Bad Faith Refusal to Return Security Deposit Costs Commercial Landlord
November 20, 2018
Five-year litigation over $16,000 ends with upholding of triple damages and attorney’s fees award.
For most kinds of cases, attorneys’ fees are not a part of recoverable damage.
Bad faith business practice cases based on Massachusetts law GL c. 93a– if found by a judge (not a jury), after trial, can permit recovery of attorney’s fees.
The Exhibit Source v Wells Ave Business Center
of Mass Appeals Court (2018)
A commercial tenant whose lease ended and who walked through the premises with the landlord finding no damages, expected the return of the $16,000 security deposit within 30 days as called for under the lease. The landlord gave excuses but did not return the deposit.
After a “bad faith” GL c 93a letter, the landlord offered $6,000. After suit started, the landlord increased its offer but never to the full amount. A jury found the landlord should have paid. The trial judge made written findings of evidence establishing the landlord’s bad faith (strung along the tenant for months with no intention to return the deposit), tripled the award and ordered the landlord to pay $60,000 – the tenant’s attorney’s fees – for work to recover what should have been paid.
INTENTIONAL MISREPRESENTATION TRUMPS DAMAGE LIMIT OF LEASE
The judge found the landlord’s strategy was to ‘wear out the tenant’ who would need to incur legal fees to fight for the security deposit. The judge found this was not a contract dispute but an intentional strategy to hold the security deposit, despite the landlord’s lacking any right to do so.
Since this was seen as a misrepresentation case rather than a contract case, the clause in the lease limiting the landlord’s liability did not apply to block the recovery awarded by the judge.
Attorney’s fees in Massachusetts are recovered in a tiny fraction of cases. The tenant here incurred $60,000 in lawyer fees over five years of trial and appeals in a dispute over $16,000.
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