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Kopanuk v. AVCP Regional Hospital (9/15/95), 902 P 2d 766
NOTICE: This is subject to formal 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,
THE SUPREME COURT OF THE STATE OF ALASKA
DANA KOPANUK, )
) Supreme Court No. S-6432
) Superior Court No.
v. ) 4BE-92-288 CI
AVCP REGIONAL HOUSING ) O P I N I O N
Respondent. ) [No. 4257 - September 15,
Petition for Hearing from the Superior Court
of the State of Alaska, Fourth Judicial
District, Fairbanks, Honorable Niesje J.
Steinkruger, Judge, on appeal from the
District Court for the Fourth Judicial
District, Bethel, Honorable Dale O. Curda,
Appearances: James J. Davis, Jr. and Deborah
Reichard, Alaska Legal Services Corporation,
Bethel, and Carol H. Daniel and Joseph D.
Johnson, Alaska Legal Services Corporation,
Anchorage, for Petitioner. Kim Dunn, Birch,
Horton, Bittner & Cherot, Anchorage, for
Respondent. W. Michael Stephenson, Jermain,
Dunnagan & Owens, Anchorage, for Amicus
Curiae Copper River Basin Regional Housing
Authority. James E. Torgerson, Assistant U.S.
Attorney, and Robert C. Bundy, United States
Attorney, Anchorage, and Althea M. Forrester,
Attorney, and Nelson A. Diaz, General
Counsel, Housing & Urban Dev., Washington
D.C., for Amicus Curiae United States.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton and Eastaugh,
Dana Kopanuk entered into a contract regarding home
occupancy with the Association of Village Council Presidents
Regional Housing Authority (AVCP RHA). Upon breach by Kopanuk,
AVCP RHA initiated a forcible entry and detainer (FED) action in
district court. Kopanuk challenged the district court's subject
matter jurisdiction, arguing that equitable interests were at
issue. He asserted that the contract was not a lease with an
option to purchase, but rather an installment contract for sale
of real property. The district court denied his challenge and
the superior court affirmed. We granted Kopanuk's petition for
hearing, Appellate Rule 302(b)(1), and now reverse.
II. FACTS AND PROCEEDINGS
In 1982 Kopanuk entered into an agreement with AVCP RHA
regarding acquisition of a home. This agreement is titled a
"Mutual Help and Occupancy Agreement" (MHOA). The agreement,
while signed with a state agency, is part of a federal Housing
and Urban Development (HUD) program to aid low-income Indian and
Native families under the Indian Housing Act, P.L. No. 100-358.
AVCP RHA was chartered in order to provide low-cost housing in
certain villages. AS 18.55.995, .996.
The MHOA is a form contract provided by HUD. HUD
requires the MHOA to be used in all cases where the agency is
receiving Mutual Help and Occupancy (MHO) funds. The MHOA
requires a non-refundable land contribution, which in this case
was contributed by a Native corporation. The MHOA is self-
described as a lease, although it contains provisions typical of
both installment contracts and leases. See infra ' II.B.
Monthly payments are required. A minimum monthly payment goes to
an administrative charge, and payments over this amount are
credited to an "Equity Payments Account." The required monthly
payment is adjusted for each contractee, and depends on his or
her income. Voluntary overpayments are credited to another
equity payments account. The home can be purchased at any time
if several conditions are met. The purchase price declines over
25 years, eventually reaching zero. Upon termination, amounts in
equity payments accounts will be refunded to the homebuyer after
deducting amounts necessary to make repairs or cover unpaid
required monthly payments.
In either 1991 or 1992, Kopanuk fell behind in his
payments. He also left the home for an extended period, an
alleged breach of the MHOA. In mid-1992 AVCP RHA filed an FED
action in district court in Bethel seeking to evict Kopanuk. At
the hearing, the parties negotiated a settlement. This
settlement was entered as a Conditional Order for Possession.
The order provided that AVCP RHA would recover possession unless
Kopanuk paid his back payments, returned to Mountain Village,
minimized the noise from the house, and "actively communicate[d]
and cooperate[d]" with AVCP RHA. Kopanuk failed to return to
Mountain Village and AVCP RHA prepared to enforce the order. In
April 1993 Kopanuk filed a Civil Rule 60(b) motion to vacate the
order. He challenged the subject matter jurisdiction of the
district court, arguing that the agreement was not a lease but
rather a mortgage, something not cognizable in an FED action.
The district court denied Kopanuk's motion, holding that the MHOA
was a lease/purchase agreement, properly the subject of an FED
On appeal to the superior court, the district court
judgment was affirmed. The court held that the MHOA was a
lease/option agreement, with no guarantee of eventual vesting of
title in Kopanuk. We granted Kopanuk's petition for hearing.
A. Standard of Review
The standard of review is de novo. In Kennecorp
Mortgage & Equities, Inc. v. First National Bank of Fairbanks,
685 P.2d 1232 (Alaska 1984), appellants challenged the trial
court's denial of a Rule 60(b)(4) motion to set aside the default
judgment. We noted that, "In reviewing the denial of a Rule
60(b)(4) motion, this court does not defer to the discretion of
the trial court." Id. at 1236. We give no deference to the
superior court because "the validity of a judgment is strictly a
question of law." Id. (quoting Aguchak v. Montgomery Ward Co.,
520 P.2d 1352, 1354 (Alaska 1974)). According to Perry v.
Newkirk, 871 P.2d 1150, 1153 n.5 (Alaska 1994), "[v]oidness under
60(b)(4) also encompasses the concept of lack of subject matter
Interpretation of a contractual agreement presents a
question of law. Aviation Assocs., Ltd. v. TEMSCO Helicopters,
Inc., 881 P.2d 1127, 1130 (Alaska 1994). When reviewing
questions of law, this court applies its independent judgment.
Summers v. Hagen, 852 P.2d 1165, 1168-69 (Alaska 1993).
B. The District Court Lacked Jurisdiction to Adjudicate
District courts are courts of limited jurisdiction. AS
22.15.050. District courts do not have jurisdiction over "an
action in which the title to real property is in question" or
"actions of an equitable nature, except as otherwise provided by
law." AS 22.15.050(1), (2).1 Kopanuk invokes both of these
prohibitions in his brief. He claims that title is in dispute
because he has "equitable ownership interests" in the house. We
address only whether this action involves equitable ownership
The district court's jurisdiction depends upon whether
equitable interests exist. Typically a lease will not give rise
to equitable interests in the lessee; however, an installment
contract often will give rise to equitable interests in the
purchaser. See 3 Richard R. Powell, Powell on Real Property 37-
155 (1994). We noted the differences between installment and
option contracts in Dillingham Commercial Co., Inc. v. Spears,
641 P.2d 1 (Alaska 1982):
The purchaser under an installment land
contract is treated as the equitable owner
and the vendor as holding the bare legal
title merely as security for the purchase
price. In contrast, an optionee under a
purchase option holds only a contractual
right to the land.
Id. at 7 n.7 (citations omitted).
Kopanuk argues that the contract at issue is more like
an installment contract than a lease/option contract, and urges
that the substance of the contract be examined. Conversely, AVCP
RHA argues that the contract is a lease-option.
Kopanuk emphasizes several contract provisions as
evidence that the contract is an installment contract. First is
use of the word "homebuyer" throughout the agreement.2 Second is
the non-refundable contribution of land. Third is the existence
of "equity accounts" for holding payments in excess of a certain
amount. Fourth is the lack of a payment required to exercise the
purchase option, if exercised after twenty-five years. Fifth is
the ability to purchase the home before the price drops to zero
by paying the declining balance. Sixth is language in the
contract stating that a "homebuyer" "must purchase" the home if
certain conditions are met, such as ability to meet the routine
costs of ownership.
AVCP RHA emphasizes other provisions in support of its
position. First is a list of homebuyer obligations similar to
those in the Uniform Residential Landlord and Tenant Act, citing
AS 34.03.120 and MHOA ' 5.4.3 Second is variable monthly
payments changeable at AVCP RHA's discretion. Third is a
counseling and inspection requirement. Fourth is the income
reporting requirement and the restrictions on who may reside in
the home. Fifth is the fact that no subletting or assignment is
allowed. Sixth is the housing authority's control of insurance.
Seventh is detailed termination information.
The MHOA is a hybrid contract, containing provisions
typical of both lease/option contracts and installment contracts.
Indeed, a contract more difficult to categorize is hard to
imagine. However, we 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, which preclude the district court from hearing the
case. One of the justifications for FED actions is the lack of
equity held by the tenant-in-possession. This is not the case
here. 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. Since the district court
lacks jurisdiction over equitable actions, AS 22.15.050(2), the
judgment of the superior court is REVERSED.4
1 As a preliminary matter, the nature of FED jurisdiction
must be clarified. In Vinson v. Hamilton, 854 P.2d 733, 737
(Alaska 1993), this court held that "in an FED hearing, an award
of possession constitutes equitable relief." AVCP argues that
this holding means that "[t]he statutory power to hear FED
proceedings simultaneously grants power to hear an equitable
action." Although an FED action may result in equitable relief,
it is a swift and summary proceeding. FED actions are unsuited
for resolution of more complex inquires, such as when equitable
ownership interests are at stake. Therefore, although AS
22.15.030(a)(6) specifically grants the district court power to
hear FED actions, this is not a grant of jurisdiction over all
2 "Homebuyer" is defined as "The person(s) who has
executed this MHO agreement . . . and who has not yet achieved
3 Specifically, keeping the house clean and safe,
disposing of waste properly, using appliances reasonably,
refraining from damaging the property, avoiding disturbing
neighbors, and refraining from illegal activity. AS
34.03.120(a)(1)-(6); MHOA 5.4(e)-(j).
4 The United States, as amicus curiae, argues that HUD
has consistently interpreted the MHOA program to be a lease
program. The HUD regulations are irrelevant, as we hold under
state law that equitable interests may exist and the district
court therefore lacks jurisdiction. HUD has no power to
interpret state law, and the cited regulations do not interpret
any provisions of federal law purporting to override the state
law at issue here.