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Thursday, October 27, 2016

The Security Deposit Sky Is Not Falling: Meikle v. Nurse Did Not Change Evictions Forever


By G. Emil Ward

Lately this author has been hearing a lot of comments swirling around Meikle v. Nurse, 474 Mass. 207 (2016), a recent security deposit case. Some think the case means that $4.61 in unpaid interest on a security deposit claim can in and of itself act as a complete defense to an eviction. Others feel that this decision portends the doom of all evictions if the tenant files a security deposit counterclaim. This author has heard it said that this spells the end of the no-fault eviction and that the fate of landlords now lies in the hands of the legislature.

This author’s response is simple: This is not so.
The case does not represent a sea change in landlord-tenant law. The case came out the way it should have under the present incarnation of M. G. L. c. 239, § 8A, the statute that was not properly applied by the Boston Housing Court to produce the Meikle decision in the trial court. While one can argue that Section 8A should be changed, Section 8A is not producing any worse results for landlords after this decision than it did before it was handed down. Here is why.
For many years, security deposit claims have been an integral part of almost every tenant's defenses that this author has ever faced under Section 8A. In Meikle, the SJC confirmed this. “The steady progression in the availability of tenant defenses, culminating in the elimination of conditions-based restrictions, confirms the Legislature’s intent to provide tenants with a broad set of defenses and counterclaims in the summary process action, including the defense asserted by the tenant in this case [alleging a violation of the security deposit statute, M.G.L. c. 186, § 15B].” Id., p. 213.
M. G. L. c. 239, § 8A allows the tenant to raise any “counterclaim or defense” arising out of the tenancy, such as a security deposit claim.  In a trial, an award under any such claim can be added to the tenant's damage award along with other damage awards, if any, and then matched against the unpaid rent found due to the landlord to determine if the tenant or landlord wins possession after setting one off against the other. This is what is usually known as the “pay over” provision.
For those of you unfamiliar with Section 8A's “pay over” provision, here is how it works. Under Section 8A, if after trial the landlord wins judgment for unpaid rent in the same amount of the tenant’s damages or less than the tenant’s damage award, (for say, a leaky radiator ignored by the landlord for months in winter) the tenant keeps possession and the landlord must pay to the tenant the balance the court found that is due to the tenant. M. G. L. c. 239, § 8A, fifth paragraph.
On the other hand, if the tenant wins an amount of money damages less than the landlord wins in unpaid rent, then the tenant has seven days in which to pay the difference between the rent found due and the damages won by the tenant into the court clerk’s office. If he pays that sum into court, the tenant retains possession. If not, the tenant loses possession. “Where a tenant prevails in a defense or counterclaim and is awarded damages in an amount less than the amount owed to the landlord, the statute provides that ‘no judgment shall enter until after expiration of the time for such payment and the tenant has failed to make such payment.’” Id., p. 213.
In Meikle, the trial judge found that the landlord won $3900 (three months' unpaid rent). The tenant won the return of the security deposit and unpaid interest: $1304.61 ($1300 security deposit, plus $4.61 unpaid interest= $1304.61).  The difference is, of course, $2595.39 that the tenant would have had to pay to the landlord through the court clerk's office to maintain possession. It is at this point that the trial court decision went off track.
For some reason not articulated in the decision, the judge failed to end the decision by offering the “pay over” opportunity, as has been the law for decades, to the tenant who would then have had the option to pay the difference in 7 days' time and retain possession, or not as she chose. The trial judge then awarded $2595.39 and POSSESSION to the LANDLORD in violation of the statute.
That is the key part of the decision that was appealed by the tenant, namely, the judge's failure to state in the decision that now that the damages had been found for both sides and set off against one another, the tenant was to be offered the opportunity to pay the difference between unpaid rent of $3900 and her judgment for damages of $1304.61, or $2595.39, and thus retain possession. Of course, if the tenant had been given the “pay over” opportunity in the decision and failed to make the payment in seven days, judgment for possession would have issued for the landlord, Mr. Meikle. While Mr. Meikle was pro se in the appellate court, landlord groups filed an amicus brief as to the issue that concerned them most which is described below.
The interesting part, and the reason the author believes landlords were so upset with the decision is this. In the appellate brief drafted by the Harvard Legal Aid Bureau (HLAB) who represented the tenant, the brief tracks the SJC’s arguments and the current law as the author understood the applicable law until its conclusion. In its “Conclusion” section, HLAB goes out of bounds and asks the SJC to ignore application of the “pay over” provision that might benefit the landlord, and just grant possession to the tenant. “This Court should vacate the judgment for possession to the Landlord, award possession of the premises to the Tenant, and hold that G.L. c. 239, § 8A provides a defense for possession when there are violations of the security deposit statute, c. 186, § 15B.” Brief of Appellant at 23, Meikle v. Nurse, 474 Mass. 207 (2016) (SJC-11859).
The SJC reversed the order for possession to the landlord and remanded for entry of an order “providing notice to the tenant of the right to retain possession in compliance with G. L. C. 239, § 8A, fifth paragraph.” Id., p. 214.
However, to clear the air regarding the reach of the decision, the SJC stated that a security deposit counterclaim would not provide the tenant with a right to possession, “in perpetuity” if she made timely payment of the amount found due. Id., p. 214. “The statute does not impose an obligatory tenancy on the landlord.” Id., p. 214.
Please note the “pay over” provision may only be used by tenants who are evicted for nonpayment or in no-fault evictions. On its face, the statute bars its use in defense of possession by tenants who are evicted for fault, i.e., breach of the tenancy terms.  The statute does not consider nonpayment of rent to be a “fault” ground.
That's it.  The Supreme Judicial Court simply rectified that error. It did not make new law. In this author’s opinion, no big deal. Just another expensive and time-consuming security deposit case. But, not a sea change in the law.
Emil Ward chairs the Association’s Landlord/Tenant Law Section.  He can be contacted by email at gemilw@aol.com.

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