Spring Hill Town Homes v. Pounds ( 2012 )

[Cite as Spring Hill Town Homes v. Pounds, 2012-Ohio-2800.]
IN THE COURT OF APPEALS OF MONTGOMERY COUNTY, OHIO
SPRING HILL TOWN HOMES :
Plaintiff-Appellee : C.A. CASE NO. 24894
vs. : T.C. CASE NO. 10CVG587
MELISSA POUNDS, et al. : (Civil Appeal from
Municipal Court)
Defendant-Appellant :
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OPINION
Rendered on the 22nd day of June, 2012.
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Joseph R. Matejkovic, Atty. Reg. No. 0056097, 8050 Beckett Center Drive, Suite 214,
West Chester, Ohio 45069-5018
Attorney for Plaintiff-Appellee
Scott A. Ashelman, Atty. Reg. No. 0074325, 703 Liberty Tower, 120 W. Second Street,
Dayton, Ohio 45402
Attorney for Defendant-Appellant
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GRADY, P.J.:
{¶ 1} Defendant Melissa Pounds appeals from a final judgment in favor of Plaintiff
Spring Hill Town Homes (“Spring Hill”) in the amount of $422.80, plus interest and costs.
{¶ 2} Spring Hill owns and operates a residential apartment property. In February of
2007, Melissa and James Pounds executed a Rental Agreement to rent an apartment from
Spring Hill. They paid Spring Hill a security deposit of $599.00, the amount of their monthly
rent.
{¶ 3} In September of 2009, Melissa noticed an infestation of bed bugs in their
apartment. She notified Spring Hill, which obtained the services of an exterminator. After
four treatments, the bed bug problem was resolved.
{¶ 4} The exterminator billed Spring Hill $780.00 for its extermination services.
Spring Hill notified the Defendants that they were responsible to reimburse Spring Hill for
that amount. On November 6, 2009, the parties entered into a “Repayment Agreement,” in
which James and Melissa agreed to pay Spring Hill $111.42 each month until the $780.00
balance was paid in full. The Repayment Agreement further provided: “I/we understand that
this agreement will be in default when one (1) payment is delinquent and that in the event of
default, no future agreement will be made and all monies will be due in full and an eviction
action will be initiated.” (Dkt. 10., Exhibit A.)
{¶ 5} Melissa and James made two payments pursuant to the Repayment Agreement,
but then stopped making payments. In a letter dated February 29, 2010, Spring Hill notified
Melissa and James that eviction proceedings would be initiated unless further payments were
received by February 26, 2010. Melissa and James made no further payments.
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{¶ 6} On March 26, 2010, Spring Hill commenced the underlying action for forcible
entry and detainer and for money damages. The Defendants filed an answer and a
counterclaim, alleging that Spring Hill failed to remit all or part of the $599.00 security
deposit the Defendants paid, and that Spring Hill failed to present them a timely and itemized
statement of the charges against their security deposit that Spring Hill had made, as required
by R.C. 5321.16(B).
{¶ 7} Defendants vacated their apartment on April 19, 2010, while the action was
pending. They provided Spring Hill a forwarding address. On May 26, 2010, Spring Hill
sent Defendants an invoice showing a total of all charges due and owing Spring Hill. The
notice stated that, after application of their $599.00 security deposit, a total of $868.79
remained due and owing Spring Hill for those charges, which included a net balance of
$642.75 due and owing under the Repayment Agreement for the exterminator’s services.
{¶ 8} The matter was referred to a magistrate. Following an evidentiary hearing, the
magistrate filed a decision finding that Defendants owe Spring Hill $630.00 under the
Repayment Agreement., and that, in addition, Defendants owe $324.80 for pro rata unpaid
rent and $25.00 and $42.00, respectively, for removing a carpet spot and for replacement of a
bedroom door. The total of these charges is $1,021.80.
{¶ 9} The magistrate further found that Defendants paid Spring Hill a security
deposit of $599.00, and that after applying that amount against the amount of $1,021.80 that
Defendants owe Spring Hill, Defendants are indebted to Spring Hill for the difference in the
net amount of $422.80. The decision awarded Spring Hill a judgment in that amount, plus
interest and costs.
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{¶ 10} Defendants filed timely objections to the magistrate’s decision. The trial court
overruled the objections and adopted the decision as the court’s judgment. Defendants filed a
notice of appeal.
{¶ 11} First Assignment of Error:
{¶ 12} “THE TRIAL COURT ERRED IN ITS DETERMINATION THAT A
TENANT IS LIABLE TO PAY THE COSTS OF PEST EXTERMINATION IN LIGHT OF A
LANDLORD’S STATUTORY DUTY TO PROVIDE A ‘FIT AND HABITABLE’
PREMISES UNDER R.C. §5321.04(A)(2).”
{¶ 13} Melissa filed two objections to the magistrate’s decision. Neither objection
addressed the error now raised in Melissa’s first assignment of error. Pursuant to Civ.R.
53(D)(3)(b)(iv), “a party shall not assign as error on appeal the court’s adoption of any factual
finding or legal conclusion * * * unless the party has objected to that finding or conclusion as
required by Civ.R. 53(D)(3)(b).”
{¶ 14} The first assignment of error is overruled.
{¶ 15} Second Assignment of Error:
{¶ 16} “THE TRIAL COURT ERRED IN FINDING THAT A CONTRACT
EXECUTED UNDER THE THREAT OF EVICTION IS AN ARMS LENGTH
TRANSACTION.”
{¶ 17} Melissa complains that the Repayment Agreement obligating Defendants to
reimburse Spring Hill for the cost of the exterminator’s services was not an “arms-length”
transaction, being instead one that arose out of the parties’ private relationship as landlord and
tenant. Melissa further complains that the agreement was a product of economic duress
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because “she felt that she had no choice but to agree to (Spring Hill’s) demands.” (Brief, p.
7).
{¶ 18} Melissa’s arms-length argument relies on Wellington Square, LLC v. Auditor of
Clark County, 2d Dist. Clark No. 2009CA87, 2010-Ohio-2928, and Walters v. Knox County
Board of Tax Revision, 47 Ohio St.3d 23, 546 N.E.2d 932 (1989). Those cases involved tax
revision determinations, which require a finding of a property’s true value and allow
consideration for that purpose of the sale price of the property in an arms-length transaction.
An arms-length transaction is one which is voluntary, that is, without compulsion or duress,
and that takes place in an open market in which the parties to the sale act in their own
self-interest. Knox.
{¶ 19} The Repayment Agreement was a private transaction and had nothing to do
with a tax assessment. The arms-length requirement in the cases on which Defendants rely
have no application.
{¶ 20} The 10th District Court of Appeals has explained that financial difficulty alone
is insufficient to establish duress and avoid a contract:
[E]conomic duress may be shown where the person claiming duress
was subjected to improper threats which deprived that person of any reasonable
alternative but to assent to the terms of the person making the threat. * * *
Generally, a threat to do what one is legally entitled to do is not an improper
threat. * * * Taking advantage of another's financial difficulty does not
constitute duress either. * * * Rather, the person claiming duress must show
that the person making the threats caused or contributed to the alleged financial
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straits.
Maust v. Bank One Columbus, N.A., 83 Ohio App.3d 103, 108, 109, 614 N.E.2d 765 (10th
Dist.1992), citing Blodgett v. Blodgett, 49 Ohio St.3d 243, 246, 551 N.E.2d 1249 (1990).
{¶ 21} There is no evidence in the record before us that Melissa was under any
economic duress that was caused by Spring Hill when she signed the Repayment Agreement.
Consequently, the trial court did not err in finding that the Repayment Agreement was an
enforceable contract.
{¶ 22} The second assignment of error is overruled.
{¶ 23} Third Assignment of Error:
{¶ 24} “THE TRIAL COURT ERRED WHEN IT DETERMINED THAT THE
REPAYMENT AGREEMENT FOR EXTERMINATION SERVICES WAS
INCORPORATED INTO THE APPELLANT’S LEASE; THUS, ANY DAMAGES OWING
FROM A BREACH OF SAID AGREEMENT WERE PROPERLY DEDUCTABLE FROM
APPELLANT’S SECURITY DEPOSIT.”
{¶ 25} R.C. 5321.16(B) allows a landlord to retain and not return a security deposit in
certain circumstances and, provides, in part:
Upon termination of the rental agreement any property or money held
by the landlord as a security deposit may be applied to the payment of past due
rent and to the payment of the amount of damages that the landlord has
suffered by reason of the tenant’s noncompliance with section 5321.05 of the
Revised Code or the rental agreement. * * *
{¶ 26} In short, R.C. 5321.16(B) allows a landlord to apply a security deposit toward
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past due rent or damages caused by a tenant’s failure to live up to his or her duties set forth in
R.C. 5321.05 or the rental agreement. R.C. 5321.05 provides, in part:
(A) A tenant who is a party to a rental agreement shall do all of the
following:
(1) Keep that part of the premises that he occupies and uses safe and
sanitary;
(2) Dispose of all rubbish, garbage, and other waste in a clean, safe, and
sanitary manner;
***
(C)(1) If the tenant violates any provision of this section, other than
division (A)(9) of this section, the landlord may recover any actual damages
that result from the violation together with reasonable attorney’s fees. This
remedy is in addition to any right of the landlord to terminate the rental
agreement, to maintain an action for the possession of the premises, or to
obtain injunctive relief to compel access under division (B) of this section.
{¶ 27} Spring Hill argues that it was entitled to apply the balance due under the
Repayment Agreement against Defendants’ security deposit pursuant to R.C. 5321.16(B)
because the bed bug infestation resulted from Defendants’ failure to keep their premises in a
“safe and sanitary condition” as required by R.C. 5321.05(A)(1). The trial court made no
finding that any such violation had occurred.
{¶ 28} The only finding by the trial court that Melissa or James failed to live up to
their obligations under the lease agreement or R.C. 5321.05 was that they failed to pay rent for
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the 19 days of April in which they lived at the Spring Hill apartment ($385.70), and that they
should have paid $25.00 to remove a spot from a carpet and $42.00 for replacement of the
bedroom door. Adding those three charges together, Spring Hill was entitled to deduct
$452.70 from the $599.00 security deposit pursuant to R.C. 5321.16(B) and 5321.05.
{¶ 29} The trial court further found that Spring Hill could apply the remainder of the
security deposit toward the amount Melissa and James owe pursuant to the Repayment
Agreement. We do not agree. The Repayment Agreement is not a rental agreement
contemplated by R.C. 5321.16(B), and it was not incorporated into their rental agreement by
the parties. In that respect, paragraph 25 of the rental agreement provides:
Amendments. This Lease is the entire agreement between the parties,
there being no oral conditions, representations, warranties or agreements. Any
subsequent conditions, representations, warranties or agreements or alterations
of the terms of this Lease shall not be valid unless in writing and signed by
both parties.
{¶ 30} Although the Repayment Agreement was in writing and signed by the parties,
it makes no reference to the rental agreement and is not a modification of the rental agreement
or replacement of the rental agreement. Consequently, Defendants’ failure to pay as
obligated by the Repayment Agreement does not constitute a failure to comply with the rental
agreement. Further, the failure to pay pursuant to the Repayment Agreement is not a failure
to comply with a tenant’s obligations pursuant to R.C. 5321.05.
{¶ 31} Spring Hill could not withhold the remainder of the security deposit and apply
it to the outstanding balance owed on the Repayment Agreement. Rather, Spring Hill was
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required to return the remainder of the security deposit within 30 days of the date on which
Melissa and James moved out of Spring Hill’s apartment, which Spring Hill failed to do. Not
having otherwise been the subject of a claim for relief pled in this action, Spring Hill’s right to
the balance due under the Rental Agreement is necessarily enforceable only in a separate
action.
{¶ 32} The trial court erred in finding that Spring Hill is entitled to apply against the
security deposit the remaining amount the Pounds owe under the Repayment Agreement.
Therefore, the third assignment of error is sustained. The judgment will be reversed and the
matter will be remanded to the trial court to determine what amount, if any, Spring Hill owes
to Melissa for its failure to timely return the remaining portion of Melissa’s security deposit,
after deduction of the other charges which the trial court found are due and owing and to order
relief accordingly.
FROELICH, J., And HARSHA, J., concur.
(Hon. William H. Harsha, Fourth District Court of Appeals, sitting by assignment of the Chief
Justice of the Supreme Court of Ohio.)
Copies mailed to:
Joseph R. Matejkovic, Esq.
Scott A. Ashelman, Esq.
Hon. Robert w. Rettich