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Peart v. District of Columbia Housing Authority

June 4, 2009


Appeal from the Superior Court of the District of Columbia (LTB1033-07) (Hon. Robert E. Morin, Trial Judge).

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

Argued December 2, 2008

Before WAGNER, NEBEKER and STEADMAN, Senior Judges.

Ms. Pearline Peart ("Ms. Peart") brought a successful rent abatement action alleging Housing Code violations against her Section 8 landlord, Ms. Nicole Jackson ("Ms. Jackson") and won a rent abatement award of over $15,000. However, the District of Columbia Housing Authority ("DCHA") intervened and successfully asserted a derivative right to all of this award. Ms. Peart concedes that DCHA is entitled to the rent abatement, but contends that the equitable doctrine of unjust enrichment entitles her to compensation from DCHA for her attorneys' fees and costs in the litigation that resulted in the award. We agree that the doctrine applies here. We therefore remand the case to allow the trial court to determine what compensation is due Ms. Peart.

I. Factual and Procedural Background

Ms. Peart was the lessee from Ms. Jackson of a three-bedroom apartment. The lease was made pursuant to the federal government's Department of Housing and Urban Development ("HUD") Housing Choice Voucher Program ("HCVP"), otherwise known as the "Section 8" program. Under the HCVP program, HUD distributes federal funds to local public housing agencies, in this case DCHA, to provide rental assistance to low-income families. 42 U.S.C. § 1437f (2006). To receive HCVP funds for renting the apartment, Ms. Jackson entered into a Housing Assistance Payment ("HAP") contract with DCHA. DCHA may pay all or some of the rent on behalf of low-income residents; Ms. Peart was a "zero rent tenant." 24 C.F.R. § 982.451. Thus, DCHA paid the entirety of Ms. Peart's rent on her behalf.

After Ms. Peart challenged an unauthorized rent increase,*fn1 Ms. Jackson filed a complaint for possession and non-payment of rent against Ms. Peart in the Landlord Tenant Branch of the Superior Court. Ms. Peart, through counsel, filed an answer, counterclaim and recoupment seeking the return of moneys she paid to Ms. Jackson pursuant to the unauthorized revised lease, as well as the "rent paid to [Ms. Jackson] from the beginning of her tenancy to the present based on [Ms. Jackson's] breach of the implied warranty of habitability."

After Ms. Jackson twice failed to appear or answer the counterclaim, the trial court dismissed her complaint and entered a default judgment on Ms. Peart's counterclaim. The court scheduled an ex parte proof hearing to hear evidence on the amount of rent to be abated. A month prior to the hearing, counsel for Ms. Peart sent a letter to DCHA alerting it that Ms. Peart intended to seek abatement of all rent moneys that she and DCHA had paid to Ms. Jackson during her tenancy. Two days before the proof hearing, DCHA intervened by filing a Complaint for Declaratory Judgment ("Complaint") and claimed "100% of the amount [the] court determines is to be abated due to . . . [Ms. Jackson's] breach of warranty of habitability." The Complaint's claim to funds was, by its own terms, entirely derivative. DCHA sought to recover the funds "only in the event [the court determines] Ms. Peart is entitled to the relief sought in her counterclaim."

At the proof hearing, Ms. Peart presented evidence, including thirty-seven exhibits, that Ms. Jackson failed to properly maintain the apartment. The evidence showed "substantial" violations of the Housing Code warranting a rent abatement of 30%, or $15,670. Counsel for DCHA was present at the hearing, but offered no evidence and made no argument relating to the extent and nature of the violations, and expressed no opinion on the appropriate percentage of abatement.

The trial court entered a judgment determining that the rent should be abated in the amount of $15,670. It awarded this entire amount to DCHA, citing our decision in Anderson v. District of Columbia Hous. Auth., 923 A.2d 853 (D.C. 2007) [hereinafter Anderson II]. The court also rejected Ms. Peart's claim to attorneys' fees and costs from DCHA.

On appeal, Ms. Peart correctly does not challenge the trial court's ruling awarding the abatement to DCHA. Anderson II establishes that, to the extent an abatement award is based on rent paid by DCHA, the abatement has the character of "public funds" and, where DCHA makes a claim to the abatement, it prevails over the competing claim of the tenant. Id. at 864. On the other hand, absent such a claim by DCHA, the funds belong to the tenant, a principle established by our prior holding in Multi-Family Mgmt., Inc. v. Hancock, 664 A.2d 1210, 1221, 1224 (D.C. 1995). See Anderson v. Abidoye, 824 A.2d 42, 44 (D.C. 2003) [hereinafter Anderson I] (describing holding in Multi-Family). Thus, these cases set up a hierarchy of property rights in an abatement award, in which the tenant is junior to DCHA. We did no more.

Ms. Peart is correct, then, in her assertion that her right to compensation for attorneys' fees and costs remains an open issue for us now to decide.*fn2 She contends that she is entitled to such recovery both under the common-fund doctrine exception to the "American Rule" on award of attorneys' fees and on equitable principles of unjust enrichment. We turn to those arguments. We first review the legal principles underlying Ms. Peart's claim to recovery in unjust enrichment, and then discuss the related common-fund doctrine which informs our analysis.

II. Unjust Enrichment

"Unjust enrichment occurs when: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains the benefit; and (3) under the circumstances, the defendant's retention of the benefit is unjust." News World Commc'ns, Inc. v. Thompsen, 878 A.2d 1218, 1222 (D.C. 2005); 4934, Inc. v. District of Columbia Dep't of Employment Servs., 605 A.2d 50, 55 (D.C. 1992) ("Unjust enrichment occurs when a person retains a benefit (usually money) which in justice and equity belongs to another.");RESTATEMENT (FIRST) OF RESTITUTION § 1 cmt. a (1937). "In such a case, the recipient of the benefit has a duty to make restitution to the other person 'if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for [the recipient] to retain it.'" 4934, Inc., supra, 605 A.2d at 55--56 (quoting REST. RESTITUTION § 1). Unjust enrichment is quasi-contractual in nature (based on a contract implied in law), and recovery will be had in restitution. TVL Assoc. v. A & M Const. Corp., 474 A.2d 156, 159 (D.C. 1984). "Thus the doctrine of unjust enrichment depends on whether it is fair and just for the recipient to retain the benefit, not on whether the person or persons who bestowed the benefit had any duty to do so." 4934, Inc., supra, 605 A.2d at 56. Ordinarily, in the absence of a close family ...

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