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A Washington appellate court has considered whether a nonprofit trade group for mobile home park owners could be liable under the state’s consumer protection laws for creating a model lease form that did not conform to state law.
The Manufactured Housing Communities of Washington (“Nonprofit”) is a nonprofit corporation that represents over 500 mobile home park owners and managers in Washington. One of the services that the Nonprofit provides to its members is the creation of model forms, such as leases.
In 1998, Echo Lake Associates (“Owner”) began using the 1997 lease form (“Form”) created by the Nonprofit at the Holiday Resort Mobile Home Park (“Park”), a mobile home park owned by the Owner. Under Washington law, mobile home landlords must give their tenants a one-year rental term which automatically renews for another year unless the tenant expressly waives this right in writing. However, the Form stated that unless tenant requests renewal prior to the expiration of the one year term, the tenant would automatically convert to a month-to-month lease, waive the automatic renewal for a one-year term right, and also waive the statutory right to revert back to a one-year term in the future.
A Park tenant’s association as well as several individuals brought a lawsuit against the Owner and the Nonprofit, alleging violations of the state’s consumer protection laws because the Form did not conform with state law. The Owner reached a settlement with the plaintiffs, leaving only the Nonprofit in the case as a defendant. The trial court then dismissed the lawsuit, ruling that the tenants did not have standing to bring a lawsuit against the Nonprofit because they did not have a contractual relationship with the Nonprofit. The tenants appealed.
The Court of Appeals of Washington, Division 1, reversed the trial court and sent the case back to the lower court for further proceedings. The court first looked at whether the tenants had standing to bring a lawsuit for violations of the state’s consumer protection act against the Nonprofit. Standing is a judicially-created requirement designed to assure that a party bringing a lawsuit is the appropriate party to be requesting relief. Standing requires a showing by a party that it “has sustained or is in immediate danger of sustaining a direct injury as a result of that action.”
Looking at the consumer protection law, the court found that the law did not require a contractual relationship between the parties in order to allege violations of the law. The consumer protection act is designed to protect the public from unsavory business practices, and a practice or act in commerce which is a violation of a statute or regulation is one way a party can establish a claim under the consumer trade practices law. The tenants had properly alleged that the Form violated state law. Thus, the court ruled that the tenants had standing to bring a lawsuit against the Nonprofit for its Form.
Next, the Nonprofit argued that even if the tenants had standing to bring a lawsuit, the Form did not violate state law and also that the tenants cannot establish an injury under the state’s consumer protection law. The court did not agree with the Nonprofit. First, the court found that the Form did alter state law because it removed that automatic lease renewal term required by state law unless a tenant had explicitly requested the renewal provision, among other things. Second, the court found that there were questions of fact which needed to be considered for the alleged violations of the consumer protection law, such as whether the Form could deceive a “substantial portion of the public” and also whether the tenants suffered any harm because of the Form. Thus, the court sent the case back to the trial court for further proceedings.
Holiday Resort Cmty. Ass’n v. Echo Lakes Assoc., LLC, 135 P.3d 499 (Wash. Ct. App. 2006).