Saturday, April 30, 2011

District Court has no Jurisdiction to oust Housing Co-op Members

Hawaiian Properties, Ltd. v. Tauala (ICA April 28, 2011)

Background. HPL brought in the district court a complaint for summary possession against Tauala on the grounds that she had broken a "rental agreement" with HPL due to unpaid rent. Tauala filed a motion to dismiss on the grounds that she was a member of a housing co-op managed by HPL and had an ownership interest in the unit. Thus, she was not in a landlord-tenant relationship. HPL opposed and argued that she pretty much a tenant. The district court denied the motion and issued HPL a writ of possession. Tauala appealed.

District Court has Jurisdiction is Limited to Landlord-Tenant Disputes. District courts "shall not have cognizance of real actions, nor actions in which the title of real estate comes in question[.]" HRS § 604-5(d). HPL initiated a summary possession proceeding pursuant to HRS chapter 666. Summary possession is "an expedient remedy to restore a landlord to the possession of his [or her] premises when it is clear that the tenant holds nothing more than a possessory interest in the property." Queen Emma Found. v. Tingco, 74 Haw. 294, 304, 845 P.2d 1186, 1190-91. (1992). But when the lessee holds more than a mere possessory interest, the landlord-tenant relationship is more complex and "summary possession is ill-suited to protect the rights and determine the obligations of all parties with an interest[.]" Id.

Co-op Memberships: less than Fee Simple, but more than Mere Possessory Interest. The ICA observed that in this case it would at first seem as if Tauala had nothing more than a possessory interest and that she was indeed a tenant. While HPL "owned" the entire housing project, the co-op agreement reflected that Tauala, as a member of the co-op owned "a 1% stock-like interest" in the co-op. According to the ICA, Tauala's agreement showed that she had more than a possessory interest in the property. But it was unclear what that something was. The agreement is complicated and more than a short-term lease. The ICA agreed with that Tauala that the agreement gave her something more than a possessory interest, and held that the district court did not have jurisdiction to order the writ of possession. The circuit court had jurisdiction.

Resolving the Jurisdictional Split: Hawai'i in the Minority. The ICA, at the end of the opinion, noted a split among jurisdictions that have examined the relationship between co-op members and property managers. According to the ICA, only a minority have held that co-op members have something more than a mere possessory interest. Kadera v. Superior Court, 187 Ariz. 557, 931 P.2d 1067 (Ariz. App. 1997); Plaza Rd. Cooperative, Inc. v. Finn, 201 N.J. Super. 174, 492 A.2d 1072 (N. J. Super. App. Div. 1985); Kohler v. Snow Village, Inc., 16 Ohio App. 3d 350, 475 N. E. 2d 1298 (Ohio App. 1984). The majority of jurisdictions consider it a mere landlord-tenant relationship. Village Green Mut. Homes, Inc. v. Randolph, 361 Md. 179, 760 A.2d 716 (Md. 2000); Susskind v. 1136 Tenants Corp., 43 Misc. 2d 588, 251 N.Y.S.2d 321 (N.Y. City Civ. Ct. 1964); Quality Management Servs., Inc. v. Banker, 291 Ill. App. 3d 942, 685 N. E. 2d 367 (Ill. App. 1997); Brandywine Townhouses, Inc. v. Joint City-County Bd. of Tax Assessors, 231 Ga. 585, 203 S. E. 2d 222 (Ga. 1974). The ICA--apparently based on Queen Emma--adopted the minority view because it was "consistent with Hawai'i jurisprudence."

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