Wild Meadows home owners win decision on rent control

24dsn Wild Meadows decision1 by .

The Wild Meadows manufactured housing community is located off Persimmon Tree Road east of U.S. 13 near Dover International Speedway. (Delaware State News/Craig Anderson)

DOVER — Approximately 220 homeowners in a manufactured homes community in Dover have the right to contest a 2015 rent increase, according to a Court of Chancery opinion decided last Tuesday.

The Wild Meadows Home Owners Association is covered under the Rent Justification Act, Vice Chancellor Sam Glasscock III determined in a lawsuit evaluation, and can continue involvement in a currently stayed Superior Court case, according to court documents.

According to arbitrator Ciro Poppiti III, December Corp. proposed an increase of $45.74 per month that was unjustified, with cost to homeowners to rent residential plots rising from $438.65 to $485.39.

At issue is how $102,000 in community repairs should be funded, according to former Wild Meadows HOA President Fred Neil. The 55-plus age neighborhood sits just east of U.S. 13 off Persimmon Tree Road near Dover International Speedway.

Attempts to reach December Corp. representatives for comment were unsuccessful.

Mr. Neil said rent has been raised as the matter is litigated in Superior Court. The case was stayed until the Chancery Court matter was resolved, he said.

Mr. Neil moved to Wild Meadows in October 2003 and served as president of the homeowners’ association for 11 years until being elected to the Dover City Council in 2015.

While there’s no ultimate resolution to the matter yet, Mr. Neil applauded Chancery Court’s ruling.

“The Chancery Court decision is the second victory for the senior citizens of Wild Meadows against the failure of the community owner to obey state and city law designed to protect the health and safety of the tenants,” he said.

“However, fueled by the monthly rents which gross over $1 million dollars a year, the community owner can continue to use our money to legally drown us in Appeal after Appeal after Appeal. Without the Community Legal Aid Society Inc., we do not have the financial resources to stand up to the legal bullying.”

If the Superior Court case is resolved in Wild Meadows’ favor, according to Mr. Neil, residents would receive a refund from their current rent paid so far.

There’s a question of future ownership, according to Mr. Neil, who said “the community has been placed for sale, and the $11.15 million dollar offer by the residents has been rejected.”

There’s also work to be done within the state legislature as well, Mr. Neil said.

“As the law is currently written, not only is rent increased to recover the money spent for the repairs, but it becomes permanent and it will be paid as base rent forever,” he claimed.

Eight-hour arbitration

December Corp., which manages Wild Meadows, had contended that the Wild Meadows association had no standing to seek arbitration because it was not registered with the state created Manufactured Home Relocation Authority, papers said.

An eight-hour arbitration hearing was held on Feb. 12 at the Wild Meadows clubhouse, according to papers; the rent increase was denied on March 30. December Corp. followed with an appeal of the decision to Superior Court, “and they have since submitted a stipulated request with the court to stay the appeal, pending (Chancery Court’s) decision.”

In his decision, Mr. Poppiti wrote, “I do admire the intellectual prowess with which the combatants thrust and parry.

“Fine blade work is on display, including a motion to dismiss, a motion in limine, two conference calls, back-and-forth debate over evidentiary issues, and an eight-hour hearing.

“However, in contemplation of the record as a whole, I cannot help but conclude that this case is nothing more than the spectacle of gladitorial games. Indeed, the key to this case lies not in the spectacle, but in a rather straightforward analysis …”

Mr. Poppiti continued by saying the landlord “was not proactive toward the safety and well-being of the homeowners. Landlord acted at best, unreasonably, and at worst, irresponsibly. As such, I find it untenable that the homeowners should now be asked to pay for the entirety of the construction costs.

“The rent increase is thus denied.”

The arbitrator cited a June 23, 2014, letter from the city of Dover alleging that December Corp. was in violation of city code regarding collapsed retainer walls, leaning yard fences, cracked pavement throughout the community and holes around the drainage grates throughout the community.

“Based on objections from Landlord, the violation letter was provisionally entered into evidence, pending this decision,” Mr. Poppiti noted.

Justify an increase

According to Delaware law, Mr. Poppiti said, a landlord can justify a rent increase for capital improvements/rehabilitation work and repairs caused by circumstances other than ordinary wear and tear.

Testifying for December Corp., according to papers, certified construction reviewer Kevin Burdette, maintained “the damage cited in the violations was caused by circumstances beyond ordinary wear and tear.”

The Wild Meadows HOA argued “the rehabilitation would have been ordinary wear and tear had December Corporation reacted in a timely manner to the concerns of homeowners over the years,” according to the arbitrator in documents.

Dover City Manager Scott Koenig testified that “as far back as 2006, he became aware of problems with drainage/ditch problems at Wild Meadows,” the arbitrator wrote.

Three letters from Dover code officer Dave McGinnis, who issued the June 2014 violation letter, were admitted into evidence, papers said.

According to the arbitrator in documents, “These [letters] are responses to complaints that the city received, but my understanding is they were because the developer or owner of the property had not addressed those concerns …”

Mr. Poppiti wrote that “Throughout the hearing, counsel for December Corporation countered that Landlord was never on notice that any ditch/drainage problems existed …”

Citing Delaware Code, Mr. Poppiti said notice must be provided in writing to a landlord at its place of business or mailed with proof of sending.

“Here, Landlord received no notice from the homeowners as defined by law; therefore, asserts counsel, what Landlord did or did not do is irrelevant,” Mr. Poppiti wrote.

Later, Mr. Poppiti reasoned that “After receiving the Violation Letter, a reasonable response would have been for Landlord to contact Code Enforcement within a quick timeframe stating, for example ‘We’re aware of the problems, and we’re hiring an expert to fix the problems …’ “

According to Mr. Poppiti, however, “Landlord displayed no sense of urgency” and did not have a response for more than 11 days from the date of the inspection and roughly 30 days after the Violation Letter.

Acrimonious history

In his findings, Mr. Poppiti noted, “There is a long history of acrimony between the parties.”

Delaware Corp. was not in violation of Delaware Code regarding the ability to raise rent since “violations by a community owner are to be enforced by the Consumer Protection Unit of the Attorney General’s office,” not the city of Dover.

In papers, Mr. Poppiti said he considered Delaware Corp.’s omissions to be “downright troubling.

“When notified by the City of Dover of significant violations, Landlord provided no safety precautions for the homeowners …

“I view an absentee owner who had no sense of urgency in protecting homeowners as acting unreasonably. I view an owner who ignores safety problems until forced by government to do something as acting irresponsibly.

“In either case, Delaware Corporation was not being proactive toward the well-being of the homeowners …”

According to Chancery Court, December Corp. had contemplated raising rents by greater than the three-year average of the Consumer Price Index, and sent a letter to each home owner on Oct. 24, 2014, that included the increase notice and upcoming meeting to justify it.

According to papers, December Corp. also sent a letter to the Wild Meadows Land Owners Inc. — not connected to the Wild Meadows association — the only HOA registered.

A meeting was held on Nov. 10, 2014, and approximately 191 people indicated they were represented by a HOA on a sign-in sheet provided by December Corp. papers indicated. No specific HOA was referenced on the sheet.

The Wild Meadows association submitted a petition for arbitration within 30 days of the meeting, papers said, and it started a docket and appointed an arbitrator to resolve the matter.

After determining it had jurisdiction to determine an equitable remedy, Chancery Court determined the meaning of home owners’ association as used in Delaware law.

Language not clear

Vice Chancellor Glasscock found the statute ambiguous regarding two HOA’s existence in a single park.

“Based on the plain language alone, I cannot determine the meaning intended by the legislature,” Vice Chancellor Glasscock wrote.

“Therefore the term is ambiguous and I must determine the term’s meaning by construing it ‘in a way that will promote its apparent purpose and harmonize it with other statutes within the statutory scheme.’ “

The General Assembly created the statute to “expand protection for manufactured home owners while simultaneously preserving the Community Owners right to a fair return on their property,” according to papers.

Vice Chancellor Glasscock said he could not determine that an HOA was required to register with the WMHA to seek arbitration.

“I find that the General Assembly did not intend to restrict the availability of arbitration to a single HOA per park, or to an HOA that has registered with the Authority; so long as an HOA represents a dissenting home owner, it may seek arbitration, as could the home owner herself,” Vice Chancellor Glasscock concluded.

According to the court, the Wild Meadows Home Owners Association has functioned as a home owners’ association representing community residents since at least 2003.

“Moreover, the Plaintiff has frequently recognized and dealt with WMHA as a home owners’ association prior to this lawsuit, including sending WMHA a notice of a rent increase pursuant to the Act in 2013,” Vice Chancellor Glasscock determined.

“The Plaintiff has not disputed these facts, arguing only that WMHA’s historical function is immaterial to the Court’s decision …”

Vice Chancellor Glasscock noted an “ambiguous” registration sheet added to the confusion of the matter.

“Nearly 200 home owners indicated they were represented by the HOA, and presumably many expected that their rights were being enforced by WMHA in arbitration,” according to the Court.

Vice Chancellor Glasscock granted a Motion for Summary Judgment in favor of WMHA and concluded with “The parties should provide an appropriate form of order.”

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