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Lawrence v. Regent Realty Group

July 26, 2001

AURELIA LAWRENCE, APPELLEE
v.
REGENT REALTY GROUP, INC., ET AL., APPELLANTS



The opinion of the court was delivered by: Chief Justice Harrison

UNPUBLISHED

Docket No. 88237-Agenda 11-January 2001.

Aurelia Lawrence (Lawrence) brought an action in the circuit court of Cook County to recover damages from her landlord, Regent Realty Group (Regent), for failure to make annual interest payments on her security deposit as required by section 5-12-080(c) of Chicago's Residential Landlord and Tenant Ordinance (RLTO) (Chicago Municipal Code §5-12-080(c) (amended November 6, 1991)). The matter was tried before the court, sitting without a jury, which entered judgment in favor of Regent. The court denied Lawrence's claim for double damages as authorized by the section 5-12-080(f) of the RLTO (Chicago Municipal Code §5-12-080(f) (amended November 6, 1991)) and refused to entertain her claim for costs and attorney fees (see Chicago Municipal Code §5-12-180 (amended November 6, 1991)), but ordered Regent to refund to Lawrence the amount of her security deposit with accrued interest.

Lawrence moved for a new trial or reconsideration. When that motion was denied, she appealed. The appellate court reversed and remanded. It held that Lawrence was entitled to judgment for double the amount of her deposit plus interest, as specified by the Chicago Municipal Code. It further held that Lawrence should be given a hearing on her fee petition and that she was entitled to an award of her reasonable attorney fees. 307 Ill. App. 3d 155, 160-61. We granted Regent's petition for leave to appeal (177 Ill. 2d R. 315) and subsequently allowed the Chicago Association of Realtors and the Illinois Association of Realtors to file amicus curiae briefs in support of Regent. We also allowed the Illinois Consumer Justice Council, Inc., and the Legal Assistance Foundation of Chicago to file amicus curiae briefs in support of Lawrence. 155 Ill. 2d R. 346. For the reasons that follow, we now affirm the judgment of the appellate court.

The facts, which come to us through a bystanders report, are straightforward. Lawrence rented an apartment in a building managed by Regent. The apartment was located in the City of Chicago in a building containing more than six residential dwelling units and was subject to the provisions of the RLTO. Lawrence lived there from October 1, 1990, to November 1, 1996. During the term of her occupancy, she received and executed a series of leases. Pursuant to the provisions of those leases, Lawrence paid Regent security deposits, including deposits to cover damage by pets. The security deposits, including the pet deposits, were each held for a period in excess of six months.

During Lawrence's first year in the apartment, Regent paid her interest on the total amount of her security deposit, including the amount designated as a pet deposit. In subsequent years, however, it only paid her interest on the basic security deposit. No interest was paid on the portion of the security deposit designated as the pet deposit. The specifics of each lease follow.

During the first year, which commenced October 1, 1990, and ended September 30, 1991, Lawrence paid Regent a basic security deposit of $435, which was equivalent to one month's rent. She also paid Regent an additional $100 as her pet deposit.

The next year, October 1, 1991, through September 30, 1992, Regent increased Lawrence's monthly rent to $455. Regent carried over her $435 basic security deposit and $100 pet deposit. At the same time, it credited Lawrence for $26.75. That sum represented interest earned on the full amount of the $535 security deposit held by Regent during the previous year, calculated at an annual rate of 5%, the amount fixed by law. Regent did not pay this money directly to Lawrence. Instead, it held it as an additional security deposit. Including the interest credit, Lawrence's total security deposit for 1991-92 was $561.75.

In 1992-93, Regent increased Lawrence's monthly rent to $460. It carried over her prior security deposit of $561.75. It also credited Lawrence for an additional $23.09 in interest, which it applied to increase Lawrence's total security deposit to $584.84. The $23.09 was computed by applying the statutory interest rate of 5% to $461.75 of Lawrence's security deposit. For purposes of determining the interest due, Lawrence's $100 pet deposit was not included.

By letter dated December 30, 1992, Lawrence advised Regent that the $100 had not been included in its interest calculation. Lawrence asked that any corrections or explanations regarding the interest calculation be in writing. Regent did not respond. Instead, it continued to exclude that portion of the security deposit attributable to the pet deposit when computing the interest it owed.

During the 1993-94 lease term, Regent increased Lawrence's monthly rent to $465. The $584.84 security deposit was carried over. In addition, Regent credited Lawrence for $24.24 in interest. As in 1992-93, that credit was computed by multiplying the 5% interest rate by the amount of the security deposit less the $100 attributable to the pet deposit. Regent retained this credit and added it to Lawrence's security deposit, increasing the amount of the deposit to $609.08.

For 1994-95, Lawrence's monthly rent was raised to $475. The $609.08 security deposit was carried over, and Regent credited Lawrence for $25.45 in interest, representing 5% of $509.08, the amount of the prior security deposit excluding the $100 pet deposit. That credit was retained by Regent and added to Lawrence's security deposit, increasing the amount of the deposit to $634.53.

Finally, in 1995-96, Lawrence paid rent of $495 per month. The $634.53 security deposit was carried over, and Regent credited Lawrence for $26.73 in interest, representing 5% of $534.53, the amount of the prior security deposit excluding the $100 pet deposit. As before, that credit was retained by Regent and added to Lawrence's security deposit, increasing the amount of the deposit to $661.26.

The 1995-96 lease was the final agreement between the parties. Under the lease, Lawrence's tenancy was month to month. She terminated her tenancy effective November 1, 1996. Shortly before moving out, she initiated these proceedings in the circuit court of Cook County. As indicated above, Lawrence premised her complaint on Chicago's Residential Landlord and Tenant Ordinance (RLTO). Section 5-12-080 of that ordinance provides:

"(c) A landlord who holds a security deposit or prepaid rent pursuant to this section, after the effective date of this chapter shall pay interest to the tenant accruing from the beginning date of the rental term specified in the rental agreement at the rate [of five percent per year]. The landlord shall, within 30 days after the end of each 12-month rental period, pay to the tenant any interest, by cash or credit to be applied to the rent due.

(f) If the landlord or landlord's agent fails to comply with any provision of Section 5-12-080(a)-(e), the tenant shall be awarded damages in an amount equal to two times the security deposit plus interest at [five percent]. This subsection does not preclude the tenant from recovering other damages to which he may be entitled under this chapter." Chicago Municipal Code §§5-12-080(c), (f) (amended November 6, 1991).

In addition, section 5-12-180 of the ordinance states:

"Except in cases of forcible entry and detainer actions, the prevailing plaintiff in any action arising out of a landlord's or tenant's application of the rights or remedies made available in this ordinance shall be entitled to all court costs and reasonable attorney's fees ***." Chicago Municipal Code §5-12-180 (amended November 6, 1991).

In her complaint, Lawrence alleged that the $100 pet deposit was part of the security deposit paid to Regent and that Regent had failed to pay interest on the pet deposit in violation of the ordinance. Based on that violation, Lawrence sought damages, as authorized by the ordinance, in an amount equal to two times the amount of the security deposit, including the pet deposit, plus interest. She also sought the costs of the action and reasonable attorney fees.

At trial, there was no dispute that the apartment leased by Lawrence was subject to the provisions of the RLTO, nor was there any dispute that Regent stopped paying Lawrence interest on the pet deposit portion of her security deposit after the first year of her tenancy. The company's defense was that it did not regard the pet deposit as a security deposit within the meaning of the RLTO's interest requirements and that any violation of the law on its part was unintentional.

In support of its defense, Regent presented the testimony of Jay Strauss, who was the only witness to testify at trial on behalf of the company. Strauss was Regent's chairman and was personally responsible for keeping track of Lawrence's security deposit and calculating the interest Regent was obligated to pay on that deposit. Although Lawrence's $100 pet deposit was specifically included in each lease under the section designated for the security deposit, Strauss claimed that he did not pay interest on that amount for the years 1991 through 1995 because he viewed the pet deposit as a pet "fee" or "charge" and not as a security deposit. Strauss did not explain how he reached that conclusion, nor did he account for why he had credited Lawrence for interest earned on her pet deposit in 1990.

The circuit court rejected Strauss' characterization of the pet deposit, concluding that it did constitute a security deposit for purposes of Chicago's Residential Landlord and Tenant Ordinance. The court nevertheless ruled that Regent's failure to pay interest on the pet deposit was not sufficient to trigger relief under the ordinance. The circuit court accepted Regent's contention that the right to collect double the amount of the security deposit plus interest under the ordinance applied only where the landlord's failure to pay was willful. The court did not believe that condition had been met here. It characterized Regent's failure to pay the full amount of interest due as nothing more than an error of judgment. Accordingly, it entered judgment for Regent, dismissed Lawrence's complaint and denied her request to submit a petition for attorney fees. At the same time, however, it ordered the company to refund Lawrence's security deposit and the interest on that deposit, including the interest attributable to the pet deposit. Lawrence moved for a new trial or, in the alternative, for reconsideration of the judgment. When that motion was denied, Lawrence appealed. The appellate court rejected the circuit court's interpretation of the RLTO, holding that a showing of willfulness is not required to subject a landlord to the remedies provided under the ordinance. As noted above, the appellate court therefore reversed and remanded with directions to vacate the judgment in favor of Regent, to enter judgment for Lawrence for double the amount of the deposit plus interest, and to conduct a hearing on Lawrence's petition for attorney fees. 307 Ill. App. 3d at 160-61.

We granted Regent's petition for leave to appeal, and the matter is before us for review. The sole issue presented for our consideration is whether the trial court was correct in concluding that the RLTO requires a landlord's violation of the interest payment provisions to have been willful before the tenant is entitled to recover the damages, attorney fees and costs provided by the ordinance. Because that determination turns on the construction and legal effect of the RLTO, our review is de novo. See Plambeck v. Greystone Management & Columbia National Trust Co., 281 Ill. App. 3d 260, 266 (1996).

The terms of the pertinent provisions of the RLTO have been set forth above. As we have indicated, the trial court in this case specifically found that the pet deposit given by Lawrence to Regent constituted a security deposit within the meaning of section 5-12-080(c) and that Regent had failed to pay Lawrence any interest on that deposit after the first year of the lease. The trial court's findings are undisputed. Under the clear and unambiguous terms of section 5-12-080(f) of the RLTO, Lawrence was ...


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