Velicky v. Copycat Bldg. LLC

476 Md. 435

264 A.3d 661

Anna VELICKY

v.The COPYCAT BUILDING LLC

Christopher Walke

v.The Copycat Building LLC

No. 2, Sept. Term, 2021

Court of Appeals of Maryland.

November 29, 2021

Argued by Douglas Edward Nivens, II (Theodosia Saffo, Legal Aid Bureau, Inc., Baltimore, MD), on brief, for Petitioner Anna Velicky.

Argued by Lee H. Ogburn (Douglas Edward Nivens, II and Theodosia Saffo, Legal Aid Bureau, Inc., Baltimore, MD), on brief, for Petitioner Christopher Walke.

Argued by Herbert Burgunder, III (Alexandra L. Neifert, Rimon, P.C., Baltimore, MD), on brief, for Respondent The Copycat Building LLC.

Amici Curiae the Public Justice Center, Homeless Persons Representation Project, Inc., and Pro Bono Resource Center of Maryland: Michael R. Abrams, Murnaghan Appellate Advocacy Fellow, Zafar S. Shah, Esq., Public Justice Center, 201 N. Charles Street, Suite 1200, Baltimore, MD 21201.

Amicus Curiae Maryland Multi-Housing Association, Inc: Avery Barton Strachan, Esq., Kerri L. Smith, Esq., Silverman, Thompson, Slutkin & White, 201 N. Charles Street, Suite 2600, Baltimore, MD 21201.

Argued before: Getty, C.J.; McDonald, Watts, Hotten, Booth, Biran, Sally D. Adkins (Senior Judge, Specially Assigned), JJ.

Booth, J.

In the instant cases, we are being asked to judicially foreclose a landlord's right to use a statutory remedy provided by the Legislature to seek the return of the landlord's possessory interest in real property at the expiration of a residential tenancy where the landlord does not have a current rental license.

The Appellee, Copycat Building, LLC ("Copycat") is a property owner who does not have a current rental license, which is required under the Baltimore City Code of Public Laws, to provide residential rental housing. The Appellants, Anna Velicky and Christopher Walke, reside in Copycat's building as month-to-month tenants. After Copycat provided the Appellants with a 60-day written notice to quit, and the Appellants refused to vacate the premises, Copycat filed tenant holding over actions in the District Court sitting in Baltimore City pursuant to Maryland Code (1974, 2015 Repl. Vol., 2021 Supp.), Real Property Article ("RP") § 8-402 (the "tenant holding over statute"). In both instances, after an appeal, the Circuit Court for Baltimore City determined that Copycat met the requisite statutory elements under the tenant holding over statute and ordered that possession of the property be returned to Copycat.

The Appellants each filed a petition for writ of certiorari asking this Court to hold, based on principles of public policy, that the tenant holding over statute is unavailable to an unlicensed landlord seeking a writ of possession of the landlord's property after the expiration of a tenancy. For the reasons set forth herein, we decline to adopt such a holding as we determine that the Legislature, through its enactment of a comprehensive statutory framework governing residential landlord and tenant relations, has achieved the balance between a landlord's right to recover the landlord's property interest at the conclusion of a tenancy and a tenant's right to safe and habitable housing conditions during the tenancy. We explain the reasons for our decision herein.

IFactual Background and Procedural History

Under the applicable provisions of the Baltimore City Code, a person may not rent or offer to rent a residential dwelling unit¹ without a rental license issued by the Baltimore City Housing Commissioner. Baltimore City Code ("BCC") Art. 13, § 5-4. The code provisions also prohibit a landlord from charging, keeping, retaining, or collecting rent payments unless the landlord has a rental license. Id. Rental licenses issued under the BCC are for a term of 1-year, 2-years, or 3-years, depending on certain "risk factors" outlined in the Code. BCC Art. 13, § 5-9. As a prerequisite to the issuance of an initial license or a renewal license, the unit must pass an inspection that certifies compliance with various housing codes. BCC Art. 13, § 5-7. Violators of the rental license law may be subject to criminal and civil penalties, including a daily fine of $1,000.00 for every day that the violation continues. BCC Art. 13, §§ 5-25, 5-26.

Copycat owns 1501 Guilford Avenue in Baltimore, which is improved with a large industrial warehouse building that was originally constructed in 1897 (the "Copycat Building" or "Building"). Considered a landmark in the Baltimore arts community, the industrial warehouse was converted into residential artist lofts that are rented to artists and musicians in the city's Station North Arts and Entertainment District.² The instant cases concern the month-to-month tenancies of two tenants, Anna Velicky and Christopher Walke, who occupy rental units in the Copycat Building.

The Copycat Building and property are owned by Copycat Building LLC, a Maryland limited liability company. The sole member of the company is Charles A. Lankford, who owned the property prior to conveying it to the limited liability company in July 2018. Prior to the change in ownership from Lankford to the single member LLC, and at the time when Appellants commenced their respective tenancies, the Building had a rental license. According to Copycat, the conveyance of the property from Lankford to Copycat triggered the loss of the rental license issued by Baltimore City.

On December 5, 2019, the Baltimore City Department of Housing and Community Development ("Department") issued Copycat two citations and associated fines—a citation and $100.00 fine for failing to complete an annual registration statement for the property, and a citation and $1,000.00 fine for failing to obtain a rental license from the Department. According to Copycat, since it learned of the lapse in its rental license at the end of 2019, it has been trying to renew the license.³ The Property is current on its property registration.⁴

A. Walke Tenancy in the Copycat Building and Copycat's Holding Over Suit

Appellant, Christopher Walke ("Walke"), moved into the Copycat Building in February 2017 pursuant to the terms of a written lease. On or around March 6, 2019, Walke moved into a different apartment in the Building. In connection with this internal move, Walke requested to live in the apartment on a month-to-month basis. When Walke changed units, Copycat did not offer Walke a written lease. Accordingly, under state law, because there was no written agreement (notwithstanding Walke's request for a month-to-month tenancy), the term of Walke's tenancy was presumed to be one-year from the date of first occupancy—through March 5, 2020.⁵

On May 24, 2020, Copycat sent Walke written notice of termination of his month-to-month tenancy and a 60-day notice to vacate his apartment on or before August 1, 2020. Walke did not vacate the apartment by August 1. When Walke did not vacate the apartment by that date, Copycat filed a Complaint for Tenant Holding Over in the District Court pursuant to RP § 8-402 seeking to regain possession of the apartment.

Prior to trial, Walke filed a motion to dismiss the complaint based upon Copycat's lack of licensure. The District Court denied Walke's motion, and the case proceeded to trial. The District Court declined to enter judgment for possession of the apartment, finding that, without a written lease, Copycat failed to satisfy its burden of proving under RP § 8-402 that the lease had expired.

On October 1, 2020, Copycat filed an appeal with the Circuit Court for Baltimore City. Prior to trial, Walke filed a motion to set an on-the-record appeal, contending that the appeal to the circuit court should be on the record, as opposed to a de novo proceeding. Walke also filed a motion to dismiss the complaint based upon Copycat's failure to have a rental license.⁶ Both motions were denied by the circuit court. On December 2, 2020, the circuit court held a de novo hearing and granted judgment for possession to Copycat.

Walke filed a petition for writ of certiorari , which this Court granted on March 5, 2021. The petition requested that we answer the following question, which we have rephrased as follows:⁷

Whether a landlord who does not have a current rental license may seek repossession of the landlord's property pursuant to the tenant holding over statute, Maryland Code, Real Property Article § 8-402, at the expiration of the tenancy?

As we explain infra , we decline to adopt the holding requested by the Appellants that would preclude the availability of the statutory remedy under these circumstances.

B. Velicky's Tenancy in the Copycat Building and Copycat's Holding Over Suit

Appellant, Anna Velicky ("Velicky") moved into an apartment in the Copycat Building in December 2015, where Velicky lived with five other co-tenants. Velicky executed a written lease for the apartment on August 1, 2017. Under the terms of the written lease, the lease term expired on July 31, 2018. Thereafter, Velicky became a month-to-month tenant.

On April 30, 2020, Copycat sent Velicky written notice of termination of Velicky's month-to-month tenancy and a 60-day notice to vacate the apartment on or before July 1, 2020. After Velicky did not vacate the apartment, on August 6, 2020, Copycat filed a Complaint for Tenant Holding Over in the District Court pursuant to RP § 8-402 seeking to regain possession of the apartment.

On September 22, 2020, the District Court held a hearing on Copycat's tenant holding over complaint. Prior to trial, Velicky filed a motion to dismiss based upon Copycat's lack of licensure.⁸ Velicky argued that under this Court's decision in McDaniel v. Baranowski , 419 Md. 560, 19 A.3d 927 (2011), Copycat could not utilize the courts to obtain possession of its property because it did not have a rental license. The court denied Velicky's motion, concluding that McDaniel did not involve a tenant holding over proceeding and had no application to the case before it. After proceeding with the trial, the District Court entered judgment in favor of Velicky,...