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AYDT v. DE ANZA SANTA CRUZ MOBILE ESTATES

April 12, 1991

RAY AYDT, JOSEPH DE FRIER, DOROTHY KANTARSKI, CLIFFORD LLOYD and HOWARD YOUNT, Plaintiffs,
v.
DE ANZA SANTA CRUZ MOBILE ESTATES, a California limited partnership, Defendant


Harry D. Leinenweber, United States District Judge.


The opinion of the court was delivered by: LEINENWEBER

HARRY D. LEINENWEBER, UNITED STATES DISTRICT JUDGE

 Plaintiffs, residents of an Elgin mobile home park, filed a seven-count complaint seeking declaratory, injunctive relief, and damages on their own behalf and on behalf of approximately 1100 other park residents against defendant, De Anza Santa Cruz Mobile Estates ("De Anza"). On April 25, 1988, the court certified a class and three sub-classes of tenants depending on the form and dates of the leases they had signed. On February 24, 1989, the court granted plaintiffs' summary judgment motion on Counts III, IV, V, VI and VII of the amended complaint. Aydt v. De Anza Santa Cruz Mobile Estates, 708 F. Supp. 192 (N.D. Ill. 1989). *fn1"

 Summary judgment was based on the court's interpretation of the Illinois Mobile Home Landlord and Tenant Rights Act (the "Act"), Ill.Rev.Stat., ch. 80, § 201 et seq., which became effective on January 1, 1980. The Act was intended to protect mobile home park tenants in three relevant ways. First, the operator of the park must offer the tenant a written lease (Section 6); second, each lease was to be automatically renewable at its expiration unless terminated for reasons of tenant misconduct (Section 8); and third, the operator could not increase fees and rents unless the written lease clearly set forth the terms for payment of rent (Section 9). Because De Anza sought unilaterally to terminate leases entered into in 1981, and to impose new leases containing rental increases not provided for in the 1981 leases, the court found it in violation of the Act.

 This decision set off a burst of legislative activity that resulted in the enactment of an amendment to Section 9 of the Act, effective on January 1, 1990. This amendment provided that "rents charged to a tenant by a park owner may be increased upon renewal of a lease. Notification of an increase shall be delivered 60 days prior to expiration of the lease." Public Act 86-851 ("PA 86-851"). Based on this amendment and the floor debate (see Senate Transcript, 86th General Assembly, Reg. Sess., June 26, 1989), De Anza sought reconsideration contending that PA 86-851 should be applied retroactively. The court denied this motion holding that Section 9 of the Act was not ambiguous prior to the amendment and therefore the amendment could not be fairly called a clarification. Aydt v. De Anza Santa Cruz Mobile Estates, slip op., p. 7 (Feb. 20, 1990). Plaintiffs have now filed a motion and a supplemental motion for entry of a judgment based on their interpretation of the court's previous opinions. The proposed judgment covers a number of areas, the most important of which seeks to enjoin De Anza from imposing further rental increases on the plaintiff classes based on a market factor. De Anza has filed specific objections, the most important of which contends that PA 86-851 now permits De Anza to impose market rate rental increases upon renewal of plaintiffs' existing leases.

 Public Act 86-851

 Plaintiffs say that in spite of the amendment to Section 9, De Anza cannot unilaterally increase rents now because to do so would defeat the Act's remedial purpose and would be inconsistent with the language in the first paragraph of Section 9 requiring the rental terms be "clearly set forth" in the lease. The easy answer is that the clear intention of the legislature in amending Section 9 was to allow park operators to do precisely what plaintiffs claim would defeat the purpose of the Act, i.e., to have the uninhibited right to condition lease renewals on the acceptance of rental increases. While this reduces the Act's protection to tenants by giving park owners considerably more economic power over their operations, it involves a question of policy that properly lies with the legislature. Despite what this court considered clear language to the contrary, the legislative debate indicates that the sponsor of the Act never intended to afford this protection to park tenants, and it was the sole purpose of the sponsor of the amendment to restore power to the park owners. Senate Transcript, June 26, 1989.

 Plaintiffs next argue that even assuming the right to impose a rent increase exists as a result of PA 86-851, nevertheless, De Anza has waived its right to do so by failing to notify the tenants properly as required by the amendment, and the amendment's effective date (Jan. 1, 1990) was too late to help De Anza with respect to lease terminations occurring on December 31, 1989.

 The evidence shows that the leases in question all expired on December 31, 1989, and new proposed leases commenced on January 1, 1990. On October 25, 1989, more than 60 days prior to the lease expirations (and prior to the effective date of the amendment), De Anza sent letters to plaintiffs notifying them that their leases were set to expire on December 31, 1989, and that De Anza had "decided to terminate" the leases. Plaintiffs were invited to enter into new leases that reflected a new "higher" rental. On November 7, 1989, De Anza sent plaintiffs another letter stating that it was not De Anza's intention to terminate the leases but only to adopt "a new form of lease" subject to the new higher rents specified in the October 25 letter. Plaintiffs contend that this second letter vitiated the first and was untimely. De Anza answers that, taken together, the two letters clearly placed plaintiffs on notice that if they wished to stay they could do so only at a higher rent and this satisfied the purpose of the notice requirement by the amendment.

 Section 9, as amended, permits rental increases upon renewal of a lease so long as the tenant is notified of the proposed increase 60 days prior to the expiration of the lease. Section 8 prohibits a landlord from terminating a lease without specifying, in writing, the reason, which this court has held can only be tenant misconduct. Thus if the letter of October 27 was a notice to terminate, it was ineffective. However, this letter also included a notice of De Anza's willingness to enter into a new lease with each tenant. This, under Illinois law, is considered to be an offer of "renewal". Sanni, Inc. v. Fiocchi, 111 Ill. App. 3d 234, 66 Ill. Dec. 945, 951, 443 N.E.2d 1108 (2nd Dist. 1982) ("Renewal is a 'demise' for [a] period with a privilege for a new lease for [an] extended term"). In other words, a tenant is in possession of the premises for a specific term pursuant to a written lease. At the end of the term, the written lease for that specific term ceases and is replaced by a written lease for a new term, i.e., the right to possession is "renewed". Looked at in this way, the letters of October 25 and November 7 say basically the same thing: the tenant has the right to remain on the premises for an additional period of time under a new lease agreement at a higher rent.

 The fact that the notice was served prior to the effective date of the amendment would not effect the validity of the notice. The amendment was signed into law by the governor on September 7, 1989. It was a valid law as of that date even though its provisions were not effective until January 1, 1989. See Ill.Rev.Stat., ch. 1, § 1201. By its clear language the amendment specifies that a park owner may raise rents if he has performed the condition precedent of sending a 60-day notice to his tenant of his intention to do so. Because his right to raise rent did not accrue until January 1, 1990, he could not raise rent until the later of the date the lease is renewed or January 1, 1990.

 The final argument presented by plaintiffs, first raised in their reply brief, is that applying PA 86-851 to plaintiffs would unconstitutionally impair their lease agreements contrary to the impairment of contract clauses of Article I, Section 10 of the Constitution of the United States, and Article I, Section 16 of the Illinois Constitution of 1970. The thrust of this argument is plaintiffs' contention that De Anza allowed the leases expiring on December 31, 1989 to renew automatically. Thus, applying the amendment to allow a rent increase would be to use the amendment to impair the plaintiffs' contract right to have the rental continue under the automatically renewed old lease. However, this argument begs the question. If De Anza allowed the leases to renew automatically at the previous rental, it then would not be entitled to impose an increase under the amendment to Section 9. If De Anza did not allow the leases to renew automatically, then it was free to impose an increase under the amendment to Section 9 if it notified plaintiffs properly. The relevant provision of plaintiffs' leases read as follows:

 
Upon the expiration of the original term of this lease, it shall automatically be extended for successive one year periods unless resident or De Anza notifies the other in writing not less than thirty days prior to the expiration of the original or any succeeding term that the lease will not be automatically renewed.

 The obvious meaning of De Anza's two letters was that it did not intend to renew the leases automatically. Both of the letters were sent more than 30 days prior to the expiration of the term of the lease, which was on December 31, 1989. Accordingly, the leases were not automatically extended ...


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