Thomas v. Goudreault
786 P.2d 1010, 45 Ariz. Adv. Rep. 13, 163 Ariz. 159 (1989)
Rule of Law:
Under the Arizona Residential Landlord and Tenant Act, a tenant may recover damages for mental suffering and anguish caused by a landlord's failure to maintain habitable premises without proving the landlord acted intentionally or culpably, as such damages are foreseeable results of the breach.
Facts:
- Thomas and Karen Thomas leased a residence in Scottsdale from the Goudreaults, initially for one year and then for a four-year term.
- The Thomases used the property as both a home and a location for their bakery business, though they did not possess the required county health permit for the business.
- Throughout the tenancy, the Thomases made numerous complaints to the landlords regarding the condition of the premises, particularly regarding the heating and air conditioning system.
- The Goudreaults hired a repairman to install a reconditioned heating and cooling unit (Gas-Pac).
- A fire originating in the Gas-Pac unit substantially damaged the residence.
- Following the fire, the Thomases ceased paying rent and eventually surrendered possession of the property.
- During the dispute over repairs, the landlord threatened to evict the Thomases after Mr. Thomas threatened to use self-help to remedy weed problems.
Procedural Posture:
- The Thomases filed a five-count complaint (breach of lease, torts, negligence) against the Goudreaults and the repairman in the trial court.
- The Goudreaults filed a counterclaim for overdue rent and conversion.
- The claims against the repairman were dismissed without prejudice.
- The trial court granted a directed verdict for the Goudreaults on the claims arising from the fire due to lack of expert testimony.
- The jury found for the Goudreaults on the intentional tort claims and the rent counterclaim.
- The jury found for the Thomases on the breach of landlord duties and retaliatory conduct claims.
- The trial court entered judgment awarding the Thomases compensatory damages and attorney's fees.
- The Goudreaults appealed and the Thomases cross-appealed to the Arizona Court of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a landlord's violation of the statutory duty to maintain habitable conditions under the Arizona Residential Landlord and Tenant Act allow a tenant to recover damages for mental suffering and anguish, and can a tenant recover lost profits for a business operated on the premises without a required license?
Opinions:
Majority - Haire
Yes, regarding mental suffering, but no regarding lost profits. The Court held that the Arizona Residential Landlord and Tenant Act allows for the recovery of 'appropriate damages,' which includes compensation for the annoyance, discomfort, and anxiety resulting from inadequate housing conditions. Unlike the Oregon rule established in Brewer v. Erwin, Arizona does not require the landlord's conduct to be 'culpable' (intentional or grossly negligent) for the tenant to recover emotional distress damages; proving the breach and resulting property interference is sufficient. However, regarding the bakery business, the Court held that the Thomases could not recover lost profits. Because the business was operated without a mandatory health license designed to protect public safety, public policy outweighs the interest in enforcing the contract's profit expectations. Additionally, the Court affirmed the directed verdict on the fire negligence claim because the plaintiffs failed to provide expert testimony regarding the standard of care for air conditioning repair.
Analysis:
This decision is significant because it expands tenant remedies in Arizona by treating residential leases as more than just commercial property contracts. It recognizes that the value of a lease includes the non-economic enjoyment of the home, allowing for emotional distress damages for habitability breaches without the high bar of 'intentional infliction of emotional distress.' However, the court simultaneously reinforced strict public policy limits on contract damages by denying lost profits for unlicensed business activities, distinguishing between revenue-raising licenses (where recovery might be allowed) and public health licenses (where recovery is barred). The case also clarifies that specific statutes regarding fire damage (A.R.S. § 33-1366) override general maintenance statutes.
