Source: http://massachusettslandlords.com/2009-dolores-v-gustafson-security-deposits/
Timestamp: 2019-04-22 07:07:29+00:00

Document:
this interlocutory appeal [Note 4] whether, in light of the Appeals Court’s October 15, 2009 decision in Taylor v. Beaudry, 75 Mass. App. Ct. 411 (2009), the motion judge properly applied Castenholz v. Calm, 21 Mass. App. Ct. 758 (1986) in allowing summary judgment for the defendants.
General Laws c. 186, s.15B(7) states that if the lessor violates certain provisions of s.15B(6), including failing to place the deposit in an interest bearing account in Massachusetts or failing to return the security deposit or the balance to which the tenant is entitled, plus interest, within 30 days after termination of the tenancy, “the tenant shall be awarded damages in an amount equal to three times the amount of such security deposit or balance thereof to which the tenant is entitled plus interest at the rate of five per cent from the date when such payment became due, together with court costs and reasonable attorney’s fees.” On the facts asserted by the plaintiffs, there is no dispute that their security deposit was not placed in a Massachusetts interest bearing account, the security deposit was not returned within 30 days after the date of the termination of the tenancy, and the defendants failed to comply with statutory requirements for any deduction from the security deposit for damage. On these facts, a literal reading of s.15B(7) would require a court to assess damages against the defendants. The motion judge found that Castenholz, supra, holds otherwise. We disagree.
Subsection (7) imposes the treble damages penalty not for a violation of subsection (3) (a), but for a violation of subsection (6) (a). Subsection (3) (a) establishes the duty to place the security deposit in an escrow account. Subsection (6) (a) declares a forfeiture of the landlord’s right to retain the security deposit if he has failed to comply with the specified duty imposed on him by subsection (3) (a). The forfeiture of the right to retain the deposit means that the landlord is under a duty to return the deposit to the tenant on demand. A violation of subsection (6) (a) occurs if the landlord fails to return the deposit when requested. In that event the treble damages provisions of subsection (7) come into play.
penal; rather, “the underlying goal” is to establish an “equitable relationship” between tenants and landlords (citations omitted).
In Taylor v. Beaudry, the Appeals Court acknowledged that Castenholz “could be read to suggest that treble damages under s.15B(7) are unavailable anytime a landlord responds to a tenant’s demand and returns a security deposit before ‘litigation.”‘ Id. at 415. The Court explained, however, that this was not the holding of Castenholz. That case involved a violation of the s.15B(3) (a) requirement that a security deposit be properly deposited, the forfeiture provision of s.15B(6) (a) applicable when there is a demand during the tenancy for the return of the security deposit because of the absence of a proper deposit in compliance with s.15B(3) (a); and the penalty provisions of s.15B(7) given the absence of statutory guidance in s.15B(6) (a) as to the timing of the return of the forfeited deposit before the end of the tenancy. The Appeals Court indicated in Taylor that the Castenholz decision allowed a “smooth application” of the penalty provisions of s.15B (7). Id. at 416. If the return were made without forcing the tenant to “resort to litigation,” then the damages provisions of s.15B(7) were unavailable. Id. at 415.
The Taylor Court distinguished the circumstances and issues in Castenholz from the situation in this case in which it is undisputed that the full security deposit was not returned within 30 days of the termination of the tenancy, whether measured from February 28, 2008 or March 8, 2008. Unlike the forfeiture brought about by the failure to make a proper deposit, s.15B (6) (e) deals with the failure to make a timely return of the deposit upon the termination of the tenancy, and contains “its own compliance deadline: thirty days after the termination of the tenancy.” Id. at 416. Therefore, “the Castenholz framework is inapplicable” in this case, id., and the penalty provisions of s.15B(7) are controlling in this situation, irrespective of whether the defendants made a timely return of the plaintiffs’ security deposit when notified of their error.
Left unresolved in Taylor is how the treble damages are to be measured. The damages provision of s.15B(7) subjects a landlord to “damages in an amount equal to three times the amount of such security deposit or balance thereof to which the tenant is entitled,” plus interest, costs, and reasonable attorney’s fees. The Taylor Court noted that, although “[n]o appellate court has expressly construed the phrase ‘balance thereof to which the tenant is entitled,'” id. at 417, the following alternative constructions were possible: (1) the “balance” to be trebled is the difference between the amount retained by the landlord and the amount that should have been returned; (2) the “balance” trebled is the difference between the amount the landlord returned within the 30 day period and the amount that the landlord should have returned; (3) where there exists a right to withhold some portion, then the amount trebled is the difference between the amount withheld and the amount that properly could have been withheld, if a timely return is made; and (4) where there exists no right to with hold any amount, the amount trebled is “the entire amount of the deposit, and the amount actually returned would be deducted from the trebled amount.” Id. at 417 418.
The allowance of summary judgment for the defendants on counts 1, 2, and 3 is reversed, and summary judgment on those counts is to be entered for the plaintiffs. The case is returned to the trial court for an assessment and award of damages, attorney’s fees, and costs to the plaintiffs on counts 1, 2, and 3, and for the adjudication of all remaining complaint counts and counterclaims.
[Note 3] The record indicates that the defendants filed a Mass. R Civ. P., Rule 12(b) (6) motion to dismiss for failure to state a claim upon which relief could be granted. The record appendix on this appeal indicates that an affidavit of Cheryl Gustafson, with supporting exhibits, and a memorandum of law were attached to the dismissal motion. It is not clear what exhibits were attached to the motion because the appendix contains only the motion itself. However, the parties have included in the appendix a number of exhibits that apparently were before the motion judge. Also included in the appendix is an affidavit of plaintiff Euridices A. Dolores stated to have been made in opposition to the defendants’ motion to dismiss. “Generally, if matters outside the pleadings are considered in deciding a Rule 12(b) (6) dismissal motion, the motion is treated as one for summary judgment under Mass. R. Civ. P., Rule 56 and each party is afforded a ‘reasonable opportunity’ to prepare and present pertinent material.” Norfolk Fin. Corp. v. MacDonald, 2003 Mass. App. Div. 153 , 156, citing Comes v. Metropolitan Prop. & Cas. Ins. Co., 45 Mass. App. Ct. 27 , 32 (1998). Neither party has challenged the propriety of the motion judge’s treatment of the defendants’ Rule 12(b) (6) motion as one for summary judgment. In any event, to establish error, a party must show prejudice. White v. Peabody Constr Co., 386 Mass. 121 , 126 128 (1982). No prejudice is shown on this record.
[Note 4] Having reviewed plaintiffs’ complaint, defendants’ answer and counterclaims, and the motion judge’s ruling, we must conclude, although no party has raised the issue, that this appeal is interlocutory. The motion judge did not explicitly rule on plaintiffs’ G.L.c. 93A claim (count 4). Fairly read, the claims adjudicated by summary judgment involved counts 1 3 of plaintiffs’ complaint alleging violations of the security deposit law, i.e., failure to return in Sill the security deposit (count 1), failure to return the deposit within thirty days of the termination of the tenancy (count 2), and failure to pay interest on the security deposit (count 3). Each of those counts sets forth the plaintiffs’ contention that they were entitled to three times the amount of the security deposit, plus costs and attorney’s fees, pursuant to G.Lc. 186, s.15B(7). Moreover, although a motion to dismiss defendants’ counterclaims for breach of contract was filed, it does not appear that those counterclaims were adjudicated. Ordinarily, this appeal would be dismissed as premature under “the basic rule that interlocutory orders are not subject to appellate review until the entire case has been disposed of at the trial level.” Chavoor v. Lewis, 383 Mass. 801 , 803 (1981). However, the parties have fully briefed the application of Castenholz v. Calm, 21 Mass. App. Ct. 758 (1986) to this case, and we elect to address the issues presented.
[Note 6] Cheryl Gustafson, in her affidavit, claims that she was given permission by the plaintiffs, on March 29, 2008, to return the security deposit by way of a check, instead of a wire transfer into the plaintiffs’ account, when they returned from vacation. The motion judge adopted this version. We adopt the plaintiffs’ version. See note 5, supra.

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