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Top Litigation Shops: Babbitt Johnson
Babbitt Johnson spearheaded fight to end early lease termination fees
On
Oct. 29, 2007, the Palm Beach, Broward and Miami Daily Business Reviews
- sister papers of The American Lawyer and National Law Journal -
spotlighted Babbitt Johnson Osborne & Le Clainche as a top Florida
Litigation Shop. The following is an excerpt of the article by Dan
Cordtz. The full article is available to paid subscribers at
www.dailybusinessreview.com
"The firm: Babbitt Johnson Osborne & LeClainche"
"The lawyers: Theodore Babbitt, Joseph R.
Johnson, Rodney L. Tennyson, Jane Kreusler-Walsh (Tennyson is a solo
practitioner who served as co-lead counsel. Kreusler-Walsh, who handled
appellate work in the case, is with Kreusler-Walsh Compiani & Vargas)"
"The cases: This tenants’ rights class
action was launched in 2002, initially against Chicago-based Equity
Residential Properties — the nation’s largest owner of rental
apartments, with 160,000 units in 24 states and the District of
Columbia. It was followed over the next four years by suits against nine
other national firms with rental properties in South Florida."
"The plaintiffs sought to halt the
companies’ practice of routinely charging a penalty of three months’
rent to Florida tenants who vacated their apartments before their leases
expired."
"Such charges, variously labeled
'liquidated damages' or 'early termination fees,' were not authorized
under Florida law, which allows a landlord to collect only the rent lost
when property stands empty after a tenant leaves before the lease
expires."
"By billing departed tenants for
termination fees even when the vacated units had already been rented to
other occupants, the defendant firms in many cases were collecting
double rent for the same apartment from two different tenants."
"Only about 10 percent of the tenants
billed for the fees actually paid. But those who refused were reported
to credit rating agencies, with the result that more than $85 million in
“unpaid debts” were listed on the records of some 68,000 Florida
tenants."
"The outcome/impact: After the class
action against Equity was certified in 2003 and its certification
successfully defended before the 4th District Court of Appeal by
Kreusler-Walsh in 2005, the case went to trial this year in Palm Beach
Circuit Court before Acting Judge Susan Lubitz. She found that the
termination fees were illegal and ordered Equity to remove all reports
of indebtedness from former tenants’ credit reports. She also directed
the company to refund all of the money it had received from tenants who
paid the fees. Equity appealed, but then decided to settle. At that
point all but two of the other defendants also settled the cases against
them."
"In the second case to reach a courtroom,
Palm Beach Circuit Judge Edward H. Fine issued a summary judgment last
June against Olen Residential of Newport Beach, Calif., which owns 11
large apartment developments in Florida. Olen also appealed the
decision, but Judge Fine has ordered a jury trial on damages to begin
next April.
"The judge also said he will allow the
jurors to consider punitive damages against Olen. In the Equity case,
damages were limited to a statutory $1,000 for each member of the
plaintiff class."
During the five years this litigation has
proceeded, landlords have repeatedly petitioned the Florida Legislature
to pass a bill undoing the results of the class action and legalizing
such termination fees."
"A coalition of consumer groups organized
by plaintiff attorneys successfully forestalled legislation until last
May, when a bill was enacted. Opponents led by the lawyers then
persuaded Gov. Charlie Crist to veto it. Tennyson called Crist’s
decision 'a great victory for consumers and the 4.5 million tenants in
Florida.'
"Not every landlord
has learned the lesson, however. This month Babbitt Johnson filed suit
against Winter Park-based Epoch Properties for continuing to assess the
termination fees that have been judged illegal in the earlier cases."
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