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Wilson Courts Tenants Association, Inc. v. 523-525 Mellon Street

May 3, 2007

WILSON COURTS TENANTS ASSOCIATION, INC., APPELLANT,
v.
523-525 MELLON STREET, LLC, APPELLEE.



Appeal from the Superior Court of the District of Columbia (CAB3587-05) (Hon. Patricia A. Broderick, Trial Judge).

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

Argued March 27, 2007

Before RUIZ and REID, Associate Judges, and KERN, Senior Judge.

Appellant, Wilson Courts Tenants Association, Inc. ("Wilson Courts"), filed a declaratory judgment action seeking to enforce its rights under Title IV of the Rental Housing and Sale Conversion Act of 1980, D.C. Code §§ 42-3404.02 et seq. (2001) ("the Act" or "TOPA"). Appellee, 523-525 Mellon Street, LLC ("Mellon"), moved for judgment on the pleadings on the ground that as a subsequent owner, it was not bound by Title IV. The trial court granted Mellon's motion and dismissed the complaint. We conclude that on this record Mellon was not entitled to judgment on the pleadings. Consequently, we vacate the judgment of the trial court and remand this case for further proceedings.

FACTUAL SUMMARY

The record shows that on May 10, 2005, Wilson Courts filed a complaint for declaratory judgment and injunctive relief against Clinton Borland and Mellon. The complaint alleged, in part, that (1) Mr. Borland sold property located at the Mellon Street address to Mellon on June 21, 2004 (Paragraph 5); (2) the tenants were not informed about the sale until June 27, 2004 (Paragraph 6), and hence, they did "not receive their mandatory, statutory Notice of Opportunity to Purchase and Right of First Refusal" under Title IV of the Act (Paragraph 7); (3) "[t]he [t]enants . . . obtained a copy of the Offer of Sale dated May 1, 2004, and a copy of a letter to the District of Columbia Department of Consumer and Regulatory Affairs ('DCRA'), citing the May 1, 2004 offer as evidence of statutory compliance, and requesting a letter from DCRA evidencing the same" (Paragraph 9); (4) "upon information and belief, DCRA relied on that letter and issued the requested letter of compliance" (Paragraph 10); (5) Mr. Borland and Mellon attempted "to cover up the violation and to harass and intimidate the [t]enants into forfeiting their rights with respect to the [p]roperty and or their tenancies" (Paragraph 11); and (6) "[Mr.] Borland submitted false information to DCRA and attempted, via information and intimidation to get individual tenants to sign documents falsely attesting to compliance, and upon information and belief, offering cash payments for false testimony" (Paragraph 12). Wilson Courts sought a declaration "that the defendants have failed to provide the [t]enants with their statutory Opportunity to Purchase and Right of First Refusal"; and they also demanded "specific performance" of their opportunity and right under TOPA.

In its July 5, 2005 answer to the complaint, which was not verified, Mellon asserted certain defenses, including a general statement that "[t]he complaint must fail under the law applicable to bona fide purchasers." Mellon also filed a cross-claim against Mr. Borland, declaring in part, that "Mellon LLC were without any notice prior to their purchase of any improprieties in affording the tenants at the subject property their Sale Rights" (Paragraph 4). As relief, Mellon requested damages against Mr. Borland if Wilson Courts prevailed. Later, on August 12, 2005, the trial court dismissed Wilson Courts' complaint against Mr. Borland because he had not been served.*fn1

Mellon submitted a motion for judgment on September 16, 2005, pursuant to Super. Ct. Civ. R. 12 (c) and Super. Ct. Civ. R. 41. In part, Mellon argued that "[t]he effect of the two dismissals [of the complaints against Mr. Borland,] . . . exonerate Mr. Borland of the improper actions claimed against him, namely failure to give the residential tenants the opportunity to purchase the [p]roperty prior to sale to Mellon . . . ." Hence, Mellon contended, "as the purchaser of the [p]roperty [it] has no liability." No affidavits or other documents were attached to the motion. Wilson Courts opposed the motion, in part, on the ground that both dismissals in effect were without prejudice, and thus, there was no adjudication on the merits. Moreover, Wilson Courts maintained that under TOPA, "Mellon is 'presumed to act with full knowledge of tenant rights and public policy . . .,' [and] Mellon is, therefore, not a 'bona fide purchaser.'" Furthermore, Wilson Courts argued that because Mellon is the current owner of the property, Mr. Borland "could not give a notice to the tenants unless the sale [to Mellon] is first undone"; and since "Mellon essentially stands in [Mr.] Borland's shoes," the trial court could "direct Mellon to provide the [t]enants with . . . the Right of First Refusal, and avoid the meaningless step of reconveying to [Mr.] Borland before giving notices."

The trial court issued an order granting Mellon's motion for judgment on December 22, 2005. In reaching its decision to grant Mellon's motion for judgment, the trial court declared:

Under D.C. Code § [42-] 3403.03, "[t]he owner shall provide each tenant and the Mayor a written copy of the offer of sale." Defendant Borland was the owner of the property prior to the sale, not Defendant Mellon.

There is nothing in the statute that puts any obligation on the current owner. Therefore, taking all the facts even in a light most favorable to Plaintiff, Defendant Mellon could not have violated the statute as it was the subsequent owner and not the seller of the property.

Wilson Courts submitted a motion for reconsideration on December 28, 2005. It argued that Mellon's motion for judgment in "substance" constituted a motion to dismiss for failure to join an indispensable party under Super. Ct. Civ. R. 19, that the court effectively characterized Mr. Borland as an indispensable party, and consequently, dismissed the complaint against him. In light of one of our prior cases, Wilson Courts maintains that Mr. Borland "was merely a stakeholder, not indispensable"; rather, his presence might be "desirable." Hence, Wilson Courts maintains that "the proper remedy is not dismissal, but rather to require that [Mr.] Borland be joined and to afford the plaintiff an appropriate time to serve him and to consider all other options for proceeding in his absence if that fails." Mellon opposed Wilson Courts' motion for judgment on January 18, 2006, insisting mainly that (1) Wilson Courts "abandoned its claim against Mr. Borland"; (2) "Mellon has never owed a duty to plaintiff under [the Act]"; and (3) Wilson Courts also "abandoned its claim of liability for any wrongdoing." The trial court issued an order on January 30, 2006, denying the motion for reconsideration, without explanation. On March 8, 2006, Wilson Courts appealed the trial court's order granting Mellon's motion for judgment, as well as the court's order of March 15, 2006 denying the motion for reconsideration.

ANALYSIS

Wilson Courts argues that the trial court "erred in determining that this action could not proceed in [Mr.] Borland's absence, and that Mellon's purchase did not violate [the Act]." Wilson Courts also claims that the trial court's "failure to consider the dictates of [Super. Ct. Civ. R.] 19 was an abuse of discretion, requiring reversal." Mellon contends that "[the Act's] plain language does not impose a duty upon the purchaser to comply with the Act's tenants notice provisions. In addition, Mellon ...


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