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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. or subject indices. Interior Regional Housing Authority v. James (10/8/99) sp-5187

Interior Regional Housing Authority v. James (10/8/99) sp-5187

     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.



             THE SUPREME COURT OF THE STATE OF ALASKA
                                 

INTERIOR REGIONAL HOUSING     )
AUTHORITY,                    )    Supreme Court Nos. S-8493/8563
                              )
            Appellant and     )    Superior Court No.
            Cross-Appellee,   )    4FA-96-2153 CI
                              )
     v.                       )    O P I N I O N
                              )
DENISE G. JAMES, as Personal  )    [No. 5187 - October 8, 1999]
Representative of the Estate  )
of CHANCE C. CARLO, and as    )
Mother and Next Friend of     )
RAVEN CARLO, a minor, and     )
personally for herself,       )
                              )
            Appellees and     )
            Cross-Appellants. )
______________________________)




          Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
                  Niesje J. Steinkruger, Judge.


          Appearances: Tracey L. Knutson, Sisson &
Knutson, P.C., Anchorage, for Appellant and Cross-Appellee. 
Michael A. Stepovich and Allen F. Vacura, Fairbanks, for Appellees
and Cross-Appellants.


          Before:  Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.  


          FABE, Justice.


I.   INTRODUCTION
          In 1988 Denise James moved into a home in Fort Yukon
under a home ownership opportunity program.  Seven years later, she
lost the home in a fire that killed her son Chance and injured
James and her daughter Raven.  James sued Interior Regional Housing
Authority (IRHA), the coordinator of the home ownership project,
for negligence and wrongful death.  IRHA defended on the ground
that the home ownership agreement signed by James placed the duty
of maintenance on James.  The trial court concluded that the
Landlord Tenant Act governed this case and imposed the duty of
maintenance on IRHA as a landlord.
          IRHA appeals the court's determination that this case
falls under the Landlord Tenant Act.  James cross-appeals,
maintaining that the court erred in refusing to allow her to
present the alternative theory that IRHA voluntarily assumed the
duty of maintenance.  Although we conclude that the Landlord Tenant
Act does not apply to this case, we remand for a new trial on
whether IRHA may have voluntarily assumed a duty of maintenance and
repair.  
II.  FACTS AND PROCEEDINGS
          The Interior Regional Housing Authority provides housing
services to at least forty-three Alaska Native tribes and thirty
villages in the Interior region.  In May 1985 IRHA, with
supplemental funding from the Department of Housing and Urban
Development (HUD), contracted to construct a mutual help home
ownership project in Fort Yukon:  Design Lab, Inc. served as the
architect; KHO Construction, Inc. was the primary contractor for
the homes; and KHO subcontracted with Tundra Mechanical, Inc. for
installation of the heating systems.
          Upon the Fort Yukon housing project's completion in
October 1988, Denise James signed a Mutual Help and Occupancy
Agreement (MHO agreement) with IRHA and moved into a home in the
project.  The agreement provides that "[IRHA] will give the
Homebuyer an opportunity to achieve ownership of a Home in the
Project in return for fulfilling [her] obligations to make a
contribution to the development of the Project, to make monthly
payments based on income, and to provide all maintenance of the
Home."  Section 3.2 of the agreement further explains that "[t]he
term of the Homebuyer's lease . . . shall expire when the Initial
Purchase Price has been fully amortized in accordance with the
Homebuyer's Purchase Price Schedule . . . unless this Agreement is
previously terminated or the Homebuyer previously acquires
ownership of the Home."  The agreement provided that IRHA would
credit any amount of James's monthly payment that exceeded the
administrative charge to an equity payments account.  Although the
MHO agreement assigned James the responsibility for the maintenance
of her home, the agreement also obligated IRHA to inspect the home
at least every three months during the contractor's warranty
period.
          Soon after the Fort Yukon homes were completed, many
occupants complained to IRHA about difficulties with the heating
system.  In particular, the occupants complained that a significant
amount of cold air was coming into the homes.  HUD, IRHA, Design
Lab, KHO, and Tundra Mechanical all collaborated on how to solve
the problem.  IRHA then had the furnaces modified and repaired in
accordance with the Uniform Mechanical Code.  IRHA performed annual
inspections of all Fort Yukon homes until at least July 1994.  In
response to several complaints from James about her furnace in the
fall of 1994, IRHA arranged for additional furnace repairs and
charged James for its costs.
          In February 1995 a fire broke out in James's home. 
James's son, Chance, was killed in the fire, and James and her
daughter, Raven, received severe burns.
          James, individually, as representative of Chance's
estate, and as guardian of Raven, sued IRHA, KHO Construction,
Design Lab, and Tundra Mechanical for negligence and wrongful
death. [Fn. 1]  James contended in her complaint that "the heating
system was inadequate to safely heat the premises, the furnace and
furnace room did not meet building codes and [were] otherwise
inadequately vented, and the design and construction of the house
did not allow for a safe escape from the fire."  She further
alleged that IRHA breached its duty to provide safe and habitable
premises under the Landlord Tenant Act and Alaska's common law.
          IRHA moved for summary judgment, claiming that the MHO
agreement placed the duty of maintenance and repair on James. 
James also moved for partial summary judgment, asserting that the
Uniform Residential Landlord Tenant Act imposed that duty on IRHA. 
The trial court denied IRHA's motion for summary judgment and
granted James's motion, ordering that "for the reasons set forth
orally on the record 9/26/97 the [MHO agreement] provisions as
applied to this case will be treated as a lease agreement subject
to the provisions of the Uniform Landlord Tenant Act, A.S.
34.03.010 et seq."
          The jury found that both IRHA and James were negligent
and that both were legal causes of the plaintiffs' damages; it
apportioned eighty percent of the fault to IRHA and twenty percent
of the fault to James.  IRHA appeals the trial court's ruling that
the Landlord Tenant Act governs this case.  James cross-appeals,
maintaining that the court should have allowed James to argue
alternatively at trial that IRHA voluntarily assumed the duty of
repairing the furnace.  
III. DISCUSSION
     A.   The Trial Court Erred in Ruling that IRHA Has a Duty of
Maintenance under the Landlord Tenant Act.

          The trial court agreed with James that the court should
treat the MHO agreement as a lease subject to the Uniform
Residential Landlord Tenant Act [Fn. 2] (Landlord Tenant Act). [Fn.
3]  IRHA maintains that the federally mandated MHO agreement
determines the relationship between James and IRHA and places
responsibility for maintenance of her Fort Yukon home, including
its furnace and smoke detectors, on James.
          As part of the Indian Housing Act, [Fn. 4] Congress
established a mutual help home ownership opportunity program
"designed to meet the homeownership needs of Indian families on
Indian reservations and other Indian areas."[Fn. 5]  Under the
home ownership program, the Secretary of Interior through HUD could
enter into contracts with Indian housing authorities to provide
financial assistance for the development and operation of single-
family home projects. [Fn. 6]  To receive federal financial
assistance, the Indian housing authority needed to require that
each selected family enter into a mutual help and occupancy
agreement. [Fn. 7]  Under federal law that agreement had to require
that "[t]he family shall be responsible for the maintenance and
monthly utility expenses of the dwelling."[Fn. 8]  The Act also
required that housing authorities develop a procedure to "ensur[e]
the timely periodic maintenance of the dwelling by the family"[Fn.
9] and provide "an opportunity [for the family] to purchase the
dwelling under a lease-purchase, mortgage, or loan agreement."[Fn.
10]  Alaska Statute 18.55.998 also authorizes supplemental housing
development grants if the housing authority has obtained approval
for a federal loan or grant through HUD. [Fn. 11]  
          Despite the many federal and state regulations governing
the mutual help home ownership program, none explicitly addresses
the legal relationship between the housing authority and the
homebuyer once they have contracted under the mutual help and
occupancy agreement.  In order to decide whether IRHA retains a
duty of maintenance under the agreement and can be liable for the
Jameses' injuries, we must determine whether the agreement places
the homebuyer in a lease or an installment land contract. [Fn. 12] 
The Landlord Tenant Act covers a lease and requires that IRHA, as
landlord, bear the duty of maintenance.  On the other hand, an
installment land contract gives the homebuyer equitable title and
responsibility for maintenance of her own home.
          James maintains that the MHO agreement is predominantly
a lease or lease with option to purchase rather than an installment
sale contract because she never acquired any equity in the home. 
Although we have never addressed specifically the legal
relationship that exists between the housing authority and a
homebuyer under an MHO agreement, we have examined the implications
of an MHO agreement in the context of a forcible entry and detainer
action.  In Kopanuk v. AVCP Regional Housing Authority, [Fn. 13]
the homebuyer "asserted that the contract was not a lease with an
option to purchase, but rather an installment contract for sale of
real property."[Fn. 14]
          While recognizing that the agreement described itself as
a lease, [Fn. 15] this court characterized it as a "hybrid
contract"[Fn. 16] that included provisions typical of both a lease
with option to purchase contract [Fn. 17] and an installment
contract. [Fn. 18]  We concluded that the housing authority could
not maintain a forcible entry and detainer action against the
homebuyer because the agreement created equitable interests in the
homebuyer under state law: [Fn. 19]
          [W]e need not determine the exact label to be
applied to the contract, as we conclude that the contract creates
equitable interests, or potential equitable interests, in the
homebuyer . . . .  One of the justifications for [forcible entry
and detainer] actions is the lack of equity held by the tenant-in-
possession. . . .  Equity may exist in fact since the "homebuyer"
has put up land for a "down payment."  Furthermore, a person who
maintains property over a period of years may have equity in the
appreciated value of that property.[ [Fn. 20]]  
Thus, our decision in Kopanuk determines that a court should treat
a homebuyer under the mutual help occupancy program as a homeowner
with equitable title.
          Here, the trial court acknowledged our analysis in
Kopanuk but found that the Landlord Tenant Act could apply to
specific provisions of the agreement that resembled a lease. 
Reasoning that the maintenance provisions were more characteristic
of those found in a lease than in an installment contract, the
court found that the Landlord Tenant Act controlled these
provisions of the agreement.  Since AS 34.030.040 [Fn. 21] prevents
a landlord or tenant from waiving the rights and remedies under the
Landlord Tenant Act, the trial court concluded that the MHO
agreement provisions assigning responsibility for maintenance to
James were unenforceable [Fn. 22] and therefore that the duty of
maintenance remained with IRHA.
          But as IRHA argues, federal law preempts any attempt to
interpret the maintenance provisions of the MHO agreement under the
Landlord Tenant Act.  Federal law preempts state law if Congress
expressly or implicitly declares the state law preempted or "if the
state law conflicts with the federal law to the extent that (a) it
is impossible to comply simultaneously with both or (b) the state
regulation obstructs the execution of the purpose of the federal
regulation."[Fn. 23]  In determining whether state law is
preempted, we look to the "policy, intent, and context of the
federal statute."[Fn. 24] 
          In enacting the Indian Housing Act, Congress explicitly
required that any housing authorities seeking financial assistance
include a provision in the MHO agreement that places responsibility
for the maintenance of the dwelling on the family. [Fn. 25] 
Federal regulations expressly provide that "[t]he homebuyer shall
be responsible for all routine and nonroutine maintenance of the
home, including all repairs and replacements."[Fn. 26]  Thus, the
Indian Housing Act and its imposition of the duty of maintenance on
the homebuyer directly conflicts with the Landlord Tenant Act's
imposition of that duty on the landlord.  Accordingly, the Landlord
Tenant Act cannot control this aspect of the mutual help and
occupancy agreement because federal law preempts it, and the trial
court erred in ruling that the Landlord Tenant Act imposed a duty
of maintenance on IRHA, rather than on James, the homebuyer. 
     B.   The Trial Court Erred in Refusing to Allow James to
Present the Alternative Theory that IRHA Assumed a Duty of
Maintenance.

          James argues on cross-appeal that the trial court erred
in refusing to allow her to present at trial the alternative theory
that IRHA voluntarily assumed the duty of repairing the furnace.
Because of its ruling that the Landlord Tenant Act applied to IRHA,
the trial court decided that the issue was moot and did not allow
James to pursue this argument at trial.  But given our conclusion
that the trial court erred in finding IRHA had a duty of
maintenance under the Landlord Tenant Act, we must consider James's
alternative theory that IRHA voluntarily assumed a duty to repair
and maintain the furnace.
          As James notes, we held in Adams v. State [Fn. 27] that
"the state [can] assume[] a common law duty by its affirmative
conduct."[Fn. 28]  In Adams, state fire officials inspected a
hotel for fire risks and discovered conditions that created an
"extreme life hazard."[Fn. 29]  The state officials never provided
further guidance to the hotel in remedying the problems, and eight
months later several guests were either killed or injured in a fire
at the hotel. [Fn. 30]  In response to the state's contention that
it did not owe a duty of care to the injured plaintiffs, this court
held that "once an inspection has been undertaken the state has a
further duty to exercise reasonable care in conducting fire safety
inspections, and that liability will attach where there is a
negligent failure to discover fire hazards which would be brought
to light by an inspection conducted with ordinary care."[Fn. 31] 
          Similarly, in Smith v. State [Fn. 32] we concluded that
the state not only assumed a duty to repair a water pump but may
have also assumed a duty to remedy a larger fluoride problem in the
town of Hooper Bay's water supply.  In Smith, the state planned to
replace water system equipment in order to decrease excessive
fluoride levels in a municipal water system.  As a first step, the
state  repaired a fluoride pump at a township wellhouse. [Fn. 33] 
A few weeks after replacement of the pump but before the beginning
of the rehabilitation project, a resident died from fluoride
poisoning. [Fn. 34]  The state conceded that it assumed a duty to
use reasonable care in repairing the pump but disputed that it
assumed a broader duty to remedy the fluoride problem. [Fn. 35] 
Even though the township was responsible for the system, we
concluded that, by voluntarily taking action on it, the state may
have assumed certain duties to individuals who rely on the water
system:
          The repair of the pump may have been a
complete undertaking in and of itself, or it may have been the
initiation of a broader undertaking to resolve the fluoride
problem. . . .

          . . . A reasonable person could infer, from
the evidence in the record, that the State had undertaken to
resolve the fluoride problem, thereby assuming a duty towards [the
plaintiff] and other Hooper Bay water users to complete this
undertaking in a non-negligent manner.[ [Fn. 36]]

          Here, IRHA may have assumed not only a narrow duty to
repair James's furnace but also a broader duty to discover and
remedy any future problems with it.  When it received complaints
about serious defects in the heating systems of the Fort Yukon
homes upon their completion in 1988, IRHA arranged and paid for all
necessary modifications to the heating systems.  While the extent
of its duty may have only been to use reasonable care in repairing
the furnace, IRHA may have voluntarily broadened its duty by
engaging in ongoing maintenance and repair.  Not only did IRHA
inspect all Fort Yukon homes at least every three months during the
contractor's warranty periods and annually thereafter until at
least June 1994, but it also served as James's contact person and
arranged for the repair of many, if not all, of her maintenance
problems from the beginning of her contract.  Thus, IRHA may have
voluntarily assumed a duty to inspect for hazardous problems with
the furnace and may be liable for negligent failure to discover and
remedy such conditions.  Accordingly, we reverse and remand for
trial on this issue. [Fn. 37]
IV.  CONCLUSION
          Because the MHO agreement assigns the duty of maintenance
to James, we REVERSE the trial court's ruling that the Landlord
Tenant Act imposed a duty of maintenance on IRHA.  But because we
conclude that the trial court erred in refusing to allow James to
pursue her voluntary assumption of duty argument, we REMAND for a
new trial. [Fn. 38]


                            FOOTNOTES


Footnote 1:

     KHO Construction and Design Lab were defunct entities when
James filed suit and did not participate in the litigation process. 
Although Tundra Mechanical litigated at the trial level, it is not
involved in this appeal because the jury found that it was not
negligent.


Footnote 2:

     See AS 34.03.010 et seq.



Footnote 3:

     We review de novo an order granting summary judgment.  See 
Jackinsky v. Jackinsky, 894 P.2d 650, 654 (Alaska 1995).


Footnote 4:

     Former 42 U.S.C. sec.sec. 1437aa et seq. (1994) (repealed
1996). 
Although Congress has repealed the home ownership portion of the
Indian Housing Act, it has enacted a similar Native American
Housing Assistance and Self-Determination Act, 43 U.S.C. sec. 4101
et
seq.  But because this action accrued under the former statute, we
analyze this issue using the former version.


Footnote 5:

     Id. sec. 1437bb(a).


Footnote 6:

     See id. sec. 1437bb(b)(1) & (c)(1).


Footnote 7:

     See id. sec. 1437bb(e).


Footnote 8:

     Id. sec. 1437bb(e)(3).


Footnote 9:

     Id.


Footnote 10:

     Id. sec. 1437bb(e)(4).


Footnote 11:

     See AS 18.55.998(b).


Footnote 12:

     This court applies its independent judgment when reviewing
interpretation of a contractual agreement.  See Kopanuk v. AVCP
Reg'l Hous. Auth., 902 P.2d 813, 816 (Alaska 1995).


Footnote 13:

     902 P.2d 813 (Alaska 1995).


Footnote 14:

     Id. at 815.


Footnote 15:

     See id.


Footnote 16:

     Id. at 817.


Footnote 17:

     To support its claim that the MHO agreement was a lease/option
contract, the housing authority in Kopanuk relied on several
provisions of the agreement, including provisions that listed
homebuyer obligations similar to those under the Landlord Tenant
Act, such as terms that allowed the housing authority to change the
variable monthly payments at its discretion, required counseling
and inspection, mandated income reports, restricted who may reside
in the home, disallowed subletting or assignment, controlled
insurance, and detailed termination procedures.  See id. at 817.


Footnote 18:

     The homebuyer in Kopanuk cited several contractual provisions
to bolster his claim that the MHO agreement was an installment
contract, including provisions that used the word "homebuyer"
throughout the agreement, required a non-refundable contribution of
land, established equity accounts for holding excess payments,
required no additional payment to exercise the purchase option if
exercised after 25 years, granted the tenant the ability to
purchase the home before the price dropped to zero, and stated that
the homebuyer "must purchase"the home if certain conditions are
met.  See id. at 816-17.


Footnote 19:

     Id. at 817 & n.4.


Footnote 20:

     Id. at 817.  Our analysis here is in accordance with that of
several tribal courts that have prohibited forcible entry and
detainer actions against MHO agreement-protected homebuyers.  See,
e.g., Cole v. Kaw Hous. Auth., 4 Okla. Trib. 362, 383-84 (Kaw D.
Ct. 1995); Sac and Fox Hous. Auth. v. McKosato, 2 Okla. Trib. 316,
326-28 (Sac & Fox 1991).  One tribal court specifically held that
"during the term of the MHO Agreement, the Homebuyer holds the
premises for all practical purposes in equitable ownership." 
McKosato, 2 Okla. Trib. at 327.


Footnote 21:

     AS 34.03.040(a) prohibits certain provisions in a rental
agreement:

          (a)  A rental agreement may not provide that
the tenant or landlord

               (1)  agrees to waive or to forego rights
or remedies under this chapter; 

               (2)  authorizes a person to confess
judgment on a claim arising out of the rental agreement;

               (3)  agrees to the exculpation or
limitation of any liability of the landlord or tenant arising under
the law or to indemnify the landlord or tenant for that liability
or the costs connected with it; 

               (4)  agrees to pay the landlord's
attorney fees.


Footnote 22:

     See AS 34.03.040(b) ("A provision prohibited by (a) or (c) of
this section included in a rental agreement is unenforceable.").


Footnote 23:

     In re J.R.B., 715 P.2d 1170, 1172 (Alaska 1986).


Footnote 24:

     Webster v. Bechtel, Inc., 621 P.2d 890, 897 (Alaska 1980)
(internal quotation marks omitted).


Footnote 25:

     See former 42 U.S.C. sec. 1437bb(e)(3) (1994) (repealed 1996).


Footnote 26:

     Former 24 C.F.R. sec. 950.428(d)(1) (1998).  Congress removed
this regulation from the C.F.R. effective April 13, 1998.  See
Implementation of the Native American Housing Assistance and Self-
Determination Act of 1996, 63 Fed. Reg. 12,349 (1998).


Footnote 27:

     555 P.2d 235 (Alaska 1976).


Footnote 28:

     Id. at 240.


Footnote 29:

     See id. (internal quotation marks omitted).


Footnote 30:

     See id. at 238-39.


Footnote 31:

     Id. at 240.  The legislature has since removed the possibility
of liability presented in such a situation.  See AS
09.65.070(d)(1); Wilson v. Municipality of Anchorage, 669 P.2d 569
(Alaska 1983).


Footnote 32:

     921 P.2d 632 (Alaska 1996).


Footnote 33:

     See id. at 633.


Footnote 34:

     See id. at 633-34.


Footnote 35:

     See id. at 634.


Footnote 36:

     See id. at 635.


Footnote 37:

     IRHA appeals several of the trial court's evidentiary rulings
and its determination of when prejudgment interest began to accrue. 
Because we vacate the judgment, we need not reach these issues.

          James argues on cross-appeal that the trial court erred
in reducing Chance's and Raven's damage awards by James's fault.
While we need not reach this issue, we note our recent decision in
Fancyboy v. Alaska Village Electric Cooperative. Inc., ___ P.2d
___, Op. No. 5153 (Alaska, August 13, 1999).  In Fancyboy, we held
that even if a non-negligent co-plaintiff bears no fault, AS
09.17.080 only permits  the court to enter judgment against a
defendant for its equitable share of the obligation and thus a
negligent co-plaintiff's fault can effectively reduce a non-
negligent co-plaintiff's recovery.  See id. at 12.


Footnote 38:

     We note that the trial court may not need to relitigate the
compensatory damages in this case.  In General Motors Corp. v.
Farnsworth, 965 P.2d 1209 (Alaska 1998), we concluded that even
when some aspects of a case must be relitigated, the compensatory
damage aspect of the verdict should stand on remand because the
trial court error did not taint that aspect.  See id. at 1222-23. 
While the court and the parties here proceeded under an improper
liability theory, James presented testimony of an economist who
calculated the amount of loss to the estate, and IRHA did not offer
an alternative amount.  Thus, it is up to the trial court to
determine if the presentation of new evidence at trial in support
of the theory of voluntary assumption of duty will affect the
amount of the compensatory damage award.  The question of "[w]hat
issues are to be relitigated upon remand, in the absence of a
directive from this court, is within the discretion of the trial
court."  Caterpillar Tractor Co. v. Beck, 624 P.2d 790, 795 (Alaska
1981).