The apartment management company Westminster Management, LLC, has agreed to pay a $3.25 million penalty and restitution to potentially tens of thousands of current and former tenants in a settlement with the state Attorney General’s office.
The payment settles a 2019 lawsuit by the attorney general’s office alleging violations of the Consumer Protection Act by the apartment management company, which is co-owned by Jared Kushner, son-in-law of former President Donald Trump.
The suit argued Westminster charged tenants illegal fees and failed to maintain the properties. The lawsuit also alleged that Westminster had used Maryland laws governing evictions “aggressively and, at times, illegally to collect rent from consumers.” The 25 companies that own or owned 17 residential communities managed by Westminster Management in Maryland are also named in the lawsuit.
Impacted tenants shared their stories at the attorney general’s office Friday morning as the settlement was announced.
When Tiffany Dixon first moved into her apartment at the Commons at White Marsh in Middle River in 2012, she was eager for her first home out of her parents’ house with her husband and two young children. But problems quickly emerged. A massive leak caused the kitchen tiling to buckle and a wall to start collapsing, with visible mold under it. After Dixon’s husband and son both began suffering from recurring bronchitis, the family discovered that the HVAC system was full of mold. After four years of living in the apartment, Dixon shined a flashlight into the oven to discover dead mice inside.
“I expected to receive services that we paid for, to be able to provide, at the very least, for our kids, a safe and healthy home,” said Dixon, standing beside a blown-up copy of a 2018 email sent from a manager at the apartment complex to a representative of the Kushner Companies, the parent company of Westminster, pleading for help addressing persistent leaks.
“As a mom, I feel like, with Westminster, I failed,” said Dixon. “I just hope and pray that this can help other people that weren’t as lucky as us, as blessed as us to have gotten out.”
The properties contain 9,000 rental units across Baltimore City, Baltimore County, and Prince George’s County. The company has since sold many of the properties.
The settlement requires Westminster to return improperly collected fees to tenants — excessive application fees, agent fees, writ fees, and court costs — and small credit balances that were improperly retained by the company.
Current and past tenants of properties managed by Westminster can also make claims to recoup rent payments if they faced serious maintenance issues like leaks or floods, rodent or bug infestations, or a lack of electricity, water, heat, or air conditioning.
In an emailed statement, Peter Febo, Chief Operating Officer of the Kushner Companies, wrote: “Westminster is pleased to have settled this litigation with no admission of liability or wrongdoing. We look forward to moving past this matter so that we can focus on our ever-expanding real estate portfolio.”
Frosh dismissed the statement. “You don’t pay $3,250,000 bucks if you’re not liable,” he said. “So they may not have formally signed a piece of paper saying that ‘we did it,’ but they did it.”
The $3.25 million civil penalty will be paid to the state. The first $800,000 Westminster pays to the tenants will be subtracted from that total penalty. But if the total amount of restitution owed to tenants exceeds $800,000, the companies will have to pay that amount on top of the $3.25 million penalty.
The rest of the penalty amount after restitution and the costs of the lawsuit the Attorney General’s office is entitled to recover will go to a fund to pay for attorneys for people facing eviction, per recent legislation.
The attorney general’s office does not have an estimate for the total amount of restitution owed, which will be determined through individual arbitration processes with each participating tenant and an outside arbiter. But Frosh said it could far exceed $800,000.
“We have folks who lost all of their personal items because of floods and constant leaks,” said Frosh. And many of the improper fees charged by the companies were charged every month, he noted, which could add up quickly in the claims process.
The total restitution amount will be limited, though, by the fact that many tenants likely won’t participate in the process, Frosh said. Many of the tenants eligible for payments have long since moved out of Westminster properties.
“Some people won’t be reachable, some people will say, ‘Oh my God, I can’t take days off work again to go do this, I mean what am I going to get out of it,’” Frosh said. He estimates that fewer than half of eligible tenants will participate in the process.
Tenants may have an opportunity to receive additional restitution through a separate class-action lawsuit. The class-action case focuses on the company’s alleged “fee-churning” practices, in which the company tacked on often improper late fees and court fees and then used tenants’ rent payments to pay down those fees instead of the actual rent owed. The resulting “late payments” would lead to more and more late and court fees. That case is still awaiting ruling from the Court of Special Appeals, which heard oral arguments in the beginning of 2021.
“It ought to be a lesson to landlords,” said Frosh, who said that his office is investigating several more management companies and landlords that have engaged in similar practices. The office established a Consumer Protection Division Housing Unit in 2019 to address landlord-tenant-related issues. “Tenants don’t have the resources to fight back against this kind of bullying and illegal conduct, and the message from us is that the Attorney General is on your side,” Frosh said.
Vaughn Phillips worked three jobs to save up money to move into his apartment at Fontana Village in Rosedale. He quickly realized that the apartment wasn’t as advertised.
“Mice would come out, watch TV with me,” he said.
Phillips and Dixon said that they didn’t expect that there would be a financial settlement in the case
“I wasn’t looking for financial gain,” said Dixon. “I was just looking for justice. I was looking for someone to acknowledge the negligence, so that way other people wouldn’t have to endure what we did.”