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Varnum Properties, LLC v. District of Columbia Department of Consumer and Regulatory Affairs

Court of Appeals of The District of Columbia

March 14, 2019

Varnum Properties, LLC, Petitioner,
v.
District of Columbia Department of Consumer and Regulatory Affairs, Respondent.

          Submitted March 1, 2018

          On Petition for Review of an Order of the District of Columbia Office of Administrative Hearings (DCRA-112-15)

          Phillip J. Collins was on the brief for petitioner.

          Karl A. Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General at the time the brief was filed, Loren AliKhan, Deputy Solicitor General at the time the brief was filed, and Mary L. Wilson, Senior Assistant Attorney General at the time the brief was filed, were on the brief for respondent.

          Before Glickman and Thompson, Associate Judges, and Nebeker, Senior Judge.

          THOMPSON, ASSOCIATE JUDGE

         On December 7, 2015, the District of Columbia Department of Consumer and Regulatory Affairs ("DCRA") revoked a building permit (Building Permit No. B1411058, hereafter "the Building Permit") that had been issued to Westend Development LLC ("Westend Development"), the trade name of Varnum Holdings, LLC ("Varnum Holdings"). Thereafter, petitioner Varnum Properties, LLC ("VP") petitioned the Office of Administrative Hearings ("OAH") for review of the DCRA revocation decision. After the OAH Administrative Law Judge ("ALJ") raised sua sponte the issue of whether VP had standing to appeal the revocation decision, VP responded by filing a motion to add Varnum Holdings as an additional petitioner whose participation was "necessary to 'effectively and completely adjudicate the dispute.'" In a May 9, 2016, Final Order (the "May 9 Order"), the OAH ALJ denied the motion to add Varnum Holdings as a party and dismissed VP's petition on the ground that VP lacked standing to challenge the revocation.[1] VP sought reconsideration of that ruling, and on July 8, 2016, the OAH ALJ issued an Order Denying Reconsideration of Final Order (the "July 8 Order"). VP now seeks review of the May 9 and July 8 Orders. We reverse and remand.

         I.

         The Building Permit authorized construction work at 1521 Varnum Street, N.W. (the "Property") (specifically, the conversion of a single family dwelling into two flats).[2] VP asserts that the "underlying zoning" has been changed since the Building Permit was issued, with the result that "any new permit application for the same project would no longer be permitted." VP further asserts that DCRA's counsel has informed VP that "the only change to the Building Permit that would be considered would be a new application under the revised zoning regulations." According to VP, this means that DCRA will not approve a request by VP to transfer the Building Permit to VP.[3]

         In petitioning for review of the December 7, 2015, notice of revocation of the Building Permit, VP asserted that it was the "successor-in-interest to Varnum Holdings, LLC d/b/a Westend Development." However, in an April 1, 2016, order denying VP's first motion for summary judgment, the ALJ found that there was no record evidence that VP was the owner of the Property and no evidence of VP's standing to appeal the revocation notice. As part of a subsequent, renewed motion for summary adjudication, VP submitted the affidavit of its managing member, Michael Taylor, to support VP's assertion that VP was formerly known as AMT-Varnum, LLC ("AMT-Varnum"); that on or about November 12, 2015 (about three weeks prior to the notice of revocation), AMT-Varnum purchased the Property from Varnum Holdings, d/b/a Westend Development; and that VP therefore "is the current owner of the Property."

         The ALJ ruled on VP's renewed motion for summary judgment on April 11, 2016. Citing 12A DCMR § 105.6.4.1 (2015) ("[t]he permit holder may appeal a notice of revocation . . . no later than 10 business days after service of written notice of the revocation upon the permit holder[]"), the ALJ explained that "[p]etitioner's right to appeal the [n]otice of the proposed revocation is dependent on it being the holder of the permit." The ALJ acknowledged that DCRA, in its opposition to the renewed motion for summary judgment, did not dispute VP's ownership of the Property. What the ALJ found to be decisive, however, was that VP "ha[d] not alleged, let alone proved, that the permit in question was transferred to it by the permit holder."[4] The ALJ denied petitioner's renewed motion for summary judgment "since [p]etitioner ha[d] not demonstrated that it ha[d] standing to appeal the [n]otice and is entitled to the relief it request[s] as a matter of law."

         Upon that ruling by the ALJ, DCRA on the same day filed a motion to dismiss VP's appeal, echoing the ALJ's finding that VP "ha[d] not established transfer of the permit from the permit holder to petitioner and therefore . . . d[id] not have standing" to pursue the appeal from the revocation notice. VP responded the next day (April 12, 2016) by moving to add Varnum Holdings as a party. VP attached to its motion a "Bill of Sale" reflecting that on that same day, it had purchased all of the membership interests in Varnum Holdings.

         In the May 9 Order, the ALJ denied VP's motion to add Varnum Holdings as a party. The ALJ reasoned that VP had not shown either that it acquired all the assets of Varnum Holdings, including the Building Permit, or that the Building Permit was properly transferred to it in accordance with 12A DCMR § 105.5.3. The ALJ concluded that because the "legal right to the permit" was not with VP, VP lacked standing to contest the revocation.

         VP sought reconsideration of the ALJ's ruling. After a telephonic hearing on July 6, 2016, the ALJ issued the July 8 Order, denying the motion for reconsideration. Construing VP's motion as a motion "to add, or substitute" Varnum Holdings as a party, [5] the ALJ found that VP had not stated grounds warranting reconsideration under OAH Rule 2828.5 (stating inter alia that an ALJ may change a final order if it "contains an error of law[, ]" id. ยง 2828.5(c) (Apr. 2016). The ALJ reasoned that VP had "not shown how adding, or substituting, Varnum Holdings as a party[] would ...


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