Elyse De Stefano v. Apts. Downtown, Inc.
2016 Iowa Sup. LEXIS 55
| Iowa | 2016Background
- Four University of Iowa students leased a four-bedroom house from Apartments Downtown (Jul 2010–Jul 2011); they paid one month's rent as a security deposit.
- During the tenancy the exterior door was kicked in during a burglary; landlord replaced the door and billed the tenants $598.46; tenants disputed payment and refused to pay.
- Tenants sought landlord consent to sublet for two summer months; landlord refused because tenants' account showed unpaid charges (door + assessed late fees), so the unit remained vacant and tenants paid rent for those months.
- At move-out landlord withheld portions of the deposit (including an automatic carpet-cleaning charge of $191 and the door charge) and sent an accounting showing a balance due; tenant Elyse De Stefano sued in small claims court.
- Magistrate largely sided with tenant and awarded $4,720 (including $200 punitive damages); district court on appeal reversed some rulings, affirmed others, awarded $851.54 plus $1,160 in attorneys’ fees (one counsel); Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument (De Stefano) | Defendant's Argument (Apartments Downtown) | Held |
|---|---|---|---|
| Whether statutory attorneys' fees count toward small‑claims $5,000 jurisdictional cap | Fees awarded under IURLTA are "costs" or otherwise excluded from the $5,000 amount-in-controversy; small claims court therefore had jurisdiction | Attorneys' fees are part of the amount in controversy and could push the claim beyond small-claims jurisdiction | Court: Attorneys' fees awarded under a statute are treated like costs "taxed as costs" and are excluded from the $5,000 small‑claims limit; small claims court had jurisdiction |
| Whether a lease may shift to tenants the cost of repairing an exterior door damaged by third‑party vandalism | Lease clause making tenants liable for door damage (including "random acts of vandalism") is unconscionable/invalid under IURLTA; landlord cannot shift duty to maintain habitability | Lease expressly allocates damage costs to tenants; §562A.15(2) permits single‑family tenants to agree in writing to perform specified repairs | Court: Landlord may not satisfy its statutory duty merely by making repairs and then charging tenants; the landlord cannot enforce the automatic shift here where landlord performed the repair and billed tenants — judgment for tenants on door charge |
| Whether landlord could reasonably refuse consent to sublease because tenants refused to pay disputed repair charge | Refusal was based on enforcing an unlawful lease provision; landlord acted unreasonably and caused tenants to lose sublease income (damages) | Lease required sublessors to have accounts in good standing; unpaid charges justified refusal | Court: Refusal to approve sublease was unreasonable because it enforced an unlawful provision; tenants entitled to damages for lost sublease months |
| Lawfulness of automatic carpet‑cleaning deduction from deposit and bad‑faith penalty for withholding deposit | Automatic charge violates §562A.12(3) because deposit deductions must be tied to actual damages or rent defaults; bad faith retention warrants punitive damages | Lease disclosed the automatic carpet charge; landlord claims it did not automatically deduct in practice and believed deduction lawful | Court: Automatic carpet‑cleaning deduction from deposit is unlawful under IURLTA (deposit may only be used for statutory purposes); but no substantial evidence of subjective dishonesty (bad faith) for punitive penalty on the carpet charge, so punitive award reversed as to that ground |
| Reasonableness and award of attorneys' fees | Tenant sought statutory reasonable fees under §562A.12(8); two affidavits filed for different amounts | Landlord argued some fee claims untimely or excessive and that inclusion would defeat small claims jurisdiction | Court: Affirmed award for second‑chair counsel (Boyer); remanded to district court to determine reasonableness of lead counsel (Warnock)'s claimed fees and any appellate fees |
Key Cases Cited
- Lettenmaier v. Lube Connection, Inc., 741 A.2d 591 (N.J. 1999) (statutory counsel‑fee awards treated like costs for small‑claims jurisdictional purposes)
- Maday v. Elview‑Stewart Sys. Co., 324 N.W.2d 467 (Iowa 1982) (statutory attorneys’ fees are in the nature of costs and are taxable by the court)
- Ayala v. Ctr. Line, Inc., 415 N.W.2d 603 (Iowa 1987) (attorney‑fee determinations are equitable/court matters akin to costs and decided after liability)
- Javins v. First Nat’l Realty Corp., 428 F.2d 1071 (D.C. Cir. 1970) (seminal implied‑warranty‑of‑habitability authority)
- Mease v. Fox, 200 N.W.2d 791 (Iowa 1972) (Iowa recognized common‑law implied warranty of habitability)
- Chaney v. Breton Builder Co., 720 N.E.2d 941 (Ohio Ct. App. 1998) (automatic carpet‑cleaning provisions held unenforceable against statutory deposit limits)