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Majerle Management Inc. v. Dist. of Columbia Rental Housing Commission

December 30, 2004


Before Wagner, Chief Judge, and Kern and STEADMAN,*fn2 Senior Judges.

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

On Petition for Review of a Decision of the District of Columbia Rental Housing Commission

Argued March 11, 2003

This case is before us for a second time after remand on a first appeal. The issue is the application of the three-year limitation for challenges to rent adjustments contained in the Rental Housing Act of 1985 (Act). D.C. Code § 45-2516(e) (1996) (now codified as D.C. Code § 42-3502.06(e) (2003)).*fn3 The Rental Housing Commission (RHC) ruled that the tenant who filed a rental overcharge claim in the case now before us could challenge a rent increase effectuated more than three years prior to the filing of the claim where (1) a further rent adjustment petition was filed by the housing provider during that three-year period and, in addition, (2) the housing provider had acknowledged both the correct lawful rent ceiling and the possibility of the tenant overcharge. Petitioner Majerle Management, Inc. (Majerle) asserts that the RHC holding is inconsistent both with prior case law and with prior holdings of the RHC interpreting the Act. We think that the RHC has permissibly found that the "unique set of facts" in this case, including the record admissions by Majerle, distinguish this case from our past precedent and from earlier RHC holdings. Accordingly, we affirm the order of the RHC imposing sanctions for rent overcharges.

I. Facts

The factual background prior to remand in the first appeal is set forth in the court's opinion in Majerle Mgmt., Inc. v. D.C. Rental Hous. Comm'n, 768 A.2d 1003, 1005-06 (D.C. 2001) (Majerle I). We set forth here only the facts relevant to the issues that arise from Majerle's challenge in this appeal to the RHC's March 26, 2002 decision and order following remand.

In the mid-1970s, Bertha Redmond (Redmond) became a tenant in a five-unit apartment building located at 4301 Halley Terrace, Southeast, in the District of Columbia. In December 1986, William and Mary Bailey purchased that property as tenants by the entirety and continued to rent the building's units, including Redmond's. On December 22, 1987, pursuant to the Rental Housing Act of 1985, D.C. Code § 45-2501 et seq. (1987) (current version at D.C. Code § 42-3501.01 et seq. (2003)), William Bailey filed an amended registration statement for the property, which the RHC found to be defective in certain respects,*fn4 that increased Redmond's rent ceiling and monthly rent from $218 per month to $228 per month, effective September 1, 1987.

Redmond paid $228 monthly in rent until November 1, 1988, when the rent was again increased to $239 per month, an amount that Redmond subsequently paid. On September 1, 1989, Mary and William Bailey*fn5 increased Redmond's rent further to $250 per month, again an amount that Redmond paid. The Rent Administrator has no record of any filing relating to either of these last two rent increases, and the record does not reveal that any such filing was ever submitted.

On March 23, 1990, an amended registration form was filed listing Mary Bailey as the property owner and Majerle as the management company. This March 1990 registration form contained no information concerning rent levels. On May 31, 1991, Majerle sent a notice of an automatic rent increase to Redmond that indicated that her rent ceiling was $228 and would be increased to $240, despite the fact that the rent being charged was $250 per month. The May 31, 1991 notice also stated that Redmond "may have been overcharged . . . rent . . . .".*fn6 Pursuant to 14 DCMR § 4204.10,*fn7 the housing provider sought to take and perfect its rent ceiling increase by filing, on July 1, 1991, a certificate of adjustment of general applicability (an automatic rent increase). On that date, the housing provider also filed a third amended registration form. The July 1991 rent adjustment reflected an increase to $240. The July 1991 registration filing was defective, in part, because the certificate of occupancy and housing business licenses attached to it contained errors. Specifically, neither the certificate of occupancy nor the housing business license were, as required, issued to the owner of the property, Mary Bailey. The certificate of occupancy also was defective because it was issued for a four-unit building, but was attached to an amended registration form and housing business license reflecting a five-unit property. In July 1991, Majerle, in fact, decreased Redmond's monthly rent from $250 to $240.

On September 22, 1992, Redmond filed a complaint with the Rental Accommodations and Conversion Division (RACD) against "Majerle Management Inc./For Mary Bailey and the Estate of William Bailey" in which she alleged that the rent she was charged exceeded the lawful rent ceiling.*fn8 During the RACD hearing, the housing provider testified that the legal rent ceiling for Redmond's unit was $228 per month at the time it executed its May 31, 1991 notice.*fn9 Following a lengthy hearing and appeals process, the RHC, to which appeals from the RACD may be taken, issued a final decision on June 4, 1999, awarding Redmond treble damages for rent overcharges from September 22, 1989 through March 27, 1996, the date of the RACD hearing, including interest.*fn10 The RHC calculated the overcharge based on its holding that the lawfully permitted rent ceiling was $228 per month. The RHC rejected Majerle's claim that because the $250 per month rent had been charged since September 1, 1989, three years and 21 days prior to the filing of the claim, the statute forbade any examination of alleged unlawful adjustments prior to that three year period so as to form the basis for the overcharge claim. Majerle petitioned this court for review of the RHC's decision. On March 15, 2001, we issued Majerle I, 768 A.2d at 1010, affirming the RHC's ruling that Majerle was liable to Redmond for excess rent charged above what it found to be the lawful rent ceiling of $228.

Majerle sought rehearing or rehearing en banc, requesting further review of our decision to reject its claim that the three year statute of limitations barred Redmond's challenge to the $250 per month rent. It cited a number of RHC decisions that it said were in direct conflict with our holding, in addition to our prior decision in Kennedy v. D.C. Rental Hous. Comm'n, 709 A.2d 94 (D.C. 1998). The merits division granted Majerle's petition for rehearing, concluding that, in light of the arguments advanced and legal authorities cited in Majerle's petition, the RHC had not adequately explained its consideration of relevant legal principles. Majerle Mgmt. Inc. v. D.C. Rental Hous. Comm'n, 777 A.2d 785 (D.C. 2001). Accordingly, the merits division vacated Part III of the Majerle I decision and remanded the case to the RHC "for further consideration of of its determination of a refund for asserted rent overcharges." Id. at 785. The court directed that "[t]he Rental Housing Commission shall provide a clear explanation of its reasons for concluding that the lawful rent ceiling for the tenant was $228 per month, including statements regarding the applicability, or not, of the Rental Housing Commission decisions cited in the petition for rehearing or rehearing en banc." Id.

On remand, the RHC, in a lengthy decision and order dated March 26, 2002, reaffirmed its own June 4, 1999 decision and order. The RHC asserted that Redmond's case presented a "unique set of facts" that distinguished it from earlier RHC precedent*fn11 holding that a challenge to a rent adjustment cannot be brought more than three years after the adjustment was put in place. The RHC focused first on the Tenant Notice for 1991 Section 206(h) Increase of General Applicability that had been sent to the tenant on May 31, 1991. In that notice, the housing provider indicated that the tenant's legal rent ceiling was $228 per month and stated on the face of the notice that its records revealed the tenant might have been overcharged. Then, on July 1, 1991, the housing provider both filed a Certificate of Election of Adjustment of General Applicability with the RACD that implemented the adjustment of general applicability, noticed on May 31, 1991, and reduced the rent accordingly from $250 to $240.*fn12 Thus, within the three year period following the implementation of the challenged adjustment, the housing provider had sought another adjustment in the rent ceiling. Furthermore, both in the notice to the tenant and in the filing with the RACD, the housing provider had acknowledged that the lawful ceiling was $228, which, absent any time limitation, accurately reflected the situation as shown by the RACD records. These facts, in the RHC's view, permitted a re-examination of the question of the proper rent level and a possible overcharge, and distinguished this case from its prior holdings which precluded challenges to rental adjustments made more than three years prior to the overcharge claim. Permitting a challenge to the $250 rent level, the RHC concluded that Majerle's last perfected rent ceiling was $228 per month, an amount contained in and dating back to William Bailey's September 1, 1987 defective, but untimely challenged, filing.*fn13

The RHC further asserted that the July 1, 1991 rent adjustment was not a decrease from $250 to $240 per month, as Majerle had characterized it, but rather an attempted increase in the monthly rent from $228 to $240. As such an increase, it was not effective because, at the time Majerle sought to implement it, the property was not properly registered.

Majerle appeals from this March 26, 2002 RHC decision and order and continues to argue that the Act's statute of limitations, D.C. Code ยง 45-2516(e), bars Redmond's claim for a rent refund. Majerle claims that the RHC's holding to the contrary remains inconsistent both with our earlier decision in Kennedy, supra,709 A.2d at 94, and with a number of prior RHC decisions, most principally the RHC's decision in Chin Kim v. Woodley, supra note 9, TP 23,260. Majerle argues that if a certain rent has been charged for three years, no overcharge claim can be made with respect thereto on the ground that the housing provider prior to that three-year period had failed in some manner to comply with the Act in order to make that rent amount lawful under it. In other words, the RHC books close, so to speak, after each three year period and any prior adjustments that might make unlawful the rent charged within the three-year period ...

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