Petition for Review of a Decision of the District of Columbia Rental Housing Commission
Before Belson, Schwelb and Farrell, Associate Judges.
The opinion of the court was delivered by: Schwelb
SCHWELB, Associate Judge: Goodman asks us to review a decision of the District of Columbia Rental Housing Commission holding that his landlord, Graybill, was entitled to claim exemption from rent stabilization under the so-called "small landlord" provision of the Rental Housing Act. See D.C. Code § 45-1516 (a)(3) (1981). *fn1 This section excludes from coverage "any rental unit in any housing accommodation of 4 or fewer units." Id.; see Blacknall v. District of Columbia Rental Housing Commission, 544 A.2d 710, 711 (D.C. 1988). He also contends that he was denied the opportunity to present favorable evidence to the Commission, and that Graybill should not have been granted an exemption because he allegedly failed to give Goodman statutorily-required written notice, before the execution of Goodman's lease, that the property was not subject to the provisions of the Act. *fn2
We agree with the Commission that Graybill was entitled to the exemption, and we hold that Goodman has not presented us with an adequate record to support his claim that his right to present evidence was improperly restricted. The question regarding Graybill's alleged failure to provide Goodman with the statutorily-required notice is more difficult. *fn3 The point was never directly articulated to the Commission, and the Commission did not rule on it. Although there are some arguably extenuating circumstances in this case for Goodman's failure to preserve the issue, and although we are reluctant to insist on rigorous adherence to procedural niceties in proceedings under a remedial statute which relies in substantial part on lay litigants to enforce it, we are compelled to conclude that the record before us with respect to the landlord's alleged failure to comply with the statutory notice requirement is simply inadequate to enable us to review it in any meaningful way. No error having been demonstrated, we affirm the Commission's decision.
At all times relevant to this proceeding, Graybill and his wife owned a small apartment building at 4034 Calvert Street, N.W. *fn4 The building has five apartments, all of which were rented through June 30, 1980. After the resident of the basement apartment gave notice in May 1980 that she was vacating the unit, the Graybills decided not to re-rent it. On September 12, 1980, they filed a "Claim of Exemption Statement" with the Rental Accommodations Office in which they represented under oath that 4034 Calvert Street, N.W. contained four rental units. The Graybills further swore that neither of them had any direct or indirect interest in any other rental unit in the District of Columbia. The Commission found--and there is no evidence to the contrary--that the basement apartment was never again offered for rent.
On December 8, 1980, Goodman rented Apartment 4 on the second floor of the property. In early 1984, a dispute arose over his rent. Goodman filed a petition with the Rental Housing Commission alleging that he had been overcharged and that Graybill was not entitled to claim the "small landlord" exemption because the accommodation contained five rental units rather than four.
The petition precipitated a number of hearings before the agency. A hearing examiner initially ruled for Graybill on the question of coverage, but later convened another hearing and decided favorably toe Goodman. The Commission as then constituted (the former Commission) agreed with Goodman that Graybill was not entitled to the exemption, but remanded to the hearing examiner on certain issues relating to the proper remedy. The hearing examiner addressed and decided each of the issues remanded to him, but did not reopen the question of Graybill's right to the exemption since the Commission had already decided the point in Goodman's favor. Both parties appealed.
The present Commission, which had taken office while the case was proceeding on its labyrinthine route through the administrative process, decided not to limit itself to consideration of the issues which had been addressed by the hearing examiner on remand. Rather, the Commission elected to revisit the underlying question whether Graybill was entitled to the exemption. On June 3, 1988, in a comprehensive and thoughtful opinion, the Commission, citing intervening changes in the law, declined to follow its predecessor body's decision as "law of the case" and held instead that Graybill had qualified for the exemption. *fn6 The Commission ruled, in pertinent part, as follows:
In reviewing the record, we are mindful that one of the social goals of the Rental Housing Acts is to regulate and in some sense discourage the conversion of rental units to alternate uses. D.C. Code (1981 Ed.), § 45-1502 (4), and Id. (1986 Repl. Vol. 8), 45-2502 (4). But neither we nor the Court have viewed this policy as an absolute bar to conversion or removal of units from the market. We were careful in Blacknall, supra, *fn6 not to encourage the removal of units from the market, and to discourage the circumvention of rent control that would arise if a landlord were allowed to temporarily remove a unit from the market to acquire an exemption for remaining units. It was our intent in Blacknall to state clearly that a small landlord exemption could not be granted if the fifth unit was removed either temporarily or in bad faith.
In this case, we think the record compels a finding that the basement apartment was not temporarily removed from the market or removed in bad faith. This is evidenced by the fact that the unit was kept continuously vacant for more than four years after the claim of exemption was filed and before there was any controversy over the claim of exemption. There is nothing in the record to suggest that the landlord ever sought to return the basement apartment to the housing market after he had filed his claim of exemption and raised rents in the other four units, and the tenant introduced no evidence to suggest that the basement vacancy was temporary, not continuous, or obtained or maintained in bad faith. We find that the landlord met the evidentiary burden of establishing that the basement unit was continuously vacant for more than four years, and neither rented nor offered for rent during that time. While this may not be a "permanent" removal of the unit from the market, *fn7 it can hardly be classified as temporary or transitory. The record admits to no other finding. Once this evidence was admitted, the tenant proffered nothing to avoid its inevitable Conclusion: that for more than four years this landlord had only four units rented or offered for rent in the residential market. On the evidence of record, we find that the Rent Administrator abused his discretion in failing to make this inevitable finding.
By the tenant's own testimony, he knew of the claim of exemption from a conversation with the landlord approximately two years before he filed his petition. Thus he had ample time to observe whether the basement apartment appeared to be rented or occupied. Furthermore, in the almost four years that this case has been pending with its various appeals and arguments, the tenant has not even suggested that the basement unit was occupied during all of this time.
The landlord has the burden of proving that he is exempt from the coverage of the Rental Housing Act, and the statutory exemptions are to be narrowly construed. Revithes v. District of Columbia Rental Housing Commission, 536 A.2d 1007, 1017 (D.C. 1987); Remin v. District of Columbia Rental Housing Commission, 471 A.2d 275, 279 (D.C. 1984). The Act forecloses sophisticated as well as simple-minded modes of nullification or evasion. Blacknall, supra, 544 A.2d at 713 (concurring opinion). Notwithstanding this generous and expansive approach to the construction of a quintessentially remedial enactment, however, it is now established beyond cavil that landlords are permitted to remove rental units from the market, and that although vacant or temporarily withdrawn units are to be counted in determining eligibility for the exemption, permanently withdrawn units are not. Blacknall, supra, 544 A.2d at 713; Revithes, supra, 536 A.2d at 1016-17 & n.24. *fn8
The Graybills swore in their application for an exemption that there were only four rental units in the building. Both the former Commission and the present one so found. Goodman submitted no evidence to indicate that a fifth unit was on the market, either before he filed his petition or since. An apartment which had not been occupied for almost four years when Goodman filed his petition cannot fairly be characterized as having been "vacant" or "temporarily" withdrawn from the market. Cf. Revithes, supra. We therefore conclude that the Commission's finding to the effect that the basement unit had been sufficiently removed from the market is supported by substantial evidence and is not arbitrary or capricious. Accordingly, we must sustain it. Cohen v. District of Columbia Rental Housing Commission, 496 A.2d 603, 605 (D.C. 1985). Since the unit had been withdrawn from the market for a continuous period of long duration, Graybill was entitled to the exemption. Blacknall, supra, 544 A.2d at 713.
Goodman places heavy reliance on our decision in Revithes, supra. In that case, we reviewed in some depth the history of the "small landlord" exemption. 536 A.2d at 1013. We emphasized the remedial purposes of the Rental Housing Act, and held that it should be construed in a manner which would discourage its circumvention. Id. at 1015-16. We observed, in particular, that
the exclusion of vacant or temporarily withheld units from the aggregate number of a landlord's holdings would encourage landlords to withdraw rental units from the market in order to obtain higher rents for the remaining units. Such a result is diametrically ...