Appeals from the Superior Court of the District of Columbia (CAB4510-07, CAB4511-07, CAB4512-07, CAB4516-07, CAB4513-07 & CAB4510-07) (Hon. Jennifer M. Anderson, Trial Judge) (Hon. Jeanette Clark, Trial Judge) (Hon. Judith E. Retchin, Trial Judge) (Hon. Maurice Ross, Trial Judge) (Hon. Natalia Combs Greene, Trial Judge)
The opinion of the court was delivered by: Schwelb, Senior Judge:
Bonnie I. Robin-Vergeer filed briefs for the Legal Aid Society of the District of Columbia, amicus curiae, in support of appellants.*fn1
Before REID and KRAMER, Associate Judges, and SCHWELB, Senior Judge.
The tenant associations of each of six apartment complexes to which these consolidated appeals relate*fn2 brought civil actions challenging the legality of the alleged sale of each building by Howard and Maxine Bernstein and their family (the Bernsteins) to limited liability companies (LLCs) controlled by Carmel Partners (Carmel or the owners). Each association claimed that the transfer of ownership of the building in which it represented the tenants constituted a sale within the meaning of the Tenants' Opportunity to Purchase Act (TOPA), D.C. Code §§ 42-3404.02 (a) et seq. (2001), and that the tenants had been denied "the right to purchase the accommodation at a price and on terms which represent a bona fide offer of sale." Id. The six cases came before five different judges, and in each of them the trial court granted the owners' motion for summary judgment, on the ground that the transfer of ownership did not constitute a sale within the meaning of TOPA,*fn3 or because, in the court's view, the tenant association bringing the suit lacked standing,*fn4 or in four of the cases, on both grounds.*fn5
On appeal, the associations claim that all six of them have "associational standing" to bring the actions; that even if they do not have "associational standing," there are genuine issues of material fact which should have precluded the entry of summary judgment denying them statutory standing pursuant to D.C. Code § 42-3401.03 (18) (2001); and, that in any event, two of the associations, Barclay Tenants' Association (BTA) and Lanier Apartments Tenants' Association (LATA) have statutory standing. The associations also contend, on a variety of grounds, that the transfers constituted a sale within the meaning of TOPA. The owners*fn6 challenge the standing of each of the associations and contend that the transactions at issue did not constitute a sale.
We hold that summary judgment was appropriately granted, for lack of standing, against all of the associations except the BTA and the LATA. We conclude, however, that the BTA and the LATA have statutory standing to bring their respective actions. We conclude that, under precedent binding on the division, none of the associations has "associational standing."
Turning to the substantive issues, we hold, in conformity with this court's recent decision in Waterside Towers Resident Ass'n v. Trilon Plaza Co., 2 A.3d 1084 (D.C. 2010), that the transfers in this case constituted a sale subject to TOPA. In response to a question of first impression raised by the owners for the first time on appeal, we conclude that D.C. Code § 42-3404.02 (a) applies to all sales and does not restrict the requirement of notice to tenants to situations where the sale is only for the purpose of demolition or discontinuance of housing use.*fn7
In light of the foregoing holdings, we affirm the judgments in Nos. 08-CV-1027, 08-CV-1114, 08-CV-1354, and 09-CV-106. We reverse the judgments in Nos. 08-CV-1438 and 08-CV-1340, and we remand Nos. 08-CV-1438 and 08-CV-1340 to the trial court for further proceedings consistent with this opinion.
These cases have their inception in a multi-million dollar real estate deal involving several rental properties. In early 2004, the Bernsteins decided to sell eleven of their apartment buildings in Washington, D.C., and to relocate their business operations to Florida. The properties were listed with the brokerage firm of Marcus & Millichap. One of the brokers at that firm contacted Ron Zeff, a member of Carmel, to inquire if Carmel was interested in acquiring the properties. Soon thereafter, Carmel sent the Bernsteins a non-binding letter of intent to purchase the buildings. Carmel offered to purchase all eleven properties for $88,000,000, treating the deal as a single transaction even though the sale was to be structured to maintain the status of each building as a single-purpose entity. After an inspection period, the parties entered into a final purchase and sale agreement providing for the transfer of the eleven buildings for $83,000.000.
The agreement called for two nominally separate transactions, both to be implemented on the same day. In the first transaction, the Bernsteins were to transfer the deed for each property, without negotiation or consideration, to a newly formed LLC (LLC II) controlled solely by them. In the second transaction, membership interests in these LLC II entities would be transferred to Carmel, which would purchase 99.99% of these interests, and to Quarry Enterprises, which was to acquire the remaining 0.01% interest.
The minority transferee, Quarry, was formed on April 19, 2004 under the laws of the District of Columbia. At the time of its formation, Quarry had a single member, Jim Ferris, the broker who had brought the properties to the attention of Carmel Partners. Ferris testified on deposition that he formed Quarry after receiving a telephone call from the president of Carmel. He stated that he did not know why Quarry was formed.*fn8
The agreement between the Bernsteins, Carmel and (ostensibly) Quarry was contingent on the approval of the transaction by the District of Columbia Department of Consumer and Regulatory Affairs (DCRA). On April 26, 2004, Richard Luchs, Esquire, counsel for the transferors and transferees, sent a letter to the DCRA requesting confirmation that the proposed transfer, which did not provide for notice to the tenants or an opportunity to purchase the accommodations at a price and terms which represent a bona fide offer of sale, would not violate the Rental Housing Conversion and Sale Act of 1980 (RHCSA). At the time, the relevant provision of the Act stated that a "sale" that would trigger TOPA rights included
the transfer of 100% of all partnership interests in a partnership which owns the accommodation as its sole asset to 1 transferee or of 100% of all stock of a corporation which owns the accommodation as its sole asset to 1 transferee in 1 or more transactions occurring during a period of 1 year from the date of the first such transfer . . . .
D.C. Code § 42-3404.02 (c) (2001).
On April 29, 2004, only three days after the date of Mr. Luchs' communication, Linda Harried, the DCRA's Housing Regulation Officer, responded with a letter to Mr. Luchs in which she described the transactions as follows:
The Properties consist of residential rental units located at 1616 16th Street, N.W., 1754 Lanier Place, N.W., 1845 Summit Place, N.W., 3150 16th Street, N.W., 2637 16th Street, N.W., 1629 Columbia Road, N.W., 2714 Quarry Road, N.W., 1604-1610 16th Street, N.W., 105 6th Street, S.E., 3055 16th Street, N.W., and 3132 16th Street, N.W.
Sellers will form eleven (11) limited liability companies ("LLCs") that will be wholly owned by Sellers, and Sellers will transfer the title of the Properties to the new LLCs.
One Hundred (100%) of the membership interests in each new LLC will be owned by the respective Seller/Transferor, which will simply be changing the form of ownership, not the ultimate ownership of the Properties.
You have advised me that each Seller will sell and assign a maximum 99.99% of the membership interest in the new LLC's to Carmel Partners, LLC, or assigns ("Carmel") and a minimum .01*fn9 to an unrelated entity, Quarry Enterprises, or assigns ("Quarry Enterprises"). There is no common ownership between Carmel and Quarry Enterprises.*fn10
Ms. Harried concluded that "the transfer of 100% of the membership interests in the limited liability companies to two (2) separate and unrelated entities, whether directly or indirectly, as described above, does not constitute a 'sale' or 'sell' as those terms are defined by the Act. Therefore this transaction is exempt from the statutory requirements of Title IV of the Act" (emphasis in original).*fn11 The deal closed on June 30, 2004, and each of the eleven buildings was transferred in conformity with the agreement.
More than a year later, in August of 2005, the DCRA notified counsel for the owners of the buildings that it was opening an investigation "into the facts and circumstances" of the issuance of the opinion letter in which the agency had concluded that the transaction did not meet the definition of a sale within the meaning of TOPA. On December 16, 2005, Leila Franklin, the DCRA's Deputy Director for Compliance Inspections, issued a report on behalf of the agency in which she reaffirmed the DCRA's position that the transaction was not a sale. Ms. Franklin, wrote, however, that "the Exemption Letter was consistent with a longstanding practice that the current DCRA Administration has ceased, notwithstanding that the practice was legally sustainable." She noted that the tenants of some of the buildings proposed to challenge the transaction as contrary to TOPA, and she stated that the agency's findings were not intended to preclude the tenants' ability to do so.
At five of the eleven buildings which had been transferred in conformity with the agreement, a number of the tenants had begun to discuss among themselves, and with a member of the Council of the District of Columbia, the possibility that they had been unlawfully denied the opportunity, under the provisions of TOPA, to purchase the buildings. Less than two weeks before the three-year statute of limitations was to expire, the tenants' associations at the various complexes held meetings and amended their bylaws to permit former tenants to become members of the associations. These amendments were designed to give the associations a sufficient number of members to qualify for standing under TOPA. On June 29, 2007, the day before any civil action would become time-barred, five of the associations filed separate suits in which they asked the Superior Court, inter alia, to invalidate the transfers. A sixth association, which was formed by five tenants of the Park Plaza building after the existing Park Plaza Tenants' Association decided not to institute litigation, filed suit on the following day, Saturday, June 30, 2007.
Following discovery, each of the defendants filed a motion for summary judgment claiming, inter alia, that the transactions in question were not sales within the meaning of TOPA, and that the rights created by that statute did not apply. All six of the trial courts, as we have noted, granted summary judgment in favor of the defendants. These consolidated appeals followed.
The owners contend, and five of the trial courts have held, that the associations lack standing to institute these actions. "Standing is a threshold jurisdictional question which must be addressed prior to and independent[ly] of the merits of any party's claim." Grayson v. AT&T Corp., et al., Nos. 07-CV-1264 & 08-CV-1089, slip op. at 16 (Jan. 20, 2011) (en banc) (quoting Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974 (11th Cir. 2005) (citations omitted)); see generally, Warth v. Seldin, 422 U.S. 490, 498-99 (1975). Accordingly, we begin our analysis by addressing the issue of standing, and we review de novo the orders granting summary judgment in favor of the owners for lack of standing. See, e.g., Board of Directors, Washington City Orphans Asylum v. Bd. of Trustees, Washington City Orphan Asylum, 798 A.2d 1068, 1074 (D.C. 2002); Abdullah v. Roach, 668 A.2d 801, 804 (D.C. 1995).
The associations claim that they had both statutory standing and associational standing to bring these actions. We consider each of these contentions in turn.
An organization has the burden to show that it has standing to bring its suit.
Friends of Tilden Park, Inc. v. District of Columbia, 806 A.2d 1201, 1210 (D.C. 2002). In order to carry this burden with respect to statutory standing, each association must demonstrate that it qualifies under the following statutory definition:
"Tenant organization" means an organization that represents at least a majority of the heads of household in the housing accommodation excluding those households in which no member has resided in the housing accommodation for at least 90 days and those households in which any member has been an employee of the owner during the preceding 120 days.
D.C. Code § 42-3401.03 (18). The owners assert that "to prove it has standing, [an] Association must: (1) know the total number of heads of household who resided in the apartment building for at least the 90-day period prior to the June 30, 2004 transfers; and (2) prove that at least half-plus-one of these heads of household were members of the tenants' association when the complaint was filed." (Emphasis added.)*fn12 The owners also assert that "[t]enants who move out of an apartment building are not eligible members of an association for [purposes of] standing." We are unpersuaded by these latter two contentions, and we specifically agree with the following articulation by Judge Judith E. Retchin in her order granting summary judgment on other grounds in the LATA case:
Defendants . . . argue that because standing must be determined at the time of the filing of the lawsuit, the plaintiff does not have standing given that five heads of household had moved out of the building prior to the filing of the complaint, and three of five left the District of Columbia. Preliminarily, the fact that standing must be determined at the time the complaint was filed does not mean that the heads of household must have lived in the building at the time the complaint was filed. The statutory definition of "head of household" does not require the tenant to live in the building at the time the lawsuit is filed. Nor does case law interpreting TOPA require the head of household to live in the building at the time the complaint is filed. Based on the foregoing, the [c]court would be inclined to find that plaintiff has standing to bring this lawsuit.
Judge Retchin's reading is supported by D.C. Code § 42-3405.11 (2001), which provides in pertinent part that "[t]he purposes of this chapter favor resolution of ambiguity by the hearing officer or a court toward the end of strengthening the legal rights of tenants or tenant organizations to the maximum extent permitted by law." (Emphasis added.) Moreover, it is a matter of common knowledge that incumbents move out of apartment buildings and that new tenants move in. The construction urged on us by the owners would create uncertainty as to whether an association which qualifies for standing under the statute at the time that its members sustained legally cognizable harm retained its standing at subsequent times, and this would thwart the broad remedial purposes of the statute and the liberal construction mandated by § 42-3405.11.
The owners cite Allman v. Snyder, 888 A.2d 1161 (D.C. 2005), for the proposition that a person who has moved out of an apartment building is no longer a tenant. The question in Allman, however, arose in an altogether different context. That case concerned the validity of an assignment of a tenant's rights, and we noted that at the time of the assignment, the assignors "were tenants, and they were residing at the Fourth Street Property." Id. at 1169. This language in the Allman opinion did not relate to the statutory definition of a "tenant organization," which is at issue here, and we do not believe that the opinion in that case has any bearing on the issue presently before us. Indeed, we think that here, as in Khiem v. United States, 612 A.2d 160 (D.C. 1992), cert. denied, U.S. (1993), the owners' argument "makes too much out of too little." Id. at 164. As we went on to explain in Khiem:
In Kraft v. Kraft, 155 A.2d 910 (D.C. 1959), the court pointed out that:
It is well to remember that significance is given to broad and general statements of the law only by comparing the facts from which they arise with those facts to which they supposedly apply. 155 A.2d at 913. See also Armour & Co. v. Wantock, 323 U.S. 126, 132-33 (1944), where the Supreme Court aptly stated:
It is timely again to remind counsel that words of our opinions are to be read in the light of the facts of the order under discussion. To keep opinions within reasonable bounds precludes writing into them every limitation or variation which might be suggested by the circumstances of cases not before the Court. General expressions transposed to other facts are often misleading.
(Emphasis added in Khiem). See also discussion, infra, in the last paragraph of Part III D, p. 32.
The record in the cases before us reflects that at the time of the alleged sale both the BTA and the LATA qualified as "tenant organizations" within the meaning of § 42- 3401.03 (18). Each of these associations demonstrated that it represented at least half of the qualifying heads of households at the time of the alleged sale. Even if tenants subsequently moved out of the buildings in question, so that the BTA and the LATA no longer represented a majority at the time that their lawsuits were instituted, this development did not undermine the standing of these two associations.
We conclude, however, that summary judgment for lack of statutory standing was correctly entered against the four associations other than the BTA and the LATA. None of the remaining four organizations provided evidence that it represented at least half of the qualifying heads of household. Viewing the record in each case, as we must, in the light most favorable to the party opposing summary judgment, and drawing every reasonable inference in that party's favor, West End Tenants' Ass'n v. George Washington Univ., 640 A.2d 718, 725 (D.C. 1994), we are nevertheless satisfied, as a matter of law, that the four associations have failed to demonstrate the existence of a genuine issue of material fact as to whether they represented a sufficient number of tenants to qualify for standing. Specifically, with the exception of the BTA and the LATA, the associations have failed to show "that there is sufficient evidence supporting the claimed factual dispute to require a jury or judge to resolve the parties' differing versions of the truth at trial." Id. (quoting Nader v. de Toledano, 408 A.2d 31, 42 (D.C. 1979), cert. denied, 444 U.S. 1078 (1980)).
B. Associational Standing
The associations contend that even if they do not qualify as tenant organizations under the statutory definition, they nevertheless have "associational standing" to represent their members. They claim that the trial courts in the five cases in which standing was held to be lacking erred in failing to recognize each plaintiff's associational standing.
If the position of the associations with respect to this issue were adopted, the result would be an incongruous one. Under that approach, an association which did not include a majority of the heads of household in an apartment building, as specified in § 42-3401.03 (18), would nevertheless have the same right to represent the tenants as would an association that did qualify under the language of the statute. This would, for all practical purposes, render the statutory definition superfluous and a nullity. We need not decide, however, whether statutory standing and associational standing can simply coexist, with the latter applying to tenant organizations not qualifying under the former, for in this case the theory that the four associations that lack statutory standing nevertheless have associational standing is precluded by our case law.
"An organization has standing to sue when one of its members has standing." Speyer v. Barry, 588 A.2d 1147, 1160 n.25 (D.C. 1991). In Friends of Tilden Park, we explained the doctrine of associational standing as follows:
"[A]n association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). At least the first of these three conditions of associational standing is inherent in the constitutional "case and controversy" requirement. See United Food & Commercial Workers Local 751 v. Brown Group, Inc., 517 U.S. 544, 555-556 (1996).
806 A.2d at 1207. Under our precedents, the associations cannot satisfy the first of these requirements, and their claims of associational standing therefore fail.
Concededly, this conclusion is not an obvious one. The statute provides, in pertinent part, that "an aggrieved owner, tenant, or tenant organization may seek enforcement of any right or provision under [TOPA] through a civil action in law or equity. . . ." D.C. Code § 42-3405.03 (2001) (emphasis added). In West End Tenants, however, we explicitly held that once a tenants' association has been registered as the representative of the tenants, individual tenants lack standing to sue on their own behalf:
The Tenants Association was joined in intervention by several individually-named tenants. The appeals of these individual-tenant appellants will be dismissed for lack of standing. D.C. Code § 45-1640 (1990 Repl.) specifies the manner in which negotiations must be conducted when a housing accommodation having five or more units is being sold. As a preliminary step to entering into a valid contract of sale with an owner, the tenants of such an accommodation must form a tenant organization registered with the Mayor. "Upon registration, the organization constitutes the sole representative of the tenants, and the [owner's] prior offer of sale is deemed an offer to the organization." D.C. Code § 45-1640(1) (1990 Repl.). D.C. Code § 45-1638 (1990 Repl.), which prescribes the statutory method of affording tenants the right to purchase, does not give the individual tenant an opportunity to negotiate with the owner or to purchase in the tenant's owner right. Accordingly, "if the conduct of an owner gives rise to any basis for a civil action against the owner under § ...