Jerome Mgmt. v. DC RENTAL HOUSING COM'N, No. 93-AA-1432

• Docket Nº: No. 93-AA-1432
• Citation: 682 A.2d 178
• Case Date: August 22, 1996
• Court: Court of Appeals of Columbia District

682 A.2d 178

JEROME MANAGEMENT, INC., Petitioner,
v.
DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.
Lydia A. WALKER, Petitioner,
v.
DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.

Nos. 93-AA-1432, 93-AA-1475.

District of Columbia Court of Appeals.

Argued March 15, 1995.

Decided August 22, 1996.

682 A.2d 179

Robert W. Gildar, Bethesda, MD, with whom Brian D. Riger was on the brief, for petitioner Jerome Management, Inc.

Edward G. Allen, with whom Victoria L. Lucchesi, Arlington, VA, and Suzanne Frare, Brooklyn, NY, were on the brief, for petitioner Lydia A. Walker.

Vanessa Ruiz, Corporation Counsel at the time the brief was filed, Washington, DC, and Charles L. Reischel, Deputy Corporation Counsel, filed a statement in lieu of brief, for respondent.

682 A.2d 180

Before WAGNER, Chief Judge, and TERRY and STEADMAN, Associate Judges.

WAGNER, Chief Judge.

Jerome Management, Inc. (Jerome) challenges decisions and orders of the District of Columbia Rental Housing Commission (the Commission) holding that its tenant, Lydia Walker, was not bound by certain terms of a voluntary settlement agreement, upholding the award of rent refunds for overcharges to Walker, and dismissing Jerome's hardship petition in a separate proceeding after the administrative agency lost documents which Jerome submitted in support of its claim at a contested hearing. Jerome also argues that, assuming Walker is entitled to a refund, no interest should be awarded for any period later than the hearing examiner's decision. Walker also filed a petition for review of the Commission's decision denying her treble damages, attorney's fees, and a higher rate of interest on the monetary award. We hold that it is not unreasonable or inconsistent with the statute the Commission administers to allow a tenant, without notice of the voluntary agreement, to challenge that portion which purported to relinquish her individual claim and set rents retrospectively. We reject the remaining challenges to the Commission's determination of interest and the denial of Walker's claim for treble damages and attorney's fees.

I.

This case has a long history. On November 5, 1982, Jerome filed with the District of Columbia Department of Consumer and Regulatory Affairs (DCRA), Rental Accommodations Office (RAO), a hardship petition (No. 10,327) seeking a 179% increase in the rent ceiling levels of all tenants in its apartment building located at 912½ Shepherd Street, N.W. where Mrs. Walker resided. A hearing was held on November 30, 1982. On March 1, 1983, Jerome implemented a provisional rent increase of 144%, as allowed under the Rental Housing Act of 1980, D.C.Code § 45-1623(c) (1991), because the agency had failed to render a decision within 90 days after the petition was filed.¹ On February 7, 1984, the RAO issued a final decision on Jerome's hardship petition in which it granted an increase in rent of 88% of the rent in effect at the time the petition was filed, ordered a refund of rent collected in excess of that amount, and required that 30 days notice be given before the increase became effective. Both parties appealed the decision.

On April 16, 1984, the Commission reversed the February 7, 1984 decision and remanded the hardship petition to the RAO for a de novo hearing. Jerome continued to charge and collect rent based upon the provisional increase of 144%. Pending the remand, Jerome negotiated with five of its seven tenants a voluntary agreement, which was approved by the Rent Administrator on September 26, 1984. The agreement included provisions that Jerome would withdraw its hardship petition provided that the rent remained at the level of the provisional increase of 144% and that the tenants waived any rent overcharges resulting from the provisional increase. The requisite number of tenants, more than 70%, approved the agreement, and the Rent Administrator approved it on September 26, 1984.² Jerome implemented the voluntary agreement for all units on November 1, 1984.

In April, 1985, Ms. Walker filed a tenant petition (No. 12,089) challenging the validity of the voluntary agreement. She contended that Jerome had increased the rent higher than allowed by the Act and the rent ceiling.

682 A.2d 181

She also contended that the voluntary agreement allowed Jerome to retain the benefit of the provisional increase and set rent levels retrospectively. The Rental Accommodations and Commission Division (RACD)³ upheld the validity of the voluntary agreement and held that Walker failed to state a claim because she did not challenge the sufficiency of the number of signatures or the voluntariness of the agreement. Walker appealed the decision to the Commission which issued an order on October 23, 1986, reversing the RACD's decision, and directing a hearing on Walker's petition. The Commission also reopened the case involving Jerome's hardship petition to allow Walker to challenge the validity of the voluntary agreement because she had not been given notice and an opportunity to be heard

The new hearing on the hardship petition was not held until almost five years later, on February 6, 1991. By that time, Jerome was unable to produce documentation in support of the petition because the agency had lost the documentary evidence which Jerome had submitted previously, and Jerome had no duplicates. Jerome argued that the agency had violated D.C.Code § 1-1501 et seq. because they had lost or misplaced the evidence. Walker argued for dismissal of Jerome's hardship petition because Jerome could not meet its burden of proof without the documents.

At the hearing on Walker's petition, she testified that she had been paying $123 per month until March 1, 1983, when Jerome increased her rent by 144% to $300 per month. According to Walker, she continued to pay this amount for nineteen months until September, 1984. She produced exhibits, including rent receipts, to support her claim for a refund of rent overcharges. She requested attorney's fees and treble damages, contending that Jerome knowingly demanded the unauthorized rent increase.

The Office of Adjudication (OAD) dismissed Jerome's hardship petition on January 4, 1993 because Jerome was unable to provide documentation in support of its claim. However, OAD specified that the dismissal was without prejudice because the agency had lost the documents submitted earlier, and the lack of supporting documentation was "due to no fault of Jerome." OAD also determined that Walker was overcharged for 19 months, from the beginning of the provisional increase until the effective date of the voluntary agreement on September 24, 1984. Therefore, the hearing examiner granted Walker a refund of $3,632.00 plus interest at the rate of 8%. The hearing examiner also found that Walker failed to prove that Jerome acted in bad faith and declined to award treble damages or attorney's fees. Both parties appealed OAD's decision to the Commission.

On October 15, 1993, the Commission affirmed the dismissal of Jerome's hardship petition because neither RACD nor the Commission had any documents to review because the agency lost them. The Commission also dismissed the tenant's appeal due to the loss of documentary evidence, stating that "the Commission does not have an adequate record for review of the tenant petition in conformity with the requirements of D.C.Code § 1-1509(c)." However, the Commission observed that the decision and order of the hearing examiner remained in effect because the examiner had an evidentiary basis for it. The Commission also found that Walker should be refunded the amount of the overcharges, totalling $3,363.00 with interest at the rate of 8% accounting from March 1, 1983 (the date of the violation) until September 26, 1984 (the date that the voluntary agreement became effective). The Commission also awarded interest during the administrative delays at the fixed rate of 5% during the nine year period, amounting to $1,513.35, and upheld the hearing examiner's denial of attorney's fees and treble damages to Walker. Both Jerome and Walker filed petitions for review in this court.

II.

Our role in reviewing agency decisions is a limited one. See Oubre v. District of Columbia Dep't of Employment Servs., 630 A.2d 699, 702 (D.C.1993) (citations omitted). "We will not disturb the agency's decision

682 A.2d 182

if it flows rationally from the facts which are supported by substantial evidence in the record." Id. (citations omitted); see also D.C.Code § 1-1510(a)(3)(E). With respect to questions of law, "we will uphold the agency's interpretation of the statute it is responsible for administering unless it is unreasonable in light of prevailing law, or conflicts with the statute's plain meaning or legislative history." Id. (citations omitted); see also Davenport v. District of Columbia Rental Hous. Comm'n, 579 A.2d 1155, 1157 (D.C. 1990). Where the agency's interpretation of a statute comports with that standard, we will sustain it even where a party advances another reasonable interpretation of the statute which this court might have accepted if construing the statute in the first instance. Oubre, 630 A.2d at 702 (citing Smith v. District of Columbia Dep't of Employment Servs., 548 A.2d 95, 97 (D.C.1988)). However, if the agency's decision is based upon a material misconception of the law, this court will reject it. Madison Hotel v. District of Columbia Dep't of Employment Servs., 512 A.2d 303, 306 (D.C.1986). "Subject to this deferential standard for matters of statutory interpretation, the reviewing court has the greater expertise when the agency's decision rests upon a question of law." Oubre, 630 A.2d at 702 (citing Saah v. District of Columbia Bd. of Zoning Adjustment, 433 A.2d 1114, 1116 (D.C.1981)). Applying these principles, we consider the parties' claims

III.

Jerome argues that under the Rental Housing Act of 1980, a voluntary settlement agreement approved by 70% of the tenants in a...