Levy v. D.C. Rental Hous. Comm'n

• Decision Date: 19 November 2015
• Docket Number: Nos. 14–AA–0623,14–AA–0636.,s. 14–AA–0623
• Citation: 126 A.3d 684
• Parties: Michael Joseph LEVY, Petitioner/Cross–Respondent, and Carmel Partners, Inc. d/b/a Quarry II, LLC, Respondent/Cross–Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.
• Court: D.C. Court of Appeals

126 A.3d 684

Michael Joseph LEVY, Petitioner/Cross–Respondent,andCarmel Partners, Inc. d/b/a Quarry II, LLC, Respondent/Cross–Petitioner,

v.DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.

Nos. 14–AA–0623

14–AA–0636.

District of Columbia Court of Appeals.

Argued Sept. 22, 2015.

Decided Nov. 19, 2015.

Michael Joseph Levy, pro se.

Debra F. Leege, with whom Richard W. Luchs, Washington, DC, was on the brief, for Respondent/Cross–Petitioner.

James C. McKay, Jr., Senior Assistant Attorney General, with whom Karl A. Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General, and Loren L. AliKhan, Deputy Solicitor General, were on the brief, for Respondent.

Before THOMPSON, EASTERLY, and McLEESE, Associate Judges.

McLEESE, Associate Judge:

Petitioner/cross-respondent Michael Joseph Levy and respondent/cross-petitioner Carmel Partners, Inc., d/b/a Quarry II, LLC, seek review of a decision by respondent District of Columbia Rental Housing Commission ("RHC"). In that decision, the RHC concluded that Quarry had not timely notified Mr. Levy that his apartment was exempt from statutory rent control before increasing Mr. Levy's monthly rent. The RHC therefore voided Quarry's claimed exemption, awarded Mr. Levy a rent refund, and reduced Mr. Levy's monthly rent to its prior level. In this court, Quarry argues that the RHC misinterpreted the Rental Housing Act in voiding the exemption, while Mr. Levy argues that the RHC failed to provide him an adequate opportunity to submit evidence of the full extent of his damages. We affirm.

I.

In 1995, Mr. Levy and a prior owner signed a six-month lease for rental of a basement apartment in a multi-unit building. The lease provided that after the initial term expired Mr. Levy could retain possession as a month-to-month tenant. When Quarry acquired the building in 2004, Mr. Levy apparently was a month-to-month tenant.

The Rental Housing Act of 1985, D.C.Code § 42–3501.01 et seq. (2012 Repl.), regulates the rental rate landlords can charge for covered housing units. Certain rental units, however, are exempt from the Act's rent-control provisions, including those that were "added to an existing structure or housing accommodation and covered by a certificate of occupancy for housing use issued after January 1, 1980." D.C.Code § 42–3502.05(a)(2).

Before raising the rental rate on an exempt unit, the housing provider must file a claim of exemption with the Rent Administrator. 14 DCMR § 4101.3(a) (2015). Additionally, "prior to or simultaneously with the filing," the housing provider must either mail a copy of the claim of exemption to each affected tenant or post a copy at the affected rental unit. Id. at § 4101.6. Unless and until a housing provider complies with those requirements, the provider "shall not be eligible for ... [a]ny of the benefits which accrue to the housing provider of rental units exempt from" the Act. Id. at § 4101.9(c).

Mr. Levy's apartment was added to the apartment building in 1981, when a prior owner of the building converted the basement into new apartments. Because the certificate of occupancy for the apartments was issued after January 1, 1980, Mr. Levy's apartment was eligible for an exemption from the Act's rent-control provisions. D.C.Code § 42–3502.05(a)(2). When Quarry acquired the building in 2004, however, no claim of exemption had been filed with the Rent Administrator regarding Mr. Levy's apartment. Thus, the rental rate for Mr. Levy's unit was still subject to rent control under the Act.

In 2005, Quarry filed a claim of exemption. Quarry did not provide Mr. Levy with notice of the claim of exemption until almost a year and a half after the filing of the claim of exemption, in August 2006, when Quarry sent a letter to Mr. Levy enclosing a copy of the claim of exemption and stating that the apartment was exempt from rent control. Two weeks later, Quarry sent a second letter, reiterating that the apartment was exempt from rent control and notifying Mr. Levy that his monthly rent would increase from $718 to $1250 as of October 1, 2006.

In November 2006, Mr. Levy filed two petitions alleging among other things that Quarry had failed to provide Mr. Levy with timely notice of the claim of exemption. Mr. Levy asked that Quarry's exemption be revoked, that Quarry refund the difference between Mr. Levy's $1250 monthly payments and the previous $718 monthly rent, and that any future rent increases be consistent with the Act.

In June and July 2007, an Administrative Law Judge ("ALJ") held two evidentiary hearings on Mr. Levy's consolidated petitions. In a post-hearing pleading, Mr. Levy submitted among other things a copy of an October 2007 notice of rent increase.

In December 2008, the ALJ issued a final order concluding that Quarry's exemption was valid and dismissing all of Mr. Levy's claims. Mr. Levy appealed to the RHC. Before the RHC's hearing on Mr. Levy's appeal, Mr. Levy mailed to the RHC a copy of a January 2009 notice of rent increase.

In August 2008, while Mr. Levy's 2006 petitions were still pending before the ALJ, Mr. Levy filed another petition, alleging that Quarry had substantially reduced or eliminated facilities and services at Mr. Levy's building and that Quarry had retaliated against Mr. Levy in violation of the Act. That petition was set to be heard by a different ALJ. In January 2010, while Mr. Levy's appeal relating to the 2006 petitions was pending before the RHC, the second ALJ dismissed the 2008 petition with prejudice, concluding among other things that Quarry's claim of exemption was valid as of 2006. Mr. Levy did not appeal from that decision, and neither party notified the RHC of that decision.

In March 2012, the RHC issued a decision with respect to the 2006 petitions, concluding that Quarry had violated the Act by failing to give Mr. Levy timely notice of the claim of exemption. The RHC therefore concluded that the claimed exemption was void ab initio and remanded the case for further proceedings.

On remand, the ALJ issued a final order in August 2012, holding that Quarry had not given Mr. Levy adequate notice of the claim of exemption, that the claimed exemption was void, that Mr. Levy's apartment was still subject to rent control under the Act, and that the August 2006 rent increase was therefore unlawful. The ALJ ordered that Quarry reduce Mr. Levy's rent to $718 per month (the pre-October 2006 rental rate) and that Quarry refund to Mr. Levy overpaid rent between October 1, 2006 (the date of the unlawful rental increase) and July 13, 2007 (the date of the last evidentiary hearing), for a total of $5,011.10 plus interest.

Both parties appealed to the RHC. Quarry argued that the rent reduction violated the Act's three-year statute of limitations, D.C.Code § 42–3502.06(e) ; that the RHC should give preclusive effect to the second ALJ's holding, in denying the 2008 petition, that the claim of exemption was valid; and that in any event the apartment was properly subject to an exemption under the Act. Mr. Levy argued that the RHC's prior decision had implicitly required the first ALJ to hold a new evidentiary hearing on the total extent of damages Levy suffered, including rental payments made after the last evidentiary hearing. Mr. Levy presented to the RHC the same January 2009 notice of rent increase he had submitted during the pendency of his first appeal.

The RHC issued its decision in 2014. Addressing Quarry's claims, the RHC first concluded that the rent reduction did not violate the Act's statute of limitations, because Mr. Levy had filed the 2006 petitions within three years of the challenged rent increase. The RHC also declined to give preclusive effect to the ALJ's ruling with respect to the 2008 petition, because Quarry had not raised the issue of preclusion at any previous stage of the proceedings. Finally, the RHC determined that the law-of-the-case doctrine precluded reconsideration of the RHC's earlier ruling that Quarry's failure to give Mr. Levy timely notice of the claim of exemption rendered the claim of exemption void.

As to Mr. Levy's claims, the RHC explained that its prior decision did not require the ALJ on remand to hold an additional hearing on damages. Moreover, the RHC noted that it has consistently permitted an award of damages only "up to, and including, the date of the final evidentiary hearing." Finally, the RHC did not sua sponte remand to the ALJ for another evidentiary hearing or consider on appeal new evidence of Mr. Levy's damages.

II.

"Our role in reviewing agency decisions is a limited one." Jerome Mgmt., Inc. v. District of Columbia Rental Hous. Comm'n, 682 A.2d 178, 181 (D.C.1996). We normally defer to the agency's decision "so long as it flows rationally from the facts and is supported by substantial evidence." American Broad. Co. v. District of Columbia Dep't of Emp't Servs., 822 A.2d 1085, 1089 (D.C.2003). This Court will defer to an agency's reasonable interpretation of ambiguous language in a statute that the agency administers. MorphoTrust USA, Inc. v. District of Columbia Contract Appeals Bd., 115 A.3d 571, 583 (D.C.2015) ; see also, e.g., Federal Express Corp. v. Holowecki, 552 U.S. 389, 403, 128 S.Ct. 1147, 170 L.Ed.2d 10 (2008) ( "Filling ... gaps in ambiguous statutes involves difficult policy choices that agencies are better equipped to make than courts.") (brackets and internal quotation marks omitted). We also give "considerable deference" to the RHC's interpretation of the RHC's implementing regulations. Sawyer Prop. Mgmt. of Md., Inc. v. District of Columbia Rental Hous. Comm'n, 877 A.2d 96, 102 (D.C.2005).

A.

Quarry first challenges the RHC's conclusion, in reliance on 14 DCMR § 4101.6, that Quarry's claim of exemption was void ab initio because Quarry failed to provide Mr. Levy with notice of the claim "prior to or simultaneously with" the filing of the claim. Quarry does not dispute that it failed to give Mr. Levy prior or simultaneous notice of the filing of the...