[RPPTL LandTen] Class Action Settlement

Wed Aug 12 12:17:57 PDT 2009

Class Action
Tenants who broke leases reimbursed with credit restored

July 31, 2009	 By: Jordana Mishory 	

Rod Tennyson

 	  	 Renters and tenants
<http://www.dailybusinessreview.com/related_news.html?cluster_id=961>

he owner of 11 South Florida apartment complexes has agreed to pay
$500,000 and remove almost $2 million in charges from credit reports of
tenants who were charged for breaking their leases. 

If approved by a judge, the settlement
<http://www.dailybusinessreview.com/images/news_photos/56541/Settlement.
pdf>  would resolve a class action by 603 former tenants against Olen
Properties and Olen Residential Realty. 

The parties will ask Palm Beach Circuit Judge Edward Fine to approve the
settlement Wednesday at a fairness hearing. Fine gave preliminary
approval in May. 

The settlement covers the last of 11 class action suits filed against
some of the state's biggest landlords who were accused in the litigation
of charging tenants illegal early termination fees of nearly three
months rent. 

Counting the final settlement, plaintiff attorneys would have recovered
almost $12.5 million for renters and removed nearly $92.3 million in
charges from credit reports. Claims in the Olen case must be filed by
Oct. 5. 

Plaintiff attorney Rod Tennyson said the goal was to help clean up
credit reports for tenants who were assessed the charges. 

When renters broke leases or failed to provide adequate notice of
nonrenewals, they would be charged the equivalent of up to three months
rent. Tennyson said 90 percent of renters wouldn't or couldn't pay the
fees and the amount was entered on their credit reports. 

"It was killing their credit," said Tennyson, a solo practitioner in
Lantana who worked on the case with West Palm Beach attorneys Theodore
Babbitt of Babbitt Johnson Osborne & LeClainche and Jane Kreusler-Walsh
of Kreusler-Walsh Compiani & Vargas. Babbitt declined to comment through
his secretary. 

The latest settlement, like the others, requires the defendants to
notify credit bureaus to remove contested charges levied against
tenants. Olen also changed its lease forms to drop provisions for
assessing the contested charges. 

Since the lawsuit was filed in 2006, state law has changed to require
that tenants who vacate their apartments early pay a maximum of two
months rent or the landlord's actual loss on a vacancy. Tenants would
make a choice when they sign the lease. 

Tennyson said he and his co-counsels' seven-year quest has made a
difference. 

"We changed this industry in Florida and made it much more friendly to
tenants," Tennyson said. 

Olen attorney Sheridan Weissenborn maintains the rental companies didn't
violate the law by charging tenants several months rent and said the new
law could be more harmful than helpful to consumers. Tenants who chose
to pay actual amount could face months of payments in a market slump. 

"The theory is that immediately these landlords are re-renting in 30
days," Weissenborn said. "That's not the norm necessarily." 

Her co-counsel, Spencer Sax of Sachs Sax Caplan in Boca Raton, said his
clients settled because it would cost less than fighting it out in
litigation. Sax said only seven people have filed claims so far -
putting his clients on the hook for only about $7,000. 

"We assumed very few people were affected," he said. "This is really a
lawsuit over legal fees." 

Ron Book, who lobbies for landlords in the Florida Apartment
Association, asserted that the litigation did "tremendous damage to
consumers" because of the potential financial consequences. 

"People who win litigation are trial lawyers who get hefty fees at the
end of class action lawsuits," he said. 

Tennyson denied consumers will be hurt. He said he has seen many
instances of landlords renting vacated units in several days. 

Click play to listen to Rod Tennyson 

"That's been their response since Day One. They're representing their
clients. What can I tell you?" Tennyson said. The class action cases
"changed the entire industry. There are 4.5 million tenants in Florida,
and this affected all of them." 

Tenants Rights 

The underlying case was filed on behalf of Samantha Moss, who left her
Boynton Beach apartment before the lease was up in 2004 for a new job.
Although she gave 30 days notice to her landlord, Olen Properties in
Newport Beach, Calif., it still required her to pay another month's rent
of $760 as the fee for vacating the apartment early. Olen kept Moss'
security deposit and threatened to report her to the credit bureau,
according to the complaint. Olen was able to quickly rent the apartment
again so it suffered little or no economic loss. 

Moss was the lead plaintiff in the class action filed on behalf of Olen
tenants and their roommates who left their apartments from March 2002 to
October 2007 and received a demand for fees worth three months rent. 

The class action, which was certified by Fine and upheld by the 4th
District Court of Appeal last year, claimed Olen's actions violated
common law, the Florida Residential Landlord Tenant Act, the Florida
Consumer Collection Act and the Florida Deceptive and Unfair Trade
Practice Act. 

Olen, which owns and operates 11 Florida rental properties in Broward
and Palm Beach counties with nearly 3,300 apartments, denied wrongdoing.

Under the settlement, tenants will receive refunds amounting to the
contested charges plus 6 percent interest. They will also get $1,000 in
statutory damages for charges between March 2004 and October 2007.
Damages will be capped at a total of $500,000. 

Plaintiff attorneys stand to be awarded $500,000 to $1.5 million in fees
and costs. The amount will be decided in arbitration starting Monday. 

The named plaintiffs will get $1,000 each. 

Tennyson said no class members have filed objections to the settlement. 

The court disputes over termination charges began in 2002 with
litigation against Chicago-based Equity Residential Properties. 

The case went to trial in 2004 before Palm Beach County Judge Susan
Lubitz, who ruled the company knowingly charged tenants illegal
early-termination fees. She ordered Equity to erase more than $15
million in charges from tenants' credit reports. The case was settled
while on appeal. 

During the litigation, landlords sought to change state law. In 2007,
the Florida Apartment Association successfully pushed a bill that would
allow landlords to charge an early termination fee or liquidated damages
worth up to two months' rent. Gov. Charlie Crist vetoed the bill,
claiming it would "harm the 4.5 million Floridians or live in rental
properties." 

A less stringent bill was signed last year that allows landlords to
charge no more than two months of rent to tenants who break their
leases, or tenants would have the option of paying a landlord's actual
economic loss for how long the apartment stays open. 

Reflecting on seven years of litigation, Tennyson said the cases
initially seemed like a challenge. 

"When we started, we figured the counter argument is going to be 'a
contract is a contract is a contract. The tenant signed a lease that if
you breach you will have to pay landlord three months rent,'" he said.
"The sanctity of a contract - that was a tough thing to overcome." 

Jordana Mishory can be reached at (954) 468-2616. 

Rod Tennyson photo by Melanie Bell 

Arthur J. Menor 
Partner  
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