acknowledging in the first paragraph of their resistance that Plaintiffs have moved for

1. DECLARATORY JUDGMENT IS APPROPRIATE The general approach taken by Defendants Resistance is perplexing. While acknowledging in the first paragraph of their resistance that Plaintiffs have moved for partial summary judgment on their claim for declaratory judgment Defendants never mention declaratory judgment again until a single reference on the penultimate page. No declaratory judgment cases are cited, the civil rules regulating declaratory judgment are not quoted and Defendants make no attempt whatsoever to directly address the issue of whether declaratory judgment is appropriate. Instead Defendants repeatedly make arguments and attempt to apply standards that ignore the fact that this is a motion seeking a declaratory judgment. For example, Defendants repeatedly assert that due to lack of actual enforcement Plaintiffs lack standing 1, and that Plantiffs are basing their arguments on, mere abstract reading of certain leases 2. It is therefore appropriate to summarize the law applicable to declaratory judgments, Civil Rule 1.1102 states, Any person interested in an oral or written contract, or a will, or whose rights, status or other legal relations are affected by any statute, municipal ordinance, rule, regulation, contract or franchise, may have any question of the construction or validity thereof or arising thereunder determined, and obtain a declaration of rights, status or legal relations thereunder. The Plaintiffs are or were tenants of Landlord and all signed standard leases, which are clearly contracts. They are, therefore, clearly interested in the leases and may seek declaratory judgment regarding the validity and legality of those leases. See, e.g. Howard v. Schildberg Const. Co. Inc., 528 N.W.2d 550 (Iowa 1995); Baron v. Crossroads Center of Iowa, Inc.,165 N.W.2d 745 (Iowa 1 Resistance at 3, 4, 5, 7, 9. 2 Resistance at 2-3, 7, 8, 9. 2

1969). Furthermore, as Civil Rule 1.1103, states, A contract may be construed either before or after a breach. Therefore, Defendants repeated assertions regarding the necessity of evidence of actual enforcement of lease provisions have no relevance in the context of declaratory judgment. 3 Finally, as the Iowa Supreme Court has held, The basic and fundamental requirement under [the declaratory judgment rule] is that the facts alleged in the petition seeking such relief must show there is a substantial controversy between the parties having adverse legal interests of sufficient immediacy and reality to warrant a declaratory judgment. There must be a justiciable controversy as distinguished from a mere abstract question. Melsha v. Tribune Publishing Co., 243 Iowa 350, 51 N.W.2d 425; Wesselink v. State Department of Health, 248 Iowa 639, 80 N.W.2d 484; Wright v. Thompson, 254 Iowa 342, 117 N.W.2d 520. McCarl v. Fernberg, 126 N.W.2d 427 at 21 (Iowa 1964). With regard to the existence of a justiciable controversy, The basic question is said to be whether the facts alleged show there is a substantial controversy between parties having adverse legal interests of sufficient immediacy and reality to warrant a declaratory judgment. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826, 829. Bechtel v. City of Des Moines, 225 N.W.2d 326 39 (Iowa 1975). In order to not be an abstract question, there must be sufficient facts pleaded to show that the issue is concrete and that particular legal rights and powers will be or are affected. Bechtel at 44. Is there a substantial controversy? Defendants are certainly vigorously disputing Plaintiffs assertions of illegality. Is the legality of Landlord s leases a mere abstract 3 Note also that despite agreeing under questioning by Judge Dillard at the July 25, 2011 hearing that knowing and willful inclusion of lease provisions without enforcement is actionable, Defendants continue to argue that lease enforcement is necessary for liability. See also 2 of Plaintiffs motion for summary & declaratory judgment for a complete discussion of the illegality of including prohibited lease provisions regardless of enforcement. 3

question? Clearly not, as the issuance of a declaratory judgment will have significant effect for Defendants, Plaintiffs and thousands of potential class members. If the leases contain illegal provisions, then Plaintiffs have conclusively established a threshold factual basis necessary for class certification. See, e.g., Kramersmeier v. R.G. Dickinson & Co., 440 N.W.2d 873, 877 (Iowa 1989) ("[A] preliminary inquiry into the legal and factual sufficiency of the plaintiffs' claim is appropriate inasmuch as they seek to represent the interests of the entire class."). If the leases contain illegal provisions, as this Court noted at the July 26, 2011 hearing, then Landlord must remove them or face the penalty for the knowing and willful inclusion of prohibited lease provisions provided by Iowa Code 562A.11(d)(2). If the leases contain illegal provisions then past tenants against whom the provisions were enforced can seek damages for improper withholding of security deposits and charges by Landlord; current tenants can seek injunctive and other relief to remove illegal provisions and to protect themselves from having illegal provisions applied to them. The legality of Landlord s leases is a key issue and as this Court opined at the July 26, 2011 hearing, declaratory judgment is the best and most expeditious way of proceeding with this case. 4

2. DEFENDANTS ARGUMENTS ARE MERITLESS A. Defendants Concede That There are No Genuine Issues of Material Fact In their resistance Defendants make no assertion that there are genuine issues of material fact, instead they argue that, these asserted facts do not show any violation of law or injury that is addressable by this court, and that Plaintiffs statement of facts is perfunctory. 4 The facts are indeed simple, but clearly sufficient. Defendants have admitted that plaintiffs are tenants of Landlord and that it uses standard leases. Defendants Answer to Plaintiffs Second Amended and Substituted Petition, filed August 29, 2011, paragraph 1; Answer of Defendant, filed on or about January 27, 2011, Division I, paragraph 3, page 1. Since this is a declaratory judgment action, all that is factually necessary is that Plaintiffs be parties to leases with Landlord and the Court can then proceed to determine the legality of Landlord s leases. B. Landlord s Leases Contain Prohibited Indemnity & Exculpatory Provisions Defendants argue that None of the provisions cited by Plaintiffs purpose [sic] to exculpate or limit the liability in a situation where the law would otherwise impose legal liability. 5 Instead, argue Defendants, these provisions merely clarify that Defendants cannot be liable at law. Defendant cites just two of the seven indemnification and exculpation clauses, Exhibit 3 6, 48 & 70 in Apartments Downtown Standard Lease 2011-12. Section 48, which deals with use of common area, states, Tenants shall hold harmless and indemnify 4 Resistance at 2. 5 Resistance at 3. 6 Exhibits in this reply reference the exhibits attached to Plaintiffs Motion for Summary & Declaratory Judgment, which are numbered in conformity with Plaintiffs Common Evidentiary Appendix. 5

the Landlord/Partners for all loss of property or injuries the Tenant sustains through improper use. Section 70 states, Tenants shall hold harmless and indemnify the Landlord/Partners for all loss of property or injuries the Tenant sustains through theft, fire, rain, snow, wind or otherwise. states that, The plain language of these clauses clearly violates Iowa Code 562A.11 which A rental agreement shall not provide that the tenant or landlord d. Agrees to the exculpation or limitation of any liability of the other party arising under law or to indemnify the other party for that liability or the costs connected therewith. Iowa Code 562A.11(1)(a). Defendants argue, without citing any authority, that these clauses do not relieve Landlord of any liability. However, the provisions state that the tenant holds harmless the Landlord & the property owning Partners, for all loss of property or injuries Emphasis supplied, Exhibit 3, 48 & 70. These provisions clearly go beyond merely clarifying Landlord s legal liability and have the effect of relieving Landlord of potential liability which was clearly the purpose for their inclusion in the lease. As the Iowa Supreme Court has held, a landlord, just as any other actor, owes a duty of due care to protect its tenants from reasonably foreseeable harm and must act as a reasonable person under all of the circumstances including the likelihood of injury to others, the probable seriousness of such injuries, and the burden of reducing or avoiding the risk Tenney v. Atlantic Associates, 594 N.W.2d 11 at 52 (Iowa 1999). In addition, the cited lease provisions even go beyond exculpation and provide that tenants indemnify Landlord, thus imposing additional obligations to third parties on tenants, 6

Under a contract for indemnification, "one party (the indemnitor) promises to hold another party (the indemnitee) harmless for loss or damage of some kind...." II E. Allan Farnsworth, Farnsworth on Contracts 6.3, at 108 (2d ed. 1998). The indemnitor "promises to indemnify... [the] indemnitee against liability of [the] indemnitee to a third person, or against loss resulting from [the] liability." 42 C.J.S. Indemnity 2, at 72 (1991). Emphasis supplied, McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d 564 at 39 (Iowa 2002). It would be difficult to conceive of a more blatant violation of the Landlord Tenant statute and the seven exculpatory and indemnification clauses included in Landlord s standard leases are clearly illegal. C. Landlords Leases Contain Illegal Automatic Cleaning Fees Defendants begin by once again arguing the lack of enforcement, a moot point in a declaratory judgment proceeding whose purpose is an examination of the legality of the lease language itself. The plain language of Landlord s lease is clear, Tenants agree to a charge starting at $95 (efficiency) not to exceed $225 (6+ bedrooms) being deducted from the deposit for professional cleaning at the expiration of the Lease. 37(e) in Exhibit 3, Apartments Downtown 2011-12 Lease. 7 Defendants cite the affidavit of Joseph Clark who insists that, in fact, the carpet charge is not automatic and a case by case determination is made with regard to carpet cleaning. 8 If this argument is meant to address the lack of enforcement of the lease provisions, it is irrelevant to a determination of their legality. If this argument is an attempt to parse the meaning of the lease provisions, it is a basic principle of contract 7 Landlord s leases for previous years are substantially similar. 8 Resistance at 4. 7

interpretation that, [e]xtrinsic evidence cannot be used to vary or alter the language in a written agreement. Bankers Trust Co. v. Woltz, 326 N.W.2d 274, 276 (Iowa 1982). Defendants cite Stutelberg v. Practical Mgmt. Co, 245 N.W. 2d 737 (Mich. App. 1976) for the proposition that Landlord can charge any non-refundable fee it wishes. First, this argument fails on narrow technical grounds because in Stutelberg the landlord charged both a security deposit and a non-refundable cleaning fee at the outset of the lease. Stutelberg, 245 N.W. 2d 737 at 45. The Stutelberg Court held that because the cleaning fee was charged in advance separately from the security deposit that the rules regulating security deposits did not apply to it. "The tenant could have no expectation that this sum or a part thereof should be returned. It is not a 'security deposit.'. Stutelberg, 245 N.W. 2d 737 at 127. Landlord s leases, however, provide with regard to carpet cleaning that, Tenants agree to a charge being deducted from the deposit Emphasis supplied, 37(e) in Exhibit 3, Apartments Downtown 2011-12 Lease. Since the carpet cleaning charge is to be deducted from the security deposit, on the facts of the instant case, the holding in Stutelberg does not apply. Secondly, on broad policy grounds Stutelberg should be rejected as persuasive precedent. Following Stutelberg would allow landlords to entirely circumvent the restrictions placed on landlords with regard to the use of security deposits and thereby relieve them of their statutory responsibility for repair and maintenance. Stutelberg interprets the Michigan landlord tenant statute very narrowly, insisting that the restrictions on the use of security deposits by landlords were only put in place so that landlords would not deceive tenants as to the use of pre-paid funds. The Act is 8

primarily aimed to protect the tenant from the landlord surreptitiously usurping substantial sums held to secure the performance of conditions under the lease. Stutelberg, 245 N.W. 2d 737 at 122. However, this holding ignores the comprehensive reform of the landlord tenant relationship undertaken through the adoption of the common law warranty of habitability in cases like Mease v. Fox, 200 N.W.2d 791 at (Iowa 1972) and in the Iowa legislature s adoption of the Uniform Residential Landlord Tenant Act. As 562A.2 states, Underlying purposes and policies of this chapter are c. To insure that the right to the receipt of rent is inseparable from the duty to maintain the premises. Iowa Code 562A.2(c). For example, under 562A.12 a tenant s security deposit cannot be taken to pay for cleaning unless the landlord can show that there is, in fact, specific damage that requires cleaning and that such damages exceeds normal wear and tear. 9 Citing Stutelberg Defendants argue that the only restriction on non-refundable fees is 562A.9(1), in other words there are no legal restrictions whatsoever so long as a landlord labels a fee as non-refundable. Plaintiffs agree with Defendants that if the reasoning in Stutelberg is accepted that landlords will be given free rein to charge any fee, for any purpose so long as it was labeled non-refundable in the lease. If Stutelberg were adopted, for example, so long as they labeled the fee non-refundable landlords would be permitted to charge for roof maintenance, remodeling, for third party vandalism, for cleaning due to normal wear and tear or even charge when cleaning was unnecessary. The reasoning in Stutelberg is flawed and its use as precedent would seriously undermine the legal and statutory scheme 9 Plaintiffs motion for summary & declaratory judgment at 11-12. 9

carefully adopted by the Iowa Supreme Court in Mease v. Fox and by the legislature in chapter 562A. Defendants appear to be making a variation on their standing and enforcement arguments by asserting that even if the lease contains automatic cleaning charges that are illegal on their face, that Landlord is still permitted to charge for cleaning if it provides written justification. 10 Once again Defendants ignore the fact that this is a declaratory judgment proceeding with regard to the illegality of their leases. If there is damage by tenants that exceeds normal wear and tear to the premises, a landlord is, of course, legally entitled to deduct from tenants security deposit so long as the prerequisites of chapter 562A are followed. Landlord s right to recover in these circumstances is established by law, not by the automatic cleaning provisions of its leases whose illegality consists in attempting to extend landlord s rights under the lease beyond what is allowable by law. D. Defendants Repair Shifting & Common Area Damage Arguments Are Meritless Defendants again argue lack of enforcement, attempt to introduce extrinsic evidence at variance with the plain language of Landlord s leases and complain of the abstract reading of leases. Defendants assert that no showing has been made of a violation that materially affects health and safety and therefore that an action relying on the provisions of 562A.15 cannot be maintained, citing Estate of Vazquez v. Hepner, 564 N.W.2d 426 (Iowa, 1997). This ignores the fact that this is action for declaratory judgment and misstates the holding of Estate of Vazquez. The Court in Estate of Vazquez did not hold 10 Resistance at 5. 10

that in order for any tenant to rely on the provisions of 562A.15 in any lawsuit that the landlord s non-compliance with the statute must materially affect health and safety. Instead the Court merely cited the landlord tenant statute, If the landlord fails to comply with section 562A.15, and it materially affects health and safety, the tenant may commence an action under Iowa Code section 562A.21. Estate of Vazquez at 52. Section 562A.21 has two sections. The first provides that if there is a material noncompliance by the landlord with the rental agreement or a noncompliance with section 562A.15 materially affecting health and safety the tenant may commence an action and if the problems are not remedied, terminate the lease. Iowa Code 562A.21(1) The second section of 562A.21 provides, the tenant may recover damages and obtain injunctive relief for any noncompliance by the landlord with the rental agreement or section 562A.15 unless the landlord demonstrates affirmatively that the landlord has exercised due diligence and effort to remedy any noncompliance, and that any failure by the landlord to remedy any noncompliance was due to circumstances reasonably beyond the control of the landlord. Emphasis supplied. Iowa Code 562A.21(2). Thus the first section allows tenants to terminate the lease for unremedied and material non-compliance with the lease or affecting health and safety, while the second section allows for damages and injunctive relief for any non-compliance, material or not, regardless of whether it affects health and safety. The requirement that a breach materially affect health and safety applies only in situations where the tenant seeks to terminate the lease and has no relevance in the instant action. Defendants then argue that charging tenants for the damage caused by unknown third parties is legal because, despite the fact that landlords are explicitly required to maintain common areas, that nowhere does the statute prescribe how the landlord is to 11

accomplish that maintenance, nor does it prohibit a landlord from incentivizing [sic] tenants to help in that effort. In other words, according to Defendants, a landlords can discharge their legal responsibility for maintenance by forcing tenants to pay for it. What the Defendants euphemistically refer to incentivizing tenants, is in fact, charging innocent tenants for damage done by unknown vandals. To call this an incentive for tenants is reminiscent of the passage in Voltaire s Candide, In this country, it is considered wise to kill an admiral from time to time to encourage the others... 11 Defendants argument that landlords are not strictly liable for damage is misplaced since it is Landlord that illegally seeks to hold tenants liable for any damage, anywhere, whether inside or outside their rental units. Defendants argument that tenants occupy the common areas of the rental unit and can therefore be charged for their maintenance flies in the face of the clear requirement set forth in 562A.15 that, The landlord shall.keep all common areas of the premises in a clean and safe condition Emphasis supplied, Iowa Code 562A.15(1)(c). Defendants argue that the TALD agreement is acceptable, but fail to address the key issue raised by Plaintiffs in their motion for summary and declaratory judgment: while a tenant can agree to do their own repairs and maintenance, they cannot agree to make repairs or do maintenance for other tenants when that responsibility rests with the landlord. 12 11 Voltaire, Candide: or, All for the Best (1759) chapter 23. 12 Plaintiffs motion for summary & declaratory judgment at 21. 12

E. Defendants Failure to Deliver Possession Arguments Are Meritless True to form, Defendants again argue that there is no evidence that they actually failed to deliver possession of their premises to Plaintiffs. Defendants are nothing if not consistent in their refusal to accept that this is a declaratory judgment action. Defendants then quote 562A.14, At the commencement of the term, the landlord shall deliver possession of the premises to the tenant in compliance with the rental agreement and section 562A.15 and argue that the language, in compliance with the rental agreement means that the rental agreement trumps the statute. Landlord s standard leases for 2011-12 states, Delay in Possession. If Landlord is unable to give possession, Landlord will make reasonable efforts to correct any problems in a timely manner. Rent will not abate unless the unit is declared uninhabitable by the City. Emphasis supplied, 12 in Exhibit 3, Apartments Downtown Standard Lease 2011-12. Since the lease terms trump the statute, according to Defendants, Landlord is entitled to collect rent without putting tenants into possession, for example, if Landlord has failed to finish cleaning or remodeling. There is no time limit provided in the lease provision, so even if a tenant is kept out of the rental unit for the entire lease term they would nonetheless be liable for rent with no legal redress. An extremely attractive prospect for landlords, but clearly not what the law requires. Even Landlord s own earlier lease contradicts this argument. Possession. If the Landlord is unable to give possession at the beginning of the term hereof, the rent shall be abated until possession is delivered as provided by law. emphasis supplied, 14 of Exhibit 7, Apartments Downtown Lease 2007-8. 13

F. Defendants Housing Code & Warranty of Habitability Arguments Are Meritless After the obligatory lack of enforcement argument, Defendants assert that the, provisions of the Iowa Housing Code do not show any limitation on tenant obligations or landlord-tenant agreements or limit how a landlord can achieve compliance. 13 Defendants are certainly consistent in arguing that they are not bound by any legal restrictions and can use any means they desire to achieve their objectives. In fact, the Iowa City Housing Code ( Housing Code ) is a detailed and specific statutory framework that regulates the obligations and responsibilities of both landlords and tenants. Chapter 562A specifically incorporates housing code requirements. Iowa Code 562A.15(1) (a) requires that landlords, Comply with the requirements of applicable building and housing codes materially affecting health and safety. Housing Code 17-5-19, is specifically entitled Responsibilities of Owners Relating to the Maintenance and Occupancy of Premises while Section 17-5-20, is entitled, Responsibilities of Occupants Relating to the Maintenance and Occupancy of Premises. Owners are required by the Housing Code to maintain and repair, while occupants are required to clean and use responsibly the unit they occupy. Similarly with regard to the warranty of habitability, [W]e hold the landlord impliedly warrants at the outset of the lease that there are no latent defects in facilities and utilities vital to the use of the premises for residential purposes and that these essential features shall remain during the entire term in such condition to maintain the habitability of the dwelling. Further, the implied warranty we perceive in the lease situation is a representation there neither is nor shall be during the term a violation of applicable housing law, ordinance or regulation which shall render the premises unsafe, or unsanitary and unfit for living therein. Brown v. Southall Realty Co., 237 A.2d 834 (D.C.App. 1968); Marini v. Ireland, 56 N.J. 130, 265 A.2d 526 (1970). 13 Resistance at 9. 14

Mease v. Fox, 200 N.W.2d 791 at 37 (Iowa 1972). Defendants insist that this enumeration of responsibilities is meaningless and that they can charge their tenants for repairs and maintenance that are their own legal responsibility as owners. This flies in the face of the plain language of the Housing Code and the mandates of the implied warranty of habitability which are clear, logical and fair in their division of responsibility between owners and occupants. 3. CONCLUSION Apts Downtown is the largest landlord in Iowa City with over 1,000 tenants. Plaintiffs have identified numerous illegal lease provisions and Defendants response is either to claim its leases do not mean what they plainly say, claim that they do not follow their own leases or argue that they are not bound by the Housing Code or applicable precedent. What is disturbing about this case is the scale and systemization of illegality. Landlord s lease provisions, illegal on their face, are only the tip of the iceberg and overturning them just the beginning of a comprehensive effort to reform landlord tenant relations in Iowa City so that both landlords and tenants conform to the law and treat each other fairly and honorably. WHEREFORE, Plaintiffs request that the Court enter Summary & Declaratory Judgment that the aforementioned provisions in Defendants standard leases are illegal. 15

Respectfully submitted, CHRISTINE BOYER AT0001153 CHRISTOPHER WARNOCK AT0009679 132 ½ East Washington Street 532 Center Street Post Office Box 1985 Iowa City, IA 52245 Iowa City, IA 52244 (319) 358-9213 (319) 321-4778 chriswarnock@gmail.com christine.boyer@mchsi.com ATTORNEYS FOR PLAINTIFF CERTIFICATE OF SERVICE The undersigned hereby certifies that a true copy of this document was served on September, 2011, via first class mail, postage pre-paid, upon all attorneys of record who have not waived their right to service and/or pro se parties at their respective addresses as shown herein: James Affeldt Elderkin and Pirnie, P.L.C. 115 First Avenue SE P.O. Box 1968 Cedar Rapids, IA 52406 Attorney for Defendant Christopher Warnock Attorney for Plaintiff 16