Court Opinion

ID: 9781548
Source: CourtListenerOpinion
Date Created: 2023-08-30 16:51:28.177172+00
Date Added: 2024-06-11T07:34:27.925696
License: Public Domain

Justice KOURLIS
concurs in part, and dissents in part.
I concur in part and dissent in part. I agree that the landlord did not account for or return the security deposit within the applicable time frame, and is thus liable for treble damages and attorneys’ fees. I disagree, however, as to the majority’s construction of “wrongfully withheld” and the amount of such treble damages.
A landlord who fails to account for a tenant’s security deposit within the statutory period may not avoid treble damages by accounting for the deposit during the subsequent seven-day period; thus, section 38-12-103(3)(a) requires judgment against him for treble the amount wrongfully withheld. In my view, however, the amount wrongfully withheld is $50.40, rather than the entire security deposit.1
The majority holds that because none of the deposit was accounted for within the 45 days after tenant’s surrender of the premises, the entire security deposit was wrongfully withheld. The majority suggests that treble damages will be assessed against a portion of the security deposit only where a landlord timely accounts for the retention of part of the deposit but fails to return the portion for which no accounting is made. I disagree.
I. Statutory Requirement
The applicable statute provides, first, that the landlord shall return the security deposit to the tenant, or the deposit minus any retention, within one month after termination or within a longer period of time — not to exceed sixty days' — -as provided by the lease agreement. § 38-12-103(1). Second, the landlord’s failure to return the deposit or provide a written statement within the required time forfeits the landlord’s rights to withhold any portion of the security deposit. § 38-12-103(2). Where the landlord fails to comply with subsection (1), subsection (3)(a) grants him one last chance to avoid liability for treble damages by returning the entire security deposit to the tenant before the filing of a complaint. I agree that the seven day period is not an additional grace period for the landlord to provide an accounting — and, to this extent, I concur with the majority.
However, I differ as to the application of the provision in subsection (3)(a) that provides:
“The willful retention of a security deposit in violation of this section shall render a landlord liable for treble the amount of that portion of the security deposit wrongfully withheld from the tenant, together with reasonable attorneys’ fees and court costs.”
*401§ 38-12-103(3)(a)(emphasis added). The plain language of this provision first requires proof that the retention of the security deposit was willful. Then, treble damages will attach, calculated based on that portion of the security deposit wrongfully withheld. I read the statute as unambiguous on that point: otherwise, the language would direct that willful retention of the security deposit beyond the return date would subject the landlord to liability for treble the amount of the security deposit. The language is not framed in that manner, but rather mandates trebling of “the amount of that portion of the security deposit wrongfully withheld from the tenant.” § 38-12-103(3)(a) (emphasis added). Thus, the statute distinguishes between forfeiture of the entire security deposit under subsection (2) and treble damages for a wrongful withholding under subsection (3)(a). Where the landlord had actual cause to retain a portion of the deposit, his retention cannot be wrongful. § 38-12-103(1).
In Turner v. Lyon, 189 Colo. 234, 539 P.2d 1241 (1975), the landlord failed to return the security deposit to the tenants before the tenants filed a demand-notice pursuant to section 38-12-103(3)(a). After the notice, the landlord sent a statement explaining why she was retaining their deposit. The tenants filed a claim in the county court for treble damages. On appeal, the court was concerned only with the construction of “willful” and did not address the substance of the “wrongful” requirement. We concluded the landlord could not cure her failure to account during the seven-day notice period and that the penalty provision of section 38-12-103(3)(a) “attaches to that portion of the money wrongfully retained.” Id., at 237, 539 P.2d at 1243 (emphasis added).
Following Turner, we implicitly addressed the meaning of “wrongfully withheld” in Heatherridge Mgmt. Co. v. Benson, 192 Colo. 190, 558 P.2d 435 (1977) overruled on other grounds by Schneiker v. Gordon, 732 P.2d 603 (Colo.1987). In Heatherridge, the tenant quit the rental premises and authorized the landlord to deduct one month’s rent from the security deposit but the landlord failed to return any of the security deposit. We held that only the portion beyond the amount held for one month’s rent had been wrongfully withheld, thus, damages were calculated on the basis of treble that amount.2 Id. Our decision was not dependent upon whether an accounting was provided before or after the statutory period. In fact, the trial court had found that the landlord failed to mail an accounting to the tenant at his new address. Therefore, I disagree that Heatherridge established that any amount not accounted for is “wrongfully retained.”
We again addressed the issue of wrongful retention as it relates to treble damages in Guzman v. McDonald, 194 Colo. 160, 162, 570 P.2d 532, 533 (1977). After the tenants vacated the premises, in that case, the landlord gave them written notice of his intent to retain the $150 security deposit. The tenants then filed a suit in county court. The trial court found that the landlord sustained actual damages of $35.75 and accordingly entered judgment in the amount of $114.25 in favor of the tenants but denied treble damages. Id. at 161, 570 P.2d at 532. On appeal, this court determined that the trial court must find the landlord’s retention of the security deposit was in good faith before denying treble damages and attorneys’ fees and costs. In Guzman, we emphasized that the general assembly intended that the retention be “wrongful” in addition to “willful” and held that “a landlord who gives notice and lists the reasons for the retention of any portion of the security deposit should not be subjected to the statutory award of treble damages ... in the absence of bad faith.”3 While the landlord in Guzman provided notice to the tenants prior to the 30 days, I view the principle concerning calculation of the amount wrongfully retained as relevant here.
The final case on which the majority relied, Martinez v. Steinbaum, 623 P.2d 49 (Colo.1981), is factually distinct from Heatherridge *402and Guzman. In that case, the landlord never presented a statement explaining the retention of the security deposit and the court did not consider the landlord’s actual damages. The case was remanded to the district court for an entry of an award of $495: treble the security deposit.
II. Application
In this case, the Young-Mishkin lease was terminated August 3, 2001. The county court found that the applicable period for return of the security deposit was 45 days, extended by operation of amendment to the lease upon the second year. Thus, Mishkin was required to return the security deposit or provide an accounting by September 17, 2001 to avoid forfeiture of the entire security deposit. Application of the statute to those findings lead to the conclusion that Mishkin did indeed violate the statute by failing to return or account for the deposit within 45 days after August 3, 2001.
When Mishkin failed to contact Young before the expiration of the applicable period, Young filed a demand notice on September 20, 2001. In response, Mishkin provided an accounting, receipts, and a check in the amount of $50.40 on September 26, 2001. The county court found that the damage to the premises exceeded the amount retained by Mishkin, but that the accounting was inadequate to avoid forfeiture under the statute.
By virtue of the county court finding that the withholding was not wrongful as to the $1,574.60, I would conclude that the statute mandates an award of treble the amount of $50.40 plus attorneys’ fees and costs to the tenant, Young — not treble the amount of $1,574.60.
III. Conclusion
The majority concludes that a failure to provide an accounting within the statutory time frame makes the retention of any portion of the security deposit necessarily wrongful. I disagree. That construction vitiates the need for the qualifying language in the statute itself, because mere retention beyond the 30 (or 45 day period here) would trigger trebling of the entire amount of the deposit: not trebling of “that amount wrongfully withheld.”

. The landlord would thus be liable for the full security deposit, $151.20 in damages, the tenant’s attorneys' fees and costs.

. The security deposit was $250; rent was $191.11; Landlord therefore wrongfully withheld $58.89 and was accordingly held liable for $176.67.

. That court further noted that the "discrepancy between the amount retained and the amount of actual damages proved by the landlord is important evidence of his good faith.” Id.