The Appellate Court of Maryland has sided with tenants who claim that various fees imposed on renters by a company co-owned by Jared Kushner were charged illegally.
The unreported opinion by a three-judge panel of the intermediate appeals court allows affected tenants of the more than 9,000 Maryland rental units previously operated by Westminster Management LLC to pursue class-action damages against the company over fees it levied when tenants paid their rent late.
In a 90-page opinion issued Monday, the court rejected numerous arguments raised by Westminster defending its practice of charging both a 5% late fee — the maximum allowed by Maryland law — and a myriad of other additional unawarded “agent fees,” “summons fees” and excessive “writ” fees. The company had “turned these illegal fees into a profit center,” attorneys representing the tenants said in a press release.
“It’s really a complete victory on all of the issues that we had brought against Westminster,” said Andy Freeman, an attorney with Brown, Goldstein & Levy, who represented the tenants. “[The fees] add up if they happen in multiple months and landlords in Maryland just need to stop — they can’t charge those fees at all unless they are awarded by a court.”
The fees were often relatively low — around $20 or $30 each time a tenant was late, Freeman added. “But to tenants living paycheck to paycheck and making tough choices of, ‘Should I pay my rent on time or should I feed my kids?’ and choosing to feed [their] kids, it’s really important.”
The class-action case is one of two lawsuits filed in recent years against the apartment management company co-owned by Kushner, the son-in-law of former President Donald Trump. The other, which was brought by the state attorney general’s office, was settled in September when the company agreed to pay a $3.25 million penalty and restitution to potentially tens of thousands of current and former tenants. That suit argued that Westminster had charged tenants illegal fees and failed to maintain the properties.
“After more than five years of litigation, I’m relieved that the Court rejected Westminster’s convoluted reasons for charging renters illegal fees and calling all of those fees ‘rent,’” said Tenae Smith, a plaintiff named in the suit, in the press release announcing the decision. “Westminster must be held accountable.”
These additional fees landed tenants in a constant cycle of eviction filings, the lawsuit argued. In a practice sometimes referred to as “fee-churning,” Westminster tacked on improper late fees and court fees and then used tenants’ rent to pay down those fees instead of the actual rent owed. The resulting “late payments” would lead to additional late and court fees, subjecting tenants to “emotional stress, fear of eviction, parents being forced to delay or deprive their children of educational and extracurricular opportunities in order to avoid eviction,” according to the court’s decision.
Westminster is not alone in these practices, Freeman said. “There are lots of landlords that don’t play this game but unfortunately many of the large landlords do,” he added.
Freeman is also representing tenants in a class-action case against Morgan Properties Management Co. LLC, which charges that the company engaged in similar practices. An appeal in that case was stayed by a circuit court judge pending a ruling in the Westminster case.
Freeman hopes that, thanks to the court’s opinion, “landlords will get the message that they can’t do this.”
Despite agreeing to pay a penalty and restitution to potentially tens of thousands of current and former tenants in the settlement with the attorney general’s office, Westminster continued to deny that it had violated Maryland law or the tenants’ rights.
In a statement emailed to The Baltimore Banner at the time, Peter Febo, chief operating officer of the Kushner Cos., 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.”
Then-Attorney General Brian Frosh, a Democrat, 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 attorney general’s office distributed claims notices to tenants in that suit in December.
The court’s opinion this week gives tenants a second opportunity to seek damages, allowing them to return to the trial court to seek a final determination of liability, damages, and an injunction on behalf of a class of all Westminster tenants who paid illegal fees.