Apartment & O. B. Ass'n of Met. Wash. v. Washington, 8985.
| Decision Date | 16 July 1975 |
| Docket Number | No. 9083.,No. 8985.,8985.,9083. |
| Citation | 343 A.2d 323 |
| Parties | APARTMENT AND OFFICE BUILDING ASSOCIATION OF METROPOLITAN WASHINGTON, a corporation, et al., Appellants, v. Walter E. WASHINGTON, Commissioner, et al., Appellees. Walter E. WASHINGTON, Commissioner, et al., Appellants, v. APARTMENT AND OFFICE BUILDING ASSOCIATION OF METROPOLITAN WASHINGTON, a corporation, et al., Appellees. |
| Court | D.C. Court of Appeals |
Eric Von Salzen, Washington, D. C., with whom Kevin P. Charles and Daniel R. Stegall, Washington, D. C., were on the brief, for appellants and cross-appellees in Nos. 8985 and 9083, respectively.
David P. Sutton, Asst. Corp. Counsel, Washington, D. C., with whom C. Francis Murphy, Corp. Counsel, Louis P. Robbins, Principal Asst. Corp. Counsel, and Richard W. Barton, Asst. Corp. Counsel, Washington, D. C., were on the brief, for appellees and cross-appellants in Nos. 8985 and 9083, respectively.
Michael R. Klein, Neil J. King and Ann K. Macrory, Washington, D. C., were on the brief of applicant tenants as amici curiae.
Before REILLY, Chief Judge, and FICKLING and NEBEKER, Associate Judges.
These interlocutory appeals1 arise from the denial of appellant-plaintiffs' request for a declaratory judgment and a permanent injunction against enforcement of District of Columbia Regulation No. 74-20 (hereinafter Regulation), which established rent control and a Housing Rent Commission (hereinafter Commission) for the District of Columbia on August 1, 1974. The Regulation was enacted pursuant to the District of Columbia Rent Control Act of 1973 (the Act).2 Appellants (hereinafter landlords; see note 1, supra) are the Apartment and Office Building Association of Metropolitan Washington, The Washington Board of Realtors, and several corporations, partnerships, joint ventures, and individuals owning various rental residential units in the District of Columbia. The Act authorized the District of Columbia City Council (hereinafter City Council) to
adopt such rules as it determines necessary and appropriate to regulate and stabilize rents in the District of Columbia . . . except that any such rules . . . shall provide means whereby increased costs incurred by such landlord . . . shall be taken into consideration in determining the amount of such rents . . . which such landlord is entitled to receive . . .3
The landlords contend that the trial court erred in failing to hold as a matter of law that the rent control program exceeded the statutory authority of the City Council and was void for failure to provide (assuming imposition of rent controls) a workable method to vindicate the landlords' statutory right to a meaningful method of passing on increased costs. Although we do not hold the regulation to be void, we do agree that a condition precedent to enforcement of rent control is a viable means whereby landlords may recoup the amount of increased costs to which they are entitled. Our judgment affirms in part, reverses and vacates in part, and remands with instructions for future disposition of the case.
On November 21, 1973, the District of Columbia Rent Control Act became law. The Act authorized the City Council to establish a temporary District of Columbia Housing Rent Commission (§ 45-1623(a)) to hold hearings regarding a known and apparent shortage of rental residences, and to adopt necessary rules and regulations for administration of any such assumed responsibilities (§ 45-1622(a)). As mentioned, the Act required in any rule or regulation a means, commonly referred to as a "pass-through", whereby increased costs could be taken into consideration in determining the amount of rent. The Act contained a provision authorizing the Commission to grant exemptions to landlords who could show serious financial hardship (due to the regulations promulgated), and provided that in such cases affected tenants would receive notice and be given an opportunity to present evidence (§ 45-1623(d)(2)). The Act also contained a provision for judicial review in Superior Court through an action by any person aggrieved by a decision of the Commission or by the failure of the Commission to act (§ 45-1625(a)).
Public hearings were held in January 1974. On May 31, 1974, the City Council passed Regulation No. 74-13,4 imposing a "rent freeze" in the District of Columbia for June and July of 1974. In a suit thereafter in the Superior Court to enjoin the "freeze", the "freeze" was upheld because of its temporary nature, despite the absence of a provision for increased costs incurred by landlords during the moratorium.5
On August 1, 1974, the date of the expiration of the "rent freeze", the City Council passed Regulation No. 74-20,6 the subject of these appeals. This Regulation included provisions which
(a) established a temporary District of Columbia Housing Rent Commission (§ 8) (which has been extended by action of the new City Council, the succeeding legislative authority to Congress under the District of Columbia Self-Government Reorganization Act);7
(b) set a base rent ceiling for all rental accommodations of 112.32% of the rent which was in effect on February 1, 1973 (§ 5b);
(c) required rents in excess of this ceiling to be "rolled back" to this ceiling as of the next regular rental date after the Regulation's promulgation (§ 5d);
(d) required thirty days' notice to a tenant before a rent increase could be effective (§ 5 l);
(e) authorized the Commission to make adjustments for landlords and tenants, based on hardship, as long as notice is given to the other party of the right to request a hearing (§ 7b);
(f) ordered the Commission to seek to maintain "maximum rents . . . which will yield . . . a reasonable return" for landlords (§ 6a); and
(g) required the Commission to act upon landlords' and tenants' hardship petitions within sixty (lays of the date of filing (§ 7a).
Shortly thereafter, the landlords instituted this class action against the municipal officers of the District on behalf of all rental residence landlords in the District subject to rent control. They initially sought a declaratory judgment and preliminary injunction against the specific provision in § 5d of the Regulation requiring landlords to "roll back" their rents, but this rent was denied. They then filed a further motion for a permanent injunction against the administration of the entire program under the Regulation.
Although the landlords described this suit as a class action, they failed to comply with the requirement in Super.Ct. Civ.R. 23-I(a) that the plaintiff file a motion requesting the court to certify that the action may be maintained as a class action. Moreover, the trial court, although it later granted partial relief to landlords as a class, failed: (1) to comply, sua sponte, with the requirement in Super.Ct.Civ.R. 23(c) (1) and R. 23-I(c) that the court determine whether the action is maintainable as a class action as soon as practicable after institution of the action, and (2) to comply with the requirement in Super.Ct. Civ.R. 23(e)(3) that the judgment in a Rule 23 class action include and describe those whom the court finds to be members of the class.8
At the evidentiary hearings on the preliminary and permanent injunctions, the landlords offered testimony and evidence by way of a research study to show that the across-the-board rent increase of 12.32% was unfair. They also sought to show that under the mechanics of the hardship provisions in sections 6 and 7 of the Regulation, the Commission was incapable of implementing the statutorily required pass-through by permitting prompt rent increases reflecting increased costs. The trial court denied the "permanent injunction . . pending a hearing on plaintiffs' complaint to declare . . . [the] Regulation . . . invalid." However, the trial court held in its conclusions of law that the hardship remedies were "not currently available through the hearing Commission" and accordingly granted relief to appellants as a class by staying the rollback requirement with respect to any landlord who had petitioned the Commission pursuant to the hardship provisions in sections 6 and 7 of the Regulation. (Absent class action determination by the trial court, see note 8 supra, and accompanying text, we do not view this selection of beneficiaries of the stay of the rollback as class-member identification.) The landlords appeal from the denial of the permanent injunction. The District of Columbia officials cross-appeal from the order granting a stay of the rollback provision.
The argument that enforcement of rent control exceeds the statutory authority of the City Council by not possessing a workable pass-through mechanism has several prongs. First, it is argued that the "oneshot" rent increase of 12.32% in § 5 of the Regulation does not satisfy this pass-through requirement and that even if it were assumed that this increase is the regulatory mechanism initially implementing the pass-through right, the across-the-board application of the 12.32% rent increase to all landlords, regardless of circumstances, is unfair in that it is inadequate for some of them. In this context, it is further argued that even if the 12.32% rent increase were assumed to satisfy the pass-through requirement and an across-the-board application of a rent increase formula were assumed to be fair, this particular increase would still be inadequate since, according to the research study, the average cost increase to landlords prior to the Regulation was 15.3%, not 12.32%.9
Secondly, they contend that the provisions in sections 6 and 7 of the Regulation for hardship petitions by landlords do not fulfill the pass-through requirement because these provisions are analogous to, and implementations of, a separate statutory policy regarding hardship exemptions for landlords (§ 45-1623(d)(2)), not the different policy in...
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