Court Opinion

ID: 9715005
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:51:22.895779+00
Date Added: 2024-06-11T18:23:30.444247
License: Public Domain

BAILEY, Judge,
dissenting.
I respectfully dissent from the majority's conclusion that Indiana Code section 33-5-2-4(b)(2) vested the small claims court here with jurisdiction over Jamestown's eviction action.
Indiana Code section 33-5-2-4(b)(2), as noted by the majority, grants the small claims docket of the superior courts in Allen County jurisdiction over "possessory actions between the landlord and tenant in which the rent due at the time the action is filed does not exceed six thousand dollars ($6,000)." The majority concludes that the court had jurisdiction over this action because Jamestown and Hoang were in a landlord-tenant relationship, and because Hoang waived his opportunity to seek more than $6,000 of the $97,000 vested interest in the cooperative. I disagree.
The relationship between Jamestown and Hoang admittedly bears some resemblance to that of a landlord and a tenant. A tenant is generally defined as "one who holds lands of another; one who has the temporary use and occupation of real property owned by another person (called the landlord"), the duration and terms of his tenancy being usually fixed by an instrument called a 'lease."" Buack's Law Dic. 1466 (6th Ed.1990). In this case, the Jamestown cooperative owned the property on which Hoang resided, and Hoang resided on the property pursuant to the terms of an occupancy agreement. In our recent decision in Cunningham v. Georgetown Homes, Inc., 708 N.E.2d 623 (Ind.Ct.App.1999), which involved a similar relationship, this Court explored the respective rights of the cooperative and the resident member with regard to the member's continued residence on the property. We strongly agreed that the cooperative was empowered to enforce the terms of a member's occupancy agreement, stating, "the unique and symbiotic nature of cooperative living requires that a cooperative association be able to remove breaching members from its community expediently." Id. at 626. We accordingly concluded that the housing cooperative could seek to remove the resident member from the property for the alleged violation of her occupancy agreement pursuant to the ejection procedures set out at Indiana Code section 32-6-1.5-1 to -12. Id. at 627.
As explained in Cunningham, however, a cooperative member is not necessarily a tenant of a housing cooperative simply because the member resides on property owned by the cooperative pursuant to the terms of an occupancy agreement. Rather, when the cooperative member has a vested ownership right in the cooperative, the member and cooperative have a unique hybrid relationship in which the member is not a tenant of the cooperative. Cunningham, 708 N.E.2d 623, 626. Instead, the cooperative member is an owner of personal property, namely the member's ownership share in the cooperative. Id.
In Cunningham, we determined that the member had a vested interest in the cooperative on the basis of the terms of the member's occupancy agreement. In particular, we noted that the occupancy agreement in Cunningham contained provisions that are "not included in a typical residential lease but, rather, are indicative of an ownership interest in the unit." 708 N.E.2d 623, 624. For example, in that case the member was obligated under her occupancy agreement to pay a monthly maintenance charge rather than rent. Id. Part of the maintenance charge included the member's share of the mortgage on the property. Id. In addition, the member was responsible for various maintenance expenses, including decorating and repairs. *1041Id. Further, the occupancy agreement at issue there indicated that the member could sell her equity interest in her membership to someone else. Id. at 626 and 626 n. 3 and n. 4. Thus, while we concluded that the member could be removed from the cooperative pursuant to the ejection procedures set out at Indiana Code section 82-6-1.5-1 to -12, we directed the frial court upon remand to ensure that the member's vested interest in the cooperative was adequately protected. Id. at 627.
Jamestown firmly. contends that this case is nothing like Cunningham, and that Hoang was simply a tenant with no pro-tectable property interest related to his membership in the cooperative. This is plainly not the case. Jamestown's Rules and Regulations, which are given to all members, explicitly state that "(als a cooperative, we differ significantly from other housing and apartments. Each member at Jamestown Homes has a vested interest in the property and pays monthly carrying charges instead of rent." (Plaintiff's Ex. 3, Tr. 14.) Hoang's occupancy agreement contains many of the same elements found in the agreement at issue in Cunningham, and confirms Jamestown's assurance that cooperative members own a vested interest in the cooperative. For example, as in Cunningham, Hoang was obligated under the agreement to maintain and repair his dwelling, and was responsible for decorating expenses. In addition, Hoang paid monthly "carrying charges" instead of rent. Most significantly, and contrary to Jamestown's contentions, Hoang's carrying charges explicitly comprise, at least in part, an investment in the cooperative. In addition to funding insurance costs, tax liabilities and various other maintenance and operating expenses, Hoang's carrying charges paid a proportional share of the principal and interest payments on the property's mortgage. The occupancy agreement provides that the "amount of Carrying Charges required for payment on the principal of the mortgage of the Corporation or any other capital expenditures shall be credited upon the books of the Corporation to the 'Paid in Surplus' account as a capital contribution by the members." (App.11.) In the corporate context, a capital contribution is a transaction between a shareholder and a corporation whereby the shareholder transfers money or property to the corporation. Brack's Law Dictionary 209 (6th Ed.1990). Instead of receiving :additional stock, the basis of the shareholder's existing investment in the corporation is increased in proportion to the capital contribution. Id. See also C.I.R. v. Fink, 483 U.S. 89, 94, 107 S.Ct. 2729, 97 L.Ed.2d 74 (1987) (explaining tax consequences of a shareholder's voluntary contribution to the capital of a corporation). Thus, every time Hoang paid his monthly carrying charges, Hoang made a contribution to Jamestown's capital, which increased Hoang's basis in his share of the cooperative.
Hoang accordingly had a vested ownership interest in the cooperative, and pursuant to Cunningham, the relationship between Jamestown and Hoang was not strictly that of landlord and tenant. Because Hoang was not Jamestown's tenant, Jamestown's ejectment action was beyond the small claims court's subject matter jurisdiction spelled out in Indiana Code seetion 38-5-2-4(b)(2). Even if Hoang could be characterized as Jamestown's tenant, or if, as the majority puts it, "the parties are sufficiently like landlord and tenant for the purposes of jurisdiction," Slip Op. at 11, the small claims court nevertheless lacked jurisdiction over the case.
The jurisdiction of an inferior court like the small claims division of a superior court is strictly limited to that which is provided for in the constitution or statute. Buckmaster v. Platter, 426 N.E.2d 148, 150 (Ind.Ct.App.1981). The statute at is*1042sue here again grants the small claims court jurisdiction over "possessory actions between the landlord and tenant in which the rent due at the time the action is filed does not exceed six thousand dollars ($6,000)." Inp.Copr § 88-5-24(b)(@). Jamestown's request for Hoang's ejectment was not simply a possessory matter. Rather, I believe that the question of Hoang's ejectment was inextricably bound up with the disposition of whatever ownership interest he had in the cooperative, taking the matter out of the small claims court's jurisdiction.
As this Court explained in Cunningham, if a trial court grants a housing cooperative's request for the ejectment of a member from the cooperative, the trial court is obligated to adequately protect the member's vested interest in the cooperative from divestment. 708 N.E.2d at 627. The majority characterizes Hoang's identification of his ownership interest as a request for damages, and appears to suggest that Hoang waived his claim to any part of his interest that exceeded $6,000 by filing his claim against Jamestown's property manager, PGPM, Inc. in the small claims court. As the majority sees it, "if Hoang was concerned about his alleged $97,000 vested interest in Jamestown, then Hoang should have filed his counterclaim on the plenary docket of the Allen Superior Court and moved for the two causes of action to be consolidated in that court." (Op. at 1085.)
First, Hoang's claim against PGPM was for personal property damage, and appears to have been totally unrelated to his vested ownership interest in the cooperative. To the extent Hoang waived his right to damages by pursuing his claim against PGPM in the small claims court, the waived damages necessarily related only to the claim against PGPM. Second, while Hoang might have sought the protection of his ownership interest in the superior court and moved for consolidation, I do not think that Hoang was required to take such action. Rather, I believe that under Cunningham, and as a matter of logic and sound public policy, a cooperative member's right to the trial court's protection of the member's ownership interest in the cooperative is a fundamental and indivisible component of, and is accordingly triggered by the filing of, a cooperative's ejectment action. This is because the cooperative member owns his membership in the cooperative primarily for the purpose of securing his right to occupy a particular residential unit within the cooperative. See id. at 626. Thus, when a housing cooperative seeks to eject a member who has a vested ownership interest in the cooperative related to his residence in the unit, the cooperative effectively seeks the forfeiture or divestment of the member's interest. The settlement of that interest under the terms of the applicable occupancy agreement, rules or bylaws is therefore necessarily implicated by the cooperative's ejectment action.
Because Jamestown's ejectment action, which requested the dispossession of Hoang from his residence, also implicated the divestment of Hoang's interest in the cooperative, the action was not simply a possessory action within the meaning of Indiana Code section 338-5-24(b)(@). It appears true, as the majority notes, that Hoang never specifically apprized the small claims court of his vested ownership interest, and never asked the trial court to take any action with regard to his interest. The existence of Hoang's interest and the trial court's affirmative obligation to address that interest, however, are disposi-tive of the small claims court's lack of subject matter jurisdiction, an issue that may never be waived. See Georgetown Bd. of Zoning Appeals v. Keele, 743 N.E.2d 301, 303 (Ind.Ct.App.2001). Hoang's failure to raise the issue of his ownership interest below therefore does *1043not alter the fact that the small claims court lacked subject matter jurisdiction over Jamestown's ejectment action. Moreover, where it appears that a trial court lacks subject matter jurisdiction, the trial court is bound to raise the issue sua sponte and determine the question. Downham v. Wagner, 408 N.E.2d 606, 611 (Ind.Ct.App.1980). I believe that when a small claims court is presented with a cooperative housing community's request to eject a member from the cooperative, the small claims court should suspect that the member may have an ownership interest, the divestment of which may be implicated by the ejectment action. The small claims court here was particularly on notice to confirm its jurisdiction under the "posses-sory action" statute because Jamestown appended to its Notice of New Claim a copy of the occupancy agreement, which supports Hoang's contention that he had a vested interest in the cooperative. Had the small claims court raised the question of its subject matter jurisdiction, the court should have concluded that jurisdiction over Jamestown's action was absent, and should have transferred the case to the court's plenary docket.
In summary, I conclude that the small claims court lacked jurisdiction over Jamestown's ejectment action under Indiana Code section 838-5-24(b)(2) because Hoang was not Jamestown's tenant, and because even if he was, Jamestown's action was not simply a possessory matter, but rather was a more complex matter contemplating the resolution of whatever ownership interest Hoang might have had in the cooperative. For this reason, the judgment of the small claims court is void. In re Adoption of H.S., 483 N.E.2d 777, 780 (Ind.Ct.App.1985). I would return this matter to the small claims court with instructions to transfer the case to the Allen County Superior Court's plenary docket for further proceedings.