In Custodia Legis: Implied Warranty of Habitability Procedure in Missouri.

• Author: Sosnoff, Connor M.

Kohner Properties, Inc. v. Johnson, 553 S.W.3d 280 (Mo. 2018) (en banc)

1. INTRODUCTION

   The common law has changed drastically in its treatment of tenants who rent their living spaces from landlords. Over the course of the twentieth century, property doctrine has evolved in response to an ever changing society. (1) Although early common law failed to recognize the relationship between landlord and tenant as a contractual relationship, modern common law has developed to treat the relationship as such. (2) The implication of contractual principles upon the relationship has increased the scope of duties landlords owe tenants in exchange for the tenants' agreed upon rent. (3)

   The evolution of the law has most notably encouraged landlords to become more responsible for maintaining safe and habitable living spaces for their tenants. The contractual nature imputed into the relationship between modern landlords and tenants allows tenants to abandon their leases when the living spaces are uninhabitable through a doctrine known as constructive eviction. (4) However, abandoning leased premises carries serious risks for tenants, particularly tenants of lower income classes. (5) With this in mind, our legal system has developed the implied warranty of habitability, which protects vulnerable tenants by allowing them to remain in possession of unsafe living spaces while withholding their monthly rent payments.

   Kohner Properties, Inc. v. Johnson applies an evolving modern habitability doctrine to a landlord-tenant dispute over unpaid rent. (6) The situation in Kohner is one in which a tenant refused to pay her rent because she asserted that her landlord failed to provide her with a habitable living space. (7) The ultimate issue assessed by the Missouri Supreme Court involved the propriety of allowing Missouri circuit courts to compel tenants to pay withheld rent to the courts, in lieu of payment to the landlord, during the course of litigation. (8)

   This Note addresses whether the judiciary should have the power to compel tenants to pay their rent to the court ("in custodia legis") as a prerequisite to asserting a breach of the implied warranty of habitability at trial. Section II of this Note will describe the relevant facts and the holding of Kohner. Section III explores the legal background surrounding the implied warranty of habitability and in custodia legis procedures. Section IV describes the Missouri Supreme Court's holding and rationale. Finally, the Comment Section of this Note argues in favor of the dissenting opinion, that the use of discretionary in custodia legis procedures is harmful to the interests of tenants in Missouri.

2. FACTS AND HOLDING

   On October 31, 2014, Latasha Johnson entered into a lease with Kohner Properties, Inc. to rent an apartment in St. Ann, Missouri. (9) Johnson paid a $200 security deposit to secure her lease at a rate of $585 per month. (10) Upon moving into the apartment, Johnson immediately discovered various problems with the only bathroom, including missing tiles and cracks on the floor. (11) Kohner's property manager informed Johnson that nothing could be done about the bathroom. (12) In November of that year, Johnson noticed a water leak had developed in the ceiling of the bathroom above the shower and bathtub. (13) Mold began growing on the ceiling, and Johnson called Kohner to report the leak and mold. (14) Over the next few months, Johnson noticed and reported various other problems with the bathroom and other rooms in her apartment. (15) Other issues that Johnson faced involved her kitchen sink, stove, and range. (16) She contacted the property manager again in February and was told "there was nothing they could do." (17)

   Beginning in March of 2015, Johnson withheld her rent because property management would not resolve the maintenance requests for the apartment. (18) At 2:00 A.M. on March 17, 2015, the bathroom ceiling in Johnson's apartment collapsed. (19) Although Johnson placed an emergency service request to fix the ceiling, Kohner's technician tried to remedy the situation by taping a "black plastic bag over the hole in the ceiling." (20) Because water eventually collected in the plastic bag, the bag did not fix the leak and Johnson found herself unable to get minimal use out of her bathroom. (21) Johnson could not safely bathe her daughter in the bathtub below the collapsed ceiling and was forced to stay at a hotel for a few nights to bathe. (22) Johnson withheld her March and April rent, and Kohner Properties sued Johnson for the unpaid rent as well as possession of the apartment. (23)

   Before opening statements were given, Kohner moved to bar Johnson from asserting either an affirmative defense or a counterclaim based upon breach of the implied warranty of habitability. (24) Kohner argued that Johnson's failure to pay her rent in custodia legis (25) prevented her from asserting any such claims. (26) This motion was granted, and on May 13, 2015, the Circuit Court for St. Louis County entered a judgment against Johnson for the unpaid rent, late fees, attorney's fees, court costs, and possession of the apartment. (27) Although the circuit court did find as a matter of fact that the hole above Johnson's bathtub had been inadequately repaired, the court found as a matter of law Johnson could not assert either an affirmative defense or counterclaim relying on the implied warranty of habitability because she had not paid her rent in custodia legis. (28) Johnson appealed to the Missouri Court of Appeals for the Eastern District. (29)

   On appeal, Johnson argued that the trial court erred in barring her from asserting the implied warranty of habitability as either an affirmative defense or counterclaim and that her failure to pay rent to the court in custodia legis was not "a legal prerequisite to asserting a breach of implied warranty of habitability." (30) Although the Eastern District concluded that it would grant Johnson's points on appeal and remand her case back to the trial court, the case was instead transferred to the Missouri Supreme Court pursuant to Missouri Rule of Civil Procedure 83.02. (31)

   The Missouri Supreme Court, in a three to two per curiam decision, ruled in favor of Kohner. (32) The Missouri Supreme Court held that circuit courts in Missouri have the power to require tenants asserting a breach of the implied warranty of habitability to pay their rent to the court during the course of litigation. (33)

3. LEGAL BACKGROUND

   Society's evolution from an agricultural-based, agrarian society to a modern industrial society has prompted concomitant changes in the common law principles governing property law. (34) This Section tracks changes in the law that have precipitated the discussion of in custodia legis procedures as they apply to claims for breach of implied warranty of habitability. First, this Section details how the implied warranty of habitability developed and the doctrines preceding it, such as caveat emptor, the covenant of quiet enjoyment, and constructive eviction. Second, this Section explains how courts in some jurisdictions have developed an in custodia legis procedure, along with some of their stated policy rationales for doing so.

   1. The Common Law and the Implied Warranty of Habitability

      At early common law, tenants were subject to the doctrine of caveat emptor--buyer beware. (35) Under this doctrine, leases were primarily understood as a rental of the land upon which a residence was built, as the land itself was the "most important feature of the conveyance." (36) Early common law leases were considered a "conveyance of an estate in land and w[ere] equivalent to a sale of the premises for the term of the demise." (37) As such, rent was due "without reference to the condition of the buildings or structures on [the land]." (38) Although tenants could negotiate with their prospective landlords, such covenants were considered "only incidental to the land and independent of the tenant's obligation to pay rent." (39) Caveat emptor imposed a duty on the potential tenant to inspect any property before entering into a lease, as there was no warranty implied by the landlord. (40) At common law, courts traditionally assumed the tenant and landlord were of equal bargaining power in the transaction, and tenants wishing to have covenants or warranties in their leases could expressly bargain for them. (41) However, even if tenants did enter into covenants with their landlords for necessary repairs, those covenants were understood as an obligation by the landlord to the land, and thus "independent of the tenant's covenant to pay rent." (42)

      The early common law of real estate leasing carried "harsh results" for tenants. (43) Because of this, courts started to carve out exceptions to these rules by treating the relationship between landlord and tenant "as if governed by contract law." (44) One such exception to caveat emptor was the covenant of quiet enjoyment, a doctrine under the early common law that suspended the tenants' obligation to tender their rent where the landlord had physically deprived them of possession of the land. (45) Originally, the implied covenant of quiet enjoyment protected only against physical extrusion, (46) but the courts soon began to consider whether a tenant's possession could be "molested by something less." (47)

      Thus, the doctrine of quiet enjoyment was expanded with the creation of constructive eviction:

      A constructive eviction arises when the lessor, by wrongful conduct or by the omission of a duty placed upon him in the lease, substantially interferes with the lessee's beneficial enjoyment of the demised premises. Under this doctrine the tenant is allowed to abandon the lease and excuse himself from the obligations of rent because the landlord's conduct, or omission, not only substantially breaches the implied covenant of quiet enjoyment but also 'operates to impair the consideration for the lease.' (48) The...