The intersection of Oregon landlord-tenant law and civil litigation can be difficult to navigate. Any eviction action must be executed in exact compliance with legal requirements, so it is advisable to consult with an attorney that specializes in landlord-tenant law on eviction action best practices.
However, even if done correctly, initiating an eviction may be the beginning of a very long litigation process. Eviction actions may result in reciprocating counterclaims for habitability issues, retaliation, and attorney fees by the tenant. Such counterclaims may trigger insurance coverage when the tenant’s claim implicates bodily injury or property damage, thus triggering a duty to defend. Often times potential covered claims are pled along with claims subject to common coverage exclusions, such as complaints related to mold infestation or intentional torts. As such, it is important for defense counsel to be aware of which exclusions may apply and develop a litigation strategy that avoids dismissing covered claims in a way that leaves remaining claims uncovered, and to maintain a dialogue with the insured as to strategy on all claims. Other areas of caution to consider:
Common Counterclaims Against Insured Landlords
One common counterclaim in eviction proceedings is the habitability complaint. ORS 90.320 provides a comprehensive list of specific requirements for landlords. Depending on the type of rental, different standards could apply. For example a mobile home or recreational vehicle park may have different requirements for the amenities required. There are some possible defenses for a landlord confronted with a claim based on violation of ORS 90.320, One example of a possible defense is that a landlord is entitled to receive notice of problems and to have an opportunity to remedy. See ORS 90.360.
Another common counterclaim or basis for suit following eviction is retaliation. ORS 90.375 allows a claim as follows:
If a landlord unlawfully removes or excludes the tenant from the premises, seriously attempts or seriously threatens unlawfully to remove or exclude the tenant from the premises or willfully diminishes or seriously attempts or seriously threatens unlawfully to diminish services to the tenant by interrupting or causing the interruption of heat, running water, hot water, electric or other essential service, the tenant may obtain injunctive relief to recover possession or may terminate the rental agreement and recover an amount up to two months’ periodic rent or twice the actual damages sustained by the tenant, whichever is greater. If the rental agreement is terminated the landlord shall return all security deposits and prepaid rent recoverable under ORS 90.300. The tenant need not terminate the rental agreement, obtain injunctive relief or recover possession to recover damages under this section.
Claims of landlord wrongdoing require a highly fact specific analysis of who said what to whom when, and whether services were diminished in any way. A simple eviction can become a question of when services were terminated, and whether any complaints had been made prior to eviction (this can be enough to create a question of fact even if the tenant complaints seem invalid to the casual observer). Accordingly, defense counsel needs to have a realistic picture of the strength of the insured landlord’s initial eviction proceeding and whether there is sufficient evidence the tenant had breached the lease.
Attorney Fee Exposure
Another critical component of risk assessment for property owners is attorney fee exposure. A tenant who prevails, even on a very small portion of their claim, may be entitled to attorney fees. ORS 90.255 states:
In any action on a rental agreement or arising under this chapter, reasonable attorney fees at trial and on appeal may be awarded to the prevailing party together with costs and necessary disbursements, notwithstanding any agreement to the contrary. As used in this section, “prevailing party” means the party in whose favor final judgment is rendered.
Courts have found that the “prevailing party” in the landlord tenant context is the party who obtains a net verdict in their favor. This means that when a plaintiff landlord asserts claims against defendant and the defendant asserts counterclaims, if each party prevails on some of its claims courts will look to who had a net award. In Torbeck v. Chamberlain, 138 Or App 446, 910 P2d 389 (1996), each party prevailed on some of its claims, but the value of the tenant’s claims based on various issues exceeded the value of the awards landlord received for his claims. The Court of Appeals held that the tenants had prevailed and awarded them attorney fees. This made a win of approximately $500 by tenants into what was likely an enormous bill for fees and costs through appeal. This must be taken into account when assessing the risk of evicting a tenant.
Moreover, courts have declined to apportion fees among tenant claims with authorized fees under the RLTA and claims based in common law. In other words, if a tenant brings claims based on habitability concerns and retaliation under the RLTA, but also brings common law negligence and breach of contract claims, a landlord is exposed to an award of fees for litigation of all claims, not just the RLTA claims because the claim arise out of the same set of facts.
There are potential defenses that may protect a landlord from attorney fee exposure, even if tenant prevails, for example unclean hands or tenant has failed to act in good faith as required by ORS 90.130. There may also be an argument that the court should award fees on a claim-by-claim basis rather than the net award applied in Torbeck. A careful analysis of the facts of each case is required to understand the potential risk.
There is also no requirement that attorney fees are in any way proportional to the amount awarded a tenant. The Oregon Supreme Court has held that “disproportion between relief tenants obtained and attorney fees they sought was not proper consideration in determining whether to award tenants fees.”
ORS 20.075 sets forth a long statutory list of factors a court must consider in determining whether to award fees, and the amount of fees. This does give the court some latitude in deciding reasonable attorney fees. It is by no means a forgone conclusion that a small award for plaintiff will trigger a large award of attorney fees, but it is one of the main risks in this type of litigation.
Preparing for Settlement Negotiations or Litigation
Once initiated, claims of habitability issues, retaliation, or similar are often the landlord’s word versus the tenant’s, and thus unlikely to be resolved as a matter of law through motion practice. If the tenant’s counsel is agreeable, early settlement talks are a good way to navigate more quickly towards a resolution and to avoid the costly discovery required by these fact intensive cases of who knew what when. Defense counsel are encouraged to educate insurers and landlords about the option to settle early on, and mitigate fees on all fronts. Depending on the case, defense counsel should consider engaging in a frank dialogue with plaintiff’s counsel about the tenant’s expectations, and perhaps even push for an early mediation. Some tenants who are in contentious living situations are open to expedited proceedings in an effort to improve their own living situations.
Leading up to settlement talks and potential mediation, defense counsel should focus on assessing the insured landlord’s liabilities. It is critical to assess the veracity of any claims made by the tenants by looking at maintenance records, complaint files, the insured’s records of incidents and issues, tenant payment, landlord financial records, and any other documentation that may shed light on whether a tenant’s claims have any basis. If the landlord is being sued in the context of a counterclaim or suit in response to an eviction, it is particularly important to gather evidence of records supporting tenant’s non-payment of rent, improper behavior, or any other basis that the landlord has cited for eviction. If the landlord cannot clearly demonstrate that it had a reason to evict, supported by clear evidence, the landlord will be much more vulnerable to counterclaims or suits for wrongful eviction or retaliation. Furthermore, good evidence of tenant’s unclean hands can be persuasive in settlement negotiations and will be critical to proving any affirmative defenses should the case proceed to motions practice and trial. A background check and social media investigation of the tenant may be worthwhile. In sum, defense counsel needs to have a thorough accounting of an insured landlord’s vulnerabilities, and solid evidence of wrongdoing by the tenant that will undermine its claims against the landlord.
[1] It is critical to review the very specific requirements set forth in ORS 90.320 and other applicable statutes.
[2] See eg. Perry v. Hernandez, 265 Or App 146, 333 P3d 1188 (2014) (The Oregon Court of Appeals held that segregation of fees between tenant’s RLTA claim and tenant’s common-law claims was not necessary).
[3] Claim by claim attorney fee awards is the normal process in cases that are not based on landlord tenant act claims. See ORS 20.077.
[4] Barbara Parmenter Living Tr. v. Lemon, 345 Or. 334, 194 P.3d 796 (2008). (In Parmenter, the tenant was awarded $1,396.00 and sought attorney fees in the amount of $40,424.42. The trial court felt that a fee award was inappropriate because the amount of attorney fees that tenants sought was disproportionate to the amount that they recovered on the two claims on which they prevailed. The Oregon Supreme Court reversed and remanded, finding that disproportionality between the recovery and the fees was not a proper consideration for the trial court).