Kirk v. Hilltop Apartments, LP

KRAUSER, C.J. LaShaun Kirk, appellant, has leased, for a number of years, a unit in a federally subsidized housing complex owned by appellee, Hilltop Apartments, LP. In March 2013, Hilltop notified Kirk that, because of numerous leasehold violations, it was terminating her lease effective April 12, 2013, and directed her to vacate the apartment by that date. When she did not do so, Hilltop filed a breach-of-lease action in the District Court of Maryland for Prince George’s County seeking repossession of the property. Kirk, in turn, demanded a jury trial, claiming that the amount in controversy exceeded $15,000, the threshold sum for such a proceeding, 1 and the case was ³⁶ thereafter transferred to the Circuit Court for Prince George’s County, as requested.

Hilltop then filed a motion to strike Kirk’s jury demand, contending that the amount in controversy was, in fact, less than $15,000 and that, therefore, the District Court had exclusive jurisdiction over the matter. The circuit court agreed and, struck Kirk’s demand for a jury trial, and remanded the case to the District Court for trial. From that ruling, Kirk noted this appeal. This appeal raises the question of how the “amount in controversy” is to be calculated in disputes of this nature.

A party to a landlord-tenant action may request a jury trial where “either” the claim for “money damages” or “the value of the right to possession” of the leased premises is over $15,000. Bringe v. Collins, 274 Md. 338, 347 , 335 A.2d 670 (1975). Because neither party asserted a claim for money damages, the only issue before us is whether Kirk’s right to possession of the leased premises exceeds $15,000. If it does, Kirk’s demand for a jury trial should not have been struck by the circuit court.

Kirk reasons that, 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. The circuit court, however, rejected Kirk’s claim of what it described as an “indefinite tenancy or a never-ending ³⁷ lease” and endorsed, instead, the approach advocated by Hilltop, that is, that 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). In accordance with that conclusion, the court then multiplied the apartment at issue’s monthly fair market rent of $1,412 by the remaining months of her lease term and found that the value of Kirk’s right to possession of the premises was $12,708, and hence the amount in controversy was less than that required for a jury trial. For the reasons set forth below, we believe that the method of computation proposed by Kirk was the correct approach to this issue, and, therefore, we reverse the circuit court’s order striking Kirk’s demand for a jury trial and remanding this case to the District Court.

The Lease 2 Hilltop and Kirk executed a “Model Lease For Subsidized Programs” (a form lease issued by the United States Department of Housing and Urban Development), in which Hilltop agreed to lease to Kirk a two-bedroom apartment in a federally subsidized “project-based” Section 8 housing development located in District Heights. 3 The earliest lease between the ³⁸ parties that is in the record before us provided that the “initial term of this Agreement” would “begin on January 1, 2010 and end on December 31, 2010.” At the conclusion of this “initial term,” the Agreement was to “continue for successive terms of one year each unless automatically terminated as permitted” under the terms of the agreement. But if the landlord wished to terminate the lease, it had to do so “in accordance with HUD regulations, State and local law,” which among other things, meant that it had to provide the tenant with a “termination notice” specifying the date of termination and the reasons the landlord was terminating the agreement. After listing ten grounds upon which the landlord could terminate the tenancy, the lease then stated that the landlord could also terminate the agreement for “other good cause.” Such a termination could only occur, however, “as of the end of any initial or successive term.” After Kirk’s initial lease term ended, her lease was renewed for successive one-year terms. A second lease, utilizing the same “Model Lease For Subsidized Programs” (Form HUD-90015-a 12/2007), was executed by the parties for the time period from January 1, 2012 through December 31, 2012, and, as in the earlier 2010 lease, it provided that “the Agreement will continue for successive terms of one year each unless automatically terminated as permitted” for “good cause.” Although it does not appear that a subsequent Model Lease was executed for the lease term running from January 1, 2013 to December 31, 2013, there is no indication in the record that either party terminated the lease, and the parties do not dispute that the 2012 agreement did, in fact, continue for another one-year term.

The Breach of Lease A letter from Hilltop dated March 7, 2013, notified Kirk that Hilltop was terminating her “Lease Agreement dated January 11, 2012.” The letter explained that Hilltop was terminating ³⁹ Bark’s lease, effective April 12, 2013, because she had “materially breached” her lease by “allowing a fire to damage” her apartment; by failing to reimburse Hilltop for that damage; by permitting her guests to engage in “criminal activity” on the premises; by failing to maintain the apartment and surrounding common areas; and by “disturbing the peace and comfort” of her neighbors in the apartment building. Specifically, the letter alleged that the apartment was damaged by a fire when the stovetop was left on and unattended; that Kirk had not reimbursed Hilltop the $3,847.30 for that fire damage; that children “occupying” her apartment “were lighting matches and allowing them to burn holes in the staircase to the common area”; that, upon inspection of her apartment, Hilltop discovered “broken blinds, broken door knobs, missing sprinkler covers, and buckling walls”; that other Hilltop residents had “submitted regular complaints of noise and heavy traffic of non-residents coming from” her apartment; that “security and police have visited the property on reports of illegal activity, including use of marijuana”; that an “altercation involving a knife and a baton” occurred in her apartment that “led to significant injury” to some of her guests and that one or more of them had been “sent to the hospital for bleeding from the head and abdomen”; and finally, that, on one occasion, there were “loud, verbal arguments” between her guests. As noted, when Kirk refused to vacate her unit, Hilltop filed a breach-of-lease action in the District Court seeking repossession of her apartment. In response, Kirk demanded a jury trial and the case was transferred to the Circuit Court for Prince George’s County where Kirk filed an Answer to the complaint in which, among other things, she denied that she had breached the lease and maintained that her eviction was unwarranted.

Hilltop then moved to strike the jury trial request and to have the case remanded to the District Court for trial, on the grounds that the amount in controversy was less than the requisite $15,000 needed for a jury trial in the circuit court. ⁴⁰ The Hearing On November 6, 2013, the circuit court held a hearing on Hilltop’s motion to strike Kirk’s demand for a jury trial. At that hearing, the parties agreed that, in a landlord-tenant action involving federally subsidized housing, the value of a tenant’s right to possession of the leased premises is determined by multiplying the fair market monthly rental payment for the housing unit by “the time period for which the tenant has a right to continued possession” of the premises. See Carroll v. Housing Opportunities Commission, 306 Md. 515, 525 , 510 A.2d 540 (1986). The parties also agreed that the fair market rental value of Kirk’s apartment was $1,412 per month and that that figure should be multiplied by the remaining months of the tenancy to determine the value of Kirk’s right to possession of the leased premises and, hence, the “amount in controversy.” The parties disagreed, however, as to the period of time for which Kirk had “a right to continued possession” of the apartment.

Hilltop asserted that Kirk was entitled to possess the property only until the current lease term expired on December 31, 2013. Accordingly, Hilltop claimed that the amount in controversy was $12,708, that is, $1,412 times the nine months remaining before Kirk’s present lease term expired. Kirk disagreed, maintaining that, because her lease automatically renewed for successive one-year terms (unless terminated for “good cause”), she was entitled to remain in possession of the property indefinitely and, therefore, the $1,412 fair market rental payment should be multiplied by the remainder of her projected lifespan. She then pointed out that she, who was then 42 years old, needed to live only an additional eleven more months (which was just two months more than her current lease term) for the value of her right to possession of the apartment to exceed $15,000.

In support of her position, Kirk invoked the Court of Appeals decision in Carroll, supra, and its subsequent decision in Cottman v. Princess Anne Villas, 340 Md. 295 , 666 A.2d 1233 (1995), both of which had endorsed her method of calcu ⁴¹ lating the amount in controversy. Hilltop responded by claiming that, because of changes in the federal subsidized housing regulations enacted in the late 1990s, Carroll and Cottman were no longer applicable, but that a later case, Carter v. Maryland Management Co., 377 Md. 596 , 835 A.2d 158 (2003), where Hilltop claimed the Court of Appeals reached a contrary conclusion, was. The circuit court agreed with Hilltop that Carter was controlling and, based on its interpretation of that case, ruled that Kirk did not have an “indefinite tenancy or a never-ending lease” and, therefore, it adopted Hilltop’s method of calculating the amount in controversy in this case. Discussion The parties on appeal make the same arguments they did below, that is, Kirk contends the correct method of determining the value of her continued right to possession of the leased premises is to multiply the yearly fair market rent by the expected number of years comprising her remaining lifespan.

That is the correct method of calculation, Kirk maintains, because, until a court determines that her landlord has good cause to evict her, she has the right “to possess her home indefinitely.” As she did in the circuit court, Kirk relies on Carroll, swpra, and Cottman, supra, in support of her position. Hilltop maintains, however, that Carroll and Cottman have been superseded by Carter , which it claims, in effect, resolves this issue in its favor. The issue before the Court of Appeals in Carroll was whether the circuit court erred in determining that a tenant of a federally subsidized housing complex had not satisfied the “amount-in-controversy” required for a jury trial after her landlord had instituted a “tenant-holding over action” in the District Court of Maryland. 4 The Court of Appeals began its analysis by observing that, “in determining the value to the tenant of remaining in possession, one must consider” the “fair market rent for comparable housing in the area” and “the time period for which the tenant has a right to continued posses ⁴² sion.” Id. at 525 , 510 A.2d 540 . The Court of Appeals then explained that, “[w]hile the lease states that the tenancy is month to month, under applicable [federal] regulations and case law, [the tenant] has a right to remain in her townhouse indefinitely until the [landlord] can establish good cause for eviction.” Id.

Thus, “the value of this potential flow of future federal rent subsidies,” declared the Court, was a “critical factor” in calculating the amount in controversy. Id. Then, after noting that other “courts have computed the value of the right to occupy federally subsidized housing over the tenant’s remaining life span, or a least over a period of years,” the Court of Appeals adopted that method of computation and found, using that approach, that “[t]here can be no doubt that ... the value of [the tenant’s] right to possession” exceeded the amount in controversy necessary for a jury trial and reversed the circuit court. Id. at 527 , 510 A.2d 540 .

Nine years later, the Court of Appeals in Cottman, supra, “reaffirm[ed]” that “the amount in controversy in an action for possession of leased premises is determined by the fair market rent for the period of possession involved in the controversy,” 340 Md. at 297 , 666 A.2d 1233 , and that, the period of possession, where the lease automatically renews unless otherwise terminated for good cause, is the tenant’s remaining lifespan. Id. at 299 , 666 A.2d 1233 . In sum, Carroll and Cottman clearly support Kirk’s position that, when calculating the amount in controversy in