First Union Management, Inc. v. Slack

• Decision Date: 08 March 1984
• Docket Number: No. 5280-III-0,5280-III-0
• Citation: 679 P.2d 936,36 Wn.App. 849
• Parties: FIRST UNION MANAGEMENT, INC., Appellant, v. Dennis L. SLACK and Linda C. Slack, husband and wife, Respondents.
• Court: Washington Court of Appeals

Page 849

36 Wn.App. 849

679 P.2d 936

FIRST UNION MANAGEMENT, INC., Appellant, v. Dennis L. SLACK and Linda C. Slack, husband and wife, Respondents.

No. 5280-III-0.

Court of Appeals of Washington Division 2, Panel Three.

March 8, 1984.

Ronald E. Cox, Robert B. Mitchell, Seattle, Preston, Thorgrimson, Ellis & Holman, Seattle, for appellant.

Joseph Woolett, Wenatchee, for respondents.

McINTURFF, Judge.

First Union Management, Inc. (First Union) appeals from a Superior Court judgment in its action against Dennis and Linda Slack (the Slacks) for unlawful detainer. The Slacks cross-appeal. The primary issue is whether the trial court had subject-matter jurisdiction to hear the Slacks' counterclaim in the unlawful detainer action. We hold the court lacked such jurisdiction and, therefore, reverse that portion of the judgment awarding the Slacks damages on their counterclaim and denying First Union its costs and attorney's fees.

First Union owns and manages the shopping center in which the Slacks lease space and operate a laundromat. On January 22, 1981, First Union served the Slacks with a notice to pay rent or vacate. The notice advised them rent and merchant's association dues of $1,946.93 were due and owing. The notice and an attached letter also advised of the following breaches of the covenants in the parties' lease: (1) seven out of 25 washing machines and one out of 10 dryers were out of order, (2) the premises was dirty and otherwise not properly maintained, ¹ and (3) the Slacks had not deposited with First Union certificates of insurance policies and evidence of premium payments. First Union required the Slacks to pay within 10 days and to cure the other defaults within 30 days or, alternatively, to vacate the premises.

On January 26, 1981, Dennis Slack tendered two checks to First Union totaling $1,539.70. ² On the same day he wrote First Union stating "All areas of default are currently being addressed and corrected." In the letter, he claimed only three of the machines were then inoperable and repairs on broken machines were made as promptly as the parts arrived. He also stated missing ceiling tiles had been replaced, several of the fluorescent lights had been deactivated to comply with conservation requests, the laundry was cleaned daily, and insurance notification would be sent.

By letter of February 25, 1981, First Union notified the Slacks it was terminating their right of possession to the leased premises. It then cashed the Slacks' checks dated January 26, together with a February 9, 1981 check for the February rent. On March 20, 1981, First Union served on the Slacks a 12-day summons and complaint for unlawful detainer as authorized by statute. The Slacks filed an answer and five counterclaims on March 27, 1981. First Union did not file a reply but it did initiate and participate in discovery relating to the counterclaims. During this time the Slacks tendered checks for the rent due each month, but First Union returned them uncashed because it did not wish to prejudice its rights under its unlawful detainer action.

At the end of October 1981, First Union retained new counsel who promptly moved to dismiss the Slacks' counterclaims as outside the trial court's subject-matter jurisdiction in an unlawful detainer action. First Union also moved to amend its complaint. Both motions were denied on November 18, 1981. The Court determined (1) the notice to pay rent or vacate was insufficient to comply with statutory notice requirements for defaults other than for payment of rent, (2) the Slacks had substantially cured the defaults in rent, and (3) the insufficiency of the foregoing notice did not permit First Union to maintain the unlawful detainer action. The order allowed First Union to proceed as in a civil action for breach of contract.

The day after the court order, First Union served the Slacks with a second notice to pay rent and other charges due in the amount of $9,914.35 for the months of March through November, 1981. The Slacks did not pay this amount. On December 10, 1981, First Union served Dennis Slack with a new 12-day summons and complaint for unlawful detainer. The Slacks filed an answer and counterclaim. In its reply, First Union affirmatively alleged lack of subject-matter jurisdiction over the counterclaims.

The March and December actions initiated by First Union were consolidated for trial. Judgment was entered for First Union on its second unlawful detainer action and for the Slacks on their counterclaim for damages resulting from First Union's failure to respond to inquiries regarding the assignment of their lease to a prospective purchaser. ³ First Union's judgment for rent was set off from the Slacks' judgment on the counterclaim, leaving the Slacks with a net judgment in their favor for $50,433.23. Each party was ordered to bear their own costs and attorney's fees.

THE APPEAL

A. Subject-matter jurisdiction

First Union contends the court erred in denying its motion to dismiss the Slacks' counterclaims for lack of subject-matter jurisdiction. It relies on the general and well-settled rule that counterclaims may not be asserted in an unlawful detainer action because the Legislature's intent in creating this action was to establish a summary procedure for determining the limited issue of the landlord's right of possession. Granat v. Keasler, 99 Wash.2d 564, 570, 663 P.2d 830 (1983); Young v. Riley, 59 Wash.2d 50, 52, 365 P.2d 769 (1961).

The Slacks argue the general rule does not apply because (1) First Union's initial complaint allegedly did not adhere to the statutory form, and (2) a determination of their counterclaims is essential to a determination of the claim of unlawful detainer. We reject both arguments.

RCW 59.12.070 provides:

The plaintiff in his complaint, which shall be in writing, must set forth the facts on which he seeks to recover, and describe the premises with reasonable certainty, and may set forth therein any circumstances of fraud, force or violence, which may have accompanied the said forcible entry or forcible or unlawful detainer, and claim damages therefor, or compensation for the occupation of the premises, or both; in case the unlawful detainer charged be after default in the payment of rent, the complaint must state the amount of such rent.

First Union's complaint fully complied with the statute's requirements. In any event, the alleged deficiencies could not enlarge the Court's jurisdiction. The appropriate procedure upon proof of a critical deficiency in the summons or complaint would have been for the court to dismiss the unlawful detainer action.

Nor is the Slacks' counterclaim one a court in an unlawful detainer action has jurisdiction to entertain. The purpose of an action for unlawful detainer is to determine the right of possession. Little v. Catania, 48 Wash.2d 890, 893, 297 P.2d 255 (1956); Motoda v. Donohoe, 1 Wash.App. 174, 175, 459 P.2d 654 (1969). Our court has permitted a counterclaim in such an action only when the counterclaim is based on facts which excuse a tenant's breach. Foisy v. Wyman, 83 Wash.2d 22, 515 P.2d 160 (1973) (The affirmative defense of breach of implied warranty of habitability goes directly to the issue of rent due and owing); Income Properties Investment Corp. v. Trefethen, 155 Wash. 493, 506, 284 P. 782 (1930) (rent cannot be recovered where landlord by his own acts has deprived the lessees of the beneficial use of the property); Andersonian Investment Co. v. Wade, 108 Wash. 373, 378-79, 184 P. 327 (1919) (If facts exist which excuse a defendant's breach, the defendant ought to be permitted to show them before ouster). Here, resolution of the Slacks' damage claim is not necessary to determine the right of possession. First Union's alleged failure to timely respond to the request for permission to assign the lease did not deprive the Slacks of the beneficial use of the property or excuse their duty to pay rent or comply with the other conditions of the lease.

The Court found First Union "apparently abandoned its pursuit of a summary remedy" by engaging in substantial discovery aimed at defending the counterclaim and preparing to present all claims between the parties on the merits. While not directly stated, the inference is First Union, by its subsequent conduct, converted this action into a general civil action, one in which the court had jurisdiction to hear counterclaims. The Court's findings ignore the rule that subject-matter jurisdiction may be challenged at any time and cannot be waived. CR 12(h)(3); ⁴ United States v. Mississippi Valley Barge Line Co., 285 F.2d 381, 387 (8th Cir.1960). The special summons and complaint employed was insufficient to give the court jurisdiction of the parties in a general proceeding. Our Supreme Court has stated: "Having obtained ... limited jurisdiction [to determine unlawful detainer], the court could not transform the special statutory proceedings into an ordinary lawsuit, and determine the issues and grant relief therein as though the action was a general proceeding." Little, at 893, 297 P.2d 255.

Consequently, we hold the Superior Court had no jurisdiction to hear the Slacks' counterclaim. In arriving at our decision, we especially noted this language cited in Little:

"As much as we regret to reverse a case for what on first impression may be called a technicality, on the other hand the very thing which instills in the mind of the thinking person a confidence and respect for the courts is the fact that they jealously guard against acting in any manner where jurisdiction may be lacking and is not apparent upon the face of the record."

Little, at 893, 297 P.2d 255 (quoting Young Women's Christian Ass'n v. LaPresto, 169 S.W.2d 78 (Mo.Ct.App.1943)).

B. Cure of the Defaults

First Union next assigns error to the findings and conclusions of the court that no basis existed for the first unlawful detainer action. The court found the Slacks...