Michael Sullivan

In the case of Phillips v. Equity Residential Management LLC, the Massachusetts Supreme Judicial Court considered whether the Massachusetts residential security deposit statute calls for a tenant to be awarded three times his security deposit and his attorneys’ fees, rather than just his security deposit, when his landlord violates the documentation requirements of the statute. The SJC found that a documentation violation does not call for treble damages or attorneys’ fees to be awarded.

In Phillips, after the plaintiff’s tenancy ended, the defendant-landlord properly deducted certain damages from the plaintiff’s $750 security deposit – for instance, cleaning charges. However, the landlord improperly documented the deductions: Whereas the security deposit statute requires landlords to deliver sworn detailed itemizations whenever deductions are made, this landlord’s itemization was un-sworn and un-detailed. As a result, he was sued by the tenant in state court, where the tenant sought to recover three times his entire security deposit, as well as attorneys’ fees. The landlord removed the case to U.S. District Court, where the tenant was awarded his security deposit, but not treble damages or attorneys’ fees. The tenant appealed to the U.S. Court of Appeals, which solicited the state SJC’s opinion as to whether treble damages and attorneys’ fees should be awarded to a tenant if his landlord’s statement of damages failed to meet the statutory requirements.

In a decision written by Justice Kimberly Budd, the SJC noted that while many violations of the security deposit require entire security deposits to be forfeited, only some of these violations require treble damages and attorneys’ fees to be awarded as well. These violations are more substantive in nature – for example, ignoring the statute altogether, commingling security deposits with other monies, and making improper deductions (such as damages not caused by the tenant). But other, more procedural violations of the statute, such as failing to explain and support proper deductions with sufficient detail and documentation, do not call for treble damages and attorneys’ fees. Budd noted that the statute “does not go as far as it might with regard to holding landlords responsible. [The court’s] job, however, is to interpret the statute as written … .”

Justice Barbara Lenk furthered this point in a concurring opinion. She agreed that the absence of treble damages and attorneys’ fees provisions from portions of the statute means that only certain violations require such awards. But she noted the incongruity between this outcome and the clear intent of the statute, which is to disincentive landlord misconduct by giving tenants strong legal remedies. As Lenk queried, “How will the paltry award in this case disincentive procedural violations, which are often as injurious and delay-causing as substantive violations?”

A Landlord-Friendly Decision?

While the security deposit statute remains a trap for the unwary, the Phillips decision provides some relief to landlords who may violate the more technical aspects of the statute. The decision is also a strike against those who may consider the SJC to be a “liberal” court. Indeed, there can be no argument that the court was too result-oriented or tenant-friendly. Nobody reading the security deposit statute could view it as anything but very tenant-friendly, and strongly intended to discourage landlords from violating any aspect of the statute, and encourage tenants to bring lawsuits for such violations. If the SJC was more interested in the general intent of the statute or in helping residential tenants rather than in the actual words of the statute, then it probably would have found a way to see that this particular tenant was awarded treble damages and attorneys’ fees. But in the end, the SJC did what any good court should do – it focused on the actual words, and in doing so, could only reach a landlord-friendly result. It is now the prerogative of the legislature to, if it wishes, modify the security deposit statute to better reflect its general intent.

Michael T. Sullivan is a litigation partner in the Boston law firm of Conn Kavanaugh Rosenthal Peisch & Ford LLP who handles a variety of real estate and construction disputes. He can be reached at MSullivan@ConnKavanaugh.com.