Summers v. Crestview Apartments, 2010 MT 164

236 P.3d 586 (Mont. 2010) · Supreme Court of Montana · July 27, 2010 · No. DA 09-0489

Summary

The Montana Supreme Court held that a landlord wrongfully deducted future unpaid rent from a security deposit and that lease provisions imposing accelerated rent and an absolute obligation to pay the landlord's attorney fees were unenforceable under Montana law. The Court further held that the entire lease agreement was unenforceable by the landlord, vacated the award of damages and attorney fees to the landlord, and remanded for determination of the tenants' damages and reasonable attorney fees. Justice Cotter concurred in part and dissented from the holding that the entire lease was unenforceable.

Holdings

  1. Montana's Security Deposits Act permits deduction only of money owing to the landlord at the time of deduction; therefore, Crestview could not deduct accelerated future rent from the security deposit. Crestview also violated the statutory 30-day accounting requirement by including rent allegedly owed beyond that period.
  2. An accelerated-rent provision in a residential lease is unenforceable when it is unconscionable, and the provision at issue was unconscionable because it unreasonably favored Crestview, conflicted with the landlord's duty to mitigate damages, and was presented in a standardized lease without meaningful tenant choice.
  3. The Landlord and Tenant Act prohibits a lease provision that absolutely requires the tenant to pay the landlord's attorney fees and thereby waives the tenant's statutory right to seek a discretionary prevailing-party fee award.
  4. Under the circumstances, merely severing the prohibited provisions was insufficient; the entire lease agreement was unenforceable by Crestview. The landlord's damages and attorney-fee award was vacated, Summers was declared the prevailing party, and the matter was remanded for attorney fees, costs, and statutory damages.

Questions Presented

  1. Whether Crestview wrongfully deducted future unpaid rent from the security deposit.
  2. Whether the Montana Residential Landlord and Tenant Act prohibits an accelerated-rent provision in a lease agreement.
  3. Whether the Act prohibits a lease from imposing an obligation on the tenant to pay the landlord's attorney fees.

Disposition

reversed_and_remanded

Cases Cited (10)

  • Solem v. Chilcote, 274 Mont. 72, 906 P.2d 209 (1995)(followed)
  • Arrowhead Sch. Dist. No. 75 v. Klyap, 2003 MT 294, 318 Mont. 103, 79 P.3d 250(followed)
  • Iwen v. U.S. West Direct, 1999 MT 63, 293 Mont. 512, 977 P.2d 989(followed)
  • Kloss v. Edward D. Jones & Co., 2002 MT 129, 310 Mont. 123, 54 P.3d 1(followed)
  • Larsen v. W. States Ins. Agency, 2007 MT 270, 339 Mont. 407, 170 P.3d 956(followed)
  • Woodruff v. Bretz, Inc., 2009 MT 329, 353 Mont. 6, 218 P.3d 486(followed)
  • Bronken's Good Time Co. v. J.W. Brown & Assoc., 203 Mont. 427, 661 P.2d 861 (1983)(followed)
  • Romain v. Earl Schwartz Co., 238 Mont. 500, 779 P.2d 54 (1989)(followed)
  • Gierke v. Walker, 279 Mont. 349, 927 P.2d 524 (1996)(followed)
  • Baierl v. McTaggart, 245 Wis. 2d 632, 629 N.W.2d 277 (2001)(persuasive)

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