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Timmermann v. Herman

Court of Appeals of Oregon

May 2, 2018

Carolyn TIMMERMANN, Plaintiff-Respondent,
v.
Raine HERMAN, and all others, Defendant-Appellant.

          Argued and submitted December 9, 2016

          Multnomah County Circuit Court 15LT01657; Edward J. Jones, Judge.

          Harry D. Ainsworth argued the cause and fled the brief for appellant.

          Matthew J. Kalmanson argued the cause for respondent. With him on the brief was Hart Wagner LLP.

          Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

         Case Summary:

         This residential landlord and tenant case presents an issue of statutory interpretation under the Oregon Residential Landlord Tenant Act: Whether a tenant is entitled to possession of the leased premises in a forcible entry and detainer action when the tenant prevails on her counterclaims to the extent that no rent remains due, but does not pay rent into court under ORS 90.370(1)(b). The trial court determined that tenant owed $606 in unpaid rent and awarded tenant $2, 550 in damages on her counterclaim. Although the $2, 550 in damages was more than enough to offset the $606 owed by tenant for rent, the court awarded possession to landlord because tenant had not "sought an order allowing or requiring the payment of rent into court." Tenant contends that "[t]he trial court erred in declining to apply ORS 90.370(1)(b) to offset the rent owed to landlord against the amounts won by tenant on her counterclaim and by awarding possession to landlord." Landlord argues that "[t]he trial court correctly ruled that tenant was not entitled to possession of the leased premises, despite having prevailed on some of her counterclaims, because she failed to pay rent to the landlord or into court." Held: After examining the text in context, case law, and legislative history, the Court of Appeals concluded that ORS 90.370(1) (b) does not require a tenant to pay rent into court to be awarded possession of the premises if her counterclaim for damages exceeds any rent adjudged due. The [291 Or.App. 548] trial court erred when it ruled that tenant was not entitled to possession of the leased premises under ORS 90.370(1)(b) because no rent was ordered to be paid into court and tenant's $2, 550 in damages was more than enough to offset the $606 in rent adjudged due.

         Reversed and remanded for entry of judgment for defendant on the right to possession.

         [291 Or.App. 549] TOOKEY, J.

         This residential landlord and tenant case presents an issue of statutory interpretation under the Oregon Residential Landlord Tenant Act (ORLTA): Whether a tenant is entitled to possession of the leased premises in a forcible entry and detainer (FED) action when the tenant prevails on her counterclaims to the extent that no rent remains due, but does not pay rent into court under ORS 90.370(1)(b).[1]We conclude that the trial court erred when it ruled that tenant was not entitled to possession of the leased premises under ORS 90.370(1)(b) because no rent was ordered to be paid into court and "the damages awarded the tenant on her counterclaims exceeded the amount of unpaid rent the landlord claimed was due." L & M Investment Co. v. Morrison, 44 Or.App. 309, 313, 605 P.2d 1347, rev den, 289 Or. 275 (1980). Consequently, we reverse and remand for entry of judgment for tenant on the right to possession.

         I. BACKGROUND

         The relevant facts are undisputed. Tenant (defendant) entered into a rental agreement with landlord (plaintiff) in which tenant agreed to pay landlord $850 per month in rent. Tenant paid $202 per month and the remaining $648 of the rent was subsidized. Tenant failed to pay rent in February of 2015, so landlord sent tenant a nonpayment of rent notice on February 12, which provided a tenancy termination date of February 22. Tenant did not pay rent pursuant to that notice and landlord brought an FED action.

         Tenant responded by filing a counterclaim, alleging unlawful access into the premises on five separate occasions. [291 Or.App. 550] Tenant retained possession of the premises throughout the FED action that took place in April. During that time, neither landlord nor tenant requested an order to pay rent into court pursuant to ORS 90.370(1)(b), the court did not order rent to be paid into court, and no rent was paid into court.

         The court then determined that tenant owed $606 for three months of unpaid rent. The court also determined that landlord had unlawfully accessed the premises on three occasions and awarded tenant $2, 550 in damages. Although the $2, 550 in damages was more than enough to offset the $606 owed by tenant for rent, the court awarded possession to landlord because tenant had not "sought an order allowing or requiring the payment of rent into court."

         On appeal, tenant argues that she did not need to pay rent into court under ORS 90.370(1)(b) to be awarded possession of the premises. Tenant contends that "[t]he trial court erred in declining to apply ORS 90.370(1)(b) to offset the rent owed to landlord against the amounts won by tenant on her counterclaim and by awarding possession to landlord." Landlord argues that "[t]he trial court correctly ruled that tenant was not entitled to possession of the leased premises, despite having prevailed on some of her counterclaims, because she failed to pay rent to the landlord or into court."

         II. ANALYSIS

         As noted above, the issue is whether a tenant is entitled to possession of the leased premises in an FED action when the tenant prevails on her counterclaims to the extent that no rent remains due, but does not pay rent into court under ORS 90.370(1)(b). The parties' arguments and the trial court's ruling present a question of statutory interpretation, which we review for legal error. See State v. Thompson, 328 Or. 248, 256, 971 P.2d 879, cert den, 527 U.S. 1042 (1999) ("A trial court's interpretation of a statute is reviewed for legal error."). When we interpret a statute, "[w]e ascertain the legislature's intentions by examining the text of the statute in its context, along with relevant legislative history, and, if necessary, canons of construction." State v. Cloutier, 351 Or. 68, 75, 261 P.3d 1234 (2011) (citing State v. Gaines, 346 Or. 160, 171-73, 206 P.3d 1042 (2009)).

         [291 Or.App. 551] A. Text of ORS 90.370(1)

         We start with the text of ORS 90.370 because it is "the best evidence of the legislature's intent." PGE v. Bureau of Labor and Industries, 317 Or. 606, 610, 859 P.2d 1143 (1993). ORS 90.370(1) provides, in pertinent part:

"(1)(a) In an action for possession based on nonpayment of the rent or in an action for rent when the tenant is in possession, the tenant may counterclaim for any amount *** that the tenant may recover under the rental agreement or this chapter * * *.
"(b) In the event the tenant counterclaims, the court at the landlord's or tenant's request may order the tenant to pay into court all or part of the rent accrued and thereafter accruing, and shall determine the amount due to each party. The party to whom a net amount is owed shall be paid first from the money paid into court, and shall be paid the balance by the other party. The court may at any time release money paid into court to either party if the parties agree or if the court finds such party to be entitled to the sum so released. If no rent remains due after application of this section and unless otherwise agreed between the parties, a judgment shall be entered for the tenant in the action for possession."

         When a tenant is in possession of the premises, subsection (1)(a) permits the tenant in a residential FED action for nonpayment of rent to assert counterclaims. See ORS 105.132 ("No person named as a defendant in an action brought under ORS 105.105 to 105.168 [, for forcible entry and wrongful detainer, ] may assert a counterclaim unless the right to do so is otherwise provided by statute."). Counterclaims under ORS 90.370 can be based on a breach of the rental agreement or any statutory violation under Chapter 90, Oregon's "Residential Landlord and Tenant Act."[2]

         [291 Or.App. 552] The first sentence of ORS 90.370(1)(b) provides that, "[i]n the event the tenant counterclaims, the court at the landlord's or tenant's request may order the tenant to pay into court all or part of the rent accrued and thereafter accruing, and shall determine the amount due to each party." The first sentence makes the application of ORS 90.370(1)(b) contingent on "the event the tenant counterclaims." See Eddy v. Parazoo, 77 Or.App. 120, 124, 711 P.2d 205 (1985) (former ORS 91.810, renumbered as ORS 90.370 (1989), "applies" in "an action for possession based upon nonpayment of rent in which the tenant assert[s] counterclaims for damages").

         If a tenant counterclaims, either party may request an order from the court to compel the tenant to pay rent into court. Such a request then invokes the discretion of the court with the phrases, "may order" and then, "all or part of the rent." ORS 90.370(1)(b). That part of the first sentence does not require the payment of rent into court, or the payment of a particular amount of rent into court, in order for the tenant to maintain a counterclaim. See In Defense of Animals v. OHSU,199 Or.App. 160, 189, 112 P.3d 336 (2005) ("The term 'shall' is a command expressing what is mandatory, " whereas the "use of the word 'may' * * * indicates that relevant entity has discretion whether to take the action described therein." (Citations omitted.)). On the other hand, the latter part of the first sentence states that the court "shall determine the amount due to each party." ORS 90.370(1)(b) (emphasis added). Thus, a determination of the merits of the parties' claims and counterclaims is mandatory under ORS 90.370(1)(b) in order to "determine the amount due to each party, " even if neither party requests that rent be paid into court ...


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