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Pot-Nets Coveside Homeowners Association v. Tunnell Companies, L.P.

Superior Court of Delaware, Sussex

May 26, 2015

Pot-Nets Coveside Homeowners Association, et al.
v.
Tunnell Companies, L.P.

James G. McGiffin, Jr. Community Legal Aid Society, Inc., Attorney for Appellants

Michael P. Morton The Law Office of Robert J. Valihura, Jr., Attorney for Appellee

Dear Counsel:

This is the second installment[1] of what is likely to be an ongoing saga between Tunnell Companies, L.P. ("Tunnell") and the homeowners of the Pot-Nets communities which Tunnell manages. Currently before the Court is Tunnell's Motion to Dismiss the Pot-Nets Coveside Homeowners Associations', et al. ("Appellants") appeal from the Delaware Manufactured Home Relocation Authority's ("Authority") decision pursuant to Superior Court Civil Rule 72 (i). The two issues presented by the parties are matters of first impression regarding the newly created Manufactured Home Owners and Community Owners Act ("Act").[2] The Court, however, finds one issue to be dispositive.

This Court has had the opportunity to review and construe the Act in the past, [3]specifically regarding the disclosure duties of the community owner under 25 Del. C. § 7043 when seeking to increase homeowner rent above a statutorily prescribed threshold, the CPI-U. Appellants now ask the Court to construe different provisions of the same section, by making a decision as to what constitutes a timely filing for arbitration. The relief Appellants seek is a reversal of the arbitrator's dismissal, and a remand of their case. Conversely, Tunnell seeks to dismiss Appellants' appeal, asserting that the Court does not have jurisdiction to address the arbitrator's dismissal due to the General Assembly's clear jurisdictional mandate laid out in 25 Del. C. § 7044.

It is a fact of life that not every wrong has a right. Though practically it may make sense for this Court to review all decisions of the arbitrator with regard to the Act, that may not have been the General Assembly's intent in crafting this legislation.

This Court, under 25 Del. C. §7044, only has review powers "as to whether the record created in the arbitration is sufficient justification under the Code for the community owner's proposed rental increase in excess of the CPI-U."[4] Though the Court finds both parties' arguments compelling with regard to section 7043 (c)'s arbitration filing requirement, it is unable to review the issue and render an opinion due to jurisdictional limitations. The Court is unable to grant redress by the means Appellants are currently attempting to utilize. For the reasons that follow, Tunnell's Motion to Dismiss is GRANTED.

FACTS

Tunnell manages six (6) separately owned, private manufactured communities known as the "Pot-Nets Communities, " which include the four (4) homeowners associations ("HOA") making up Appellants. These four (4) HOAs, all of which are separate and independent from one-another as they each are affiliated with a separate and distinct community, represent the homeowners of Pot-Nets Coveside, Pot-Nets Bayside, Pot-Nets Lakeside, and Pot-Nets Creekside.

25 Del. C. § 7043 (b) directs a community owner on what it must do prior to increasing rent above the CPI-U. These steps are as follows:

First, the community owner must give written notice to each affected home owner, the community's HOA, and the Authority at least 90 days prior to any increase in rent. Second, if the proposed increase is over the CPI-U, there must also be a meeting between the community owner and the other parties. At the meeting, the community owner must provide written disclosures, in good faith, of all material factors resulting in its decision to increase rent. These material factors include "financial and other pertinent documents and information." Finally, if the parties cannot reach a resolution at the meeting, any affected homeowner, or the HOA on behalf of one or more of the affected homeowners, may petition the Authority for non-binding arbitration.[5]

In addition to these steps, an aggrieved party, if seeking arbitration, must file for it with the Authority within thirty (30) days of "the final meeting."[6]

Tunnell, seeking to increase rent above the CPI-U, followed the above procedural requirements, and held the mandated meetings with the affected homeowners and HOAs, after giving proper notice. The meetings were held as follows: "on September 30, 2014 for Pot-Nets Bayside; October 1, 2014 . . . for Pot-Nets Lakeside; October 1, 2014 . . . for Pot-Nets Coveside; and on October 2, 2014 for Pot-Nets Creekside."[7] Tunnell alleges it repeatedly informed Appellants of the need to file any petition, including one for arbitration, on a timely basis. Appellants acknowledge that Tunnell informed them that the 30 day clock started following these meeting dates. However, the Appellants did not file their petitions for arbitration until either November 12, 2014, or November 14, 2014. These dates are, of course, thirty (30) days past the initial meeting dates stated above.

With that said, Appellants assert they were each "invited by Tunnell to continue settlement discussions in meetings that continued, with the final meeting[s] taking place on November 3, 2014, [with the exception of] the Bayside Home Owners Association[, ] [which] last met with Tunnell on October 24, 2014."[8] According to Appellants, several meetings occurred after the initial meeting dates cited above. The Appellants received final settlement offers from Tunnell at either the October 24, 2014, or November 3, 2014 meetings. Appellants argue that Tunnell's willingness to discuss settlements after the initial meeting ...


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