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Kwon v. Edson

Supreme Court of Vermont

August 23, 2019

Soon K. Kwon
v.
Eric Edson and Dina Well

          On Appeal from Superior Court, Chittenden Unit, Civil Division, Robert A. Mello, J.

          Herbert J. Downing of Kolvoord, Overton & Wilson, P.C., Essex Junction, for Plaintiff-Appellant.

          Samantha V. Lednicky of Murdoch Hughes Twarog Tarnelli Attorneys at Law, P.C., Burlington, for Defendants-Appellees/Cross-Appellants.

          PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

          CARROLL, J.

         ¶ 1. In this landlord-tenant dispute, following a bench trial, the court found that the parties had an oral rental agreement and awarded plaintiff landlord back rent and reimbursement for electric bills.[1] The court granted tenant Edson damages to compensate him for work he performed on landlord's properties and tenant Well compensatory and punitive damages for breach of the implied warranty of habitability and illegal eviction. Landlord appeals, arguing that the court erred in (1) finding that there was an oral rental agreement between the parties and that defendants were tenants; (2) awarding rent for only a portion of the period tenants occupied the property; (3) awarding tenant Edson damages because the claim was not properly pled; and (4) awarding tenant Well punitive damages. Tenants cross appeal, arguing that the court abused its discretion in finding there was an agreement to pay rent once the building was compliant with the housing code and erred in awarding landlord back rent based on a theory of unjust enrichment. We affirm in part and reverse and remand in part.

         ¶ 2. In sum, we conclude that the evidence supports the court's finding that the parties entered an oral agreement allowing tenants to stay in landlord's apartment rent-free for some portion of time. The record does not support the court's findings as to the terms of that agreement: that tenants agreed to pay rent after the building became compliant with the housing code and that the building did not become code-compliant until the third week of November 2016. Consequently, we strike the award of back rent and reimbursement for electrical costs to landlord and remand for the court to make new findings regarding the nature of the parties' agreement and to enter any revised judgment if supported by the facts. We affirm the court's award of damages to tenant Edson for the work he performed for landlord, concluding that the issue was tried by implied consent. Finally, we conclude that an award of punitive damages was allowable as damages for breach of the warranty of habitability and affirm the award of punitive damages to tenant Well.

         I. Facts

         ¶ 3. Following a bench trial, the court found the following. Landlord and his wife own an apartment building on South Union Street in Burlington. In June 2016, the building required indoor and outdoor painting to be brought into compliance with the city's lead-paint requirements. Landlord contacted a painting company, but he was unable to reach an agreement. Tenant Edson, who was employed by the painting company, offered to do the painting during his nonwork hours. Edson provided an initial estimate of $30, 000 but landlord was not willing to spend that much money. Instead, the parties reached an agreement under which Edson would work on the building in his free time and landlord would pay for the materials and compensate Edson $35 an hour for his labor. Landlord gave Edson an initial check for $500 and the code to access the building in July 2016.

         ¶ 4. By early August 2016, Edson had finished the first phase of the work and requested payment of $3000 for his labor. Landlord was satisfied with the quality of the work but gave Edson only an additional $500. Edson told landlord that he would discontinue working unless he received the balance of $2500. Landlord offered that if Edson continued to paint, he would pay Edson in full for all his work and agreed that Edson and his girlfriend, tenant Well, could reside in apartment 2 of the building rent-free until the building was fully brought up to code. At that time, tenants would pay landlord $1650 in monthly rent. Edson accepted the offer and resumed painting.[2]

         ¶ 5. Edson continued painting the building through the summer and fall of 2016. He did other work on the property, including replacing locks and fire alarms, removing satellite dishes, replacing a toilet, and painting indoor hand railings, doors, and windows. Edson and Well also did cleaning and trash removal. The building became compliant with the city's lead-paint requirements. Landlord was satisfied with the quality of Edson's work and sent him checks totaling $1400, which was far less than what Edson was owed. The court found that landlord owed Edson $12, 400 for the painting and other work.

         ¶ 6. Throughout the summer and fall of 2016, tenants resided in apartment 2. They did not have a written lease and did not pay rent. Landlord knew that tenants were residing in the apartment without a lease or security deposit and without paying rent. Landlord paid the electrical bill for that apartment. Landlord did not attempt to evict tenants.

         ¶ 7. In November 2016, the building was up to code except that landlord needed to pay the city a reinspection fee before he could receive a certificate of occupancy.

         ¶ 8. Also, in November 2016, the Department of Corrections revoked Edson's furlough status and he was incarcerated. He has not resided in the apartment since that time. Well continued to reside in the apartment without paying rent. She did not have an agreement to perform services for landlord in lieu of rent.

         ¶ 9. In March 2017, landlord sent tenants a letter requesting that they move out by the end of April 2017 and indicating that landlord needed to prepare the apartment for new tenants. He stated that he would disconnect the utilities since tenants had not taken over the utilities. Well did not vacate the apartment, but she did contact the electric department and transferred the electric bill to her name. In May 2017, landlord sent tenants a notice entitled "Termination of Your Tenancy for Non-Payment of Rent." The notice stated that the tenancy was terminated as of May 31, 2017 due to nonpayment of rent and that there was ten months of back rent due totaling $16, 500. This was the first time that landlord alleged tenants owed back rent. Tenant Well responded by removing her name from the electric account.

         ¶ 10. Landlord initiated this eviction action in June 2017. In his complaint, landlord alleged that tenants agreed to rent from him on a month-to-month basis and agreed to pay him $1650 in monthly rent plus electricity. He stated that tenants moved in around August 1, 2016 and had paid no rent. Tenants counterclaimed, pleading breach of the implied warranty of habitability and illegal eviction and seeking compensatory ...


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