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Cane v. EZ Rentals

Court of Appeals of Maryland

November 29, 2016

Wendy Cane
v.
EZ Rentals

          Argument: September 1, 2016

         Circuit Court for Calvert County Case No. 04-C-15-000089

          Barbera, C.J. Greene, Adkins, McDonald, Watts, Hotten, Getty, JJ.

          OPINION

          McDONALD, J.

         The General Assembly has provided a residential tenant who experiences serious conditions or defects in a rental unit with legal remedies in what is known as the rent escrow statute. That statute places "an obligation upon landlords to repair and eliminate conditions and defects which constitute, or if not promptly corrected will constitute, a fire hazard or a serious and substantial threat to the life, health, or safety of occupants."[1] That statute creates both a cause of action for the tenant and an affirmative defense that may be asserted by the tenant in certain types of actions that may be brought by a landlord. If the tenant is successful in showing that the landlord was aware of such a defect and failed to correct it, the tenant may be entitled to an abatement or reduction of the rent, among other relief.

         Petitioner Wendy Cane rented an apartment in a house in Calvert County managed by Respondent EZ Rentals. EZ Rentals filed a summary ejectment action against her to collect unpaid rent for the month of January 2015 and to regain possession of the unit. During the bench trial in the Circuit Court, Ms. Cane attempted to submit evidence of what she asserted were serious defects in the rental property, including a leak that resulted in a threat to shut off water service to the property. The Circuit Court declined to accept Ms. Cane's proffered evidence on the ground that it would be relevant only in an affirmative rent escrow action which, the court believed, must be filed as a separate action. Ultimately, the Circuit Court entered a monetary judgment in favor of EZ Rentals and awarded possession of the rental unit to the landlord.

         This appeal followed. We hold that Ms. Cane was not required to present her evidence and contentions under the rent escrow statute in a separate action, but could also present them in defense of the summary ejectment action brought by EZ Rentals. Of course, simply because a tenant alleges such defects does not by itself amount to a valid defense to a summary ejectment action. Accordingly, we vacate the judgment of the Circuit Court and remand the matter so that the Circuit Court may consider whether Ms. Cane's proffered evidence would make a difference in its decision.

         I. Background

         A. Summary Ejectment and Rent Escrow

         The Maryland statutes that govern disputes between landlords and tenants who are parties to a residential lease are codified in Title 8 of the Real Property Article ("RP") of the Maryland Code.[2] Pertinent to this case are the statutes concerning summary ejectment and rent escrow.

         1. Summary Ejectment

         When a tenant does not pay rent that is owed, a landlord may bring an action under RP §8-401 to obtain a judgment for the unpaid rent and to repossess the premises. Such an action is known as summary ejectment. "Summary ejectment proceedings empower the court to enter a money judgment for the amount of rent determined to be owing and also to issue an order for the tenant to yield possession of the premises when the jurisdiction over the tenant has been obtained." Schuman, Kane, Felts & Everngam, Chartered v. Aluisi, 341 Md. 115, 122 (1995) (internal quotation marks omitted).

         Summary ejectment proceedings are expedited. A trial is ordinarily to be held on the fifth day following the filing of the complaint. RP §8-401(b)(3)(i). The statute allows a court to adjourn the trial for one day to permit a party to procure necessary witnesses if it is in "the interests of justice, " but requires the consent of both the landlord and the tenant for a longer postponement. RP §8-401(c)(1). If the tenant was personally served with the complaint and if the trial does not take place within five days of the filing of the complaint, the trial court may include in the judgment any unpaid rent and late fees accruing since the filing of the complaint, as well as court costs. RP §8-401(c)(2)(iii)-(iv). If judgment is for the landlord, the tenant ordinarily must vacate the premises within four days. RP §8-401(c)(3).

         If the judgment is in favor of the landlord, including restitution of the premises, the tenant has a "right to redemption of the leased premises" if the tenant tenders to the landlord the amount of the judgment, as well as any court-awarded costs and fees, before the execution of the judgment. RP §8-401(e)(1). However, a tenant who has had three judgments of possession for unpaid rent within the previous 12 months does not have a right of redemption. RP §8-401(e)(2). When a court holds that a tenant no longer may redeem the tenancy for that reason, it is said to foreclose the right of redemption.

         Summary ejectment cases originate in the District Court. RP §8-401(b). Either party may appeal to the Circuit Court within four days of the District Court's judgment. RP §8-401(f)(1). If the tenant appeals, the tenant must furnish an appeal bond to stay execution of the judgment. RP §8-401(f)(2)-(3).

         2. Rent Escrow

         The rent escrow statute is designed to provide an incentive for a landlord to repair "serious and dangerous defects" in a residential rental unit by creating "meaningful sanctions" for a landlord who allows such conditions to exist. RP §8-211(a)-(b). The statute establishes "an obligation upon landlords to repair and eliminate conditions and defects which constitute, or if not promptly corrected will constitute, a fire hazard or a serious and substantial threat to the life, health or safety of occupants." RP §8-211(e). It is "remedial legislation" that should not be construed narrowly. Neal v. Fisher, 312 Md. 685, 693-94 (1988).

         The statute provides a non-exhaustive list of examples of conditions for which a tenant may seek relief under statute. Such conditions include:

(1) Lack of heat, light, electricity, or hot or cold running water, except where the tenant is responsible for the payment of the utilities and the lack thereof is the direct result of the tenant's failure to pay the charges;
(2) Lack of adequate sewage disposal facilities;
(3) Infestation of rodents in two or more dwelling units;
(4) The existence of any structural defect which presents a serious and substantial threat to the physical safety of the occupants; or
(5) The existence of any condition which presents a health or fire hazard to the dwelling unit.

RP §8-211(e)(1)-(5). There is a rebuttable presumption that such conditions do not include minor defects or the "absence of air conditioning." RP §8-211(f).

         The rent escrow statute creates both an affirmative cause of action for a tenant and a defense to certain actions brought by a landlord. If the tenant notifies the landlord of serious conditions or defects, and "[i]f the landlord refuses to make the repairs or correct the conditions, or if after a reasonable time the landlord has failed to do so, the tenant may bring an action of rent escrow to pay rent into court because of the asserted defects or conditions." RP §8-211(i). The tenant also "may refuse to pay rent and raise the existence of the asserted defects or conditions as an affirmative defense" to an action brought by the landlord to obtain the rent or recover possession of the premises. Id. As a condition for relief under the statute, the tenant must notify the landlord of the defect and may be required to pay the rent to the court. RP §8-211(g) and (k). Tenants who have a certain number of judgments for unpaid rent within the 12 months prior to initiation of the action may not obtain relief under the statute. Id.

         In adjudicating issues under the rent escrow statute, the trial court is to make "appropriate findings of fact" and order relief either for the landlord - e.g., termination of the lease and restitution of the premises - or the tenant - e.g., abatement of the rent and an order that the landlord make necessary repairs. RP §8-211(m).

         B. Facts

         The Rental

         The basic facts of the landlord-tenant relationship and the procedural path of this case are undisputed. As will become apparent, there were some disputes of fact between the tenant and landlord at the trial, but we need only acknowledge them, rather than resolve them, to address the legal question at issue.

         The rental property in question is located at 1235 Golden West Way in Lusby, Calvert County. The property is a single-family residence that has been divided into a ground floor unit and a basement unit. During the relevant period, Daniel Brown owned the property, by virtue of an installment contract with a partner.[3] Mr. Brown rented out the units and managed the property through EZ Rentals.[4] Beginning in May 2013, Ms. Cane rented the ground floor unit from EZ Rentals under a one-year lease. When the lease expired, Ms. Cane continued to occupy the unit as a month-to-month tenant.

         Summary Ejectment Action in District Court

         On January 7, 2015, EZ Rentals filed a summary ejectment action against Ms. Cane in the District Court of Maryland sitting in Calvert County. The complaint sought rent for the month of January 2015 in the amount of $1, 100, [5] as well as a late fee of $50, foreclosure of Ms. Cane's right of redemption, [6] and possession of the property. A week later, the District Court entered a judgment in favor of EZ Rentals in the amount of $1, 150 and granted judgment for possession of the property, without the right of redemption, to EZ Rentals. On January 20, Ms. Cane noted a timely appeal to the Circuit Court and posted a court-ordered appeal bond in the amount of $1, 150.

         De Novo Appeal in Circuit Court

         A de novo bench trial was held in the Circuit Court for Calvert County on June 26, 2015.[7] At the trial, Ms. Cane appeared without counsel and Mr. Brown ...


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