J. Parreco & Son v. Rental Housing Com'n

• Decision Date: 28 November 1989
• Docket Number: No. 88-607.,88-607.
• Citation: 567 A.2d 43
• Court: D.C. Court of Appeals
• Parties: JAMES PARRECO & SON, Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent, Tenants of 2231 California Street, N.W., Intervenor.

567 A.2d 43

JAMES PARRECO & SON, Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent, Tenants of 2231 California Street, N.W., Intervenor.

No. 88-607.

District of Columbia Court of Appeals.

Argued September 14, 1989.

Decided November 28, 1989.

Roger D. Luchs, for petitioner.

Richard W. Luchs, with whom Abraham J. Greenstein, Washington, D.C., was on the brief, for amici curiae, Washington, D.C. Ass'n of Realtors, Inc. and Apartment and Office Bldg. Ass'n of Metropolitan Washington, Inc.

James C. McKay, Jr., Asst. Corp. Counsel, with whom Frederick D. Cooke, Jr., Corp. Counsel at the time the brief was filed, and Charles L. Reischel, Deputy Corp. Counsel, Washington, D.C., were on the brief, for respondent.

Eric M. Rome for intervenor.

Before STEADMAN, SCHWELB, and FARRELL, Associate Judges.

SCHWELB, Associate Judge:

Although understandably less popular with landlords, of whom there are relatively few, than with tenants, of whom there are many, rent "stabilization" and rent control have been around for a long time in the District of Columbia, and their death-knell on constitutional grounds does not appear to be around the corner. Pennell v. City of San Jose, 485 U.S. 1, 8-15, 108 S.Ct. 849, 855-859, 99 L.Ed.2d 1 (1988); see also Hornstein v. Barry, 560 A.2d 530, 537-38 (D.C. 1989) (en banc.) The terminology of some of the provisions of our legislation is not characterized by the most luminous clarity, see Winchester Van Buren Tenants Ass'n v. District of Columbia Rental Hous. Comm'n, 550 A.2d 51 (D.C. 1988), and this court will generally defer to the Rental Housing Commission's resolution of any ambiguity, provided that the agency's construction is reasonable and consistent with the language and purposes of the statute. Id. In the present case, however, the agency has adopted an interpretation of a provision of the statute relating to hardship rent increases which is incompatible with its plain language, and we are not persuaded that a literal construction produces absurd or manifestly unjust results antagonistic to the statutory purposes. Neither the Commission nor this court is authorized to read into an unambiguous statute language that is not there, or to rewrite legislation to make it more "equitable" or "fair."¹ Accordingly, we reverse the Commission's decision and remand for further proceedings.

I

Petitioner James Parreco & Son (hereinafter Parreco or the landlord) owns a multiple dwelling in northwest Washington to which the provisions of the Rental Housing Act apply. Parreco refinanced the property with a second trust and thereafter filed a hardship petition requesting that he be permitted to increase the rent, upon the grounds that he was not receiving a ten per cent return on his equity, as provided by D.C.Code § 45-1523 (1981) (recodified 1985).² He now appeals from a decision of the Rental Housing Commission holding that he is not entitled, in calculating his net income from the property, to deduct interest payments on the mortgage loan, because he has failed to demonstrate that the borrowed money has been reinvested in the premises. Parreco has, however, been required to treat the same mortgage loan as an encumbrance on the property, thus reducing the value of his equity in the calculation of his rate of return.

To explain the context in which the issue in this case arises, we begin with a brief exposition of the statutory framework. A primary purpose of the rent stabilization program is "[t]o protect low and moderate income tenants from the erosion of their incomes from increased housing costs." D.C.Code §§ 45-1502(1) (1981), 45-2502(1) (1986 Repl.). To achieve that end, rent increases in housing covered by the Act are tightly controlled. Rents may be raised only for reasons explicitly authorized by the legislation, e.g., a rise in the consumer price index, or capital improvements to the property. See Winchester, supra, 550 A.2d at 52, and the statutory provisions there discussed.

What the Commission, in its decision in this case, has termed a "sometimes competing goal" of the legislation is to provide landlords and developers with a reasonable rate of return on their investments. §§ 45-1502(5) (1981), 45-2502(5) (1986 Repl.). The chief mechanism for achieving this goal is the hardship rent increase. As the Commission correctly explained:

if the landlord demonstrates that he is earning less than the minimum rate provided by statute, the Rent Administrator must approve rent increases in an amount sufficient to produce the guaranteed rate, fixed by § 213(a) of the 1980 Act as "a 10 percent rate of return computed according to [statutory formula]." Id., § 45-1523(a).[³] In order to determine whether the landlord is receiving the specified rate of return, one must first ascertain the net income from the property and then divide it by the landlord's equity.

The Act provides that, in calculating "net income," the landlord may deduct, among other items, "[i]nterest payments." §§ 45-1523(b)1)(G) (1981), 45-2522(b)(1)(G) (1986 Repl.). The term "interest payments," which appears only in the provision of the Act relating to hardship petitions, is defined in §§ 45-1503(11) (1981) and 45-2503(18) (1986 Repl.) as

the amount of interest paid during a reporting period on a mortgage or deed of trust on a housing accommodation.

A number of items, including "[m]ortgage principal payments," are explicitly enumerated as not being deductible. §§ 45 — 1523(b)(1)(A)(v) (1981), 45-2522(b)(1)(A)(v) (1986 Repl.).

The term "equity" likewise appears only in the portion of the statute dealing with hardship petitions. Sections 45-1503(7) (1981) and 45-2503(13) (1986 Repl.) both define equity as

the portion of the assessed value of a housing accommodation that exceeds the total value of all encumbrances on the housing accommodation.

There is nothing in the definition either of "interest payments" or of "equity" to suggest that the Council was referring only to those mortgages or encumbrances of which the proceeds have been reinvested in the housing accommodation. In spite of the statutory language, however, the Commission held that a literal reading of the definition of "equity" is appropriate, but that the landlord is nevertheless not entitled, in determining his net income, to deduct interest payments on mortgage loans of which the proceeds have not been reinvested in the property. Quoting from its decision in Tenants of 1323 Clifton St., N. W. v. Joseph Beavers, HP 10,692 (RHC July 22, 1987) at 8, the Commission held that

interest is a deductible expense only if the money that it (the loan) obtains is devoted to or invested in the particular housing accommodation for which the hardship increase is sought. This is the nexus that is essential for deductibility, not simply that the loan is secured by equity in the property.

The landlord contends that the Commission's decision should be reversed on the grounds that its interpretation of the interest provision is incompatible with the plain language of the statute.⁴ In the alternative, he suggests that if the Commission's restrictive construction is sustained, then "symmetry" requires that only those mortgage loans of which the proceeds have been reinvested in the housing accommodation should likewise be subtracted from assessed value to determine "equity." The District of Columbia and the tenants ask us to interpret the statutory definition of "equity," but not of "interest payments," according to the plain meaning of the words. They contend that the Commission's decision is correct, and that to allow deduction of interest where the loan has not been used to benefit the property is contrary to the purposes of the Act. We agree with the landlord and find the Commission's construction untenable.

II

In interpreting a statute, we are mindful of the maxim that we must look first to its language; if the words are clear and unambiguous, we must give effect to its plain meaning. Office of People's Counsel v. Public Serv. Comm'n, 477 A.2d 1079, 1083 (D.C. 1984); Peoples Drug Stores, Inc. v. District of Columbia, 470 A.2d 751, 753 (D.C. 1983) (en banc). The primary rule of statutory construction is that the intent of the legislature is to be found in the language which it has used. United States v. Goldenberg, 168 U.S. 95, 102-03, 18 S.Ct. 3, 4, 42 L.Ed. 394 (1897); Peoples Drug Stores, supra, 470 A.2d at 753. Moreover, the words of the statute should be construed according to their ordinary sense, and with the meaning commonly attributed to them. Peoples Drug Stores, supra; see also United States v. Thompson, 347 A.2d 581, 583 (D.C. 1975). "The words used, even in their literal sense, are the primary and ordinarily the most reliable source of interpreting the meaning of any writing." Cabell v. Markham, 148 F.2d 737, 739 (2d Cir.) (Learned Hand, J.), affd, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165 (1945).

We must not, of course, make a fetish out of plain meaning. As Judge Hand stated with his customary eloquence in Cabell, supra,

it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.

148 F.2d at 739.⁵ Courts do not wallow in literalism where the plain language of a statute would lead to absurd consequences which the legislature could not have intended. United States v. Brown, 333 U.S. 18, 27, 68 S.Ct. 376, 380, 92 L.Ed. 442 (1948); Holt v. United States, 565 A.2d 970, 972 (D.C. 1989) (en banc). Moreover, as the Supreme Court stated in Perry v. Commerce Loan Co., 383 U.S. 392, 400, 86 S.Ct. 852, 857, 15 L.Ed.2d 827 (1966) (quoting United States v. American Trucking Ass'ns, Inc., 310 U.S. 534, 543, 60 S.Ct. 1059, 1064, 84 L.Ed. 1345 (1940)): Frequently, . . . even when the plain meaning did not produce absurd results...