TENANTS OF 2301 E STREET v. HOUSING COM'N

• Decision Date: 12 September 1990
• Docket Number: No. 89-727.,89-727.
• Parties: TENANTS OF 2301 E STREET, N.W., Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent. Columbia Plaza Limited Partnership, Intervenor.
• Court: D.C. Court of Appeals

580 A.2d 622

TENANTS OF 2301 E STREET, N.W., Petitioner, v. DISTRICT OF COLUMBIA RENTAL HOUSING COMMISSION, Respondent Columbia Plaza Limited Partnership, Intervenor.

No. 89-727.

District of Columbia Court of Appeals.

Argued May 2, 1990.

Decided September 12, 1990.

James P. McGranery, Jr., Washington, D.C., for petitioner.

Charles L. Reischel, Deputy Corp. Counsel, and Herbert O. Reid, Sr., Corp. Counsel, Washington, D.C., filed a Statement in Lieu of Brief, on behalf of respondent.

Vincent Mark J. Policy, Washington, D.C., with whom Roger T. Scully, Bethesda, Md., was on the brief, for intervenor.

Before FERREN and SCHWELB, Associate Judges, and REILLY, Senior Judge.

SCHWELB, Associate Judge:

This case had its inception in a dispute over relatively minor repairs to roofs which also serve as patios, and over the effect of such repairs on rent ceilings. It requires us to delve into the mysteries of agency procedure and the scope of judicial review thereof, the reach of the "private attorney general" doctrine, the perils of retroactivity, and that most familiar chestnut of the connoisseur of Rental Housing Act litigation, the Ungar presumption.¹

Intervenor Columbia Plaza Limited Partnership (the landlord) filed a capital improvement petition pursuant to D.C.Code § 45-2520 (1986), requesting that the rent ceiling of four apartments at 2301 E Street, N.W. be increased by $40.10 per unit. The hearing examiner dismissed the petition on technical grounds, but denied the tenants' counter-request for a reduction in the rent ceiling and for penalties and counsel fees. On the tenants' appeal, the District of Columbia Rental Housing Commission affirmed the hearing examiner's ruling.

The tenants now ask this court to review the Commission's order, contending that the denial of relief to them was error. We affirm the Commission's decision with respect to the requested rent reduction and penalties, but remand for further proceedings on the issue of counsel fees.

I

The landlord's petition was based on a claimed need to waterproof the roof and to rehabilitate the roof deck. In October 1986, during the proceedings before the hearing examiner, counsel for the tenants moved to dismiss the petition upon the ground that it had not been signed. The hearing examiner held the motion in abeyance.

The tenants claimed at the hearing that the repairs on which the requested increase in the rent ceiling was based were in reality for the benefit of commercial tenants and had resulted in a reduction of facilities and services to the tenants' units.² Specifically, they contended that portions of their apartments had become unusable as a result of the work. At the conclusion of the hearing, the hearing examiner requested (and eventually received) post-hearing submissions with respect to the affected square footage.

In a decision issued in January 1987, the hearing examiner did not address the post-hearing submissions but dismissed the petition on the ground that the filed copy of it was unsigned.³ He declined to reach the tenants' request for a rent reduction or for penalties, holding that these issues were not properly before him in a proceeding generated by the landlord's capital improvement petition.⁴ The tenants appealed to the Commission. The landlord did not.

On May 8, 1989, the Commission sustained the decision of the hearing examiner. The Commission also denied the tenants' request for counsel fees. In doing so, the Commission cited its own prior decision in Hampton Courts Tenants' Ass'n v. William C. Smith Co., C120, 176 (RHC July 8, 1988), in which it had held that the presumption that prevailing tenants are entitled to an award of counsel fees on a "private attorney general" theory, see Ungar v. District of Columbia Rental Hous. Comm'n, 535 A.2d 887, 892 (D.C.1987), does not apply in proceedings initiated by the housing provider. The tenants filed a motion for reconsideration, which the Commission denied on June 1, 1989.

II

The Commission held in its initial decision that the tenants' request for a reduction of rent was not properly before it in the context of a capital improvement petition filed by the landlord. It explained that

the housing provider is not put on notice of any issues not presented in the capital improvement petition. Since the tenants can easily file a tenant petition with allegations of rent overcharges or, as in this case, reductions in services or facilities, no prejudice attaches to these issues by the failure of the hearing examiner to rule upon them in a capital improvement petition. Additionally, under the procedure proposed by the tenants the housing provider cannot allege a violation of the notice requirements of the D.C. Administrative Procedure Act, D.C.Code § 1-1509 (1987 Repl.Vol. 2). Accordingly, the Commission finds no error in the hearing examiner's refusal to consider issues relating to reductions in services and facilities.

The agency relied on its prior decision in Epstein v. McCampbell, HP 10,165 (RHC Feb. 12, 1985), in which it had reached the same result where a landlord had filed a hardship petition and the tenants had sought a reduction in the rent ceiling.

We agree with the Commission. The agency's rules contain no provision for counterclaims, and the position for which the tenants contend would compel the landlord to defend a de facto counterclaim without prior notice of its contents. As the landlord correctly points out in its brief, there was nothing in the Rental Housing Act, in the regulations promulgated pursuant to it, 14 D.C.M.R. § 4210 (1989), or in the Notice of Hearing served upon the parties in connection with the capital improvement petition, which gave the landlord any notice that the hearing would address possible reductions in the rent ceiling, rather than the increase which the landlord itself was requesting.

The tenants claim that the Commission's capital improvement petition form, which it is the landlord's responsibility to complete, gave the landlord notice that the tenants could make a claim for reduction in services and facilities in conjunction with a capital improvement petition.⁵ This contention founders on its own logic; the landlord cannot be required to give itself notice that the tenants are making a claim against it, nor does the landlord receive notice of the tenants' claim by completing (or not completing) a form prescribed by the Commission.

Moreover, as the agency explained, the form was not designed to elicit the kind of information with which we are concerned here. In its opinion on reconsideration, the Commission held that

the petition form requires information on reduction in services only as they relate to the proposed capital improvement, i.e. if the housing provider has been paying the utilities and the capital improvement would make the tenant responsible for the utilities, then the housing provider must show the cost to be deducted from the current rent for no longer providing utilities.

We find this interpretation by the agency of its own form entirely reasonable. We cannot agree with the tenants' contention that the present situation resembles the one posited by the Commission, involving a change from payment of utilities by the landlord to payment by the tenants. The form, as we read the Commission's order, was intended for the situation where the capital improvement by its nature makes a permanent change in the landlord's obligation to the tenant to the tenant's detriment. It was not designed for a scenario, such as the one that allegedly exists here, where work being done on a proposed capital improvement temporarily interferes with a tenant's use of his premises. That type of impairment, as the Commission reasonably held, is properly addressed by a tenant petition.

At argument, counsel for the tenants contended that the reduction in services could be considered as an offset or recoupment against the landlord's claim. In the present case, however, the landlord received no relief against which any recovery for the tenant could be offset. The Commission's use of a standardized form directed to an entirely different situation did not inaugurate a counterclaim procedure through the back door.

Our review of the agency's interpretation of the Rental Housing Act and of its own procedures is deferential. Winchester Van Buren Tenants Ass'n v. District of Columbia Rental Hous. Comm'n, 550 A.2d 51 (D.C.1988). Here, the Commission's view that a request to reduce the rent ceiling must be raised in a separate tenant petition, rather than by resort to a de facto counterclaim, is neither plainly wrong nor inconsistent with the legislative purpose. Id. at 52. We discern no reason to substitute our judgment for that of the Commission with respect to its own procedures. Accordingly, we conclude that the Commission properly denied the tenants a decrease in the rent ceiling.⁶

III

Two weeks before argument in this case, in Hampton Courts Tenants' Ass'n v. District of Columbia Rental Hous. Comm'n, 573 A.2d 10 (D.C.1990), this court reversed the Commission's Hampton Courts decision, on which the agency had relied in declining to award counsel fees to the tenants. This court concluded that

the Commission's construction of the statute, rejecting the Ungar presumption and substituting therefor its own negative presumption, is plainly wrong. We hold that the Ungar presumption applies to prevailing tenants in both tenant-initiated and landlord-initiated proceedings.

Id. at 13. We held, in effect, that a tenant who successfully resists an attempt by the landlord to raise the rent by resort to a capital improvement petition acts as a "private attorney general"⁷ in protecting tenants of low or moderate income from unwarranted increases in their rent. See also Goodman v. District of Columbia Rental Hous. Comm'n, 573 A.2d 1293, 1297 (D.C. 1990), emphasizing the "quintessentially remedial" character of the Rental Housing Act.

The landlord...