PHILIP CEDILLOS, Petitioner/Plaintiff/ Counterclaim Defendant-Appellant,
PATRICIA MASUMOTO, Respondent/Defendant/ Counterclaim Plaintiff-Appellee.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-13-0000107; DC-CIVIL NO. 12-1-2171)
Philip Cedillos, petitioner pro se.
Matson Kelley, for respondent.
RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.
This case is a landlord-tenant dispute between Petitioner/Plaintiff/Counterclaim Defendant-Appellant Philip Cedillos ("Cedillos"), pro se, and Respondent/Defendant/Counterclaim Plaintiff-Appellee Patricia Masumoto ("Masumoto"). Cedillos timely applied for writ of certiorari on August 31, 2015 from a July 2, 2015 Judgment entered by the Intermediate Court of Appeals ("ICA") pursuant to its May 27, 2015 Summary Disposition Order ("SDO"). The ICA affirmed the District Court of the Second Circuit's ("district court['s]") "January 17, 2013 Judgment for Possession and Writ of Possession" in favor of Masumoto.
In his Application for Writ of Certiorari ("Application"), Cedillos presents three questions:
A. Did the ICA commit grave error of law and fact by determining that despite the harmless error, the grant of summary possession was still correct because Petitioner did not set forth any evidence or establish retaliatory eviction in accordance with the provisions and restrictions of HRS 521-74, HRS 521-21 and HRS 521-71?
B. Did the ICA commit grave error of fact and is its summary decision inconsistent with Hawai'i case and statutory law by finding - in direct contradiction to the district court's determination of bifurcation and record of proceedings- that the district court afforded Petitioner the opportunity to present affirmative defenses pursuant to HRS 521-42 and HRS 521-64, as they concerned repairs made and/or reported, that went unresolved and unpaid?
C. Did the ICA commit grave error of fact by wrongfully affirming the denial of a rent trust fund and incorrectly asserting that Petitioner's request for establishment of a rental trust fund was improper?
For the reasons discussed herein, the ICA erred in affirming the district court's Judgment for Possession and Writ of Possession based on an October 6, 2012 45-day notice to vacate. Furthermore, there were no grounds to remove Cedillos based on a failure to pay rent for November 2012.
A. Factual Background
Cedillos and Masumoto entered into an agreement for the rental of "271 Makaena Place, back unit" ("property") on November 1, 2011 for a period of six months. The written rental agreement and two addenda did not include an attorney's fee provision. Rent was $800 per month with Cedillos performing yard service worth $150 per month. The lease ended on May 31, 2012, and automatically converted to month-to-month terms thereafter.
During the initial lease period, Masumoto e-mailed Cedillos on February 19, 2012 stating: (1) a prior tenant had issues with the legality of the rental units at 271 Makaena Place; (2) to Masumoto's knowledge, she had "brought all building construction and risk hazards up to code, " and (3) the only "remaining illegality" was the stove in Cedillos's rental unit. She asked Cedillos to remove the stove by the end of February.
After the lease converted to month-to-month terms, on August 2, 2012, Masumoto e-mailed Cedillos: "Beginning September 1, 2012, there will be a rent increase of $25/month." By letter dated August 6, 2012, Cedillos asserted to Masumoto that:
Hawaii Revised Statute[s] chapter 521-74 prohibits you from raising the rent or evicting me from my particular unit until you have brought the unit into compliance with applicable building and rental housing law.
On February 12, 2012 you informed me via email that the unit you rented to me was not a legal rental unit under Hawaii landlord-tenant law.
Even if you were able to legally raise the rent at my unit, your notice is defective and unenforceable under Hawaii Revised Statute 521-21. . . .
Additionally, I have submitted, with this correspondence, an itemized invoice billing you, in part, for the mandated firewall installation between the separate dwellings at this address. Please refer to the applicable provision in Hawaii Revised Statute 521-64 if you have questions about this billed item.
(Emphasis added). Masumoto replied by e-mail dated August 7, 2012 stating that the unit's illegality was due to a stove that was left in Cedillos's unit "to accommodate [him] and [despite] knowing it was an illegal stove, [Cedillos] chose to use it anyway." Thus, the e-mail served to give Cedillos "1 month's notice that [Masumoto was] going to change the lease to mention, 'No stove included.'" Masumoto then intended to remove the stove after the notice period, and thereafter raise the rent by "$25/ per month, or 85 cents per day, prorated." Masumoto also took issue with Cedillos's invoice for erecting a firewall in another tenant's unit, as she was unaware Cedillos took such action until she received Cedillos's invoice. Masumoto noted that "[Cedillos's] having done such a thing constitutes reasons for an eviction."
Masumoto e-mailed Cedillos on August 28, 2012, stating that she would "respond to each [of Cedillos's invoices] soon, " and asking for "September rent, without deductions [for Cedillos's invoices], and add the $25." Cedillos paid $825 to Masumoto by checks dated September 1, 2012 and October 1, 2012. According to the stamps on the checks, the first check was deposited on or around September 12, 2012, and the second check was cashed on October 1, 2012.
By letter dated September 1, 2012, among other things, Cedillos (1) identified that Masumoto's notice of the $25 rent increase did not comply with HRS § 521-21 (2006), because it did not provide forty-five consecutive days of notice, and (2) asserted that after numerous notices to Masumoto of safety deficiencies in the rental units, he repaired the firewall in his unit and the upstairs unit pursuant to HRS § 521-64(c) (2006), and submitted receipts for the repair.
The first time Masumoto informed Cedillos that she wished him to leave the premises was on October 1, 2012. She gave him 30-days' notice. Cedillos responded by e-mail dated October 1, 2012, stating that the eviction notice violated HRS § 521-71 (2006) and was retaliatory under HRS § 521-74, and that he planned to initiate legal proceedings to protect himself. Cedillos filed a complaint in district court on October 5, 2012. It was served on Masumoto the same day. See infra Part II.B.
On October 6, 2012, Masumoto served a 45-day eviction notice on Cedillos, which stated the lease would be terminated November 20, 2012.
On October 30, 2012, Cedillos mailed his November rent to Masumoto at her P.O. Box address by way of USPS certified mail. According to Masumoto, she did not pick it up because she often "pick[s] up [her] mail at night" in Pukalani due to her spending a lot of time in Lahaina taking care of her mother. Because Masumoto did not pick up and sign for the certified mail during business hours, the post office stamped the certified envelope as being routed for return to Cedillos on November 19, 2012.
Through her attorney, Masumoto sent a "Five-Day Notice to Pay Rent or Quit [Premises]" letter dated November 26, 2012 to Cedillos. The letter stated that if Cedillos challenged the 45-day lease termination notice, rent for the month of November 2012 amounting to $950 ($800 plus $150 for non-performed yard work) was past due, and that payment in full was required within five days or else the lease would be terminated. If Cedillos did not challenge the 45-day lease termination notice, rent was due for the period of November 1 to November 20, 2012 ($633.33) plus $31.66 per day starting November 21, 2012. Masumoto emphasized: " [P]lease note that it is our position that the rental agreement has been terminated based upon the 45 days notice. Still, if you dispute this fact, this notice is to provide you notice that your rental agreement will be terminated due to past due rent if payment is not made in a timely manner."
The "Five-Day Notice to Pay Rent or Quit [Premises]" letter was received by Cedillos on November 27, 2012. By letter dated November 27, 2012, Cedillos informed Masumoto's attorney that he received the letter that morning; that the deliverer threatened Cedillos and therefore a police report was filed to document the harassment; and that
I dispute your assertions that rent has not been paid and I have enclosed here copies of certified mail sent to [Masumoto] that she refused to pick up and collect. The content of the certified mail was the rent for November. I will be also sending December rent in a timely manner using the same certified process.
I also dispute the assertion that yard maintenance was not performed during this period.
Please contact me immediately if you have any questions or desire to be the recipient of the refused certified mail that contained the November rent.
On November 27, 2012, Masumoto's attorney e-mailed Cedillos stating:
We have not [received] rent payment for the month of November that you are now alleging was mailed on October 30, 2012. If the check has been returned to you, please forward it to my office within five business days from November 26, 2012. If the check has not been returned, please re-issue a new check and place a stop order on the prior check as we have not received it, and deliver the new check on or before five business days from November 26, 2012.
In addition, to prevent further issues, please forward all rent payments to [Masumoto] c/o my office ....
Cedillos did not receive the returned certified mail envelope containing the November rent until November 29, 2012. Cedillos did not re-mail the returned envelope upon receipt. Having written out a new check, on November 29, 2012, Cedillos again submitted rent to Masumoto at her P.O. Box address by certified mail. The mailing receipt from USPS indicated the expected delivery date was November 30, 2012. There is no record of the actual delivery date. The check was for $825 and the memo line stated "Rent 12/12." According to a bank stamp on the check and Masumoto's endorsement, it was deposited by Masumoto on December 4, 2012.
On December 12, 2012, Cedillos responded to the November 27 e-mail by letter addressed to Masumoto's attorney stating:
[I]n my Opposition to Defendant's Motion for Leave to File Counterclaim [filed on December 4, 2012], I informed the court that I would be in possession of the unclaimed and returned certified mail of November rent for 271 Makaena PI, Makawao 96768 sent to Patricia Masumoto. Now that the hearing is concluded I am giving you possession of the mail as you have previously requested. I will also be submitting further rent payments directly to your office.
The certified envelope containing the November rent was included with the December 12, 2012 letter. The attorney received the letter and November rent envelope on or around December 12, 2012. Masumoto's attorney did not give the certified envelope to Masumoto until the date of trial, January 7, 2013. Masumoto acknowledged receipt of the letter and certified envelope.
On December 31, 2012, Cedillos sent his January 2013 rent payment of $825 to Masumoto by certified mail, which was received by Masumoto.
Cedillos asserted he performed the requisite monthly yard maintenance on November 3 and November 24, 2012, so his rent was $800, not $950. Masumoto disputed this assertion.
B. District Court Proceedings
As noted earlier, on October 5, 2012, Cedillos filed a complaint in district court alleging claims for retaliatory eviction, fraudulent misrepresentation, fraudulent inducement, failure to disclose, unfair or deceptive acts and practices, bad faith, and injunctive relief. The specific violations alleged by Cedillos included, among others:
20. In early May of 2012, [Masumoto] entered [Cedillos's] rental premises, in violation of HRS 521-53, and demanded that [Cedillos] fix her other neighboring (271A) rental unit's broken washing machine hose. [Cedillos] complied and executed the repair immediately.
25. On August 2, 2012 [Masumoto] sent to [Cedillos] a demand for rental increase in violation of HRS 521-21 and HRS 521-74. . . .
34. n October 1, 2012, [Cedillos] was served with an eviction notice that was not in conformity with the law.
Cedillos requested "damages and civil penalties, " "punitive damages, " and "establishment of a rental trust fund, pursuant to HRS 666-21, in which the court shall direct [Masumoto] to deposit all disputed rental overpayments and for [Cedillos] to deposit future rental payments to be secured by the court until all litigation has concluded in this case."
At a hearing on October 15, 2012, the district court (1) denied Cedillos's request for a rental trust fund, (2) referred the parties to mediation, and (3) continued the matter for a status conference on December 10, 2012. Cedillos filed a Motion for Reconsideration on October 29, 2012, urging the court to establish a rental trust fund and to "order [Masumoto] to deposit rental overpayments into the Fund and [Cedillos's] deposit of future rental payments, until the conclusion of the litigation." Cedillos also asked that Masumoto be "enjoin[ed] . . . from further statutory violations and from further attempting to illegally dispossess [Cedillos] during the duration of [Cedillos's] litigation against [Masumoto] for retaliatory eviction."
On October 22, 2012, Masumoto filed a non-hearing motion for leave to file a counterclaim for summary possession. Cedillos opposed the motion, and asserted that Masumoto's motion was premature as he had not yet "overstayed the deadline of any legal eviction notice and post-deadline notices, " and that Masumoto's counterclaim can become actionable "only if the court does not enjoin [Masumoto] in [Cedillos's] retaliatory eviction case from further pursuing the illegal dispossession, and the time and notice requirements of statutory rules fulfilled." Further, Cedillos contested Masumoto's assertion that Cedillos refused to mediate. Thus, in addition to responding to Masumoto's motion, Cedillos moved for Rule 11 sanctions against Masumoto and her attorney, arguing that there were "outrageous misstatements of fact" in Masumoto's motion. Cedillos pointed to a letter from Mediation Services of Maui dated October 25, 2012 (which did not indicate when Cedillos contacted the mediator's office), stating that "[Cedillos] has contacted our office and would like to invite you in to mediation. . . . Please contact our office . . . by Friday, November 9, 2012 for more information." In reply, Masumoto's attorney declared that Cedillos previously stated, "mediation will be an exercise of futility, " in an e-mail dated October 1, 2012, which was prior to the district court's October 15, 2012 order requiring mediation. The district court denied Masumoto's motion on November 13, 2012.
At a hearing on November 26, 2012, the district court denied Cedillos's motion for reconsideration and motion for sanctions. The district court also noted that 45 days had passed since Masumoto issued the October 6, 2012 eviction notice. On November 27, 2012, Masumoto filed a motion for leave to file a summary possession counterclaim, asserting that Cedillos had not yet vacated the property despite the 45-day notice terminating the lease, and that Cedillos had not paid any rent required under the lease. Cedillos's written opposition to the motion focused on Masumoto's failure to pick up the November rent envelope, stated that he would bring the returned certified mail to court on December 10, 2012, and asserted that because Masumoto's rental unit was "illegal, " she could not avail herself of legal remedies. In his opposition, Cedillos did not specifically challenge the 45-day notice terminating the lease based on the fact that it was issued after he notified Masumoto of various violations of the Landlord-Tenant code and filed and served his district court complaint against Masumoto for those violations; he did, however, assert: "[T]here is no new evidence or cause to grant [Masumoto's] motion. Circumstances have not changed since the denial by this court of the original non-hearing motion . . . ." The district court granted the motion on December 10, 2012, and set a hearing on various pre-trial motions and trial on possession for January 7, 2013. The hearing and trial proceeded as scheduled.
At the hearing preceding the trial, the district court heard arguments on three motions filed by Cedillos (Motion for Alternative Dispute Resolution, Motion for Pre-Trial Admission of Evidence, and Motion to Compel Discovery) and a Motion to Compel filed by Masumoto. Without providing any specific rationale on the record, the court denied each of the motions. The court also granted Masumoto leave to submit a request for attorney's fees associated with defending against Cedillos's three motions.
At trial, Masumoto's attorney called as witnesses Masumoto and another tenant of a unit near the property. Cedillos, pro se, called Masumoto as a witness. Cedillos questioned Masumoto about the $25 per month rental increase beginning September 2012, and the court accepted Exhibit 4, which contained an e-mail communication between Cedillos and Masumoto about the rent increase, into evidence. When Cedillos attempted to submit evidence with respect to whether Masumoto agreed to compensate Cedillos for purchasing and pouring caustic soda into the cesspool, the court and Cedillos had the following colloquy:
THE COURT: What's the relevance?
[CEDILLOS]: As far as rent, rental payments[?]
THE COURT: You understand the issue in this case is you didn't pay November rent in a timely fashion.
[CEDILLOS]: Yes, I do, your Honor. But I'm still a ...