Opinion
25411
October 8, 2003.
APPEAL FROM THE DISTRICT COURT OF THE THIRD CIRCUIT NORTH AND SOUTH KONA DIVISION (CIV. NO. 02-101KN)
On the briefs:
Elizabeth B. Croom for Defendant-Appellant. James Sogi for Plaintiff-Appellee.
MEMORANDUM OPINION
After a bench trial, Defendant-Appellant Ian Adams (Adams) appeals from the following actions taken by Judge Joseph P. Florendo, Jr.: (1) the August 21, 2002 Judgment ordering Adams to pay $3,015.75 in damages to Plaintiff-Appellee Susan Kiehm (Kiehm) and (2) the August 29, 2002 Writ of Ejectment ordering the removal of Adams from the single dwelling unit at 75-261 Pumehana Street, Kailua-Kona, Hawai`i (the Unit), owned by Kiehm. We affirm.
BACKGROUND
In early 2000, Kiehm orally rented the Unit to Tammy Ayau (Ayau) on a month-to-month basis for $1,000 per month. Ayau agreed to pay for electricity and cable. Kiehm agreed to pay for water. According to Ayau, she "had to find a roommate because [she] couldn't afford the $1,000, a month." In late 2000, Adams became "that roommate that [Ayau] had contemplated[.]" There is evidence that initially, and for some unspecified time during their co-occupancy of the residence, Adams and Ayau had a romantic relationship. Kiehm was aware that Adams was Ayau's "roommate" and that $500 of the rent paid by Ayau was coming from Adams. On some unspecified day, by mutual oral agreement, Kiehm and Ayau terminated Ayau's tenancy of the Unit effective March 31, 2002. On some unspecified day, Ayau notified Adams that the Ayau-Adams tenancy would end on March 31, 2002. On the termination of Ayau's tenancy, Ayau terminated electric and cable service and Adams refused to exit. After water service was terminated for nonpayment of post-March 31, 2002 service, Kiehm instructed the water supplier not to supply water to the Unit absent a resident's written rental agreement with Kiehm.
After filing a Complaint on April 19, 2002, Kiehm on May 28, 2002, filed a First Amended Complaint against Adams seeking a writ of possession, actual and punitive damages, and attorney fees and costs.
Adams filed a Counterclaim for damages for unlawful interference with Adams' use of the Unit, unfair or deceptive acts or practices in violation of Hawai`i Revised Statutes (HRS) § 480-2, and emotional distress. Adams also sought "$100 plus attorneys fees as a penalty under [HRS] § 521-67 for [Kiehm's] violation of [HRS] § 521-43(f)." In his Counterclaim, Adams alleged that he was without utilities "from April 29 through May 7, 2002 (when utilities were restored in [Adams'] name pursuant to the Temporary Restraining Order Against Unlawful Utility Cut-Off or Diminishment filed on May 6, 2002 in S.P. No. 02-079KN)."
The $3,015.75 amount of the Judgment in favor of Kiehm was the total of $2,821.75 damages ($1,000 for each of April and May and $32.86 per day in June) plus $194 for court costs and sheriff's fees and mileage.
On August 21, 2002, the court entered Findings of Fact (FsOF) and Conclusions of Law (CsOL).
I.
Adams argues that he and Kiehm had a tenant-landlord relationship pursuant to HRS § 521-22 (1993) which states, in relevant part, as follows: "The landlord and tenant may agree in writing to any period as the term of the rental agreement. In the absence of such an agreement, the tenancy shall be month to month[.]"
This argument begs the question. HRS § 521-8 (1993) defines "Tenant" as "any person who occupies a dwelling unit for dwelling purposes under a rental agreement." The begged question is whether Adams, post-March 31, 2002, occupied the residence "under a rental agreement" that legally binds Kiehm.
II.
In Hawaiian Elec. Co., Inc. v. DeSantos, 63 Haw. 110, 621 P.2d 971 (1980), Hawaiian Electric Co., Inc. (HECO), purchased the subject property from Bishop Estate subject to the rights of the tenants of twenty-one dwelling units. Over the course of time, tenants of nineteen of the dwelling units were replaced by other tenants without HECO's express permission. HECO sought to eject the tenants of those nineteen units. The Hawai`i Supreme Court reversed a lower court's decision in favor of HECO, concluding that (1) the fact that HECO had been accepting rent and tax payments from those nineteen tenants for more than ten years when it filed for summary possession estopped HECO from arguing that the nineteen tenants held possession without right, (2) as a result, the tenants were month-to-month tenants, and (3) HECO failed to give the nineteen tenants the statutorily required notice of termination of their tenancies.
Adams argues that
[the] Hawaii Supreme Court's decision in DeSantos is mandatory authority in this case and cannot be distinguished. [Adams] stands in the same position as the nineteen residents in DeSantos who had no express rental agreement. Month-to-month tenancies are created in both cases by the landlord's acceptance of monthly rental payments from the residents. In this case, undisputed facts show that [Adams] moved into the residence owned by [Kiehm] in November 2000 where he continuously paid rent through the end of March 2002. [Kiehm] knew that [Adams] was [Ayau's] boyfriend and that he had been living in the residence and paying $500 of the rent. Having accepted rental payments from [Adams] since November of 2000, [Kiehm], like HECO, must be estopped from arguing that [Adams] holds possession of her property without right. [Adams], like the residents in DeSantos without express rental agreements, has an implied month-to-month tenancy under Haw. Rev. Stat. § 521-22.
(Record citation omitted.)
We disagree that "[Adams] stands in the same position as the nineteen residents in DeSantos[.]" In his points on appeal, Adams does not challenge FOF No. 9 that "[Ayau] received cash from [Adams] and deposited the rent into [Kiehm's] bank account." Adams further states in his opening brief that "[t]here are no material facts in dispute." We recognize that Adams states in his reply brief that "[Adams] testified that he considered [Kiehm] to be the landlord explaining, `that's who I made deposits into her account every month since I moved in.'" This testimony is not a "fact" for two reasons: (1) the statement in Rule 28(b)(4) of the Hawai`i Rules of Appellate Procedure that "[p]oints not presented in accordance with this section will be disregarded" and (2) the combination of (a) the standard of appellate review applicable if Adams had challenged FOF No. 9 and (b) Kiehm's testimony supporting FOF No. 9 that the rental payments were deposited to her account, she did not know who paid them, and she assumed the $1,000 was from Ayau.
III.
Adams challenges the following CsOL:
5. When the month to month lease terminates, the sublease terminates.
6. [Adams] was not entitled to possession upon termination of the lease between Ayau and [Kiehm].
Adams argues that the voluntary termination of the Kiehm-Ayau "lease" did not terminate the Ayau-Adams "sublease" and that when the Kiehm-Ayau "lease" was voluntarily terminated effective March 31, 2002, "[Adams] became the immediate tenant of [Kiehm]" and entitled to proper notice prior to termination of his tenancy.
Adams cites Reade v. IG Second Generation Partners, L.P., 708 N.Y.S.2d 273, 276-77 (2000), as authority that in a commercial lessor-lessee-sublessee situation, where the lessor and the lessee agree to a termination of the lessor-lessee relationship, the sublessee becomes the lessee.
The basic rules specifying the rights of parties when a sublessor voluntarily surrenders possession were set forth by the Court of Appeals in 1875 when it wrote in Eten v. Luyster, 60 N.Y. 252, as follows (at p. 259):
"That surrender, and the consequent merger of the greater and lesser interest, terminated the original lease, and the term created thereby, as between the parties to the lease and the surrender. . . . But it was not competent for the lessor and lessee to affect the rights of third parties by a formal surrender of the lease. The interests and the terms of the subtenant of the lessee continued as if no surrender had been made. The defendants, the surrenderees and owners in fee, became the immediate landlords of the plaintiff (the sublessee), with only such rights as his lessor would have had to the possession of the premises before the expiration of the term. . . . Morrison (the Sublessor) could not sell, give up, or surrender to the defendants anything that did not belong to him; and he could not terminate the lease to the plaintiff, or destroy his rights".
These principles remain good law today, with the issue often litigated being whether the surrender was voluntary, and if it is not then the sublessee's rights would fall as the provisions of a sublease are subject to the termination rights of a landlord set forth in a main lease [ Ocean Grille, Inc. v. Pell, 226 A.D.2d 603, 641 N.Y.S.2d 373 (2d Dept. 1996); Unionport Shoes, Inc. v. Parkchester South Condominium, 205 A.D.2d 385, 613 N.Y.S.2d 605 (1st Dept. 1994); Benderson v. Computer Task Group, Inc., 216 A.D.2d 922, 629 N.Y.S.2d 559 (4th Dept. 1995); DaCosta's Automotive, Inc. v. Birchwood Plaza Shell, Inc., 106 A.D.2d 484, 482 N.Y.S.2d 832 (2d Dept. 1984); Ashton Holding Co., Inc. v. Levitt, 191 A.D. 91, 180 N.Y.S. 700 (1st Dept. 1920); 2 West 45th Street Joint Venture v. Advance Realty, Inc., N.Y.L.J. Sept. 9, 1987, p. 7, c. 2 (A.Term, 1st Dept.); Precision Dynamics Corp. v. Retailers Representatives, Inc., 120 Misc.2d 180, 465 N.Y.S.2d 684 (Civ.Ct., N.Y.Co. 1983); Lippe v. Professional Surgical Supply Co., Inc., 132 Misc.2d 293, 503 N.Y.S.2d 254 (Civ.Ct., Queens Co. 1986); 1 Dolan, Rasch's Landlord Tenant — Summary Proceedings (4th ed.) § 9.68].
"The effect of a voluntary surrender is equivalent to a transfer of the reversion, the interests of the landlord and tenant merge, and what remains is the landlord's fee subject to the subtenancy."
( Precision Dynamics Corp. v. Retailers Representatives, Inc., supra at p. 182, 465 N.Y.S.2d 684).
Adams also cites Chumash Hill Properties, Inc. v. Peram, 46 Cal.Rptr.2d 366, 370 (1995), in support of this rule.
Kiehm responds by citing Sauer v. Toye, 616 So.2d 207, 211 (La.Ct.App. 1993) (citations omitted), in relevant part, as follows:
To maintain an eviction rule, the lessor must show that a lessee's right to occupancy of the rented premises has ceased because of termination of the lease, that the lessor wishes to obtain possession, and that the lessee has failed to comply with the required notice to vacate.
When, as here, an owner-lessor seeks to evict a sublessee, the proof necessary to establish entitlement to that eviction differs because no privity of contract exists between the owner-lessor and the sublessee. A sublessee derives occupancy rights from the sublease covering the rented premises. Rights under a sublease are secondary to the primary lease, and a sublease ceases to exist when the primary lease is dissolved. Thus, an owner-lessor attempting to evict a sublessee has the burden of establishing the dissolution or termination of the primary lease covering the rented premises.
We conclude that the precedents cited by Adams do not apply in this case. As noted in FOF No. 5, "[Ayau] entered into an agreement with [Adams] to rent part of the residence for $500 per month." Adams was a co-tenant of a dwelling unit by oral sub-rental agreement. The co-tenancy of Adams was subordinate to Ayau's tenancy. Ayau was authorized to terminate the co-tenancy of Adams, but Adams was not authorized to terminate Ayau's tenancy. Kiehm was authorized to terminate both tenancies by terminating Ayau's tenancy.
Hawaii Revised Statutes § 521-37(a) (1993) states that "[u]nless otherwise agreed to in a written rental agreement and except as otherwise provided in this section, the tenant may sublet the tenant's dwelling unit or assign the rental agreement to another without the landlord's consent."
Assuming there may be situations in Hawai`i where a lessor and lessee will not be permitted to agree to terminate the lease to the prejudice of a sublessee, we conclude that with respect to dwelling units, the tenancy of a co-tenant by sub-rental agreement is terminated when the tenant's tenancy terminates, whether by agreement between the landlord and the tenant or otherwise.
IV.
Adams alleges that "[Kiehm] resides on the Island of Maui. On May 9, 2002, [Adams] requested that [Kiehm] provide the name and address of her designated agent on the Island of [Hawai`i] pursuant to [HRS] § 521-43(f) so that he could serve her. [Kiehm] never responded." (Record citations omitted.) Adams contends that "[u]nder these facts, the Court should impose a fine of $100 and attorneys fees against [Kiehm] as authorized by [HRS] § 521-67." We disagree.
In COL No. 14, the court decided that "[Kiehm] is not entitled to damages against [Kiehm] for [Kiehm's] failure to disclose a local agent."
HRS § 521-43(f) (1993) states as follows:
Any owner or landlord who resides without the State or on another island from where the rental unit is located shall designate on the written rental agreement an agent residing on the same island where the unit is located to act in the owner's or landlord's behalf. In the case of an oral rental agreement, the information shall be supplied to the tenant, on demand, in a written statement.
HRS § 521-67 (1993) states as follows: "If the landlord fails to comply with any disclosure requirement specified in section 521-43 within ten days after proper demand therefor by the tenant, the landlord shall be liable to the tenant for $100 plus reasonable attorney's fees."
Assuming the credibility of his factual assertions, we conclude that Adams is not entitled to relief under these statutes because, on May 9, 2002, he was not "the tenant[.]"
V.
Adams challenges COL No. 7. It states that "[Adams] is not entitled to damages against [Kiehm] for unfair and deceptive trade practices."
HRS § 521-74.5 (1993) states as follows:
The landlord shall not recover or take possession of a dwelling unit by the wilful interruption or diminution of running water, hot water, or electric, gas, or other essential service to the tenant contrary to the rental agreement or section 521-42, except in case of abandonment or surrender. A landlord who engages in this act shall be deemed to have engaged in an unfair method of competition or unfair and deceptive acts or practices in the conduct of any trade or commerce within the meaning of section 480-2; provided that in addition to the penalties available under section 480-3.1, there shall also be minimum damages of three times the monthly rent or $1,000, whichever is greater.
HRS § 521-42(a) (1993) states, in relevant part, as follows:
The landlord shall at all times during the tenancy:
. . . .
(4) Maintain all electrical, plumbing, and other facilities and appliances supplied by the landlord in good working order and condition, subject to reasonable wear and tear;. . .; and
(5) Except in the case of a single family residence, or where the building is not required by law to be equipped for the purpose, provide for the supplying of running water as reasonably required by the tenant.
Assuming the credibility of the allegation by Adams that Kiehm willfully caused Adams to go without water and electricity for eight days, Kiehm did not violate HRS § 521-74.5 because Adams was not, at the time of the alleged deprivation, a "tenant" and the action was not "contrary to the rental agreement or section 521-42[.]"
VI.
Our decisions above dispose of all of the other challenges by Adams to the FsOF and CsOL.
CONCLUSION
Accordingly, we affirm (1) the August 21, 2002 Judgment and (2) the August 29, 2002 Writ of Ejectment.