Sawyer Prop. Mgmt. v. DC RENTAL HOUS. COM'N, No. 02-AA-1362.

• Decision Date: 16 June 2005
• Docket Number: No. 02-AA-1362.
• Citation: 877 A.2d 96
• Parties: SAWYER PROPERTY MANAGEMENT OF MARYLAND, INC., Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.
• Court: D.C. Court of Appeals

877 A.2d 96

SAWYER PROPERTY MANAGEMENT OF MARYLAND, INC., Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent.

No. 02-AA-1362.

District of Columbia Court of Appeals.

Argued February 10, 2004.

Decided June 16, 2005.

Eric Von Salzen, Washington, DC, for petitioner.

Mary T. Connelly, Assistant Attorney General, with whom Robert J. Spagnoletti, Attorney General, and Edward E. Schwab, Deputy Attorney General, were on the brief, for respondent.¹

Vincent Mark J. Policy, Richard W. Luchs, Washington, DC and M. Ryan Jenness, filed a brief on behalf of the Apartment and Office Building Association of Metropolitan Washington as amicus curiae.

Before GLICKMAN, Associate Judge, and KERN and STEADMAN,² Senior Judges.

GLICKMAN, Associate Judge:

The Rental Housing Commission ("RHC") disallowed a rent increase for a rent-controlled apartment because of defects in the housing provider's registration and notice to the tenant and, more critically, because the increase did not implement a properly perfected upward adjustment of the rent ceiling for the apartment. We affirm on the latter ground. We defer to the RHC's interpretation of statutory provisions and its own regulations governing two common rent ceiling adjustments that a housing provider may take, the adjustment of general applicability and the vacant accommodation adjustment. The RHC reasonably construed its regulations to require a housing provider to file for either rent ceiling adjustment within thirty days after it first becomes eligible for it. A housing provider that fails to meet this thirty-day deadline, the RHC held, forfeits its right to the adjustment.

I.

In June of 1999, Brenda Mitchell signed a one-year lease for apartment number 419 in Walden Commons, a multi-unit housing accommodation located at 1336 Missouri Avenue, N.W., in the District of Columbia. Ms. Mitchell, who is disabled and lives on a fixed disability income, agreed to a rental rate of $625 per month. The lease did not specify the rent ceiling applicable to apartment 419 under the District's rent control laws, and Ms. Mitchell evidently was not informed of the rent ceiling when she signed the lease.

The owner of Walden Commons, Ms. Mitchell's landlord, was identified in the lease as Lynwood L.L.C. At the time Ms. Mitchell signed the lease, the apartment building was managed by the landlord's agent, Winn Management, Inc. In early 2000, the landlord replaced Winn Management with petitioner Sawyer Property Management of Maryland, Inc. ("Sawyer").

On May 30, 2000, Ms. Mitchell received a "Tenant Notice of Increase of General Applicability" informing her that her monthly rent would be increased by twenty percent, from $625 to $750. The notice did not disclose the basis for a rent increase of this magnitude. It stated only that Ms. Mitchell's rent ceiling would be increased by 2.1%, from $1,267 to $1,294 per month, to reflect the increase in the consumer price index for the Washington, D.C. area during calendar year 1999.

Ms. Mitchell contacted the office of the Rent Administrator to investigate the propriety of the rent increase. She was informed that the most recent filing on record from her housing provider was a 1998 "Certificate of Election of General Applicability." According to this filing, the rent ceiling for apartment number 419 was $782 and the actual rent was $553 per month. There were no documents in the Rent Administrator's file justifying a current rent of $625, an increase to $750, or either of the rent ceilings mentioned in the tenant notice Ms. Mitchell received. Further, there was no amended registration form on file identifying Sawyer as the current manager of the property.

After receiving this information, Ms. Mitchell filed a tenant petition complaining, inter alia, that her housing accommodation was not properly registered and that her rent increase was excessive, in violation of the Rental Housing Act of 1985. "I am on a fixed income," Ms. Mitchell stated, "and unable to meet this increase of $125." In response, Sawyer asserted that the accommodation was registered properly and that it was entitled to raise Ms. Mitchell's rent to implement one of several authorized increases in the rent ceiling for her apartment. These rent ceiling increases were of two types: so-called adjustments of general applicability that were based on yearly increases in the consumer price index, and adjustments that were permitted when Ms. Mitchell's apartment was vacant (prior to her occupancy).

The dispute proceeded to a full evidentiary hearing. In August 2001, the hearing examiner issued his decision. Ruling in Ms. Mitchell's favor on her principal claims, the examiner disallowed the rent increase in its entirety and ordered Sawyer to refund $1,828.75, representing the amount Ms. Mitchell was overcharged with interest. The examiner also fined Sawyer $500 for knowingly demanding and receiving rent in excess of the maximum allowed by law. See D.C.Code § 42-3509.01(a) (2001).

On appeal, with one Commissioner dissenting, the RHC affirmed the hearing examiner's order. On Sawyer's motion for reconsideration, the RHC modified its reasoning but not the result. The RHC ultimately identified three independently sufficient reasons why the rent increase was invalid. First, the housing provider had not filed a timely amended registration form to report the change in management at Walden Commons.³ Second, the rent increase notice given to Ms. Mitchell was defective because it did not identify the previously authorized rent ceiling adjustment that the provider sought to implement.⁴ Third, the provider had lost its opportunity to take advantage of the rent ceiling adjustments on which it relied because it failed to "perfect" them within thirty days after it became eligible to do so. Of the three reasons given for disallowing the rent increase, this last is the most definitive, for while the formal defects in the registration and notice are readily correctable, the loss of the right to implement rent ceiling adjustments is not. Under the RHC's interpretation of its regulations, the loss is permanent.

II.

Joined by the Apartment and Office Building Association of Metropolitan Washington as amicus curiae, Sawyer attacks the RHC's decision on numerous grounds. While Sawyer may not prevail unless it successfully challenges each of the three rationales on which the RHC relied, we must affirm as long as any one of the rationales withstands our scrutiny, which proves to be the case. We do not reach the merits of the RHC's first two reasons for disallowing the rent increase, for Sawyer does not persuade us that the RHC erred in concluding that the housing provider lost its claimed rent ceiling adjustments by failing to perfect them in time.

A.

As the dispositive issues before us concern the RHC's interpretation of the rent control statutes and regulations, our review is circumscribed. While this court is the final arbiter of legal questions, we owe considerable deference to the RHC's interpretation of the statutes it administers and the regulations it promulgates. Winchester Van Buren Tenants Ass'n v. D.C. Rental Hous. Comm'n, 550 A.2d 51, 55 (D.C.1988); Charles E. Smith Mgmt., Inc. v. D.C. Rental Hous. Comm'n, 492 A.2d 875, 877 (D.C.1985). We are obliged to sustain the RHC's interpretation of those statutes and regulations unless it is unreasonable or embodies "a material misconception of the law," even if a different interpretation also may be supportable. Jerome Mgmt., Inc. v. D.C. Rental Hous. Comm'n, 682 A.2d 178, 182 (D.C.1996). Thus, "[t]o persuade us to reject the Commission's construction . . ., the [challenging party] must show that it is plainly wrong or incompatible with the statutory purpose." Winchester Van Buren, 550 A.2d at 55.

B.

A large proportion of rental housing in the District of Columbia is subject to the comprehensive regulatory scheme commonly known as rent control. See D.C.Code § 42-3501.01 et seq.; D.C. MUN. REGS. tit. 14, § 3800.1 et seq. (2004). Briefly put, the goal of this scheme, born of a perceived severe housing shortage in the District, is to "ensure that decent, affordable housing is available for the various sectors of the population, while at the same time landlords are allowed a fair rate of return on their investments." Charles E. Smith Mgmt., 492 A.2d at 878. In the pursuit of that goal, housing providers are subject to a variety of reporting and monitoring requirements. "[S]trict compliance" with those requirements has been found to be essential to the efficient and effective enforcement of the rent control program. Id.

Under the rent control laws, "the principal protections for tenants are the imposition of a rent ceiling and the prohibition against upward adjustment of that ceiling except on specifically enumerated grounds." Winchester Van Buren, 550 A.2d at 55. The rent ceiling operates as an upper bound on the amount of rent that a housing provider is allowed to charge a tenant. Id. at 53; see also Afshar v. D.C. Rental Hous. Comm'n, 504 A.2d 1105, 1107 (D.C.1986)

; D.C.Code §§ 42-3502.06, 42-3502.08(h)(1); D.C. MUN. REGS. tit. 14, § 4205.7.

A rent ceiling is established for each rental unit by starting with a "base rent," see D.C.Code § 42-3501.03(4), and adding any "duly authorized" upward adjustments that are permitted from time to time. Winchester Van Buren, 550 A.2d at 53. Downward adjustments of the rent ceiling also may be required, for example to reflect substantial decreases in the services or facilities supplied to the rental unit by the housing provider. D.C.Code § 42-3502.11. In order to obtain one of the several upward rent ceiling adjustments authorized by law, a housing provider must "take" and "perfect" the adjustment in accordance with the requirements of the housing regulations. D.C. MUN. REGS. tit. 14, § 4200.5. To do that, as discussed in further detail below, the provider must either petition for, or...