Judge Dina Fein, follow the law, please! (part 2)

After I published Judge Dina Fein, follow the law, please I received a comment by Attorney A. Joseph Ross saying that Leardi is consistent with the ruling in Hershenow. I realized that I couldn’t answer with a couple of sentences and that my answer would require its own post. Here it is:

Attorney Ross, thank you for your comment. I appreciate and try to answer every comment.

Nice try but Leardi is NOT consistent with Hershenow. If it was consistent it would mean that the rule “no actual injury = no 93A” somehow applies to all businesses except landlords and that would be ….ahh, weird  (: Treating landlords as the only exception and as second-hand citizens and businesses in this case would be intellectually dishonest.

Here is a quote from the Majority Opinion in Hershenow:

MAJORITY OPINION:  “The plaintiffs do not directly address the issue of causation, arguing simply that under Leardi, any misrepresentation of legal rights in a consumer contract is a “per se injury” and that no more is needed to establish injury under G. L. c. 93A, § 9. We disagree.”

And here are some quotes from the concurring and dissenting opinions. Please note that BOTH the concurring and dissenting opinions say that Leardi is not consistent with Hershenow:

COWIN, J. (concurring).

“The Legislature never intended to allow a plaintiff who has not been adversely affected to recover nominal damages leading to attorney’s fees that may eclipse that damage award many times over. See, e.g., Lord v. Commercial Union Ins. Co., 60 Mass. App. Ct. 309, 313-314 (2004) (reviewing nominal damage award of $25 that resulted in further award of $9,000 in attorney’s fees and $2,170 in litigation costs)

The truth is that today Leardi v. Brown, supra, has been overruled as it should be, but sub silentio. While he disagrees with the outcome, Justice Greaney, in his dissent, makes the same observation.”

GREANEY, J. (dissenting, with whom Spina, J., joins).

“FN4 In concluding today that an illegal consumer contract (the invasion of a legally protected interest) cannot constitute an injury under G. L. c. 93A unless a plaintiff demonstrates an ascertainable loss, the court appears to limit the reach of the Leardi holding to the circumstances of that case…

The efforts of the court to distinguish Leardi (from this case) are transparently feeble… (This decision) has effectively set aside the principles stated in the Leardi.”

And here is what I have to say:

What Judge Fein is doing is extremely abusive and is exactly why Hershenow came into being. It is wrong, wrong, wrong to award $25 which leads to thousands and sometimes tens of thousands of attorney fees in cases where the tenants were not really injured. That Judge Fein is still doing this in 2012 and getting away with it is simply amazing and it shows that landlord groups in MA have no backbone. Just to put things in perspective the average landlord in MA makes about 10% from the rents as profit/salary. Unless they bought the units for less than $10,000/unit do your math and you’ll see that I am right. In other words if your yearly rents are $100,000 your yearly salary/profit after you pay all expenses is about $10,000. On the other hand Leases are long and complicated contracts. For example my lease is almost 20 pages, 8,500 words and 63 Clauses. It would be hard NOT to find any sentences or combination of words that could be considered possibly illegal or deceptive or unfair to someone. So it is an easy financial bonanza for the average lawyer who can get thousands of dollars for an afternoon of reading a Lease. We are talking about clauses that were never enforced by the landlord or the tenant! No one was injured here and yet by awarding $5,000 to a lawyer who found an unfair sentence when probably 95% of landlords make less than $10,000/year is putting all landlords in MA in a serious financial trouble. 93A is not covered by insurance.  A friend of mine was forced to settle for $140,000 most of that money, I believe, going to the tenant lawyers after almost 3 years of litigation over sentences that were found to be unfair and deceptive by Judge Dina Fein. First, it was highly debatable whether they were either but the point is once she ruled that way he had to settle or risk another 2 years of appeals and lawyer costs. He had to settle even though neither he nor the tenant ever enforced any of these clauses. I don’t think he is making more than $100,000/year. The “punishment” doesn’t fit the crime and that is why Leardi was de facto overruled by SJC in Hershenow.  The intent of the Legislature was not the abusive result in Leardi.

I agree with the concurring opinion that it would have been less confusing if Leardi was explicitly overruled and that it should have been explicitly overruled.

The fact that the Leardi decision was not explicitly overruled as it should have been creates a narrow opening for some out-of-the-mainstream judges like Judge Fein, who do not need much encouragement to be anti-landlord to begin with(:, to continue applying Leardi as if nothing had changed.

But even if Leardi can be applied, it can no longer be applied fully as the Majority explains. Here is the hair-splitting explanation given by the Majority as to why Leardi was not explicitly overruled: “The illegal lease terms would deter tenants from exercising their legal rights on pain of loss of their tenancy. Stated differently, the illegal lease terms acted as a powerful obstacle to a tenant’s exercise of his legal rights… In marked contrast, the statutorily noncompliant terms in Enterprise’s automobile rental contracts did not and could not deter the plaintiffs from asserting any legal rights.” Of course the SJC doesn’t  ask or  answer one simple question that throws the above hair-splitting comparison out of the window and that is: “How was Tina Leardi not able to assert  her legal rights when she not only found a lawyer to defend her but in fact brought the case to the Supreme Court and won?” The very fact that we are still talking about Leardi shows that she asserted her legal rights plenty.

Judge Fein, Leardi should not be used at all any more under these circumstances but if you want to use Leardi to continue to declare illegal and/or unfair and/or deceptive clauses in a lease as “per se” violations under 93A then you must make sure first that those specific clauses acted as a  “powerful obstacle to a tenant’s exercise of his legal rights”. If they didn’t or can’t, then Hershenow and Iannacchino should be applied. No Classes of Tenants should be allowed over Leases with unenforced clauses.

Attorney Ross, while I appreciate and welcome any comments including comments that disagree with me I must say that based on your background I completely understand why you are running so quickly in defense of Judge Fein. After all, according to your own web site you are the creator of the infamous MGL 239, sec 8A, the “rent  withholding” law in MA that has caused so much pain to so many people over the past 30 or so years. And by the way, don’t just take my word for it. Plenty of respected attorneys have addressed it.

Ahh, if I were you I wouldn’t brag about it!

MGL 239, sec 8A happens to be one of the most poorly written laws in MA, in my opinion (well, in fairness, I am slightly exaggerating, they are all pretty poorly written and difficult to understand). It is convoluted and confusing, it is full with Legalese (in fact so much so that I had to “translate it in English“) and this statute has single-handedly caused probably millions of dollars of lost tax revenue and countless unnecessary landlord-tenant confrontations.

It is safe to say that two of the main reasons why http://www.MassachusettsLandlords.com came into existence are #1 – the abuses going on around 93A including the fact that it is unconstitutional not to give it to juries because it is a legal and not an equitable claim and #2 – your unfair MGL 239, sec 8A. I have written numerous articles on MGL 239, sec 8A.(Why We Need Mandatory Rent Escrow Now, I even filed a bill with the help of Senator Flanagan to change it, A Form Letter to be used by Massachusetts Landlords regarding 93A and 239, sec8A)

You don’t want to read all of that…? What’s wrong with it, you ask?…Here are 3 quick things:

1. To start with, it is most likely unconstitutional because it is unconstitutional to deprive one person of their property (the withheld rent) without due process (at least one hearing in front of a judge).

2. It is written in a way that is not clear. It is constructed poorly. It is difficult to understand. It is titled “rent withholding” but doesn’t seem to talk about or authorize rent withholding…Of course, that hasn’t stopped lawyers and judges from using it to allow rent withholding even when the withholding was done in bad faith and basically legalize stealing.

3. Because it contains no build-in consequences (like mandatory rent escrow, for example) to bad-faith rent withholding it has basically legalized tenant retaliation against landlords in MA. Tenants routinely use it to justify the “withholding” of the entire rent for minor things like missing window screens or for things that they had broken. They routinely call the Health Board in bad faith and then start “withholding rent” after they receive a letter from us or after we tell them something they don’t like to hear. Sometimes they call the Health Board and start “withholding” simply because they ran out of money for the rent. By the time we reach a judge (about 2 months) they are gone with our rent because it was never escrowed. If they are not gone they try to use the “poor conditions” as counterclaims against us when they are the ones who called the Health Board in bad faith and in retaliation to something we said or did or simply because they ran out of the rent money. Once the law had been written and considering that legislators tend to pander to the majority (the tenants) and the fact that tenant lawyers would lose a windfall if mandatory rent escrow was enacted so there is a considerable opposition to modifying your MGL 239, sec 8A, it has proven very difficult to correct it. We have filed legislative bills every year for the past 15, I think, without any successful change to the law. If the full rent was not escrowed, it must be assumed that the Health Board was called in bad-faith and all Habitational Counterclaims disallowed, that’s what needs to happen.

In the other words, your MGL 239, 8A is a total mess and it has been very expensive to the state of MA. If money is stolen from landlords, it is not only immoral and wrong but it also becomes an issue of reduced tax revenues.

While the rent is being illegally withheld and then spent without any accountability or stolen by some tenants, keep in mind that most landlords really rely on this rent to pay their bills and who knows how many foreclosures have been caused by your short-sighted MGL 239, sec 8A. It should have been written in a way that allows due process and has mandatory rent escrow built-in to discourage tenant retaliation. But it wasn’t…and we’ve had to endure it and pay for your mistake for over 30 years and we are still paying for it…so…if I were you I wouldn’t brag about it online… where things tend to stay forever. You don’t want to be remembered (as you probably will be) as the person who created MGL 239, sec 8A.

Dear Landlords, we really need to get our act together and unite. Without unity and without understanding the issues and being helpful to each other we would not be able to convince Legislators to act. This web site has pre-written letters and the emails of all legislators under the section called “Take Action”. Use them. Write more and send them to me at e@massachusettslandlords.com. The SJC has done what they have done but apparently that is not enough. Cases like Pumiglia should be appealed. I completely understand why an individual landlord would not want to risk his own money for the common benefit. Maybe we need to have a common foundation funded by donations by those of us that are more successful as a way to give back which will help worthy cases to be appealed.

Send your stories to e@massachusettslandlords.com. The more we talk about it the better. The more publicity we get about these injustices the better. Write to your legislators, meet with them. Tell them that MGL 239, sec 8A needs to be modified to add a mandatory rent escrow to counteract bad-faith retaliatory calls to the Health Board and bad-faith retaliatory counterclaims. Tell them that some judges are still ignoring the causation/actual injury requirement of 93A and small property owners seem to be the only business in Massachusetts that are still held liable for unfair clauses in their leases even when no one was injured by enforcing the clause. Tell them to clarify 93A – Letter by RHAGS, Signatures of Central MA Landlords, Signatures of Western MA Landlords.

In the next week I will be filing legislative bills to that effect. We need Mandatory Rent Escrow, Late Fees after 10 days not 30, 3-day Notices not 14 and clarifications to 93A. We need to modify MGL 186, 15B – another poorly written law. We must talk about these issues with our Legislators. Otherwise they will never get enacted and the abuses will continue. There are plenty of bad landlords out there but I hope there are plenty of good ones as well who will fight for our rights. If you think that things will get better on their own, think again. We can’t blame Judge Fein or the Tenant Lawyers 100%. We, the Landlords of MA, carry a responsibility to learn the law and to be critical of what’s going on. Exercise your Right to Free Speech. Use Social Media. Criticize judges and other public officials. We all have a responsibility to be politically active. So…really the harshest criticism I have reserved is not for Judge Fein (Hell, I’d probably try to get away with doing the same things as she is doing if I were in her place after having to deal with countless landlord trolls coming to my court), the tenant attorneys, the SJC  or even the Legislators but for the Massachusetts Landlords. We need to look in the mirror. We are to blame for the past and the current situation. Not only because there were and are many ignorant and uneducated people who think that they can be landlords but also in my experience we are currently very fragmented and disorganized and not enough politically active as a whole.

Respectfully,
Elmir Simov