University Community Properties, Inc. v. Norton

• Decision Date: 29 October 1976
• Docket Number: 46199,Nos. 46153,s. 46153
• Parties: UNIVERSITY COMMUNITY PROPERTIES, INC., Respondent, v. Katie NORTON, etc., Appellant. UNIVERSITY COMMUNITY PROPERTIES, INC., Appellant, v. Larry GLENN, Respondent.
• Court: Minnesota Supreme Court

Page 858

246 N.W.2d 858

311 Minn. 18

UNIVERSITY COMMUNITY PROPERTIES, INC., Respondent, v. Katie NORTON, etc., Appellant.

UNIVERSITY COMMUNITY PROPERTIES, INC., Appellant, v. Larry GLENN, Respondent.

Nos. 46153, 46199.

Supreme Court of Minnesota.

Oct. 29, 1976.

Syllabus by the Court

Although the advent of tenants' unions bears a striking resemblance to the early efforts by workers to adjust the employer-employee relationships, the law of labor relations is not applicable without specific statutory enactment to the field of tenants' rights. Therefore, the result in these unlawful detainer actions must be based upon the law of contracts and of unlawful detainer. Where there is no statutory authority for doing so and no language in the agreement between the union and the landlord stating that those who are not directly affected by a breach of a rent-arbitration clause in the agreement may assert the breach as a defense in an unlawful detainer action, the breach cannot be asserted as a defense.

Oppenheimer, Wolff, Foster, Shepard & Donnelly and Richard M. Bisanz, Wm. P. Studer and Mary Ann Barrows, St. Paul, for appellants.

Smith, Juster & Feikema and Allen H. Gibas, Minneapolis, for respondents.

Heard before TODD, YETKA and SCOTT, JJ., and considered and decided by the court en banc.

SCOTT, Justice.

These cases involve two unlawful detainer actions for nonpayment of rent. Plaintiff, University Community Properties, Inc. (hereinafter UCPI), sued tenants Katie Norton and Larry Glenn in Hennepin County Municipal Court. UCPI's motion for summary judgment was granted as to defendant Norton; its motion for partial summary judgment was denied as to defendant Glenn. Norton appealed to this court. On August 5, 1975, the trial court amended its order to certify the following question as doubtful and important:

'Given a binding agreement between a tenants' union and a landlord, can a landlord's alleged breach of the agreement be raised as a defense in an unlawful detainer action for non-payment of rent brought by that landlord against a member of the union not directly aggrieved by the landlord's breach?'

Pursuant to this certification, on September 2, 1975, UCPI appealed the denial of its motion for partial summary judgment against defendant Glenn. The cases were consolidated for hearing.

UCPI is a Minnesota corporation which at the times involved herein provided property management services to the landholding subsidiaries of Cedar Riverside Associates, Inc. Both Norton and Glenn have oral month-to-month leases with UCPI. In June 1974, UCPI sent tenants in over 400 units in the East and West Bank areas near the University of Minnesota notices of rent increases effective August 1, 1974. Each defendant received such a notice. Some tenants of UCPI then formed the West Bank Tenants Union (hereinafter WBTU) as an unincorporated association which has no formal charter, membership list, or elected officers. WBTU membership is not conditioned upon being a tenant of UCPI.

On August 1, 1974, members of WBTU began withholding rent from UCPI. On September 27, 1974, an agreement (hereinafter the 'September Agreement') was reached between the two parties. The September Agreement modified the rent increases for current tenants according to a specified formula and contained a grievance procedure for tenants who thought that the formula rent increase was inequitable.

In December 1974, UCPI sent notices of rent increases effective March 1, 1975, to tenants in some of its newer apartment buildings. No notice was sent to Glenn or Norton. On March 2, 1975, members of WBTU voted to withhold rent from UCPI. UCPI filed unlawful detainer actions for nonpayment of rent in Hennepin County Municipal Court. Approximately 100 separate actions were commenced, including proceedings against Norton and Glenn. Glenn alleged both breaches of covenants of habitability and breaches of the September Agreement by UCPI as defenses. Norton alleged only the breach of the September Agreement as a defense. Neither Glenn nor Norton had received rent increases nor been denied a grievance procedure regarding rent increases.

UCPI moved for summary judgment against Norton and for an order striking the defense asserted by Glenn of retaliatory eviction and granting release of withheld rent. In an order dated July 3, 1975, and amended on August 5, 1975, the court granted UCPI's motion with respect to Norton and denied its motion with respect to Glenn.

The issues presented are:

(1) Should an appeal be granted from an order directing entry of judgment?

(2) Is a landlord entitled to summary judgment where a tenant not directly aggrieved by the landlord's alleged breach of an agreement with a tenant's union raises such breach as a defense in an unlawful detainer action?

1. According to Minn.St. 566.12, an appeal is allowed only from the judgment of restitution and not from an order directing entry of judgment. Northwest Holding Co. v. Evanston, 265 Minn. 562, 122 N.W.2d 596 (1963); Goldberg v. Fields, 247 Minn. 213, 76 N.W.2d 668 (1956). However, this court has granted discretionary review under Rule 105, Rules of Civil Appellate Procedure, in the similar case of Fritz v. Warthen, 298 Minn. 54, 213 N.W.2d 339 (1973). Because of the closely related issues in this suit, this court assumes jurisdiction in this case as well.

2. The governing statute in an unlawful detainer action is Minn.St. c. 566. ¹ The purpose of the statute is to provide a summary proceeding to quickly determine the present right to possession of premises. In Leifman v. Percansky, 186 Minn. 427, 430, 243 N.W. 446, 448 (1932), this court observed:

'* * * Where the plaintiff (in an unlawful detainer proceeding) shows defendant in possession under a lease, and failure to pay the stipulated rent, his cause of action under the statute is complete. * * * The defenses that can be interposed are strictly limited.' (Italics supplied.)

In Fritz v. Warthen, supra, this court held that the unlawful detainer statute was broad enough to allow a tenant to assert a breach of the statutory covenants of habitability listed in Minn.St. 504.18, subd. 1, as a defense. Minn.St. 504.18, subd. 1, requires that a landlord covenant to keep leased premises in reasonable repair, fit for their intended use, and maintained in compliance with applicable health and safety laws. ² The defendants here contend that they should be allowed to assert as a defense a breach in a collective agreement between the tenants' union and their landlord which does not directly affect them. As statutory authority, they cite Minn.St. 566.07, which allows a defendant in an unlawful detainer proceeding to plead 'all matters in excuse, justification, or avoidance of the allegations' in the complaint.

For the defense asserted here to be available: (1) The September Agreement must modify the oral leases so as to be part of the oral lease of each tenant; (2) such modification must be a dependent covenant with the covenant to pay rent in that lease; and (3) the breach of the dependent covenant set forth in the September Agreement must be the type recognized as a defense in an unlawful detainer action. ³

As a threshold matter, it appears that the September Agreement did not modify the tenants' leases but only affected the amount of announced rent increases. There is no reference in the September Agreement to the oral month-to-month leases, and the agreement was entered into in a separate transaction between different parties. Neither is there evidence that the covenant to pay rent and that agreement were dependent covenants. Contrary to defendants' argument, this court did not bury the doctrine of independent covenants in Fritz, but modified that doctrine regarding the covenant of habitability. We said:

'While we intimate no opinion as to the continued justification for the common-law rule of independent covenants in leases of modern urban dwellings, we do not believe the rule is applicable to the landlord's covenants of habitability imposed by Minn.St. 504.18. These covenants are not made part of the lease by agreement between the parties but by statutory mandate. ⁴ 298 Minn. 57, 213 N.W.2d 341.

Defendants argue that landlord and tenant here intended that the covenants to pay rent and to establish a grievance procedure be dependent and cite Clark v. Clark, 164 Minn. 201, 204 N.W. 936 (1925), for the proposition that the dependence of the covenants is determined by the intent of the parties. The defendants here have not established, however, that the grievance procedure covenant was intended to modify the leases involved. Even if the parties intended the covenants to be dependent, there is no authority for finding that a breach of the covenant to establish a grievance procedure should be available as a defense in an unlawful detainer action.

While this court in Fritz v. Warthen, supra, permitted an assertion of breach of the warranty of habitability under the 'excuse, justification, or avoidance' language of Minn.St. 566.07, this was because we held that the legislature, by enacting ...