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Kohner Properties, Inc. v. Johnson

Supreme Court of Missouri, En Banc

July 3, 2018

KOHNER PROPERTIES, INC., Respondent,
v.
LATASHA JOHNSON, Appellant.

          APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY The Honorable Judy P. Draper, Associate Circuit Judge.

          PER CURIAM.

         Latasha Johnson appeals a judgment entered in favor of Kohner Properties, Inc., in a rent-and-possession action. She argues the circuit court erroneously barred her from asserting the implied warranty of habitability as an affirmative defense and counterclaim because she remained in possession of the premises without depositing her unpaid rent to the circuit court in custodia legis, which is "traditionally used in reference to property taken into the court's charge during pending litigation over it." Black's Law Dictionary 885 (10th ed. 2014). The circuit court's judgment is affirmed.

         Factual and Procedural History

         Johnson entered into a written lease agreement with Kohner to rent an apartment. The lease required Johnson to pay monthly rent. During her tenancy, the ceiling above the shower in the bathroom collapsed as a result of a water leak in the unit above Johnson's apartment. Kohner attempted to repair the leak and placed a tarp or trash bag over the hole in the ceiling, but the leak persisted. As a result of the damage, Johnson stayed at a hotel at her own expense to use the shower. The circuit court found the parties offered conflicting testimony as to whether Johnson allowed Kohner access to the premises to repair the ceiling and broken floor tiles. Johnson withheld two months-worth of rent.

         Kohner filed an action against Johnson seeking unpaid rent and possession of the apartment. Johnson filed an answer and raised an affirmative defense and counterclaim alleging Kohner had breached the implied warranty of habitability. At trial, and prior to opening statements, Kohner verbally moved to bar Johnson's affirmative defense and counterclaim because she remained in possession of the apartment but had failed to deposit her unpaid rent to the circuit court in custodia legis. After hearing argument, the circuit court overruled Kohner's motion, explaining:

Inasmuch as the Court has not received any evidence at this juncture as to what the circumstances are regarding this tenancy and has no information at this time as to the status of the tenant in her claim, so at this point the Court finds -- I'm sorry -- the Court is going to overrule [Kohner]'s objection and does not consider whatever position [Kohner] has at this juncture. A bar to [Johnson] defending this claim and will take up whether or not the elements of any defense she might have have been substantiated during this trial.

         At trial, the parties were permitted to introduce evidence regarding whether Kohner breached the implied warranty of habitability. After trial, the circuit court, upon "careful consideration of the evidence[, ]" entered judgment in favor of Kohner. The circuit court found the hole in the ceiling remained covered by plastic and had not been repaired, and water continued to drip from the hole and plastic covering the ceiling into the bath tub below. Nonetheless, the circuit court barred Johnson from asserting her affirmative defense and counterclaim based on the implied warranty of habitability because she "failed to either vacate the premises or tender her rent to the Court in custodia legis as required by" King v. Moorehead, 495 S.W.2d 65, 77 (Mo. App. 1973).

         However, the circuit court also found, while Johnson was barred from asserting her affirmative defense and counterclaim, Kohner breached its promise to make repairs under the maintenance clause of the lease agreement and awarded Johnson a set-off for hotel expenses. Accordingly, the circuit court awarded Kohner possession of the apartment along with rent, late fees, attorney fees, and court costs. Johnson appealed, and the court of appeals, after opinion, transferred the case to this Court. Mo. Const. art. V, sec. 10.

         Analysis

         "On review of a court-tried case, [this C]ourt will affirm the circuit court's judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law." Sun Aviation v. L-3 Commc'ns Avionics Sys., 533 S.W.3d 720, 727 (Mo. banc 2017) (citation omitted). Legal questions are reviewed de novo. See, e.g., Blanchette v. Blanchette, 476 S.W.3d 273, 277-78 (Mo. banc 2015).[1]

         I.

         Johnson argues the circuit court erroneously barred her from asserting the implied warranty of habitability as an affirmative defense and counterclaim on the basis she failed to either vacate the premises or tender her rent to the court in custodia legis.

         The circuit court relied on King in barring her from asserting a breach of the implied warranty of habitability. In King, a landlord sued a tenant for rent and possession. 495 S.W.2d at 67. The tenant lost in the magistrate court and vacated the premises before appealing to the circuit court. Id. The tenant asserted, as an affirmative defense, that the landlord breached an implied covenant to provide premises in a safe, sanitary, and habitable condition. Id. at 68. The circuit court determined the tenant failed to state a valid defense. Id. The court of appeals reversed, holding the tenant stated a valid defense because all residential leases include an implied warranty of habitability obligating lessors to guarantee the "dwelling is habitable and fit for living at the inception of the term and that it will remain so during the entire term." Id. at 75.

         Because a landlord is obligated to provide a habitable dwelling, a breach of the warranty "justifies retention of possession by the tenant and withholding of rent until habitability has been restored." Id. at 77. The court of appeals in King concluded its analysis of the implied warranty of habitability by stating, "A tenant who retains possession . . . shall be required to deposit the rent as it becomes due, in custodia legis pending the litigation." Id. It explained, "This procedure assures the landlord that those rents adjudicated for distribution to him will be available to correct the defects in habitability, and will also encourage the landlord to minimize the tenant's damages by making tenantable repairs at the earliest time." Id.

         The court of appeals' discussion of the in custodia legis procedure in King was unnecessary to resolve the case. Because the tenant in King had already vacated the premises, the in custodia legis procedure, which applies when a tenant retains possession of the property, did not pertain to the tenant in King. Therefore, the discussion in King, imposing the in custodia legis procedure in all rent and possession actions when the tenant retains possession of the premises and alleges the landlord breached the implied warranty of habitability, was not necessary to resolve King and could be accurately characterized as dicta.

         Even if King's pronouncement of an in custodia legis procedure was dicta, it is undisputed that the legal pronouncement in King has been dutifully followed by our circuit courts for almost five decades in the absence of contrary guidance from this Court or the Missouri General Assembly. See, e.g., 36 Jane Pansing Brown, Missouri Practice Series: Landlord-Tenant Handbook §§ 1:1, 23:8 (2017); 18A Timothy J. Tryniecki, Missouri Practice Series: Real Estate Law § 52:18 (3d ed. 2006). Moreover, since King, the in custodia legis procedure has been discussed in at least two reported decisions by the court of appeals: Tower Management, Inc. v. Henry, 687 S.W.2d 564 (Mo. App. 1984), and Wulff v. Washington, 631 S.W.2d 109 (Mo. App. 1982). As in King, however, the tenant in Wulff vacated the premises, 631 S.W.2d at 109-10, and, therefore, any discussion of an in custodia legis procedure in Wulff is, likewise, dicta. And in Henry, the tenants retained possession, but did not deposit their rent to the circuit court in custodia legis. 687 S.W.2d at 565-66.[2]

         Until now, this Court has never been required to examine King's pronouncement of an in custodia legis procedure in all rent and possession actions when the tenant remains in possession. In Detling v. Edelbrock, in which this Court recognized an implied warranty of habitability, most of the tenants had vacated the premises. 671 S.W.2d 265, 267, 270 (Mo. banc 1984), abrogated on other grounds by Heins Implement Co. v. Mo. Highway & Transp. Comm'n, 859 S.W.2d 681, 684 n.2 (Mo. banc 1993). Therefore, this Court did not address ...


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