Hernandez v. Banks

• Decision Date: 06 February 2014
• Docket Number: No. 12–CV–711.,12–CV–711.
• Citation: 84 A.3d 543
• Parties: Ricardo HERNANDEZ, Appellant, v. Bryant BANKS, et al., Appellees.
• Court: D.C. Court of Appeals

84 A.3d 543

Ricardo HERNANDEZ, Appellant,

v.Bryant BANKS, et al., Appellees.

No. 12–CV–711.

District of Columbia Court of Appeals.

Argued Sept. 20, 2013.

Decided Feb. 6, 2014.

Aaron Sokolow, with whom Morris R. Battino, Washington, DC, was on the brief, for appellant.

Russell M. Squire, Student Attorney (No. 13056), with whom Marc Bentzen, Supervising Attorney, was on the brief, for appellees.

Before BECKWITH and McLEESE, Associate Judges, and REID, Senior Judge.

REID, Senior Judge:

This case represents another chapter in the longstanding controversy over residential property located in the Northwest quadrant of the District of Columbia. We resolved one appeal relating to the property in an en banc opinion, Hernandez v. Banks, 65 A.3d 59 (D.C.2013)( Hernandez I ). There the court held that a lease that appellees, Bryant and Sheillia Banks, signed with the mentally incapacitated previous owner of the property is “voidable, rather than inherently void”; we remanded the case to “the division to consider whether the trial court erred in determining that the lease between [the previous owner] and [the Bankses] was never disaffirmed.” Id. at 74.

The instant case began when the 718 Associates Trustee of the 718 NW Trust (“718 Associates”) purchased 718 Marietta Place, Northwest (“the Property”) at a tax sale, and later sold it to the present owner, appellant Ricardo Hernandez. In order to remove the Bankses from the Property, 718 Associates filed an ejectment action in the trial court in December 2008. The Bankses failed to respond to the summons and complaint, and a default was entered on January 27, 2009, but on July 10, 2009, after a hearing, the trial court granted their motion to vacate the default. Following additional proceedings, the trial court ruled on May 18, 2012, that because the Bankses were tenants at will and were not sent the proper notice to quit, 718 Associates could not prevail on its effort to eject them. As part of its ejectment action, however, 718 Associates also demanded a monetary award of $25,000 for the Bankses' “use, enjoyment, and occupancy of the premises.” The trial court denied the demand, concluding that the rental value of the Property when the Bankses took possession was “zero” because of its uninhabitable condition, and the value of their use and occupation of the premises had not been established. Mr. Hernandez challenges the trial court's rulings on appeal.

First, we conclude that the trial court did not abuse its discretion in vacating the entry of default against the Bankses. Second, we hold that the trial court correctly determined that as tenants at will, the Bankses were entitled to, but never received, a proper notice to quit the property. Third, we also hold that a person seeking damages in an ejectment action, under D.C.Code § 16–1109(a)(2), must prove the clear and reasonable value of the use and occupancy of his or her property during the time in which possession was denied; we conclude that the trial court correctly ruled that Mr. Hernandez (and 718 Associates) failed to sustain their burden of proof as to damages.

FACTUAL SUMMARY

The record reveals that 718 Associates filed its 2008 complaint for ejectment and monies owed,¹ in the Civil Division of the Superior Court, under D.C.Code § 16–1101, et seq. When the Bankses failed to answer the summons and complaint, default was entered but after a hearing, the Honorable Thomas J. Motley granted the Bankses' motion to vacate the entry of default. Later, the Honorable Erik P. Christian held an evidentiary hearing regarding 718 Associates' complaint. At that hearing, Steven Calvert, trustee of the 718 NW Trust, and Mr. Hernandez testified on behalf of 718 Associates, and Mr. and Mrs. Banks testified as defense witnesses.

At the time of the hearing, Mrs. Banks, her husband, and their four children had occupied the Property for nine years. The testimony from Mr. Calvert and the Bankses, and documentary evidence, revealed that the Bankses had signed two lease documents with Patricia Elizabeth Spelios,² the prior owner of the Property. The first lease, dated March 17, 2001, was a standard form “lease with purchase option,” for a term of two years. It obligated the Bankses to pay $500 per month at a Connecticut Avenue address, beginning on April 18, 2001, and ending on March 17, 2003. That lease also granted the Bankses an option to purchase the Property “as is” for the sum of $50,000, with a down payment of $1,800; and the lease stated that: “Tenants may renovate as they wish while living at 718 Marietta Place, N.W.”

The second lease, dated March 22, 2001, was not on a standard form, but it also was titled, “lease with purchase option.” This lease was for a term beginning on March 22, 2001, and extending until “N/A,” apparently creating an open-ended tenancy. As with the first lease, the Bankses were required to pay $500 per month for rent, but the rent was payable directly to the landlord, Ms. Spelios. The Bankses also were given “an exclusive option” to purchase the Property for a $500.00 down payment, “[r]ental payment deposits to b[e] held in trust by the Landlord,” and “[c]ash or certified check for the balance on closing”; the remaining sum for the purchase was $50,000.00. In addition, the lease provided that the Bankses “may make any necessary changes to the [P]roperty,” but the lease also specified that Ms. Spelios, as landlord, would “make necessary repairs to bathroom, kitchen (including appliances), exterior roof, interior ceiling and front and back porch.”

During their testimony, the Bankses described the condition of the Property when they moved in and in later years: the Property lacked a functioning kitchen and bathroom; the ceilings, floors, and walls in the house were riddled with holes; the dining room and back room on the first floor “were in awful condition”; the “living room was in terrible shape” with a large hole and water seeping into it; and the front and back porches were unstable. Due to the stark condition of the house, only two of the rooms were habitable immediately; the Bankses began to patch the holes, replace the floor, and build a working kitchen and bathroom. Their renovation work continued through 2005 and up to the time of the evidentiary hearing.

At the hearing, both parties sought to establish how much rent the Bankses had paid. The Bankses maintained that they paid rent directly to Ms. Spelios “up until 2003 until she entered the nursing home,” and then paid money into the court registry after a 2007 lawsuit by 718 Associates. Mr. Calvert testified that the Bankses paid some monies into the court registry but owed money for other months, that from July 2009 to an unspecified time, the Bankses paid $9350, and that they currently owed $25,000 minus the $9350 sum in the court registry. Mr. Calvert further testified that 718 Associates considered the Bankses to be squatters, did not check the Property to see whether anyone occupied it until after the resolution of 718 Associates' quiet title action, and had never asked the Bankses for any rent money.

Mr. Calvert was unaware of any occupants when 718 Associates purchased the Property. He has never been inside the Property and has never had a key to it. He learned that the Property was occupied when 718 Associates sent a painter there. Mr. Hernandez testified that the Bankses did not know that he owned the Property.

At the conclusion of the testimony, the Bankses asked Judge Christian to take judicial notice of the fact that they paid $6500 into the court registry in Case No. 2007 LTB 3926, and that by court order the funds were disbursed to 718 Associates on April 30, 2008. During his closing argument, Mr. Calvert asserted that the Bankses had paid $500 a month into the court registry from July 2009 to February 2011, for a total of $9840, but that they owed money for December 2005 to February 2007, and from April 2008 to July 2009, or a total of $25,000 minus the $9840 in the court registry. Counsel for the Bankses declared in his closing argument that the value of the Bankses' use and occupation of the Property without the improvements they made “is zero.” ³

Judge Christian credited the testimony of the Bankses and found, in part, that the Property “was uninhabitable” when the Bankses began living there in 2001; “that it was riddled with holes and lacked a kitchen and working toilet, and that over the years [Mr.] Banks has worked on the Property and improved it, such that it currently has marble floors, patched walls, and a working kitchen with fixtures including a sink, stove, and refrigerator.” Yet, Judge Christian determined that “the Bankses did not provide receipts or other evidence to establish the value of their improvements, nor were they able to provide dates for most of the renovations.” The judge determined as a matter of law that the Bankses were tenants at will and had not received proper notice to quit under the Rental Housing Act. Finally, Judge Christian concluded that Mr. Hernandez had not sustained his burden with respect to his claim to damages for the Bankses use and occupancy of the Property.

ANALYSIS

The Default and the Order to Vacate Default

Mr. Hernandez emphasizes that the Bankses “concede that they did not [a]nswer the [c]omplaint until roughly six months after having validly received the [s]ummons and [c]omplaint,” and he argues that because the Bankses “offered no other explanation” except “confusion” about the documents they received in December 2008, “the trial court abused its discretion in granting [the Bankses'] [m]otion to [v]acate.” Mr. Hernandez further contends that the trial court used the wrong legal standard in vacating the Bankses' default, and failed to consider other pertinent factors.

The Bankses generally support the trial court's order to vacate the entry of default, invoke their status as tenants at will who were entitled to a proper notice to quit, and assert that the court...