Hilder v. St. Peter

Hilder v. St. Peter Supreme Court of Vermont, 1984. Facts: Hilder (plaintiff) rented an apartment owned by the St. Peters (defendants) and lived there with her three children and newborn grandson. Hilder’s lease term began in October of 1974. There were many problems with the apartment, including a broken kitchen window, no functioning lock on the front door, a non-functioning toilet, inoperative light fixtures, water leakage, falling plaster and leaking sewage. Hilder complained to St. Peter about each of these problems as she discovered them. St. Peter almost always promised he would fix the problem but never did. Often, Hilder would fix the problem herself at her own expense. Throughout the fourteen months she and her family lived there, Hilder paid the rent as it came due. Procedural History: When Hilder moved out, she sued the St. Peters for breach of the warranty of habitability. The trial court ruled in Hilder’s favor and awarded $4,945, which included $3,445, representing the entire amount of rent paid over the fourteen months, $50 for the security deposit, and other compensatory damages. Both parties filed motions asking the court to reconsider (P: denial of punitive damages. D: amount of damages awarded) the court denied both motions. St. Peter appealed, arguing that the damages were incorrectly calculated. Issue: (1) Should the court adopt the implied covenant of habitability? (2) If yes, whether a tenant is entitled to a return of rents paid for prevailing on a claim of breach of implied covenant of habitability. (3) If yes, whether a tenant is entitled to an award of compensatory and punitive damages for prevailing on the same claim. Holding: Yes, there is an implied warranty of habitability in every lease that cannot be waived. Compensatory damages are calculated by taking the value of the property and subtracting the value of the property in its state of disrepair. Tenant’s can also recover for discomfort and annoyance related to the state of disrepair. Reasoning: (1) Yes. Historically, residential leases were governed by the theory of caveat lessee, wherein the lessee took the property as it was and could not complain of defects. The lessee was presumed to have at least equal knowledge as the lessor regarding the transaction, and could refuse to enter into a lease with someone if the dwelling were insufficient. Today, however, the landlord is likely to be more sophisticated regarding the details of housing units. Therefore, it is appropriate to hold that all residential leases carry with them an implied covenant that the dwelling is safe, clean, and fit for human habitation. (2) Yes. The implied covenant attaches to all residential leases. Because the lease is a contractual relationship between the parties, the standard contract remedies of rescission, reformation, and damages are available upon a breach of the covenant. St. Peter’s claim that Hilder should not recover all of her rent because she nonetheless lived in the premises is rejected. That argument is based upon the premise that a tenant must vacate the premises, likely claiming constructive eviction, before she can make a claim for breach of warranty of habitability. This is no longer the law. Abandonment is not necessary for a tenant to recover her back rent paid for a substandard dwelling. The trial court was correct in holding that one of Hilder’s remedies included the recovery of all the rent paid to St. Peter. (3) Yes. Where a breach of the implied covenant of habitability exists, the tenant has several options. She may, for example, withhold future rent payments until the problems are resolved. In the case of needed repairs, she may make the repairs herself (or contract with another to perform the repairs), and deduct the cost from future rent. On top of these remedies emphasizing repair of the facilities, a tenant may recover compensatory damages reflecting her discomfort and annoyance arising from the defects. In addition, the tenant may recover punitive damages under certain situations. With leases, as with other contracts, a party may recover punitive damages where the breach is so wanton, willful or fraudulent so as to justify an award of exemplary damages. Here, the trial court made a monetary award of $4,945, which was to be reimbursement of all rents paid “plus additional compensatory damages.” The “additional compensatory damages” were not itemized (though they appear to total $1,500) and not discussed in the trial court’s opinion. Without such a discussion, the court cannot review the award’s propriety. Hilder did not appeal the trial court’s refusal to award punitive damages. The matter is remanded to the trial court for a further calculation of Hilder’s compensatory damages consistent with this opinion.