Green v. Copperstone Ltd. Partnership

Menchine, J., delivered the opinion of the Court. This case reaches us on certiorari to the Circuit Court for Howard County. The litigation had been initiated by Copperstone Limited Partnership (Landlord) against Helen Green (Tenant) in the District Court for Howard County by a Complaint in Ejectment-Tenant Holding Over, under Real Property Article § 8-402 1 of the Annotated Code of ⁵⁰⁰ Maryland. After hearing in the District Court, judgment of restitution of leased premises to the landlord was extended.

Tenant appealed to the Circuit Court for Howard County. After hearing on appeal, monetary judgment against tenant and a warrant of restitution to landlord was entered in the Circuit Court. A stay of execution of judgment was granted pending petition for certiorari. Tenant occupied apartment 4 of 5858 Stevens Forest Road, Columbia, Maryland under a written lease executed by both landlord and tenant.

The lease, dated December 17, 1971, was for the term of twelve (12) months beginning on that ⁵⁰¹ date, at a monthly rental of $137.00. Landlord and tenant agreed that the fair market rental of the premises was $215.52 monthly. Paragraph 4 of the lease read as follows: “4. Unless terminated as provided herein, this lease shall be automatically renewed for successive terms of one month each at the aforesaid rental, subject to adjustment as herein provided, payable in advance without demand on the first day of each month.

Either party may terminate this lease at the end of the initial term or any successive term by giving 30 days written notice in advance to the other party.” After tenant had continued in possession under that lease for almost three years she received the following letter by certified mail: “September 5,1974 Ms. Helen Green 5858-4 Stevens Forest Road Columbia, Maryland 21045 Dear Ms. Green: This letter is to constitute a thirty-day (30-day) written notice of our intent to terminate the month-to-month lease agreement between yourself and Copperstone Limited Partnership, as called for in Page 2, Paragraph 4, of your lease for the unit at 5858-4 Stevens Forest Road, and to notify you that you must vacate the premises on or by October 31, 1974. Should you fail to do so, you will be considered a tenant holding over, and appropriate measures will be instituted. It is our duty, under the law, to advise you that if you hold over beyond the expiration of this term ending October 31, 1974, you can be held liable for double the amount of rent apportioned for the duration of the hold-over. Your monthly rent for September and October must be paid as usual per your lease agreement. ⁵⁰² Failure to do so will afford immediate appropriate legal action prior to the October 31st termination date.

Sincerely, PATRICIA L. WEYHRAUCH Resident Manager Copperstone Circle Apartments.” When tenant refused to vacate the premises on October 31, 1974, the landlord filed its complaint in the District Court for Howard County seeking restitution of the premises pursuant to the cited provisions of the Annotated Code of Maryland. For reasons that will become apparent we emphasize at this point that both the notice to the tenant and the complaint against her for restitution as filed in the District Court declared that expiration of the term of the lease was the sole ground for termination of the tenancy, and no other cause was assigned. The case presents the issues: (a) whether an apartment complex developed pursuant to section 236 of the National Housing Act (12 U.S.C.A. § 1715z-1, et seq.) involves such government action that a landlord must assure due process of law before eviction of a tenant may occur; (b) whether the appellant, as a tenant in such a facility, acquired such a property right as entitled her to the protection accorded by the due process of law provisions of the Fifth or Fourteenth Amendments to the Constitution of the United States; and (c) whether eviction may be based solely upon expiration of a lease. Appellant tenant contends that procedural due process demands that there be notice of eviction and a hearing to determine if good cause exists for eviction, and that the mere expiration of the term of a lease is not good cause.

Appellant concedes that the provisions for a hearing set forth in the Real Property Article § 8-402 comply with procedural due process requirements, if notice and proof at the hearing demonstrate good cause for eviction. Appellee landlord contends that the litigation is between ⁵⁰³ private parties contesting their respective contractual rights under a Maryland statute authorizing eviction, after notice, when the term of the lease has expired, and that there is no constitutional bar to her eviction. Section 236 of the National Housing Act, as amended, (12 U.S.C.A. § 1715z-l) is a statutory scheme seeking to achieve improved housing at reduced rentals for low and middle income families. The statutory aim is accomplished in part by governmental rent supplements to some tenants and in part by periodic federal government payments of interest for owners to mortgagees who meet the special requirements of the section.

Among project owners authorized to participate in the statutory scheme are limited dividend corporations or other limited entities. 2 Tenants of a section 236 facility include some who receive rent supplement payments; 3 and some whose monthly rent is on a sliding scale, depending on income, not less than a basic monthly rental charge and not more than a fair market monthly rental charge. 4 The tenant in the subject case pays only the basic monthly rental charge but does not receive a rent supplement. In sum, landlord is a limited dividend owner of a multi-family apartment complex developed pursuant to section 236 of the National Housing Act (Title 12 U.S.C.A. § 1715z-1-6) and tenant derives benefits under that section by virtue of being required to pay only the basic monthly rental of $137.00, rather than the fair market rental of $215.52. ⁵⁰⁴ In the subject project twenty-five tenants are subsidized by government provided rent supplements. The remaining one hundred seven tenants pay rent based on income, 5 varying from $137.00 to $215.52 monthly. Tenant acknowledges that she received the letter notice dated September 5, 1974, supra, and that she executed a lease that included the provisions contained in paragraph 4 thereof, supra.

She contends, however, that such paragraph 4 is invalid as applied to tenancies arising under section 236 of the National Housing Act. Landlord acknowledges that the apartment was constructed under section 236 of the National Housing Act, as amended. That the Fifth and Fourteenth Amendments affect only Federal and State action, and do not relate to the conduct of private individuals is firmly fixed by decisions of the Supreme Court. The Fifth Amendment “is a limitation only upon the powers of the general government.” Talton v. Mayes, 163 U. S. 376, 382 , 16 S. Ct. 986, 988 , 41 L. Ed. 196, 198 .

It is not directed against the action of individuals. Corrigan v. Buckley, 271 U. S. 323 , 46 S. Ct. 521 , 70 L. Ed. 969 . The prohibitions of the Fourteenth Amendment “have reference to state action exclusively, and not to any action of private individuals.” Virginia v. Rives, 100 U. S. 313, 318 , 25 L. Ed. 667, 669 . “It is state action of a particular character that is prohibited. Individual invasion of individual rights is not the subject matter of the Amendment.” Civil Rights Cases, 109 U. S. 3, 11 , 3 S. Ct. 18, 21 , 27 L. Ed. 835, 839 . “It is obvious that [neither] of these amendments prohibited private individuals from entering into contracts respecting the control and disposition of their own property. * * * ” Corrigan v. Buckley, supra, at 330 [972].

Thus, it would appear at first blush that the subject case involves no Fifth and Fourteenth Amendment issue. There are, however, Supreme Court decisions exemplified ⁵⁰⁵ by American Communications Asso., C.I.O. v. Douds, 339 U. S. 382 , 70 S. Ct. 674 , 94 L. Ed. 925 , declaring that: “ * * * when authority derives in part from Government’s thumb on the scales, the exercise of that power by private persons becomes closely akin, in some respects, to its exercise by Government itself.” (at 401, [945]) Thus in Public Utilities Comm. v. Pollak, 343 U. S. 451 , 72 S. Ct. 813 , 96 L. Ed. 1068 , the Capital Transit Company, a privately owned corporation contracted with a privately owned radio broadcasting company for radio programs to be received and amplified in busses operated by the transit company. Protesting passengers who were compelled to listen, argued that their Fifth Amendment right to liberty was infringed. The Supreme Court, although denying that the facts showed violation of Fifth Amendment rights, acknowledged its obligation to pass upon the constitutional issue, saying in 343 U. S. at 461 , 72 S. Ct. at 820 , 96 L. Ed. at 1076 -77: “It was held by the court below that the action of Capital Transit in installing and operating the radio receivers, coupled with the action of the Public Utilities Commission in dismissing its own investigation of the practice, sufficiently involved the Federal Government in responsibility for the radio programs to make the First and Fifth Amendments to the Constitution of the United States applicable to this radio service.” adding in 343 U. S. at 462 , 72 S. Ct. at 820 , 96 L. Ed. at 1077 : “We find in the reasoning of the court below a sufficiently close relation between the Federal Government and the radio service to make it necessary for us to consider those Amendments.” Tenant urges that the Fifth and Fourteenth Amendments protect her valuable property right from invasion by action of landlord because the authority of the latter derives “from Government’s thumb on the scales.” ⁵⁰⁶ The seminal case involving constitutional limitations upon private owners of apartment projects developed under the provisions of the National Housing Act is that of Joy v. Daniels, 479 F. 2d 1236 (4th Cir. 1973).

That case arose under Section 221 of that Act 6 under facts thus summarized by the Court (at 1238): “On September 2, 1970, plaintiff leased one of defendant’s apartments. The standard form lease provided in relevant part: ‘At the end of one year, lease is automatically renewed from month to month, rent to be payable in advance without demand on first day of each month. Either party may terminate lease at end of term or any successive term by giving 30 days’ notice in advance to other party.’ On September 11,1971, the defendant gave plaintiff 30 days’ notice to vacate, no cause being assigned. It appears that the plaintiff has continued to occupy her apartment on a month-to-month basis, with her tenancy dependent on the outcome of this litigation. “Section 221(d)(3) of the National Housing Act, 12 U.S.C. § 1715l(d)(3) (1971), is a statutory scheme for encouraging housing for low income families.

To participate in this program, defendant was required to conform to a regulatory agreement with the Federal Housing Administration governing, inter alia, the construction, occupancy, and daily operations of the project. The FHA also grants defendant rent supplements for the plaintiff and other tenants under Section 101 of the Housing and Urban Development Act of 1965, 12 U.S.C. § 1701s(b) (1971). Plaintiff, for example, enjoys ⁵⁰⁷ occupancy of an apartment worth $157.00 per month at a cost to her of $48.00. FHA pays the difference, i.e., $109.00 per month, directly to defendant.

As a prerequisite to participation in the rent supplement program, there must be local government approval. 24 C.F.R. § 5.15 (c) (1971). The County Council specifically approved rent supplements for Joseph Paul Apartments on August 6,1968.” 7 The Court, concluding that State action had “ ‘so far insinuated [the state] into a position of interdependence’ with the defendant that the challenged activity ‘cannot be considered to have been so “purely private” as to fall without the scope of the Fourteenth Amendment’ ” declared: (at 1239) “Accordingly, we hold there is sufficient state involvement to constitute ‘state action’ for purposes of the fourteenth amendment.” The Court in Joy then discussed in considerable depth the rights of the tenant; the congressional purposes sought to be served by passage of § 221; and the regulations adopted to carry out those purposes, saying at 1239, et seq.: “The district court concluded that plaintiff had no right of occupancy upon expiration of the term of the lease. Plaintiff contends that despite expiration of the term she may be evicted only for ‘good cause’ and is entitled to the protection of procedural due process in the determination of whether cause exists. Since procedural due process applies only to the deprivation of interest protected by the fourteenth amendment, i.e., liberty and property, we must first determine plaintiff’s substantive rights.

See Board of Regents v. Roth, 408 U.S. 564, 569 , 92 S.Ct. 2701 , 33 L.Ed.2d 548 (1972); McQueen, 317 F.Supp. at 1128. ⁵⁰⁸ “As stated in Board of Regents v. Roth: ‘Certain attributes of “property” interests protected by procedural due process emerge from [the Court’s] decisions. To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.

It is a purpose of the ancient institution of property to protect those claims upon which people rely in their daily lives, reliance that must not be arbitrarily undermined. It is a purpose of the constitutional right to a hearing to provide an opportunity for a person to vindicate those claims. ‘Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law — rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.’ 408 U. S. at 577 , 92 S. Ct. at 2709 . ‘A person’s interest in a benefit is a “property” interest for due process purposes if there are such rules or mutually explicit understandings that support his claim of entitlement to the benefit and that he may invoke at a hearing.’ Perry v. Sinderman, 408 U.S. 593, 601 , 92 S. Ct. 2694, 2699 , 33 L.Ed.2d 570 (1972). Thus we must now look to applicable statutes, governmental regulations, and the custom and understandings of ⁵⁰⁹ public landlords in the operation of their apartments to determine if a public tenant has a ‘property interest’ in a tenancy beyond the term of the lease except for cause. “When Congress legislated with regard to mortgage insurance benefits which defendant receives, it provided: ‘The Congress affirms the national goal, as set forth in section 1441 of Title 42, of “a decent home and suitable living environment for every American family”.’ 12 U.S.C. § 1701t.

This policy of improving the ‘living environment of urban areas’ was also the policy of Congress in enacting the Housing and Urban Development Act of 1965. Pub.L. 89-117, 79 Stat. 451 (Aug. 10, 1965). ‘This [policy] includes adequate, safe, and sanitary quarters. But it also implies an atmosphere of stability, security, neighborliness, and social justice.’ McQueen, 317 F.Supp. at 1130. Cf., Trafficante v. Metropolitan Life Ins.

Co., 409 U.S. 205 , 93 S.Ct. 364 , 34 L.Ed.2d 415 (1972). “In addition to the policy statements contained in the relevant funding statutes, Congress has also expressed itself in part on how these programs should be run. ‘No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.’ 42 U.S.C. § 2000d. The policy of this statute, a person’s right to be free of invidious discrimination in federally assisted programs, is contained in many statutes, see, e.g., 42 U.S.C. § 2000a. ‘This legislative establishment of policy carries significance beyond the particular scope of each of the statutes involved. The policy thus established has become itself a part of our law, to be given its appropriate weight not only in matters of statutory construction but also in those of decisional law.’ ⁵¹⁰ Moragne v. States Marine Lines, Inc, 398 U.S. 375, 390-391 , 90 S.Ct. 1772, 1782 , 26 L.Ed.2d 339 (1970). “Not only the statutes, but also FHA regulations authorized under 12 U.S.C. § 1701s(f), imply a right to be free from arbitrary and discriminatory action. For example, 24 C.F.R. § 221 .-536 (1971) provides that a landlord in a § 221(d)(3) apartment may not discriminate against any family because of children.

The House Report dealing with the Housing and Urban Development Act of 1965 said, with regard to the rent supplement program: ‘If his income increases sufficiently so that he can pay the full economic rent with 259r of his income, rent supplement payments on his behalf would cease to be made. The tenant could, however, continue to live in the project and would not be required to pay more than the full economic rent.’ H.R. Rep. No. 365, 89th Cong., 1st Sess. (1965), 1965 U.S.Code Cong. and Ad.

News, pp. 2614, 2618. This suggests the Congress was contemplating more occupancy entitlement than limited leasehold terms. “The tenant’s expectation of some degree of permanency, seemingly shared by the Congress, if not by the landlord, is bolstered by ‘custom.’ Just as there may be a ‘common law’ of tenure at a college or university, there may be a common law of tenancy in public housing projects. See Perry, 408 U.S. at 602 , 92 S. Ct. 2694 . ‘The actual workings of the subsidized housing program must be examined to determine whether there is a reasonable basié for tenants to expect that in normal circumstances they will be permitted to remain in the housing indefinitely. And indeed one finds that the normal practice in subsidized housing, as in ⁵¹¹ private housing, is to permit tenants to remain beyond the expiration of a lease unless a reason has arisen for eviction; termination is the exception, not the rule.

Thus tenants do have a