DELAWARE MANUFACTURED HOME OWNERS ASSOCIATION, GEORGE MAKDAD, and BREANNA WALTZ, Plaintiffs Below, Appellants,
INVESTORS REALTY, INC., ST. JONES LANDING, LLC, K-4 MANAGEMENT, and DELAWARE MANUFACTURED HOME RELOCATION AUTHORITY, Defendants Below, Appellees.
Submitted: April 11, 2018
Below: Court of Chancery of the State of Delaware C.A. No.
STRINE, Chief Justice; VALIHURA and VAUGHN, Justices.
T. VAUGHN, JR. JUSTICE.
31st day of May 2018, upon consideration of the
parties' briefs and the record on appeal, it appears to
the Court that:
This case arises from a change in use of a manufactured home
community. Prior to the change, each tenant placed a
manufactured home which the tenant owned upon a lot owned by
the landlord and leased to the tenant. The change converted
the community into one in which the tenant leased both the
lot and the dwelling unit from the landlord. Appellants,
Delaware Manufactured Home Owners Association ("the
Association"), George Makdad, and Breanna Waltz, appeal
from a Court of Chancery bench ruling which denied their
motion for an injunction to prevent the change of use.
Appellants contend the Court of Chancery erred by finding
that the change was legally permissible; that Appellees'
notice to tenants of the change was legally sufficient; and
that the Association had no standing to pursue claims.
Appellee St. Jones Landing, LLC, ("St. Jones") is
the owner of the land which is the subject of this
litigation. As mentioned, it operated as a "land lease
only" community in which the tenant owned the
manufactured home but paid rent to St. Jones for the lot on
which the home was placed. Appellee K-4 Management
("K-4") was the property management company which
ran the day-to-day operations of St. Jones. Appellee
Investors Realty, Inc., is a dealer of manufactured homes but
had no management or ownership role in St. Jones.
March 4, 2016, K-4 sent notice letters to the St. Jones
tenants leasing Lots 1-10 and 62-65 ("First
Notice"). The First Notice advised the tenants that St.
Jones and K-4 planned to change the use of the St. Jones land
upon which their manufactured homes were situated. The
tenants were notified that their land lease agreements with
St. Jones were being terminated effective March 31, 2017.
Sent along with the First Notice was a Relocation Plan.
Simultaneously with the service of the First Notice on the
tenants, K-4 sent a copy of the First Notice and the
Relocation Plan to the Delaware Manufactured Home Relocation
Authority ("the Authority"). This was to be Phase I
of the land use change.
August 22, 2016, K-4 sent notice letters to the St. Jones
tenants leasing Lots 11-16, 41, and 50-56 ("Second
Notice"). The Second Notice advised the tenants of the
proposed change in use and notified the tenants that their
land lease agreements with St. Jones were being terminated
effective August 31, 2017. A Relocation Plan accompanied the
Second Notice. As was done with the First Notice, K-4 sent a
copy of the Second Notice and Relocation Plan to the
Authority. This was to be Phase II of the land use change.
lots in Phase I and Phase II were being changed from a land
lease only arrangement to a full rental arrangement under
which St. Jones would own the dwelling unit and the lot-both
of which would be rented to a tenant. The First and Second
Notices informed tenants that St. Jones was changing from a
manufactured home park to an "apartment style lease
February 14, 2017, Appellants filed a Verified Complaint,
Motion for Expedited Proceedings, and Motion for Preliminary
Injunction against Appellees. The injunction request sought
to stop the eviction of the Phase I and Phase II tenants,
stop all relocation payments from the Authority, and stop St.
Jones from doing any new construction to replace the current
manufactured homes with new ones. Appellants sought penalties
for Appellees alleged violations of the Manufactured Home
Owners and Community Owners Act
Court of Chancery heard oral argument on the Motion for
Preliminary Injunction on September 6, 2017. In its decision
on that motion, the Court of Chancery found: St. Jones'
intended change of the use of the land was a permissible
basis for terminating the tenants' leases under the Act;
the First and Second Notices complied with the Act;
Appellants failed to demonstrate irreparable harm; the
Association lacked organizational standing; and the
injunctive claims were moot as all tenants, including
Appellants Makdad and Waltz, because they had moved or were
in the process of voluntarily moving from St. Jones. The
parties then submitted, and the Court of Chancery approved, a
stipulation for entry of final judgment. This appeal
tenants in Phase I and Phase II of St. Jones, including
Appellants Makdad and Waltz, have relocated, with the
assistance of relocation funds made available by the
Authority. Relocation funds are paid under a statutorily
created program of state financial assistance to tenants who
have to relocate due to a change in the use of a manufactured
home community. The land-lease only to landlord-tenant change
has been completed.
review the denial of a motion for a preliminary injunction
under the abuse of discretion standard. However, we
review the Court of Chancery's legal conclusions de
novo. In order for the Court of Chancery to
issue a preliminary injunction the plaintiff must show: a
reasonable probability of success on the merits; that
irreparable harm will follow ...