Judge: Tenants Not Entitled To Return Of Rent Money

Written by: Alan Nochumson

In Ricchetti v. Ellis, 2016 Phila. Ct. Com. Pl. LEXIS 348 (Sept. 7), Judge Bradley K. Moss issued a memorandum opinion providing one of the most detailed analysis I have seen regarding the ­obligation of a landlord in Philadelphia to provide a tenant with what is called a Certificate of Rental Suitability and the associated “Partners for Good Housing Handbook.”

In Richetti, the landlord and the ­tenants entered into a written lease agreement for a house located in Northern Liberties, Philadelphia. According to the opinion, the lease term began on July 16, 2012, and ­expired on July 31, 2013.

Soon after the tenants moved into the house, the relationship with the parties soured, the opinion said.

The landlord eventually retained the ­services of legal counsel to collect the rent and the cost of utilities overdue under the lease agreement entered into by the parties as well as for possession of the house, the opinion said.

The landlord then filed suit in the Philadelphia Municipal Court against the tenants.

According to the opinion, after a hearing at the Philadelphia Municipal Court-level, the landlord obtained both a judgment for money and a judgment for possession of the house against the tenants.

The tenants then voluntarily vacated from the house and filed an appeal of the money judgment only to the Philadelphia County Court of Common Pleas, the opinion said.

The landlord filed a complaint against the tenants, seeking payment of the unpaid rent and costs of utilities until the tenants ­vacated the house, the cost of the alleged damage caused to the house by the ­tenants, as well as for the legal fees and costs ­incurred by the landlord in connection with these alleged breaches of the lease ­agreement entered into by the parties.

In response, the tenants filed a ­counterclaim against the landlord centering on the landlord’s failure to provide the tenants with a Certificate of Rental Suitability and the associated handbook in accordance with the Philadelphia Property Maintenance Code.

In the counterclaim, the tenants asserted that not only did they not owe rent to the landlord under the lease agreement ­because the stated certificate and handbook were not delivered to them in a timely fashion, but they would also be entitled to reimbursement from the landlord of the rent they did pay under the lease agreement during the period of noncompliance under the law.

A jury trial administered by Judge Bradley K. Moss eventually took place.

During the trial, the jury heard ­conflicting testimony about when the tenants allegedly received the Certificate of Rental Suitability and the associated handbook from the landlord.

The jury ultimately found that the ­landlord had provided the tenants with the stated certificate and handbook based upon the landlord’s version of events, thus, allowing the landlord to collect the unpaid rent sought under the lease agreement.

At trial, the jury did not consider whether or not the tenants were entitled to ­reimbursement for rent they paid prior to receiving the stated certificate and brochure because Moss ruled that such reimbursement was not compensable under the law.

In addition, the jury award included some of the landlord’s claims for damages to the house, the cost of the unpaid utilities, as well as most of the legal fees and costs incurred by the landlord in connection with her dispute with the tenants.

The tenants then appealed the jury award and some of Moss’ legal rulings to the Superior Court of Pennsylvania.

As part of these appellate proceedings, Moss issued a written opinion setting forth his rationale as to, among other things, why the tenants were not entitled to reimbursement of the rent paid under the lease agreement to the landlord prior to the tenants receiving the stated certificate and handbook.

Moss first cited to the relevant sections of the Philadelphia Property Maintenance Code.

Under Section 102.6.4, which is titled Rent Collection, “no person shall collect rent … unless … at the inception of each tenancy, an owner shall provide to the tenant a Certificate of Rental Suitability … no more than 60 days prior to the inception of the tenancy … along with … the “City of Philadelphia Partners for Good Housing Handbook” issued by the Department” of Licenses and Inspections.

Section 102.7.4, which is titled Private Right of Action provides that “any tenant … shall have the right to bring an action against the owner … to compel ­compliance with this code.”

From the outset, Moss interpreted that the private cause of action established by that cited section was “limited to ­permitting the tenant to compel compliance with the code and not to permitting the tenant to sue the landlord for the return of money the tenant has paid while the landlord was in noncompliance.”

Moss also relied upon a court-approved stipulation agreed to by the city ­government and the Homeowner’s Association of Philadelphia in the litigation that ensued when the original ordinances concerning the Certificate of Rental Suitability and associated handbook were first enacted in March of 2006. According to Moss, the stipulation specifically provided that these ordinances did not limit or expand “the rights of private parties to pursue any legal rights and claims they may possess under a written lease agreement or at common law.”

Moss relied upon rulings handed down in Rittenhouse v. Barclay White, 625 A.2d 1208 (Pa. Super. Ct. 1993), and Goldstein v. Weiner, November 2010 Term–No. 3964 (C.C.P. Phila. Dec. 14, 2011), in rejecting the tenants’ argument that the failure of the landlord to deliver the stated certificate and handbook within 60 days from the inception of the lease agreement in compliance with the law makes the lease agreement void and unenforceable.

Moss pointed out that the Superior Court in Rittenhouse similarly rejected a ­contention by a tenant hat a lease should be deemed unenforceable as a contract for an illegible purpose because the landlord had failed to obtain a necessary permit required by the township’s building code.

In Rittenhouse, the Superior Court ­emphasized that an agreement should only be considered void for illegality when it cannot be performed without violating a statute. Under those circumstances, the Superior Court in Rittenhouse found that “the lease was not, by its terms, per se illegal”, as the tenant did not make any assertion that had a proper application been filed, a permit would not have been issued.

Similarly, Moss noted that the tenants in Ricchetti did not argue that the stated ­certificate and handbook “could not have been obtained and provided at the time that the parties entered into the lease if the landlord had applied for it.”

Moss then stated that Judge David C. Shuter in Goldstein refused to allow for the return of already paid rent when the landlord had failed to obtain a housing inspection license from the city of Philadelphia’s Department of Licenses and Inspections.

In Philadelphia, on an annual basis, a landlord must also obtain a housing inspection license for each and every residential unit the landlord is leasing during that calendar year.

In Goldstein, Shuter held that, while the landlord was prohibited from recovering any unpaid rents from the tenant for the period in which the landlord did not have the required housing inspection license, the tenant had no right to the return of any rent that the tenant had paid to the landlord while the landlord did not have the stated license.

Moss applied the same reasoning ­employed by Shuter in Goldstein in so holding that the tenants in Ricchetti had a potential defense to an action by the landlord to collect unpaid rents but could not affirmatively disgorge any rents that the landlord had allegedly collected from the tenants during the period of noncompliance.

In other words, Moss held that the ­tenants in Ricchetti were not “entitled to the return of the rent money that they paid to the landlord before receiving the certificate and handbook.”

Reprinted with permission from the October 10, 2016 edition of The Legal Intelligencer © 2016 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.

Alan Nochumson