Lawrence N. Brandt, Inc. v. Montgomery County Commission on Landlord-Tenant Affairs

• Decision Date: 13 March 1978
• Docket Number: LANDLORD-TENANT,No. 830,830
• Citation: 39 Md.App. 147,383 A.2d 688
• Parties: LAWRENCE N. BRANDT, INC., et al. v. MONTGOMERY COUNTY COMMISSION ONAFFAIRS et al.
• Court: Court of Special Appeals of Maryland

Page 147

39 Md.App. 147

383 A.2d 688

LAWRENCE N. BRANDT, INC., et al. v. MONTGOMERY COUNTY COMMISSION ON LANDLORD-TENANT AFFAIRS et al.

No. 830.

Court of Special Appeals of Maryland.

March 13, 1978.

William J. Chen, Jr., Bethesda, for appellants.

Daniel J. Cassidy, Asst. County Atty. for Montgomery County, with whom were Richard S. McKernon, County Atty., and Richard E. Frederick, Deputy County Atty., on the brief, for appellees, Montgomery County, Md. and Montgomery County Com'n on Landlord-Tenant Affairs.

A. Howard Metro, Rockville, for other appellees.

Argued before GILBERT, C. J., and THOMPSON and MOORE, JJ.

MOORE, Judge.

This appeal is another episode in the life now legislatively extinguished of the Montgomery County rent control law. ¹ Here, a landlord was rejected in its bid for an "Extraordinary Rent Increase." A subsequent statutory appeal to the circuit court was unavailing, as were a request for a hearing en banc and a motion to revise judgment. The landlord then sought a rehearing before the administrative agency which the latter denied. Unbowed, the landlord then pursued an action in the circuit court for a declaratory judgment, and was again rebuffed. From the lower court's adverse declaration, this appeal has been taken; but a like fate awaits this persistent litigant's latest encounter.

I

On July 29, 1974, appellant, Lawrence N. Brandt, Inc., filed an application for an extraordinary rent increase (ERI) with the office of Landlord-Tenant Affairs for Montgomery County (OLTA) in conformance with § 29-51(b) of the Montgomery County Code (1972, 1974 Cum.Supp.). The ERI was sought under the county's rent control law as a result of alleged increased operating expenses at Colesville Towers, an apartment-hotel complex in Silver Spring; the expenses were claimed to be of such magnitude as to create a "hardship" if the landlord was limited to a "basic rent increase" (BRI), up to a maximum of four per cent of the base rent for each apartment, permitted to be charged to holdover tenants under new leases. ²

The executive director of OLTA was empowered to rule, in the first instance, upon ERI applications and, after a hearing in which appellant and certain tenants participated, he issued a decision on January 6, 1975 granting appellant's request.

Appeals were taken by both tenants and landlord ³ to the Commission on Landlord-Tenant Affairs, pursuant to § 29-51(b)(10), and a hearing was held on March 17, 1975. The executive director's determination of the landlord's entitlement to the ERI was reversed by the Commission. In a written "Decision and Order," dated May 20, 1975, the Commission's Chairman, John L. Catalan, stated, in pertinent part:

"In deciding this appeal the Commission finds that it must agree with the tenants' contention that the record established during these proceedings fails to disclose any creditable evidence to support the landlord's allegation of hardship.

"Section 29-51b permits the granting of an Extraordinary Rent Increase only upon a showing that the basic rent increase would result in a 'hardship.' Section 29-51b(5) requires the Executive Director to make a specific finding as to hardship. The landlord has the burden of proving the existence of hardship by a preponderance of the evidence.

"The record doesn't contain any evidence to support the conclusion that the landlord has even sustained any loss in his business during the period under review, much less hardship." ⁴

The Commission's order constituted final administrative action under § 29-51(b)(12), and the sole remaining remedy for an "aggrieved party" under the provisions of the Code then existing was an appeal to the Circuit Court for Montgomery County, under Subtitle B of the Maryland Rules of Procedure, entitled "Administrative Agencies Appeal From." ⁵

Appellant did not petition the Commission for a rehearing ⁶ but filed in the circuit court, on June 10, 1975, a Petition in Support of Appeal. Appellant's allegations were two-fold: paragraph seven, which contained eight sub-parts, challenged the constitutionality of the rent control article of the Montgomery County Code as violating due process and equal protection, impairing freedom of contract, and improperly extending the police power; the succeeding paragraph, in six sub-parts, claimed arbitrary and capricious action on the part of the Commission in substituting its judgment for that of the executive director. The relief requested was that the court declare the act unconstitutional and that it reinstate the ERI granted by the director, effective September 1, 1974, rather than October 1, 1974. (No claim of error was made in the failure of the Commission to grant a basic rent increase, as distinguished from an extraordinary rent increase.)

A hearing was held in the circuit court before Judge Richard B. Latham and, on July 15, 1976, the court rendered an oral opinion. After reviewing the history of the case and the evidence presented, Judge Latham stated:

"Considering the various data as presented by the tenants at the hearing before the full Commission plus the record of the hearing before the Executive Director, the Court can only conclude that there was in fact a factual basis for the Commission finding that the record established during their hearing, and also referring to the proceedings before the Executive Director, that the landlord had in fact failed to disclose any credible evidence to support the allegation of hardship." (Emphasis added.)

The court further held that "the findings of the full Commission (were) fairly debatable," and refused to "substitute its own judgment for that of the Commission. . . ." The challenges to the constitutionality of the act were not addressed in the court's opinion. ⁷

A motion to revise the judgment, pursuant to Maryland Rule 625, was then filed by appellant in the circuit court. At a hearing before Judge Latham, appellant's counsel argued (a) that some members of the Commission had arrived at their decision without reviewing the entire record of the proceedings before the executive director, (b) that certain new evidence of increased expenses forwarded by appellant to the Commission after the hearing had not been considered, and (c) that the Commission had applied an incorrect evaluative standard in determining whether appellant had suffered financial hardship. On February 22, 1977, Judge Latham denied appellant's motion for revision, after hearing extensive oral argument from counsel for the parties.

Thereupon, on March 7, 1977, almost two years after the final order of the Commission from which the appeal had been taken, appellant engaged new counsel and filed a Petition for Rehearing before the Commission alleging "fraud, mistake, or inadvertence" in the Commission's original decision of May 20, 1975. Four grounds were asserted, the first three of which had been presented to the circuit court in the appeal proceedings: that the Commission applied an incorrect evaluative standard in denying the ERI; that the appellant was prejudiced by virtue of its being denied the opportunity to present evidence at the Commission hearing, and that the panel of Commissioners failed to discharge its duty to review the entire proceedings, where one or more members failed to read the record in its entirety. The fourth ground was that the Commission failed to consider appellant's entitlement to a "Basic Rent Increase" (BRI), when it ruled unfavorably with respect to the ERI. On March 22, 1977, the Commission, agreeing "that it may have the authority under certain circumstances to rehear such a case," declined to do so by a 4 to 3 vote.

At that juncture, appellant instituted a declaratory judgment action in the Circuit Court for Montgomery County which has given rise to this appeal. The bill of complaint also included a prayer for injunctive relief. Appellee demurred to appellant's complaint, alleging that the action was barred by collateral estoppel or res judicata as a consequence of the prior appeal to the circuit court. At a hearing before Judge David L. Cahoon, on May 19, 1977, oral motions for summary judgment were made by appellees. ⁸ Judge Cahoon, holding that the court could properly enter summary declaratory judgment, delivered an oral opinion from the bench in which he carefully considered the grounds upon which appellant contended that error had been committed by the Commission. In sustaining appellees' demurrers without leave to amend and issuing a declaratory judgment, he stated in part:

"In summary, I find in the first instance that taken in their best light, the grounds for rehearing presented to the Commission were insufficient in not meeting the test of a decision that had been caused by fraud, mistake or irregularity. More significantly, each and every one of the matters, insofar as the proceedings before this Court are concerned would be barred by res judicata, or collateral estoppel. . . .

"For those reasons, the Court will sustain the demurrers that have been filed and will sustain them without leave to amend and issue a declaratory judgment that the Commission's action of March 22, 1977 was not an abuse of administrative discretion in that the Commission's hearing and action on the ERI request of Lawrence N. Brandt, Inc. was not shown to have been attended by mistake, fraud, or inadvertence. . . ."

The court also denied the injunctive relief prayed by appellant to enjoin OLTA, the Commission, other county officials and certain tenant intervenors from interfering with appellant's right to collect the ERI rent, pending appeal procedures, under the provision of § 29-51(b)(13) of the rent control law. See Riger v. L & B Limited Partnership, supra, note 2. Appellant thereafter filed a petition for reconsideration of Judge Cahoon's final order. That petition was also denied.

On this appeal, it is contended that the lower court erred in disposing of the suit under a summary judgment procedure; ⁹ that...