Steenes v. MAC Property Management, LLC
16 N.E.3d 243
Ill. App. Ct.2014Background
- Steenes signed a one-year lease for a Chicago apartment; a separate “Welcome to MAC Property Management” statement required a nonrefundable $350 "move-in fee" to be paid before lease execution. The lease referenced a security deposit but listed no amount and did not mention the move-in fee.
- Steenes paid the fee, moved out early, and alleged the move-in fee was actually a security deposit or prepaid rent disguised to avoid Chicago’s Residential Landlord and Tenant Ordinance (RLTO).
- She filed a class-action amended complaint asserting (1) RLTO security-deposit violations, (2) Illinois Consumer Fraud Act/deceptive practices based on the alleged disguise, and (3) lease invalidity under RLTO; additional individual tort claims were later adjudicated separately.
- Defendants moved to dismiss counts alleging the move-in fee was a security deposit or prepaid rent; the trial court dismissed those counts with prejudice and denied leave to amend.
- On appeal the court reviewed whether the move-in fee was (a) a security deposit under the RLTO, (b) prepaid rent under the RLTO’s definition of “rent,” and (c) whether denial of leave to amend was erroneous.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the nonrefundable move-in fee is a security deposit under the RLTO | The move-in fee functions as a security deposit because the lease references a security deposit but lists no amount; fee lacked consideration and was effectively held as tenant money | The fee is a separate, one-time nonrefundable charge for moving in and not intended to secure lease performance; it lacks the earmarks of a deposit held in trust | Fee is not a security deposit: amount, timing, and explicit nonrefundable language show it was a move-in charge, not security held for tenant performance |
| Whether the move-in fee qualifies as prepaid rent under RLTO’s definition of “rent” | The fee must be rent because RLTO defines rent broadly as “any” consideration; no consideration was provided to tenant | The RLTO’s "any" modifier applies only to payments made "for or in connection with the use or occupancy" of the unit; a one-time nonrefundable move-in charge is not payment for occupancy | Fee is not prepaid rent: a one-time nonrefundable move-in charge is not consideration "for or in connection with" ongoing use or occupancy |
| Whether plaintiff’s consumer-fraud claim (and related counts) survives if the fee is not security deposit or rent | Steenes: disguise of fee supports deceptive-practices claim | Defendants: consumer-fraud claim depends on the fee being a disguised security deposit or rent; without that, no RLTO violation to underlie the fraud claim | Dismissal affirmed: fraud/other counts fail because fee is neither security deposit nor prepaid rent |
| Whether denial of leave to file second amended complaint was an abuse of discretion | Steenes: proposed allegations (including hypothetical fact sets) would cure defects | Defendants: amendment futile and plaintiff had prior opportunity; record supports denial | No reversible abuse: appellant failed to supply hearing transcript; appellate court presumes trial court acted properly and dismissal with prejudice was proper |
Key Cases Cited
- Starr v. Gay, 354 Ill. App. 3d 610 (describing characteristics of a security deposit)
- Pool v. Insignia Residential Group, 736 N.E.2d 507 (Ohio Ct. App.) (nonrefundable/one-time charges may be security deposits only if they secure performance)
- Stutelberg v. Practical Management Co., 245 N.W.2d 737 (Mich. Ct. App.) (nonrefundable, openly contracted fees are not security deposits and not within landlord-tenant provisions)
- Lawrence v. Regent Realty Group, 197 Ill. 2d 1 (explaining RLTO purpose and protection of tenant security-deposit rights)
- Foutch v. O’Bryant, 99 Ill. 2d 389 (appellate review presumes trial court record supports denial of relief when record is incomplete)