Peart v. District of Columbia Housing Auth.

• Decision Date: 04 June 2009
• Docket Number: No. 07-CV-1003.,07-CV-1003.
• Citation: 972 A.2d 810
• Parties: Pearline PEART, Appellant, v. DISTRICT OF COLUMBIA HOUSING AUTHORITY, Appellee.
• Court: D.C. Court of Appeals

972 A.2d 810

Pearline PEART, Appellant, v. DISTRICT OF COLUMBIA HOUSING AUTHORITY, Appellee.

No. 07-CV-1003.

District of Columbia Court of Appeals.

Argued December 2, 2008.

Decided June 4, 2009.

Peter Wilson, with whom Barbara McDowell and Julie Becker, Legal Aid Society, and David A. Reiser were on the brief, Washington, for appellant.

Alex Chintella, with whom Frederick A. Douglas, Washington, Margaret McFarland, and Hans Froelicher, IV, Acting General Counsel, were on the brief, for appellee.

Before WAGNER, NEBEKER and STEADMAN, Senior Judges.

STEADMAN, Senior Judge:

Ms. Pearline Peart ("Ms.Peart") brought a successful rent abatement action alleging Housing Code violations against her Section 8 landlord, Ms. Nicole Jackson ("Ms.Jackson") and won a rent abatement award of over $15,000. However, the District of Columbia Housing Authority ("DCHA") intervened and successfully asserted a derivative right to all of this award. Ms. Peart concedes that DCHA is entitled to the rent abatement, but contends that the equitable doctrine of unjust enrichment entitles her to compensation from DCHA for her attorneys' fees and costs in the litigation that resulted in the award. We agree that the doctrine applies here. We therefore remand the case to allow the trial court to determine what compensation is due Ms. Peart.

I. Factual and Procedural Background

Ms. Peart was the lessee from Ms. Jackson of a three-bedroom apartment. The lease was made pursuant to the federal government's Department of Housing and Urban Development ("HUD") Housing Choice Voucher Program ("HCVP"), otherwise known as the "Section 8" program. Under the HCVP program, HUD distributes federal funds to local public housing agencies, in this case DCHA, to provide rental assistance to low-income families. 42 U.S.C. § 1437f (2006). To receive HCVP funds for renting the apartment, Ms. Jackson entered into a Housing Assistance Payment ("HAP") contract with DCHA. DCHA may pay all or some of the rent on behalf of low-income residents; Ms. Peart was a "zero rent tenant." 24 C.F.R. § 982.451. Thus, DCHA paid the entirety of Ms. Peart's rent on her behalf.

After Ms. Peart challenged an unauthorized rent increase,¹ Ms. Jackson filed a complaint for possession and non-payment of rent against Ms. Peart in the Landlord Tenant Branch of the Superior Court. Ms. Peart, through counsel, filed an answer, counterclaim and recoupment seeking the return of moneys she paid to Ms. Jackson pursuant to the unauthorized revised lease, as well as the "rent paid to [Ms. Jackson] from the beginning of her tenancy to the present based on [Ms. Jackson's] breach of the implied warranty of habitability."

After Ms. Jackson twice failed to appear or answer the counterclaim, the trial court dismissed her complaint and entered a default judgment on Ms. Peart's counterclaim. The court scheduled an ex parte proof hearing to hear evidence on the amount of rent to be abated. A month prior to the hearing, counsel for Ms. Peart sent a letter to DCHA alerting it that Ms. Peart intended to seek abatement of all rent moneys that she and DCHA had paid to Ms. Jackson during her tenancy. Two days before the proof hearing, DCHA intervened by filing a Complaint for Declaratory Judgment ("Complaint") and claimed "100% of the amount [the] court determines is to be abated due to ... [Ms. Jackson's] breach of warranty of habitability." The Complaint's claim to funds was, by its own terms, entirely derivative. DCHA sought to recover the funds "only in the event [the court determines] Ms. Peart is entitled to the relief sought in her counterclaim."

At the proof hearing, Ms. Peart presented evidence, including thirty-seven exhibits, that Ms. Jackson failed to properly maintain the apartment. The evidence showed "substantial" violations of the Housing Code warranting a rent abatement of 30%, or $15,670. Counsel for DCHA was present at the hearing, but offered no evidence and made no argument relating to the extent and nature of the violations, and expressed no opinion on the appropriate percentage of abatement.

The trial court entered a judgment determining that the rent should be abated in the amount of $15,670. It awarded this entire amount to DCHA, citing our decision in Anderson v. District of Columbia Hous. Auth., 923 A.2d 853 (D.C.2007) [hereinafter Anderson II]. The court also rejected Ms. Peart's claim to attorneys' fees and costs from DCHA.

On appeal, Ms. Peart correctly does not challenge the trial court's ruling awarding the abatement to DCHA. Anderson II establishes that, to the extent an abatement award is based on rent paid by DCHA, the abatement has the character of "public funds" and, where DCHA makes a claim to the abatement, it prevails over the competing claim of the tenant. Id. at 864. On the other hand, absent such a claim by DCHA, the funds belong to the tenant, a principle established by our prior holding in Multi-Family Mgmt., Inc. v. Hancock, 664 A.2d 1210, 1221, 1224 (D.C.1995). See Anderson v. Abidoye, 824 A.2d 42, 44 (D.C. 2003) [hereinafter Anderson I] (describing holding in Multi-Family). Thus, these cases set up a hierarchy of property rights in an abatement award, in which the tenant is junior to DCHA. We did no more.

Ms. Peart is correct, then, in her assertion that her right to compensation for attorneys' fees and costs remains an open issue for us now to decide.² She contends that she is entitled to such recovery both under the common-fund doctrine exception to the "American Rule" on award of attorneys' fees and on equitable principles of unjust enrichment. We turn to those arguments. We first review the legal principles underlying Ms. Peart's claim to recovery in unjust enrichment, and then discuss the related common-fund doctrine which informs our analysis.

II. Unjust Enrichment

"Unjust enrichment occurs when: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains the benefit; and (3) under the circumstances, the defendant's retention of the benefit is unjust." News World Commc'ns, Inc. v. Thompsen, 878 A.2d 1218, 1222 (D.C.2005); 4934, Inc. v. District of Columbia Dep't of Employment Servs., 605 A.2d 50, 55 (D.C. 1992) ("Unjust enrichment occurs when a person retains a benefit (usually money) which in justice and equity belongs to another."); RESTATEMENT (FIRST) OF RESTITUTION § 1 cmt. a (1937). "In such a case, the recipient of the benefit has a duty to make restitution to the other person `if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for [the recipient] to retain it.'" 4934, Inc., supra, 605 A.2d at 55-56 (quoting REST. RESTITUTION § 1). Unjust enrichment is quasi-contractual in nature (based on a contract implied in law), and recovery will be had in restitution. TVL Assoc. v. A & M Const. Corp., 474 A.2d 156, 159 (D.C. 1984). "Thus the doctrine of unjust enrichment depends on whether it is fair and just for the recipient to retain the benefit, not on whether the person or persons who bestowed the benefit had any duty to do so." 4934, Inc., supra, 605 A.2d at 56. Ordinarily, in the absence of a close family relationship, a "promise to pay will be implied in law when one party renders valuable services that the other party knowingly and voluntarily accepts." Brown v. Brown, 524 A.2d 1184, 1186 (D.C. 1987). Whether unjust enrichment occurred is a question of law that this court reviews de novo. Kramer Assoc. v. Ikam, Ltd., 888 A.2d 247, 254 (D.C.2005).

As we explained in Jordan Keys & Jessamy, LLP v. St. Paul Fire & Marine Ins. Co., 870 A.2d 58 (D.C.2005), in evaluating whether a party has been unjustly enriched, we must consider whether DCHA received the benefit of Ms. Peart's services and, if so, "whether it is fair and just" to receive them without compensating her. Id. at 63 (quoting 4934, Inc., supra, 605 A.2d at 55-56). We evaluate claims of unjust enrichment on a case-by-case basis, considering the particular circumstances giving rise to the claim. See Fred Ezra Co. v. Pedas, 682 A.2d 173, 176 (D.C.1996) (examining unjust-enrichment claim under the "circumstances").

We conclude that Ms. Peart stated a valid equitable claim under unjust enrichment. We are guided by several considerations. First, the manner in which DCHA profited from Ms. Peart's action against her landlord convinces us that equity requires DCHA to compensate her for her efforts. Second, we are unpersuaded by DCHA's arguments that it was not unjustly enriched. Finally, the analogies we draw between the facts of the present case and examples drawn from property law support Ms. Peart's recovery. We discuss each of these considerations in turn.

The facts of this case, as we understand them, demonstrate Ms. Peart's virtual singlehanded efforts in obtaining the moneys that enriched DCHA. Ms. Peart informed DCHA by letter a month before the hearing that she would seek abatement of rent moneys based on the landlord's violation of the Housing Code. Not until two days before the hearing did DCHA respond by filing its complaint for declaratory judgment and asserting its claim to the abatement. DCHA then entered an appearance at the proof hearing, but did so solely to protect its own contingent right to any moneys that might be recovered. It is unconstested that DCHA did nothing at the trial level to assist Ms. Peart in establishing the facts and amount of the rent abatement. Ms. Peart thus conferred a two-fold benefit on DCHA: not only did Ms. Peart's efforts produce a fund that DCHA recovered to apply to the HCVP program, but more importantly, it also saved DCHA from the expense of prosecuting the action itself, or of pursuing available administrative remedies to recover the abatement.³ See REST. RESTITUTION § 1, cmt. b (noting that a party confers a benefit on another where it produces not only an affirmative pecuniary advantage, but also "saves the other from expense or loss"). DCHA knowingly accepted...