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10/16/92 CAFRITZ COMPANY v. DISTRICT COLUMBIA

October 16, 1992

CAFRITZ COMPANY, PETITIONER
v.
DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, RESPONDENT; JOSEPH ROGERS, PETITIONER V. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, RESPONDENT



Petitions for Review of an Order of the District of Columbia Rental Housing Commission.

Before Terry, Schwelb and King, Associate Judges.

The opinion of the court was delivered by: King

KING, Associate Judge:

This matter is before the court on cross-petitions from decisions of the Rental Housing Commission (hereinafter "Commission") by Joseph Rogers ("tenant") and the Cafritz Company ("landlord"), the housing provider and intervenor before the Commission. In his appeal, the tenant seeks reversal of a finding by the Rent Administrator, affirmed by the Commission, that the landlord was entitled to a capital improvement rent increase of $30 per month. Rogers v. District of Columbia Rental Housing Commission, No. 91-859. In its cross-appeal, the landlord challenges the Commission's ruling that it was compelled, by holdings of this court, to automatically stay the rent increase pending final resolution on appeal. Cafritz Company v. District of Columbia Rental Housing Commissioner, No. 91-845. We affirm the Commission's finding permitting the rent increase. We reverse the Commission's order imposing an automatic stay of the Rent Administrator's decision ordering the rent increase.

These cases involve a rent increase request at a forty-five year old, 164-unit apartment house, located at 2000 Connecticut Avenue, N.W. Pursuant to the Rental Housing Act of 1985 ("Rental Housing Act") the landlord filed a petition seeking a rent increase to cover the costs of a capital improvement proposal for the replacement of the original elevators and boiler mechanical plant, and for the installation of emergency generators. The expected cost of the improvements exceeded $350,000, and the landlord requested approval of a $30 per-month, per-unit rent increase. A contested hearing was conducted in July 1989 with only Rogers and the Tenant Association ("Association") appearing in opposition. At the Conclusion of the hearing the landlord and the Association entered into a settlement agreement, pursuant to which the latter withdrew its opposition to the rent increase request.

In March 1990 the Rent Administrator issued a final decision, granting the petition in full, which permitted the landlord to proceed with the capital improvements and implement the rent increase once the improvements were completed and paid for. The decision of the Rent Administrator was appealed to the Commission by Rogers. Thereafter, in September 1990, the improvements were completed, and the rent increase was implemented in October 1990.

In April 1990, Rogers moved to stay the Rent Administrator's decision pending appeal; however, the landlord never received notice that the motion had been filed. The Commission denied the motion, concluding that it need not reach the merits of Rogers's request because, based upon its interpretation of two cases previously decided by this court, it was compelled to hold that a stay was automatic. Neither the landlord nor the tenant received notice of that ruling by the Commission, and the tenant began paying the rent increase in October 1990 when it was implemented after the completion of the improvements.

A hearing on Rogers's appeal was held before the Commission in May 1991, during which both the landlord and the tenant learned, for the first time, that the Commission had previously ruled that the rent increase should be automatically stayed. Thereafter Rogers ceased paying the rent increase. Cafritz's motion for reconsideration of the order ordering the stay was denied, with the Commission reiterating that it considered itself bound, by the two cases mentioned earlier, to hold that a stay was automatic. The appeal in No. 91-845 followed. Subsequently the Commission issued an order affirming, in all respects, the Rent Administrator's decision with respect to the rent increase. The appeal by Rogers in No. 91-859 followed.

Tenant's Appeal

The tenant makes three claims: (1) the new elevators and boiler, that replaced the old ones, cannot qualify as capital improvement under the Rental Housing Act; (2) it was error to permit a rent increase to cover the cost of replacement of the elevators and boiler since the cost of the original elevators and boiler had been recovered by depreciation; and (3) it was error to reject Rogers's claim that a rent increase was unwarranted for the new equipment, since provision of a working boiler and elevators was required as part of the contract originally agreed to when the tenant moved into the housing accommodation.

Only the first claim *fn1 merits more than summary Discussion. That claim is based upon the tenant's reading of a definitional provision applicable to the rent increase request. The Rental Housing Act allows a rent increase to cover the cost of a capital improvement. Further, the Rental Housing Act provides that:

"Capital improvement" means an improvement or renovation other than ordinary repair, replacement or maintenance if the improvement or renovation is deemed depreciable under the Internal Revenue Code (26 U.S.C.).

D.C. Code § 45-2503(6) (emphasis supplied).

The tenant argues that the boiler and elevators were "replacements" -- a fact which is not disputed by the landlord. Therefore, argues the tenant: since pursuant to ยง 2503(6) a "replacement" is excepted from the definition of capital improvement, and since it is undisputed that the boiler and elevators were replacements, it follows that the ...


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