DICKSON, J.
This landlord-tenant dispute centers on Indiana’s rental agreement deposit statute. We hold that a landlord’s untimely or inadequate statutory damage notice to a tenant precludes only the landlord’s claims for physical damage to the premises and does not bar the landlord from recovery of unpaid rent and other losses.
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[In this case, t]he tenant argues that the “no damages are due” language in [Ind. Code § 32-31-3-15] means that in the event of a landlord’s failure to timely provide the tenants with an adequate notice, the landlord may not recover unpaid rent or other damages and that such failure also requires remittance of the full security deposit and reasonable attorney fees.
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If applied as urged by the tenant to preclude the landlord from recovery of all unpaid rent and other damages, the “no damages are due” clause in Section 15 is inconsistent with Sections 12(b) and(c), which declare a landlord’s failure to give a timely itemized notice to the tenant en-titles the tenant to recover the entire security deposit plus reasonable attorney fees, but “does not preclude the landlord or tenant from recovering other damages to which either is entitled.” I.C. § 32-31-3-12(c). The “no damages are due” phrase in Section 15 may also be read to refer only to physical damages to the premises instead of damages of any kind. We also note that Section 16 prescribes that the liability of a landlord who fails to comply with the notice of damage requirement is “equal to the part of the deposit withheld by the landlord plus reasonable attorney’s fees and court costs,” but does not refer to any forfeiture of unpaid rent and other damages. I.C. § 32-31-3-16. In addition, to construe Section 15 to preclude a landlord who failed to timely provide an adequate notice of damages from recovering unpaid rent and damages other than physical damages to the rented premises would render meaningless Section 12(c), which expressly permits such a landlord to recover “other damages” to which the landlord may be entitled. But if “no damages” under Section 15 is understood to mean no physical damages to the premises, then Section 15 and Section 12 may be construed complementarily and in harmony. We adopt such a construction. Considering the full context of these provisions, we decline to find that the legislature intended to incentivize the providing of a notice of damage by anything greater than a forfeiture of a landlord’s claim for physical damages to the premises.
We hold that a landlord’s failure to provide to the tenant a timely and adequate notice of damages under Sections 12 through 16 of Indiana Code § 32-31-3 precludes the landlord only from recovering damages for physical harm to the rented premises and does not bar the landlord from seeking unpaid rent and other damages.
Although not outcome determinative in this case, we express our disapproval of consider-ing a landlord’s trial exhibit itemizing damages as equivalent to the statutory notice of damages. In view of our holding in Part 1, even if the tenant is correct that the landlord’s damage list exhibit fails to satisfy the notice of damages requirement, the effect would only preclude the landlord from recovering $2,848.94 in claimed physical damages to the premises and would entitle the tenants to the refund of their damage deposit and resulting attorney fees. Reducing the landlord’s total claimed damages ($11,918.94), which are not challenged by the tenant, by the portion attributable to premises damages ($2,848.94), results in a difference of $9,070.00, which, even after an offset for the $600.00 damage deposit and reasonable attorney fees incurred by the tenant, would substantially exceed the $6,000.00 small claims court jurisdictional limit. But in many cases, a landlord’s claim for total damages will likely be much smaller and the role of the statutory notice of damages may be quite significant, thus warranting our clarification of this issue. Section 14 requires that a landlord must, not more than forty-five days after the termination of occupancy, mail to the tenant an itemized list of damages for which the security deposit may be used. The landlord contends that his Plaintiff’s Exhibit 7 (an itemized listing of unpaid rent and late fees during the period of the lease, physical damages to the premises, and attorney’s fees) satisfied the statutory notice of damages requirement. Appellant’s Br. at 7, 18, and Appellant’s Re-ply Br. at 7.
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In many landlord-tenant disputes, either or both of the parties may not be represented by counsel, and thus may be unfamiliar with, or unable to effectively seek, a continuance of the hear-ing to permit further investigation or discovery. It is advisable that judges exercise caution to avoid scheduling the final damage hearing in forty-five days or less from the date of the tenant’s surrender and the landlord’s acceptance of the premises. For a landlord, the better practice is to separately provide the detailed notice of damages to the tenant at the earliest opportunity, reasona-bly in advance of a hearing on damages. When the trial court schedules the damages hearing after the landlord’s deadline for providing the tenant with the notice of damages, it will be in the inter-ests of landlords who seek to assert claims for premises damages to comply with the notice of damages procedure rather than to attempt to first provide their list of damages at trial.
We hold that a failure to timely comply with the notice of damages requirement subjects a landlord to forfeiture of all claims for physical damage to the premises, to refund of a tenant’s damage deposit, and to payment of the tenant’s statutory attorney’s fees incurred by the tenant in seeking return of the deposit and in resisting the landlord’s claim for premises damages, but such failure does not preclude a landlord from recovery of unpaid rent or other damages to which the landlord may otherwise be entitled. Here, the landlord’s total claims so exceed the $6,000.00 small claims jurisdictional limit that the inadequacy of the landlord’s purported notice of damages is immaterial, even though it would preclude his recovery of the portion of his claim that consists of physical damages to the premises and attorney fees, and would require him to refund the tenants damage deposit and resulting attorney fees. This cause is remanded to the trial court for entry of a judgment for the landlord in the sum of $6,000.00.
Boehm, and Rucker, JJ., concur. Shepard, C.J., concurs in result with separate opinion. Sullivan, J., dissents with separate opinion.
SHEPARD, C.J., concurring in result.
I join in today’s disposition and in directing that judgment be entered for $6,000. The Court’s harmonization of the several sections of the statutes on rentals and security deposits is especially helpful.
Because we do not receive very many appeals from the 300,000 small claims cases litigated each year in Indiana, I would go a bit further and answer a question posed by this appeal but not answered in the Court’s opinion.
The informality of the small claims procedure, directed by the legislature and affirmed by this Court’s rules, would not countenance compulsory rejection of a legitimate claim for physical damage solely on grounds of failure to mail before the rent and damage hearing. If, for example, a landlord presented at the hearing held on day 35 a repair estimate of $90 for damage done to an apartment’s dishwasher, and the former tenant acknowledged causing the damage and did not dispute that the repair estimate was reasonable, I would say that the tenant could not defeat the landlord’s claim for withholding $90 from the security deposit by saying solely, “I’m entitled to have this mailed to me.”
I would also say that a tenant faced with a more complicated list of physical damage claims ought to be afforded more time to look into the enumerated items of damage. Our state (and most others) has always believed that such informal approaches to small claims disputes make for substantial justice to litigants on both sides of the “versus.”
SULLIVAN, J., dissenting.
I respectfully dissent.
I believe the statutory scheme works as follows. First, section 14 imposes an affirmative obligation on a landlord, not more than 45 days after termination of occupancy, to give its tenant by mail: (1) notice containing an itemized list of damages, if any, to which it is applying the tenant’s security deposit; and (2) a check for the balance of the security deposit.
Next, section 15 puts teeth into section 14 by saying that if the landlord doesn’t comply with section 14’s requirement, “no damages are due.” And the meaning of damages is clearly set forth in section 13 – actual damages to the rental unit, rent in arrears, unpaid utility and sewer charges for which the tenant is obligated, etc.
The Court finds that subsection (c) of section 12 relieves landlords of the effect of section 15. It provides: “This section does not preclude the landlord or tenant from recovering other damages to which either is entitled.”
Significant to me is the use in subsection (c) of the reference “this section.” The section is section 12; this subsection by its terms does not apply to any other section, to wit, sections 13, 14, or 15.
Furthermore, I think the Court simply misreads subsection (c). In its opinion, the Court says that subsection (c) “declare[s] a landlord’s failure to give a timely itemized notice to the tenant . . . does not preclude the landlord . . . from recovering other damages to which [it] is en-titled.'” Subsection (c) says nothing about applying when a landlord fails to give timely notice. I read it to say that if a tenant owes the landlord more than the balance of the security deposit, the landlord is not precluded from recovering the additional amount due.
Simply put, if occupancy ends with a tenant owing a landlord more than the amount of the security deposit in damages (as defined in section 13), subsection (c) expressly authorized the landlord to recover the additional amount – but only so long as the landlord has complied with section 14 and subsection (a) of section 12.
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