Cunningham v. Phoenix Management, Inc.

540 A.2d 1099, 1988 D.C. App. LEXIS 61, 1988 WL 35873

• Court: District of Columbia Court of Appeals
• Decided: April 20, 1988
• Docket: 85-1037, 86-1306
• Status: Published

Opinions

NEWMAN, Associate Judge:

In this case, we are required to decide whether, in a landlord and tenant suit for possession of realty based on a notice to quit rather than on grounds of nonpayment of rent, a landlord can obtain a court order requiring the tenant to pay rent into the registry of the court pending the outcome of the proceedings.¹ Cunningham, the tenant, contends that since in such notice cases, the landlord cannot satisfy the requirements of Bell v. Tsintolas Realty Co., 139 U.S.App.D.C. 101, 430 F.2d 474 (1970), no protective order can be entered. Phoenix Management, Inc. (Phoenix) argues that Bell is not dispositive of the issue. Phoenix urges that its need for an order requiring payment into the registry is to avoid an argument of waiver of the notice by acceptance of the rent for a period after the expiration of the notice, citing us to Habib v. Thurston, 517 A.2d 1 (D.C.1985). We hold that an order requiring payment into the registry of the court may be made in the court’s discretion in such circumstances; we affirm the trial court’s entry of such an order and subsequent disbursement order in this case.

On May 30, 1985, Phoenix filed suit in the Landlord and Tenant Branch seeking possession of Cunningham’s apartment based on expiration of notice to cure or quit because of the tenant’s alleged violation of a lease covenant not to engage in unlawful activities on the premises. There was no allegation of nonpayment of rent. Phoenix sought an order requiring Cunningham to pay the lease rent into the registry of the court. Cunningham opposed the motion on two grounds: 1) her rent was fully current and thus there was no basis for a protective order; and 2) there were serious housing code violations and thus any protective order should be in an amount less than the lease rent. After a hearing, the trial court entered an order requiring Cunningham to pay the monthly lease rent of $81.00 into the registry of the court.² Cunningham noted an appeal of this ruling; the proceedings in the trial court continued.

Cunningham complied with the order for approximately one year. Upon her default in making a payment thereafter, Phoenix sought and was granted an order striking Cunningham’s pleadings.³ Thereafter, the trial court entered judgment for possession and, over Cunningham’s objection, disbursed the funds from the registry to Phoenix. Cunningham duly appealed from the entry of both the deposit and disbursement orders. We consolidate Cunningham’s interlocutory appeal with her appeal from the final order.⁴

The United States Court of Appeals for the District of Columbia referred to the idea of a protective order in the final footnote of Javins v. First National Realty Corp., 138 U.S.App.D.C. 369, 428 F.2d 1071, 1083 (1970), cert. denied, 400 U.S. , 91 S.Ct. 186, 27 L.Ed.2d 185 (1970), a suit based on nonpayment of rent. The court indicated that payment into the court registry was “an excellent protective procedure.” Id. at 381 n. 67, 428 F.2d at 1083. Shortly thereafter in Bell v. Tsintolas Realty Company, supra, the same court, in enumerating several factors which may be considered in determining the propriety of the entry of a protective order, held that the Landlord and Tenant Branch of the Superior Court could enter protective orders in suits for possession of real estate based on nonpayment of rent.⁵ Subsequent to Bell, also in the context of nonpayment cases, we have addressed this same issue in a series of decisions, resulting in the evolution of a number of principles. Fundamental among them are:

1. With the advent of affirmative defenses and the right to trial by jury, landlord and tenant proceedings for possession are no longer as summary in nature as they previously had been. See Bell, supra; Davis v. Rental Associates, 456 A.2d 820 (D.C.1983) (en banc).

2. The tenant remains in possession during the course of the litigation. See Bell, supra; McNeal v. Habib, supra note 1.

3. Requiring the tenant to pay rent during the litigation is to require no more than the tenant contracted to do at the inception of the tenancy. See Bell, supra.

4. Orders requiring the funds to be paid into the registry of the court entail no prejudice to any party concerning the ultimate disbursement of the funds. McNeal v. Habib, supra note 1.

5. The protective order is needed to give protection to the landlord by providing a fund for the payment of the rents ultimately found to be owed. Under some circumstances, it may also benefit the tenant. See McNeal v. Habib, supra note 1.

1. the amount of rent alleged to be due;

2. the number of months the landlord has not received even a partial rental payment;

3. the reasonableness of the rent;

4. the amount of the landlord’s monthly obligations for the premises;

5. whether the tenant has been allowed to proceed in forma pauperis; 6. whether the landlord faces a substantial threat of foreclosure.

As the foregoing principles indicate, in our efforts to fashion an equitable remedy in this area, we have attempted to balance the hardship to all parties as well as the public interest, always mindful of the traditional limitations on invoking equitable relief. We take the same approach in this case, evaluating the same principles.

As to the first four of the enumerated principles, there is no difference between a nonpayment action and one based on notice. It is only as to the remaining factor— providing a fund for the payment of rent ultimately found to be due — that notice cases differ from nonpayment cases. The premise of the landlord’s claim of need for a protective order is the fear that acceptance of rent for a period after the expiration of the notice to quit may be found to constitute a waiver of the notice to quit. In Habib v. Thurston, supra, we held that the acceptance of rent by the landlord for a term after the expiration of the notice to quit may or may not amount to a waiver depending upon the parties’ mutual intent derived from all the evidence — i.e., it is a question of fact for the trier of fact. See also Kaiser v. Rapley, 380 A.2d 995, 997 (D.C.1977). This landlord’s concern is a legitimate one. Providing the mechanism of a protective order permits the tenant to tender the rent into the registry of the court, rather than to the landlord and thus eliminates a “waiver” argument.⁶

Cunningham contends, however, that given the permissible sanction for noncompliance with a protective order — striking the tenant’s pleadings and entry of a default, see Mahdi v. Poretsky Management, 433 A.2d 1085 (D.C.1981) — a protective order effectively converts a notice action into a nonpayment one. We see no legitimate interest in compelling the landlord to seek to amend the notice suit to add a claim for nonpayment in order to qualify for a protective order or to file a subsequent action for back rent where the tenant eventually defaults in payment of rent. No useful purpose is served by thus exalting form over substance.

Affirmed. 7

1 . Although we have considered cases with a protective order based on notice to quit, we have never decided the propriety of the order per se in a notice case. See, e.g., Temple v. Thomas D. Walsh, Inc., 485 A.2d 192 (D.C.1984); Hamilton v. Calomiris Investment, 461 A.2d 466 (D.C.1983); McNeal v. Habib, 346 A.2d 508 (D.C.1975).

2 . Cunningham’s apartment was subsidized by the Department of Housing and Urban Development (HUD). Under its Section 8 "Set-aside” program, HUD pays a monthly subsidy to the landlord in an equal amount to the difference between a tenant’s rent and the fair market rent of the apartment. While Cunningham was paying the $81.00 a month into the court registry, Phoenix continued to receive payments directly from HUD throughout the litigation.

3 . Cunningham does not contend on appeal that the trial court abused its discretion by entering this order.

4 . Thus, we need not decide whether the protective order is subject to an interlocutory appeal. Compare Dameron v. Capitol House Associates, 431 A.2d 580 (D.C.1981), with Taylor v. First American Title Co., 477 A.2d 227 (D.C.1984). We are presently en banc to resolve this issue in McQueen, et al. v. Lustine Realty Co., No. 86-474.

5 . Bell allows the trial court to assess the landlord’s need for a protective order by considering:

6 .In determining the amount of the protective order in notice cases, the court is guided by the factors set forth in Bell v. Tsintolas Realty Company, supra, specifically to include the evaluation provided for by Bell when housing code violations are shown. 139 U.S.App.D.C. at 111, 430 F.2d at 484.

7 . Cunningham did not seek a McNeal hearing in the trial court; she raises no such issue on this appeal.