Blog post written by Atty. Jennifer M. Hayden of Petrie + Pettit S.C.
In State v. Troy R. Lasecki, the Court of Appeals upheld the ability of the District Attorney’s office to charge a Landlord with a misdemeanor for unfair trade practices for the failure to return or account for a tenant’s security deposit as required by law.
In response to arguments that a Landlord doesn’t have notice he or she could face criminal charges, the court responded: “an ordinary person, acting as a residential landlord, would have sufficient notice that it can be a criminal unfair trade practice for a landlord either to withhold amounts of a tenant’s security deposit not reasonably necessary to pay for items authorized by statute or to fail to provide a tenant with a security deposit withholdings statement if some or all of a security deposit is withheld.”
In the Lasecki case, two tenants had complained to DATCP that Lasecki had not returned or provided an accounting for their security deposits. Lasecki failed to respond to DATCP’s inquiries and was charged by the District Attorney’s Office under Wis. Stat. § 100.20 unfair business or trade practices which carries the potential penalties under § 100.26(3): “Any person … who intentionally refuses, neglects or fails to obey any regulation or order made or issued under s. 100.19 or 100.20, shall, for each offense, be fined not less than $25 nor more than $5,000, or imprisoned in the county jail for not more than one year or both.”
While supporting the basis for the charges, in the instant case, the Court of Appeals remanded the case to the lower court due to problems with the jury instructions and instructed that “the trier of fact is to determine whether the landlord committed an unfair trade practice by either: (1) violating WIS. STAT. § 704.28—including by failing to timely return any portion of a security deposit without having a lawful basis to do so under the statute; (2) violating WIS. ADMIN. CODE § ATCP 134.06(4) by failing to provide a required withholdings statement; or (3) violating both requirements.”
While in a civil action a tenant can claim twice the value of the pecuniary loss plus reasonable attorney’s fees, in a criminal case the “primary purpose of restitution is not to punish the defendant, but to compensate the victim for his or her actual loss.” Therefore, the Court of Appeals reasoned that in a criminal action, the victim/tenant can only recover his or her actual pecuniary losses and that the victim/tenant would have to bring a civil case in order to recover more.
What are the takeaways from this unfortunate incident? 1) Always, always, always (did I say always?) account for or return the security deposit within the time allowed by law and take only those deductions provided for by law; and 2) Always, always, always (did I say always already?) respond to an investigation by DATCP.