Opinion ID: 2082593
Heading Depth: 2
Heading Rank: 1

Heading: Nature of Ordinance

Text: The first issue that must be addressed in this case is whether the Ordinance is remedial or penal. If a statute is penal in nature, this court will not impose absolute liability absent either a clear indication that the legislature intended to impose absolute liability or an important public policy favoring absolute liability. See People v. Gean, 143 Ill.2d 281, 287, 158 Ill.Dec. 5, 573 N.E.2d 818 (1991). Instead, this court will impose a scienter requirement, whether that be intent, knowledge or recklessness. See People v. Anderson, 148 Ill.2d 15, 23, 169 Ill.Dec. 288, 591 N.E.2d 461 (1992). Both the circuit court and the appellate court addressed this issue. The majority, however, does not feel constrained to do so. In the absence of any discussion in the majority opinion, I outline my thoughts on the nature of the Ordinance, and the intention of the Chicago city council in enacting the Ordinance. As noted in the bystanders' report, the circuit court found that Regent's mistake of judgment in characterizing the pet deposit as a fee or charge and not as a security deposit did not rise to the level of willfulness, as discussed in Szpila, which would support an award of twice the amount of the security deposit. In Szpila, the tenant entered into a one-year lease from May 1, 1989, to May 1, 1990, and paid $975 as a security deposit. At the expiration of the lease term, the parties orally agreed to renew the lease. The building owners deposited rent money they received into the same account in which they held the tenant's security deposit. The tenant vacated the premises on September 30, 1993. The owners claimed that the tenant had admitted breaking a key off in a lock and had requested that the owners deduct the cost of the repair from the security deposit. By October 11, 1993, the owners refunded the tenant $926 of his security deposit. They had deducted $49 from the deposit for the repair, but failed to send the tenant a receipt for the repair. Further, at no time during the tenancy did the owners pay the tenant interest on his security deposit or provide him with a summary of the Ordinance. In a complaint against the owners, the tenant alleged that the owners had violated: section 5-12-080(a) of the Ordinance, which requires that a landlord keep a tenant's security deposit in a different account from that used for rent collected; section 5-12-080(c) of the Ordinance, which required a landlord to pay his tenant 5% interest on a security deposit; section 5-12-080(d) of the Ordinance, which requires that a landlord provide the tenant with a receipt for all repair costs deducted from the security deposit; and section 5-12-170 of the Ordinance, which requires that a landlord provide the tenant with a summary of the Ordinance. The tenant claimed a separate violation of section 5-12-080(c) of the Ordinance for each year that the owners failed to pay interest on the security deposit. For each violation of section 5-12-080, the tenant requested two times the security deposit as a penalty under the Ordinance. The tenant also requested the yearly interest payments on the security deposit, and $100 as a penalty under section 5-12-170. In all, the tenant requested $12,044 for the owners' failure to pay him a total of $195 in interest over a four-year period, for the owners' failure to provide him with a summary of the Ordinance, for the owners' failure to send him a receipt for the repair of the lock and for the owners' failure to keep the security deposit in a separate account. The trial court awarded the tenant the $100 penalty for the owners' failure to give the tenant a summary of the Ordinance, attorney fees and court costs. The trial court also awarded the tenant twice the amount of the security deposit for one of the violations of section 5-12-080. However, the trial court determined that the tenant was not entitled to separate penalties for each violation of section 5-12-080. The appellate court affirmed. Initially, the appellate court noted that section 5-12-080 of the Ordinance does not contain a willfulness requirement. The appellate court also noted the rule of statutory construction that when necessary to effectuate the intent of the legislature a court may alter, supply or modify words and obvious mistakes. The appellate court then stated: We judge, therefore, that to avoid the absurd and unjust result urged upon us by the [tenant], the city council intended that violations under the ordinance, in order to be subject to the penalty provisions, must have been willful. At the very least, the [tenant] should have made some requests for the summary, the receipt and the interest payments.    For these reasons, the trial judge's holding that the [tenant] was not entitled to separate penalties is affirmed. We note parenthetically, although the [owners] do not cross-appeal, that under our holding the [tenant] should not have received a payment of a sum double the amount of the security deposit under any count. Szpila v. Burke, 279 Ill.App.3d 964, 972-73, 216 Ill.Dec. 297, 665 N.E.2d 357 (1996). In Szpila, the appellate court did not refer to the Ordinance as being remedial or penal. However, noting the court's reference to willfulness, other panels of the appellate court have stated that Szpila found the Ordinance to be penal. See Namur v. Habitat Co., 294 Ill.App.3d 1007, 1011, 229 Ill.Dec. 309, 691 N.E.2d 782 (1998); 307 Ill.App.3d at 156, 240 Ill.Dec. 350, 717 N.E.2d 443 (a willfulness requirement can only stand if the ordinance is penal). In Namur, the court held that sections 5-12-080(f) and 5-12-170 of the Ordinance are penal. Initially, the court observed that: A statute is penal if it imposes automatic liability for a violation of its terms and if the amount of liability is predetermined by the statute and imposed without actual damages suffered by the plaintiff. [Citation.] A statute is remedial where it imposes liability only for actual damages resulting from a violation. Namur, 294 Ill.App.3d at 1010-11, 229 Ill.Dec. 309, 691 N.E.2d 782. The court stated that sections 5-12-080(f) and 5-12-170 of the Ordinance are penal because they specify either the amount of damages that can be awarded for violations or the formula by which the amount of damages is to be calculated. Namur, 294 Ill.App.3d at 1011, 229 Ill.Dec. 309, 691 N.E.2d 782. The court also recognized that some portions of the Ordinance are remedial because they permit recovery of actual damages. Namur, 294 Ill.App.3d at 1011, 229 Ill.Dec. 309, 691 N.E.2d 782. Other panels of the appellate court have distinguished Szpila, or simply refused to follow its reasoning. Thus, in Friedman v. Krupp Corp., 282 Ill.App.3d 436, 217 Ill.Dec. 957, 668 N.E.2d 142 (1996), a panel of the appellate court found that the Ordinance is remedial, not penal. The court looked to the statement of purpose contained in section 5-12-010 of the Ordinance to support its finding that the Ordinance is remedial: It is the purpose of this chapter and the policy of the city, in order to protect and promote the public health, safety and welfare of its citizens, to establish the rights and obligations of the landlord and the tenant in the rental of dwelling units, and to encourage the landlord and the tenant to maintain and improve the quality of housing. Chicago Municipal Code § 5-12-010 (amended November 6, 1991). The court employed a rule of liberal construction to give effect to the Ordinance's stated purpose. Friedman, 282 Ill.App.3d at 443, 217 Ill.Dec. 957, 668 N.E.2d 142. Likewise, in the case at bar, the appellate court stated that the clear intent of the Ordinance is to protect tenants and hold landlords to a high standard of conduct when entrusted with a tenant's money. 307 Ill.App.3d at 159, 240 Ill.Dec. 350, 717 N.E.2d 443. The court reasoned: The primary role of statutory construction is to give effect to the legislative purpose, and an inquiry into the legislative intent must begin with the language of the statute. [Citation.] One clear purpose of the ordinance is to protect tenants. This purpose is rooted in the public policy that recognizes that tenants are in a disadvantageous position with respect to landlords. Viewing section 5-12-080(f) as penal, with respect to the single-count violation, would defeat its remedial purpose. 307 Ill.App.3d at 160, 240 Ill.Dec. 350, 717 N.E.2d 443. See also Plambeck v. Greystone Management & Columbia National Trust Co., 281 Ill.App.3d 260, 217 Ill.Dec. 1, 666 N.E.2d 670 (1996) (directing that the trial court award the tenant damages in an amount equal to two times the security deposit plus interest for the landlord's failure to keep two small increases in the security deposit in a separate account from that used for rent monies, and that the trial court award the tenant an identical sum for the landlord's failure to pay interest on the security deposit). In Friedman, and in the case at bar, the appellate court focused on the statement of purpose to find the Ordinance remedial. I am no less conscious of the purpose of the Ordinance. I am also aware that certain sections of the Ordinance provide damages which are remedial in nature. See Chicago Municipal Code § 5-12-060 (landlord's remedies for improper denial of access to premises); § 5-12-110 (tenant's remedies for landlord's failure to maintain premises); § 5-12-120 (landlord's remedies for early termination of rental agreement); § 5-12-130 (landlord's remedies for tenant's failure to pay rent and failure to maintain premises). However, I cannot agree that the Ordinance is purely remedial. A remedial statute contemplates recovery of direct damages sustained by reason of the omission or failure of which complaint is made. Compensation for injuries inflicted, not punishment, is the ground of recovery. Odin Coal Co. v. Denman, 185 Ill. 413, 417-18, 57 N.E. 192 (1900). By contrast, as we explained in Bell v. Farwell, 176 Ill. 489, 52 N.E. 346 (1898): `A penal statute is one which imposes a forfeiture or penalty for transgressing its provisions or for doing a thing prohibited. It is the effectnot the formof the statute that is to be considered, and when its object is clearly to inflict a punishment on a party for violating it, i.e., doing what is prohibited or failing to do what is commanded to be done,it is penal in its character.' Bell, 176 Ill. at 496, 52 N.E. 346, quoting Diversey v. Smith, 103 Ill. 378, 390, 1882 WL 10327 (1882). See also Hoffmann v. Clark, 69 Ill.2d 402, 429, 14 Ill.Dec. 269, 372 N.E.2d 74 (1977). A review of the Ordinance shows that it must be construed as both remedial and penal. For example, section 5-12-080, at issue in this case, provides that the tenant shall be awarded damages in an amount equal to two times the security deposit plus interest. Section 5-12-150 prohibits retaliatory conduct by the landlord and provides that the tenant shall recover an amount equal to not more than two months' rent or twice the damages sustained by him, whichever is greater, and reasonable attorney fees. Section 5-12-160 prohibits an interruption of the tenant's occupancy and provides that a tenant shall recover an amount equal to not more than two months' rent or twice the actual damages sustained by him, whichever is greater. In addition, section 5-12-160 provides that the Chicago police department shall investigate and determine whether a violation of the section has occurred. Any person found guilty of violating the section shall be fined not less then $200 or more than $500, and each day that such violation shall occur or continue shall constitute a separate and distinct offense for which a fine shall be imposed. These damage provisions give a tenant an incentive to enforce the Ordinance. Concurrently, the provisions serve to discourage future violations of the Ordinance by landlords. I, therefore, conclude that the Ordinance is both remedial and penal. That a statute may be both remedial and penal is well supported in our jurisprudence. See Harris v. Manor Healthcare Corp., 111 Ill.2d 350, 361, 95 Ill.Dec. 510, 489 N.E.2d 1374 (1986) (Although we believe that section 3-602 [of the Nursing Home Care Reform Act of 1979] was enacted primarily to encourage private enforcement of the Act and to compensate residents for violations of their rights, we agree that the section also must be construed as being punitive); Acme Fireworks Corp. v. Bibb, 6 Ill.2d 112, 126 N.E.2d 688 (1955); Cedar Park Cemetery Ass'n v. Cooper, 408 Ill. 79, 96 N.E.2d 482 (1951); Howlett v. Doglio, 402 Ill. 311, 318, 83 N.E.2d 708 (1949) (Although the Dram Shop Act is penal in character and should be strictly construed, [citations] the legislation is, at the same time, remedial and should be so construed as to suppress the mischief and advance the remedy); Bell, 176 Ill. at 496, 52 N.E. 346, quoting Diversey, 103 Ill. at 390 (`A penal law may also be remedial, and a statute may be remedial in one part and penal in another'). See also 73 Am.Jur.2d Statutes §§ 13, 292 (1974); 3 N. Singer, Sutherland on Statutory Construction § 60.04 (5th ed. 1992). I believe that a balanced approach, which recognizes that certain portions of the Ordinance are remedial and certain portions are penal, furthers the goal of the Ordinance to promote the public health, safety and welfare of the citizens of Chicago by establishing the rights and obligations of the landlord and the tenant in the rental of dwelling units, and encouraging the landlord and the tenant to maintain and improve the quality of housing. The majority rejects such a balanced approach. Instead, the majority states [t]he purpose of the law is to help protect the rights of tenants with respect to their security deposits, including the right to receive interest. 197 Ill.2d at 10, 257 Ill.Dec. at 681, 754 N.E.2d at 339. The majority nowhere acknowledges the Chicago city council's intention to establish the rights of landlords, and to protect both landlords and tenants in order to promote the goal of quality housing. In my view, the majority's approach to the Ordinance is unbalanced, serving as it does the interests of only one of the two constituencies the Chicago city council intended to protect.