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Clifton Street, LLC v. District of Columbia

March 8, 2012


Appeal from the Superior Court of the District of Columbia (CAB 2496-09) (Hon. Judith N. Macaluso, Motions Judge)

The opinion of the court was delivered by: Blackburne-rigsby, Associate Judge:

Argued April 12, 2011

Before GLICKMANand BLACKBURNE-RIGSBY, Associate Judges, and EPSTEIN, Associate Judge, Superior Court of the District of Columbia.*fn1

Appellant 1303 Clifton Street, LLC, ("Clifton Street") challenges the trial court's denial of its request for declaratory judgment and the trial court's grant of summary judgment in favor of appellees District of Columbia ("District") and Lauren Pair,*fn2 administrator for the Rental Conversion and Sales Division ("CASD") of the District of Columbia's Department of Housing and Community Development. Appellant planned to convert its property into condominiums and sought a declaratory judgment to exempt it from paying the statutory conversion fee, claiming that its property was "not a housing accommodation" and therefore was not subject to a conversion fee on the sale of its units. There remains a material fact at issue in this case: whether the pre-converted property was exempt from the conversion process. The trial court did not reach this issue because it decided that appellant was either procedurally barred or estopped from seeking status as a non-housing accommodation, and granted summary judgment in favor of appellees. We reverse and vacate the trial court's grant of summary judgment, with instructions that the trial court remand this case to CASD for further proceedings consistent with this opinion.

I. Background

Before a property may be offered for sale as a condominium unit, the owner must first apply for condominium registration with CASD. D.C. Code § 42-1904.02 (a) (2001). If the property is a condominium at the time of application - defined as real estate with designated portions for separate and common ownership - the owner may directly apply for the registration. D.C. Code §§ 42-1901.02 (4) (2001) and -1904.03. However, if the property is being converted into a condominium from some other use, the owner must first go through the conversion process outlined in the Rental Housing Conversion and Sale Act of 1980, as amended ("Conversion Act"). D.C. Code §§ 42-3401.01 to -3405.13 (2001). The Conversion Act makes a distinction between the process required to convert a property that is a housing accommodation, which the Conversion Act defines as a structure containing one or more rental units, see D.C. Code § 42-3401.03 (11), and the process required to convert a property that is not a housing accommodation. A property owner seeking to convert a housing accommodation into a condominium must seek tenant approval and pay a five percent conversion fee on the sale price at the time the condominium units are sold. D.C. Code §§ 42-3402.04 (a-1), (b-1) (2009 Supp.). The owner of a housing accommodation that is not occupied may apply for a vacancy exemption, which exempts the owner from seeking tenant approval, but not from paying the conversion fee. See D.C. Code §§ 42-3402.10, -3402.04 (a-1). If the property is not a housing accommodation, the owner may apply for a "not-a-housing-accommodation" exemption ("NHA exemption"), which exempts the property owner from having to pay a conversion fee. 14 DCMR § 4708.4 (2004). For example, the owner of a vacant warehouse who wishes to convert his or her building into loft condominiums would qualify for this exemption.

On May 16, 2008, appellant purchased a vacant four-story row house property located at 1303 Clifton Street, Northwest, in the District of Columbia ("Clifton Street Property") and initiated the process to convert the property into a condominium. Appellant initially applied for a vacancy exemption for the Clifton Street Property, describing the property as a shell that was both vacant and uninhabitable. Administrator Pair informed appellant that its vacancy exemption application had been approved andthat the Clifton Street Property was now exempt from the tenant election requirements of § 42-3402.10, but was still subject to the conversion fee requirements of § 42-3402.04. Administrator Pair's letter advised appellant that it could proceed to file a registration application to convert the property to a condominium. Appellant filed a registration application on October 6, 2008,and ten days later, on October 16, 2008, CASD issued a notice of filing to Clifton Street.*fn3 CASD approved the application and registered the Clifton Street Property as a condominium on November 10, 2008.

Over a month after CASD issued the notice of filing in connection with the Clifton Street Property and nine days after it was registered as a condominium, Administrator Pair had a conversation with Jason Pardo, counsel for Clifton Street. Administrator Pair described to Pardo the circumstances in which a vacant property might fall within the NHA exemption to the Conversion Act, and informed him that such properties would not be required to pay the conversion fee on their units. However, Administrator Pair also informed him that when the notice of filing issues, the conversion process ends, and amendments to the exemption application would not be considered after that date.In a letter memorializing the conversation approximately three months later, Administrator Pair recalled that she advised Pardo:

[T]hat a structure that is not a "housing accommodation" as defined under the Conversion Act . . . would be exempt from certain conversion requirements. Commercial properties or owner-occupied dwellings are typically designated as 'not-a-housing accommodations.' As I recollect, [Pardo was] unaware of the availability of an NHA exemption, and shortly after our discussion, [he] withdrew several pending vacancy exemption applications on behalf of other clients, and resubmitted NHA applications instead.

When Pardo submitted an NHA exemption application to exempt the Clifton Street Property from paying the conversion fee, Pardo sent Administrator Pair a copy of it. Pardo did not seek to withdraw the vacancy exemption application he had originally filed on behalf of the Clifton Street Property, but rather characterized the NHA exemption application as a "supplemental/amended exemption based on the fact that the [Clifton Street] Property is not a Housing Accommodation."

Administrator Pair denied Clifton Street's supplemental application for the NHA exemption, concluding that Clifton Street could not seek retroactive withdrawal of an exemption (the earlier vacancy exemption application) after the notice of filing had been issued and the conversion process completed. Administrator Pair explained her understanding that a legal conversion of a property occurs at the time of issuance of the notice of filing. See D.C. Code §§ 42-3401.03 (3) and -1904.06 (a). She reasoned that "[t]he type of certificate of eligibility to convert is immaterial; when the notice of filing issues, by operation of law, the property is deemed to have converted to a condominium[,]" and that it was "inequitable from a policy perspective" to retroactively withdraw the vacancy exemption because "[c]hanging the basis for the conversion retroactively sets a bad precedent and a slippery slope for other retroactive conversion applications."

Appellant filed a complaint in Superior Court against Administrator Pair and the District seeking, inter alia, a declaratory judgment that it was not required to pay a conversion fee in connection with the sale of its condominium units because it was not a housing accommodation. Both parties subsequently filed cross-motions for summary judgment. The trial court granted the District's motion for summary judgment and dismissed appellant's complaint with prejudice. The motions judge found that the procedural bar asserted by Administrator Pair was a reasonable interpretation by CASD of the Conversion Act and that the interpretation "comports with the statute's plain meaning and the design of the conversion process as a whole." The motions judge further concluded that appellant was estopped from seeking the NHA exemption, since it had represented in the vacancy exemption application that it was a housing accommodation. Appellant filed this appeal on April 5, 2010.

II. Analysis

We are asked to determine whether the two bases of the trial court's grant of summary judgment in favor of the government - that appellant was procedurally barred from applying for the NHA exemption or, in the alternative, estopped from seeking the exemption - were proper. We recognize that summary judgment is appropriate only when there are no material facts at issue and when it is clear that the moving party is entitled to judgment as a matter of law. Padou v. District of Columbia, 29 A.3d 973, 980 (D.C. 2011). "The question whether summary judgment was properly granted is one of law, and we review the trial judge's order de novo." Cormier v. District of Columbia Water & Sewer Auth., 959 A.2d 658, 662 (D.C. 2008) (citations omitted). In conducting our de novo review of the trial court's grant of summary judgment, we must view the record in the light most favorable to the non-moving party. Id. at 663. We first conclude that appellant is not procedurally barred from applying for the NHA exemption because we are not persuaded that the Conversion Act should be read to foreclose a property owner from applying for an NHA exemption once the notice of filing has been issued. We further conclude ...

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