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Bernstein Management Corp. v. District of Columbia Rental Housing Commission

July 10, 2008

BERNSTEIN MANAGEMENT CORPORATION, PETITIONER,
v.
DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, RESPONDENT.



On Petition for Review of a Decision of the District of Columbia Rental Housing Commission. (TP 27,265).

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

Argued October 19, 2006

Before RUIZ, REID, and GLICKMAN, Associate Judges.

The District of Columbia Rental Housing Commission ("RHC" or "Commission") affirmed the Order of the District of Columbia Rent Administrator which imposed on petitioner, Bernstein Management Corporation, a civil fine and treble damages, after finding that it violated the Rental Housing Act, D.C. Code § 42-3501.01 et seq. (2001), by charging rent in excess of the allowable ceiling. Petitioner argues that neither the Rent Administrator nor the Commission had authority to impose the sanctions and that the evidence did not, in any event, support the imposition of sanctions in this case.*fn1 We conclude that they had authority to impose the penalties, and that there was substantial evidence of record to support the findings of willfulness and bad faith necessary to impose the civil fine and treble damages against petitioner. We therefore affirm.

I.

Petitioner is the managing agent of Columbia Realty Venture, the owner of multi-unit rental buildings in the District of Columbia. On October 29, 1996, petitioner filed a registration form with the District of Columbia Rental Accommodations and Conversion Division ("RACD") reflecting that, as of October 1, 1996, the rent ceiling for apartment No. 103 in the rental building located at 829 Quincy Street, N.W. was $772.*fn2 On November 14, 1996, appellant leased apartment No. 103 to Belinda Sheppard for the monthly rent of $675. The lease agreement stated that the "legal rent" on the apartment was $772.*fn3 In July 1998, petitioner increased Ms. Sheppard's rent to $689 per month; and in July 2000, to $746 per month, leaving only $26 in unimplemented increases under the ceiling established in 1996. In July 2001, petitioner increased Ms. Sheppard's rent to $821 per month, $49 above the rent ceiling established in 1996; and in July 2002, the rent was raised to $882 per month, which was $110 above the rent ceiling. On November 7, 2002, Ms. Sheppard filed a petition with the District of Columbia Rent Administrator complaining that petitioner was charging rent in excess of the applicable rent ceiling.

During the hearing before the Rent Administrator there was no dispute about the rent increases, but petitioner asserted that they were properly made pursuant to an unimplemented rent ceiling adjustment that predated the $772 ceiling imposed in 1996. Petitioner, however, presented no evidence to establish the existence of the claimed rent ceiling adjustment, but took the position that the RACD's records "may be incomplete" and that there "might be" pre-1996 rent ceiling adjustments of sufficient size to justify the rent increases in 2001 and 2002. On September 16, 2003, the Rent Administrator found that petitioner had intentionally charged Ms. Sheppard rent in excess of the rent ceiling over a two-year period, and, based on that fact, awarded to Ms. Sheppard treble damages in the amount of $4,914*fn4 and imposed a civil fine of $2,500 against petitioner. The Rent Administrator discounted petitioner's vague references to an unimplement rent ceiling and reasoned that, as a large property management company, petitioner could not have mistakenly or inadvertently calculated the rent applicable to Ms. Sheppard's apartment. Petitioner filed a motion for reconsideration, which was denied.*fn5 Petitioner next sought the Commission's review. On August 12, 2005, the Commission issued its final decision and order affirming the Rent Administrator's ruling in all respects. This petition for review ensued.

II.

Our scope of review in administrative cases prohibits the substitution of this court's judgment in areas of expertise reserved for the administrative agency, see Kegley v. District of Columbia, 440 A.2d 1013, 1018 (D.C. 1982), including an agency's reasonable interpretation of the statute it is charged with implementing. See Dorchester House Assocs.

Ltd. P'ship v. D.C. Rental Hous. Comm'n, 938 A.2d 696, 702 (D.C. 2007). Under the judicial review provisions of the District of Columbia Administrative Procedure Act ("DCAPA"), see D.C. Code § 2-510 (2001), the court inquires whether the agency made findings of fact on each material, contested factual issue, based its findings on substantial evidence, and drew conclusions of law that flow rationally from those findings. See BioMed. Applications of the District of Columbia v. D.C. Bd. of Appeals & Review, 829 A.2d 208, 215 (D.C. 2003). Agency findings of fact and conclusions of law must be affirmed if supported by and in accordance with reliable, probative and substantive evidence in the record. See id. This court will reverse a decision that was made arbitrarily, capriciously, or otherwise not in accordance with law or contrary to constitutional rights; or in excess of statutory jurisdiction or authority; or without observance of procedure required by law. See D.C. Code § 2-510 (a)(3) (2001).

Rental Housing Act of 1985 and Department of Consumer and Regulatory

Affairs Civil Infractions Act

Under the Rental Housing Act of 1985, the Rent Administrator and the Rental Housing Commission were authorized to impose fines by virtue of D.C. Law 6-10, which became effective July 17, 1985. The act provides in relevant part:

Any person who willfully (1) collects a rent increase after it has been disapproved under this chapter, until and unless the disapproval has been reversed by a court of competent jurisdiction, (2) makes a false statement in any document filed under this chapter, (3) commits any other act in violation of any provision of this chapter or of any final administrative order issued under this chapter, or (4) fails to meet ...


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