Weidner Prop. Mgmt. v. Cutsforth

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WEIDNER PROPERTY MANAGEMENT, LLC, a Washington limited liability company, d/b/a Riverside 9 Apartment Homes, Respondent, v. BRIAN CUTSFORTH and JENA KINCHELOE and all other occupants of 895 Riverside Dr., #D252, Wenatchee, Washington, Appellants.

No. 39121-3-III

Court of Appeals of Washington, Division 3

November 7, 2023

UNPUBLISHED OPINION

Fearing, C.J.

In 2021, the Washington legislature, in the face of the continuing COVID-19 pandemic, adopted RCW 59.18.630, designed to keep renters housed by requiring a landlord to offer a reasonable proposal for repayment of defaulted rent and to cooperate with an emergency rental assistance program. RCW 59.18.410(2), however, an older statute, does not require the landlord to agree to new lease terms as a condition to accepting rent payments from an emergency rental assistance program. We must resolve the tension between the two statutes. In this appeal, a landlord and tenants ask us to determine if the landlord's denial of new lease terms should be considered when assessing whether the landlord acted reasonably in offering a repayment plan under RCW 59.18.630 or whether RCW 59.18.410(2) excuses the landlord from otherwise accepting a reasonable offer from the tenants for repayment of the defaulted rent because a rental assistance program, from which the tenants seek aid, demands additional terms. We hold that the program's demand for new lease terms does not automatically excuse the landlord from accepting rental payments made using rental assistance but rather constitutes one factor for the trial court to consider when assessing the reasonableness of repayment proposals. We remand for further proceedings.

FACTS

On August 23, 2021, Brian Cutsforth and Jena Kincheloe, as tenants, and Weidner Property Management, LLC (Weidner), as landlord, entered a one-year lease running from September 7 2021 to September 6, 2022. The lease covered an apartment in Wenatchee. Tenants agreed to pay rent at $1,830 per month.

When Brian Cutsforth and Jena Kincheloe moved into the apartment Cutsforth worked as a night auditor at a La Quinta Inn, and Kincheloe served as a housekeeper at the same motel. Their collective income allowed payment of the apartment rent.

Illness struck within weeks of Brian Cutsforth and Jena Kincheloe moving into the apartment. Cutsforth was bedridden for seven weeks. Cutsforth tested negatively for COVID-19, but he suffered symptoms common for those stricken with the virus. Cutsforth could not taste food, faced weakness and exhaustion, and ran fevers. His high fevers prevented his working at his job and resulted in his loss of employment at LaQuinta.

Jena Kincheloe encountered symptoms of asthma. A physician diagnosed her with Chronic Obstructive Pulmonary Disease (COPD). The lung condition progressively worsened, and Kincheloe lost stamina. She could no longer perform her duties as a housekeeper and also lost employment. With both Kincheloe and Cutsforth unemployed, the couple could no longer afford to pay rent.

In December 2021, Brian Cutsforth and Jena Kincheloe submitted a Treasury Renat Assistance Program (T-RAP) rent payment agreement application form to the Washington State Department of Commerce (DOC). The submittal sought rent assistance for the months of October, November, and December 2021 in an amount totaling $5,280. Landlord Weidner also signed the application. With its signature, Weidner agreed to accept additional terms outlined on the form, which included accepting $5,067 as full satisfaction of Cutsforth and Kincheloe's past-due rent. DOC approved the application. DOC paid Weidner $5,067.

Brian Cutsforth and Jena Kincheloe defaulted on rent again in January 2022, and Weidner offered a rent repayment plan on January 7. Cutsforth and Kincheloe accepted the repayment plan on January 19. Cutsforth and Kincheloe made no additional payments after accepting the repayment plan, and, when they failed to pay rent yet again for the month of February, Weidner served a notice to pay or vacate. Under the Eviction Resolution Pilot Program (ERPP) requirements, outlined in RCW 59.18.660, Weidner needed to secure a certificate of participation with the program before proceeding with an unlawful detainer action. See RCW 59.18.660(5). A Wenatchee dispute resolution center issued the requisite certificate on March 28, 2022 after conducting mediation between the tenants and landlord.

On April 6, 2022, landlord Weidner offered tenants Brian Cutsforth and Jena Kincheloe another repayment plan. On that date, Cutsforth and Kincheloe owed $7,600.95 in back rent for January through April 2022. The plan required that Cutsforth and Kincheloe pay the past-due rent at a rate of $609.99 per month beginning on May 8, 2022 and on the eighth of each month thereafter. Payments would extend for thirteen months and end after the lease term expired.

Also on April 6, Brian Cutsforth and Jenna Kincheloe met with and sought from the Chelan-Douglas Community Action Council (CDCAC) emergency rental assistance. CDCAC contracted with DOC to administer Washington State's emergency rental assistance program.

Brian Cutsforth and Jena Kincheloe returned to Weidner a counteroffer that offered to repay past-due rent with emergency rental assistance from CDCAC and from a second organization in the event their remaining debt exceeded what CDCAC would cover. CDCAC conditioned payment of funds, however, upon Weidner signing an agreement that contained terms beyond the August 2021 lease terms between Weidner and tenants Cutsforth and Kincheloe. Among other new terms, Weidner needed to refrain from charging any late fees, withhold rent increases for six months, allow six months of occupancy except for serious lease violations, and supply CDCAC a copy of Weidner's lease agreement with Cutsforth and Kincheloe. Weidner refused to agree to the additional terms on which CDCAC conditioned receipt of the funding.

PROCEDURE

On May 9, 2022, Weidner Property Management filed an unlawful detainer complaint against Brian Cutsforth and Jena Kincheloe. The trial court initially scheduled a show cause hearing for May 27, but continued the hearing twice and until June 27.

Brian Cutsforth and Jena Kincheloe submitted a memorandum to the trial court in which they argued for dismissal of the unlawful detainer action because Weidner violated RCW 59.18.630(3)(c) by rejecting emergency rental assistance for repayment of past-due rent and because the April 2022 repayment plan offered by Weidner was not reasonable under RCW 59.18.630. Cutsforth and Kincheloe later counterclaimed for source of income discrimination in violation of RCW 59.18.255(4). Weidner replied that, under RCW 59.18.410(2) it had no obligation to accept new lease terms as a condition to accepting past-due rent from a third party and its rejection of the new lease terms lacked relevance when determining the reasonableness of repayment proposals under RCW 59.18.630.

On June 30, 2022, the trial court delivered an oral ruling on the issues raised at the May 27 hearing. The court remarked:

[THE COURT:] Issue number three. The non-acceptance of conditions of funding. And that deals-that issue deals with RCW 59.18.410. And specifically (2) of which I want to read the relevant portion of that. It says . . . the landlord shall accept any written pledge of emergency rental assistance funds provided to the tenant from a governmental or non-profit entity after the expiration of the pay or vacate notice if the pledge will contribute to the total payment of both the amount of rent due, including any current rent and other amounts if required under this subsection. . . . [B]y accepting such pledge of emergency rental assistance, the landlord is not required to enter into any additional conditions not related to the provisions of necessary payment, information and documentation.

And here, the Court-the evidence was presented that the-the Chelan Douglas Community Action Council proposal, the standard one, I think that they use-it appears to the Court in almost every case does have those additional conditions, specifically, the condition the landlord must accept not to move for eviction or do those types of proceedings for an additional six[-]month period. And the six[-]month period was an additional condition the court finds to-not related to the provision of necessary payment, information, and documentation.

And therefore, the Court is finding that RCW 59.18.410[(2)], provides the landlord with the authority to reject the rental assistance funds in this case from the Chelan Douglas Community Action Council.

Report of proceedings (RP) at 115-16.

THE COURT: . . . And then the-the other issue is the RCW 59.18.630. The objection was to or the issue was, did the repayment plan offered by the landlord in this case comply with that statute? Specifically, subparagraph well, all of that statute, basically. And the requirements, in part, are that any replacement plan entered into this-under the section must not require payment until 30 days after repayment is offered to the tenant, cover rent only and not only late fees, attorneys fees or other fees and charges, allow for payments of any source of income as defined in RCW 59.18.255 or from pledges by nonprofit organizations, churches religious institution or governmental entities. And there's other provisions as well, which I don't think are relevant in this case. I mean they are relevant, but the Court's finding is that the repayment plan that was offered, I think it might have been attached to the summons and complaint, it does comply with that statute.

And so, the Court is finding that the repayment plan that was offered by the landlords in this case complied with RCW 59.18.630. And that is the Court's

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