Court Opinion

ID: 9897434
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:11:30.990729+00
Date Added: 2024-06-11T09:15:46.408943
License: Public Domain

FILED
                                                                                   Apr 03 2023, 9:12 am

                                                                                       CLERK
                                                                                   Indiana Supreme Court
                                                                                      Court of Appeals
                                                                                        and Tax Court

      ATTORNEYS FOR APPELLANTS
      Daniel Kahle
      Indiana Legal Services, Inc.
      Indianapolis, Indiana

      Andrew Thomas
      Indiana Legal Services, Inc.
      Fort Wayne, Indiana

                                                   IN THE
           COURT OF APPEALS OF INDIANA

      Montgomery Scott Turner and                                 April 3, 2023
      Morgan Mitchell,                                            Court of Appeals Case No.
      Appellants-Defendants,                                      22A-EV-2622
                                                                  Appeal from the Lawrence
              v.                                                  Superior Court
                                                                  The Honorable Robert R. Cline,
      Roxanna Knowles,                                            Judge
      Appellee-Plaintiff                                          Trial Court Cause No.
                                                                  47D02-2206-EV-173

                                        Opinion by Judge Mathias
                                     Judges May and Bradford concur.

      Mathias, Judge.

[1]   Montgomery Scott Turner and Morgan Mitchell (“the Tenants”) appeal the

      Lawrence Superior Court’s judgment for Roxanna Knowles (“the Landlord”).

      Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023                             Page 1 of 10
      The Tenants raise a single issue for our review, which we restate as whether the

      trial court erred when it concluded that the Landlord did not accept the

      Tenants’ surrender of leased property prior to the date through which they had

      paid their rent. We reverse and remand with instructions.

      Facts and Procedural History
[2]   On January 6, 2020, the Tenants entered into a rental property agreement with

      the Landlord for a residence in Mitchell. Pursuant to that agreement, the

      Tenants paid a $650 security deposit. On July 9, 2021, the parties executed a

      second lease for the same property, with the same security deposit carrying

      over.

[3]   On May 4, 2022, the Landlord sent notice to the Tenants that she would be

      increasing the monthly rent at the residence beginning on June 1. On May 10,

      the Tenants informed the Landlord via certified mail that they did not accept

      the rent increase, and, instead, they would vacate the premises by June 1. In

      that same letter, the Tenants demanded the return of their $650 security deposit

      and provided a new mailing address at which the Landlord could send them the

      deposit. The Tenants also had paid their rent under the pre-May agreement’s

      terms through June 21, and they sought remittance of the unused balance of

      their rent. The Landlord responded to the Tenants that same day and

      demanded that they vacate the premises within thirty days of May 10.

[4]   Nonetheless, on June 2, the Landlord filed a complaint for eviction against the

      Tenants. The court held a hearing on the Landlord’s complaint on June 15. The

      Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023       Page 2 of 10
      Tenants were not present at that hearing because the Landlord had not served

      them with her complaint. Tr. p. 4. Still, the court held the hearing, and the

      Landlord informed the court that the Tenants had already “left the residence”

      and had “let me have the place [on] June the [7th]” by returning the keys to her.

      Id. at 4, 6. She further acknowledged that she had since entered the residence.

      Id. at 7-8.

[5]   The court ordered that the Tenants be evicted from the residence and set

      Landlord’s complaint for a damages hearing for August 3. Thereafter, the

      Tenants learned of the eviction proceedings, retained counsel, and moved to set

      aside the eviction order due to the lack of service of process. The court granted

      that motion but denied a corresponding motion for a continuance of the

      damages hearing.

[6]   At the ensuing August 3 damages hearing, the parties agreed that the Tenants

      had returned the keys to the leased residence to the Landlord by June 7. The

      Tenants’ May 10 certified letter was also admitted into evidence without

      objection. The Tenants further presented undisputed evidence that the Landlord

      never provided them with an “itemized receipt accounting for damages” and

      never returned their security deposit. Id. at 75. Based on that evidence, the

      Tenants argued that the Landlord was not only not entitled to any damages, but

      they were entitled to a return of their security deposit in accordance with

      Indiana Code sections 32-31-3-14 to -15 (2021). Id. at 121-22.

      Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023        Page 3 of 10
[7]   The court found that the Landlord was entitled to damages for the physical

      condition of the residence in the amount of $4,727.05, which the court reduced

      by $500 for loss of value and by an additional $650 for the already-paid security

      deposit. The Tenants filed a timely motion to correct error, which the trial court

      denied after a hearing. In its order denying the motion to correct error, the trial

      court stated that the Indiana Code’s provisions on the return of security deposits

      did not apply here because the “surrender and acceptance” of the residence

      “occurred on June 21 by virtue of” the Tenants’ having paid their rent through

      that date. Appellant’s App. Vol. 2, p. 12. This appeal ensued.

      Discussion and Decision
[8]   The Tenants appeal the trial court’s conclusion that the surrender and

      acceptance of the residence happened on June 21 rather than on June 7. Our

      standard of review is clear:

              We review facts from a bench trial under the clearly erroneous
              standard with due deference paid to the trial court’s opportunity
              to assess witness credibility. Morton v. Ivacic, 898 N.E.2d 1196
              (Ind. 2008). “This deferential standard of review is particularly
              important in small claims actions, where trials are informal, ‘with
              the sole objective of dispensing speedy justice’ between parties
              according to the rules of substantive law.” Id. at 1199 (quoting
              City of Dunkirk Water & Sewage Dep’t v. Hall, 657 N.E.2d 115, 116
              (Ind. 1995)). The only issues presented in this case are questions
              of law. Accordingly, we review them de novo. Id.

      Branham v. Varble, 952 N.E.2d 744, 746 (Ind. 2011).

      Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023         Page 4 of 10
[9]    Further, the Landlord has not submitted a brief on appeal. As our Supreme

       Court has made clear:

                where, as here, the appellee[] do[es] not submit a brief on appeal,
                the appellate court need not develop an argument for the
                appellee[] but instead will “reverse the trial court’s judgment if
                the appellant’s brief presents a case of prima facie error.” Front
                Row Motors, LLC v. Jones, 5 N.E.3d 753, 758 (Ind. 2014). Prima
                facie error in this context means “at first sight, on first
                appearance, or on the face of it.” Id.

       Salyer v. Washington Regular Baptist Church Cemetery, 141 N.E.3d 384, 386 (Ind.

       2020).

[10]   When the surrender and acceptance of the residence occurred is of material

       significance. According to Indiana Code section 32-31-3-14:

                Not more than forty-five (45) days after the termination of
                occupancy, a landlord shall mail to a tenant an itemized list of
                damages claimed for which the security deposit may be used . . . .
                The list must set forth:

                        (1) the estimated cost of repair for each damaged item; and

                        (2) the amounts and lease on which the landlord intends to
                        assess the tenant.

                The landlord shall include with the list a check or money order
                for the difference between the damages claimed and the amount
                of the security deposit held by the landlord.

       Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023          Page 5 of 10
       And, under Indiana Code section 32-31-3-15: “Failure by a landlord to provide

       notice of damages under section 14 of this chapter constitutes agreement by the

       landlord that no damages are due, and the landlord must remit to the tenant

       immediately the full security deposit.” There is no question that, if June 7 is the

       date on which the parties terminated their lease, the use of the August 3 hearing

       to provide notice of the damages (as there was no evidence that the Landlord

       provided notice to the Tenants at any other time) was untimely; likewise, if

       June 21 is the proper date, the notice of damages at the August 3 hearing was

       within the statutory forty-five-day window.

[11]   We conclude that the Tenants have established prima facie error in the trial

       court’s determination that the parties terminated their lease on June 21 instead

       of June 7. As the Indiana Supreme Court has held: “termination of the rental

       agreement occurs after surrender by the tenant and acceptance of surrender by

       the landlord,” provided that “the tenant has supplied a forwarding address.”1

       Lae v. Householder, 789 N.E.2d 481, 484 (Ind. 2003). As we have added:

               A surrender will arise by operation of law when the parties to a lease
               do some act so inconsistent with the subsisting relation of landlord and
               tenant as to imply they have both agreed to consider the surrender as
               effectual. Paxton Realty Corp. v. Peaker, (1937) 212 Ind. 480, 9
               N.E.2d 96, 100; Carpenter v. Wisniewski, (1966) 139 Ind. App.
               325, 215 N.E.2d 882; 3A G. Thompson § 1344. Thus, a
               surrender cannot be effected by the actions of only one party;
               therefore, a surrender may not be forced upon a landlord by the

       1
        The Tenants’ May 10 certified letter to the Landlord demanded the return of their security deposit and
       provided the Landlord with an address at which to mail the deposit.

       Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023                               Page 6 of 10
               unilateral actions of the tenant. To constitute a surrender by
               operation of law, there must be some decisive, unequivocal act by the
               landlord which manifests the lessor’s acceptance of the surrender. Carp &
               Co. v. Meyer, (1929) 89 Ind. App. 490, 167 N.E. 151; Aberdeen
               Coal & Mining Co. v. City of Evansville, (1896) 14 Ind. App. 621, 43
               N.E. 316; see G. Thompson § 1342; 52 C.J.S. Landlord and
               Tenant § 493 (1968). The resolution of whether there has been
               such a surrender and acceptance will be determined on a case by
               case basis by examining the acts of the respective parties in each
               case. State v. Boyle, (1976) 168 Ind. App. 643, 344 N.E.2d 302;
               Northern Indiana Steel Supply Co. v. Chrisman, (1965) 139 Ind. App.
               27, 204 N.E.2d 668.

               In the case at bar, [the tenant] has attempted to attach undue
               importance to its delivery of the keys to the [landlord’s] office by
               asserting that solely by the act of accepting the keys, the landlord
               accepted the tendered surrender. This assertion is erroneous. The
               keys must be returned and accepted with a view to terminate the tenancy
               to make this evidence of a surrender. Woodward v. Lindley, (1873) 43
               Ind. 333. Clearly, the mere delivery of the keys to the landlord without
               other acts to show the landlord accepted the keys as a surrender of the
               premises[] is not sufficient to release [a tenant] from further liability.

       Grueninger Travel Serv. of Ft. Wayne, Ind., Inc. v. Lake Cnty. Trust Co., 413 N.E.2d

       1034, 1038-39 (Ind. Ct. App. 1980) (emphases added).

[12]   Here, the undisputed evidence makes clear that the Landlord accepted the

       Tenants’ surrender of the residence no later than June 7. On May 10, the

       Tenants sent the Landlord a certified letter stating their intent to vacate by June

       1. In that letter, the Tenants acknowledged they had paid their rent through

       June 21, and they demanded the return of the unused portion of that rent. The

       Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023                Page 7 of 10
       Landlord responded to that letter the same day and demanded the Tenants

       vacate the premises within thirty days.

[13]   Prior to the expiration of that thirty days, however, the Landlord filed her

       complaint to evict the Tenants from the residence on June 2. A few days after

       that, although they had not received notice of the complaint, the Tenants

       returned the residence’s keys to the Landlord. The Landlord accepted the keys

       and then used them to access the premises. After doing so, she admitted to the

       court at the June 15 eviction hearing that the Tenants had vacated the residence

       and “let me have the place” on June 7th. Tr. p. 4.

[14]   These facts are unlike those in cases where we have held the mere surrender of

       keys to be insufficient evidence of a landlord’s acceptance of the termination of

       a lease. For example, in Grueninger, we held that the landlord did not accept the

       surrender of the keys as termination of the lease where the landlord had

       “repeatedly advised [the tenant] of [the landlord’s] intention to hold [the tenant]

       liable under the lease.” 413 N.E.2d at 1039. Similarly, in Figg v. Bryan Rental

       Inc., we held that the landlord did not accept the surrender of the keys as

       termination of the lease because the landlord demanded the tenant “continue

       his lease payments until the lease term ended or until a subtenant could be

       found.” 646 N.E.2d 69, 74 (Ind. Ct. App. 1995), trans. denied. And, in Eppl v.

       DiGiacomo, we held that the tenant did not present any evidence that the

       landlord had taken “any decisive, unequivocal action . . . that manifested his

       acceptance of her surrender of the premises.” 946 N.E.2d 646, 652 (Ind. Ct.

       App. 2011).

       Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023        Page 8 of 10
[15]   Here, the Landlord made no demand and expressed no intent to hold the

       Tenants to the lease. Indeed, the evidence is clear that she took decisive,

       unequivocal action that manifested her acceptance of the Tenants’ surrender of

       the residence when she demanded the Tenants to vacate the premises within

       thirty days of May 10; when she sought to evict the Tenants by filing her June 2

       complaint; and when she admitted to the court that, on June 7, the Tenants had

       “let me have the place” after returning the keys. Tr. p. 4. Accordingly, the

       Tenants have shown prima facie error in the trial court’s determination that the

       Landlord’s acceptance of the Tenants’ surrender did not occur by June 7 but

       instead occurred on June 21.

[16]   The Indiana Code is clear that where, as here, a landlord fails to provide a

       tenant with notice of damages within forty-five days of the termination of a

       lease under I.C. § 32-31-3-15, the landlord agrees as a matter of law that “no

       damages are due, and the landlord must remit to the tenant immediately the full

       security deposit.” Thus, the trial court erred when it awarded damages to the

       Landlord for physical damage at the residence and did not order the Landlord

       to return the $650 security deposit to the Tenants. We therefore reverse the trial

       court’s judgment and remand with instructions to vacate its award of damages

       for the Landlord and order the Landlord to return the $650 security deposit to

       the Tenants. We further instruct the trial court on remand to determine the

       Tenants’ reasonable fees and costs in accordance with Indiana Code section 32-

       31-3-16.

[17]   Reversed and remanded with instructions.

       Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023         Page 9 of 10
May, J., and Bradford, J., concur.

Court of Appeals of Indiana | Opinion 22A-EV-2622 | April 3, 2023   Page 10 of 10