1618 21ST STREET TENANTS'ASS'N v. Phillips

• Citation: 829 A.2d 201
• Decision Date: 24 July 2003
• Docket Number: No. 02-CV-893.,02-CV-893.
• Parties: 1618 TWENTY-FIRST STREET TENANTS' ASSOCIATION, INC., Appellant, v. THE PHILLIPS COLLECTION, Appellee.
• Court: Court of Appeals of Columbia District

829 A.2d 201

1618 TWENTY-FIRST STREET TENANTS' ASSOCIATION, INC., Appellant, v. THE PHILLIPS COLLECTION, Appellee.

No. 02-CV-893.

District of Columbia Court of Appeals.

Argued May 21, 2003.

Decided July 24, 2003.

Eric Rome, Washington, DC, for appellant.

Donald B. Mitchell, with whom Richard A. Newman and Ernest A. Tuckett, III, Washington, DC, were on the brief, for appellee.

Before FARRELL, REID and WASHINGTON, Associate Judges.

WASHINGTON, Associate Judge:

Appellant, 1618 Twenty-First Street Tenants' Association, Inc. ("Tenants' Association"), appeals a decision of the trial court, which found that appellee, The Phillips Collection ("Phillips"), had made a bona fide offer of sale to the Tenants' Association pursuant to the Rental Housing Conversion and Sale Act ("Act"), D.C.Code § 42-3404.02(a) (2001). Finding no error, we affirm.

I.

The facts in this case are largely not in dispute. They do, however, present a unique scenario and it is useful to briefly review them here. The Phillips Collection is a nonprofit corporation under both D.C. law and § 501(c)(3) of the federal tax code. Phillips owns a building located at 1600 21st Street, N.W., Washington, D.C., which is adjacent to a small fifteen-unit apartment building located at 1618 21st Street, N.W. In May of 1999, Phillips purchased the apartment complex for approximately $1.4 million with the intention of demolishing the building and constructing "The Center for the Study and Appreciation of Modern Art" ("Art Study Center"). It is uncontested that when Phillips bought the apartment complex from the original owners, the tenants were given an opportunity to purchase the property as required under D.C.Code § 42-3404.02 (providing for a first right of refusal). The tenants did not purchase the property and the sale to Phillips closed on February 26, 2001. By August of 2001, Phillips had secured all the necessary zoning to demolish the building and construct the Art Study Center.

After unsuccessfully negotiating with the representative of the tenants' association to have the tenants voluntarily vacate their apartments, Phillips decided to proceed formally under the Rental Housing Conversion and Sale Act. On or about December 5, 2001, Phillips issued a 180-Day Notice to Vacate for Demolition. On or about the same time, Phillips also issued an Offer of Sale and Tenant Opportunity to Purchase Without a Third-Party Contract for Housing Accommodations with Five or More Rental Units pursuant to D.C.Code §§ 42-3404.02(a),—3404.11. The offer to the tenants was for $7.8 million. This amount reflected what Phillips thought it would have to pay to purchase another property which was both suitable to build the Art Study Center and in close proximity to the 1600 21st Street site. Based on their belief that Phillips' offer was not a "bona fide offer of sale" as required under the statute, the tenants rejected the offer. Phillips then brought this action in the trial court for a declaratory judgment that the $7.8 million offer was a "bona fide offer of sale" under the D.C.Code § 42-3404.02. The trial court, Judge Cheryl M. Long, in a well-reasoned Memorandum Order concluded that $7.8 million was a bona fide offer. Thus, because the bona fide offer was rejected, Phillips was entitled to the property. The Tenants' Association now appeals the trial court's finding that the offer was a "bona fide offer of sale" within the meaning of D.C.Code § 42-3404.02.

II.

The primary question before us—the meaning of "a bona fide offer of sale"—is one of statutory interpretation, and we review the trial court's answer to that question de novo. See, e.g., District of Columbia v. Gallagher, 734 A.2d 1087, 1090 (D.C.1999)

; Ashton Gen. P'ship, Inc. v. Federal Data Corp., 682 A.2d 629, 632 (D.C.1996). "As a threshold matter, we acknowledge the often stated axiom that `the words of [a] statute should be construed according to their ordinary sense and with the meaning commonly attributed to them.'" E.R.B. v. J.H.F., 496 A.2d 607, 609 (D.C.1985) (quoting Davis v. United States, 397 A.2d 951, 956 (D.C.1979)); see also United States v. Goldenberg, 168 U.S. 95, 102-03, 18 S.Ct. 3, 42 L.Ed. 394 (1897); accord Gallagher, 734 A.2d at 1090. "When the plain meaning of the statutory language is unambiguous, the intent of the legislature is clear, and judicial inquiry need go no further." Id. at 1091. In finding the ordinary meaning, "[t]he use of dictionary definitions is appropriate in interpreting undefined statutory terms." West End Tenants Ass'n v. George Washington Univ., 640 A.2d 718, 727 (D.C.1994) (quoting 2A SINGER, SUTHERLAND STATUTORY CONSTRUCTION § 47.07 (5th ed.1992)). Furthermore, "where Congress borrows terms of art in which are accumulated the legal tradition and meanings of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken." Bates v. District of Columbia Bd. of Elections & Ethics, 625 A.2d 891, 894 (D.C.1993) (quoting Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 96 L.Ed. 288 (1952)). While we first employ the plain meaning rule to our task of statutory interpretation, we have acknowledged that in certain circumstances it is appropriate to look beyond even the plain and unambiguous language of a statute to understand the legislative intent. See generally Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 754 (D.C.1983) (citations omitted).

A. The Rental Housing Conversion and Sale Act

Section 42-3404.02(a), is part of the larger Act. See D.C.Code §§ 42-3401.01 et seq. The Act's overarching purpose is to protect tenant rights.¹ The Act was passed in response to the housing crisis in the District of Columbia, during which many residents were left with no home after their rental units were converted to condominiums. These conversions had the greatest effect on the city's low and moderate income families and the elderly population who lived on fixed incomes, in that both groups were "least able to purchase their unit once it converted and [were] least able to compete in a rental market which [was] rapidly increasing in price, while decreasing in available units." See COUNCIL OF D.C., COMM. ON HOUSING AND ECONOMIC DEVELOPMENT, REPORT ON BILL 3-222: RENTAL HOUSING CONVERSION AND SALE ACT OF 1980, at 2 (enacted as D.C.Code §§ 42-3401.01 et seq.) (hereinafter "COUNCIL REPORT"); see also D.C.Code § 42-3401.02(1). The Council's desire to protect tenants' rights is further reflected in § 42-3405.11, which states 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 permissible under law." Id. At the same time, this court may not rewrite the statute to create ambiguity where the "statutory scheme" is "unambiguous" in establishing the meaning of its terms. Coburn v. Heggestad, 817 A.2d 813, 823 (D.C. 2003) (construing related provisions of the Act.).

The section of the Act at issue in our case is D.C.Code § 42-3404.02(a), which states that

Before an owner of a housing accommodation may sell the accommodation, or issue a notice of intent to recover possession, or notice to vacate, for purposes of demolition of discontinuance of housing use, the owner shall give the tenant an opportunity to purchase the accommodation at a price and terms which represent a bona fide offer of sale.

Id. (emphasis added). While "bona fide offer of sale" is not defined in the statute, § 42-3404.05 requires that the owner and tenants bargain in good faith. Good faith is absent when an owner fails to "offer the tenant a price or terms at least as favorable as that offered to a third party . . . ." § 42-3404.05(a)(1). Thus, when there is a third-party contract, the statute implicitly requires that the bona fide offer be roughly equal to the offer made to a third party. See D.C.Code § 42-3404.05(a-1). Furthermore, there is no requirement in the statute that such an offer be based upon the property's use as a rental unit. For example, as the appellant conceded during oral argument, if the rental property is zoned for a more financially lucrative use—a mixed use retail and residential— and was offered for sale on the open market, the tenants would have to match a third party offer even if that offer was based upon the value of the property as a mixed use complex.

B. Bona Fide Offer of Sale, No Third-Party Contract

In this case, however, there is no third-party contract: Phillips plans to demolish the property and rebuild. Therefore, we must determine what a "bona fide offer of sale" means when no third party contract exists. Appellant suggests that a bona fide offer of sale, when there is no third party contract, is one which reflects the market value of the property as rental housing; in its view, therefore, the $7.8 million offer based on Phillips' anticipated costs of buying an alternative property is counter to the stated purpose of the Rental Housing Conversion and Sale Act and not a bona fide offer of sale. Phillips contends, by contrast, that "bona fide" is a legal term of art and should be accorded its general and ordinary meaning. See, e.g., BLACK'S LAW DICTIONARY 177 (6th ed.1990). Thus, Phillips contends that any offer of sale made in objective good faith is a bona fide offer.

A simple Lexis search shows that the term "bona fide" has appeared in 271 of our published opinions in all variety of cases. While only a few of our opinions define the term, when read in context, it is clear that this court has adopted the plain meaning, common law definition of bona fide as articulated in BLACK'S LAW DICTIONARY, which defines the term as:

In or with good faith; honestly, openly, and sincerely; without deceit or fraud. Truly; actually; without simulation or pretense. Innocently; in the attitude of trust and

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