Petition for Review of a Decision of the District of Columbia Rental Housing Commission
Before Schwelb, Farrell, and Wagner, Associate Judges.
The opinion of the court was delivered by: Farrell
FARRELL, Associate Judge: This petition for review brings before us a decision of the District of Columbia Rental Housing Commission (RHC) which in turn reversed a decision by an RACD *fn1 hearing examiner voiding two rent increases implemented by the respondent housing providers (hereafter the "owners"). On the owners' appeal from the RACD decision, the RHC determined that the hearing examiner erred in failing to apply res judicata principles which would have resulted in the Conclusion that the housing accommodation was exempt from the rent increase restrictions of the Rental Housing Act (the Act), *fn2 as determined in a prior proceeding involving the same parties. Therefore, the RHC did not reach the owners' contention on the merits that the RACD erred in determining that they operated the rental unit as a partnership and for that reason were not exempt from the Act's coverage. We reverse the RHC's application of res judicata, as we hold that the owners failed as a matter of law to establish their preclusion defense in the proceedings before the hearing examiner. We remand to the RHC for consideration of the owners' claim of error by the examiner on the merits.
On July 13, 1988, petitioner filed Tenant Petition 21,400 with the RACD, challenging rent increases taken by the owners in 1985 and 1987. After unsuccessful settlement negotiations, the case proceeded to a hearing in September 1988 before RACD examiner Anderson, at which petitioner contended, as relevant here, that (1) the owners' claim of exemption from coverage by the Act was invalid because they owned and operated the housing accommodation in question as a partnership, see D.C. Code § 45-2515 (a)(3)(A) (1990) (exempting from coverage of the Act a housing accommodation owned by not more than four "natural persons"); Price v. District of Columbia Rental Hous. Comm'n, 512 A.2d 263, 267-68 (D.C. 1986); and (2) the rent increases were invalid because the rental unit was not in substantial compliance with District of Columbia housing regulations. See D.C. Code § 45-2518 (a)(1)(A) (1990). The owners disputed both contentions, and additionally asserted that petitioner was barred by a previous RACD order from litigating the partnership (hence the exemption) issue, which could have been litigated in the prior proceeding.
Specifically, counsel for the owners asked the examiner to take "judicial" notice of a 1987 written decision by the RACD in case number TP 20,871, which had involved one (though not both) of the rent increases at issue here. The RACD in that case had upheld the owners' claim of exemption from the Act's coverage. Counsel argued here that petitioner, "while not a party to [the prior proceeding], was present at the time that this took place" and had "full opportunity to enter into the case"; so that, although the partnership issue had not been litigated at the hearing, preclusion principles barred its litigation now because she could have raised the issue at that time. In support of this defense, the owners' counsel offered as proof only "what's on the paper," that is, the RACD examiner's written decision of August 7, 1987. That document listed petitioner as one of two tenants who were "present at the hearing," but captioned the case: "Ms. Carol Wills, Tenant (Petitioner) v. Shirley Gray, Housing Provider (Respondent)." Petitioner was not otherwise named in the decision. She therefore objected to official notice being taken of a document which, on its face, described an action "between a different party and [the owners]." She argued that she could not be bound by a party's failure to raise an issue solely because of her presence as a non-party. The hearing examiner agreed to "take notice" of the written decision, saying that "the document will be addressed." Counsel for the owners had the last word, telling the examiner: "You have the document. Give it whatever weight this Examiner feels is appropriate to give it and whatever decision that would be there."
In his written decision, the examiner proceeded directly to the merits, finding that the owners had forfeited their claim to exemption under the statute by owning and operating the housing accommodation as a partnership, and that for several reasons (including non-compliance with the housing regulations) the rent increases violated the Act. He ordered partial relief in the form of a rent refund and rollback. On appeal to the RHC, the owners did not dispute the findings of violations, but challenged the examiner's failure expressly to address their argument of claim preclusion or res judicata, and his determination on the merits that they had operated the unit as a partnership rather than as "natural persons."
At oral argument before the RHC, the owners' counsel for the first time referred to the actual tenant petitions filed in the earlier proceeding (TP 20,871), which he had discovered in his file. He handed them to a commissioner and asked the RHC to take official notice of them. Petitioner objected to the reviewing body's consideration of the petitions, which had not been part of the record before the examiner. Her counsel argued that "the defense of . . . preclusion is an affirmative defense, and the proponent of that doctrine has the burden of coming forward with evidence to support that proposition like any other affirmative proposition." Inasmuch as the owners had claimed and proven to the examiner only that petitioner was present at the 1985 hearing, the examiner was correct, counsel urged, in implicitly rejecting the owners' reliance on a doctrine -- res judicata -- which assumed identity of the parties in the prior proceeding.
The RHC, in its written decision, effectively agreed that the written ruling of the RACD of August 7, 1987, by itself, could not preclude consideration of the partnership issue on the merits. However, disregarding (or overlooking) petitioner's objection to consideration of the pleadings in TP 20,871, the RHC explained that "the parties agreed we would take judicial notice of TP 20,871 and counsel for the housing provider offered the Commission the decision and order in TP 20,871 as well as copies of three tenant petitions that had been filed in that case," including "the petition of Helen Johnson" (emphasis added). Moreover, the RHC went beyond these documents and took "official notice of the original file in TP 20,871," concluding from the file as a whole that "it is perfectly clear that Ms. Johnson was . . . a party in that case." The RHC explained:
The originals of the three tenant petitions are in the file and each contains two RACD date stamps. One stamp is for January 17, 1986; the other is for March 30, 1987. There is also a memorandum dated March 30, 1987 from Sylvia F. Peters to Michael Scott, an employee of RACD in which Ms. Peters explains that she is resubmitting three tenant petitions which were filed the previous year, but which were returned by RACD to the petitioners by mistake. Each original petition has the RACD number TP 20,871 on the front. There are also in the file notices of hearing which were sent to Ms. Johnson, Ms. Peters and Ms. Willis as parties to the case. In addition, there is a notice of appearance sheet which was filled out by all present at the hearing. One of the entries is by Charles A. Brady who identified himself as, "Attorney for Petitioners." *fn4 Ms. Willis, Ms. Johnson and Ms. Peters also signed the appearance sheet where each identified himself as "Tenant." Similarly, the hearing examiner in his decision and order in TP 20,871 identified Mr. Brady as Counsel for "petitioner's" .
Because it was thus "clear to the Commission . . . that Ms. Johnson was a party to TP 20,871 and . . . was represented by counsel," the RHC applied settled principles of res judicata in holding that she was barred from relitigating an issue -- operation of the premises as a partnership -- which she ...