Revithes v. Rental Housing Com'n, 84-1269.

• Decision Date: 01 December 1987
• Docket Number: No. 84-1269.,84-1269.
• Citation: 536 A.2d 1007
• Parties: Lola REVITHES, Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent,
• Court: D.C. Court of Appeals

Page 1007

536 A.2d 1007

Lola REVITHES, Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent,

No. 84-1269.

District of Columbia Court of Appeals.

Argued September 26, 1985.

Decided December 1, 1987.^*

Kenneth J. Loewinger, with whom Paul D. Crumrine, Washington, D.C., was on brief, for petitioner.

Richard B. Nettler, Asst. Corp. Counsel at the time the case was argued, and Inez Smith Reid, Corp. Counsel at the time the brief was filed, John H. Suda, Principal Deputy Corp. Counsel at the time the brief was filed, and Charles L. Reischel, Deputy Corp. Counsel, Washington, D.C., were on brief, for respondent.

Richard D. Carter, for intervenors.

Before PRYOR, Chief Judge, and MACK and BELSON, Associate Judges.

MACK, Associate Judge:

Petitioner Lola Revithes seeks review of a decision of the Rental Housing Commission ("RHC") affirming a hearing examiner's order that Revithes refund to tenant-intervenors Bessie Janis Stamper and Igor Kozak $10,784 each as trebled damages for rent overcharges for the period between August 1978, and October 1982. The decision and order also imposed a $5,000 fine on Revithes for her allegedly willful violations of the rental housing laws. On appeal, Revithes raises two issues. She argues that under the "small landlord" exemption to rent control, she was exempt from rent control limitations during the period in which she allegedly illegally increased the rents. She also argues that the RHC is not statutorily authorized to impose fines for willful violations of the Rental Housing Act, and that, alternatively, the imposition of the fine violated due process and was unsupported by substantial evidence.

We affirm the findings of non-exemption and the damages imposed thereon for the period up to and including June 25, 1980. We also affirm so much of the order as imposes a $5,000 fine. We reverse and remand for a more careful evaluation of Revithes' claim of exemption for the period subsequent to June 25, 1980. If Revithes' claim of exemption subsequent to June 25, 1980, fails, we nevertheless direct the agency to vacate the award of treble damages for the period after January 1, 1982, since Revithes' reliance on the agency's initial erroneous establishment of a rent ceiling of $189 as of January 1, 1982, constitutes "good cause" for imposing a single award only. 14 DCMR § 3410.2 (1986).

I.

A.

A brief summary of the Rent Stabilization Program provides the necessary background for this somewhat procedurally complex case.

Since 1975, the Council of the District of Columbia has enacted four consecutive acts designed to stabilize rents, moderate evictions, and regulate the conversion of rental units to condominiums or cooperatives within the District of Columbia. These rental housing acts are commonly referred to as the 1975 Act,¹ the 1977 Act,² the 1980 Act,³ and the 1985 Act.⁴ At the heart of the Rent Stabilization Program of all four Acts is the registration requirement. In order to monitor rent increases according to the statutory scheme, landlords are required to register their rental units with the Rental Accommodations and Conversion Division ("RACD") of the Department of Consumer and Regulatory Affairs.⁵ Information furnished on the registration form results in a determination of a "base rent" for each registered unit. The base rent level may be increased to a "rent ceiling" by taking increases in accordance with the law. Unless a rental unit is properly exempt from the Rent Stabilization Program, one of the pre-conditions for increasing rent above the base level is proper registration with the RACD.⁶

The so-called "small landlord" exemption at issue here has been a continuously evolving feature of the Rent Stabilization Program since its inception. The "small landlord" provision of the 1975 Act originally exempted only those rental units rented by the occupant of a housing accommodation of not more than two rental units.⁷ Frenkel v. District of Columbia Rental Accommodations Commission, 432 A.2d 1226, 1229 (D.C. 1981). In order to facilitate administration of the program, emergency legislation of August 12, 1976, (the "August Act") eliminated the "occupancy" requirement and exempted from coverage those rental units in a housing accommodation of not more than 4 units, all interest in which was owned by not more than 4 natural persons none of whom had any direct or indirect financial interest in any other rental unit or housing accommodation.⁸ Id. "[Four] or fewer units" has consistently remained the "cut-off" point for exemption regardless of whether or not those units are located within the same housing accommodation.⁹ The 1985 Act amended and clarified the language to exempt "4 or fewer rental units."¹⁰

Under the 1975 Act as originally enacted, even "small" landlords were required to register their rental units.¹¹ That requirement was subsequently eliminated in August 1976.¹² Since November 1976, however, small landlords have been required to file a Claim of Exemption Statement affirming their eligibility for exemption.¹³ The Rental Housing Acts of 1977, 1980 and 1985 have likewise required that landlords seeking the exemption file valid claims of exemption with the Rent Administrator.¹⁴

B.

In 1978, and at all times relevant to this controversy, tenant-intervenors resided in separate units at 233 Pennsylvania Avenue, S.E., a multi-unit structure owned by Revithes. It is undisputed that the building at 233 Pennsylvania Avenue, S.E., contained three residential rental units used and occupied by tenants. The tenants' claims of Revithes' non-exempt status and her consequent unlawful rent increases arose out of her ownership of an adjacent property at 235 Pennsylvania Avenue, S.E a property which had been the subject of litigation prior to the tenants' complaints in this case. A summary of proceedings involving 235 Pennsylvania Avenue, S.E., is necessary to an understanding of the decision on review here.

On August 1, 1978, G. Rodney Crowther III, a tenant at 235 Pennsylvania Avenue, S.E., filed a petition in the Rental Accommodations Office ("RAO") alleging that Revithes' demand for a rent increase from $103.50 to $150 was unlawful. He claimed that Revithes had not properly registered the property under the Rental Housing Act of 1977 thus invalidating the demanded increase. In response, Revithes offered a Claim of Exemption Statement filed in July, 1978. The form required Revithes to indicate whether she had an ownership interest in any other rental unit in the District. Under oath, Donohoe & Drury, Revithes' management company, failed to indicate that Revithes also owned the building located at 233 Pennsylvania Avenue, S.E.

In a decision rendered on November 13, 1978 (the "Crowther decision"), a hearing examiner determined that 235 Pennsylvania Avenue, S.E., was a four-story, multi-unit structure containing three residential rental units. The hearing examiner found that Revithes also owned three residential rental units at 233 Pennsylvania Avenue, S.E. Based on those findings, the hearing examiner determined that Revithes was not exempt from rent control. Since the Claim of Exemption Statement filed in July 1978, failed to mention ownership of Revithes' second housing accommodation, it appeared to the hearing examiner that Revithes' representatives had "made possible misrepresentations as to the housing accommodation" owned by Revithes. The hearing examiner found that Revithes' violations of the registration and coverage provisions of the Act were willful. A rollback of Crowther's rent and treble damages were ordered. A new rent ceiling, equivalent to the rent prior to the increase, was assigned. The hearing examiner also ordered Revithes to properly register the housing accommodation within twenty-one days of the November 13, 1978 order.

On November 27, 1978, Donohoe & Drury filed two registration statements for 233 and 235 Pennsylvania Avenue, S.E., with the RAO. On the registration form for 233, Revithes' agent indicated that the multi-unit structure contained three rental units. The agent also indicated that the adjacent building at 235 contained only one residential rental unit. On the registration form for 235, the agent indicated that while three units had been rented there in 1973, at the current time, only one unit, presumably Mr. Crowther's, was a rental unit. Another unit was allegedly commercial and a third unit was allegedly owner-occupied. A Certificate of Occupancy for 235 Pennsylvania Avenue, S.E., which was issued on November 30, 1978, (and presumably supplemented the registration statement as required by RHC regulations), indicated that the building was used as an apartment house, with two apartments on the second floor, one apartment on the third floor, and an unused fourth floor.

At approximately the same time as the filing of the registration statements, Revithes filed a notice of appeal of the hearing examiner's November 13, 1978, decision and order. The appeal was subsequently dismissed because Revithes failed to request a stay of the order, partially failed to comply with the order, and failed to appear at the appeal hearing. In July 1979, shortly after the dismissal, Revithes sent Crowther a notice to quit. Crowther defended the eviction by arguing that Revithes was retaliating against him. In an opinion dated November 25, 1980, Judge Schwelb of the Superior Court found that Crowther had presented an unrebutted prima facie case of retaliatory eviction and dismissed the action for possession. Donohoe & Drury, Inc. v. Crowther, 108 Daily Wash.L.Rptr. 2405 (D.C.Super.Ct., November 25, 1980) (the "Superior Court decision").

That brings us to the history of the decision and order currently on review. On August 1, 1978, at the same time Revithes increased Crowther's rent, she also increased the rents of the three units at 233 Pennsylvania Avenue, S.E., from $106.50 to $150. At that time, and at all relevant times, the three...