Canterbury Crossing Homeowners' Association, Inc. v. Canterbury Crossing MHC, LLC

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

CANTERBURY CROSSING )
HOMEOWNERS’ ASSOCIATION, )
INC., )
Appellant, )
)
v. ) C.A. No. K22A-04-002-NEP
)
CANTERBURY CROSSING )
MHC, LLC, )
)
Appellee.1 )

Submitted: October 28, 2024
Decided: November 6, 2024
Public Version Issued: November 19, 2024

OPINION

Upon Appeal from the Decision of the Arbitrator

AFFIRMED

Anthony V. Panicola, Esquire, and Olga K. Beskrone, Esquire, Community Legal
Aid Society, Inc., Dover, Delaware, Attorneys for the Appellant.

Robert J. Valihura, Jr., Esquire, David C. Zerbato, Esquire, and Caren L. Sydnor,
Esquire, Morton, Valihura & Zerbato, LLC, Greenville, Delaware, Attorneys for
the Appellee.

Primos, J.
1
Although the Notice of Appeal lists the Delaware Manufactured Home Relocation Authority
(the “Authority”) in the caption under the name of the appellee, Canterbury Crossing MHC,
LLC, neither the caption nor the Notice itself designates the Authority as an appellee, and the
Authority would not have been properly joined even had it been so designated. See 1 Del.
Admin. C. § 202-8; 25 Del. C. § 7054. Moreover, the Authority did not participate in the briefing
of this matter. Therefore, the Court has not listed the Authority in the caption.
Canterbury Crossing Homeowners’ Association appeals the decision of an
arbitrator approving an increase to market rent pursuant to the Rent Justification
Act.2 The appellant contends that the arbitrator made errors of law and based his
decision on insufficient evidence. The Court today determines that the arbitrator’s
decision was supported by substantial evidence and that any errors of law were
harmless. Therefore, the Court AFFIRMS his decision.

I. BACKGROUND3

A. Facts

Canterbury Crossing (the “Community”) is a 157-lot manufactured home
community near Felton, Delaware.4 The Community is owned by Canterbury
Crossing MHC, LLC (the “Landlord”).5 Canterbury Crossing Homeowners’
Association, Inc. (the “HOA”) represents residents of the Community.6 In the spring
and summer of 2021, the Landlord commissioned a contractor to alleviate flooding
in parts of the Community, including common roadways.7 The Landlord hired a
second contractor to regrade parts of the area affected by this work and to lay new

2
The Rent Justification Act (the “Act”) is a rent control statute that attempts to balance the interests
of community owners and of manufactured home owners renting lots from them. The Act limits
rent increases to the rate of inflation, absent one of eight justifications for increasing the rent
further. When one of these justifications is cited by a community owner, homeowners (or any
HOA acting on their behalf) may petition the Delaware Manufactured Home Relocation Authority
to appoint an arbitrator. The arbitrator’s determination of whether the above-inflation rent increase
is justified may be appealed to this Court. See Section III, infra.
Subsequent to the events giving rise to this appeal, the General Assembly amended the Act. See
83 Del. Laws ch. 341 § 4 (2022). Unless otherwise indicated, all references to the Delaware Code
are to the Code as it existed prior to this amendment.
3
Citations in the form of “A___” refer to a page of the Appendix to Appellant’s Opening Brief.
Citations in the form of “D.I. ___” refer to docket items.
4
A0581.
5
Id.
6
A0582.
7
A0371–73; A0379–80; A0383.
2
asphalt.8 The cost of the two projects totaled $33,212.90.9
On June 30, 2021, the Landlord mailed notices to homeowners of its intent to
raise each homeowner’s rent to a market price of $505.00 per month, plus 1.767%
of the prior rate (derived from the CPI-U10 inflation metric).11 The notices also
informed homeowners of their current rent, the new rate (to take effect on October
1, 2021), and that the Landlord would meet with them just under thirty days later,
on July 29, 2021, “to discuss the reasons for the increase.”12 The notices told
residents how to attend the July 29 meeting (telephonically or via Zoom video
conferencing) and receive hard copies of the Landlord’s presentation (from the
Community office).13
On July 1, 2021, the Landlord’s counsel notified the executive director of the
Delaware Manufactured Home Relocation Authority (the “Authority”) that “in
accordance with regulations, all affected tenants have been informed of a proposed
price increase.”14 This letter included an example of the notices sent to the
homeowners and a list of all homeowners affected, including their names and
addresses.15 This list did not include the current rent paid by each tenant. 16 The
Landlord’s counsel copied the HOA on the letter.17
Around the time that the contractors’ work was completed, the Landlord’s

8
A0374; A0381–82.
9
A0381–83; A0584.
10
“CPI-U” is shorthand for the measure ordinarily used to cap annual rent increases under the Act:
the “Consumer Price Index For All Urban Consumers in the Philadelphia-Wilmington-Atlantic
City area.” See 25 Del. C. § 7052(a); see also Section III, infra.
11
A0001–304.
12
Id.
13
Id.
14
A0343–48; A0595.
15
A0343–48; A0595–96.
16
A0343–48; A0595–96.
17
A0597.
3
counsel commissioned a “fair market rent analysis”18 from a certified real estate
appraiser19 (the “Appraiser”). The Appraiser’s report considered the rents charged
to the last ten households to enter the Community ($505.00 per month) as well as
rents charged at six other communities “within the competitive area” that “offer[ed]
similar facilities, service, amenities and management.”20 These communities’ rents
were then adjusted on the basis of six factors to better approximate an “apples-to-
apples” comparison.21 Through this analysis, the Appraiser concluded that the fair
market rent for lots in the Community ranged from $505.00 to $525.00 per month.22
The report did not consider any flooding issues in the Community: the Appraiser
stated that he was unaware of these issues, but that such knowledge would not have
affected his analysis.23 Neither did the report differentiate between leases of vacant
lots and leases of lots on which manufactured homes were already located.24
The Landlord’s July 29 PowerPoint presentation contained the following
information: the effective date of the increase;25 a brief explanation of the rent
justification process and the showing required of the Landlord;26 the basis on which
the Landlord was justifying the increase (market rent);27 why the Landlord believed
it had complied with the requirements of the Act;28 proof of the work done and

18
See A0437–96.
19
See A0497–98 (laying out the Appraiser’s resume and licenses); A0822–27 (excerpt from
hearing transcript covering the same). See also A0590 n.36 (noting that the Appraiser was
“qualified as [an expert] witness with no objection.”); accord A0827 (excerpt from transcript of
hearing in which the Appraiser was so qualified).
20
A0386; A0391–410; A0412.
21
A0406–09. These factors were “conditions of rental agreement,” “time” (i.e., changed market
conditions since the leases were signed), “location,” “quality,” “condition,” and “utilities included
in rent.” Id.
22
A0412.
23
A0593; A0887–88.
24
A0589–93.
25
A0352.
26
A0353–59; A0361–64.
27
A0360.
28
A0361–69.
4
expenses incurred;29 portions of the Appraiser’s report;30 and the residents’ right to
pursue arbitration.31 Following the meeting, the Landlord’s community manager
personally handed the president of the HOA a copy of the Landlord’s presentation.32
Despite the Landlord’s efforts to remedy the Community’s flooding issues,
both the community manager and representatives of the HOA agreed that the issues
remained partially unresolved.33 Witnesses gave different impressions as to whether
the situation had been improved by the contractors’ work, how extensive the
problem was, and whether the issue was intractable.34
Once the arbitration process commenced, the Landlord provided the HOA
with a copy of the notice letters sent to every affected address on June 30, 2021.35
A review of the homeowners’ prior rents, as listed in these letters, reveals that a rent
increase to $505.00 per month netted the Landlord an additional $74,322.36 per
year.36

B. Procedural History

The HOA, representing 97 sets of homeowners, filed a petition with the Authority

29
A0370–83.
30
A0384–412.
31
A0418.
32
A0953 (testifying to this effect).
33
A0960 (concession of the community manager to this effect); A1027 (testimony by HOA vice
president that the flooding was “worse” after the Landlord commissioned the contractors); A1121
(statement by the HOA president that the flooding was not improved).
34
A0939 (community manager’s statement that the drainage had been “improved”); A0960
(community manager’s testimony that there was “nothing that [could] be done” to address flooding
on residents’ lots); A1027, A1029–66, A1075–78 (HOA vice president’s discussion of the
continued flooding issues); A1121–23, A1126–29, A1135 (HOA president’s discussion of the
continued flooding issues).
35
A0001–304.
36
Id.
5
to challenge the rent increase, and the Authority appointed an arbitrator (the
“Arbitrator”).37 The parties engaged in limited discovery.38 Following a hearing,
the Arbitrator issued a decision on March 28, 2022, approving a rent increase to
$505.00 per month but denying an additional adjustment for the CPI-U.39
The HOA filed a notice of appeal to this Court on April 25, 2022.40 On June 7,
2022, the Court issued a stay of the appeal pending the issuance by the Superior
Court of a decision as to certain confidentiality issues in Ridgewood Manor MHC,
LLC v. Ridgewood Manor HOA, C.A. No. K21A-10-002 RLG (“Ridgewood
Manor”).41 Following the Court’s decision on confidentiality issues in Ridgewood
Manor, the parties entered into a stipulation and proposed order governing
confidential information, which the Court approved on November 10, 2022. 42
On April 6, 2023, the Court again stayed proceedings pending the Supreme
Court’s decision in Shady Park Homeowners’ Association, Inc. v. Shady Park MHC,
LLC.43 The Supreme Court decided Shady Park on October 31, 2023.44 Thereafter,
the parties stipulated to a briefing schedule, and briefing followed.45
Following the submission of briefs by the parties, the Court discovered that the
Authority had never filed the record with the Court and that, due to a clerical error

37
A0582.
38
Id.
39
A600–A0601. The Arbitrator found that the Landlord had not imposed the additional increase,
and that it had waived its argument on this point. Id. The Landlord has not challenged either
finding on appeal.
40
D.I. 1.
41
D.I. 13.
42
D.I. 18.
43
D.I. 24.
44
Shady Park Homeowners’ Ass’n, Inc. v. Shady Park MHC, LLC, 308 A.3d 168, 2023 WL
7151197 (Del. Oct. 31, 2023) (ORDER).
45
See D.I. 35–39, 41–42. Because this case is subject to an order governing confidential
information, the docket contains both public and sealed versions of filings—notably, the parties’
briefs—with and without redactions. See D.I. 18.
6
in the Prothonotary’s Office, this missing filing had not been previously identified.46
The Prothonotary’s Office reached out to the Authority regarding the missing filing,
and the Authority then filed what it purported to be the paper record in this case.47
However, the Authority subsequently informed Prothonotary staff that the Authority
was in possession of several hundred pages of additional material in electronic
format, also purportedly part of the record, that the Authority had no ability to print
out and file with the Prothonotary. A representative of the Authority then submitted
to the Prothonotary’s Office, without request from or authorization by that office, a
“thumb drive” purportedly containing the additional material in electronic format.
On September 17, 2024, the Court met with counsel for the HOA and the
Landlord and informed them of what had transpired regarding the status of the
record. The Court explained that it had not accessed the material on the “thumb
drive,” and could not do so pursuant to its normal procedures.48 The Court further
explained to counsel that it was imperative to define the record and establish its
integrity should the matter be subject to further appeal to the Delaware Supreme
Court. Counsel suggested, and the Court agreed, that counsel would confer with one
another and with the Authority regarding the record and would work to ensure that
a proper record was filed with the Court.49
On October 11, 2024, counsel for the Authority filed correspondence with the
Court indicating that, upon consultation with counsel for the HOA and the Landlord,
the Authority was willing to certify that the Appendix filed by the HOA in

46
The Authority was required to file a paper copy of the certified record in this case pursuant to
Superior Court Civil Rule 72(e) and Superior Court Administrative Directive 2011-4.
47
D.I. 44.
48
Attempting to access the material on the “thumb drive” using the Court’s information systems
could have exposed those systems to, e.g., viruses or other malware.
49
As explained at the conference, this would include ensuring that any material was properly
redacted to comport with earlier orders in the case regarding confidentiality of materials.

7
conjunction with the Opening Brief constituted the record in the case.50 On October
16, 2024, the Court conferred with counsel for the HOA, the Landlord, and the
Authority, and raised the issue that the Appendix filed by the HOA, referenced by
the Authority in its October 11 correspondence as Docket Item 35, had been filed
under seal, but that the record maintained by the Prothonotary’s Office would be
accessible to the public. The Court suggested, and counsel for all parties agreed,
that the parties file a stipulation and proposed order clarifying that the record would
be the HOA’s Appendix as filed under seal, but that the public version of the HOA’s
Appendix (Docket Items 36 and 37) would be filed and maintained in paper form in
the Prothonotary’s Office to comply with the Court’s prior orders regarding
confidentiality. The parties subsequently filed a stipulation and proposed order,
which the Court approved on October 23, 2024,51 and a paper copy of the public
version of the Appendix was filed in the Prothonotary’s Office on October 28,
2024.52

II. STANDARD OF REVIEW

25 Del. C. § 7054 provides that an appeal from the decision of an arbitrator “shall
be on the record and the Court shall address written and/or oral arguments of the
parties as to whether the record created in the arbitration is sufficient justification
for the arbitrator’s decision and whether those decisions are free from legal error.”53
The Supreme Court has interpreted this language to mandate substantial evidence
review.54

50
D.I. 49. Prior to October 11, 2024, counsel for the Authority had not entered an appearance or
otherwise participated in the appeal. See Note 1, supra.
51
D.I. 54.
52
D.I. 56.
53
25 Del. C. § 7054.
54
Rehoboth Bay Homeowners’ Ass’n v. Hometown Rehoboth Bay, LLC, 252 A.3d 434, 441 (Del.
8
Under this standard, closely paralleling the statute, the reviewing court must “ask
‘whether there is substantial evidence in the record to support the [arbitrator’s]
findings and whether such findings are free from legal error.’”55 “Substantial
evidence is relevant evidence that a reasonable mind might accept as adequate to
support a conclusion.”56 When conducting substantial evidence review, the Court is
“require[d]” to “search the entire record.”57
Issues of statutory construction and interpretation are reviewed de novo.58 When
conducting de novo review of a statute’s interpretation, the Court’s purpose is to
“determine and give effect to the legislature’s intent.”59

III. THE RENT JUSTIFICATION ACT

The Rent Justification Act (the “Act,”) codified in Title 25, Chapter 70 of the
Delaware Code, seeks to balance two conflicting imperatives: “protecting
manufactured homeowners, residents, and tenants from unreasonable and
burdensome space rental increases, while simultaneously providing for the need of
manufactured home community owners to receive a just, reasonable, and fair return
on their property.”60 The General Assembly was evidently concerned that, after a
manufactured homeowner had placed his or her home on a leased “pad” or “lot,” the

2021).
55
Id. (quoting Murphy & Landon, P.A. v. Pernic, 121 A.3d 1215, 1221 (Del. 2015)) (alteration in
original).
56
Id. (quoting Murphy, 121 A.3d at 1221).
57
National Cash Register v. Riner, 424 A.2d 669, 674–75 (Del. Super. 1980); accord Fasano v.
Delaware Dep’t of Nat. Res. & Env’t Control, 2024 WL 469638, at *2 (Del. Super. Feb. 2, 2024);
Hudson v. Beebe Med. Ctr., 2024 WL 36063, at *5 (Del. Super. Jan. 3, 2024).
58
Sandhill Acres MHC, LC v. Sandhill Acres Home Owners Ass’n., 210 A.3d 725, 728 (Del. 2019)
(citing Bon Ayre Land, LLC v. Bon Ayre Community Ass’n (Bon Ayre II), 149 A.3d 227, 233, n.21
(Del. 2016)).
59
Wild Meadows MHC, LLC v. Weidman, 250 A.3d 751, 756 (Del. 2021); accord Bon Ayre II,
149 A.3d, at n.21 (Del. 2016).
60
25 Del. C. § 7050.
9
community owner would have “disproportionate power in establishing rental
rates.”61 In essence, because it was difficult and costly for homeowners to relocate,
the Assembly feared that community owners might exploit their positions by
dramatically and unreasonably increasing their tenants’ rent.62
The Act contains a variety of substantive protections for the owners of
manufactured homes. Key to this appeal is the “rent justification” process. Under
the Act, community owners may increase their tenants’ rents only once every twelve
months,63 and ordinarily only in accordance with the CPI-U.64 In other words, rent
increases cannot ordinarily exceed the rate of inflation. A landowner may, however,
increase the rent above the CPI-U rate if the owner has not been found to have
committed a health and safety violation within the preceding twelve months;65 the
rent increase is “directly related to operating, maintaining, or improving the
manufactured home community;” and the increase is justified by one or more of
certain enumerated factors.66 One of these justifying factors, at issue in this case, is
“market rent,” or “rent that would result from market forces absent an unequal
bargaining position between the community owners and the homeowners.”67
After a community owner notifies homeowners of an above-CPI-U rent increase
and holds a final meeting to explain the basis for that increase, affected homeowners
may (individually or through an HOA) petition the Authority to appoint an
arbitrator.68 If the arbitrator determines that the rent increase is not justified, the
community owner must rebate the additional money collected pursuant to that

61
Id.
62
Id.
63
25 Del. C. §§ 7051, 7052(a).
64
25 Del. C. § 7051.
65
25 Del. C. § 7052(a)(1).
66
25 Del. C. § 7052(a)(2).
67
25 Del. C. § 7052(c)(7).
68
25 Del. C. § 7053(f).
10
increase.69 The community owner, the HOA, or any affected homeowner may
appeal the arbitrator’s decision to this Court.70 This appeal “shall be on the record
and the Court shall address written and/or oral arguments of the parties as to whether
the record created in the arbitration is sufficient justification for the arbitrator’s
decisions and whether those decisions are free from legal error.”71

IV. ANALYSIS

A. No Statute Or Regulation Provides A Remedy For A Landlord’s
Insufficient Initial Notice To The Homeowners’ Association

In addition to the provisions previously set out, the Act contains specific
notice requirements. Relevant here, the Act requires that a landlord provide each
affected homeowner, the Authority, and any homeowners’ association with notice
of a rent increase at least ninety days before that increase is to take effect.72 The Act
sets forth the minimum requirements for such notice.73 The Authority has
subsequently promulgated regulations that, among other things, require that
additional material be included in this initial disclosure.74 The HOA contends that
the notice it received was insufficient under these regulations, and that the Court
should overturn the Arbitrator’s decision as a result.75
1 Del. Admin. C. § 202-4 provides, in relevant part, as follows:
A community owner is required to give written notice to each affected
home owner, to the Home Owner’s Association, if one exists, and to
69
25 Del. C. § 7053(l).
70
25 Del. C. § 7054.
71
Id.
72
25 Del. C. § 7053(a)(1).
73
See generally 25 Del. C. § 7053(a).
74
1 Del. Admin. C. § 202-4. The Supreme Court has previously recognized the Authority’s power
to promulgate such regulations. See Weidman, 250 A.3d at 757. Neither party contests the validity
of the regulation at issue in this case.
75
Appellant’s Opening Br. at 10–18.
11
the Authority, at least 90 days prior to any increase in lot rent. When
more than one tenant is affected by the rent increase, in lieu of
providing the HOA or the Authority with copies of each letter sent to
each affected tenant, the community owner shall provide the HOA and
the Authority with a summary letter . . . . certifying that written notice
has been sent to each affected home owner together with a copy of the
form of notice provided . . . [and] (with respect to each affected home
owner) state whether or not the proposed rent increase exceeds the CPI-
U and provide . . . the current monthly lot rent[.]
In this instance, although the Landlord’s notice identified each affected
homeowner to the HOA and the Authority, it failed to “state whether or not [each
homeowner’s] proposed rent increase exceed[ed] the CPI-U” and failed to provide
each homeowner’s “current monthly lot rent.”76 As such, the Landlord failed to
comply fully with the regulation, as the Arbitrator concluded in his opinion.77 The
record, which includes a copy of the notice sent to the HOA and the Authority,78
provides substantial evidence in support of this finding.
The Arbitrator further found that the notice defect was not remedied by later
disclosure because the statute and regulation required that the information be turned
over at least ninety days before the rent increase.79 This finding was free of legal
error. Nonetheless, the Arbitrator declined to deny the rent increase on this basis
because the Landlord had “substantially complied” with its notice obligations, while
the “use of hyper-technicalities” to defeat rent increases would “unfairly benefit the
homeowners” and run contrary to the Act’s dual purposes.”80
The Court need not address the HOA’s critiques of the Arbitrator’s reasoning
on this issue. Any legal error on the Arbitrator’s part is rendered harmless by this
Court’s opinion in Shady Park, which was affirmed by the Supreme Court “on the

76
1 Del. Admin. C. § 202-4; A0343.
77
A0597.
78
A0343–48.
79
A0598.
80
A0599.
12
basis of and for the reasons stated in the Superior Court’s . . . Memorandum
Opinion.”81 In Shady Park, the Court noted that no provision of the Act or Delaware
Administrative Code “set[s] forth any sort of punishment for non-compliance with
the initial notice requirements” of the Act.82 Moreover, the standards contained in
25 Del. C. § 7052, which guide arbitrators in their duties, neither “state nor allude to
a partial non-compliance with the initial notice requirements equating to an
automatic forfeiture of an above CPI-U increase in rent” to which the landlord would
otherwise be entitled.83 Thus, neither the Arbitrator nor this Court has statutory
authority to deny a market-rate rent increase on the basis of an insufficient initial
disclosure.
The HOA attempts to distinguish Shady Park by claiming, for the first time
on appeal, that the Landlord “purposely”84 chose not to provide the notice required
by the regulation.85 Appellant contends that this is evident from the Landlord’s
counsel having been involved in two prior cases under the Act that put the initial
notice requirements at issue.86 On this basis, they conclude that the Landlord,
“through its attorney, was fully aware of the notice requirements mandated by
law.”87 Even assuming that purposeful concealment would be grounds for rejecting
Shady Park’s statutory interpretation—a conclusion that the Court does not reach
today—the HOA has not shown that the Landlord’s counsel were anything more
than negligent in failing to include the required information. The Arbitrator made
no factual findings on this question, and the Court declines to make a finding of its

81
Shady Park Homeowners’ Ass’n, Inc. v. Shady Park MHC, LLC, 2023 WL 2366643, at *3–4
(Del. Super. Mar. 3, 2023), aff’d, 308 A.3d 168, 2023 WL 7151197 (Del. Oct. 31, 2023) (ORDER).
82
Shady Park, 2023 WL 2366643, at *4.
83
Id.
84
Appellant’s Reply Br. at 3.
85
Though not explicit in the HOA’s brief, the allegation seems to be that the Landlord hoped to
discourage homeowners from joining any subsequent arbitration.
86
Appellant’s Reply Br. at 3–4 (D.I. 41–42).
87
Id. at 4.
13
own. The record contains no indication that either the HOA or the Authority
objected to the sufficiency of the initial disclosure at the time it was made. Such
objection would have put the Landlord and its counsel on notice, thereby making the
omission of residents’ rent rates less easily excusable.
Notwithstanding Shady Park, Appellant urges the Court to find in its favor for
the reasons stated in Tunnell Companies, L.P. v. Greenewalt.88 In Tunnell, this Court
denied a landlord’s proposed rent increase because the landlord failed to disclose
“all relevant material information.”89 The HOA’s argument has two principal
deficiencies. First, the “material information” and “material factors” referenced in
Tunnell are not those facts required to be in the initial notice, but, rather, those that
the Act requires be disclosed “at or before the final meeting” between the landlord
and homeowners.90 Second, Appellant’s argument ignores that “material factors”
are those that, in the terms of the Act, “result[ed] in the decision to increase the
rent.”91 At issue in Tunnell were “reports on comparable manufactured home
communities” that “led [the landlord] to determine that it needed to increase rent
above the CPI-U.”92 The contents of these reports were rendered material only
because the landlord relied on them in determining the market rent rate.93
The facts of this case are distinguishable from Tunnell. Here, the Appraiser
disclosed and thoroughly explained the material factors underlying his market-rate
determination at the final meeting between the landlord and homeowners.94 On

88
2014 WL 5173037 (Del. Super. Oct. 14, 2014).
89
Id. at *5–6.
90
See 25 Del. C. § 7053(c) (“At or before the final meeting the community owner shall, in good
faith, disclose in writing all of the material factors resulting in the decision to increase the rent.”);
Tunnell, 2014 WL 5173037, at *3.
91
25 Del. C. § 7053(c); Tunnell, 2014 WL 5173037, at *3.
92
Tunnell, 2014 WL 5173037, at *5.
93
Id.
94
See A0371–83 (section of Landlord’s presentation to homeowners detailing the work
completed); A0386 (section stating the rent paid by the last ten new tenants); A0388–412 (section
14
much the same facts as the present case, and for this reason, Shady Park
distinguished Tunnell: “[T]he Owner complied with the requirements of holding a
final meeting with the community. At that final meeting an extensive PowerPoint
presentation was displayed explaining the material factors used in the decision for
the rent increase above the CPI-U level, including the Market Rent Analysis
Report.”95 The analogy to Tunnell is, as in Shady Park, inapt. As in Shady Park,
the Court declines to extend Tunnell’s holding beyond the scope of its statutory
basis.

B. The Arbitrator’s Finding That The Landlord Fulfilled The
Statutory Requirements For An Above-CPI-U Rent Increase Is
Supported By Substantial Evidence, And Any Legal Error Was
Harmless

In order to “open the door” to an above-CPI-U rent increase under the Act, a
landlord “need only show that there were no relevant health or safety violations and
that ‘[t]he proposed rent increase is directly related to operating, maintaining or
improving the manufactured home community.’”96 In this case, the Arbitrator
found, on the basis of substantial evidence and without dispute by the HOA, that
there were no relevant health or safety violations.97 Admittedly, the Arbitrator erred
as a matter of law by failing to consider whether the rent increase was proportional
to the expenditure, as was required to determine that it was directly related to
operating, maintaining, or improving the Community. Despite this oversight, the

detailing the findings and methodology of the Appraiser’s report). The Landlord also apparently
made physical copies of the presentation available to community members, and specifically
handed one to the president of the HOA. A0001–304; A0953.
95
Shady Park, 2023 WL 2366643, at *3.
96
Sandhill, 210 A.3d at 727 (quoting 25 Del. C. § 7052(a)(2)).
97
A0582.
15
Arbitrator ultimately concluded that the rent increase was “directly related.”98 On
appeal, the record is sufficient to show that this conclusion was supported by
substantial evidence in light of the proper legal test.99 Thus, any error on the
Arbitrator’s part was harmless.

1. The Arbitrator’s conclusion that the Community was free
of any health and safety violations was free of legal error
and supported by substantial evidence.

25 Del. C. § 7052(a)(1) requires that a community owner, prior to obtaining a
rent increase above the CPI-U average, demonstrate that “[t]he community owner,
during the preceding 12-month period, has not been found in violation of any
provision of [the Act] that threatens the health or safety of the residents, visitors, or
guests that persists for more than 15 days . . . .”100
The Arbitrator found that the Landlord met this burden for three reasons: (1)
during the July 29 final meeting between the Landlord and homeowners, the
Landlord asserted that it was free of any health or safety violations; (2) the regional
director overseeing the community for the Landlord “testified that she was unaware
of any outstanding health and safety violations and that she would have been aware
of such violations if the [Landlord] received the same”; and (3) the on-site
community manager “testified that there were no outstanding health and safety

98
A0588.
99
In reaching this conclusion, the Court summed the rent increases included in the notices sent to
each affected homeowner. This total figure was not included in the Arbitrator’s report. The Court
finds that a remand instructing the Arbitrator to perform this mathematical calculation would be
purely ministerial, needlessly delay the proceeding, and contravene the goal of judicial economy,
since the figure is easily calculated and supports the Arbitrator’s decision. Cf. Bartlett v. State,
249 S.W.3d 658, 667 (Tex. Ct. App. 2008) (“Where . . . the trial court did not make explicit written
findings of fact, we view the evidence in the light most favorable to the trial court’s rulings and
assume that the trial court made implicit findings of fact that are supported by the record.”).
100
25 Del. C. § 7052(a)(1).
16
violations at the community at the time the rent increase was sent out.”101 Each of
these findings correctly summarized the evidence presented and was accompanied
with an accurate citation to the record. While some of the evidence cited by the
Arbitrator did not directly pertain to the statutory requirements, their satisfaction was
a fair inference from the evidence the Landlord presented.102 Further, as the
Arbitrator noted, the HOA “provided no evidence” of any relevant violation.103 The
HOA does not contest the Arbitrator’s finding on appeal, and it is supported by
substantial evidence.

2. The rent increase at issue was directly related to
operating, maintaining, or improving the community,
because the Landlord made a material expenditure for a
capital improvement, the rent increase was not
disproportionate, and the Landlord saw its costs increase
as a result.

The Supreme Court has held that a prima facie case that a rent increase is
“directly related” to operating, maintaining, or improving a community rests on two
interrelated elements: (1) the expenditure must be material; and (2) the rent increase
must be proportionate to the amount spent such that there is a “substantial
relationship” between the two.104 The Landlord in this case has easily satisfied both
elements, as the HOA concedes.105

101
A0582.
102
Cf. Donovan Smith HOA v. Donovan Smith MHP, LLC, 190 A.3d 997, 2018 WL 3360585, at
*1 (Del. 2018) (ORDER) (“Although the Landowner did not present evidence of what these
improvements cost, the arbitrator was charged with addressing the evidence in front of him and
making fair inferences from it.”).
103
A0582.
104
Sandhill, 210 A.3d at 730.
105
Appellant’s Reply Br. at 6 (D.I. 41–42) (“In its answering brief, [the Landlord] dedicates six
pages of hyperbole in support of the claim that it met its prima facie case at arbitration. The HOA
has not disputed this before this Court and concedes that [the Landlord] has met its initial burden.”)
(internal citation omitted).
17
i. The Landlord’s expenditure was material.

The Landlord justifies its rent increase by referencing the $33,212.90 it spent
to reduce flooding in the Community’s common spaces, such as its roadways.106 The
Landlord provided substantial evidence that these monies were spent, including
copies of invoices, proof of payment, and photographs of the completed work.107
The Arbitrator, though not fully explaining his reasoning, found that this was a
material capital expenditure.108 Whatever the inadequacies of the logic employed,
the conclusion itself is free of legal error. Sandhill involved an expenditure of only
$12,185, which the Supreme Court found to be material.109 The Sandhill Court,
though reiterating that the materiality threshold was a “modest” requirement,
contrasted this with a hypothetical $1,000 spent “touching up the community.”110 If
this hypothetical cost were paired with a disproportionate increase in rent, the Court
reasoned, an arbitrator would be “justified” in not granting a rent increase.111 The
amount spent in this case is nearly three times that in Sandhill. The Arbitrator thus
did not err in concluding that the amount spent was material.

106
A0369; A0586; Appellee’s Answering Br. at 6 (D.I. 38–39).
107
A0371–83.
108
A0585. The Arbitrator’s analysis focused primarily on whether the expenses were incurred
“for the benefit of the Community” rather than the materiality thereof—i.e., the purpose of the
expenditure, not how substantial the cost was. Id. While the former consideration may seem to
bear more intuitively on whether an expenditure is directly related to operating, maintaining, or
improving the community, it is the latter consideration that lies at the heart of the Supreme Court’s
materiality test. See Sandhill, 210 A.3d at 729. The Arbitrator, relying on substantial evidence,
concluded that the costs were incurred for the benefit of the community. A0585.
109
Sandhill, 210 A.3d at 729.
110
Id.
111
Id.
18
ii. The rent increase was proportionate to the
Landlord’s expenditure.

The Arbitrator did not explicitly consider the issue of proportionality.112 This
was legal error.113 The error, however, was harmless, because the Arbitrator found
that the rent increase was “directly related,” and the proper proportionality analysis
supports this conclusion. The record contains substantial evidence of the income
netted by the Landlord’s rent increase. While neither party provided a total, and the
Arbitrator did not mention one in his opinion, the amount in question can be
calculated through the rent-increase notices that were turned over to the HOA during
discovery. The rent increase detailed by these letters totaled $6,193.53 per month,
or $74,322.36 annually.114 In the first year, therefore, the Landlord realized a net
return of 223.78 percent.
By contrast, the annual rent increase in Sandhill was $53,760, weighed against
a $12,185 expense.115 In other words, the Sandhill court approved a first-year net
return of approximately 441.20 percent—nearly double that realized by the Landlord
in this case. The rent increase before this Court is, accordingly, proportionate as a
matter of law. Unlike a rent increase justified solely by a capital improvement, as
permitted by 25 Del. C. § 7052(c)(1),116 a rent increase justified by market rent is
not capped to the amount expended by the landlord.117

112
See A0584-85.
113
Sandhill, 210 A.3d at 730.
114
A0001–304.
115
Sandhill, 210 A.3d at 729.
116
See Rehoboth Bay, 252 A.3d at 444 (“where the cost of a one-time capital improvement is the
justification for a rent increase, the justification for that increase ends when the cost has been fully
recovered.”).
117
Interpreting 25 Del. C. § 7052(c)(7) otherwise would not only contradict the reasoning of
Sandhill but would also render the provision functionally indistinguishable from § 7052(c)(1).
Such interpretation is contrary to the Supreme Court’s instruction to “consider the statute as a
whole . . . read[ing] each section in light of all others to produce a harmonious whole.” Bon Ayre
19
iii. The Landlord saw its costs increase as a result of
the expenditure, and those costs were likely to
reduce its expected return.

Once a landlord makes a showing sufficient to satisfy the elements of
materiality and proportionality, the landlord has made the prima facie case that its
rent increase is directly related to operating, maintaining, or improving the
community.118 This prima facie case rests on a prospective analysis performed at
the time the rent increase is proposed. Simply because a rent increase is taken to
arbitration does not obligate the landlord to prove that, following the expenditure,
its costs did, in fact, increase. This would be a retrospective analysis not
contemplated by the Act. In Sandhill, the Supreme Court explicitly rejected the
argument that a landlord would “have to affirmatively ‘offer evidence about its
original costs and original expected return and how the expenditure altered that
relationship.’”119 “There is no basis in the Act to infer such a requirement,” the
Court wrote.120 Rather, “it suffices for the community owner to offer evidence that
in making some capital improvement, the community owner has incurred costs that
are likely to reduce its expected return.”121
Once the landlord has made its prima facie case, the burden shifts to the party
opposing the rent increase. Under Sandhill, to rebut the landlord’s prima facie case,
the petitioner must show that the expenditure “did not in fact reflect any increase in
costs—for example because the expenditure was offset by reduced expenditures in

II, 149 A.3d at n.21 (quoting Taylor v. Diamond State Port Corp., 14 A.3d 536, 538 (Del. 2011)).
See also Taylor, 14 A.3d at 538 (“We also ascribe a purpose to the General Assembly’s use of
statutory language, construing against surplusage, if reasonably possible.”).
118
Sandhill, 210 A.3d at 729.
119
Id. (emphasis in original).
120
Id.
121
Id. (emphasis supplied).
20
other areas.”122 Moreover, these “reduced expenditures” must be rationally related
to the expenditure that opened the door to the rent increase.123 In other words, an
expenditure reflects an increase in costs when the landlord’s costs are higher than
they would have been had the expenditure not been made, not when costs are higher
overall after the expenditure than prior to it.124
Interpreting the Act otherwise would discourage community owners from
economizing, and irrationally penalize them for proposing rent increases the year
after they suffer unusually high expenses (e.g., from cleaning up a natural disaster).
This would “conflict with the Act’s stated purpose,”125 because it would neither
minimize homeowners’ rent nor help the community owner to realize a “fair return”
on investment.126 In other words, it better comports with the Act’s text and purpose
to allow a landlord to make a material capital improvement (and receive an increase

122
Sandhill, 210 A.3d at 729.
123
In so holding, the Court is persuaded by the reasoning of Wild Meadows MHC, LLC v. Wild
Meadows Homeowners Ass’n, Inc. (Wild Meadows 2020), 2024 WL 1956135, at *4 (Del. Super.
May 2, 2024) and Wild Meadows Homeowners Ass’n, Inc. v. Wild Meadows MHC, LLC (Wild
Meadows 2019), 2024 WL 3495769, at *5 (Del. Super. July 22, 2024). These decisions are
consistent with Shady Park, as explained fully infra. See also Shady Park, 2023 WL 2366643, at
*5. “Wild Meadows 2020” and “Wild Meadows 2019” refer to the date of the proposed rent
increases at issue in those cases, rather than the years those cases were decided.
124
This holding does not foreclose a petitioner from seeking to rebut a community owner’s prima
facie case. For instance, in a hypothetical case, homeowners could show that installing a more
efficient boiler in the community’s office would not increase overall costs, because it would result
in energy savings. Thus, if the return on investment for the capital improvement exceeds the
landowner’s expected return for the community as a whole, the capital investment would not be
an increase in costs. Reduced expenditures are also, as stated in Sandhill, just one example of a
way to rebut the landlord’s case. See Weidman, 250 A.3d at 759 (quoting Sandhill, 210 A.3d at
731–32) (“[B]oth sides of the community owner’s financial statements bear logically on whether
and to what extent a rent increase is ‘directly related to operating, maintaining or improving the
manufactured home community’ under the Act.”). On the other side of the ledger, a capital
improvement could generate new revenues. Adding new roads and new pads for residences could
be paid for by new revenue from a larger rent roll, for example. If these increased revenues were
likely to improve the community owner’s expected return after accounting for the up-front
expenditure, they would not justify a rent increase.
125
Rehoboth Bay, 252 A.3d at 444.
126
See 25 Del. C. § 7050 (stating that the Act’s purpose is to balance these competing interests).
21
to market rent in exchange) while at the same time economizing in other areas to
keep costs low and maximize its return—as opposed to encouraging multiple
expensive and unnecessary capital improvements designed to keep costs on an
upward trajectory from year to year, and thereby keep the door open for market
rent.127
In recent years, this Court has held that expenses were “directly related” to
operating, maintaining, or improving the community without comparing the overall
costs incurred prior to and after a capital improvement. Shady Park held that the
following reasoning, propounded by an arbitrator, was “legally sound”:
The arbitrator concluded that he could not accept the HOA’s arguments
about the previous versus current community owners’ expected rates of
return because doing so would “essentially rule out justification of a
rent increase under § 7052(c) by a ‘new owner by purchase’ of a park,
with no ‘profit history,’ who attempts a statutory rent increase
following purchase.”128
It was instead sufficient that “the expenditure likely reduced the expected return of
the Owner due to the large amount of money allocated to the new office building”
constructed on the property.129
Two recent decisions of this Court have persuasively interpreted Shady Park
to require a causal relationship between a door-opening expenditure and offsetting
reductions in expenses. In Wild Meadows 2020, this Court explicitly held that
“offsetting expenses, as described in Sandhill Acres, refers to lowered expenses
resulting from an expenditure, not merely an overall reduction in costs.”130

127
Cf. Rehoboth Bay, 252 A.3d at 444 (declining to adopt an interpretation that would
“incentiviz[e] owners of manufactured home communities to perform as many costly capital
improvements as possible so as to increase their revenue each year to whatever maximum limit
the market will bear.”).
128
Shady Park, 2023 WL 2366643, at *5 (cleaned up).
129
Id.
130
Wild Meadows 2020, 2024 WL 1956135, at *4. For an explanation of the Wild Meadows case
nomenclature, see Note 123, supra.
22
Accordingly, the Court reversed an arbitrator who had denied a rent increase because
the landlord’s “year-over-year costs decreased.”131 In Wild Meadows 2019, decided
several months later, the Court again emphasized that “[h]omeowners seeking to
prove the existence of offsetting expenses must show evidence that the expense itself
reduced costs – by lowering ongoing maintenance costs, for example. Showing only
that the community owner’s overall costs decreased, however, does not suffice.”132
Arguing that this Court should reject the reasoning of the Wild Meadows
cases, the HOA asserts that “[n]owhere does the Supreme Court state the lowered
costs must relate to the expenditure it made for the capital improvement[.]”133 While
this may be literally true, the causal interpretation of Sandhill’s “likely to reduce its
expected return”134 language is the most natural one. “Likely to reduce” implies
both that the relationship is causal and that the analysis is prospective from the time
the expense is incurred.135 Consider an analogous construction: “an individual who
commits a crime is likely to be arrested and prosecuted.” An ordinary English
speaker would understand that the writer does not mean that the individual will be
arrested wrongly, or for an unrelated crime, but, rather, for the crime mentioned.

131
Id. at *2–3, 5. The HOA in this case raises the issue that certain amortization and depreciation
expenses were included in the Community’s 2020 profit and loss report, whereas they had not yet
been calculated for 2021. Appellant’s Opening Br. at 21. As the Wild Meadows 2020 Court
reasoned, whether these “paper losses” are appropriate to consider is irrelevant to the Court’s
decision if only raised to argue that the Community is profitable; the legal test does not turn on
whether the Community is profitable or not. Wild Meadows 2020, 2024 WL 1956135, at *5. Here,
the Landlord does not contend that its costs increased following the expenditure because its
amortization and depreciation expenses increased—there simply is no evidence of what those
expenses were. Whether one assumes that the appropriate weight to be given to these expenses is
nil or, as the Arbitrator did, infers that the costs would have been substantially the same in 2021,
these costs have no bearing on the analysis. Thus, the Court need not determine whether the
Arbitrator erred in considering them, as any error would be harmless.
132
Wild Meadows 2019, 2024 WL 3495769, at *5.
133
Appellant’s Reply Br. At 10.
134
Sandhill, 210 A.3d at 729.
135
See, e.g., Likely, Black’s Law Dictionary (12th Ed. 2024) (“Apparently true or real; probable
<the likely outcome>”).
23
Likewise, the statement above is plainly a forecast of the future based on the writer’s
assessment of probability. If the individual in question did commit the crime, but
was neither arrested nor prosecuted for some period of time thereafter, this would be
relevant information to show that the forecast was wrong (i.e., that the mentioned
eventualities were not “likely” when the forecast was made). It would not, however,
be dispositive, because a statement that something is “likely” admits the possibility,
however unlikely, that something else will turn out to be true.
Nonetheless, the HOA points the Court to other language from the Supreme
Court’s 2021 Weidman decision. This language, it contends, militates for the
opposite interpretation.136 The Weidman court required, in relevant part, that the
landlord’s “original expected return has declined, because the cost side of its ledger
has grown;” that its “costs have gone up;” and that it “has seen its costs increase
for operating, maintaining, or improving the manufactured home community.”137 As
a preliminary matter, this language is susceptible to either interpretation: in essence,
must the “cost side” of the landlord’s ledger have “grown” relative to past years (the
HOA’s preferred interpretation) or relative to a hypothetical scenario in which the
expenditure was not made (this Court’s causal interpretation)?
Perhaps more importantly, Weidman was a case about a discovery dispute,
rather than about the analysis of materials that had already been discovered. The
Court held that those challenging a rent increase have a right to compel disclosure
of the landlord’s business records.138 This was necessary so that the homeowners
could “‘fairly test’ the community owner’s proffered justifications.”139 Thus, the
Supreme Court’s analysis was tailored to resolve a narrower issue than the point the

136
Appellant’s Reply Br. at 11–14 (D.I. 41–42).
137
Weidman, 250 A.3d at 758 (quoting Bon Ayre II, 149 A.3d at 234–35).
138
Id. at 760.
139
Id. at 758 (quoting Donovan Smith, 2018 WL 3360585, at *3).
24
HOA hopes to prove with its quotation.
The HOA’s quotation is also selective. For instance, the Weidman Court also
quoted Bon Ayre II’s formulation that homeowners should be “protected from
material increases in rent unrelated to the benefits and costs of living in the
community.”140 Another passage from Bon Ayre II quoted by the Weidman Court
asserted that “[i]f a landowner invests in its development, and therefore has
improved the community, it can also reap the reward from that investment through
higher-than-inflation rent increases.”141 Viewed in its full context, the language
quoted by the HOA expresses only one of the conflicting interests the Court was
attempting to balance.142
The HOA further argues that ruling, as the Court does today, that a landlord’s
total costs are irrelevant to the “directly related” analysis would lead to a parade of
horribles. Doing so, per the HOA, “would allow a community owner to raise rents
every time it replaced an old carpet regardless of its cutbacks in operation and
maintenance costs in other areas . . . . [E]very trivial repair and replacement would
provide a basis for a rent increase.”143 The concerns the HOA raises are serious, but
rest on a misapprehension of the relevant law.
Under the holding reached today, “every trivial repair and replacement” does
not open the door to a rent increase, for three reasons. First, as previously explained
at greater length, the expenditure made by the landlord must be “material” rather
than “trivial.”144 Second, if an expenditure is used to justify an increase in the rent
to the market rate, this increase must be proportionate to the amount expended:145 if

140
Id. (quoting Bon Ayre II, 149 A.3d at 235) (emphasis supplied).
141
Id. (quoting Bon Ayre II, 149 A.3d at 234).
142
Id. at 759 (noting that the Act’s “stated goal” was to “balance[e] the homeowner’s and
community owner’s competing interests.”).
143
Appellant’s Reply Br. at 13 (D.I. 41–42) (emphasis in original).
144
See discussion supra Section IV(b)(2)(i).
145
See discussion supra Section IV(b)(2)(ii).
25
an increase to the market rate would be disproportionate, the landlord would be
required to rely on one of the seven remaining justifications allowed by 25 Del. C. §
7052(c). Third, if a landlord attempts to justify a rent increase by reference to a
“capital improvement or rehabilitation work in the manufactured home
community,”146 rather than the market rent, the landlord must show that the
expenditure is not for “ordinary repair, replacement, and maintenance,”147 and even
if a landlord clears this threshold, the increase is only justified to the extent that it
recoups the landlord’s investment.148

146
See 25 Del. C. § 7052(c)(1).
147
Id.; Rehoboth Bay, 252 A.3d at 442 (“[I]t makes sense to characterize an ‘ordinary repair,
replacement, and maintenance’ as a regular, normal, and usual repairing of property, while a
‘capital improvement’ is to acquire a long-term, nonrecurring asset or improve or enhance such an
asset already in existence.”).
148
Rehoboth Bay, 252 A.3d at 444 (“[W]here the cost of a one-time capital improvement is the
justification for a rent increase, the justification for that increase ends when the cost has been fully
recovered . . . . [§ 7052(d) of the Act] expresses an intent that a community owner may not obtain
multiple recoveries, year after year, of the cost of the same capital improvement.”).
26
C. The Arbitrator’s Finding That Market Rent Justified The Rent
Increase Is Free of Legal Error And Supported By Substantial
Evidence

The Arbitrator ultimately concluded that the Landlord’s proposed rent,
$505.00 per month per lot,149 was justified by the market.150 This conclusion was
supported by substantial evidence. Testimony established that $505.00 was the
amount charged to the last ten homeowners to move into the Community.151 The
Appraiser’s report, considering both these facts and the rates charged by similar
communities, estimated that market rent for lots in the Community ranged from
$505.00 to $525.00 per month.152 The HOA, though, argued that the evidence just
described could not support the Arbitrator’s finding because it was tainted by the
bargaining power of the Landlord and other community owners. 153 After full
consideration, the Arbitrator was unpersuaded by this argument.154 On appeal, the
Court will not hold that the Arbitrator should have disregarded the evidence before
him, nor that, as a matter of law, he was required to adjust it to account for landlords’
bargaining power.
At arbitration, the HOA argued that the Appraiser, and by implication the
Arbitrator, should have done more to account for the unequal bargaining position of
the Landlord and homeowners.155 The HOA asserted that a landlord could

149
A0599. See also A0600 (concluding that, though the Landlord initially proposed to charge a
CPI-U adjustment on top of the $505.00 market rent, “it is . . . clear that the Landlord has not
charged the affected homeowners rent that exceeds the $505.00 market rent.”). The Arbitrator
described the original proposal as a “miscalculation,” and the Landlord has not pursued a right to
an additional CPI-U adjustment either before the Arbitrator or on appeal. Id. For this reason, the
Court does not consider whether the Landlord was entitled to a CPI-U adjustment.
150
A0601.
151
A0591; A0784.
152
A0388.
153
A0589.
154
A0589–93.
155
A0589–93.
27
effectively drain the equity from homes that would be difficult and expensive to
move by raising rents for incoming homebuyers.156 Phrased differently, a
prospective manufactured home buyer will pay less up-front for a home with a higher
lot rent. The benefits of raising rent rates would redound to the landlord, while the
costs would fall on the selling homeowner. This is a plausible theory, raising many
of the same concerns motivating the Act.
Notwithstanding the merits of the HOA’s theory, the Arbitrator was not
obligated to accept it, and the Court may not limit the types of evidence used to prove
the market rent to an arbitrator absent statutory authority. The Court is particularly
hesitant to impose such restrictions when doing so would render it all but impossible
for a landlord to justify a rent increase. In Bon Ayre II, the Superior Court held that
comparisons to rents charged at other communities, when used to justify a “market
rent” increase, must be “actual” rents, as opposed to “advertised” rents before
negotiation.157 On appeal, the Supreme Court reversed: “The Rent Justification Act
does not limit what is relevant to showing market rent to actual lease terms, nor do
the Delaware Rules of Evidence.”158 Taking an even stronger position, the Court
added that the Superior Court erred by
materially rais[ing] the threshold for evidence to prove one of [§
7052(c)’s] factors without a basis in the text of the Act. To the extent
that this judicially created standard makes it essentially impossible for
a landowner to prove the market rent factor, the Superior Court’s
interpretation also raises constitutional due process concerns by
subjecting landowners to restrictions on their property rights without a
fair way to prove a relevant statutory factor that could ease the
restriction.159

156
A0590.
157
Bon Ayre Cmty. Ass’n, Inc. v. Bon Ayre Land, LLC, 2016 WL 241864, at *10 (Del. Super. Jan.
12, 2016).
158
Bon Ayre II, 149 A.3d at 237.
159
Id.
28
Accepting the HOA’s bargaining power argument would raise the same
concerns the Supreme Court cited in Bon Ayre II. Doing so would “materially raise
the threshold” for admissible evidence of market rents “without a basis in the text of
the Act” and thereby “make[] it essentially impossible for a landowner to prove the
market rent factor.”160
The implications of accepting the HOA’s bargaining power argument are
evident from the evidentiary issues the Arbitrator confronted. Owners of
comparable communities, just like the Landlord, arguably have power over new
homebuyers when the home is already located in the community. Thus, accepting
the HOA’s premise, neither advertised nor actual rent rates for lots with existing
manufactured homes would reflect a fair market rent, regardless of the community
in which they are located.
For this reason, the Arbitrator found that extending the HOA’s theory would
mean that only the rates charged for vacant lots would be usable as evidence of
market rent.161 The Arbitrator noted that “not all communities have vacant lots, and
those that do may only have limited vacancies. Canterbury Crossing, for example,
has 94.3% occupancy. It would, thus, be difficult, if not impossible, for a landlord
to ever meet this requirement if vacancy rates were low or non-existent.”162 This
factual statement was supported by substantial evidence. The Appraiser’s report,
included in the record, indicated that many communities had limited or no

160
Id. 25 Del. C. § 7052(c) provides a nonexclusive list of “relevant considerations” to determine
market rent. See Antonin Scalia & Bryan Garner, Reading Law 112 (2012) (“The verb ‘to include’
introduces examples, not an exhaustive list.”); accord Legislative Council Division of Research,
Delaware Legislative Drafting Manual 112–14 (2022). Specifically mentioned are “rents charged
to recent new homeowners entering the subject manufactured home community and/or by
comparable manufactured home communities.” 25 Del. C. § 7052(c). The statute does not limit
either category, or the broader class of “relevant considerations,” to vacant lots.
161
A0591.
162
A0592 (emphasis supplied).
29
vacancies.163 The Appraiser also testified that he did not know which residents of
the Community and other comparable communities he reviewed purchased existing
homes, rather than bringing their own.164
The Arbitrator justifiably found that “the Apex Report may reasonably rely
on the recent rents for lots within the Community and comparable communities
regardless of whether those lots are currently occupied by existing homes without
an adjustment for the ‘unequal bargaining power.’”165 For the reasons just stated,
this conclusion was without legal error and supported by substantial evidence.
The HOA also challenged the determination of market rent on the ground that
the Appraiser did not account for persistent, and arguably intractable, flooding in
some areas of the community.166 The Arbitrator gave the HOA’s arguments due
consideration but rejected them on the basis of substantial evidence. The Court will
not overturn this factual finding.
Two reasons for the Arbitrator’s decision are evident in his opinion: The
Appraiser testified that the flooding issues, if known to him, would not have
impacted his report;167 and the Arbitrator questioned the extent of the drainage
problem that persisted.168 The Arbitrator made his findings after hearing extensive

163
A0393.
164
See A0867 (“Can’t discern. Wasn’t available to us” with regard to the Community); A0878 (“I
do not know if they bought a home in that community or if they brought their own.”); A0889 (“I
told you that I do not know if they brought their own personal property or if they bought somebody
else’s. We couldn’t discern that necessarily.”); A0895–96 (stating that the Appraiser did not ask
for data on comparable communities beyond the “rack rates.”).
165
A0593.
166
Id.
167
A0593–94 (“[The Appraiser] testified that he would not be able to make a subjective percent
adjustment to the market rent based on the drainage issues . . . . I do not find his analysis
unreasonable . . . . [R]eal estate valuation is often an inexact science.”) (internal citation omitted).
168
See, e.g., A0585 (noting that a video was recorded during or immediately after a tropical storm).
This finding was consistent with a stipulation of the parties as to the date of the video. A1111–16.
Moreover, the date of the storm was appropriate for judicial notice under D.R.E. 201. See In re
Estate of Lomker, 1997 WL 907995, at *1 (Del. Ch. Dec. 15, 1997) (“judicial notice may be taken
that the winter of 1995-96 was one of the worst in the century in this part of the country”); 29 Am.
30
testimony from the Appraiser about his report and methodology169 and after the
community manager,170 the president of the HOA,171 and the vice president of the
HOA172 testified about the flooding issue. The Arbitrator was also provided with
photographs taken before the contractors began their work on the drainage issue, as
well as photographs and a video taken afterwards.173 It is unclear from the record
which of the ten leases relied on by the Appraisal (each at $505.00 per month) may
have been affected by flooding, if any of them were. Only one witness, who was
professedly uncertain, and whose knowledge was incomplete, addressed this
question.174
It may be that the evidence cited by the Appraiser and relied upon by the
Arbitrator was, in the latter’s words, “probably not perfect.”175 Nonetheless, and
recognizing these limitations, the Arbitrator found that the Appraiser’s report made
“fair” comparisons to other communities, and that it was “reliable.”176 When
conducting substantial evidence review on appeal, “this Court will not weigh the
evidence, determine questions of credibility, or make its own factual findings.”177
“Only when there is no satisfactory proof to support a factual finding . . . may the

Jur. 2d Evidence § 164 (“Judicial notice may be taken as to . . . facts contained in weather reports
regarding rainfall in a county and the surrounding region . . . [and] facts relating to hurricanes and
typhoons.”).
169
See generally A0821–926.
170
A0939.
171
A1121–23; A1126–29; A1135.
172
A1027-66.
173
A0584–85.
174
A1130–31 (testimony by HOA president that “I don’t know how many homeowners have
moved. Because there are areas here that are not that bad . . . . I don’t know how many they
move[d], but some of them that I know they moved here, they didn’t move into an area where
there’s a lot of flood . . . . I know some of them, where they moved in. And this -- it's an area
where there’s no flooding. I, I talked to them.”).
175
A0594.
176
Id.
177
Zayas v. State, 273 A.3d 776, 785 (Del. 2022) (quoting Roos Foods v. Guardado, 152 A.3d
114, 118 (Del. 2016)); see also Powell v. OTAC, Inc., 223 A.3d 864, 870 (Del. 2019).
31
Superior Court . . . overturn that finding.”178 While the Court may not have reached
the same conclusions as the Arbitrator if this case were presented in a different
procedural posture, it will not reweigh the evidence or disturb the Arbitrator’s
credibility judgments on appeal. As previously stated, the Arbitrator’s conclusion
that the Appraiser’s report was a “fair” and “reliable” indicator of value is supported
by substantial evidence.

V. CONCLUSION

In sum, the Court finds that the Arbitrator’s factual findings were supported
by substantial evidence and that any legal error was harmless.
WHEREFORE, the Arbitrator’s decision of March 28, 2022, is
AFFIRMED.
IT IS SO ORDERED.

NEP/tls
Via File & Serve Xpress
oc: Prothonotary
cc: Counsel of Record

178
Powell, 223 A.3d at 870 (quoting Noel-Liszkiewicz v. La-Z-Boy, 68 A.3d 188, 191 (Del. 2013)).
32