Lindquist & Vennum LLP has successfully won an appeal affecting utility-billing contracts between residential landlords and tenants on behalf of their client, a property management company. The decision potentially impacts owners and renters of single-metered apartment buildings statewide.
Minnesota law states that a landlord has the right to apportion utility charges among tenants when an apartment building has a single meter for utilities running into the building. Third-party providers commonly handle the process of apportioning the utility charges, issuing the apportioned bills to tenants, and collecting payment from tenants. Lindquist’s client hired one of those third-party providers, also a party to the case, for those services. As is standard in the industry, that provider passes certain fees on to tenants, including for late payments. Two tenants sued and sought class-action status, claiming that Minnesota law either prohibits such fees or limits their amount.
Lindquist partner Mark Jacobson served as lead counsel and argued the case on behalf of the client and all other defendants. The Court of Appeals agreed with the client and the other defendants in the case that Minnesota law neither prohibits nor regulates the amount of fees charged in connection with apportioned utility billing. “The Court’s decision affirms what we believed to be the law all along, that Minnesota law allows landlords and tenants to agree by contract on the proper way to divide utility costs, including fees,” stated Jacobson. “That benefits landlords and tenants, and landlords should not have to worry that those agreements will be second-guessed by the courts.”
Lindquist attorneys took advantage of an infrequently-used appeals process and asked the district court to send the issue to Court of Appeals before the expensive discovery phase of the litigation process, avoiding both that expense and the uncertainty of trial on an issue lacking any precedent. “We were glad the courts agreed with us that this unusual early appeal was warranted to avoid the expense of class certification, discovery, and trial for all involved parties and provide immediate legal guidance for landlords across the state,” said Karla Vehrs, one of the Lindquist & Vennum lawyers who handled the case.
This decision allows property owners and managers across the state to continue to rely on their agreements with tenants concerning utility costs and fees and to continue to use experienced third-party providers for utility billing.