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Mary Graham v. Lanier Associates

May 12, 2011

MARY GRAHAM, APPELLANT,
v.
LANIER ASSOCIATES, APPELLEE.



Appeal from the Superior Court of the District of Columbia (LTB-9013-10) (Hon. Robert I. Richter, Trial Judge)

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

Argued December 7, 2010

Before OBERLY, Associate Judge, KRAMER,*fn1 Associate Judge, Retired, and FARRELL, Senior Judge.

Lanier Associates (Lanier) filed a possession action against appellant Mary Graham alleging nonpayment of rent after Lanier conditionally increased Graham's rent pursuant to a pending hardship petition. Graham defended on the grounds that the hardship petition was flawed, housing code violations reduced the value of her rental unit, and the action was in retaliation for her participation in the building's tenants' association.

She moved for a Drayton stay,*fn2 which the trial court granted. Lanier moved for a protective order and, after a Bell hearing,*fn3 the court decided that Graham should make monthly payments of $1,500, $900 to be paid directly to Lanier and the remaining $600 to be deposited into the court registry. Graham noted this interlocutory appeal. See McQueen v. Lustine Realty Co., 547 A.2d 172 (D.C. 1988). For the reasons that follow, we order the protective order amount reduced to $1,150 monthly, the amount a motions division of this court ordered Graham to pay ($917 to Lanier, the remaining $233 into the court registry) in staying the trial court's order for the greater amount.

I. Factual Background

A. The Hardship Petition

D.C. Code § 42-3502.12 (a) (2001) entitles a landlord to charge sufficient rent to receive a maximum 12% rate of return on investment. When a landlord is receiving less than the statutory 12%, he may seek a rent adjustment from the Rent Administrator (RA) by filing a hardship petition. Id. This triggers a two-step process. First, the RA reviews the submitted petition and supporting documentation and issues an audit report. 14 DCMR § 4209.20 (d), (e). That audit report contains findings of fact, conclusions of law, and recommendations. Id. The RA then serves the audit report on the tenants, and, from that point, the tenants have thirty days to file written exceptions and/or objections to the audit report. 14 DCMR § 4209.20 (f)(1). If tenants do file exceptions or objections, the RA must conduct a hearing. 14 DCMR § 4209.20 (f)(3).

The RA "shall issue and publish a final decision within 90 days after the petition has been filed." D.C. Code § 42-3502.12 (c). When the RA fails to issue a final decision within that time, the statute permits the landlord to conditionally implement the rent increase sought, an increase subject to subsequent modification by the RA's final order taking account of the tenants' exceptions. Id.

On April 29, 2009, Lanier filed a hardship petition with the RA asking permission to increase the rental rates of the units in Graham's building. Lanier claimed that it needed to raise rents by 225% to achieve the 12% statutory return. When the RA failed to take action on the petition within the 90-day window, Lanier gave notice to the tenants that it would conditionally increase the rent effective January 1, 2010. Lanier notified Graham, in particular, that her monthly rent would increase from $917 to $2000, an increase of 118%.*fn4

The rent increase went into effect January 1, 2010, but Graham continued to pay only $917, the cost of her rent before the conditional increase.

B. The Action for Nonpayment of Rent

On March 23, 2010, Lanier filed a complaint against Graham for possession of her rental unit, claiming nonpayment of rent and seeking rent past-due for the difference between the $917 per month Graham had been paying and the $2000 per month Lanier was charging pursuant to the conditional increase. On March 29, the RA completed the first step of the hardship petition process and issued its audit report, determining that Lanier, to achieve the permitted statutory rate of return, was entitled to raise the rent by 110.17%. On April 19, within the time frame allotted, Graham filed exceptions and objections to the hardship petition, claiming that Lanier's documentation supporting the petition was flawed and that substantial housing code violations existed in the building. The next day, she filed a motion to stay the possession proceedings in landlord-tenant ...


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