## Facts

- Dorothy Jean (Gruzella) Cunningham became a member-shareholder (tenant-stockholder) in Georgetown Homes, Inc., a cooperative housing corporation, by paying $3,500 to occupy a designated unit.
- Georgetown and Cunningham executed an Occupancy Agreement and related membership/stock documents that tied Cunningham’s right to live in the unit to her cooperative interest.
- Cunningham agreed to pay a monthly “carrying charge” (about $385) reflecting her share of the cooperative’s common expenses, including amounts associated with the cooperative’s mortgage, rather than a typical rent payment.
- The documents contained ownership-like features, including Cunningham’s responsibility for decorating and interior repairs/maintenance and a provision for redemption/reimbursement of her membership interest if the unit were destroyed and not rebuilt.
- The Occupancy Agreement also stated that the parties had a landlord-tenant relationship and included clauses seeking to limit rights upon dispossession.
- Cunningham subleased the unit to her sister-in-law without obtaining Georgetown’s prior approval, violating the Occupancy Agreement.
- Georgetown filed an ejectment action seeking termination of Cunningham’s occupancy rights and sought prejudgment possession of the unit.
- At the prejudgment-possession hearing, Cunningham did not have a meaningful opportunity to present evidence supporting her claim to continued possession.
- The trial court ordered that Georgetown would receive prejudgment possession unless Cunningham posted a $10,000 possessory bond to remain in the unit during the litigation.
- Cunningham pursued an interlocutory appeal from the prejudgment-possession order.

## Issues

1. Whether a cooperative member-shareholder’s interest in a unit is more than an ordinary tenant’s interest, limiting a cooperative’s ability to use summary landlord-tenant remedies to dispossess the member before final judgment.
2. Whether the trial court erred by granting prejudgment possession conditioned on a $10,000 bond where the hearing did not provide a meaningful chance for Cunningham to present evidence and where the order lacked the required legal and factual basis for such extraordinary relief.

## Decision

- The Court of Appeals of Indiana vacated the trial court’s prejudgment-possession order and remanded for further proceedings.
- The court concluded that Cunningham’s cooperative interest, tied to stock/membership and the right to occupy a specific unit, involved a vested property interest greater than a standard residential leasehold.
- The court ruled that contractual language labeling the relationship “landlord-tenant” did not control when the parties’ arrangement included investment and ownership-like rights and obligations.
- The court held that the prejudgment transfer of possession—especially one that effectively required Cunningham to pay a substantial bond to stay in her home—was improper on this record because the hearing and order did not provide the level of process and support required before awarding possession prior to a final determination on the merits.

## Legal Principles

- Courts classify property and possessory interests by examining the substance of the transaction and the rights and duties created, not solely by labels in an agreement.
- A cooperative housing arrangement may confer on a member-shareholder a vested, ownership-like interest linked to possession of a particular unit, even though the cooperative holds title to the building.
- Prejudgment possession is an extraordinary remedy; before a court shifts possession prior to final judgment, the procedures used must provide a meaningful opportunity to be heard and must rest on an adequate evidentiary record supporting the relief ordered.
- A possessory bond requirement does not by itself cure a deficient prejudgment-possession process when the affected party’s interest is more than a simple tenant’s right to occupy.

## Conclusion

The Indiana Court of Appeals vacated a trial court order awarding Georgetown Homes prejudgment possession of Cunningham’s cooperative unit unless she posted a $10,000 bond, holding that Cunningham’s member-shareholder interest was a vested property interest exceeding an ordinary leasehold and that the prejudgment-possession ruling, entered after a hearing that did not allow a meaningful presentation of evidence, lacked the process and support required for such relief.


Cunningham v. Georgetown Homes, Inc., 708 N.E.2d 623 (1999)