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Tenants Do Not Need to Prove Willful Violation of Chicago Ordinance to Recover Security Deposit Interest, First District Rules

 

 

As Chicago class action attorneys with a focus on consumer rights and consumer protection law, we know that renters in Chicago are fortunate to be protected by a law requiring landlords to pay interest on the renters’ own security deposits once a year, as long as the tenant stays for more than six months. Section 080 of the Chicago Residential Landlord and Tenant Ordinance (PDF) also specifies that landlords must return security deposits, minus unpaid rent or reasonable costs of repairs, within 45 days of the tenant’s departure. Unlike with the corresponding state law, this is true regardless of the number of units the landlord owns. If a landlord fails to comply, the tenant has the right to sue for twice the amount of the deposit, plus interest and attorneys’ fees.

The ordinance also applies even if the landlord did not willfully (that is, intentionally) withhold the payment. That provision was established by the decision of the First District Court of Appeal in Lawrence v. Regent Realty Group, 307 Ill.App.3d 155, 717 N.E.2d 443, 240 Ill.Dec. 350 (1999). In that case, Aurelia Lawrence sued her landlord for withholding interest on a pet deposit. At trial, the court decided that a pet deposit is a security deposit for the purposes of the law (rather than a fee or charge). But because the landlord didn’t willfully refuse to pay interest on that pet deposit, it declined to impose the penalty of twice the deposit plus interest and attorney fees. Lawrence moved for a new trial, which was denied, and appealed to the First District.

In its analysis, the appeals court noted that it did not need to decide whether the landlord actually did willfully fail to pay; what mattered was whether the ordinance required willfulness in the first place. In order to require willfulness, the court wrote, a law must be penal (intended to punish) rather than remedial (intended to make the victim whole). Both sides agreed that the case turned on the issue of penal versus remedial. The court first decided that its decision should not be controlled by Szpila v. Burke, 279 Ill. App. 3d 964, 665 N.E.2d 357 (1996), in which the appeals court decided that a tenant was entitled to damages once rather than for each separate violation of the ordinance. In that case, the First District said, it found willfulness because to do otherwise would give a result that was out of proportion to the violation and unjust. A similar case, Namur v. Habitat Co., 294 Ill. App. 3d 1007, 691 N.E.2d 782 (1998), was dismissed because it did not address the question at issue here.

In this case, the court looked to legislative intent to guide it as to whether the Landlord and Tenant Ordinance is remedial or penal. The plain language of Chicago Municipal Code sec. 5-12-010 states that the ordinance “shall be liberally construed … to promote its purposes and policies,” it noted. The court then cited an entire paragraph from Friedman v. Krupp Corp., 282 Ill. App. 3d 436, 668 N.E.2d 142 (1996), in which it had previously written that the ordinance is remedial, because the law itself says its purpose is to establish rights and obligations in the landlord-tenant relationship and to promote the public welfare. Viewing it as penal would undermine the goals of the ordinance, wrote the court. Thus, the appeals court remanded the case to trial court, with instructions to enter judgment for “double damages” plus interest for Lawrence, and to hold a hearing on attorneys’ fees.

This decision established that tenants do not need to prove that a landlord willfully withheld the security deposit interest they’re owed — only that the landlord did so. This is an important tool for us as Chicago tenants’ rights lawyers, because it allows us to pursue valid cases that might otherwise have been actiionable. From offices in Chicago and Oak Brook, DiTommaso-Lubin handles tenants’ rights cases like this, both for individuals like Lawrence and as class actions that bring together neighbors harmed by the same landlord’s illegal practices. If you believe your landlord has illegally withheld your security deposit or its interest and you’d like to pursue a claim, please contact our Oak Brook and Chicago class action lawyers for a free consultation outlining your legal options.