Jeff Persigehl and Samone Bodley, individually and on behalf of the putative classes, (A14-0027), (A14-0123) v. Ridgebrook Investments Limited Partnership, (A14-0027), (A14-0123), MNS Investors, LLP d/b/a Bar-Ett Investment Company, (A14-0027), (A14-0123), American Utility Management, Inc., (A14-0027), (A14-0123).

Court of Appeals of Minnesota·Decided January 26, 2015·No. A14-27,A14-123·Published

Opinion

STATE OF MINNESOTA

IN COURT OF APPEALS

A14-0027

A14-0123

Jeff Persigehl and Samone Bodley, individually and on behalf of the putative classes, Respondents (A14-0027),

Appellants (A14-0123),

vs.

Ridgebrook Investments Limited Partnership, Appellant (A14-0027),

Respondent (A14-0123),

MNS Investors, LLP d/b/a

Bar-Ett Investment Company, et al., Appellants (A14-0027),

Respondents (A14-0123),

American Utility Management, Inc., Appellant (A14-0027),

Respondent (A14-0123).

Filed February 2, 2015

Affirmed; certified question answered in the negative Hudson, Judge

Concurring in part, dissenting in part, Peterson, Judge

Hennepin County District Court File No. 27-CV-13-13415

E. Michelle Drake, Anna P. Prakash, Joseph Hashmall, Nichols Kaster PLLP, Minneapolis, Minnesota (for Persigehl and Bodley)

Richard T. Ostlund, Brooke D. Anthony, Anthony, Ostlund, Baer & Louwagie P.A., Minneapolis, Minnesota (for Ridgebrook Investment Limited Partnership)

Mark A. Jacobson, Karla M. Vehrs, Lindquist & Vennum LLP, Minneapolis, Minnesota (for MNS Investors LLP, et al.)

Bradley M. Jones, Jeffrey M. Thompson, George H. Norris, Meagher & Geer, P.L.L.P., Minneapolis, Minnesota (for American Utility Management)

Considered and decided by Hudson, Presiding Judge; Peterson, Judge; and Larkin, Judge.

SYLLABUS

Minnesota Statute section 504B.215 (2014) does not prohibit a landlord from billing tenants for fees charged in connection with tenants’ utility bills and does not impose a requirement that those fees be equitable in comparison to the costs of the utilities services apportioned among tenants.

OPINION

HUDSON, Judge In these consolidated appeals involving a certified question, a notice of related appeal (A14-0027), and a separate appeal (A14-0123), we consider whether Minn. Stat. § 504B.215 prohibits a landlord from billing tenants for fees in connection with a tenant’s utility bill; whether the statute imposes a requirement that those fees be equitable in comparison to the cost of the utility service itself; and whether the district court erred in dismissing an unjust-enrichment claim against the utility administrator who billed tenants for the fees. We conclude that the certified question is important and doubtful and that the statute does not prohibit landlords from billing tenants for the fees at issue here; answer the certified question in the negative; and affirm the district court’s decision to dismiss the unjust-enrichment claim.

FACTS

Jeff Persigehl and Samone Bodley (tenants) are the named plaintiffs of a putative class action. At the time the complaint was filed, they resided respectively in two apartment complexes: (1) Minnetonka Terrace, located in St. Louis Park and owned by MNS Investors, LLP; and (2) Ridgebrook Apartments, located in Brooklyn Park and owned by Ridgebrook Investments Limited Partnership. Both apartment complexes are managed by Steven Scott Management, Inc. (SSM). SSM contracts with American Utility Management, Inc. (AUM)1 to provide utility billing services for both complexes. Because both apartment complexes are served by a single meter, AUM pays the total cost of the utility, apportions the utility costs among the tenants, and then bills each tenant for his or her share of the utility. Included in each tenant’s lease is a Water/Sewer Utilities and Trash Addendum in which the tenant agrees to pay AUM the following fees: a new- account activation fee, a monthly administrative fee, a late-payment fee, and a convenience fee if the tenant pays by credit card (add-on fees). The legality of these add- on fees is at the heart of this case.

In July 2013, tenants filed a class-action complaint, asserting two causes of action.

In count one, tenants allege alternative claims. First, they assert that Minn. Stat. § 504B.215 prohibits landlords from billing tenants for add-on fees. Second, tenants allege that, if Minn. Stat. § 504B.215 permits landlords to bill tenants for add-on fees, the fees billed by AUM violate Minn. Stat. § 504B.215, subd. 2a, which, tenants allege,

1 Ridgebrook Investments Limited Partnership, MNS Investors, SSM, and AUM are collectively referred to as “landlords.” While AUM is not necessarily a landlord, this opinion refers to it as a landlord for ease of reference.

requires that add-on fees be equitable and reasonable compared to the actual cost of the utility service. In count two, tenants assert a claim of unjust enrichment against AUM.

Landlords moved to dismiss the complaint for failure to a state a claim upon which relief can be granted, pursuant to Minn. R. Civ. P. 12.02(e). The district court denied the motion to dismiss count one, concluding that, though Minn. Stat. § 504B.215 does not prohibit landlords from charging add-on fees, the statute requires that those fees be equitable and reasonable in comparison to the cost of the utility itself. The district court granted the motion to dismiss count two, concluding that tenants’ unjust-enrichment claim failed because tenants possessed a remedy at law. The district court subsequently issued an order certifying the following question as important and doubtful:

Minn. Stat. § 504B.215 provides that “[a] landlord of a single-metered residential building who bills for utility charges separate from rent must predetermine and put in writing for all leases an equitable method of apportionment and the frequency of billing by the landlord.” Does this provision include a requirement that any fees charged by a landlord in connection with utility billing be equitable or reasonable in comparison to the cost of services rendered or the utility costs paid?

The district court also granted tenants’ motion for entry of partial judgment on the unjust- enrichment claim.

Landlords filed a notice of appeal from the order denying the motion to dismiss count one. Tenants filed a notice of related appeal from the same order, challenging the district court’s conclusion that Minn. Stat. § 504B.215 does not prohibit landlords from billing tenants for add-on fees. Tenants also filed a separate notice of appeal from the

district court’s partial judgment dismissing count two of the complaint. This court subsequently consolidated the appeals.

ISSUES

I. Did the district court properly certify the question of whether Minn. Stat.

§ 504B.215 requires that fees charged by a landlord in connection with utility billing be equitable and reasonable in comparison to the cost of services rendered or utility costs paid?

II. Does Minn. Stat. § 504B.215 prohibit landlords from billing tenants for add-on fees in connection with a tenant’s utility bill?

III. Given the conclusion that Minn. Stat. § 504B.215 does not prohibit add-on fees, does the statute require that those fees be equitable compared to the actual cost of the utility?

IV. Did the district court err by dismissing tenants’ claim for unjust enrichment?

ANALYSIS

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Jeff Persigehl and Samone Bodley, individually and on behalf of the putative classes, (A14-0027), (A14-0123) v. Ridgebrook Investments Limited Partnership, (A14-0027), (A14-0123), MNS Investors, LLP d/b/a Bar-Ett Investment Company, (A14-0027), (A14-0123), American Utility Management, Inc., (A14-0027), (A14-0123)., (Mich. Ct. App. 2015).

Jeff Persigehl and Samone Bodley, individually and on behalf of the putative classes, (A14-0027), (A14-0123) v. Ridgebrook Investments Limited Partnership, (A14-0027), (A14-0123), MNS Investors, LLP d/b/a Bar-Ett Investment Company, (A14-0027), (A14-0123), American Utility Management, Inc., (A14-0027), (A14-0123). (Jeff Persigehl and Samone Bodley, individually and on behalf of the putative classes, (A14-0027), (A14-0123) v. Ridgebrook Investments Limited Partnership, (A14-0027), (A14-0123), MNS Investors, LLP d/b/a Bar-Ett Investment Company, (A14-0027), (A14-0123), American Utility Management, Inc., (A14-0027), (A14-0123).) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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