Park View Manor, Inc. v. Housing Authority of Stutsman County

• Citation: 300 N.W.2d 218
• Decision Date: 21 November 1980
• Docket Number: No. 9627-A,9627-A
• Parties: PARK VIEW MANOR, INC., a North Dakota corporation, Plaintiff and Appellant, v. HOUSING AUTHORITY OF the COUNTY OF STUTSMAN, Jamestown, North Dakota, a Public Corporation, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 218

300 N.W.2d 218

PARK VIEW MANOR, INC., a North Dakota corporation, Plaintiff and Appellant, v. HOUSING AUTHORITY OF the COUNTY OF STUTSMAN, Jamestown, North Dakota, a Public Corporation, Defendant and Appellee.

Civ. No. 9627-A.

Supreme Court of North Dakota.

Nov. 21, 1980.

John Hjellum, of Hjellum, Weiss, Nerison, Jukkala & Wright, Jamestown, for plaintiff and appellant.

Charles J. Gilje, of Gilje, Greenwood & Dalsted, Jamestown, for defendant and appellee.

VANDE WALLE, Justice.

Park View Manor ("PVM") appeals from a judgment of the Stutsman County district court against PVM and in favor of the Stutsman County Housing Authority ("Authority") in the sum of $2,282.50 together with interest at a rate of six percent per annum. We affirm in part and reverse in part.

PVM and Authority entered into four lease agreements, on varying dates, in which PVM was the landlord and Authority was the tenant. The leases covered certain buildings which were to be used by the Authority for the purpose of sublease pursuant to Authority's leasing program of low-rent housing under Section 23 of the United States Housing Act of 1937, as amended. The first lease (hereinafter referred to as Lease No. 1) was executed on May 1, 1969. The other three leases were executed subsequent to that date. Lease No. 1 contained a provision for renewal for consecutive five-year periods and further provided:

"In the event the lease shall be renewed for any such five-year term, and in the event the real estate taxes on the leasehold premises or other costs of operation or maintenance on the part of Lessor have increased substantially since the beginning of the previous term, the parties agree to negotiate for a possible increase in the amount of rental for said renewal term to cover the cost to the Lessor of such increase in taxes, operation or maintenance, and any such rental increase subsequently agreed upon shall be made a part hereof by attaching a written memorandum thereof as an exhibit to this lease."

PVM and Authority became involved in litigation in which PVM was the plaintiff and Authority the defendant to determine whether or not the real estate taxes and other costs of operation and maintenance had increased "substantially." The other three leases contained no such provision and were not involved in the litigation. Prior to the trial or the first lawsuit between PVM and Authority the parties entered into a stipulation. The stipulation was intended to settle the differences between the parties as to the terms of Lease No. 1. The stipulation provided, in part:

"III.

"... Should real estate taxes for any year during the term of this lease commencing with 1975 exceed $15,064.18, the defendant (Authority) shall reimburse the plaintiff (PVM) for the excess above and beyond the $15,064.18 at the time as hereinafter specified. Should taxes for any year during the term of the lease commencing with the tax year 1975 be less than said figure of $15,064.18, plaintiff shall reimburse defendant in the same manner for such difference.

"Any increase or decrease in real estate taxes shall be paid for or given credit to the lessee (Authority) respectively after the same has been ascertained on December 31 of the year in which the taxes are levied, and any increase or decrease will be adjusted in the monthly payment to be made by the lessee on February 1 following the increase or decrease.

"IV.

"The defendant agrees to pay plaintiff an additional $2.00 per unit per month commencing October 1, 1973, to be deposited by plaintiff in an escrow account to be established with the Jamestown National Bank of Jamestown, North Dakota, in the names of 'Park View Manor, Inc., in the trust for The Housing Authority of the County of Stutsman.' Said escrow account is established for the sole purpose of assuring that funds for redecorating the interior of the units are available for use by the defendant in performing the decorating as needed....

"V.

"When the actual costs of operation and maintenance, as operation and maintenance are hereinafter defined, shall exceed in any one year $1,800.00, the defendant shall pay to the plaintiff the difference between the actual costs of operation and maintenance over and above said $1,800.00. The terms 'operation,' 'maintenance,' 'operation or maintenance,' or 'operation and maintenance' shall include actual costs of repairs necessitated by ordinary wear and tear. Said terms shall also include for purposes of this stipulation and the lease the actual costs of rental of water heaters.

"The terms shall exclude, without limitation, insurance, real estate taxes, special assessments, management expense, office expense (including officer personnel), structural repairs, and replacement of total units of fans, ranges, heating plants, and refrigerators. The terms shall further exclude repairs that are necessitated for reasons other than ordinary wear and tear of the building and repairs necessary for unusual, extraordinary, or unforeseen occurrences which do not destroy the building, but merely render it less suited for the use to which it was intended, which are paid for by insurance.

"VI.

"The plaintiff and defendant shall meet for an annual accounting some time after October 1st of each year but no later than February 1st, and at that time it shall be determined whether the actual costs of operation and maintenance have exceeded $1,800.00, and it shall be determined whether or not real estate taxes have exceeded or not reached $15,064.18, and moneys will be exchanged between the parties according to the provisions hereinbefore contained.

"It is further agreed that the plaintiff each year, at or before the time of the annual accounting, shall present to the defendant a list of its actual expenditures for taxes and for operation and maintenance, with source documents as evidence required itemizing separately hours of labor and costs."

The stipulation did not meet its avowed purpose of settling the differences of opinion in interpretation of Lease No. 1. A subsequent action was commenced by PVM against Authority in which PVM alleged that for the period November 1, 1975, through September 30, 1976, its expenses had exceeded $1,800 and that the taxes had exceeded $15,064.18. It alleged the same for the expenses for the year October 1, 1976, to September 30, 1977, but PVM conceded that the taxes for the year 1977 had been reduced by $1,385.38.

In its complaint PVM added a second count concerning the three leases executed subsequent to Lease No. 1. With respect to those leases, PVM claimed moneys owing from Authority because of an increase in taxes on property covered by those leases.

Authority answered the complaint by denying that the costs of operation and maintenance as defined in the stipulation exceeded $1,800 in either of the years ending September 30, 1976, or September 30, 1977. Authority asserted that PVM had failed to submit its list of expenses between October 1, 1976, and February 1, 1977, insofar as the October 1, 1975, through September 30, 1976, expenditures were concerned, and that PVM therefore was not entitled to an accounting for that period of time. Authority also alleged that the only money due anybody under the first count of the complaint (concerning Lease No. 1) was due to Authority in the amount of $1,385.38, the difference between the base figure of $15,064.18 contained in the agreement and the actual tax of $13,678.80 paid by PVM for 1977 taxes. With respect to the other three leases, Authority in its answer alleged that PVM owed Authority $897.12 because of a decrease in taxes for 1977 and that although there had been increases in the taxes for 1975 and 1976 on the three subsequent leases, the notice of increase required by those leases had not been given by PVM to Authority, and PVM therefore could not recover these amounts. Those leases contained the following provisions:

"Monthly rental may be increased by the Lessor in an amount equal to any increase in municipal, county or state real estate taxes on the real property and improvements ... over and above the amount of such taxes assessed for the base year, ... The increase can only be increased upon written notice by the Lessor to the Lessee within sixty days prior to said anniversary date."

After trial to the court, the court determined that with regard to taxes on all four leases, PVM was entitled to payment from Authority in the sum of $1,565.72 for payments over the base tax rates and Authority was entitled to payment from PVM in the sum of $2,282.50 for payments under the base tax rates. With regard to Lease No. 1, in the payment for operation and maintenance, the court found that PVM had failed in its burden of proving that its actual costs of operation and maintenance exceeded in either of the two years the sum of $1,800.

PVM appealed to this court and Authority cross-appealed. We reversed the trial court's judgment and remanded it for the preparation of more adequate findings of fact or, if deemed necessary by the trial court, for a new trial. See Park View Manor v. Housing Authority, 287 N.W.2d 83 (N.D.1979). Following remand the trial court executed new findings of fact, conclusions of law, and order for judgment. Judgment was entered and PVM has again appealed that judgment to this court. In its findings, conclusions, and order for judgment following remand the trial court denied PVM reimbursement for costs of operation and maintenance and for the excess taxes and awarded judgment in the sum of $2,282.50 to Authority for the amount of taxes less than the base rate. PVM has listed three issues on appeal:

1. What do the "actual costs of operation and maintenance" include as defined in the stipulation?

2. Did PVM's "actual costs of operation and maintenance" exceed $1,800 for either the fiscal year ending September 30, 1976, or October 1, 1977, and, if so, in what amount?

3. Did the trial court err in failing to give PVM...