APARTMENT & OFF. BLDG. ASS'N OF WASH. v. Moore

359 A.2d 140
CourtDistrict of Columbia Court of Appeals
DecidedJune 14, 1976
Docket10601
StatusPublished

This text of 359 A.2d 140 (APARTMENT & OFF. BLDG. ASS'N OF WASH. v. Moore) is published on Counsel Stack Legal Research, covering District of Columbia Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
APARTMENT & OFF. BLDG. ASS'N OF WASH. v. Moore, 359 A.2d 140 (D.C. 1976).

Opinion

359 A.2d 140 (1976)

APARTMENT AND OFFICE BUILDING ASSOCIATION OF METROPOLITAN WASHINGTON et al., Petitioners,
v.
The Honorable Luke C. MOORE, Judge, Superior Court of the District of Columbia, Respondent.

No. 10601.

District of Columbia Court of Appeals.

Argued April 14, 1976.
Decided June 14, 1976.
Rehearing en Banc Denied July 22, 1976.

Eric Von Salzen, Washington, D. C., with whom Kevin P. Charles and Martin Klepper, Washington, D. C., were on the petition, for petitioners.

Michael A. Cain, Asst. Corp. Counsel, with whom Louis P. Robbins, Principal Asst. Corp. Counsel, and John C. Salyer, *141 Asst. Corp. Counsel, were on the answer to petition, for respondent.

Before REILLY, Chief Judge, and FICKLING and NEBEKER, Associate Judges.

NEBEKER, Associate Judge:

On July 16, 1975, this court's judgment in lieu of mandate in Apartment and Office Building Association of Metropolitan Washington v. Washington, D.C.App., 343 A.2d 323, 333 (1975), directed (1) that as an alternative to outright injunctions of rent control, the government be given 90 days to adopt and to implement means of affording reasonably prompt vindication of the cost pass-through right, an integral part of the 1973 congressional rent control authorization, and (2) that in the interim period, rent increases be allowed on a general or on an individual basis if necessary in order to keep rent revenue abreast of the increased costs and the right of owners to a reasonable return. The trial court chose to treat the interim requests individually.[1] No significant progress was made during this 90-day period. It is therefore clear that the trial court mistakenly failed to notice that with the expiration of this deadline, our mandate was not complied with.[2] Instead, on February 17, 1976, the trial court issued an order, significantly predicated on its finding of need for court-ordered rent increases, which, according to petitioners, was not in compliance with our earlier holding. We agree with petitioners and, in view of the trial court's failure to comply with our mandate, issue an order for relief as will appear herein. See Appendix, infra.

During the pendency of the remand proceeding, the District of Columbia Rental Accommodations Act of 1975, enacted by the District Council, became effective. See D.C.Law No. 1-33, 22 D.C.Register 2498 (November 13, 1975).[3] The 1973 congressional enactment had expired by its own terms with one significant exception which provided that

as to . . . rights or liabilities incurred, prior to such termination date, the provisions of sections 45-1621 to 45-1627, and such rules, orders, and requirements, shall be treated as still remaining in force for the purpose of sustaining any proper suit . . . with respect to any such right [or] liability.. . . [See D.C.Code 1974 Supp., § 45-1627(a).]

Notwithstanding this provision, vesting petitioners' rights to a pass-through of increased operating costs, the trial court adopted a means of calculating rent increases contained in the new Act. It permitted increases in rent "as would generate a rate of return of no greater than 8%. . . as computed according to § 204(a)(3)(b), D.C.Law 1-33 . . . ." It also denied a requested rent surcharge calculated to make up for operating costs not offset due to earlier failure to grant rent increases. In addition, rent increases were denied to anyone who had received such an increase under the new law.[4]

*142 In the ultimate analysis, petitioners assert that under our mandate and § 45-1627(a), supra, they are entitled to have rent increases for the interim period together with whatever impact such increase orders will have on their base rent for the future. That was the effect of the relief we ordered, and neither the expiration of the 90-day period nor the enactment of a new rent control program alters the rights which earlier vested.

We need not here deal with the method of calculation under the new Rental Accommodations Act whereby an 8% rate of return is fixed. It is sufficient to observe that before the "rent freeze" of May 1974 and the rent control program of August 1974 (see Apartment and Office Building Association of Metropolitan Washington v. Washington, supra), some of the petitioners were making a reasonable return in excess of that rated calculation. Under the 1974 program and the 1973 enabling legislation, a cost pass-through right existed and as to the class it vested. The class members are therefore entitled to have rents set on that basis, for if the return exceeds the 8% rate of return as determined under the new Act no mandatory rent roll-back is required. Moreover, there are differences in the two rent control programs, the most significant being the exclusion from the latter program of mortgage interest and other operational debt-related costs in computing the 8% rate of return.

There remains the question of how the needed relief is to be supplied. Our earlier holding gave the trial judge a choice whether within the 90-day grace period to grant an across-the-board rent increase or to act on individual applications. He chose the latter, but events show that such method has proved unworkable. As Chief Judge Reilly observed in his concurring opinion in the previous appeal, "Congress did not direct the Superior Court to administer and enforce pass-through rights". Id. at 334. However, Congress did provide for judicial review in the Superior Court. See D.C.Code 1974 Supp., § 45-1625 (a). That review has been timely sought and rights appertaining thereto continue. See § 45-1627(a), supra. The need for prompt and effective relief also continues. We are of the view, in light of the delay and administrative lethargy under the old rent control program and the congested docket of the trial court,[5] that relief of the kind proposed by petitioners to the trial court is in order. We include, as an appendix hereto, that proposed order and direct its prompt implementation with one modification. In essence, we permit rent adjustments to become effective under the old program upon the filing with the court and with the Rent Administrator a certified statement showing the current annual costs, base period annual costs, annual amount of cost increase, monthly amount of cost increase, unit pass-through amount, and the amount of the adjusted rent ceiling allowed under the order.[6] The agency would retain the right to audit and inspect such statements should the adjustment be challenged.

Our point of modification of plaintiffs' proposed order is at the "Recoupment Surcharge". We fail to see, and we are *143 shown no authority for imposing, a surcharge on future rent to make up for past deficiencies. Such a surcharge would be inequitable, for the burden of make-up payments would then fall upon tenants not in possession for the period of deficiency, or upon tenants then in possession who might have exercised an option to quit. In any event, and contrary to the government's suggestion that a surcharge has impact on the premises, a surcharge operates in the nature of a judgment for rent due against persons not parties to the action. Increased rents, even under a rent control program, operate prospectively.[7]

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