Daniel Kline, Frank Sories, and Amaris McCann v. Southgate Property Management, LLC
2017 WL 2200463
Iowa2017Background
- Three former tenants (Kline, Sories, McCann) sued SouthGate alleging its standard lease and attached rules contained provisions prohibited by the Iowa Uniform Residential Landlord and Tenant Act (Iowa Code ch. 562A).
- Challenged provisions included assorted fees/charges/liquidated damages (returned-check fee, new-tenant fee, utility handling/reconnection, maintenance call charges, pet liquidated damages, assignment/sublet fee, holdover daily rate, rent acceleration), lockout/key/violation fees, an automatic carpet-cleaning rule, a delayed-possession rent-abatement clause (para. 11), and an apartment-condition checklist deadline (para. 30).
- Tenants moved for partial summary judgment declaring the provisions prohibited and sought damages under § 562A.11(2); SouthGate argued provisions were lawful, that no damages arose because provisions were not enforced, and that tenants lacked standing.
- District court granted partial summary judgment for tenants: it declared the fees/charges, carpet-cleaning rule, paragraph 11 (delayed possession), and paragraph 30 (checklist waiver) prohibited, and certified a class of similarly-situated tenants.
- Iowa Supreme Court granted interlocutory review and narrowed issues: meaning of “uses” in § 562A.11(2) (standing/damages), whether particular lease terms are categorically prohibited under the Act, and whether class certification was proper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning of “uses” in § 562A.11(2) / standing to recover damages for inclusion of prohibited terms | Tenants: “uses” includes knowingly including prohibited provisions in a lease; damages remedy available even if not enforced | SouthGate: “uses” means attempted enforcement that causes actual damages; without enforcement tenants lack standing | Court: § 562A.11(2) ambiguous; interpret “uses” broadly to include knowingly inserting prohibited terms; tenants may recover up to 3 months’ rent even without proof of actual damages; standing exists |
| Whether assorted fees/charges/liquidated-damage provisions are categorically prohibited under § 562A.11(1) | Tenants: amounts are not actual damages and thus prohibited | SouthGate: § 562A allows nonprohibited contract terms; these are enforceable unless unconscionable or otherwise barred | Court: Reversed district court — these fee/liquidated-damage provisions are not categorically prohibited under § 562A.11(1); may still be challenged on other grounds (unconscionability, penalty doctrine) on remand |
| Delayed-possession / rent-abatement clause (paragraph 11) | Tenants: clause attempts to limit landlord liability and waive remedies for failure to deliver possession | SouthGate: clause preserves other remedies and simply provides abatement and termination options | Court: Affirmed district court — paragraph 11 is a prohibited exculpatory/limitation clause under § 562A.11(1)(d) because it purports to accept pro rata abatement as full settlement of all damages |
| Carpet-cleaning / automatic charge rule (Rule 9) | Tenants: provision imposes automatic cleaning fee and permits withholding from deposit without proof — prohibited | SouthGate: provision sets a move-in/move-out cleanliness benchmark; no automatic deposit withholding was shown | Court: Reversed district court — rule 9 is not a categorical prohibition; it functions as a benchmark and any deposit withholding for “extra” cleaning must meet § 562A.12(3) requirements; automatic-fee inference unsupported on this record |
| Apartment-inspection checklist (paragraph 30) | Tenants: failure to return checklist within 3 days presumes no defects — functions as a waiver/exculpation of landlord duties | SouthGate: checklist is a procedural documentation tool protecting tenants and promoting repairs | Court: Reversed district court — paragraph 30 is not a prohibited waiver or exculpation under § 562A.11(1); it is a procedural evidence mechanism |
| Class certification | Tenants: class is appropriate to adjudicate common statutory questions across similarly leased tenants | SouthGate: district court failed to make the Rule 1.263(1) findings and the class definition is vague/unbounded | Court: Certification order procedurally flawed (lacked required findings); reversed and remanded for proper Rule 1.263(1) analysis and, if appropriate, a clarified class definition |
Key Cases Cited
- De Stefano v. Apts. Downtown, Inc., 879 N.W.2d 155 (Iowa 2016) (landlord may not impose automatic carpet-cleaning fee deducted from security deposit)
- D.R. Mobile Home Rentals v. Frost, 545 N.W.2d 302 (Iowa 1996) (damages require proof under post-termination landlord claim; distinguishable here)
- IBP, Inc. v. Harker, 633 N.W.2d 322 (Iowa 2001) (statutory interpretation principles and ambiguity)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (federal standing discussion referenced for comparison)