John Lukens v. Kevin Quigley & a.

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2020-0013, John Lukens v. Kevin Quigley & a.,
the court on January 15, 2021, issued the following order:

Having considered the briefs and record submitted on appeal, we
conclude that oral argument is unnecessary in this case. See Sup. Ct. R. 18(1).
The landlord, John Lukens, appeals, and the tenants, Kevin Quigley and
Patricia Quigley, cross-appeal, orders of the Circuit Court (Carroll, R., approved
by Sadler and Vetanze, JJ.), dismissing the landlord’s summary action for
possession of residential property for nonpayment of rent, see RSA 540:13
(2007), and awarding the tenants: (1) three months’ rent based upon a finding
that the eviction was retaliatory, see RSA 540:13-a, :14, II (2007); (2) $608 for a
“substantial violation of the standards of fitness for health and safety,” see RSA
540:13-d (2007); (3) $1,000 for a violation of the right to quiet enjoyment under
RSA 540-A:2 (2007), see RSA 540-A:4, IX(a) (Supp. 2020); RSA 358-A:10, I
(2009); and (4) attorney’s fees based upon the finding that the landlord violated
RSA 540-A:2,1 see RSA 540-A:4, IX(a). We affirm the award of three months’
rent, reverse the award of $608, vacate the awards of $1,000 and attorney’s
fees, and remand for the entry of judgment in accordance with this order.

We will uphold the trial court’s findings unless they lack evidentiary
support or are erroneous as a matter of law. Colonial Village v. Pelkey, 157
N.H. 91, 92 (2008). We review its legal conclusions, as well as the application
of law to fact, independently for plain error. Id. Thus, our inquiry is to
determine whether the evidence presented at trial reasonably supports the trial
court’s findings, and whether its decision is consonant with applicable law. Id.
We review any questions of law, including the trial court’s interpretation of
statutory provisions, de novo. Id.; Liam Hooksett, LLC v. Boynton, 157 N.H.
625, 628 (2008).

1 The trial court did not expressly articulate the basis for the award of attorney’s fees in its

order. However, the tenants relied upon RSA 540-A:4, IX(a), the provision that authorizes an
award of reasonable attorney’s fees incurred in successfully prosecuting a claim under RSA
540-A:2, as the basis for an award of attorney’s fees in their pleadings. Moreover, the trial
court awarded the tenants their attorney’s fees in its order immediately after announcing that
it had awarded them $1,000 for the landlord’s violation of RSA 540-A:2. The trial court made
no finding in its order of bad faith that would have justified an award of attorney’s fees, and
cited no contractual provision that would have entitled the tenants to an award of fees. In
context, therefore, we construe the trial court’s order as having grounded the award of
attorney’s fees upon its finding of a violation of RSA 540-A:2. See In the Matter of Salesky &
Salesky, 157 N.H. 698, 702 (2008) (stating that the interpretation of a trial court order is a
question of law, which we review de novo).
 The property at issue consists of a single-family home with a separate
loft above the garage. The tenants leased the property for a three-year term
beginning on May 1, 2017. The lease required the tenants to pay $1,520 per
month in rent. The lease also allowed the landlord, who resides in Thailand for
a portion of the year, to stay in the loft when he was in New Hampshire, but
required him to “reimburse [the] tenant[s] for electricity and propane used”
during the times that he stayed in the loft. The lease did not articulate how the
landlord’s use of electricity and propane would be calculated.

During the fall of 2018, a dispute arose between the parties regarding
how much the landlord owed for his use of propane and gas. In the course of
the dispute, the tenants asked the landlord whether they could simply deduct
the amount that the landlord owed for his propane usage from their December
rent payment. In response, the landlord stated that, although he preferred to
write a check, “if you’re paying the rent in cash, deduct the excess.”

Thereafter, the tenants sent the landlord a letter showing that they had
deducted from their December rent payment $320 for the landlord’s use of
propane and $300 for his use of electricity. The landlord responded by
thanking the tenants for their December cash payment, stating that he
“disagree[d] with [them] on the propane, but won’t contest it anymore,” and
proposing a different calculation for his electricity usage if the tenants were
“still thinking of re-calculating the shared electricity costs.” At no point did the
landlord demand that the tenants charge less for his electricity usage. At trial,
he testified that he had “given . . . up” his dispute over the propane charge, and
was attempting to negotiate a compromise that would lower the electricity
charge. Around the same time, the tenants notified the landlord that they
intended to vacate the property following the winter, and prior to the expiration
of the lease. The landlord responded by urging the tenants not “to break the
lease.” In a separate e-mail to his real estate agent, the landlord stated that
the background of the tenants’ threat to vacate the property included the
dispute over the landlord’s responsibility for the utilities, and that he had in
fact “paid $620 for three months for electricity and gas.”

A separate dispute arose between the parties regarding a strong sulfur
odor that would emanate from the water when the faucets were turned on, but
would dissipate as the water ran. During the fall of 2018, while he was still
staying in the loft, the landlord eliminated the odor by treating the property’s
hot water tank. In March 2019, however, while the landlord was in Thailand,
the tenants notified him that the odor had returned. They expressed concern
that the water was unsafe, and demanded that he have it tested. If he did not
test the water, the tenants stated that they would have it tested themselves and
deduct the expense from their rent. Although the landlord had a “handyman”
inspect the odor, and although the handyman advised the landlord on
measures to take in order to address it, the landlord neither addressed the
odor nor arranged to have the water tested during the spring of 2019. Nor did

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the tenants test the water themselves at this time. Nevertheless, the parties
exchanged several e-mails regarding the issue during the spring of 2019.

In May 2019, the landlord told the tenants that he would evict them
because their May rent had been “short” by $18. The tenants responded that
the $18 represented the cost of a water testing kit, and that to avoid eviction,
they would pay the $18. However, they asserted that the landlord was still
responsible for addressing the water issue. They further claimed that the odor
was worsening, and that it caused a burning sensation in their eyes. On May
19, the landlord e-mailed the tenants a demand for rent of $18. After the
tenants paid their June rent, the landlord instructed his real estate agent not
to cash the check because it would “make[] it more difficult to evict” them.

The landlord returned to the property in June 2019, and accused the
tenants of “trespassing.” He admitted at that time that he had “done nothing
about [the tenants’] main complaint, that the water odor was back,” claiming
that the tenants had not provided him with information he “need[ed] to
diagnose the problem.” The landlord claimed that the tenants had “forced” him
to return to New Hampshire early “in order to evict” them. On June 11, the
parties met in order to discuss their dispute. At that meeting, the landlord
served a demand for rent and an eviction notice for the $620 that the tenants
had deducted from the December 2018 rent, the $18 that they had deducted
from the May 2019 rent, and the June 2019 rent. When the tenants pointed
out that they had, in fact, paid both the $18 and the June rent, the landlord
responded that the rent was late because, although the tenants had paid it, he
had not yet deposited the check, and that they thus owed an additional late
fee. The landlord subsequently deposited the June rent check.

On July 3, 2019, the landlord told the tenants that if they paid the $620
they had deducted from their December 2018 rent plus late penalties, he would
address the water odor. On July 8, the tenants advised the landlord that they
had had the water tested, and that it was hard and showed high calcium, iron
bacteria, and hydrogen sulfide levels. The landlord responded by stating that,
“[n]ow that . . . [the tenants] ha[d] finally given [him] most of the information
[he] need[ed],” he would “try to fix” the issue. By the time of trial in September
2019, however, the landlord still had not addressed the issue. Nevertheless, he
introduced at trial the results of testing performed by the New Hampshire
Department of Health and Human Services in July demonstrating that the
water was, in fact, safe for human consumption, and that “[t]he sulfur odor is
not a health hazard. It is just unpleasant.”

On July 6, 2019, the landlord served the eviction notice and demand for
rent underlying this case based only upon the $620 that the tenants had
deducted from the December rent. He filed the possessory action on July 15,
but did not assert a claim for unpaid rent. The tenants pleaded ten separate
“counterclaims” that sought, inter alia, three months’ rent for retaliatory

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eviction under RSA 540:14, II, damages and attorney’s fees pursuant to RSA
540-A:4, IX(a) and RSA 358-A:10, I, for several alleged violations of RSA
chapter 540-A (2007 & Supp. 2020), and $608 for breach of the implied
warranty of habitability, claiming that $608 represented the difference between
the agreed-upon rent and the fair rental value of the property with the
malodorous water. The landlord sought to dismiss the counterclaims in part
on the basis that, because he had not sought an award of unpaid rent, the
tenants were not entitled to assert counterclaims under RSA 540:13, III.

Following a three-day hearing, the trial court: (1) denied the request to
dismiss the counterclaims; (2) dismissed the possessory action on the basis
that the landlord had acquiesced in the tenants’ setoff of $620; (3) found that
the landlord had brought the eviction in retaliation for the tenants’ complaints
about the water, and awarded the tenants three months’ rent; (4) found that
the malodorous water breached the right to quiet enjoyment under RSA 540-
A:2, and awarded the tenants $1,000 plus attorney’s fees under RSA 540-A:4,
IX(a); and (5) awarded $608 under RSA 540:13-d for breach of the warranty of
habitability. The landlord challenges these rulings, arguing in part that the
trial court erred by: (1) not dismissing the counterclaims; (2) not finding that
the tenants owed at least one week’s rent so as to preclude a claim for
retaliatory eviction; (3) determining that the eviction was in retaliation for the
tenants’ good faith report and reasonable belief that the water odor violated
RSA chapter 540-A; (4) finding that the water breached the implied warranty of
habitability; and (5) exceeding the $1,500 limit on judgments under RSA
540:13.2 In their cross-appeal, the tenants challenge the trial court’s denial of
certain other counterclaims that they had raised under RSA chapter 540-A.

We first address the landlord’s arguments that the trial court erred by
not dismissing the tenants’ counterclaims, and by exceeding the $1,500
limitation of RSA 540:13, III. We are the final arbiter of the legislature’s intent
as expressed in the words of a statute considered as a whole. Liam Hooksett,
LLC, 157 N.H. at 627. We ascribe the plain and ordinary meanings to the
words used in a statute, construing legislative intent from the language used,
and not considering what the legislature might have said or adding language
that it did not see fit to include. Id. at 627-28. We interpret statutory
language within the context of the entire statutory scheme. Id. at 628.

RSA chapter 540 (Supp. 2020) “authorizes summary possessory actions
to simplify and facilitate the landlord’s recovery of possession of the premises.”
So. Willow Properties v. Burlington Coat Factory of N.H., 159 N.H. 494, 498
(2009). Its purpose is to facilitate a landlord’s expeditious recovery of

2 We note that, in their brief, the tenants contend that most or all of these arguments are not

preserved and are insufficiently developed. We have reviewed the record and conclude that
each of the arguments addressed below was sufficiently raised in the trial court, and was
adequately developed by the landlord in his brief and answering brief.

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possession of leased premises without the delay, loss, or expense to which the
landlord would be subjected under a common law action for ejectment. Id.;
Matte v. Shippee Auto, 152 N.H. 216, 217-18 (2005). Because RSA chapter
540 establishes rights and benefits to which a landlord was not entitled at
common law, we have emphasized that strict compliance with the statute is
required. So. Willow Properties, 159 N.H. at 498; Matte, 152 N.H. at 218.

Although the statute allows a landlord the opportunity to seek up to
$1,500 in unpaid rent, the landlord is not obligated to make such a claim in a
possessory action. See RSA 540:13, III; Liam Hooksett, LLC, 157 N.H. at 629.
Once a landlord elects to pursue a claim for unpaid rent, however, the statute
entitles the tenant to assert “any defense, claim, or counterclaim . . . which
offsets or reduces the amount owed to” the landlord. RSA 540:13, III; Liam
Hooksett, LLC, 157 N.H. at 629-30. The statute further provides:

If the court finds that the landlord is entitled to possession on the
ground of nonpayment of rent, it shall also award the landlord a
money judgment. If the court determines that the amount owed by
the landlord to the tenant, as a result of set-off or counterclaim
exceeds or equals the amount of rent and other lawful charges
owed by the tenant to the landlord, judgment in the possessory
action shall be granted in favor of the tenant. If the court finds
that the tenant’s counterclaim exceeds the amount of the
nonpayment, a money judgment shall issue in favor of the tenant.
Any decision rendered by the court related to a money judgment,
shall be limited to a maximum of $1,500 and shall not preclude
either party from making a subsequent claim in a court of
competent jurisdiction to recover any additional amounts not
covered by the $1,500 judgment.

RSA 540:13, III. We have interpreted the plain meaning of this provision to be
that a “defense, claim, or counterclaim . . . which offsets or reduces the
amount owed to” the landlord is available to a tenant in a possessory action
only if the landlord elects to seek unpaid rent. Matte, 152 N.H. at 218.

In contrast to a defense, claim, or counterclaim that offsets or reduces
the amount of rent owed, we have observed that “[c]ertain defenses are
recognized in RSA chapter 540 itself,” and that “those defenses are of course
cognizable in a summary proceeding brought under that statute.” Id. One
such defense exists if a landlord brings a possessory action in retaliation for a
residential tenant’s good faith reporting of what the tenant reasonably believed
to be a “violation of RSA chapter 540-A.” RSA 540:13-a, I. This defense is
available, however, only if the tenant does not owe the landlord “the equivalent
of one week’s rent or more.” RSA 540:13-a. In the event that the tenant proves
retaliation, the trial court may award the tenant “damages of not more than 3
months’ rent.” RSA 540:14, II. We have construed this provision to be in the

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nature of a penalty imposed upon a landlord for the landlord’s retaliatory
conduct in violation of the statute. Sherryland v. Snuffer, 150 N.H. 262, 266
(2003). RSA 540:13-d provides an additional defense for a residential tenant to
a possessory action for nonpayment of rent if the premises “are in substantial
violation of the standards of fitness for health and safety,” and if the violation
“materially affects the habitability of said premises.” RSA 540:13-d, I.

In this case, the tenants’ counterclaims brought under RSA chapter 540-
A were not defenses to possession that were “recognized in RSA chapter 540
itself.” Matte, 152 N.H. at 218. Rather, they were independent claims for
damages that would offset any unpaid rent owed to the landlord. Cf. Liam
Hooksett, LLC., 157 N.H. at 629-30 (ruling that, because RSA 540:13, III
expressly allows a tenant to raise any claim or counterclaim that offsets or
reduces the amount owed to the landlord, the trial court erred by not allowing
tenants to assert counterclaims under RSA chapter 540-A in response to the
landlord’s claim for unpaid rent). Because the landlord did not assert a claim
for unpaid rent under RSA 540:13, III, therefore, the trial court necessarily
erred by not dismissing such counterclaims without prejudice. Matte, 152
N.H. at 218. Accordingly, we vacate the trial court’s awards of $1,000 and
attorney’s fees pursuant to RSA 540-A:4, IX(a), and need not address the
tenants’ arguments that the trial court erred by not awarding judgment in their
favor on certain other counterclaims brought under RSA chapter 540-A.

In contrast to the tenants’ RSA chapter 540-A counterclaims, retaliatory
eviction, as noted above, is a defense “recognized in RSA chapter 540 itself.”
Id. Indeed, we note that the landlord appeared to concede at trial that the RSA
540:13-a claim was cognizable in this case. Accordingly, the tenants were
entitled to raise the defense regardless of whether the landlord sought unpaid
rent, and upon finding proof of the defense, the trial court had discretion to
award up to three months’ rent. See RSA 540:14, II.

To the extent the landlord is arguing that the $1,500 limitation on “[a]ny
decision rendered by the court related to a money judgment” in RSA 540:13, III
limited the retaliatory eviction award, we construe this language within the
overall context of the statute. Consistent with the legislative purpose of
simplifying and facilitating the expeditious recovery of possession, Matte, 152
N.H. at 217-18, RSA 540:13, III limits the right of tenants to assert
counterclaims offsetting the amount owed only to those cases in which the
landlord affirmatively seeks unpaid rent, and then further limits the amount of
any “money judgment” the court may render in such cases to $1,500. Indeed,
allowing a party to assert a claim seeking more than $1,500 might trigger the
opposing party’s right to a jury trial and removal of the matter to superior
court, thereby undermining the purpose of RSA chapter 540. See N.H. CONST.
pt. I, art. 20; RSA 502-A:14, III(b), :15 (2010 & Supp. 2020) (authorizing
removal of district court civil cases to superior court if claim or counterclaim
arising out of same transaction exceeds $1,500). Unlike a defense, claim, or

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counterclaim that offsets the amount owed under RSA 540:13, III, the defense
of retaliation may be raised by a residential tenant in “any possessory action”
(unless the tenant owes the landlord the equivalent of one week’s rent or more),
RSA 540:13-a, and the tenant is not required to plead or prove any amount of
damages, see Sherryland, 150 N.H. at 266. Nor does the express language of
RSA 540:14, II obligate the trial court to impose a penalty if it finds retaliation.
Read within the context of the overall statutory scheme, we conclude that the
legislature did not intend the $1,500 limitation on money judgments in RSA
540:13, III, which applies to claims for unpaid rent and to defenses, claims,
and counterclaims that offset or reduce unpaid rent claims, to limit the penalty
that the trial court has discretion to award under RSA 540:14, II.

We next address whether the trial court erred by finding that the eviction
was in retaliation for the tenants’ good faith report, and reasonable belief, that
the water odor violated RSA chapter 540-A. To the extent that the landlord
argues that the trial court violated the parol evidence rule by considering
evidence of an agreement to deduct $620 from the December 2018 rent as
reimbursement for the landlord’s propane and electricity usage, and that,
therefore, the trial court erred by not finding that the tenants owed more than
one week’s rent so as to preclude a retaliatory eviction defense,3 see RSA
540:13-a, we note that the terms and conditions of any contract may be
waived, and that a party’s waiver may be implied by the party’s conduct. See
Prime Financial Group v. Masters, 141 N.H. 33, 37-38 (1996); Packer v.
Burditt, 104 N.H. 248, 249 (1962).

The evidence reasonably supports the trial court’s findings that the
landlord acquiesced or agreed to a deduction of $620 from the December 2018
rent in order to reimburse the tenants for his use of propane and electricity,
and that the tenants, therefore, did not fail to pay their rent. Accordingly, the
trial court did not err by finding that the defendants were not in arrears on
their rent so as to exclude their retaliatory eviction claim. The evidence
likewise reasonably supports the trial court’s findings that the landlord
brought the eviction in retaliation for the tenants’ reporting of the water odor,
and that the tenants, in good faith, reasonably believed that the issue violated
RSA chapter 540-A. Under these circumstances, we cannot conclude that the
award of three months’ rent under RSA 540:14, II was unsupported by the
evidence or erroneous as a matter of law. Pelkey, 157 N.H. at 92.

We next address whether the trial court erred by finding that the water
odor violated the implied warranty of habitability. We note that, although the
3 The tenants assert, and the landlord does not dispute, that they vacated the premises just

prior to the expiration of the lease. Thus, we agree with the tenants that the appeal is moot to
the extent the landlord is attempting to challenge the dismissal of the possessory action on the
basis that the trial court erred by finding that he acquiesced to the deduction of $620. The
appeal is not moot, however, to the extent he is appealing this finding within the context of
challenging the retaliatory eviction award.

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tenants pleaded this claim under the common law theory, see Kline v. Burns, 111 N.H. 87, 92-93 (1971), the trial court premised its award of $608 upon the
statutory defense to violations of the standards of fitness for health and safety
codified in RSA 540:13-d. Even assuming, without deciding, that the trial
court could properly have granted relief to the tenants in this case under RSA
540:13-d, the evidence does not support the trial court’s award. In order to
entitle a tenant to relief under RSA 540:13-d, the premises must be “in
substantial violation of the standards of fitness for health and safety,” and the
violation must “materially affect[] the habitability of said premises.” RSA
540:13-d, I (emphasis added). To constitute a breach of the implied warranty
of habitability, the violation must “render[] the premises unsafe or unsanitary,
and thus unfit for living therein.” Crowley v. Frazier, 147 N.H. 387, 391 (2001)
(emphasis added); see also Kline, 111 N.H. at 93. In this case, the evidence
establishes that the malodorous water “is not a health hazard. It is just
unpleasant.” Indeed, the trial court expressly found that the water “was not
dangerous for human consumption.” Under these circumstances, the trial
court erred as a matter of law by awarding $608 under RSA 540:13-d.

In sum, we: (1) conclude that the trial court should have dismissed,
without prejudice, the tenants’ counterclaims for damages that were not
defenses to possession recognized by RSA chapter 540 itself, including the
counterclaims seeking damages under RSA chapter 540-A; (2) vacate the
awards of $1,000 and attorney’s fees pursuant to RSA 540-A:4, IX(a) and RSA
358-A:10, I; (3) affirm the award of three months’ rent for retaliatory eviction
pursuant to RSA 540:13-a, I, and RSA 540:14, II; and (4) reverse the award of
$608 for breach of the warranty of habitability pursuant to RSA 540:13-d. We
direct the trial court, on remand, to enter judgment in favor of the tenants in
the amount of $4,560.

Affirmed in part; reversed in part;
vacated in part; and remanded.

Hicks, Bassett, Hantz Marconi, and Donovan, JJ., concurred.

Timothy A. Gudas,
Clerk

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