Tuesday, December 22, 2015

Maryland Appeals Court: Section 8 Tenant Under Automatically Renewing HUD "Model Lease" For Project-Based Federally Subsidized Housing Cannot Be Booted For Alleged Lease Violations Without First Receiving Requested Jury Trial

From a client alert from the law firm Pessin Katz Law, P.A.:
  • In Kirk v. Hilltop Apartments, L.P., the Maryland Court of Special Appeals (No. 2054, September 30, 2015, Krauser, C.J.) was called upon to decide a novel question. If a lease has no expiration date and a tenant sues a landlord for a breach of lease, how does one determine if the case is properly in the Maryland District Court’s jurisdiction or that of the Circuit Court?

    The issue is not a minor one, because if the “value of the right to possession” (or the “amount in controversy”) to the tenant exceeds $15,000 then the tenant is entitled to a jury trial in the Circuit Court. If not, the case remains within the District Court’s jurisdiction. In this case, the Circuit Court denied its jurisdiction and struck a demand to jury trial by Kirk and she appealed that decision.

    Kirk was a longtime tenant in a federally subsidized housing complex. Due to lease violations the landlord, Hilltop, sought termination of her lease and repossession of the premises. When she failed to vacate her apartment by the termination date, Hilltop sued for repossession of her unit in the District Court. Kirk alleged that the amount in controversy exceeded the District Court’s $15,000 jurisdictional limit and the case was then transferred to the Circuit Court which, in turn, agreed with a motion filed by Hilltop that the amount involved was less than $15,000 and sent the case back to the District Court, as being within its exclusive jurisdiction.

    Kirk reasoned as follows:

    “…because her lease, by its express terms, automatically renews for successive one-year terms unless terminated for good cause, she has a right to possess the apartment for an “indefinite period of time” and, thus, the value of her right to possess the premises should have been calculated by multiplying the annual fair market rental payment by the number of years of her remaining estimated life expectancy, the product of which, it is undisputed, exceeds $15,000.”

    Hilltop believed that the “amount in controversy” should be as follows:

    “…the value of Kirk’s right to possess the premises should be calculated, not by multiplying her annual rent by her estimated life expectancy, but by multiplying her monthly rental payment by the number of months that remained on her current lease, which was due to expire on December 31, 2013 (approximately nine months after Hilltop notified Kirk that it was terminating the lease).”

    Hilltop’s methodology would deny the jurisdiction of the Circuit Court.

    Kirk entered into a model lease required to be used by the Federal Department of Housing and Urban Development for Section 8 federally subsidized housing. The lease provided that after expiration of the first year of the term it would continue for successive one-year terms unless it automatically terminated for “good cause”.

    In its termination notice to Kirk, Hilltop recited a litany of alleged lease violations which gave it the right to terminate Kirk’s lease. Kirk denied the alleged violations. Moreover, she contended that until a court ruled that Hilltop terminated her lease for “good cause” it continued indefinitely. Furthermore, she argued that she only needed two more months beyond Hilltop’s lease termination date to reach the jurisdictional limit at which she could maintain a jury trial in the Circuit Court, there being no dispute as to the amount of the monthly rental due Hilltop pursuant to her lease. The issue was the length of time Kirk had the right to continued possession of the premises.

    Kirk argued two cases in the Maryland Court of Appeals supported her position. (See Carroll v. Housing Opportunities Commission, 306 Md. 515, 525 (1986) and Cottman v. Princess Anne Villas, 340 Md. 295 (1995)). Hilltop argued that a later-decided case supported its position. (See Carter v. Maryland Management Co., 377 Md. 596 (2003)

    The Maryland Court of Special Appeals agreed with Kirk’s use of the two Maryland Court of Appeals cases in determining the length of her tenancy. Her “model lease”, applicable to “project-based federal housing program[s]”, provided for automatic renewals until the lease was terminated for “good cause” and neither Hilltop’s cited case nor subsequent federal housing program regulations negated that fact. The judgment of the circuit court was reversed and the matter was remanded to that court for further proceedings.
Source: Maryland Court of Special Appeals finds Tenant Entitled to Jury Trial.

Editor's Note: It should be highlighted that the automatically renewing "model lease" used in this case was used in connection with a "project-based" Section 8 HUD program, as opposed to the, perhaps, more familiar Section 8 "tenant-based voucher" program.

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