Kohner Properties, Inc., Plaintiff/Respondent v. Latasha Johnson

In the Missouri Court of Appeals
Eastern District
DIVISION TWO
KOHNER PROPERTIES, INC., ) No. ED103133
)
Plaintiff/Respondent, ) Appeal from the Circuit Court
) of St. Louis County
v. )
)
LATASHA JOHNSON, ) Honorable Judy Preddy Draper
)
Defendant/Appellant. ) Filed: September 13, 2016
Introduction
Latasha Johnson (Appellant) appeals from the trial court’s judgment in favor of
Kohner Properties, Inc. (Respondent) on Respondent’s suit in rent and possession for
unpaid rent.1 We transfer to the Missouri Supreme Court pursuant to Rule 83.02.2
Factual and Procedural Background
On October 31, 2014, Appellant entered into a lease with Respondent to rent the
premises at 3543 DeHart Place, Apartment 1. The lease provided for $585.00 per month
in rent and a $200.00 security deposit. Appellant moved into the apartment that day and
immediately noticed problems with the only bathroom. Appellant wrote on her move-in
sheet that the shower was missing tiles and there were cracks in the bathroom floor.
Appellant testified the stove was also not working properly and there were some issues
1
Respondent’s Motion for Attorney Fees on Appeal is denied.
2
All rule references are to Mo. R. Civ. P. 2016, unless otherwise indicated.
with the blinds. While moving in, Appellant asked the property manager about the
bathroom floor and was told there was “nothing [they] could do.”
In November 2014, a water leak appeared in the ceiling above the shower. The
leak began as a drip but developed into a stream. Shortly thereafter, mold began growing
on the ceiling. Appellant reported the leak and mold via Respondent’s telephone service
line and by personally speaking with the maintenance technician.
Records indicate on November 29, 2014, Appellant made a service request
regarding two tiles that had fallen off the shower wall. The tiles were placed back on the
wall by Respondent’s maintenance technician. According to the property manager, the
property was built in the 1950s and “[t]iles are going to start popping.”
Records indicate that over the course of December 2014, Appellant reported an
issue with a board under the kitchen sink, her range would not light and the oven was not
functioning properly, and the tiles had fallen off the bathroom wall again. Respondent’s
maintenance technician replaced the board, turned on the gas to the stove, and put the
tiles back up on the bathroom wall. Shortly thereafter, Appellant reported an electrical
shortage in a bedroom. Respondent’s maintenance technician replaced a light switch in
the bedroom and installed some new blinds.
On February 10, 2015, Appellant contacted Respondent again about the mold on
the bathroom ceiling and the cracked, unstable bathroom floor. Appellant testified the
condition of the floor continued to deteriorate during her tenancy. Respondent’s
maintenance technician responded the following day, at which time he “cleaned [the]
mold area” and requested that a supervisor look at the floor.
2
On March 1, 2015, Appellant withheld her rent payment because her maintenance
requests regarding the leak in the bathroom ceiling, the mold, and the floor were not
resolved.
On March 17, 2015, at 2:00 a.m., the bathroom ceiling above the shower
collapsed. Appellant placed an emergency service request. Respondent’s maintenance
technician responded later that morning and determined the bathtub above Appellant’s
apartment was leaking. After “repairing” the tub spout in the bathroom upstairs,
Respondent taped a black plastic bag over the hole in the ceiling. The leak persisted,
however, and water collected in the plastic and pulled at the tape on the ceiling.
Appellant repeatedly asked Respondent to repair the leak and the hole in her ceiling but
Respondent failed to do so. At the time of trial, in April 2015, both the leak and the
ceiling remained unrepaired.
As a result of the leaking water, Appellant was only getting “minimum” use of the
bathroom. Although Appellant continued to use the shower to bathe, her young daughter
with cerebral palsy was unable to use the bathtub for bathing and was only able to be in
the bathroom for short periods of time. Appellant testified the mold and air conditions in
the bathroom aggravated her daughter’s allergies and irritated her daughter’s eyes to the
extent her eyes were beginning to droop.
Since the collapse, Appellant and her daughter have stayed at a hotel three or four
nights at her own expense. Appellant testified she is still living in the apartment and has
not yet been able to secure other housing due, in part, to a lack of resources. Appellant
testified that while she withheld her March and April rent, she had to expend some of that
money for hotel rooms. Appellant has applied for other housing in her daughter’s school
3
district, but she has been repeatedly rejected because she does not meet the minimum
income requirements. Appellant stated she lives in a low-income area and that it takes
time to find housing within her price range.
On March 20, 2015, Respondent filed a lawsuit against Appellant seeking unpaid
rent and possession of the premises. Appellant filed an answer; affirmative defenses,
including a breach of the implied warranty of habitability; and a two-count counterclaim
for violation of the Missouri Merchandising Practices Act and a common law breach of
lease alleging violation of the implied warranty of habitability. The case went to trial on
April 21, 2015.
Prior to opening statements, Respondent moved to bar Appellant’s affirmative
defense and counterclaim for breach of lease based on the implied warranty of
habitability, asserting such could not be raised because Appellant failed to pay her rent to
the court in custodia legis.3 The court overruled Respondent’s motion and the case
proceeded to trial.
The court took the case under submission and, on May 13, 2015, entered its Order
and Judgment against Appellant for $2,104.36 in rent, late fees, attorney’s fees and court
costs and awarded possession of the premises to Respondent. The court found the
credible evidence demonstrated that, at the time of trial, the hole in the ceiling remained
covered by plastic, the hole had not been repaired, and water continued to drip from the
hole and plastic covering the ceiling. The court found Appellant was barred from
asserting the affirmative defense or counterclaim of implied warranty of habitability
because she failed to either vacate the premises or tender her rent to the court in custodia
3
In custodia legis is defined as “[i]n the custody of the law” and is used in reference to property placed in
the court’s charge pending litigation over the property. Black’s Law Dictionary 836 (9th ed. 2009).
4
legis as required by King v. Moorehead, 495 S.W.2d 65 (Mo. App. W.D. 1973). The
court also found Respondent breached the maintenance clause of the lease agreement and
awarded Appellant a $300 set-off for hotel costs. This appeal follows.
Points on Appeal
In her first point on appeal, Appellant argues the trial court erred in barring her
from asserting the affirmative defense of breach of the implied warranty of habitability
on the grounds she had not vacated the premises or tendered her rent to the court in
custodia legis because doing so is not a legal prerequisite to asserting the affirmative
defense of breach of implied warranty of habitability.
In her second point on appeal, Appellant argues the trial court erred in barring her
from asserting a counterclaim for breach of the implied warranty of habitability on the
grounds she had not vacated the premises or tendered her rent to the court in custodia
legis because doing so is not a legal prerequisite to asserting a breach of implied warranty
of habitability counterclaim.
Discussion
The central issue in the case is whether a tenant who remains in possession of
leased premises must tender her unpaid rent to the court in custodia legis as a prerequisite
to raising a defense of or counterclaim for a breach of the implied warranty of habitability
in a rent and possession suit against her.
King v. Moorehead
King v. Moorehead, 495 S.W.2d 65 (Mo. App. W.D. 1973) is the seminal case in
Missouri on the implied warranty of habitability. The King court provided a thorough
history of the relevant common law, including the traditional doctrine of caveat emptor
5
and the evolution of this doctrine as applied to tenants purchasing an estate in land. Id. at
68-73. The court recognized that modern housing leases are not purely conveyances of
property interests with independent covenants to perform but are also bilateral contracts,
and examined existing judicially created exceptions to the doctrine of caveat emptor. Id.
at 71.
The King court justified the reappraisal of the common law principles of landlord-
tenant law in favor of finding an implied warranty of habitability in residential leases due
to (1) the landlord’s superior bargaining power as a result of contemporary housing
shortages, (2) housing codes requiring the landlord to repair and maintain the property in
compliance with housing codes including Enforcement of Minimum Housing Code
Standards Act (Housing Code Enforcement Act), Section 441.500 et seq,; (3) the
landlord’s superior knowledge of the condition of the premises including latent defects
and of housing requirements and violations, and (4) the residential lessee’s position as a
purchaser of “a well known package of services” who relies on the lessor to provide
habitable housing. Id. at 71-72.
The court further examined legislative actions that altered the common law, such
as the enactment of the Housing Authorities Law, Chapter 99, originally enacted in 1939,
and the 1969 enactment of the Housing Code Enforcement Act. King, 495 S.W.2d at 73-
75. The purpose of the Housing Code Enforcement Act is to coerce landlords to repair
conditions harmful to the life, health, and safety to occupants resulting from violations of
the housing code. Id. at 73. Under the statute, if a landlord failed to make the requisite
repairs within a reasonable time after receiving notice, a receiver appointed upon the
petition of the code enforcement agency or the requisite number of tenants was
6
authorized to collect rent and encumber the property to pay for abatement of the housing
code violations. Id.4
Based on these factors, the court ruled:
[A] lease is not only a conveyance but also gives rise to a
contractual relationship between the landlord and tenant from which the
law implies a warranty of habitability and fitness by the landlord. Under
contract principles a tenant’s obligation to pay rent is dependent upon the
landlord’s performance of his obligation to provide a habitable dwelling
during the tenancy….A more responsive set of remedies are thus made
available to the tenant, the basic remedies for contract law, including
damages, reformation and rescission.
King, 495 S.W.2d at 75-76.
The King court held that every residential lease contains:
an implied warranty by the landlord that the dwelling is habitable and fit
for living at the inception of the term and that it will remain so during the
entire term. The warranty of the landlord is that he will provide facilities
and services vital to the life, health and safety of the tenant and to the use
of the premises for residential purposes. It is an obligation which the
landlord fulfills by substantial compliance with the relevant provisions of
an applicable housing code.
Id. at 75.
The implied warranty of habitability developed, in part, as a response to a chronic
and prolonged housing shortage, particularly for low-income households. King, 495
S.W.2d at 76. The remedy of the implied warranty of habitability is necessary because
common law constructive eviction, which requires the tenant to abandon the premises, is
an insufficient remedy for low-income tenants. Id. Constructive eviction creates a
4
The statute in effect in 1973 provided that a civil action could be maintained under the Housing Code
Enforcement Act on the ground that a nuisance existed with respect to a dwelling by the municipality or
one-third of the tenants. Section 441.510 RSMo 1969. The statute was amended in 1993 to allow certain
not-for-profits and owners or tenants within 1,200 feet of the nuisance property to bring suit. In 1998, the
statute was amended to allow only the county or municipality to bring an action. In 2001, the statute was
amended again and now allows only the county, municipality, local housing corporation, or neighborhood
association to bring an action under the Act. Thus, tenants occupying a noncompliant dwelling have no
personal right of action under the statute.
7
dilemma for tenants, forcing them to either “continue to pay rent and endure the
conditions of untenability or abandon the premises and hope to find another dwelling
which, in these times of severe housing shortage, is likely to be as uninhabitable as the
last.” Id. at 76-77.
The King court stated:
This dilemma is avoided by recognizing that the modern lease is a bilateral
contract so that the tenant’s obligation for rent is dependent upon the
landlord’s performance of his responsibilities, among them, his implied
warranty of habitability. Breach of this duty justifies retention of
possession by the tenant and withholding of rent until habitability has been
restored.
Id. at 77.
The tenant must plead and prove a material breach of the warranty in order to
prevail. In determining whether a condition constitutes a material breach, the court
should consider, among other factors:
the nature of the deficiency or defect[;] its effect on the life, health or
safety of the tenant[;] length of time it has persisted[;] and the age of the
structure. Minor housing code violations which do not affect habitability
will be considered de minimis. Also, the violation must affect the tenant’s
dwelling unit or the common areas which he uses. The tenant is under an
obligation to give the landlord notice of the deficiency or defect not
known to the landlord and to allow a reasonable time for its correction.
The contract principle that a person may not benefit from his own wrong
will exonerate a landlord for a defect or deficiency caused by a tenant’s
wrongful conduct.
Id. at 76.
The court went on to say, “A tenant who retains possession, however,
shall be required to deposit the rent as it becomes due, in custodia legis pending
the litigation.” Id. The court found this procedure “assures the landlord that those
rents adjudicated for distribution to him will be available to correct the defects in
8
habitability” and encourages the landlord to minimize the tenant’s damages by
making tenantable repairs at the earliest time. Id. The court found the trial court
had discretion to make partial distributions of the escrowed funds to the landlord
pending litigation when necessary to prevent an irreparable loss to the landlord.
Id. The court in King concluded this procedure was most compatible with the
policy of the legislature, local housing codes, and the need to preserve and
maintain an adequate supply of habitable housing. Id. at 77.
Detling v. Edelbrock
Eleven years later, the Missouri Supreme Court in Detling v. Edelbrock, 671
S.W.2d 265 (Mo. banc 1984) (abrogated on other grounds), adopted the implied warranty
of habitability established by King and the reasoning set forth therein.
In doing so, the Detling Court looked to the evolution of the common law, the
modern acceptance of a lease as both a conveyance and a contract and the rejection of
caveat emptor in transactions for the purchase of a new home. Id. at 268-69.
Furthermore, the Court recognized the enactment of local housing codes imposed new
duties on property owners and the state legislature’s enactment of the Housing Code
Enforcement Act encouraged compliance with local housing and building regulations by
creating a state remedy for municipalities and tenants against the owners of buildings
failing to meet local housing code standards. Id. at 269.5
The Court noted:
The statute authorizes only three limited remedies which courts are
authorized to order: (1) the payment of present and future rents due from
occupants into the court, § 441.570(1); (2) permitting “the owner to draw
upon the rents deposited in the court to pay for the cost of necessary
5
Again, the Housing Code Enforcement Act has since been amended such that tenants no longer have a
right of action under the statute.
9
repairs ...” § 441.590.1(1); and (3) the appointment of a receiver to
administer the rent moneys paid into the court in order to abate the
nuisance, § 441.590.1(2). The legislature’s authorization of these
remedies suggests it desired to establish a statutory mechanism by which a
nuisance could be abated through the direct use of the tenant’s rent. The
creation of such a mechanism is not in itself an adequate substitute for the
various existing remedies available at common law or under municipal
regulatory schemes for dealing with the abatement of and the damages
caused by nuisances. We believe it is clear that the legislature intended
the Act to be cumulative of these other remedies.
Detling, 671 S.W.2d at 272.
In adopting the implied warranty of habitability, the Court specifically found the
Housing Code Enforcement Act was not the exclusive remedy of tenants occupying sub-
habitable housing. Detling, 671 S.W.2d at 271-72. Instead, a tenant could pursue
traditional contract remedies. Id. at 270. “Tenants may use a breach of the warranty both
as a defense to a landlord’s action for possession and rent [] and as the basis for an
affirmative suit for damages.” Id. at 270. When raised as an affirmative suit, tenants
may seek to recover damages for impaired enjoyment of the premises and consequential
damages. Id.
To state a cause of action for breach of the implied warranty of habitability, the
tenant must allege facts satisfying the following elements: (1) entry into a lease for
residential property; (2) the development of a dangerous or unsanitary condition
materially affecting the life, health, and safety of the tenant; (3) reasonable notice of the
defect to the landlord; and (4) the landlord’s failure to restore the premises to habitability.
Detling, 671 S.W.2d at 270.
Is There An In Custodia Legis Requirement?
In this case, prior to trial on Respondent’s rent and possession lawsuit,
Respondent moved to bar Appellant’s affirmative defense and counterclaim based on
10
Respondent’s alleged violation of the implied warranty of habitability because Appellant
had remained in possession of the premises but had not deposited her rent to the court
pursuant to King’s assertion that “[a] tenant who retains possession...shall be required to
deposit the rent as it becomes due, in custodia legis pending the litigation.” King, 495
S.W.2d at 77. Appellant objected, asserting this language was nonbinding dicta. The
court initially allowed Appellant’s evidence to be admitted but subsequently barred
Appellant’s defense and counterclaim in its Order and Judgment based on King. The
parties maintain their respective positions on appeal.
The Missouri Supreme Court discussed the importance of distinguishing a court’s
holding from dicta in State ex rel. Baker v. Goodman, 274 S.W.2d 293, 297 (Mo banc
1954):
There is no doctrine better settled than that the language of judicial
decisions must be construed with reference to the facts and issues of the
particular case, and that the authority of the decision as a precedent is
limited to those points of law which are raised by the record, considered
by the court, and necessary to a decision.
A careful review of King demonstrates its pronouncement that a tenant asserting a
claim of breach of the implied warranty of habitability, who retains possession of the
premises, is required to deposit his rent with the court pending litigation is nonbinding
dicta.
In King, the landlord sued a tenant for rent and possession. King, 495 S.W.2d at
67. After losing in the magistrate court, the tenant appealed to the circuit court. Id. At
the time of her appeal to the circuit court, the tenant had already vacated the premises and
she raised breach of the implied warranty of habitability as a defense to her withholding
of rent. Id. Because the tenant had already vacated the premises, any alleged
11
precondition to bringing the defense or counterclaim when the tenant remained in
possession was not before the court and was unnecessary to the decision.
We also reject Respondent’s contention that King’s dicta was established as legal
precedent in Wulff v Washington, 631 S.W.2d 109 (Mo. App. W.D. 1982) and Tower
Management, Inc v. Henry, 687 S.W.2d 564 (Mo. App. W.D. 1984). Like King, Wulff
involved a tenant who vacated the premises prior to raising the defense and the court
found the King “requirement” to be inapplicable. 631 S.W.2d 109-110. In Henry, 687
S.W.2d at 565, the circuit court barred the tenants’ implied warranty of habitability
counterclaim because they failed to escrow their rent as it became due even though they
remained in possession. The only issue on appeal was whether the tenants’ appeal bond
satisfied the escrow “requirement.” Id. at 566. The Henry court rejected the tenants’
argument because an appeal bond serves different purposes than funds escrowed in the
circuit court. Id. There is no indication the tenants ever challenged the propriety of the
King escrow requirement itself. Id.
Furthermore, we reject Respondent’s contention the Missouri Supreme Court
implicitly adopted the King in custodia legis requirement in Detling, 671 S.W.2d 265, by
favorably citing to King and because the Detling tenants effectively complied with the
King requirement by paying their rent to a court-appointed receiver. While Detling
adopted the implied warranty of habitability established by King and quoted extensively
from the case, Detling did not adopt the King in custodia legis requirement via citation,
quotation, or rationale. Instead, the King requirement is conspicuously absent from the
opinion, including the Court’s holding as to the claim’s essential elements. Detling, 671
S.W.2d at 270. Nor can it be said the Court implicitly adopted the requirement because
12
the Detling tenants fulfilled the requirement by paying their rent to the court-appointed
receiver. In Detling, the tenants brought an action against the landlord raising several
claims, including a claim under Housing Code Enforcement Act. Id. at 267. The Detling
tenants sought appointment of the receiver and payment thereto as part of their claim
under the Act. Id. The Detling Court specifically found the tenants were not limited to
remedies under the Act and never indicated the King in custodia legis requirement was
(1) being adopted or (2) satisfied by the tenants’ compliance under the Act. Moreover,
most of the Detling tenants had vacated the premises as a result of the untenable
conditions so it is unclear the extent to which the King requirement could even be said to
apply to the Detling tenants. Id.
While the parties argue the implications of several competing cases, there appears
to be no case that clearly addresses the in custodia legis requirement following King.
That being said, and the parties agree, some circuit courts seem to accept the in custodia
legis requirement as established law. Several secondary sources, citing to King, agree.
See 36 Mo. Prac., Landlord-Tenant Handbook §§ 1:1, 23:8; and 18A Mo. Prac., Real
Estate Law §52:18. King’s declarations on this issue, however, are dicta and thus there is
currently no binding legal authority requiring a tenant who remains in possession of the
premises to pay their withheld rent in custodia legis prior to being able to raise the
landlord’s breach of the implied warranty of habitability as a defense or counterclaim in
the landlord’s rent and possession action.
Should There Be An In Custodia Legis Requirement?
The issue then is whether this Court should adopt the King in custodia legis
requirement. By establishing the right to the implied warranty of habitability, King
13
expanded the common law and set forth a new judicially created remedy in landlord-
tenant disputes. In doing so, the court attempted to balance the rights and interests of the
parties before it and to establish guiding principles for future litigation.
As King notes, the implied warranty of habitability was intended to provide a
remedy to low-income households faced with limited housing options by allowing the
tenant to retain possession and withhold rent until habitability was restored, a remedy not
then available to the tenant. King, 495 S.W.2d at 77 (“Breach of this duty justifies
retention of possession by the tenant and withholding of rent until habitability has been
restored.”). The underlying rationale is that people living in poverty may lack the ability
or option of relocating even when presented with what is commonly considered to be an
untenable condition. Courts have recognized that tenants faced with serious unsafe or
unhealthy conditions which a landlord fails to address in a reasonable amount of time are
sometimes forced to remediate the situation at their own cost by making the necessary
repairs or seeking alternative accommodations or housing. See Pugh v. Holmes, 253 Pa.
Super. 76, 88-90, 384 A.2d 1234, 1240–41 (1978), aff’d, 486 Pa. 272, 405 A.2d 897
(1979) (tenant may assert breach as a defense or as a counterclaim and seek
reimbursement or a rent reduction for reasonable sums expended by the tenant for repairs
made to make the dwelling habitable); and Marini v. Ireland, 56 N.J. 130, 146, 265 A.2d
526, 535 (1970) (tenant may make repairs and replacements of vital facilities necessary to
maintain the premises in a livable condition when landlord fails to do so after adequate
period of time and deduct the cost thereof from future rents).
As both King and Detling recognized, a breach of the implied warranty of
habitability entitles the tenant to pursue traditional contract remedies, including damages
14
and consequential damages when raised in an affirmative suit. King, 495 S.W.2d at 75-
76; Detling, 671 S.W.2d at 270. To automatically require every tenant to escrow her
entire withheld rent payment dilutes the very remedy the implied warranty establishes.
Such an inflexible requirement potentially creates a new dilemma for impoverished
tenants to (1) use their rent money to seek new housing or to remediate the condition or
its deleterious effect and be prevented from countersuing or defending against the
landlord, or (2) continue to pay or escrow their rent and live in unsafe and unsanitary
conditions in order to pursue the claim in court.
The King court was concerned about maintaining an adequate supply of habitable
dwellings and fashioned the in custodia legis procedure to assure “the landlord that those
rents adjudicated for distribution to him will be available to correct the defects in
habitability, and will also encourage the landlord to minimize the tenant’s damages by
making tenantable repairs at the earliest time.” King, 495 S.W.2d at 77. It is unclear,
however, why a landlord is entitled to the special protection of being assured of recovery
on a monetary judgment before the tenant can even raise an otherwise permissible
defense or counterclaim. See Missouri Supreme Court Rules 55.08 and 55.32 (rules
governing affirmative defenses and counterclaims, respectively, do not contain general
requirement that a party escrow funds as a precondition to raising an affirmative defense
or bringing a counterclaim).
Furthermore, it is unclear how barring a tenant’s viable defense or counterclaim
for failing to escrow her withheld rent “encourage[s] the landlord to minimize the
tenant’s damages by making tenantable repairs at the earliest time” or helps maintain an
adequate supply of habitable dwellings. Landlords have alternative incentives to
15
maintain their rental properties in habitable condition, including the financial incentive to
rent the premises for the maximum profit and a legal incentive to lawfully maintain the
property in compliance with local housing codes. Instead, armed with the knowledge that
a low-income tenant faces a potentially insurmountable financial barrier to raising a legal
defense in a rent and possession action, landlords lose incentive to quickly repair the
condition because they may be able to avoid making necessary repairs while still
collecting full rent.
Such a severe limitation on a tenant’s ability to raise a breach of the warranty as a
defense or counterclaim places unnecessarily burdensome restrictions on the remedy.
The implied warranty of habitability applies only in extreme situations where living
conditions pose risks to the life, health, or safety of the tenant, through no fault of their
own. Minor housing code violations are insufficient to sustain a claim. See Acad.
Spires, Inc. v. Brown, 111 N.J. Super. 477, 482; 268 A.2d 556, 559 (Dist. Ct. 1970)
(failure to provide heat, hot water, and garbage removal are violations of implied
warranty of habitability but malfunction of blinds, minor water leaks, wall cracks, and
lack of painting go to amenities and, while unpleasant or aesthetically unsatisfying, do
not come within the category of uninhabitability). See also Detling, 671 S.W.2d at 270
(material and substantial violations of municipal codes including roach and rodent
infestations, missing screens, exposed wiring, boiler malfunctions, water leakage,
rubbish, and unstable steps can constitute violation of warranty); King, 495 S.W.2d at 68
(rodent and vermin infestation, defective and dangerous electrical wiring, leaking roof,
inoperative toilet, unsound and unsafe ceilings); Lemle v. Breeden, 51 Haw. 426, 428;
462 P.2d 470, 472 (1969) (rodent infestation violation of implied warranty); Kolb v.
16
DeVille I Properties, LLC, 326 S.W.3d 896, 903 (Mo. App. W.D. 2010) (bedbug
infestation violation of implied warranty); and 43 Am. Jur. Proof of Facts 3d 329 §§ 10-
13.5 (1997) (2016 update) (common conditions that render a premises unfit for human
habitation include insect and rodent infestation; water leakage through roofs, ceilings,
and walls; mold; and faulty plumbing and electric).
Furthermore, the landlord’s interests are protected, in part, because a claim under
the implied warranty can be sustained only if the landlord received notice of the condition
and has been given a reasonable time to repair said condition. Detling, 671 S.W.2d at
270. Also, tenants who withhold rent without sufficient justification, i.e., for de minimis
conditions as opposed to those that pose risks to their life, health, or safety, or otherwise
fail to establish their right to abate or withhold rent, are in default of the lease and the
landlord may pursue the remedies available to him, including damages provided by the
contract such as per diem penalties, late fees, or attorney’s fees.
Other Jurisdictions
Many jurisdictions do not automatically require tenants in possession to escrow
rent with the court in order to raise a breach of the implied warranty. In fact, the majority
of courts which permit rent withholding as a remedy under the warranty allow the tenant
to retain his rent, subject to the court’s discretionary power to order the tenant to deposit
his rent with the court. Restatement (Second) of Property §11.3 note 2 (1977) (2016
update). “This approach provides relief to the tenant while at the same time protecting
the landlord’s valid interest in the property.” Id. Requiring a tenant to place the full
amount of rent into escrow penalizes the tenant by requiring him to pay for more than he
received from the landlord. Restatement (Second) of Property §11.3 note 4 (1977) (2016
17
update). See also, Pugh, 486 Pa. at 292 (declining to institute mandatory escrow
procedure, finding determination of whether a tenant should deposit all or some of the
withheld rent into escrow lies within the sound discretion of the trial court, with the court
considering the seriousness and duration of the alleged defects and the likelihood the
tenant will prevail); Javins v. First National Realty Corp., 428 F.2d 1071, 1083, n.67
(D.C. Cir. 1970) (noting an escrow requirement might be a good procedure to follow but
not requiring such); Bell v. Tsintolas Realty Co., 430 F.2d 474, 484 (D.C. Cir. 1970)
(discussing considerations for the court in entering an order requiring tenant to pay rent
into court registry pending litigation, including factors supporting an amount less than the
contracted-for rent, amount the tenant spent on repairs, and concern that a “tenant’s
financial condition may render the original burden so heavy as to preclude litigation of
meritorious defenses”); Hinson v. Delis, 26 Cal. App. 3d 62, 71; 102 Cal. Rptr. 661 (Ct.
App. 1972), disapproved of on other grounds by Knight v. Hallsthammar, 29 Cal. 3d 46,
623 P.2d 268 (1981) (court may, at the request of either party, require the tenant to make
rental payments at the contract rate into court as they become due for as long as the
tenant remains in possession); and Teller v. McCoy, 162 W.Va. 367, 393-394, 253 S.E.2d
114, 129-130 (W.Va. 1978) (escrow protective orders are not favored but are permitted in
limited circumstances upon the landlord’s motion and a hearing, wherein the landlord
must show an obvious need for protection and must be balanced against the apparent
merits of the tenant’s defense).
To be sure, this Court is not attempting to alter the elements of or relax the strict
standards necessary to successfully maintain a defense or counterclaim of a breach of the
implied warranty of habitability. To successfully maintain a cause of action for breach of
18
the implied warranty of habitability, the tenant must prove: (1) entry into a lease for
residential property; (2) the development of a dangerous or unsanitary condition
materially affecting the life, health, and safety of the tenant; (3) reasonable notice of the
defect to the landlord; and (4) the landlord’s failure to restore the premises to habitability.
Detling, 671 S.W.2d at 270. Instead, we hold a tenant’s submission of the entire
contracted-for rent to the court in custodia legis is not an automatic prerequisite to a
tenant raising the landlord’s breach of the warranty as a defense or counterclaim in a rent
and possession suit against her. We join the majority of other jurisdictions that have
examined and adopted the implied warranty of habitability over the last four decades and
hold that the trial court may order a tenant in possession to submit all, part, or none of her
withheld rent to the court in custodia legis pending litigation. Because the trial court is in
the best position to assess the merits of the case and the parties’ respective positions and
competing interests, the trial court shall have the discretion to enter a suitable protective
order upon either party’s request and after notice and an opportunity to be heard by the
opposing party.
Conclusion
Based on the foregoing, we would grant Appellant’s Points I and II, reverse the
trial court’s judgment, and remand the cause to the trial court for the court’s
consideration of Appellant’s affirmative defense and counterclaim based on the implied
warranty of habitability. However, due to the general interest and importance of the issue
on appeal, we transfer to the Missouri Supreme Court pursuant to Rule 83.02.
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SHERRI B. SULLIVAN, P.J.
Roy L. Richter, J., and
Colleen Dolan, J., concur
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