Landlord Keeps Tenants’ $2,600 Deposit in Bad Faith, Then Sues for More Only to Lose in Court

Keeping her former tenants’ $2,600 security deposit wasn’t enough for one Texas landlord, who also demanded additional money for alleged damage to the property. When the couple refused to pay, she decided to take them to court.

That plan backfired.

Instead, the tenants won a judgment against their former landlord that included triple the amount of their security deposit, along with attorney’s fees and interest.

Landlord Yunan Angelina Zhou challenged the outcome, arguing that the tenants had failed to prove their entitlement to damages and that the financial award had been calculated incorrectly.

On Oct. 15, a Texas appeals court upheld the judgment in favor of Adrienne and Corey Rawlings, although it agreed that some of the amounts awarded needed correcting.

Landlord Demands More Money After Keeping Deposit

The dispute began after the Rawlingses moved out of a home they had rented from Zhou in Texas.

According to a memorandum opinion from Texas’ Fourteenth Court of Appeals, Zhou claimed the couple owed money for repairs and cleaning.

Rather than returning their $2,600 security deposit, Zhou kept the money and demanded additional payment. When the couple refused, she sued them in justice court, alleging breach of contract and fraud.

The tenants responded with a counterclaim over the withheld deposit, seeking damages under Texas law.

The initial judgment went against Zhou, who appealed to a county court for a new trial. After a trial before a judge, the court again ruled in the tenants’ favor and rejected her claims.

Zhou took the dispute to the appellate court, arguing that she had sufficient evidence to support her allegations. She also maintained that the Rawlingses hadn’t provided a forwarding address, which she said prevented them from recovering statutory damages.

There was one major obstacle to her appeal: Neither party had arranged for a court reporter to record the county-court trial.

Appeals Court Upholds Tenants’ Victory

Without a trial transcript, the appellate judges could not establish what evidence had been presented. Under the applicable legal rules, they had to presume that the missing record supported the lower court’s judgment.

That meant Zhou couldn’t successfully challenge the sufficiency of the evidence supporting the tenants’ victory or the rejection of her own claims.

She did, however, identify two mistakes in the financial award.

The lower court had awarded the couple both their original $2,600 deposit and another $7,800 representing triple that amount. The appeals court agreed with Zhou, and the tenants themselves, that the correct damages award was $7,800 rather than $10,400.

The judges also reduced prejudgment interest from $3,019.36 to $158, correcting another calculation the tenants agreed was wrong.

Under Texas Property Code Section 92.109, landlords who retain security deposits in bad faith can face damages equal to three times the amount wrongfully withheld, as well as other statutory liability and reasonable attorney’s fees.

The appeals court left the tenants’ attorney’s fees intact and affirmed the lower court’s judgment with the corrected figures. Zhou received relief on the calculations, although her attempts to recover additional money from the couple remained unsuccessful.