Terrace v. Williams

OPINION OF THE COURT (July 1, 2009) Cabret, J. Cheryl Williams owns a mobile home located in the Peppertree Terrace mobile home community on St. Croix. Peppertree Terrace sued Williams in the Small Claims Division of the Superior Court alleging that she owed several thousand dollars in past due rent for occupying the lot in the community. After a bench trial, the trial court found that Peppertree Terrace’s claim lacked merit and dismissed the claim. Peppertree Terrace filed this appeal asserting that the trial court erred in dismissing its claim because the evidence presented at trial showed that Williams failed to pay past due rent. We agree with Peppertree Terrace that the trial court erred in dismissing its claim and accordingly reverse the trial court’s dismissal. I. FACTS AND PROCEDURAL HISTORY The record shows that Williams owns a mobile home located on lot number fifty-one, Peppertree Terrace (“Subject Property”). Although Williams owns her mobile home, she does not own the Subject Property, and at trial she testified that when she purchased the home, she understood that she would pay Peppertree Terrace a “maintenance fee” for the lot.1 [228] (App. at 29.) According to Williams, shortly after she purchased the mobile home, someone in the Peppertree Terrace office telephoned her to inform her about the amounts she was required to pay: When I bought the place, I got a call about three weeks later telling me, do you know you are supposed to pay [a] maintenance fee; and I said, yes, how much; and she told me [$]361 and that was it. That’s the only thing we’ve ever had. So, what I was doing was I was just paying on it, paying on it, paying on it.... (App. at 32.) In addition to the monthly fee, which Williams was told would cover grass cutting, water, and security, Peppertree Terrace also charged a fee for late payments.2 Williams and Peppertree Terrace did not have a written agreement providing for Williams’ occupancy or any of these payments, and Williams testified that she complained to Peppertree Terrace that the amounts being charged were excessive for the services she received. Peppertree Terrace’s manager explained at trial that, although Williams owned the mobile home, she was required to pay rent “[f]or the lot that the trailer is on.” (App. at 28.) The manager thus characterized the amount charged for the lot as a “lot rental fee,” (App. at 36) and she testified that the amount due for rent each month was $385.00. The manager presented the trial court with monthly account statements purportedly evidencing the amounts Williams owed Peppertree Terrace. The first monthly statement is from May, 2006 and shows that as of March 31, 2006, Williams had a past due balance forward of $1,590.00. The May 2006 statement also reflects the only payment evidenced by any of the statements: a $550.00 remittance by Williams in April, 2006. The manager for Peppertree Terrace testified that this was the last time Williams paid rent. The account statements further reflect that late payment fees were initially assessed against Williams at the rate of $25.00 per month, that the late payment fee was increased to $50.00 per month in May, 2006, and that beginning in February, 2007, the late payment fees were further increased on a monthly basis and eventually included interest [229] charges as well. According to these statements, as of July, 2007, the month of the trial, Williams owed Peppertree Terrace $8,111.79. Williams did not dispute that she was indebted to Peppertree Terrace in some amount. Upon being questioned by the trial judge about the amount she owed, Williams testified: I don’t know how [the property manager] came up with the figures. I know she needs to be paid. That’s how we are coming to court, and we can’t come up to agreement on how much and she can’t make the decision as being the manager. Someone has to make the decision being over her because this is the fourth time we are coming [to court]____ I guess that’s why the money is so high. It’s been almost a year [sic]. (App. at 31.) (Paragraph indention omitted). Although the account statements presented to the court indicate that they were sent to Williams at a post office box, and Williams acknowledged that she received a letter on May 8, 2006 stating that she was in arrears in the amount of $1,885.00, Williams also testified that she never received anything in writing telling her the amount she was supposed to be paying. Williams acknowledged, however, that “[t]hey told [her] over the phone” the amounts she was supposed to be paying. (App. at 32.) Upon receiving this evidence, the trial judge remarked on the difficulty he was having resolving the case due to the conflicting testimony of the parties: I’m hearing two different things. [Peppertree Terrace is] talking about rental fee still, but at the same token, Ms. Williams owns her unit. So, how can she pay rent for something that she owns? [T]he problem I’m having here is it would have been easier if both you and Ms. Williams were speaking in the same terms, but you’re not. She’s talking maintenance fees; you are talking rent. What does your record show that establish [sic] basically what she’s supposed to be paying and what it’s supposed to be for? . . . Why would she want a lease if she owns her unit? (App. at 36, 38.) The Peppertree Terrace manager again explained that it is a lot rental fee and that Williams did not want a lease, although leases prevent rent increases during the year, and that without a lease, the rent can be [230] increased by Peppertree Terrace at any time. The trial judge responded: “I’m sorry, ma’am. This seems a little bit oily. Case dismissed.” (App. at 39.) Peppertree Terrace subsequently filed this appeal. II. JURISDICTION AND STANDARDS OF REVIEW We have jurisdiction over this appeal pursuant to title 4, section 32(a) of the Virgin Islands Code, which vests the Supreme Court with jurisdiction over “all appeals arising from final judgments, final decrees, [and] final orders of the Superior Court.” In considering the appeal of Peppertree Terrace, our standard of review is as follows: The standard of review for this Court in examining the Superior Court’s application of law is plenary. Findings of fact are reviewed on appeal under a clearly erroneous standard of review. The appellate court must accept the factual determination of the fact finder unless that determination either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data. St. Thomas-St. John Bd. of Elections v. Daniel, 49 V.I. 322, 329 (V.I. 2007) (citations and quotation marks omitted). In addition, because this was a small claims matter, we should remain mindful that the goal of the trial judge was “to do substantial justice between the parties.” Super. Ct. R. 64. III. DISCUSSION The trial court clearly erred in dismissing Peppertree Terrace’s claim. The trial court was apparently confused as to why Williams would want to rent the Subject Property when she owned her mobile home, and this confusion seemed to be compounded by the varying characterizations of the monthly fee as a “maintenance fee” and a “lot rental fee.” But however one characterizes the fee, it is undisputed that: (1) Williams’ mobile home was located on the Subject Property in Peppertree Terrace; (2) Williams knew she was required to pay Peppertree Terrace some amount, on a monthly basis, for occupying the Subject Property; and (3) Williams continued to occupy the Subject Property with her mobile home after being informed of the monthly fee. It is unclear why the trial court disregarded the fact that Williams was not renting her mobile home, but rather the land on which the home was [231] situated. Again, there does not seem to be any dispute that Williams occupied the Subject Property or that Peppertree Terrace was charging Williams a monthly fee for this occupancy and the related services provided by Peppertree Terrace. As is discussed below, the transfer of possession of the Subject Property created a landlord-tenant contractual relationship between Peppertree Terrace and Williams under an oral lease with a month-to-month tenancy.3 Before discussing how the lease in this case was created, we note that, as a general rule, a landlord-tenant relationship can arise from an agreement under which one person, the landlord, gives another person, the tenant, a present right to possess a plot of land for a fixed period of time. See generally RESTATEMENT (Second) OF PROPERTY, LANDLORD AND TENANT §§ 1.1-1.4 (1977);4 see also 49 Am. Jur. 2d Landlord and Tenant § 1 (West Supp. 2008) (“The relation of landlord and tenant generally arises from an agreement, or lease, which may be either express or implied, pursuant to which one person — the tenant or lessee — enters into possession and occupancy of the premises of another — the landlord or lessor — for a consideration, usually the payment of rent.”). Under the Restatement (Second) of Property, “[a] landlord-tenant relationship can be created orally if the duration of an oral lease does not exceed the period specified in the controlling Statute of Frauds.” RESTATEMENT (SECOND) of Property, Landlord and Tenant §2.1 (1977). In the Virgin Islands, the Statute of Frauds, which generally requires that certain leases be in writing and executed with specified formalities, applies only to leases with terms exceeding one year. See V.I. Code Ann. tit. 28, §§ 241, 242 (1996). [232] Because the lease at issue in this case was for a term of less than one year, it could have been created orally. To be clear, it does not appear that Williams and Peppertree Terrace ever discussed, in express terms, the duration of Williams’ lease. Rather, the evidence at trial showed only that Peppertree Terrace told Williams she was required to pay a monthly fee, and Williams acknowledged that she needed to pay the fee. The parties’ dispute was not whether a monthly fee was due; they merely provided different characterizations of the fee and disputed the amount of the fee. This agreement that a monthly fee was due created a monthly tenancy under the Restatement (Second) of Property. Specifically, the Restatement provides: The parties may expressly state that the lease shall continue from period to period or their agreement may be apparent from the circumstances. Where the parties enter into a lease of no stated duration and periodic rent is reserved or paid, a periodic tenancy is presumed. The period thus presumed is equal to the interval for which rent is reserved or paid to a maximum periodic tenancy of year to year. Restatement (Second) of Property, Landlord and Tenant §1.5 cmt. d (1977); see also id. §1.5 cmt. d, illus. 2 (“L leases a residence to T to commence July 1, at a rent of $ 100 per month. No duration is specified. The lease creates a periodic tenancy continuing for successive periods of one month until terminated by proper notice.”). In this case, although Williams and Peppertree Terrace disputed the amount of the fee, it is undisputed that the fee was to be paid monthly. Therefore, the circumstances created a month-to-month tenancy that continued until it was properly terminated by one of the parties.5 See id. § 1.5 (“A landlord-tenant relationship may be created to endure until one of the parties has given the required notice to terminate the tenancy at the end of a period.”). There was no evidence pre [233] sented at trial that either of the parties terminated the lease during the period in question. To the contrary, the undisputed evidence showed that Williams’ knew when she purchased the mobile home that she was required to pay a monthly fee and that she continued to occupy the Subject Property up to the time of trial. Accordingly, the trial court’s dismissal of Peppertree Terrace’s claim, on the ground that the parties’ agreement was a little too “oily” to be enforceable, was clearly erroneous. Although we conclude that Williams was a tenant under an oral month-to-month lease, and that she was required to pay some amount of monthly consideration for her occupancy of the Subject Property, we are not able to determine the amount of that consideration. The evidence presented at trial showed that Peppertree Terrace told Williams that the fee for the Subject Property was $361.00 per month if you believe Williams, or $385.00 if you believe the Peppertree Terrace manager. Because the trial court apparently concluded that there was no lease, it did not query further as to the amount of consideration that was due. From the cold record before us, we cannot establish which of the two amounts — $361.00 per month or $385.00 per month — the parties agreed would be due to Peppertree Terrace for Williams’ occupancy of the Subject Property or whether the parties agreed that penalties would apply for late payments. We can only say with certainty that Peppertree Terrace did not gratuitously give Williams possession of the Subject Property, that Williams knew she was required to pay at least $361.00 per month to Peppertree Terrace for occupying the Subject Property, and that the trial court did not do the parties substantial justice by dismissing the action. See Restatement (Second) of Property, Landlord and Tenant §12.1(1) (1977) (“Except to the extent the tenant is legally excused from doing so, there is a breach of the tenant’s obligation if he fails to pay the rent reserved in the lease on or before the date the rent is due.”); id. §12.1(2)(a) (“Except to the extent the parties to a lease validly agree otherwise, if there is a breach of the tenant’s obligation to pay the rent reserved in the lease, the landlord may: (a) recover from the tenant the amount of the rent that is due . . . .”); see also id. §12.1 cmt. m (“The remedy generally available [for nonpayment of rent] is a suit at law to obtain a judgment for the amount of the rent and the collection of the rent by the usual procedure available to enforce a money judgment.”); SUPER. Ct. R. 64 (stating that in small claims actions trial court is required “to do [234] substantial justice between the parties.”). For these reasons, we will reverse the trial court’s dismissal of this case. IV. CONCLUSION The undisputed evidence presented at trial established that a landlord-tenant relationship existed between Peppertree Terrace and Williams. The undisputed evidence also established that Peppertree Terrace and Williams agreed that the rental fee for Williams occupying the Subject Property was no less than $361.00 per month, and Williams testified that she was withholding payment of rent. In light of this evidence, the trial court did not do substantial justice between the parties and clearly erred in dismissing the case. Accordingly, the trial court’s judgment is reversed and this matter is remanded to the trial court for further proceedings to determine the amount Williams owes to Peppertree Terrace. CONCURRING OPINION Footnotes [1] Although Justice Swan’s concurring opinion states that Williams relocated her mobile home to Peppertree Terrace’s property, we have not found any support for this finding in the [228] record. Rather, it appears that when Williams purchased the mobile home, it was already located on the Subject Property in Peppertree Terrace. [2] It is unclear from the record when and how Peppertree Terrace informed Williams that she would be liable for late fees. [3] Although certain aspects of contract law govern the landlord-tenant relationship, see Boulevard Assocs. v. Sovereign Hotels, Inc., 72 F.3d 1029, 1031 (2d Cir. 1995) (recognizing that “[t]he legal relationship between landlords and tenants is a strange hybrid of contract and property law”), we believe that under the facts of this case, the parties’ relationship and the obligations arising from that relationship should be analyzed under the applicable provisions of the Restatement (Second) of Property, Landlord and Tenant (1977). [4] Because there are no local laws governing the question, we turn to the Restatement pursuant to title 1, section 4 of the Virgin Islands Code which provides: The rules of the common law, as expressed in the restatements of the law approved by the American Law Institute, and to the extent not so expressed, as generally understood and applied in the United States, shall be the rules of decision in the courts of the Virgin Islands in cases to which they apply, in the absence of local laws to the contrary. [5] Contrary to Justice Swan’s concurring opinion, the oral lease creating a month-to-month tenancy did not violate the Statute of Frauds merely because it continued in effect for more than one year. “It is well settled that the oral contracts invalidated by the Statute because they are not to be performed within a year include only those which cannot be performed within that period.” 9 RICHARD A. Lord, Williston on Contracts § 24-3 (4th ed. 1999) (emphasis in original). Because a monthly tenancy is, by definition, performed within one year, it does not violate the Statute even if successive one-month terms continue beyond one year. See, Hamilton v. Tanner, 962 So. 2d 997, 1002 n.6 (Fla. Dist. Ct. App. 2007); Carter v. Schick, 817 S.W.2d 238, 239-40 (Ky. Ct. App. 1991).