Adm'R of Veterans Affairs v. Valentine, 83-250.

• Decision Date: 24 April 1985
• Docket Number: No. 83-486.,No. 83-250.,83-250.,83-486.
• Parties: ADMINISTRATOR OF VETERANS AFFAIRS, Appellant, v. Joyce VALENTINE, Appellee.
• Court: D.C. Court of Appeals

490 A.2d 1165

ADMINISTRATOR OF VETERANS AFFAIRS, Appellant, v. Joyce VALENTINE, Appellee.

No. 83-250.

No. 83-486.

District of Columbia Court of Appeals.

Argued December 8, 1983.

Decided April 24, 1985.

Michael J. Ryan, Asst. U.S. Atty., Washington, D.C., with whom Stanley S. Harris, U.S. Atty., Washington, D.C., at the time brief was filed, Royce C. Lamberth and R. Craig Lawrence, Asst. U.S. Attys., Washington, D.C., were on brief, for appellant.

Felice Busto, Washington, D.C., with whom Lindsey Bishop Lang, Washington, D.C., was on brief, for appellee.

Before MACK, BELSON and TERRY, Associate Judges.

PER CURIAM:

In Simpson v. Jack Spicer Real Estate, Inc., 396 A.2d 212 (D.C.1978) (per curiam), we held that District of Columbia statutory eviction restrictions¹ did not protect a property owner who defaulted on a mortgage (deed of trust) and continued to live in his former home after it was sold at foreclosure. This case presents the question whether those restrictions protect the tenant of a defaulting mortgagor who remains in her previously rented apartment after a foreclosure sale. We hold that they do.²

Joyce Valentine rented an apartment in a four-unit building at 3221 Massachusetts Avenue, S.E., in 1977. Her initial 1-year lease expired in 1978, but she continued to live in the apartment and paid rent to successive owners of the building.³ When a default occurred in the mortgage payments, the lender foreclosed and purchased the property at public auction in May 1982. In June 1982, the lender conveyed the property to the Veterans Administration (VA), which had insured the mortgage.

On October 22, 1982, Valentine received a 30-day notice to quit from the VA. The letter stated, "It is necessary that we obtain possession of this property immediately in order that we may take steps to dispose of the property with the least delay."⁴ When Valentine failed to vacate the premises, the VA filed a complaint for possession in D.C. Superior Court. The trial court granted Valentine's motion to dismiss on the ground that the VA had failed to allege any of the reasons recognized in the Rental Housing Act, D.C.Code § 45-1561 (1981), as valid grounds for eviction.

In its appeal of that dismissal, the VA contends that evictions of tenants holding under a defaulting mortgagor are governed by D.C.Code §§ 45-222 and 45-1403 (1981), statutes which have long been in force in the District. Section 45-222 provides, in pertinent part:

[I]n case of a sale of real estate under mortgage or deed of trust or execution, and a conveyance thereof to the purchaser the grantor in such mortgage or deed of trust, execution defendant, or those in possession claiming under him, shall be held and construed to be tenants at will. . . . (Emphasis supplied.)

Thus, the VA argues, upon a forced sale, the defaulting mortgagor or any tenant renting the premises from him, is deemed a tenant at will. Section 45-1403 provides that a tenancy at will may be terminated merely by the giving of 30 days' written notice.

The more recently enacted Rental Housing Act, however, severely restricts a landlord's authority to evict tenants. D.C.Code § 45-1561(a) provides, in part:

Except as provided in this section, no tenant shall be evicted from a rental unit, notwithstanding the expiration of his or her lease or rental agreement, so long as he or she continues to pay the rent to which the landlord is entitled for such rental unit. No tenant shall be evicted from a rental unit for any reason other than for nonpayment of rent unless he or she has been served with a written notice to vacate which meets the requirements of this section.

The other subsections of § 45-1561 enumerate the grounds upon which a landlord may recover possession of a rental unit. They include: violation by the tenant of an obligation of his tenancy; performance of an illegal act by the tenant within the rental unit; a good faith intention by the landlord to use the premises for his own personal use as a dwelling; and a good faith written contract by the landlord to sell the unit for the personal use of the purchaser as a dwelling, but only after the tenant has been given notice and an opportunity to purchase it himself. In addition, § 45-1561 imposes restrictions on displacement of tenants for the purpose of rehabilitating or demolishing the housing accommodation.

The VA does not argue that its attempt to evict Valentine is based on any of the reasons permitted by § 45-1561; rather, it contends that § 45-1561 does not apply in the situation before us. In expressing the reasons for our rejection of the VA's position, we observe first that the Rental Housing Commission, the administrative agency charged with responsibility for interpreting and applying Chapter 15 (Rent Control) of Title 45 of the District of Columbia Code, including § 45-1561, has ruled that foreclosure of a mortgage does not deprive the mortgagor's tenants of the protection of § 45-1561. Ficke v. Washington Federal Savings and Loan Assn, No. T.P. 11,062/NV 14, 621 (May 4, 1984). "In reviewing the construction of a statute by the agency charged with its interpretation and enforcement, the agency's interpretation is controlling unless it is plainly erroneous or inconsistent with the statute." Totz v. Rental Accommodations Commission, 412 A.2d 44, 46 (D.C.1980) (citation omitted). For the reasons we develop below, we think that the Commission's interpretation, entirely apart from the deference it is owed, is correct.

In support of its position, the VA relies heavily on our decision in Simpson v. Jack Spicer Real Estate, Inc., 396 A.2d 212. Simpson, a homeowner who had defaulted on his mortgage, resisted the subsequent purchaser's efforts to evict him by claiming that he was a tenant at will under the predecessor to D.C.Code § 45-222. Since he was thus a "tenant," Simpson claimed, he could be evicted only for one of the reasons enumerated in the predecessor to § 45-1561.

We rejected that argument, stating:

The primary fallacy in [Simpson's] position is his contention that the statutes are in pari materia and that the term "tenant" is defined consistently throughout the D.C.Code. The distinction here is between a tenant at common law — one who holds or possesses lands by any kind of right or title — and a tenant under the renters' statute — one who stands in a contractual relationship with his landlord. See Surratt v. Real Estate Exchange, Inc., D.C.Mun.App., 76 A.2d 587, 588 (1950). . . . We conclude that the tenancy arising from mere possession is not that which is referred to in the rent control statute and reject [Simpson's] contentions to the contrary.

Simpson, 396 A.2d at 214-15.

The VA asserts that because tenants holding under defaulting mortgagors are placed in the same category as defaulting mortgagors in § 45-222, and because we held that defaulting mortgagors are not protected by (the predecessor to) § 45-1561, it follows that those tenants are likewise unprotected by § 45-1561. The VA also argues, relying upon some of the language quoted above, that Valentine cannot claim the protection of § 45-1561 because there is no contractual relationship between her and the VA.

The VA has succumbed to the same fallacy that Simpson did. It asks us to apply rigidly a classification rooted in another statute to the situation before us without considering whom § 45-1561 was designed to protect. We decline to take such an inflexible approach and conclude that a proper construction of § 45-1561 requires distinguishing between defaulting mortgagors and tenants of defaulting mortgagors.

Initially, we note that in Surratt v. Real Estate Exchange, 76 A.2d at 588, cited in Simpson, this court stated that it was "obvious" that persons who had been renting from a defaulting mortgagor were in a different situation from the mortgagor himself for purposes of statutory eviction controls. Surratt involved basically the same fact situation as in Simpson and the court came to the same conclusion. However, the court was careful to distinguish several cases that had held that eviction controls similar to those in § 45-1561 were applicable in an action by a post-foreclosure purchaser to obtain possession from tenants of the defaulting mortgagor. See, e.g., Long Branch Banking Co. v. Howland, 133 N.J.Eq. 315,32 A.2d 860 (N.J.Ch. 1943) (eviction restrictions apply even though technically there was no landlordtenant relationship between post-foreclosure purchaser and tenant of former owner).

An examination of the Rental Housing Act confirms the validity of the distinction we drew in Surratt. One of the purposes of the Act is "[t]o protect the existing supply of rental housing from conversion to other uses." D.C.Code § 45-1502(4) (1981). Before the foreclosure, Valentine's apartment clearly was part of the existing supply of rental housing in the District; to allow the VA to evict her would have opened the way to conversion of that building to other uses. In Simpson, on the other hand, the property had not been part of the District's rental housing stock, so permitting the former owner's eviction did not diminish the supply of rental units.

Moreover, the eviction restrictions of § 45-1561 are only part of a comprehensive legislative scheme to protect the rights of tenants and therefore must be construed liberally. See McCree v. McCree, 464 A.2d 922, 927-28 (D.C.1983) (remedial statute construed liberally to effectuate its purposes); Hutchison Brothers Excavation Co. v. District of Columbia, 278 A.2d 318, 321 (D.C.1971).⁵ To the same end, present law in the District imposes rent ceilings on most apartments in buildings of more than four units. D.C.Code §§ 45-1516, -1517 (1981 & Supp.1984).⁶ It also limits the conversion of rental accommodations to condominiums or cooperatives. Id. §§ 45-1601, et seq.

The salient provision here, subsection (a) of § 45-1561, prohibits eviction in most cases even though the lease or agreement has...