A large residential property management company has settled a class-action lawsuit with 1,442 Baltimore tenants who accused the firm of charging improper fees and then threatening them with eviction to force payment, the parties announced Friday.

Dunne Wright Services, based in Baltimore, denied the allegations in the lawsuit but agreed to allocate nearly $663,000 to reduce the debts of past and current tenants, to credit their rents and reimburse some costs. The company also agreed to pay $61,500 in tenants' legal fees.

The company, which owns or manages 900 units throughout the region, also agreed to rewrite its standard lease, change its rent collection and property management practices and adjust disputed fees.

Dunne Wright also agreed to define “rent” “to include only the fixed sum due from the tenant each month (not including repair charges or utilities, which will be classified as non-rent charges),” the company said in a joint statement issued Friday with Public Justice Center, the nonprofit that represented the former and current tenants.

The agreement on the definition comes as judges across Maryland grapple with the proper application of a ruling by the Court of Appeals. The court ruled in February that a property manager should not have claimed unpaid utility bills amounted to overdue rent for the purpose of filing eviction proceedings against a tenant.

In the settlement agreement, Dunne Wright agreed to abide by the same standard.

Philip Garboden, a researcher at The Poverty and Inequality Research Lab at the Johns Hopkins University who has interviewed hundreds of landlords, called the settlement “a big win” for tenants.

“They've established that you can evict only on rent, not on fees,” he said.

Garboden said other landlords will take notice of the settlement and possibly adjust their practices “to avoid being the target of a class-action lawsuit.”

Tenants accused Dunne Wright of filing hundreds of failure-to-pay-rent actions in District Court every year not just for rent but also for late payment of water bills, repair fees and maintenance charges. The tenants alleged it was the company's responsibility to cover these charges.

Dunne Wright charged tenants $50 for failure-to-pay-rent actions in District Court that actually cost $27; $70 for filing warrants of restitution that actually cost $50; and a $10 “eviction posting fee” that state law says cannot exceed $5.

In the settlement, the company agreed that it would stop billing tenants more than “the amount charged by the district court.”

Tenants alleged that Dunne Wright would apply their rent checks to cover overdue utilities and other unpaid bills stemming from those excessive fees. That left the rent not fully paid, resulting in another court action and the assessment of a new set of those eviction-related fees.

“As a result of this misallocation, Dunne Wright unilaterally deems subsequent payment for rent insufficient, churning the cycle of litigation, late fee, and illegal fee accrual again,” tenants said in the lawsuit.

The company then used the threat of eviction to collect, the tenants said.

Under the settlement, Dunne Wright agreed to allocate tenants' payments to outstanding rent charges before additional “non-rent charges,” to bill tenants only for the actual costs of filing court actions, and to pay for repairs that are the company's responsibility.

The company “denied the allegations of the complaint and disputed all liability in the case,” it said in the joint statement. Dunne Wright contended that their practices were not illegal, followed customary practices and did not violate any laws.”

ddonovan@baltsun.com