September 12, 1990
TENANTS OF 2301 E STREET, N.W., PETITIONER
DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, RESPONDENT. COLUMBIA PLAZA LIMITED PARTNERSHIP, INTERVENOR
Petition for Review of a Decision of the District of Columbia Rental Housing Commission
Ferren and Schwelb, Associate Judges, and Reilly, Senior Judge. Opinion for the court by Associate Judge Schwelb. Concurring opinion by Senior Judge Reilly.
The opinion of the court was delivered by: Schwelb
This case had its inception in a dispute over relatively minor repairs to roofs which also serve as patios, and over the effect of such repairs on rent ceilings. It requires us to delve into the mysteries of agency procedure and the scope of judicial review thereof, the reach of the "private attorney general" doctrine, the perils of retroactivity, and that most familiar chestnut of the connoisseur of Rental Housing Act litigation, the Ungar presumption. *fn1
Intervenor Columbia Plaza Limited Partnership (the landlord) filed a capital improvement petition pursuant to D.C. Code § 45-2520 (1986), requesting that the rent ceiling of four apartments at 2301 E Street, N.W. be increased by $40.10 per unit. The hearing examiner dismissed the petition on technical grounds, but denied the tenants' counter-request for a reduction in the rent ceiling and for penalties and counsel fees. On the tenants' appeal, the District of Columbia Rental Housing Commission affirmed the hearing examiner's ruling.
The tenants now ask this court to review the Commission's order, contending that the denial of relief to them was error. We affirm the Commission's decision with respect to the requested rent reduction and penalties, but remand for further proceedings on the issue of counsel fees.
The landlord's petition was based on a claimed need to waterproof the roof and to rehabilitate the roof deck. In October 1986, during the proceedings before the hearing examiner, counsel for the tenants moved to dismiss the petition upon the ground that it had not been signed. The hearing examiner held the motion in abeyance.
The tenants claimed at the hearing that the repairs on which the requested increase in the rent ceiling was based were in reality for the benefit of commercial tenants and had resulted in a reduction of facilities and services to the tenants' units. *fn2 Specifically, they contended that portions of their apartments had become unusable as a result of the work. At the Conclusion of the hearing, the hearing examiner requested (and eventually received) post-hearing submissions with respect to the affected square footage.
In a decision issued in January 1987, the hearing examiner did not address the post-hearing submissions but dismissed the petition on the ground that the filed copy of it was unsigned. *fn3 He declined to reach the tenants' request for a rent reduction or four penalties, holding that these issues were not properly before him in a proceeding generated by the landlord's capital improvement petition. *fn4 The tenants appealed to the Commission. The landlord did not.
On May 8, 1989, the Commission sustained the decision of the hearing examiner. The Commission also denied the tenants' request for counsel fees. In doing so, the Commission cited its own prior decision in Hampton Courts Tenants' Ass'n v. William C. Smith Co., C120, 176 (RHC July 8, 1988), in which it had held that the presumption that prevailing tenants are entitled to an award of counsel fees on a "private attorney general" theory, see Ungar v. District of Columbia Rental Hous. Comm'n, 535 A.2d 887, 892 (D.C. 1987), does not apply in proceedings initiated by the housing provider. The tenants filed a motion for reconsideration, which the Commission denied on June 1, 1989.
The Commission held in its initial decision that the tenants' request for a reduction of rent was not properly before it in the context of a capital improvement petition filed by the landlord. It explained that
the housing provider is not put on notice of any issues not presented in the capital improvement petition. Since the tenants can easily file a tenant petition with allegations of rent overcharges or, as in this case, reductions in services or facilities, no prejudice attaches to these issues by the failure of the hearing examiner to rule upon them in a capital improvement petition. Additionally, [under the procedure proposed by the tenants] the housing provider cannot allege a violation of the notice requirements of the D.C. Administrative Procedure Act, D.C. Code 1-1509 (1987 Repl. Vol. 2). Accordingly, the Commission finds no error in the hearing examiner's refusal to consider issues relating to reductions in services and facilities.
The agency relied on its prior decision in Epstein v. McCampbell, HP 10,165 (RHC Feb. 12, 1985), in which it had reached the same result where a landlord had filed a hardship petition and the tenants had sought a reduction in the rent ceiling.
We agree with the Commission. The agency's rules contain no provision for counterclaims, and the position for which the tenants contend would compel the landlord to defend a de facto counterclaim without prior notice of its contents. As the landlord correctly points out in its brief, there was nothing in the Rental Housing Act, in the regulations promulgated pursuant to it, 14 D.C.M.R. § 4210 (1989), or in the Notice of Hearing served upon the parties in connection with the capital improvement petition, which gave the landlord any notice that the hearing would address possible reductions in the rent ceiling, rather than the increase which the landlord itself was requesting.
The tenants claim that the Commission's capital improvement petition form, which it is the landlord's responsibility to complete, gave the landlord notice that the tenants could make a claim for reduction in services and facilities in conjunction with a capital improvement petition. *fn5 This contention founders on its own logic; the landlord cannot be required to give itself notice that the tenants are making a claim against it, nor does the landlord receive notice of the tenants' claim by completing (or not completing) a form prescribed by the Commission.
Moreover, as the agency explained, the form was not designed to elicit the kind of information with which we are concerned here. In its opinion on reconsideration, the Commission held that
the petition form requires information on reduction in services only as they relate to the proposed capital improvement, i.e. if the housing provider has been paying the utilities and the capital improvement would make the tenant responsible for the utilities, then the housing provider must show the cost to be deducted from the current rent for no longer providing utilities.
We find this interpretation by the agency of its own form entirely reasonable. We cannot agree with the tenants' contention that the present situation resembles the one posited by the Commission, involving a change from payment of utilities by the landlord to payment by the tenants. The form, as we read the Commission's order, was intended for the situation where the capital improvement by its nature makes a permanent change in the landlord's obligation to the tenant to the tenant's detriment. It was not designed for a scenario, such as the one that allegedly exists here, where work being done on a proposed capital improvement temporarily interferes with a tenant's use of his premises. That type of impairment, as the Commission reasonably held, is properly addressed by a tenant petition.
At argument, counsel for the tenants contended that the reduction in services could be considered as an offset or recoupment against the landlord's claim. In the present case, however, the landlord received no relief against which any recovery for the tenant could be offset. The Commission's use of a standardized form directed to an entirely different situation did not inaugurate a counterclaim procedure through the back door.
Our review of the agency's interpretation of the Rental Housing Act and of its own procedures is deferential. Winchester Van Buren Tenants Ass'n v. District of Columbia Rental Hous. Comm'n, 550 A.2d 51 (D.C. 1988). Here, the Commission's view that a request to reduce the rent ceiling must be raised in a separate tenant petition, rather than by resort to a de facto counterclaim, is neither plainly wrong nor inconsistent with the legislative purpose. Id. at 52. We discern no reason to substitute our judgment for that of the Commission with respect to its own procedures. Accordingly, we conclude that the Commission properly denied the tenants a decrease in the rent ceiling. *fn6
Two weeks before argument in this case, in Hampton Courts Tenants' Ass'n v. District of Columbia Rental Hous. Comm'n, 573 A.2d 10 (D.C. 1990), this court reversed the Commission's Hampton Courts decision, on which the agency had relied in declining to award counsel fees to the tenants. This court concluded that
the Commission's construction of the statute, rejecting the Ungar presumption and substituting therefor its own negative presumption, is plainly wrong. We hold that the Ungar presumption applies to prevailing tenants in both tenant-initiated and landlord-initiated proceedings.
Id. at 13. We held, in effect, that a tenant who successfully resists an attempt by the landlord to raise the rent by resort to a capital improvement petition acts as a "private attorney general" *fn7 in protecting tenants of low or moderate income from unwarranted increases in their rent. See also Goodman v. District of Columbia Rental Hous. Comm'n, 573 A.2d 1293, 1297 (D.C. 1990), emphasizing the "quintessentially remedial" character of the Rental Housing Act.
The landlord argues that our Hampton Courts decision should be given prospective application only. *fn8 Specifically, the landlord claims that, in deciding to go forward with its capital improvement petition, it justifiably relied on Commission precedent restricting the private attorney general doctrine to proceedings initiated by tenants. The landlord also says that this court's decision in Hampton Courts is a departure from prior law which it could not reasonably have been expected to anticipate. We find both contentions unpersuasive.
The capital improvement petition in this case was filed on July 18, 1986. The landlord claims to have relied on the decision of the Commission in Hagner Management Corp. v. Rutherford, T/P 12, 117 (RHC September 8, 1986), for the proposition that the tenants were not entitled to recover their counsel fees. The landlord would surely have required a crystal ball or, to borrow from its counsel's brief, "the gift of prophecy," to rely on a case which was not decided until six weeks after the action which was allegedly taken in reliance upon it. Moreover, this reliance is supposed to have taken place when the landlord was litigating pro se.
We likewise cannot agree with the landlord's argument that this court's decision in Hampton Courts was a dramatic and unexpected departure from prior law. The question whether the rule enunciated in Ungar and in Alexander v. District of Columbia Rental Hous. Comm'n, 542 A.2d 359 (D.C. 1988), could properly be applied to landlord-initiated proceedings was one of first impression, but the principle that tenants who resist unwarranted increases in their rent should presumptively be compensated for their legal expenses was surely common to all three cases. The purposes of the statutory provision for counsel fees are to encourage tenants to enforce their own rights and attorneys to accept the cases of non-affluent tenants. Alexander, supra, 542 A.2d at 360. These goals are promoted by enabling tenants who prevail on the merits to recover their counsel fees, and this is true irrespective of whether the tenants or their landlord initiated the proceedings.
Citing Mendes v. Johnson, 389 A.2d 781 (D.C. 1978), and Kelly Adjustment Co. v. Boyd, 342 A.2d 361 (D.C. 1975), the landlord contends that our decision in Hampton Courts ought only to be applied prospectively, and not to cases in which appeals were pending when that case was decided. In the present case, however, the tenants had already raised and briefed the very issue decided in Hampton Courts before that decision was issued, and we do not think that the retroactivity analysis in Mendes and Kelly Adjustment was designed to deny the benefits of a change in the law to individuals so situated. These tenants' right to recover counsel fees should not depend on whether Hampton Courts was decided before or after this case -- a fortuitous matter over which the tenants had no control -- when the same issue was raised in both.
Moreover, even if the landlord could overcome this hurdle -- and we do not think it can -- Mendes and Kelly Adjustment would be of no avail to it. In Mendes, this court overruled precedents which had permitted a landlord to resort to self-help in evicting a delinquent tenant. In Kelly Adjustment, collection agency practices which had long been utilized without judicial disapproval had been invalidated by a then-recent decision of this court. *fn9 Each of these cases thus arose out of a situation in which a party could reasonably have relied on the prior state of the law in planning his or her conduct, and application of the new rules to pending cases would have been inequitable. No such reasonable reliance would have been possible here. *fn10
Even if our decision in Hampton Courts had overruled prior precedent, which it did not, it is our duty to apply its holding to this case unless equitable considerations require a contrary result. See United States v. The Schooner Peggy, 5 U.S. 103, 1 Cranch (5 U.S.) 103, 110, 2 L. Ed 49 (1801) (where there has been a statutory change in the applicable law since the lower court's decision, the reviewing court must apply the law as revised, even though the lower court's decision was rightful when made). Accord, Bell v. Maryland, 378 U.S. 226, 231 & n.2, 84 S. Ct. 1814, 12 L. Ed. 2d 822 (1964). Here, the same equitable considerations which led to the decision in Hampton Courts, based on the same remedial legislation, support the invocation of the Ungar presumption in the present case. We must therefore follow Hampton Courts. M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C. 1971). *fn11
For the foregoing reasons, the decision of the District of Columbia Rental Housing Commission is affirmed in part and reversed in part, and the case is remanded for further proceedings consistent with this opinion on the issue of counsel fees. *fn12
REILLY. Senior Judge, Concurring specially: While I agree with the Disposition of the petition for review and the analysis in Parts I and II of the majority opinion, I regard most of the Discussion on the issue of counsel fees in Part III as unnecessary in view of the fact that at the time these proceedings were initiated by the landlord, no administrative ruling on this issue had even been made. Thus, neither party was in a position to claim reasonable reliance on agency precedent when the application for a rent increase based on capital improvements was filed.
Although the recent decision of this court in Hampton Courts did not overrule any judicial precedents, *fn1 I do not regard as unfounded its depiction by the landlord as a departure from prior law, for it not only reversed an administrative ruling, but limited the statutory discretion of the agency to award (or withhold) attorney fees to the prevailing party. Whether or not this case was correctly decided is not a question any division of the court is called upon to discuss. Under our rules, we are bound by it, unless and until it is overthrown by an en banc court, subsequent legislation, or a decision of the Supreme Court. *fn2
Hence, the majority opinion's attempt to justify Hampton on the ground that the attorney fee provision in the District Rental Housing Act is analogous to a corresponding section of the federal Fair Housing Act is superfluous. It may also have a mischievous effect, for the analogy is strained. The federal statute reflects a national policy against racial discrimination. Thus persons aggrieved by such discrimination who retain lawyers to vindicate their rights may well be conceived as acting as private attorneys general. The same can scarcely be said of a local statute which protects wealthy as well as impoverished tenants from the law of supply and demand. As one of the express purposes of the statute is to prevent further erosion of the supply of available rental units, certainly a landlord who expends money to keep the rental structure from deteriorating so badly that it would have to be taken off the rental market is furthering the objectives of the statute. *fn3 It would then seem to follow that such a landlord is entitled as a "private attorney general" to an award of counsel fees if his lawyer prevails in a contested case in which the tenants unsuccessfully oppose a compensating rent increase. But the notion that the rent control law should receive the same interpretation as statutes forbidding racial discrimination when a counsel fee issue is presented suggests that a landlord has no such entitlement. *fn4 Surely we should avoid any observation which might lay the groundwork for any such one-sided holding. Tenants have no monopoly of virtue, and landlords who promote the purposes of the Act by capital improvements or by maintaining existing units in a high state of repair should not be denied equal treatment when litigation costs are incurred. *fn5
I also regret that the majority opinion did not put to rest the landlord's contention that if Hampton Courts is applied here, such "retroactive" application will enable tenants to reopen cases which have already been closed, apply for counsel fees, and place an administrative burden upon the agency. Even granted that Hampton announced a new rule of decision, its application to the counsel fee issue in the instant case is not "retroactive," because as the majority points out, the tenants here had made the same claim for fees at the agency level that was asserted by the Hampton tenants.
But as Kelly Adjustment *fn6 made clear, judgments which have become final may not be invalidated retroactively so that the losing litigants may take advantage of a new rule of decision. Accordingly, I see no reason for refraining from holding that tenants who made no contemporaneous request for legal fees while their own cases were pending have no standing to return to the Commission and invoke the Hampton rule. Plainly, Hampton has no impact on cases where no such request was made during the proceedings before the Commission, or if made and rejected, was not raised again in a petition for judicial review challenging the adverse ruling of the agency. It is equally plain that our decision and Hampton are applicable to petitions for review currently pending which present the same issue. See Linkletter v. Walker, 381 U.S. 618, 85 S. Ct. 1731, 14 L. Ed. 2d 601 (1965).