Premiere Mgt., L.L.C. v. Nutt

[Cite as Premiere Mgt., L.L.C. v. Nutt, 2010-Ohio-1255.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
HARDIN COUNTY
PREMIERE MANAGEMENT, LLC.,
SCIOTO VILLAGE,
PLAINTIFF-APPELLANT, CASE NO. 6-09-15
v.
REBECCA NUTT, OPINION
DEFENDANT-APPELLEE.
Appeal from Hardin County Municipal Court
Trial Court CVG 0900377
Judgment Reversed and Cause Remanded
Date of Decision: March 29, 2010
APPEARANCES:
Amy L. Lambdin for Appellant
Rebecca Nutt, Appellee
Case No. 6-09-15
ROGERS, J.
{¶1} Plaintiff-Appellant, Premiere Management, LLC (“Premiere”),
appeals the judgment of the Hardin County Municipal Court dismissing its
complaint for forcible entry and detainer and damages against Defendant-
Appellee, Rebecca Nutt. On appeal, Premiere argues that the trial court erred by
finding that its continued acceptance of government housing assistance payments
subsequent to serving on Nutt a notice to leave the premises waived her breach of
the lease and prevented it from proceeding with its action. Based upon the
following, we reverse the judgment of the trial court.
{¶2} In May 2008, Premiere and Nutt entered into an agreement whereby
Premiere agreed to lease Nutt an apartment at the Scioto Village Apartment
Complex located in Hardin County, Ohio. The lease provided that it was subject
to Rural Development Regulations and that rent would be no less than $315 nor
more than $397 per month. Additionally, pursuant to a “Rent Notification” letter
issued to Nutt in March 2009 by the Allen Metropolitan Housing Authority
(hereinafter “Housing Authority”), the Housing Authority agreed to pay a “HAP
[Housing Assistance Payment] Amount” of $222, and Nutt agreed to pay a
“Tenant Amount” of $113 toward the total “Contract Rent” of $335.
{¶3} In July 2009, Premiere filed a petition in forcible entry and detainer
and a claim for damages against Nutt, alleging that she failed to timely pay rent on
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the apartment; that, on June 22, 2009, it served upon Nutt a written notice to leave
the premises for breach of the rental agreement; and, that Nutt unlawfully and
forcibly entered subsequent to the notice and continued to forcibly detain the
premises from Premiere’s possession. Consequently, Premiere requested
possession of the premises, judgment for the reasonable value of repairs for any
damages to the premises, judgment for $139 representing past-due rent, interest at
a rate of 10% per annum, and court costs and attorney fees.
{¶4} In July 2009, the trial court held a civil eviction hearing. Connie
Biddinger, manager of the Scioto Village Apartments and employee of Premiere
Management, testified that Nutt failed to fulfill the terms and conditions of the
lease agreement because she did not pay her rent for the months of May and June
2009; that Nutt attempted to tender partial payment after Premiere filed the
eviction action, but she informed Nutt that she could not accept partial payment
because it would result in dismissal of the eviction action; that she informed the
Housing Authority that Nutt had not paid her rent; and, that she had no knowledge
whether Premiere received a housing assistance payment from the Housing
Authority on Nutt’s behalf for the months of May, June, or July 2009.
{¶5} In August 2009, the trial court held another hearing. Premiere’s
attorney stipulated that it had, in fact, received payments from the Housing
Authority on Nutt’s behalf after filing the eviction action. Additionally, Cindy
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Ring, the Housing Authority’s Executive Director, testified that all of the housing
assistance payments for twenty of Premiere’s tenants, including Nutt, were placed
on one check and directly and electronically deposited into Premiere’s bank
account, and the Housing Authority would then send Premiere a statement with a
breakdown of the housing assistance payments; and, that the Housing Authority
was responsible to make the housing assistance payments until the tenant actually
vacated the premises, even if the tenant continued to occupy the premises after an
eviction order. During this hearing, the trial court stated the following from the
bench:
[TRIAL COURT]: * * * when we look at rent, while the tenant is
normally liable for the payment of full rent, nothing in the law
procludes [sic] the landlord of accepting partial payment,
however he cannot use a partial payment as excuse to evict the
tenant once he’s accepted it. When we look at where that
subsidy is, in part, rent or not rent, because an interpretation of
the Court I believe, as to the contract and the information in
regards to that. If you refer to your exhibit “B” [March 2009
Rent Notification letter] filed in your complaint, contract rent is
three hundred and thirty-five dollars. * * * So, it’s, it is called
rent, by your own agreement, contract rent, so they were
receiving partial payments during that time of contract rent. * *
*
(Aug. 2009 Hearing, p. 2).
{¶6} In September 2009, the trial court issued the following findings of
fact and conclusions of law, in pertinent part:
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(1) The parties entered into a written lease agreement on May
20, 2008 which called for rent in the amount of $315.00 per
month;
(2) The Allen Metropolitan Housing Authority agreed to pay to
Plaintiff the sum of $222.00 per month for partial payment
towards Defendant’s monthly obligation (Exhibit B – from
complaint);
(3) In June of 2009 Defendant fail [sic] to pay her share of rent;
(4) However Plaintiff has received and kept the payment from
the Allen Metropolitan Housing Authority on a monthly basis
through the month of August
***
(9) The Plaintiff has received and kept partial rent for June,
July and August of 2009 and they have waived their right to
proceed on their complaint filed with this Court on July 7, 2009.
(Sep. 2009 Findings of Fact Conclusions of Law and Entry, pp. 1-2). Thereafter,
the trial court denied Premiere’s request for restitution of the premises.
{¶7} It is from this judgment that Premiere appeals, presenting the
following assignment of error for our review.
THE TRIAL COURT ERRED BY FINDING THAT
APPELLANT’S CONTINUED ACCEPTANCE OF HOUSING
ASSISTANCE PAYMENTS SUBSEQUENT TO SERVING A
NOTICE TO LEAVE PREMISES CONSTITUTED WAIVER
OF THE BREACH OF THE LEASE AS A MATTER OF LAW.
{¶8} In its sole assignment of error, Premiere argues that the trial court
erred when it found that Premiere’s acceptance of housing assistance payments
subsequent to its serving Nutt with a notice to leave the premises amounted to a
waiver of Nutt’s breach of the lease. Specifically, Premiere argues that the
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housing assistance payments did not constitute “rent”, for which partial acceptance
bars a forcible entry and detainer action. We agree.
{¶9} Premiere argues that the housing assistance contract between Nutt
and the United States Department of Housing and Urban Development (hereinafter
“HUD”) specified that the monthly housing assistance payment as of March 10,
2009, was $222 per month, with the tenant paying the remaining $113 as “rent”;
that, during the pendency of the forcible entry and detainer action, Premiere
continued to receive housing assistance payments from the Housing Authority;
that the housing assistance payments for twenty tenants, including Nutt, were
consolidated and paid via a single check directly and electronically deposited into
Premiere’s bank account on a monthly basis; that the trial court erroneously found
that the payments constituted acceptance of partial rent, for which Premiere could
not evict Nutt; that the trial court wrongly based its decision that the payments
were “rent” on the letter to Nutt from the Housing Authority that referred to the
housing assistance payment as part of the total “rental amount”; that Section
1437f, Title 42, U.S. Code, which governs the federal housing assistance program,
does not define “rent,” but uses that term only in reference to the amount paid by
the assisted low-income parties; that the trial court’s interpretation of the term
“rent” is inconsistent with the Supreme Court of Ohio’s definition of the term;
and, that at least one other court has found that assistance payments do not
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constitute rent where that interpretation is inconsistent with the lease agreement,
citing Midland Management Co. v. Helgason (1994), 158 Ill.2d 98, 103, 630
N.E.2d 836.
{¶10} A landlord may bring a forcible entry and detainer action against a
tenant who defaults on payment of rent. R.C. 1923.02(A)(2). However, a
landlord is first required to notify the tenant that she is being asked to leave the
premises. R.C. 1923.02(B) and 1923.04(A). If the tenant fails to vacate the
premises within three days of receiving the notice to vacate, the landlord is then
permitted to commence a forcible entry and detainer action against the tenant.
R.C. 1923.04. If the landlord waives the notice to vacate, the trial court lacks
jurisdiction to proceed with the action. Shimko v. Marks (1993), 91 Ohio App.3d
458, 463. Courts have long held that a landlord waives notice to vacate where she
accepts a partial or full payment of future rent after issuing the notice, and, thus,
may not proceed with her forcible entry and detainer action. Wingate at Belle
Meadows v. Higgenbotham, 179 Ohio App.3d 645, 2008-Ohio-6229; Classic A
Properties v. Brown, 4th Dist. No. 02CA2868, 2003-Ohio-5850; Gary Crim, Inc.
v. Rios (1996), 114 Ohio App.3d 433, 436; Shimko, 91 Ohio App.3d at 463;
Country Squire Apartments v. Morales, 6th Dist. No. 91WD096, 1992 WL
185679; Graham v. Pavarini (1983), 9 Ohio App.3d 89, 92.
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{¶11} Several Ohio courts have held that a landlord’s acceptance of a
housing assistance payment from government housing authorities does not
constitute a waiver of notice to vacate, and thus, it does not prevent the trial court
from proceeding on the forcible entry and detainer action because a housing
assistance payment does not constitute the payment of “rent” by the tenant.
{¶12} In Vienna Forest Apartments v. Passmore, 12th Dist No. CA2004-
05-104, 2005-Ohio-2368, the Twelfth Appellate District examined a situation
where the defendant-tenant was receiving housing assistance payments from HUD
under Section 1437f, Title 42, U.S. Code, administered through a local housing
agency. The plaintiff-landlord filed a forcible entry and detainer action against the
tenant alleging untimely payment of rent, which the trial court dismissed. On
appeal, the landlord argued that the trial court erred in ruling that the landlord’s
acceptance of housing assistance payments from HUD on the tenant’s behalf
constituted acceptance of rent, waiving the notice requirements of R.C. 1923.04
and requiring dismissal of the action. The evidence demonstrated that the landlord
received one monthly check on behalf of all of its tenants receiving government
housing assistance and was, in fact, required to accept payment on behalf of a
tenant as long as the tenant remained in the housing, and his right to remain there
was questionable. Based on these facts, the Twelfth District concluded that the
landlord’s acceptance of government housing assistance payments made on the
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tenant’s behalf for payment of future rent did not waive the notice requirements of
R.C. 1923.04 or invalidate the action in forcible entry and detainer. 2005-Ohio-
2368, at ¶33.
{¶13} The Ninth Appellate District examined a similar situation in Natl.
Corp. for Hous. Partnership, d.b.a. Spring Hill Apartments v. Chapman (1984), 18
Ohio App.3d 104. In Chapman, the defendant-tenant also received housing
assistance through HUD for housing she leased from the plaintiff-landlord, Spring
Hill. Spring Hill eventually filed a forcible entry and detainer action after the
tenant failed to make timely rent payments. The tenant appealed from the trial
court’s judgment in Spring Hill’s favor, arguing that, because Spring Hill accepted
payments from HUD that were made on her behalf, it waived the notice to vacate
under R.C. 1923.04, and the trial court lacked jurisdiction to decide the action.
The Ninth District reasoned that, in determining whether the housing assistance
payments from HUD had the same legal effect as rental payments made by the
tenant, it was necessary to examine the terms of the lease as well as the federal
regulations. The Ninth District then found that the terms of the lease permitted the
landlord to terminate the lease for the tenant’s failure to pay rent; that no part of
the applicable federal regulations prohibited a landlord from evicting a tenant for
failing to pay rent or a portion of the rent even if the landlord had received partial
payment via a federal housing assistance payment; and, that “[t]he rent subsidy,
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while providing a personal benefit to a qualified tenant * * *, is not personal in the
sense that it is [the tenant’s] money.” 18 Ohio App.3d at 106. For these reasons,
the court concluded that the landlord had not waived notice and the trial court had
jurisdiction to proceed with the forcible entry and detainer action.
{¶14} In contrast to Passmore and Chapman, supra, the Fourth Appellate
District has found that, where a tenant’s rent is fully subsidized by the federal
government, the housing assistance payments are essentially “rent” paid to the
landlord on the tenant’s behalf, and a landlord’s acceptance of these payments for
future rent waives the notice requirement under R.C. 1923.04 and prevents the
landlord from proceeding with her forcible entry and detainer action. Classic A
Properties, 2003-Ohio-5850, at ¶26, appeal not allowed by 101 Ohio St.3d 1468,
2004-Ohio-819.
{¶15} We note that, as discussed in Premiere’s brief, the Supreme Court of
Illinois has reached a decision similar to Passmore and Chapman, supra. In
Midland Management Co. v. Helgason (1994), 158 Ill.2d 98, 630 N.E.2d 836, the
defendant-tenant’s rent was subsidized under Section 1437f, Title 42, U.S. Code,
administered through a housing agency that made housing assistance payments on
his behalf. The plaintiff-landlord eventually served the tenant with a notice of
termination of the lease and a forcible entry and detainer action due to the tenant’s
failure to pay for damages he caused to the premises. The tenant failed to vacate
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the premises and the landlord continued to receive housing assistance payments
under HUD for several months. The trial court found that the landlord’s
acceptance of the housing assistance payments constituted acceptance of rent and
waived the tenant’s breach of the lease, leaving the trial court without jurisdiction
to proceed on the detainer action, which the appellate court affirmed. Thereafter,
the Supreme Court of Illinois reversed, finding that the housing assistance
payments did not constitute “rent” for purposes of waiver of the notice to vacate
requirements. The Court cited Chapman, supra, for what it characterized as the
most compelling reason—that HUD was not a party to the lease agreement
between the tenant and landlord and that there was no contention that the tenant
was a party to the housing assistance contract between HUD and the landlord.
Additionally the Court based its decision on further reasoning: (1) that the housing
assistance payments were neither defined nor referred to as “rent” in the lease
agreement; (2) that “[r]ent is given in consideration of a lease,” a lease gives rise
to a landlord-tenant relationship, that possession and control of the premises must
pass to the tenant, and, that the lease at issue did not demonstrate that HUD
acquired any possessory interest in the premises; (3) that, pursuant to Section
1437f, Title 42, U.S. Code, a landlord is entitled to receive housing assistance
payments even for a vacant premises under certain conditions, which indicates
“that the housing assistance payment flows with the rental unit, and not the
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Section 8 tenant” and that “the housing assistance payment contract, unlike a
lease, survives the landlord-tenant relationship”; and, (4) that the characterization
of housing assistance payments as rent for purposes of waiver of breach would be
inconsistent with HUD’s goal of providing housing for low-income families
because it could make landlords reluctant to lease a premises to a tenant receiving
such payments. 158 Ill.2d at 105-106. See, also, Westminster Corp. v. Anderson
(1995), Minn. App. No. C4-95-409, 536 N.W.2d 340 (finding that “the doctrine of
waiver does not apply to a landlord’s acceptance of public housing assistance
payments”).
{¶16} Initially, we note that the housing assistance contract to which
Premiere refers in its argument was appended to Premiere’s appellate brief and
reflects that, in March 2009, Nutt entered into a “Housing Assistance Payments
Contract” pursuant to Section 1437f, Title 42, U.S. Code, the Tenant-Based
Assistance Housing Choice Voucher Program administered by HUD. However,
this document was not made a part of the record and, consequently, is not properly
before us. Accordingly, we may not consider the housing assistance contract in
our analysis of Premiere’s arguments. See Bank One Lima, N.A. v. Altenburger
(1992), 84 Ohio App.3d 250, 256, citing Paulin v. Midland Mut. Life Ins. Co.
(1974), 37 Ohio St.2d 109.
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{¶17} Page 8, paragraph 26, of the lease between Premiere and Nutt
provides, in pertinent part, that “If Tenant (1) fails to pay any rent or other charges
within 10 days of the due date hereunder * * * Landlord shall have the option and
right to terminate this Lease and Tenant’s right to occupy the Apartment, and
Landlord shall be permitted to evict Tenant and repossess the Apartment by any
lawful means.” The lease does not define “rent” nor is that term used to refer to
housing assistance payments. HUD was not made part of the lease, and it does not
appear that Premiere endorsed the “Rent Notification” letter issued to Nutt by the
Housing Authority in March 2009 that indicated the “contract rent” of $335
included the $222 housing assistance payment.
{¶18} We find that, as stated in Chapman, while the housing assistance
payment provided a personal benefit to Nutt, it was not “personal” in the sense
that it was Nutt’s money. See Chapman, 18 Ohio App.3d at 106. Further, we
cannot find that the letter issued unilaterally by the Housing Authority to Nutt
modified the lease between Premier and Nutt in that it characterized the housing
assistance payments as “rent.” Additionally, similar to Passmore, the evidence
demonstrated that Premiere received one lump monthly payment on behalf of
twenty of its tenants receiving government housing assistance payments, directly
and electronically deposited into its bank account. Further, as in Passmore and
Helgason, evidence was heard that Premiere was, in fact, entitled to receive
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payments on behalf of a tenant for so long as she occupied the housing, regardless
of the eviction action against her. We are persuaded by the reasoning in
Passmore, Chapman, and Helgason, as applied to the facts of this case, that
Premiere’s acceptance of government housing assistance payments did not
constitute a waiver of the notice to vacate and bar its forcible entry and detainer
action, because the housing assistance payments did not constitute the payment of
“rent” by Nutt.
{¶19} Having found error prejudicial to the appellant herein, in the
particulars assigned and argued, we reverse the judgment of the trial court and
remand for further proceedings consistent with this opinion.
Judgment Reversed and
Cause Remanded
WILLAMOWSKI, P.J. and SHAW, J., concur.
/jlr
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