Background
CMRT Holdings, LLC filed an eviction action in April 2025 against tenants Courtney Butler and Jason Hunt, seeking possession of a mobile home, unpaid rent, and damages beyond normal wear and tear. Tenants raised affirmative defenses including habitability. Tenants voluntarily vacated in late April or early May 2025, and the Superior Court, Orange Unit, held a bench trial on damages in July 2025.
Evidence at trial revealed that tenants had reported habitability concerns to landlord in the fall of 2024, but no repairs were made for approximately five months. Tenants then contacted the State Fire Marshal, whose February 2025 inspection uncovered serious deficiencies: water-leak damage to the bathroom subfloor requiring replacement, out-of-code electrical and plumbing connections, an uncorrected water heater, non-compliant exterior handrails, and mold that a tenant alleged caused hospitalization. Landlord acknowledged receiving written notice of these violations from the Fire Marshal and admitted that some repairs remained incomplete even after obtaining an extension. The unit could not be re-rented without final Fire Marshal approval.
At the same time, tenants admitted to smoking in violation of the lease and acknowledged that their dogs caused some property damage. The court found that tenants failed to pay rent in March and April 2025. After applying the security deposit, the court found a $1,300 balance owed to landlord and awarded $450 in damages (covering twenty hours of smoke-remediation work), plus court costs and filing fees — but denied landlord’s request for attorney’s fees based on “the mixed nature of the verdict and counter evidence.”
The Court’s Holding
The Vermont Supreme Court affirmed the trial court’s denial of attorney’s fees. The court acknowledged that both the lease’s attorney’s-fee provision and 9 V.S.A. § 4456(e) — which authorizes fees when a tenant deliberately or negligently damages the premises — would ordinarily support a fee award. Nevertheless, the court held that the trial court acted within its authority in withholding fees given the totality of the circumstances.
Relying on Villeneuve v. Beane, 2007 VT 75, 182 Vt. 575, the court reaffirmed that contractual and statutory fee-shifting provisions do not strip trial courts of discretion to deny fees when the overall equities of the case warrant it. In Villeneuve, a landlord who prevailed on back-rent claims but engaged in egregious harassment was denied fees, and the Supreme Court found no error. Here, the panel applied the same reasoning to landlord’s serious, prolonged failure to maintain habitable premises — a breach of the implied warranty of habitability recognized in Hilder v. St. Peter, 144 Vt. 150 (1984), and codified in 9 V.S.A. § 4457(a).
The court emphasized that tenants raised habitability concerns as early as fall 2024, that five months passed with no remediation, that the Fire Marshal documented structural and code violations attributable to landlord’s inaction, and that the unit remained unfit for occupancy through the time of trial. Given that landlord obtained only a modest damages award on a mixed record against self-represented tenants living in a code-deficient unit, the denial of attorney’s fees was not an abuse of discretion.
Key Takeaways
- Contractual and statutory attorney’s-fee provisions in residential leases do not automatically entitle a prevailing landlord to fees; Vermont trial courts retain discretion to deny fees when the equities are mixed — particularly where the landlord’s own habitability failures are significant.
- A landlord’s prolonged failure to address documented habitability defects can weigh against a fee award even when the tenant independently violated lease terms (nonpayment, smoking, pet damage).
- The Villeneuve framework applies beyond egregious landlord misconduct: courts may deny fees whenever the overall outcome and equities make a fee award inequitable, not only in cases of willful wrongdoing.
- This decision is a non-precedential three-justice panel entry order and may not be cited as precedent before any Vermont tribunal.
Why It Matters
The decision reinforces that Vermont’s implied warranty of habitability — established in Hilder v. St. Peter and codified in 9 V.S.A. § 4457 — carries real litigation consequences for landlords who allow conditions to deteriorate, even when tenants are themselves in breach. Attorneys advising residential landlords should recognize that fee-shifting clauses, however broadly worded, will not guarantee recovery when the landlord’s own maintenance failures are part of the trial record.
For tenant-side practitioners, the case illustrates that documenting habitability complaints, involving regulatory agencies such as a state fire marshal, and presenting credible counter-evidence at trial can defeat a landlord’s attorney’s-fee claim even in the absence of a formal counterclaim or damages award in the tenant’s favor.