Ridgewood Manor II, Inc.
The Delaware Manufactured Home Relocation Authority
Date Submitted: July 22, 2014
Plaintiffs, landlords and tenants of manufactured home communities throughout Delaware, filed this action seeking declaratory relief, injunctive relief, and disgorgement of monthly assessments collected under the Manufactured Home Owners and Community Owners Act by Defendants from February 1, 2006, through April 8, 2014. The parties have stipulated that there is no dispute of material fact and have filed cross-motions for summary judgment. For the reasons that follow, Plaintiffs' motion for summary judgment is generally denied, except to the extent that the Court concludes that certain assessments were collected unlawfully and leaves open the possibility of recovery.
Defendant the Delaware Manufactured Home Relocation Authority (the "Authority" or "DMHRA") has collected a monthly assessment of $3 per rented manufactured home lot in Delaware pursuant to a resolution adopted by its board (the "Board") on February 19, 2004. The assessments have been deposited in the Delaware Manufactured Home Relocation Trust Fund (the "Trust Fund"), an account maintained by Defendant the Division of Revenue of the Delaware Department of Finance (the "Division of Revenue, " and collectively with DMHRA, the "Defendants"). Plaintiffs are landlords and tenants who have paid the monthly assessments.
The General Assembly established DMHRA in 2003 "to provide financial assistance to tenants and landlords in manufactured home communities who may be required to relocate, abandon, or remove manufactured homes under a variety of circumstances." This financial assistance comes from the assessments Defendants collect and hold in the Trust Fund. The parties do not dispute that, at least before February 1, 2006, 25 Del. C. § 7012(f)(1) gave DMHRA the power to collect and change the amount of the monthly assessments:
The board of directors of the Authority shall set a $3.00 monthly assessment for deposit in the Trust Fund for each rented lot in a manufactured home community. The board may adjust, eliminate or reinstate the assessment, and shall notify landlords and tenants of each adjustment, elimination or reinstatement [pursuant to board regulations]. If the board does not adopt an adjusted assessment on or before January 31, 2006, the board shall eliminate the fee in its entirety.
The Board established the $3 assessment at a meeting on February 19, 2004. At all times relevant to the litigation, the nine-member Board needed a 75% majority of votes to "'adjust, eliminate, or reinstate the Trust Fund assessment.'" The implementing legislation provided that the Authority and the Board may "[s]ue or be sued, " but also granted them immunity from a "civil cause of action of any nature . . . for any act or omission in the performance of powers and duties under this subchapter unless the act or omission complained of was done in bad faith or with gross or wanton negligence."
DMHRA has consistently collected the $3 assessment. It has also made various expenditures, including relocation benefits and administrative costs. As of January 31, 2006, the Trust Fund reported a balance of $843, 057.17. At 1:19 p.m. on the same day, DMHRA's administrative assistant, Leslie Bird, sent an email to the members of the Board asking each to "'respond as a vote wether [sic] you approve the reinstatement of the fee.'" By 2:33 p.m., five members of the Board had voted by email to approve. The last of the nine approvals came in at 5:15 p.m. The parties agree that all nine members of the Board voted in favor of reinstating the fee on January 31, 2006. They also agree that, with respect to the January 31 vote, there was no public notice of a meeting, no public meeting, no record in the form of minutes, and no subsequent notice of the contested Board actions to any landlords or tenants. The extent of deliberation involved in the Board's vote is unclear. Meeting minutes show that the Board had hired an actuarial consultant in the months before the vote. Yet while the Board's Actuary Committee had "no report" at the January 11, 2006, meeting,  the Board considered holding "an informal meeting to discuss increasing the collected fee to $5 or $6 over time" at its meeting held shortly after the email vote. The Board officially mustered the requisite votes to recommend increasing the assessment to $4 at a June 2008 meeting,  but neither the General Assembly nor the Board has actually changed the assessment from the original $3 amount.
The Trust Fund had a balance of $6, 093, 948.57 and had paid out $572, 714.59 in relocation benefits and $940, 615.98 in administration and overhead costs as of October 2013. Financial summaries indicate that no relocation benefits have been paid since 2009,  but the Trust Fund provides insurance value and has been authorized to cover some arbitration fees since June 2013. In July 2013, the General Assembly voted to (1) raise the cap on the Trust Fund from $10 million to $15 million and (2) extend the Trust Fund's term from July 1, 2014, to July 1, 2019. Pursuant to an April 8, 2014, amendment, 25 Del. C. § 7012(f)(1)'s final sentence (regarding elimination of the fee absent an adjusted assessment) was removed. The synopsis of the amending bill states that the General Assembly removed the sentence because "[t]he Authority having complied with the requirement, the sentence is no longer relevant."
Plaintiffs filed this action on May 6, 2013. There is no evidence that Plaintiffs complained about the assessments before then. To promote efficient resolution, the parties agreed "to bifurcate the substantive merits of the claims stated by the Plaintiffs' Complaint . . . from the issues of class certification . . . and what remedies are available to the class, " if applicable. The parties have submitted a stipulated record and cross-motions for summary judgment on the merits of the claims. In addition, Plaintiffs have filed a motion in limine to exclude certain evidence on the grounds of relevance, confusion, and undue prejudice.
Plaintiffs contend that Defendants' continued collection of the monthly assessments from February 1, 2006, to April 8, 2014, fell beyond their statutory mandate and that the money should be returned. They argue that the Board acted unlawfully, not only by maintaining the dollar amount of the assessment without meaningful analysis, but also by disregarding the Freedom of Information Act ("FOIA") requirements for public bodies and the requirement for notice of fee-related actions in 25 Del. C. § 7012(f)(1). They read the implementing legislation to mean that DMHRA would lose the power to collect any assessments in the future unless the Board changed the monthly assessment to an amount other than $3 before February 1, 2006. They ask for strict construction of DMHRA's statutory authority and claim that theirs is the clear and unambiguous interpretation, giving effect to all parts of the statute and its mandatory language. They further allege unjust enrichment and seek a constructive trust for the disputed amounts collected.
Defendants, on the other hand, argue that the Board complied with 25 Del. C. § 7012(f)(1) on January 31, 2006, because the Board made a reasoned decision to maintain the level of the assessment under the then-present circumstances.They explain that their interpretation of the requirement to adopt an adjusted assessment (and the consequences of failing to do so) is correct by invoking the plain language of the statute, legislative intent, a holistic reading, and subsequent legislative acts. They also argue that Plaintiffs' real complaint lies in the acts (or lack thereof) taken on or around January 31, 2006. As such, immunity, the three-year statute of ...