A Sigh of Relief from Oregon Landlords as Oregon Court of Appeals Determines a Tenant Cannot Receive “Per Violation” Damages

From the Desk of Sean K. Conner:

In recent years, the measure of damages recoverable under the Oregon Residential Landlord Tenant Act’s utility billing provisions has been a hot topic at the trial-court level, with courts issuing many conflicting opinions as to whether damages are calculated on a “per violation” basis or limited to only a single month’s periodic rent. The Oregon Court of Appeals has finally addressed and put the issue to rest, hopefully for good.

Claims Pointer:  

At issue in this case was the meaning and purpose of ORS § 90.315(4)(f).  The Oregon Court of Appeals examined the text and context of the statute and rejected a broad reading of permissible damages, holding that under the Oregon Residential Landlord Tenant Act, a tenant is not entitled to a month’s period rent for each instance of noncompliance with utility billing provisions.  Rather, even where there are repeat violations, the Court held that the statute permits only the recovery of the greater of one month’s periodic rent or twice the total amount wrongfully charged. 

Shepard Investment Group, LLC v. Ormandy, 320 Or App 521 (2022).

Facts:

Tenant had been renting a residential unit in Landlord’s apartment since 2008. In 2013, Landlord notified Tenant that it would begin charging a monthly flat fee for utilities like water, sewer, and garbage. Tenant’s subsequent rental agreements included a provision to that effect. Landlord charged a $40 a month utility fee. However, in charging this utility fee, Landlord did not comply with the strict notice provisions of ORS § 90.315.  

In November 2019, Tenant failed to pay his rent. Landlord then issued a notice of its intent to terminate Tenant’s rental agreement and, when Tenant failed to cure the violation by paying past-due rent, Landlord initiated an eviction action. Tenant, in response, asserted a counterclaim alleging that Landlord had violated the notice requirements of the utility billing provisions of the Oregon Residential Landlord Tenant Act (“ORLTA”), specifically ORS § 90.315(4)(b). Tenant alleged that Landlord failed to timely bill him in writing for utility charges over the preceding year, failed to provide him an explanation of the manner in which the utility providers assessed their charges, and failed to explain the manner in which the Landlord allocated those charges among all tenants.

Tenant argued that pursuant to the damages provision of ORS 90.315(4)(f), he was entitled to recover twice the amount that was wrongfully charged to him or one month’s periodic rent for each month he was charged utilities in an unlawful manner. Tenant argued that that amount totaled $11,010.

After a bench trial, the trial court found that Landlord had failed to comply with ORS § 90.315(4)(b) each month for the preceding twelve months – the maximum number of violations alleged given the ORTLA’s one-year statute of limitations – and awarded Tenant damages in an amount equal to one month’s rent for each of those violations, a total of $9,050 and attorney fees, related to Tenant’s counter claim. The trial court then deducted Tenant’s unpaid rent and other outstanding charges from this amount. Landlord appealed, arguing that the trial court erred because ORS § 90.315(4)(f) is not a “per violation” provision. 

Law:

ORS § 90.315 is one of many statutes that comprise the ORLTA and specifically addresses the procedural requirements for a landlord to assess utility and service charges to tenants in residential tenancies.  Under that statute, a landlord may require a tenant to pay utility charges only if the rental agreement allows it and only if the landlord provides certain notices and information to the tenant in a timely fashion. Among other things, a landlord must provide the tenant with an explanation of “the manner in which the provider assesses a utility or service charge” and an explanation of “the manner in which the charge is allocated among the tenants” if the utility bill covers multiple tenants.  ORS § 90.315(4)(b)(B).

ORS § 90.315(4)(f) – the interpretation and application of which was the subject of this appeal – then defines the statutory damages available to a tenant for a landlord’s noncompliance with these notice and information requirements. That subsection states that, if a landlord “fails to comply” with these provisions of ORS § 90.315, a tenant may recover “an amount equal to one month’s periodic rent or twice the amount wrongfully charged to the tenant, whichever is greater.”

Analysis:

The Oregon Court of Appeals began its analysis with the text of the statute. The Court started with the language of ORS 90.315(4)(b) and noted that the statute sets requirements for a landlord to meet when a landlord charges a tenant “a” utility charge, noting the use of the singular.  Based on this language, the Court held that it was beyond dispute that a single non-compliance with statutory requirements of ORS § 90.315(4) resulted in a violation of the ORTLA and entitled the tenant to statutory damages. However, the Court recognized that the damages provisions of this portion of the ORLTA did not explicitly differentiate between one and multiple violations and that the statute’s reference to a landlord’s “fail[ure] to comply” does not, standing alone, indicate what the legislature intended as a remedy.  

To determine this issue, the Court turned to statutory construction and concluded that ORS 90.315(4)(f) contained two methods of calculating damages, one of which accounted for the possibility of repeat violations.

The first available remedy is based on the amount of periodic rent: a tenant can recover one month’s period rent if a landlord fails to comply with the provisions of ORS § 90.315.  According to the Court, this amount does not change even if there are multiple violations. The tenant is only entitled to recover a single month’s rent regardless of the number of months a landlord failed to comply with the statute.  Multiple violations, nevertheless, could lead to damages in excess of a single month’s rent under the second method of calculating damages. Under the statute, a tenant is entitled to recover the greater of a single month’s rent or “twice the amount wrongfully charged to the tenant” in violation of ORS § 90.315. According to the Court, the plain language of this portion of the statute does not have limiting language and could apply to either a single violation or multiple violations. This alternative measure of damages, the Court reasoned, was the legislature’s way of providing an avenue for calculating damages when there are repeated noncompliant utility charges.  Further, the Court noted that, had the legislature intended for a tenant to be able to recover a month’s period rent for each noncompliant utility billing, it would have enacted language to that effect.

Ultimately, the Court held that ORS § 90.315(4)(f) does not permit a tenant to recover a month’s rent for each instance of landlord non-compliance, resolving the split among the trial courts throughout the State.

Applying this reasoning and holding, the Court of Appeals determined that, because of the repeated violations, the proper measure of damages in this case was twice the amount wrongfully charged, as this amount was greater than Tenant’s periodic rent. Over the course of the twelve months prior to trial, Landlord had charged Tenant $40 per month without providing any of the required notices or information. Because twice this wrongfully charged amount – $480 in wrongful charged, times two – was greater than Tenant’s period rent of $825, the Court of Appeals concluded that Tenant was entitled to a recovery in the amount of $960. It then reversed and remanded the matter for entry of a judgment in accordance with its ruling. 

Big Picture:

This opinion from the Oregon Court of Appeals is a favorable – and welcome – result for landlords in Oregon and finally provides some clarity and certainty in this area of the law. The measure of damages recoverable for technical violations of the utility billing provisions of the ORLTA has been a hot-button issue in Oregon for years, with lower courts split on how to interpret the statute and most litigants unwilling to risk additional attorney fee exposure on appealing adverse rulings. The Court’s ruling on this issue has the potential to drastically reduce the value of utility billing claims both in individual tenant and class action litigation and any claim involving utility billing issues under the ORLTA should be re-evaluated immediately.