review of the denial of summary judgment applies. See Deerskin Trading Post, Inc. v. Spencer Press, Inc., 398 Mass. 118, 126 (1986). Contrast Bacon v. Federal Kemper Life Assur. Co., 400 Mass. 850, 851 nn.3 & 4 (1987) (defendant was entitled to review of ruling where motion for summary judgment was based on doctrine of collateral estoppel and facts and theories underlying motion were not in issue at trial).
Summary judgment was denied because the judge determined there was a dispute regarding a genuine issue of material fact as to whether the parties had entered into a settlement agreement. As discussed herein, this issue was resolved at trial.
2. Settlement agreement. Zhao argues that the plaintiffs agreed to settle the case prior to trial and that the judge erred by concluding that the alleged settlement agreement was not enforceable because the plaintiffs had not agreed to pay rent for the month of March, 2010. There was no error. The duty to pay the March rent was an important term and, as the judge found consistent with the evidence, the parties harbored different beliefs about it. Absent a complete agreement on all essential terms, no binding settlement agreement was formed. See Targus Group Intl., Inc. v. Sherman, 76 Mass. App. Ct. 421, 428-430 (2010).
The evidence established that while both sides believed that they had reached a settlement agreement, they disagreed about the terms. According to Zhao, as memorialized in a March 18, 2010, offer letter, the terms of the deal included the requirement that the tenants pay the outstanding March rent, and were unequivocally accepted by the tenants' attorney by letter dated March 26, 2010. According to the tenants, the deal involved a waiver of the March rent obligation, which they had withheld due to continuing unresolved problems in the apartment, as well as mutual releases. As the judge noted in his subsidiary findings, the alleged acceptance letter did not mention the March rent, and also requested that Zhao's attorney draft mutual releases for execution. No formal settlement agreement or release was signed by the parties.
3. Security deposit. There was no error in the allowance of the tenants' motion for partial summary judgment with respect to this claim. Zhao violated the security deposit law by, inter alia, placing the tenants' funds in a non-Massachusetts bank and by failing to provide the tenants with a complete bank account number. See G. L. c. 186, § 15B(3)(a); Taylor v. Burke, 69 Mass. App. Ct. 77, 79-80 (2007). Moreover, by failing to return the security deposit upon demand and forcing the plaintiffs to seek redress through the courts, Zhao triggered the punitive damages provision of the statute. See G. L. c. 186, § 15B(6)(a), (7); Taylor v. Beaudry, 75 Mass. App. Ct. 411, 414-415 (2009); Karaa v. Yim, 86 Mass. App. Ct. 714, 720-722 (2014).
The withholding of all but the last four digits of the E*Trade bank account number from the tenants "for security reasons" demonstrated a complete misunderstanding about the nature of a security deposit. At all times, the funds remained the property of the tenants. See G. L. c. 186, § 15B(1)(e). An owner who fails to give his tenants notice of the bank and account number commits an unfair or deceptive act or practice under G. L. c. 93A. See 940 Code Mass. Regs. § 3.17(4)(d) (1993).
4. Quiet enjoyment. The evidence fully warranted the finding that Zhao interfered with the tenants' statutory right to quiet enjoyment of the premises. "The implied covenant of quiet enjoyment guarantees tenants the right to be free from 'serious' interferences with their tenancies." Jablonski v. Clemons, 60 Mass. App. Ct. 473, 476 (2004). Pursuant to G. L. c. 186, § 14, tenants are protected from a wide variety of wrongful conduct.
Here, the judge determined Zhao was liable on three separate factual grounds: (1) the "repeated" entries into their apartment without advance notice in violation of the lease; (2) the constant delays in making repairs; and (3) the use of an unqualified repair person resulting in inadequate repairs. Zhao contests only the first ground. Even if we were to assume, arguendo, that the unauthorized entries into the apartment did not rise to the level of a statutory violation, the two uncontested grounds support the damage award. See Cruz Mgmt. Co. v. Thomas, 417 Mass. 782, 789 (1994) (landlord's failure to repair known defects is "omission which frequently has been deemed to violate [G. L. c. 186,] § 14").
Under the statute, the tenants were entitled to the greater of actual and consequential damages or three months' rent. There was no error in the damage award of three months' rent ($4,800).
5. Breach of the lease. Zhao also argues that he was entitled to an offset of four months' rent from the damage award based upon the tenants' early termination of the lease. This issue was raised in his first appeal to the Appellate Division. Contrary to Zhao's assertion, the issue was not addressed on the merits. Rather, based on the lack of a fully developed argument and Zhao's failure to preserve the issue for review, the Appellate Division refused to reach the merits. In light of this procedural history and the brevity of Zhao's appellate argument on this point, we decline to address the matter further.
The plaintiffs allege that Zhao's appeal is frivolous and argue that they are entitled to an award of appellate attorney's fees and costs. We decline to so order.
Decision and order of Appellate Division affirmed.
By the Court (Vuono, Grainger & Milkey, JJ.),
The panelists are listed in order of seniority. --------
/s/
Clerk Entered: March 31, 2016.