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Real Estate Escrow, Inc. v. Fitzgerald

April 01, 2004


Appeal from the Superior Court of the District of Columbia (CA-3295-98) (Hon. Stephanie Duncan-Peters, Trial Judge)

Before Steadman, Farrell and Glickman, Associate Judges.

The opinion of the court was delivered by: Steadman, Associate Judge

Argued December 4, 2003

This appeal involves a dispute between an owner of real property who prevailed in a suit to redeem the premises after a tax sale and the purchaser (technically, the successor in interest to the original purchaser) at the tax sale who received a tax deed. The disputed question is over the tax purchaser's liability for imputed rental value in circumstances where the tax purchaser affirmatively took steps to keep the property vacant.

In the case before us, prior to the determination that the tax deed was invalid but while aware that the owner was asserting rights in the property, the tax purchaser evicted a tenant on the premises and left the premises vacant. The tax purchaser rejected a proposal by the owner that the premises be rented and the rent proceeds placed into escrow pending the determination of the validity of the tax deed.

In its order finding the tax deed to have been invalid, the trial court ruled that the owner was entitled to recover from the tax purchaser the lost rental value of the premises for the period following the eviction. On appeal, the tax purchaser acknowledges the invalidity of the tax sale but challenges the rental value award. We affirm.


"The trial court's factual findings are binding upon this court unless they are clearly erroneous" and evidence is viewed in the light most favorable to the prevailing party. Drevenak v. Abendschein, 773 A.2d 396, 415-16 (D.C. 2001). In 1983, appellee, Lee Fitzgerald, purchased a condominium, known as Apartment 213, at One Scott Circle, Washington D.C. (the "subject property"), along with three other condominiums in that building. Mr. Fitzgerald paid all real estate taxes for the three other units but did not receive the real estate tax bills for and did not pay the necessary taxes on the subject property.

Following a tax sale and Mr. Fitzgerald's failure to redeem the property, on *fn1 December 13, 1995, a tax deed was issued by the District of Columbia to David Levin for the subject property for $7,350.42. Appellant, Real Estate Escrow, Inc. ("REE") purchased the property from the estate of David Levin on December 11, 1996.

In May 1997, REE filed a complaint to quiet title to the subject property. A *fn2 final order divesting Mr. Fitzgerald of his interest in the property was entered on October 31, 1997. That order was subsequently vacated and service of process was quashed on March 7, 2000.

Meanwhile, Mr. Fitzgerald, through his management company, leased the subject property to Kris Menga for one year beginning October 1, 1997 for $675.00 per month. On March 18, 1998, REE filed a complaint for possession against Ms. Menga. Mr. Fitzgerald did not intervene in the case but appeared with his attorney to inform the court that it was his property that was before the court. Ms. Menga did not appear at the April 8, 1998 hearing, and the court entered judgment for possession to REE by default. The subject property remained vacant after Ms. Menga's departure in April of 1998. Mr. Fitzgerald attempted to negotiate an arrangement with REE to permit Ms. Menga to remain on the premises with the rent to be escrowed pending the outcome of the title dispute or to rent the premises to another tenant on the same basis. However, all such proposals were rejected by REE. *fn3

On May 1, 1998, Mr. Fitzgerald filed suit against REE to recover the subject property. After a court trial, judgment was docketed on August 30, 2000. Finding that Mr. Fitzgerald had not been given proper notice of his right to redeem, the court restored the title of the subject property in Mr. Fitzgerald "nunc pro tunc to December 13, 1995," the date of the tax deed. The trial court also credited Mr. Fitzgerald's testimony that REE refused to let Ms. Menga stay in the apartment or to rent the apartment to another tenant and escrow the rent received pending the outcome of the title dispute. In regard to Mr. Fitzgerald's claim for damages for lost rents, the court held that "[s]ince the possession in this case was wrongful, the tax purchaser had the opportunity to collect rents but refused to take advantage of it, and the tax purchaser acted affirmatively to evict a rent paying tenant . . . the tax purchaser should be liable for the lost rental income." The trial court awarded Mr. Fitzgerald a monetary judgment of $18,900.00 in lost rental income set off by the *fn4 $7,350.42 paid by David Levin at the tax sale plus 6% interest from that date and by $3,049.20 paid by REE in real estate taxes plus 6% interest from the date of each payment. *fn5

On appeal, REE does not challenge the restoration of title in Mr. Fitzgerald but contends that the award of damages was in error because (i) REE did not have actual or constructive possession of the property; (ii) any possession was not wrongful in light of the tax deed and quiet title judgment; (iii) REE was not ...

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