Charmaine Hunter Vs. City Of Des Moines Municipal Housing Authority, Russell Underwood, Theresa Taylor And Tangela Weiss

Citation: Not availableDocket: 35 / 05-0375

Court: Supreme Court of Iowa; November 8, 2007; Iowa; State Supreme Court

Original Court Document: View Document

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Charmaine Hunter leased a residence from the Des Moines Municipal Housing Authority (DMMHA) under a lease that automatically renewed monthly. The lease required Hunter to accurately report her income and family composition, which the DMMHA used to determine rent and eligibility for low-income housing. Hunter's rent was set at $12 per month, and she could terminate the lease with fifteen days' notice, while the DMMHA could only terminate the lease for significant violations, such as willful misrepresentation of information.

Hunter lived in the property for twelve years, consistently reporting low income from public assistance and failing to disclose unauthorized residents. In 2001, DMMHA discovered that Leo Clark, an unauthorized individual, had been living with Hunter, and that both had received significant gambling winnings that were not reported. Subsequently, the DMMHA issued a notice of lease termination on April 27, 2001, requiring Hunter to vacate by May 31, 2001, citing multiple lease violations.

The district court ruled in favor of the landlord, but the Iowa Court of Appeals reversed that decision, leading to a review by the Supreme Court of Iowa. Ultimately, the Supreme Court vacated the Court of Appeals' decision and affirmed the district court's judgment in favor of the DMMHA.

In 1996, Hunter initiated a civil rights lawsuit against a Des Moines police officer, with a trial occurring in 2001. During the proceedings, both Hunter and her partner Clark testified about their cohabitation and disclosed significant gambling winnings totaling over $75,000 each in 1999, despite also incurring substantial losses. Hunter contested the termination of her lease, which was upheld by a hearing officer on May 24, 2001, due to Clark's unauthorized residency and failure to report income to the Des Moines Municipal Housing Authority (DMMHA). 

Following the hearing, Hunter sought judicial review in federal court while the DMMHA served her with a three-day notice to quit and initiated a forcible entry and detainer action in state court, which was stayed pending the federal review. On July 23, 2001, the federal court affirmed the hearing officer's decision, and Hunter did not appeal. However, on August 7, 2001, the small claims court ruled in favor of the DMMHA, which Hunter appealed, leading to a district court reversal on October 2, 2001, due to DMMHA’s failure to provide a notice to cure as required by Iowa law.

Subsequently, on January 16, 2002, the DMMHA issued a notice of termination of Hunter's month-to-month tenancy, again not providing a notice to cure. The grievance hearing upheld the DMMHA’s decision, stating that Hunter's violations were not curable. Hunter contested this termination, resulting in another forcible entry and detainer action, which the district court dismissed based on the lack of a notice to cure. 

In response, Hunter filed a lawsuit against the DMMHA alleging breach of contract and abuse of process, seeking damages, injunctive relief, and attorney fees for the DMMHA's actions. The DMMHA counterclaimed for breach of contract, seeking rent payments that Hunter would have owed had she complied with the lease terms.

Hunter and the DMMHA both sought summary judgment, with Hunter arguing that the DMMHA was obligated to provide her a notice to cure before lease termination and eviction. She claimed that prior district court rulings in forcible entry and detainer (FED) actions established that notice to cure was legally required, citing res judicata to prevent relitigation. Conversely, the DMMHA maintained that notice was not necessary and pointed to previous grievance proceedings that demonstrated Hunter's failure to disclose required information, leading to damages of $20,294.

Hunter denied any gambling income in an affidavit, asserting that Clark was only her paid caretaker. The district court ruled in favor of the DMMHA, dismissing Hunter’s claims on the grounds that she could not recover for breach of contract without proving compliance with lease terms, which the grievance proceedings established she failed to do. The court also concluded that the DMMHA was not required to provide a notice to cure, further undermining Hunter's abuse-of-process claim due to lack of evidence of improper purpose.

Following this ruling, both parties entered a stipulation regarding the DMMHA’s breach-of-contract claim, acknowledging Hunter owed over $20,000 in past rent. The district court awarded the DMMHA $20,294 in damages based on its previous findings and the stipulation. Hunter appealed, leading to a reversal by the court of appeals, which remanded the case for a determination of damages. The court of appeals agreed there was no evidence of improper purpose but held that Hunter was entitled to a breach-of-contract judgment, finding the prior grievance decisions could not establish her non-compliance under the lease. It ruled that the DMMHA’s reliance on those findings had no preclusive effect due to the absence of a notice to cure, and federal law further disallowed such preclusion. The court of appeals also held that the district court could not rule on the notice-to-cure requirement due to prior determinations. Both parties subsequently sought further review of the case. The review will focus on the summary judgment motions, with legal error corrections at stake.

Summary judgment is warranted only when the evidence, including pleadings and affidavits, indicates no genuine material fact dispute and that the moving party is entitled to judgment as a matter of law, as per Iowa R. Civ. P. 1.981(3). The moving party bears the burden of proof, and evidence must be viewed favorably for the nonmoving party. Hunter's breach-of-contract claim hinges on the assertion that the DMMHA was obligated to issue a notice to cure before lease termination under Iowa Code section 562A.27(1). The district court ruled that such notice was not required, contrasting with prior FED decisions that mandated it. The court of appeals determined these earlier decisions were res judicata, preventing DMMHA from contesting the notice requirement.

Issue preclusion applies when the following criteria are met: the issue is identical, litigated previously, material to the prior case, and essential to its judgment. This doctrine aims to ensure fairness to the victorious party and conserve judicial resources by avoiding repetitive litigation. The court of appeals ruled that the district court could not revisit the established requirement for a notice to cure based on the previous FED litigation.

However, courts must assess whether special circumstances exist that would render it inequitable to bar relitigation of the issue. The Restatement (Second) of Judgments outlines exceptions to issue preclusion, including the allowance for relitigation of legal issues in substantially unrelated claims or when a new determination is justified due to changes in the legal landscape. The court has not previously addressed the application of this exception, leading to the need to evaluate if special circumstances justify relitigation of the notice-to-cure issue.

The case involves the legal interpretation of whether a landlord must provide a notice to cure before terminating a month-to-month tenancy. The district court had previously ruled on this issue in relation to its jurisdiction over an FED action, without resolving a specific factual dispute between the parties. The current case presents the same legal question but in a different context, focusing on a tenant's claim for damages against the landlord for failing to provide a notice to cure, based on allegations of abuse of process and breach of contract. This claim is distinct from the eviction action and permits the DMMHA to challenge the legal principle established in the previous ruling, as the circumstances fall under the fifth exception to issue preclusion due to the unforeseen nature of the subsequent claims.

The DMMHA is not contesting the application of the law in the first case but is instead questioning the validity of the legal rule itself. The Restatement notes indicate that a legal rule set in one proceeding may not be permanently binding on all subsequent claims between the same parties. The court acknowledges that the prior findings do not bind this case and allows for further examination of whether a notice to cure was necessary.

The analysis will also consider various sources governing lease termination, including the Iowa Code, the rental agreement, and federal law. Hunter’s claim asserts that the DMMHA breached the lease by not providing a notice to cure as mandated by section 562A.27(1) of Iowa’s Uniform Residential Landlord and Tenant Act (IURLTA), which, although not specifically designed for federally subsidized housing, applies to rental agreements initiated after January 1, 1979, thus necessitating compliance with its provisions.

The DMMHA is obligated to provide notice under the Iowa Uniform Residential Landlord and Tenant Act (IURLTA) when terminating a residential lease, with specific requirements varying based on the type of tenancy and reasons for termination. For month-to-month tenancies, a written notice must be given at least thirty days prior to termination. If a landlord seeks to terminate a lease for tenant noncompliance before the lease's end date, they must adhere to statutory procedures outlined in Section 562A.27(1), which includes delivering a written notice of the breach and a notice to cure, allowing the tenant seven days to remedy the situation. If the tenant cures the breach within this timeframe, the lease remains intact; if a similar breach occurs again within six months, the landlord can terminate the lease with a seven-day notice. However, for month-to-month tenancies, no notice to cure is necessary when a landlord intends to end the tenancy at the conclusion of the rental period since there is no breach to remedy. The IURLTA allows landlords and tenants to stipulate their own terms, provided they do not contradict the IURLTA or other laws. In this case, since the lease established a month-to-month tenancy, the DMMHA does not need a notice to cure if terminating at the end of the tenancy period.

The IURLTA mandates only thirty days' written notice for lease termination, and the lease terms allowed DMMHA to terminate based on "serious or repeated violations of material terms." The DMMHA's termination notices informed Hunter that her lease would end thirty days after the current month, explicitly complying with both the IURLTA and lease terms. Although the notice cited violations, it did not necessitate a notice-to-cure requirement under either the IURLTA or lease terms, meaning DMMHA needed to prove noncompliance to terminate the lease. Since the thirty-day notice sufficed, Hunter's breach-of-contract claim failed, and the district court rightly granted DMMHA's summary judgment.

Regarding DMMHA's breach-of-contract claim, it based its motion on findings from grievance proceedings where Hunter was found to have violated the lease. DMMHA argued these findings were res judicata, while Hunter contended that the lack of a notice to cure voided the findings due to jurisdiction issues. However, since DMMHA was not obligated to issue a notice to cure under section 562A.27(1), the previous adjudicative bodies had jurisdiction. Hunter also claimed an exception to issue preclusion applied, but this misinterpreted prior rulings. The court clarified that the grievance hearings were sufficiently recognized for res judicata purposes, thus affirming DMMHA's claims.

A new determination of an issue may be justified by differences in procedural quality or jurisdictional factors between two courts. The court upheld that the Department of Human Services could revise its assessment, emphasizing the specific statutory framework governing jurisdiction. The ruling was narrow, not focused on procedural differences, and Hunter's reliance on such differences to claim relitigation support was found lacking. The grievance procedures available to tenants were deemed to align with due process, providing tenants the right to counsel, present evidence, and examine witnesses, akin to court proceedings. Although the grievance process requires tenants to demonstrate entitlement to relief, this preliminary burden does not significantly alter the procedural landscape. The court noted that it does not necessitate identical procedures for relitigation but considers whether procedural differences might affect outcomes. In this case, no significant procedural differences were found that would likely lead to a different result. The grievance officer determined that the DMMHA established Hunter's lease violations by a preponderance of evidence, reinforcing the notion that grievance decisions should carry res judicata effect. Moreover, Hunter's assertion that federal law prohibits using grievance decisions in other court proceedings was addressed, with federal regulations affirming that decisions from hearing officers hold similar weight to court judgments.

A grievance decision favoring the DMMHA or denying the complainant's relief does not waive the complainant's rights to a trial de novo or judicial review, as stated in 24 C.F.R. 966.57(c). Although there is limited judicial authority on this regulation, it raises questions about whether such decisions can preclude relitigation. A breach-of-contract claim by the DMMHA is considered a separate matter from the grievance process. Even if the federal regulation intended to prevent res judicata effects for grievance decisions, state courts are not bound to follow it. The court determined that the doctrine of res judicata applies to administrative decisions in this case, affirming the DMMHA was entitled to summary judgment on its counterclaim due to Hunter's lease violation, with the parties having agreed on damages. All of Hunter's arguments against summary judgment were rejected.

For Hunter's abuse-of-process claim, the court noted that Hunter must demonstrate the DMMHA acted improperly or unlawfully. Hunter argued that the DMMHA failed to comply with district court decisions requiring a notice to cure, but the court found these decisions did not have res judicata effect. Even if the notice was required, Hunter had to prove the DMMHA acted with an improper motive, which was not established. The DMMHA's reliance on a different statutory provision for lease termination and its legislative lobbying efforts did not indicate an improper motive. Consequently, the district court's summary judgment favoring the DMMHA on the abuse-of-process claim was upheld.

The court vacated the court of appeals' decision and affirmed the district court's judgment, with all justices concurring except for Justice Hecht, who did not participate.