Warwick Housting Authority v. Barbara McLeod

Barbara McLeod (defendant or McLeod) appeals from
a judgment of the Superior Court in favor of the Warwick Housing Authority (WHA or plaintiff)
evicting her from her apartment in Meadowbrook Terrace, a subsidized housing complex in
Warwick. The defendant contends that because WHA, after giving her notice of termination,
continued to accept rent without preserving its right to terminate the lease, was thereby precluded
from pursuing the ejectment action and that the motion to dismiss should have been granted by
the trial court. The WHA counters that because McLeod was aware of the eviction proceedings
against her, it was entitled to accept her rent without reservation. The trial justice agreed with
WHA and entered judgment for the plaintiff. McLeod has timely appealed. This case came
before the Supreme Court for oral argument on December 4, 2006, pursuant to an order directing
the parties to appear and show cause why the issues raised in this appeal should not summarily
be decided. After hearing the arguments and examining the memoranda filed by the parties, we
are of the opinion that cause has not been shown and we proceed to decide the appeal at this time without further briefing or argument. For the reasons stated in this opinion, we reverse the
judgment of the Superior Court.

Facts and Procedural History

In 1996, McLeod began living in Meadowbrook Terrace, one of several Warwick
facilities providing subsidized housing primarily for elderly residents. In 2002, the administrators
of WHA began to receive complaints regarding McLeod's son, Mark Anthony (Anthony).
Specifically, other residents of Meadowbrook Terrace reported to the executive director of
WHA, Michael Lyckland (Lyckland), as well as to other employees of WHA, that Anthony was
living with McLeod, which, if true, would constitute a violation of her rental agreement. Because
of those complaints, Lyckland instructed his director of maintenance, Everett O'Donnell, to
investigate whether Anthony was, in fact, living in the apartment. O'Donnell's investigation led
him to believe that Anthony was indeed residing with McLeod. However, WHA never cited
Anthony's residence in the apartment as a cause for the termination of McLeod's lease.

On January 4, 2005, the Warwick police were called to McLeod's apartment, where they
arrested Anthony for first-degree sexual assault and domestic simple assault and battery on his
ex-wife, who was visiting Anthony. Anthony gave a statement to the police in which he said his
address was McLeod's Meadowbrook Terrace apartment. From the record, it does not appear
that McLeod was at home when the violent assault took place. Nonetheless, on January 8, WHA
sent McLeod a notice that her rental agreement would be terminated on January 31 because of
her son's criminal activity in the apartment. Notwithstanding the notice, however, McLeod paid
her rent for February, and WHA accepted it without reservation.

On February 2, 2005, McLeod was sent a second letter notifying her that her rental
agreement was terminated, this time as of February 28, 2005. The violation of the rental
agreement cited in this notice was that McLeod herself had pled nolo contendere to an identity
fraud charge on November 17, 2004. This, according to WHA, violated another term of her
rental agreement.1 Still, McLeod paid the rent due on March 3, 2005; significantly, she has
continued to pay her rent since, which has been unconditionally accepted by WHA while this
litigation has been pending.

WHA filed a complaint for eviction in the District Court on February 24, 2005, and the
agency obtained a judgment against McLeod on June 7, 2005. The defendant exercised her right
to a trial de novo2 in the Superior Court by filing a notice of appeal on June 10, 2005. That court
conducted a nonjury trial on September 9, 2005. At the conclusion of the trial, the trial justice
rendered a bench decision and judgment was again entered in favor of WHA.

During the trial, WHA presented evidence on two issues that it said entitled it to
judgment for possession of the premises: (1) that McLeod violated her rental agreement, and (2)
that McLeod was aware, at all relevant times, that WHA was prosecuting an eviction action
against her. The defendant, on the other hand, argued that the eviction action must be dismissed
pursuant to G.L. 1956 § 34-18-41. That section of the Residential Landlord and Tenant Act,
chapter 18 of title 34, sets out the circumstances in which a landlord waives the right to terminate
a lease by accepting rent:

"Acceptance of rent with knowledge of a default by the
tenant or acceptance of performance by him or her that varies from
the terms of the rental agreement constitutes a waiver of the
landlord's right to terminate the rental agreement for that breach,
unless the landlord gives written notice within ten (10) days.
However, acceptance of partial payment of rent shall not constitute
a waiver of the balance due. Acceptance does not waive the
landlord's right to seek remedies for the default." Section 34-18-
41. (Emphasis added.)

McLeod argued before the trial justice that WHA waived its right to terminate her lease because
it continued to accept her rent without written reservation after discovering her breach of the
rental agreement – that breach being either her son's criminal activity or her own plea to a
criminal offense.3

At the outset of the trial, the trial justice said that § 34-18-14,4 a general notice provision,
"specif[ies] that a person has notice of a fact if he or she has actual knowledge of it, has received
notification, or from all facts and circumstances known to him or her at the time in question he or she has reason to know that it exists." Relying on that statute, the trial justice reasoned that if the
testimony showed that McLeod had notice of WHA's continuing efforts to evict her, she would
deny defendant's motion to dismiss the action despite the language of § 34-18-41.

At the conclusion of the testimony, the trial justice found that there was an abundance of
credible evidence that Anthony was living in the apartment5 in violation of the rental agreement,
and that McLeod was given adequate notice that she would be evicted. As a result, the trial
justice denied McLeod's motion to dismiss pursuant to § 34-18-41, and she entered judgment for
plaintiff.

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Therefore, we hold that § 34-18-41 clearly and unambiguously says that a landlord
waives the right to terminate for a breach of which he has notice when he accepts rent unless he
reserves his right to terminate for that breach in writing within ten days. This is so even when
there is an action pending. See Bove, 444 A.2d at 195. Here, WHA sent McLeod two separate
termination notices, one on January 8, 2005, and the other on February 2, 2005. Those notices
make it clear that WHA alleged that McLeod had breached her rental agreement. Nonetheless,
WHA continued to accept rent from McLeod without reserving its right, in writing, to terminate
her tenancy for those breaches. Thus, WHA was precluded from pursuing the eviction action
against McLeod.

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