An Oakland jury says a landlord must pay $5.5 million in punitive damages for cheating tenants out of their security deposits by fabricating claims of damage to their living quarters.
The Alameda County Superior Court jury decided Tuesday that landlord Richard Thomas had defrauded tenants out of $183,000 in security deposits between 1999 and 2007, and followed up Wednesday by awarding 30 times that amount in punitive damages.
Tenants' lawyer Laura Stevens acknowledged that the punitive award will have to be reduced because of U.S. Supreme Court rulings that have limited those damages to 10 times the amount of compensation in most cases. But she said the verdict allows Thomas' former tenants to recoup their losses, and possibly to recover additional sums as penalties.
After Judge Steven Brick lowers the punitive damages, Stevens said, she will ask him to award those sums to nonprofit housing agencies rather than the former tenants.
Thomas' attorney, William Hopkins, said he would ask Brick to overturn the verdict and would appeal if necessary. Thomas "cares a lot about the tenants," allows them to stay even when they fall behind in their rent, and denies defrauding them, Hopkins said.
Thomas owns 135 rental units, including apartments, duplexes and homes, in Oakland and 15 more in Castro Valley and Hayward. Stevens said the suit covers as many as 200 former tenants, but Hopkins said only about 100 are eligible for damages.
State law requires rental property owners to return a security deposit when the tenant leaves, except for rent owed and for damage the tenant caused, apart from normal wear and tear. Stevens said Thomas sent letters to departed tenants containing damage claims that were invented or wildly exaggerated in order to keep most of each security deposit, which amounted to 125 percent of a month's rent.
The letters, sometimes as long as 20 pages, listed such items as $3 charges to remove clothes hangers from a closet and $2,500 to redo a supposedly ruined hardwood floor that was actually intact, as well as false claims of overdue rent, Stevens said. When tenants tried to recover their deposits in small claims court, she said, Thomas would countersue for additional damages and the tenants usually dropped their suits.
"He collected security deposits with no intention of giving them back," Stevens said.
Hopkins said many of Thomas' tenants left while owing rent that exceeded their security deposits. He also said the landlord wasn't allowed to present some photographs that would have supported his claims of property damage.
FAIR USE NOTICE. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.