Suing Your Tenant for Damages – Can You Recover Attorney’s Fees?

It’s one of the larger mines in the minefield of renting out property as a landlord – what happens when the tenant breaches the lease? What happens when the tenant doesn’t pay? In and among the questions presented by such a scenario is whether a suit against the tenant would be cost-effective. The landlord’s decision may, in large part, depend on whether the landlord is entitled to recover its costs and attorney fees associated with prosecuting its claim against the tenant. And, in Kentucky, the landlord’s right to recover costs and attorney fees depends on the circumstances surrounding the tenant’s breach of the lease.

Kentucky has adopted the Uniform Residential Landlord and Tenant Act (KRS 383.500 to 383705)(hereinafter the “Act”), which governs transactions between those parties in jurisdictions where the Act has been adopted and enacted.[1] The discussion herein is limited to jurisdictions where the Act has been adopted. Pursuant to the Act, KRS 383.570 lists provisions that landlords are prohibited from including in lease agreements. Specifically, KRS 383.570(1)(c) prohibits provisions that require tenants to agree to pay the landlord’s attorney fees under any circumstances.

However, while lease agreements may not require the payment of attorney fees from the outset, the recovery of attorney fees and costs by the landlord is permitted under other parts of the Act. For instance, KRS 383.660(3) states that “If the tenant’s noncompliance is willful the landlord may recover actual damages and reasonable attorney’s fees.” However, it must be determined whether the tenant’s conduct is “willful” before any such recovery is permitted under the Act.

In Batson v. Clark, 980 S.W.2d 566 (Ky. App. 1998), the Kentucky Court of Appeals noted Kentucky’s general policy against awarding attorney’s fees as costs in the absence of a statute or contract provision specifically allowing for recovery. With regard to the award of attorney’s fees under KRS 383.660, the Kentucky Court of Appeals very clearly stated that it views the prohibitions in KRS 383.570 as a strong indicator of “public policy disfavoring a landlord’s recovery of attorney’s fees incurred in an action against a tenant.”[2] The Court determined the mere failure to pay rent, accompanied by requests for more time or promises to pay, did not rise to the level of “willful” as defined by the statute.[3] The Court found a strong presumption against the award of attorney fees and set a high bar with regard to declaring a tenant’s noncompliance with a lease “willful.”

Hispanic couple outside home for rentHowever, there are circumstances where attorney fees are recoverable. In Palladino v. Shropshire, 2013 WL 6730733 (Ky. App. 2013), the Kentucky Court of Appeals held that a tenant’s deliberate damaging of the premises and keeping a pet in contravention of the lease rose to the level of willfulness as envisioned by the statute and left an award of attorney’s fees intact.

Thus, while the burden is high in establishing the right to recover attorney fees and costs, it is not insurmountable. In most situations, landlords will not be entitled to recover attorney fees when seeking damages from tenants for the nonpayment of rent. However, the landlord may be entitled to its attorney fees and costs where there is deliberate damage to the premises by the tenant and for other willful violations of the lease. For more information on the remedies available to landlords under the Uniform Residential Landlord and Tenant Act, contact the attorneys at McBrayer.

BYatesBrendan Yates joined the Lexington office of the firm as an associate in 2002. Brendan is a member of the firm’s Litigation Department, where he focuses his practice on construction and real estate litigation, workers’ compensation defense litigation, insurance defense and commercial litigation. He has successfully defended his clients in state and federal courts, the Kentucky Court of Appeals, the Kentucky Supreme Court, and in administrative agency proceedings in Kentucky. He can be reached at byates@mmlk.com or (859) 231-8780, ext. 208.

This article is intended as a summary of state and federal law and does not constitute legal advice.

[1] See KRS 383.500. It is important to note that, if adopted, the provisions of the Act must be adopted in their entirety and without amendment.

[2] O’Rourke v. Lexington Real Estate Company L.L.C., 365 S.W.3d 584, 586 (Ky. App. 2011).

[3] Id.

Use of Restrictive Covenants in the Zoning Process

Zoning categories and the uses that are allowable in each of them are subject to the possibility of amendment by the legislative body. This means that a property can apply to the planning authority to change his zoning designation or to add uses within that designation that are otherwise prohibited. However, many citizens incorrectly believe that zoning designations are permanent and that uses within each zoning category never change. When a neighboring property owner files to rezone property, asking to amend the zoning ordinance to add a new use to a particular category that is prohibited, the neighbors become alarmed at the potential change to their area. Although neighboring property owners have a right to attend hearings and object to the proposed changes, they have no final say or authority as to whether the governmental body approves it. This can lead to zoning battles.

Sometimes zone change applicants will offer to impose restrictive covenants on the property they are seeking to rezone in order to address neighbor concerns. Restrictive covenants, when recorded and enforceable by the neighbors, are a powerful way to protect property from zoning changes that otherwise the neighbors would consider too intensive or inappropriate.

Sketching Of Building Construction On Flying Book Over Urban SceRestrictive covenants are restrictions on land use that are recorded in the county clerk’s office. Restrictions run with the land and last for a term of years, often in 10 or 20 years renewable terms. They typically spell out who has the power to enforce them and how they are to be enforced. In general, restrictive covenants cannot be removed or modified without the written consent of the party who has the power to enforce them. Restrictive covenants can control issues that generally go beyond the reach of the government to regulate in the zoning process, for example architectural and design features, restricting certain uses or agreeing to preserve certain natural features.

Many governments do not enforce restrictive covenants of this nature because they are rightly considered private agreements. However, restrictive covenants can be a valuable tool to assuage opposition to zoning amendments if the proponent is willing to live with some restrictions on his property in order to reduce neighborhood objection to his proposal and thereby increase the chances the planning body will approve the zoning amendment.

CWestoverChristine Neal Westover is an attorney in the Lexington office of McBrayer. Ms. Westover has extensive experience practicing law in both the public and the private sector. The focus of Ms. Westover’s experience and area of practice is land use law since her assignment in 1991 as legal advisor to the boards, commissions and divisions of government within Lexington Fayette County on all matters related to planning, zoning and land use law. Ms. Westover has an extremely deep and broad expertise of the laws governing land use in Kentucky and the procedural and substantive complexities that underpin planning and zoning matters. She also has significant experience dealing with governmental divisions such as Building Inspection, Code Enforcement and other administrative bodies due to their regulatory authority in land use matters. Ms. Westover can be reached at cwestover@mmlk.com or (859) 231-8780, ext. 137.

AAA Revises Construction Arbitration Rules

New home constructionThe American Arbitration Association (“AAA”) revised its Construction Industry Arbitration Rules and Mediation Procedures (“Rules”) as of July 1, 2015. Many of the changes are designed to streamline the arbitration process, making it more efficient and cost-effective. While there were many noteworthy changes in the rules, we summarize the most significant and far-reaching revised and new rules below. It is important to note that not all the revised or new rules will apply to contracts in effect before the rules took effect, so the following provisions may or may not apply to existing claims.

Mediation

Possibly the most significant change in the rules is the addition of a phase of mediation in disputes in Rule R-10. Previously only an option, parties to a dispute are now required to mediate the disputes in a fashion prescribed in the AAA’s construction mediation procedure if any claim in the dispute exceeds $100,000 during the pendency of an arbitration. Parties may opt out of mediation after giving notice unless there is an agreement that requires mandatory mediation.

Emergency Relief

Concerns about speed and need for intervention led to the creation of new Rule R-39. Under new Rule R-39, a party may apply for emergency relief if it believes it will be subject to immediate and irreparable loss or damage. Within one business day of such notice for emergency relief, the AAA will appoint an emergency arbitrator, and that arbitrator will set a schedule for consideration of the application for emergency relief within two business days. The emergency arbitrator may then award such relief as he or she deems necessary. This rule only applies to arbitration agreements entered into after July 1, 2015.

Joinder

New Rule R-7 fills a prior gap in the arbitration rules concerning joinder, setting the deadline of submission of requests for joinder or consolidation prior to the later of the selection of a Merits Arbitrator or within 90 days of the AAA determining that all filing requirements have been satisfied. Written responses to these requests must come within 10 or 14 days, respectively, of the AAA’s notice of such a request. Failure to object to joinder waives such objections.

Sanctions

If a party does not comply with obligations under the arbitration rules or any order of the arbitrator, new Rule R-60 allows the opposing party to request that the arbitrator impose sanctions on the noncompliant party.

Fast Tracking

Rule F-1 has been revised to apply to two-party cases where no claim or counterclaim exceeds $100,000. The earlier rule capped the applicability of fast tracking to claims of not more than $75,000.

Preliminary Hearing

Rule R-23 has been rewritten, providing that the timing of the preliminary hearing is at the arbitrator’s discretion and points to new Rules P-1 and P-2 to flesh out general and specific topics, respectively, to be discussed.

Pre-Hearing Exchange of Information

Rule R-24 has been revised so that an arbitrator may act on his or her own initiative or at the request of a party to (a) require the parties to exchange any information on which they will rely at the hearing, (b) update exchanges of information as more documentation becomes known to the parties, (c) require the parties to respond to document requests from the seeking party, and (d) require the parties, when documents to be produced are in electronic form, to make such documents available in the form most convenient and economical to the party in possession of such documents unless the arbitrator determines that the documents should be in a different form. The size and scope of such an electronic production of documents should be considered, and search parameters should be established at the outset of the exchange at the agreement of the parties or the determination of the arbitrator.

Dispositive Motions

New Rule R-34 allows an arbitrator to now consider motions that would dispose of part or all of a claim or would narrow the issues in a claim.

There are other changes to the rules that will serve to effectuate a more streamlined arbitration process, and these revisions should have a profound effect on the construction industry. The attorneys of McBrayer can assist with understanding how the new arbitration rules will affect alternative dispute resolution in construction claims. Contact us today for more information on how the new arbitration rules will affect you.

CRichardsonChristopher A. Richardson is an associate at McBrayer, McGinnis, Leslie & Kirkland, PLLC in the Louisville, KY office. Mr. Richardson concentrates primarily in real estate, where he is experienced in residential and commercial closing transactions, landlord/tenant relations, and mortgage lien enforcement/foreclosure. Mr. Richardson has closed innumerable secondary market and portfolio residential real estate transactions and his commercial practice ranges from short-term collateralized financing and construction lending to development revolving lines of credit. He can be reached at 502-327-5400 or crichardson@mmlk.com. This article is intended as a summary of  federal and state law and does not constitute legal advice.