Court Opinion

ID: 9782620
Source: CourtListenerOpinion
Date Created: 2023-08-30 19:00:20.543794+00
Date Added: 2024-06-11T07:35:06.595044
License: Public Domain

NEHRING, Justice:
137 While I concur in the Majority's result, I write separately because I believe that, in some instances, a claim of equitable setoff may be so intertwined with a tenant's obligation to pay rent as to require suspension of a preliminary determination of possession pending adjudication of the equitable setoff claim.
1388 Utah's unlawful detainer statute states that a tenant "holding real property for a term less than life" is guilty of an unlawful detainer if the tenant "continues in possession ... after default in the payment of any rent." Utah Code $ T8B-6-802(1) & (1)(c) (2008). The Majority today concedes that some counterclaims pled by a tenant claimed to be in unlawful detainer may go directly to the issue of whether the tenant is entitled to lawful possession of the leased premises. In this case the Majority has concluded that DEI has valid equitable claims of setoff, but "[blecause DEI's equitable claim of setoff does not relate to the issue of possession, the district court need not decide this claim before ruling on the issue of possession."
1 39 I do not contest that DEI's equitable claim of setoff does not relate to the issue of possession. The Majority's holding, however, chooses not to acknowledge the possibility that instances could arise where a tenant's equitable claim of setoff is directly related to its obligation to pay rent. Even without a contractual agreement contemplating an offset of rent, the extent of the parties' interaction as evidenced by their relationship, understandings, and conduct could result in a "dependence of covenants" such that a breach of a promise between the parties "is directly relevant to the issue of possession." P.H. Inv. v. Oliver, 818 P.2d 1018, 1021 (Utah 1991). Additionally, a related agreement between a landlord and tenant that establishes a right to a setoff of rent that proves to be otherwise unenforceable may be at issue. In such a case, an equitable claim under the unenforceable agreement may directly relate to a tenant's obligation to pay rent.
140 A final adjudication of possession before a determination of the counterclaim's merits would produce unjust results in the situations described above. This court reasoned in P.H. Investment that if a tenant could not bring a breach of the warranty of habitability as a defense or counterclaim to an unlawful detainer claim, "the tenant would be required to vacate before being able to raise the breach, a result entirely inconsistent with the policy behind our adoption of the implied warranty." 818 P.2d at 1021. Similarly, a determination of possession before further investigation into whether a tenant's claim of equitable setoff sufficiently relates to its obligation to pay rent could cause irreversible harm to a tenant. See Nork v. Pac. Coast Med. Enter.'s, Inc., 73 Cal. App.3d 410, 414, 140 Cal.Rptr. 734 (Cal.App.1997) (listing proper equitable defenses to an unlawful detainer action brought for failure to pay rent). Like the counterclaims of breach of the warranty of habitability and retaliatory eviction, a counterclaim of equitable setoff may similarly resemble an affirmative defense to an allegation of failure to pay rent rather than a permissive counterclaim. See Lincoln Fin. Corp. v. Ferrier, 567 P.2d 1102, 1104 (Utah 1977) (acknowledging that controversies presented in the context of an unlawful detainer action "may be settled as simply and expeditiously as possibly by allowing all legitimate claims, defenses and counterclaims relating thereto in one action" (emphasis added)); Mark VII Fin. Consultants Corp. v. Smedley, 792 P.2d 130, 183 n. 2 (Utah C. App.1990) ("At times, though, a defendant may desire to use recoupment or set-off defensively, rather than as the basis for a counterclaim seeking affirmative relief, and he may properly do so." (quoting J.W. Moore, Moore's Federal Practice § 8:27(8]l (2d ed.1989))).
T 41 I recognize, as does the Majority, that the purpose of the unlawful detainer statutory scheme is designed to speedily determine the issue of possession. P.H. Inv., 818 P.2d at 1020. An adjudication on the merits of an equitable setoff claim before a determination of possession however will not always contra*1213vene the objectives of an unlawful detainer action. If a case contains an equitable claim of setoff sufficiently tied to the obligation to pay rent, the unlawful detainer statute provides a mechanism for the court to determine which party may remain in lawful possession of the premises for the pendency of the litigation. Utah Code section 78B-6-810 states that "[iJn an action for unlawful detain-er where the claim is for nonpayment of rent, ... the court shall hold an evidentiary hearing, upon request of either party." Utah Code Ann. § 78B-6-810 (2008)(2)(a).4 -It is at the evidentiary hearing that "the court shall determine who has the right of occu-pancey during the litigation's pendency." Id. § 78SB-6-810(2)(b)(I). This section allows the court to adjudicate the issues between the parties on the merits "if the court determines that all issues between the parties can be adjudicated without further proceedings." Id. § TSB-6-810(@2)(b)(ii). If the court determines that a tenant's permissive counterclaim of equitable setoff directly relates to whether the tenant is in unlawful detainer, the court may preliminarily decide the issue of occupancy during the pendency of the Titigation under section 78B-6-810(2)(b).
1 42 By correctly stating that DEI's counterclaim of equitable setoff does not directly relate to possession, the Majority's opinion may have the unintended effect of constrict, ing the range of cireumstances under which counterclaims and defenses to unlawful de-tainer are relevant to a determination of possession. The world of real property law relies on written agreements to define the rights between the parties. Equitable claims from time to time may, however, require further inquiry before a court may deprive the tenant of its right to possession.
[ 43 Chief Justice DURHAM concurs in Justice NEHRING's opinion.

. I recognize that section 78B-6-810 was not enacted by the legislature until 2007. Reference to this section is meant only to illustrate the procedure courts may use in unlawful detainer actions going forward.