IN THE SUPREME COURT OF IOWA No. 14–0820 Filed May 6, 2016 ELYSE DE STEFANO, Appellant, vs. APTS. DOWNTOWN, INC., Appellee. Appeal from the Iowa District Court for Johnson County, Nancy A. Baumgartner, Judge. A tenant appeals and a landlord cross-appeals a district court ruling affirming in part and reversing in part a small claims court decision in a residential landlord–tenant dispute. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED. Christopher S. Warnock and Christine E. Boyer of Iowa Tenants’ Project, Iowa City, for appellant. Robert M. Hogg and James W. Affeldt of Elderkin & Pirnie, P.L.C., Cedar Rapids, and C. Joseph Holland, Iowa City, for appellee. 2 APPEL, Justice. This case is a landlord–tenant dispute that was initially tried as a small claims matter. The case presents a preliminary question of first impression, namely, whether an award of attorneys’ fees should be considered as part of the “amount in controversy” for purposes of determining the jurisdiction of the small claims court. If there is subject matter jurisdiction, the case includes several important issues under the Iowa Uniform Residential Landlord and Tenant Act (IURLTA), including (1) whether a landlord may enter into a contract with a tenant that requires the tenant to assume the cost of making repairs necessary to maintain the premises in a fit and habitable condition, (2) whether a landlord can refuse to approve a sublease based upon the refusal of the tenant to assume the cost of maintaining the premises in a fit and habitable condition, (3) whether a landlord may automatically deduct a fee for carpet cleaning at the conclusion of the lease term, and (4) whether statutory punitive damages are available for willful violation of the IURLTA in this case. The landlord rented a four-bedroom home to four students in the college community of Iowa City. An exterior door and door lock to the premises were damaged due to third-party vandalism, requiring repair in order to maintain a fit and habitable premises. When the landlord was informed of the damaged door, the landlord repaired it but billed the tenants for the cost. The tenants refused to pay. When the tenants subsequently sought to sublease the apartment for two summer months, the landlord refused to approve the sublease on the ground that the tenants had failed to pay for the repairs and the penalties assessed for nonpayment. The tenants still refused to pay. As a result, the landlord 3 refused to approve the sublease, and the premises was vacant for the last two months of the lease term. At the conclusion of the lease term, the landlord then withheld the tenants’ rental deposit. The landlord withheld the rental deposit by asserting that (1) the tenants owed the landlord for the cost of repairing the damaged door, (2) the tenants incurred penalties under the lease for failing to timely pay for the damaged door, (3) the tenants were automatically obligated to pay the landlord for the cost of cleaning the carpet upon their surrender of the premises at the end of the lease term regardless of the condition of the carpet, and (4) the tenants owed the landlord various other relatively minor fees and costs of no relevance to this appeal. One of the tenants, Elyse De Stefano, sued in small claims court, claiming that the landlord improperly withheld the rental deposit. The magistrate held for the tenant on most issues and awarded damages of $4720. The magistrate did not award attorneys’ fees to De Stefano because no attorney fee affidavits were filed. The landlord appealed to district court. On appeal, the district court upheld some but not all of the magistrate’s decision. The district court concluded that under the terms of the lease, the landlord could charge the tenant for the replacement of the exterior door that had been vandalized by a person or persons unknown. The district court also found the landlord properly refused to allow the proposed sublease in light of the tenant’s refusal to pay for the exterior door. As a result, the tenant was liable to the landlord for rent during the two summer months when the premises was vacant. The district court found, however, that the landlord’s automatic deduction from the rental deposit for carpet cleaning violated the IURLTA and that 4 certain late fees imposed by the landlord were improper. In the end, the district court awarded De Stefano $651.54 for the balance of the deposit improperly withheld and $200 in statutory punitive damages. After trial, the attorneys for De Stefano sought fees under the terms of the IURLTA and submitted two separate fee affidavits supporting the fee claims. The district court awarded $1160 in attorneys’ fees, the sum claimed in a fee affidavit submitted by attorney Christine Boyer. The district court declined to award attorneys’ fees claimed in a fee affidavit submitted by attorney Christopher Warnock for $5466. Both parties appealed, and we granted discretionary review. For the reasons that follow, we affirm in part and reverse in part the decision of the district court on tenant’s appeal. We affirm in part and reverse in part the district court’s ruling on the landlord’s cross-appeal. We reverse and remand the case to the district court. I. Background Facts and Proceedings. In July 2010, four University of Iowa students—Elyse De Stefano, Hillary Block, Meghan Crotty, and Jennifer Connelly—rented a four- bedroom home in Iowa City from Apts. Downtown, Inc., (Apartments Downtown) under a written lease agreement. The period of the lease was from July 31, 2010, to July 26, 2011. The collective rent was $1635 per month, and the tenants paid a rental deposit of one month’s rent. The preprinted lease contained seventy tightly-spaced paragraphs featuring many subparts and considerable detail. In paragraph 30 the lease provided, “Tenants agree to pay for all damages to the apartment windows, screens, and doors, including exterior unit doors (including random acts of vandalism).” The lease also provided in paragraph 33, “Unless the Landlord is negligent, Tenants are responsible for the cost of all damages/repairs to windows, screens, doors, carpet, and walls, 5 regardless of whether such damage is caused by residents, guests or others.” Additionally, the lease contained a $452–$690 estimated cost for the repair or replacement of a prehung entry door. The lease further provided that Iowa City Maintenance would perform all repairs “unless written authorization is secured from [the] Landlord.” It stated that Iowa City Maintenance charges $70 per hour during regular business hours and $90 per hour during nights and weekends, with a minimum of one hour per service call. Iowa City Maintenance is an alter ego of Apartments Downtown. Furthermore, the lease included an automatic charge for carpet cleaning at the conclusion of the lease term. Specifically, the lease stated as follows: The carpets throughout the building are professionally cleaned each time apartments turn over occupancy. 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. The four student tenants, including De Stefano, took possession and paid the regular rent on a monthly basis for the duration of the lease, including for the months of June and July, 2011 after failing to receive Apartments Downtown’s approval for a sublease. On August 25, 2011, the student tenant whose forwarding address had been provided to the landlord received a “Security Deposit Statement 2011”1 from Apartments Downtown detailing the following charges to the tenants’ rental account: Carpet Cleaning: $ 191.00 Cleaning Charges: $ 280.00 1This opinion follows Iowa Code section 562A.12(3) in referring to this as a “rental deposit,” but we consider any reference to a “security deposit” to be synonymous. 6 Past Due Rent & Fees on Acct: $1,308.45 Lawn Clean Up: $ 60.00 Screens (Kitchen, BR 2): $ 150.00 Blinds (BR 2, 4): $ 99.00 Removal & Disposal of Tenants Items (Bed mattress in front lawn): $ 50.00 Total Deductions (-) $2,138.45 Total Due: $ (503.45) The past-due rent and fees in the amount of $1308.45 consisted of charges of $210 for lawn care in June 2011; $598.46, the total cost for a replacement exterior door; $150 of late fees for failure to timely pay for the replacement door; and $349.99, the cost of replacing a refrigerator gasket and two broken screens found during a June 2011 maintenance inspection. The statement instructed the tenants to pay the $503.45 due on the account within thirty days. The door replacement charge and the subsequent late fees stemmed from a burglary that occurred at De Stefano’s residence in October 2010. De Stefano and the other tenants filed a police report with the Iowa City Police Department. The report stated that the burglary had left the exterior doorframe damaged and the door lock broken.2 Apartments Downtown was called to repair the door on October 11. It arranged for Iowa City Maintenance, its in-house maintenance group, to replace the kicked-in door, and the charges were billed to De Stefano and her roommates. The total cost of the repair and replacement was $598.46, which included $318.46 for the replacement door and $280 for four hours of labor. Upon receipt of this charge, one of De Stefano’s cotenants sent a letter dated November 2 to Apartments Downtown, contesting the charge and advising that the damage was not 2The front door was split for a length of approximately twelve inches around the latch and deadbolt, and the frame was damaged as a result of being “kicked in” during a burglary. This damage rendered the front door of the house unlockable. 7 caused by any of the tenants and the police investigation was ongoing. The student tenant, in a letter apparently written with the advice of counsel, referenced paragraph 30 of the lease agreement which stated: “Tenants agree to pay all damages to the apartment windows, screens, and doors, including exterior unit doors (including random acts of vandalism).” The tenant said she believed this lease provision to be unconscionable and thus unenforceable by a court. Apartments Downtown responded on November 17, By signing the lease agreement you agree to pay for all damages to the apartment windows, screens, and doors, including exterior unit doors, including random acts of vandalism. If . . . the door was broken down during a burglary, the destruction of the door is considered vandalism . . . . Even though the door was damaged during the break in, and not by a guest of the tenants, it still falls under the basis o[f] a visitor, whether they were a known guest or not. . . . [I]f the police investigation results in the finding of the guilty party that was responsible for the damage, then at that time we would be more than happy to charge said person(s) for the damage. Until then however, the damage incurred to the property fall[s] under the responsibility of the leased tenants. At this time you currently still have an outstanding balance of 598.46 on your account, if this would happen to still be current when December[’]s rent comes due, it will accumulate the standard $40.00 late charge. On December 2, De Stefano emailed Apartments Downtown and indicated that on the advice of counsel the tenants would not be paying for the door and that if Apartments Downtown held back their deposit they would take legal action. Apartments Downtown, apparently believing the email to be a request that the $598.46 be taken from the tenants’ damage deposit at the end of the rental term, responded by email and referred De Stefano to a provision in the lease agreement stating that charges needed to be paid immediately or else late fees would accumulate. The email stated, 8 [I]f you do not pay this bill, a $40 late charge will be applied to your rental account balance, which from now until the end of you[r] lease term would amount to an additional $320.00 in addition to the door balance. In May 2011, De Stefano and the other tenants sought to sublet their apartment for the summer months. They located individuals interested in subleasing their rental property and contacted Apartments Downtown per the lease agreement, which stated, “[T]enants shall not sublet the dwelling unit . . . without the written consent of Landlord.” The lease also provided, however, “Only apartments whose rental accounts are in good standing may sublease. All rent/fees on the account must be paid before Landlord consents to a sublease.” Thus, Apartments Downtown refused to consent to any sublease because the tenants’ rental account carried an unpaid balance consisting of the charges for the replacement door and subsequent late fees for nonpayment. De Stefano and the other tenants were not able to sublet their rental property. On June 22, Apartments Downtown entered the tenants’ rental property without proper notice to conduct an annual maintenance tour. Iowa City Maintenance employees repaired two bent window screens at a cost of $150 and replaced a torn refrigerator gasket at a cost of $129.99. Apartments Downtown added the total charge of $349.99 to the tenants’ rental account, and it eventually became part of the “Past Due Rent and Fees.” A month later, De Stefano and the other tenants received an email from Apartments Downtown containing move-out and inspection information. The email also told the tenants, in bolded and capital letters, “Tenants Only Need to Vacuum Carpet!” Below, it stated, “As agreed to in the lease’s addendum there will be a charge of $95-$225 9 deducted from the tenant’s deposit to pay for professional carpet cleaning at the expiration of the lease.” On July 26, Apartments Downtown performed a checkout inspection at the residence. After the inspection, the company arranged for carpet cleaning to be performed by a local company for a cost of $191. On August 25, Apartments Downtown sent out its statement disclosing the amounts withheld from the rental deposit and the balance still owed. De Stefano responded with an email asking for the return of the deposit and characterizing the landlord’s charges against the account as illegal and unreasonable. Apartments Downtown countered with a letter dated September 8, asserting that the deductions from the rental deposit complied with Iowa Code chapter 562A, which authorizes deductions from a rental deposit either for a tenant’s default in payment of rent or to restore a unit to the condition it had been in at the commencement of the tenancy. The letter provided a reason for each charge and declined to remove any of the charges. The landlord’s letter further requested that the tenants pay the balance on the account by September 25 to avoid future collections action. On September 19, the Apartments Downtown Department of Collections and Litigation sent De Stefano and the other former tenants individual letters demanding payment of the claimed $503.45 balance due on the rental account. On October 4, De Stefano brought a small claims action against Apartments Downtown.3 De Stefano’s notice requested $5000 from Apartments Downtown as well as attorneys’ fees and court costs. On October 28, De Stefano’s case was stayed and consolidated with a 3De Stefano’s standing to assert claims on behalf of herself and her three cotenants is not disputed. 10 different case pending against Apartments Downtown in the district court. The district court denied De Stefano’s motion for partial summary judgment in the consolidated case on May 17, 2012. De Stefano then moved to transfer the case back to the small claims division, and the district court granted the motion on June 8. On July 18, the parties appeared for trial in small claims court. De Stefano presented a number of claims, including (1) that the automatic carpet-cleaning charges in the lease were illegal, (2) that the charges for replacement of a door that had been wrecked during the burglary of the tenants’ residence were unlawful, (3) that the tenants lost two months’ rent because the landlord wrongfully refused to consent to their proposed sublease, (4) that punitive damages should be awarded under the IURLTA for the willful withholding of the rental deposit, and (5) that reasonable attorneys’ fees should be awarded under the IURLTA. The small claims court found that the carpet-cleaning provision in the lease was unenforceable, the lease provisions making tenants responsible for the damage to the door caused by a burglary were unconscionable and thus unenforceable, and punitive damages were warranted. The court applied various other deductions to the rental deposit not relevant to this appeal. The court awarded De Stefano $4520 in damages and $200 in statutory punitive damages for a total of $4720. After the trial, De Stefano’s cocounsels Warnock and Boyer filed two separate affidavits requesting attorney fees in the amounts of $5466 and $1160 be added to the judgment nunc pro tunc. Apartments Downtown resisted on the ground that the attorney fee applications were untimely and would result in damages in excess of the jurisdictional limits of the small claims court. The court declined to rule on the