Timothy Terry and Penny Terry v. William O'Brien and Susan Cain O'Brien

Summary

The Vermont Supreme Court reviews a landlord-tenant dispute involving statutory warranty-of-habitability, Consumer Protection Act, negligence, and emotional-distress claims arising from a residential fire. The court holds that the trial court improperly instructed the jury that actual notice was unnecessary for latent habitability defects and gave an overbroad Consumer Protection Act instruction. It vacates the verdict and judgment except for the jury’s unpaid-rent award and remands for further proceedings.

Holdings

1. Under 9 V.S.A. § 4458(a), a tenant seeking statutory habitability remedies must establish actual notice of the material noncompliance from the tenant, a governmental entity, or a qualified independent inspector. The notice requirement applies even when the alleged defect is latent, and a landlord without actual notice of the defect cannot be held liable under the statutory warranty on that basis.
2. A Consumer Protection Act claim based on a landlord's failure to disclose habitability-related code violations requires proof that the alleged deceptive act was material and that the landlord knew or should have known of the alleged defect. Renting premises with any code violation, without more, is not automatically a deceptive act imposing strict liability.
3. Because the statutory habitability claim was vacated, the tenants had no remaining basis in this action to withhold rent; therefore, the jury's $20,000 unpaid-rent award to the landlords had to stand.
4. The trial court properly denied the landlords attorney's fees under 9 V.S.A. § 4456(e) because the evidence did not establish that the tenants' conduct violated a code or regulation or contributed to the landlords' noncompliance with the applicable electrical code.

Questions Presented

1. Whether the jury instruction on Vermont's statutory warranty of habitability improperly excused tenants from proving that landlords received actual notice of the alleged habitability defect.
2. Whether the warranty-of-habitability claim could be based on a latent electrical defect of which the landlords had no actual notice.
3. Whether the trial court improperly instructed the jury that renting a residence with any code violation constituted a deceptive practice under the Consumer Protection Act without requiring materiality or landlord knowledge.
4. Whether the trial court properly vacated the jury's award of unpaid rent to the landlords.
5. Whether the trial court properly awarded attorney's fees to the tenants and denied attorney's fees to the landlords.

Disposition

reversed_and_remanded