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Kiehm v. Adams
Citations: 109 Haw. 278; 125 P.3d 499; 2004 Haw. App. LEXIS 128Docket: No. 25411
Court: Hawaii Intermediate Court of Appeals; April 30, 2004; Hawaii; State Appellate Court
Defendant-Appellant Ian Adams appeals a judgment and order from the Third Circuit District Court, which includes a $3,015.75 damages award to Plaintiff-Appellee Susan Kiehm and a Writ of Ejectment for his removal from Kiehm's property at 75-261 Pumehana Street, Kailua-Kona. The appeal is based on events following the oral rental agreement between Kiehm and Tammy Ayau in early 2000. Ayau rented the unit for $1,000 monthly, covering electricity and cable, while Kiehm paid for water. Adams became Ayau's roommate later that year. Ayau claimed she terminated their rental agreement via a letter on January 15, 2002, requiring Adams to vacate by February 28, 2002, as she planned to move out by March 20, with new tenants set to move in April 1. Kiehm testified that Ayau moved out on March 28, while Adams contended he never received written notice from Kiehm regarding termination of his lease. He acknowledged receiving numerous letters from Ayau, which he discarded, asserting they did not contain any formal eviction notice. Adams initially paid $500 in rent, which later increased to $1,000 after Ayau moved out. He attempted to make a rental payment to Kiehm on April 29, 2002, but she refused to accept it, insisting he vacate immediately. Following the termination of the Kiehm/Ayau rental agreement, both electric and cable services were cut, and Kiehm instructed the water supplier not to provide service without a written rental agreement. The court vacated the judgment and remanded for further proceedings. On April 19, 2002, Kiehm filed a Complaint, followed by a First Amended Complaint on May 28, 2002, against Adams seeking a writ of possession, damages (both actual and punitive), and attorney fees. Adams counterclaimed for unlawful interference with his use of the unit, alleging violations of HRS 480-2 regarding unfair practices, emotional distress, and a $100 penalty for Kiehm's violation of HRS 521-67 related to utility cut-off. He claimed lack of utilities from April 29 to May 7, 2002, until restored under a Temporary Restraining Order. The August 21, 2002, judgment in favor of Kiehm totaled $3,015.75, which included $2,821.75 in damages and $194 in court costs. The court's Findings of Fact and Conclusions of Law (FsOF and CsOL) indicated that Kiehm had orally rented to Ayau for $1,000/month, while Ayau had a separate agreement with Adams for $500/month. The court found that Kiehm and Ayau's tenancy ended on March 31, 2002, with no agreement between Kiehm and Adams. The court concluded that a sublease does not create privity between the landlord and sublessee, meaning Kiehm could not be held liable to Adams. It determined that Adams was trespassing after the lease termination and ruled in favor of Kiehm on all counterclaims, granting her a judgment for damages from April to June 2002, plus costs. Adams was denied damages for failure to disclose a local agent and Kiehm was not awarded punitive damages. HRS Chapter 521 governs landlord-tenant relationships in Hawaii, superseding conflicting provisions from other laws. This chapter governs the rights, remedies, and obligations associated with residential rental agreements for dwelling units within the State. Key definitions include "dwelling unit," which refers to a structure used as a residence by one or more individuals; "landlord," encompassing the owner and any agents; "premises," which includes the dwelling unit and associated facilities; "rental agreement," covering all terms governing the use of the dwelling; and "tenant," defined as any person occupying a dwelling unit under a rental agreement. Tenants generally have the right to sublet or assign their rental agreements without landlord consent unless otherwise specified in a written agreement. For month-to-month tenancies, a landlord must provide at least 45 days written notice to terminate the agreement, while tenants must give 28 days written notice. If a tenant remains in possession after termination without the landlord's consent, they may be liable for up to twice the monthly rent for each day of holdover. The landlord can initiate summary proceedings for recovery of possession within the first 60 days of holdover. If not initiated, a month-to-month tenancy will be established based on the previous rental terms after the 60-day period. Additionally, HRS 666-1 allows for summary possession when a tenant holds over without right after lease termination. A sublessee or subtenant is defined as a person holding under the lessee or tenant, maintaining a subordinate relationship as outlined in HRS Chapter 521. Under HRS 521-8, the definitions of "Landlord" and "Tenant" encompass sublessors and sublessees, respectively, and "Rental Agreement" includes oral subleases. HRS 521-37 allows tenants to sublease without landlord consent unless otherwise stated in a written agreement. For month-to-month tenancies, HRS 521-71(a) permits landlords to terminate agreements with 45 days' written notice, while tenants may terminate with 28 days’ notice, but these rules do not extend to subtenants. The Hawaii Residential Landlord-Tenant Code does not mandate notice to subtenants during lease termination and maintains that subleases are subordinate to the primary lease, terminating upon its expiration unless a contrary enforceable contract exists. A lease simultaneously acts as a conveyance and contract, resulting in rights and obligations through both privity of estate and privity of contract. A sublease transfers only a portion of the tenant's estate, leaving the tenant with a reversionary interest. The distinction between "surrender" and "termination" is crucial; surrender requires mutual agreement to terminate the lease, while abandonment involves unilateral action by the lessee. A distinction is made between "surrender" and "termination" of a lease. A sublessee's rights terminate with the original lessee's lease, especially if the original lessor declares a forfeiture due to the lessee's nonperformance. If the landlord annuls the lease due to forfeiture, they regain possession from the sublessee. However, a lessee's surrender of a lease after a sublease cannot affect the sublessee's estate. Adams argues against the assertions in CsOL Nos. 5 and 6, contending that Kiehm (the lessor) and Ayau (the lessee) agreed to surrender their rental agreement, which should not prejudice Adams (the sublessee). Adams claims that the surrender did not terminate his sublease, and upon the surrender's effective date, he became the direct tenant of Kiehm entitled to proper notice before any termination. Adams challenges the notice given by Ayau, stating it lacked the required 45 days under Haw.Rev.Stat. 521-71(a). He references a case (Reade v. IG Second Generation Partners, L.P.) to support that in a commercial context, if a lessor and lessee agree to surrender, the sublessee assumes the role of lessee for the duration of the original lease term. The legal principles established in Eten v. Luyster emphasize that a surrender between lessor and lessee does not affect the rights of third parties, ensuring that sublessee rights persist regardless of the original lease's surrender. These principles remain applicable today, with disputes often focusing on the voluntary nature of the surrender. A voluntary surrender is treated as a transfer of reversion, merging the interests of landlord and tenant, while preserving the subtenancy rights. A tenant of a month-to-month rental can terminate their tenancy unilaterally after complying with HRS 521-71(b) for twenty-nine days. Without any contractual obligations benefiting a subtenant, both the tenant and landlord can mutually agree to terminate the rental agreement at the end of its full term without it being considered a surrender. The court must determine whether the agreement between the tenant and landlord to terminate occurred twenty-nine or more days prior to the termination date, which affects whether the termination is valid or constitutes a surrender. If terminated on March 31, 2002, Adams’ rights as a subtenant ended with Ayau’s rights as a tenant, and he had no right to notice of termination. Any contractual right Adams may have had for notice would not impact Kiehm's rights, and he did not assert claims against Ayau. In Hawaiian Elec. Co. Inc. v. DeSantos, the Hawai'i Supreme Court ruled that HECO could not evict tenants from nineteen units due to their acceptance of rent for over ten years, which established an implicit month-to-month tenancy. Similarly, Adams has been paying rent since November 2000, and Kiehm’s acceptance of these payments means she cannot argue that Adams lacks possession rights. However, the court does not agree that Adams is in the same position as the tenants in DeSantos. In DeSantos, tenants in nineteen units were replaced by new tenants paying rent directly to HECO, while Adams was merely a subtenant of a portion of a unit, paying $500 monthly to Ayau, and did not contest certain findings of fact. The claim that Kiehm, having accepted rent from Adams since November 2000, should be estopped from asserting that Adams lacks rightful possession is unsupported. Adams argued that HRS 666-1 (1993) necessitated a ten-day notice to vacate, but the court disagreed, concluding Adams was holding possession without right after the termination of his tenancy and was not entitled to such notice. HRS 521-43(f) requires landlords residing out of state to designate a local agent in the rental agreement. Adams requested this information from Kiehm on May 9, 2002, but did not receive a response. Despite this, the court determined in Conclusion of Law (COL) No. 14 that Adams was not entitled to damages for Kiehm’s failure to disclose a local agent, as he had no rights as a subtenant at that time. Adams also contested COL No. 7, which stated he was not entitled to damages for unfair and deceptive trade practices under HRS 521-74.5 (1993). This statute prohibits landlords from taking possession of a unit through willful service interruption and outlines penalties, including minimum damages. HRS 521-42(a) mandates landlords to maintain essential services during the tenancy. The key issue revolves around whether Adams' tenancy ended before he experienced an eight-day deprivation of water and electricity, allegedly caused by Kiehm. The court vacated several prior judgments and writs, including an August 21, 2002 Judgment and an August 29, 2002 Writ of Ejectment, and remanded the case for further proceedings. It clarified that a landlord and tenant can reach an agreement verbally, fulfilling conditions outlined in Hawaii Revised Statutes (HRS) 521-71(b) without a written contract, as both parties are presumed to have notice. The law permits a landlord to terminate a month-to-month tenancy after fulfilling HRS 521-71(a) requirements, distinguishing this from an early surrender of the lease. Additionally, any requirement for a subtenant to receive notice of termination must be explicitly included in their rental agreement, and such a requirement does not affect the landlord's rights upon termination of the main rental agreement, as tenants can sublet without the landlord's consent per HRS 521-37(a).