Jefferson-11th Street, LLC v. District of Columbia

CourtDistrict Court, District of Columbia
DecidedApril 9, 2020
DocketCivil Action No. 2019-1416
StatusPublished

This text of Jefferson-11th Street, LLC v. District of Columbia (Jefferson-11th Street, LLC v. District of Columbia) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jefferson-11th Street, LLC v. District of Columbia, (D.D.C. 2020).

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

JEFFERSON-11TH STREET, LLC,

Plaintiff,

v. Civil Action No. 1:19-cv-1416 (CJN)

DISTRICT OF COLUMBIA, et al.,

Defendants.

MEMORANDUM OPINION

Plaintiff Jefferson-11th Street, LLC owns an apartment building in Washington’s

Columbia Heights neighborhood. Compl. ¶ 10, ECF No. 1. The building is outdated and in need

of repair, though it has remained partially occupied in recent years. Id. ¶¶ 10, 15, 21–25. After

Jefferson engaged in a protracted battle with tenants over plans to improve the property and raise

rents, the District of Columbia’s Attorney General intervened and brought a civil suit against

Jefferson in D.C. Superior Court in 2017. Id. ¶ 110. As part of that proceeding, the Superior

Court placed the property in receivership and appointed a receiver to oversee the building’s

rehabilitation under a court-approved plan. Id. ¶¶ 129–40.

Jefferson subsequently brought this federal lawsuit, alleging that the District’s suit and

the ensuing receivership constitute an uncompensated taking of property under the Fifth

Amendment, id. ¶¶ 153–63, or, in the alternative, a deprivation of property without due process

of law, id. ¶¶ 163–74. 1 The Complaint also alleges a common law tortious interference with

1 In addition to the District of Columbia, the Complaint names the receiver, Benjamin Gilmore, as a Defendant in Counts I and II. Id. ¶¶ 153–74.

1 business expectancy claim against Defendants 2724 11th St. NW Tenants’ Association, Inc.

(“Tenants”) and the Latino Economic Development Corporation of Washington, D.C. (“LEDC”),

an organization allegedly assisting the Tenants in their legal battle.

Both sets of Defendants moved to dismiss the Complaint under Federal Rule of Civil

Procedure 12(b)(6). See generally Defs. The District of Columbia and Benjamin Gilmore’s Mot.

to Dismiss (“D.C. Mot.”), ECF No. 10; Defs. 2724 11th St. NW Tenants’ Ass’n, Inc. and Latino

Econ. Dev. Corp. of Wash., D.C.’s Mot. to Dismiss (“Tenants’ Mot.”), ECF No 11. The Court

agrees with the District that the ongoing proceedings in Superior Court “are judicial in nature

and implicate important District interests; [that] those proceedings afford [Jefferson] an adequate

opportunity to litigate its federal claims; and [that] there are no extraordinary circumstances

warranting equitable relief.” JMM Corp. v. District of Columbia, 378 F.3d 1117, 1128 (D.C. Cir.

2004). The Court therefore grants the District’s Motion to Dismiss. Because that action

“dismisse[s] all claims over which [the Court] has original jurisdiction,” the Court declines to

exercise supplemental jurisdiction over Count III of the Complaint and grants the Tenants’

Motion to Dismiss. 28 U.S.C. § 1367(c)(3).

I. Background

2724 11th Street NW is a century-old, two-story apartment building containing 26

residential apartments. Compl. ¶ 10. Plaintiff acquired the building in 2009 and owns the

property outright. Id. ¶¶ 10–11. The units are rent-controlled and have not been updated in

some time, so the tenants’ rent is significantly below the market rate in the neighborhood. Id.

¶¶ 16–19. Because of the low rents and the moderate level of occupancy, the operation is not

profitable. Id. ¶ 19. The building “lacks central air conditioning[] and requires major structural

repairs . . . and major improvements to or replacement of all systems.” Id. ¶ 23. It also needs

2 “substantial interior repairs and rehabilitation, including repair and replacement of many interior

floors, walls, and ceilings, some of which are known to cover asbestos and lead paint.” Id. ¶ 24.

Beginning in 2012, Jefferson began the first of its several attempts to overhaul the

building. Id. ¶ 26. It tried to secure approval from a sufficient number of tenants to institute a

voluntary rehabilitation plan that would have completely renovated the property and raised rents

accordingly. Id. ¶¶ 27–28. The tenants did not agree. Id. ¶ 29. Jefferson then turned to the

administrative process, filing a hardship petition with the District government to obtain

permission to upgrade the property and raise rents unilaterally. Id. ¶¶ 32–35. Individual tenants,

allegedly aided by LEDC, filed objections to the hardship petition. Id. ¶ 39. The newly

incorporated Tenants Association then filed its own tenants’ petition, seeking the government’s

assistance in remediating existing D.C. Housing Code violations. Id. ¶¶ 43–46. Several rounds

of administrative petitions, hearings, and orders followed, along with multiple property

inspections that found dozens of code violations in each instance. Id. ¶¶ 46–97. Jefferson

alleges that it resolved most of the violations at substantial cost. Id. One inspection turned up

evidence of mold in several units, prompting individual tenants to file a lawsuit in Superior Court

to force Jefferson to alleviate the mold problem. Id. ¶¶ 98–102, 106–109.

On April 24, 2017, the District’s Attorney General filed a three-count suit against

Jefferson in D.C. Superior Court, seeking the appointment of a receiver to take control of the

property and renovate it under the Tenant Receivership Act, D.C. Code. §§ 42-3651.01–.08;

injunctive relief under the same statute, id.; and money damages for alleged unfair trade practices

in violation of the District’s Consumer Protection Procedures Act, id. §§ 28-3901–13. Compl.

¶¶ 110–12. Parallel administrative proceedings continued. Id. ¶¶ 114–21. Jefferson resolved

many of the outstanding code violations and proposed to the Court a plan to abate the remainder,

3 but the District continued to conduct new inspections and to identify even more problems. Id.

¶¶ 122–28. The Superior Court therefore rejected Jefferson’s proposal and granted the District’s

petition to appoint Defendant Benjamin Gilmore as receiver with “sole and plenary authority to

collect rents, operate the Property in accordance with the powers conferred by the [Tenant

Receivership Act], and abate not merely the housing code violations alleged in the [District’s]

complaint, but all violations that currently exist or may exist in the future at the Property while

the [receivership] is in effect.” Id. ¶¶ 128–30 (internal quotation omitted).

Thereafter, Gilmore submitted two potential abatement plans for the Court’s review. Id.

¶ 131. The Court adopted the more extensive of the two, requiring Jefferson to contribute over

$2 million toward the property’s complete overhaul, as well as more than $260,000 to pay for the

tenants to relocate temporarily during construction. Id. ¶¶ 139–43. The Superior Court declined

to amend certain aspects of the plan at Jefferson’s request, though it permitted Jefferson to

negotiate with Gilmore to fund desired projects that exceeded the planned upgrades so as to

accomplish all new work at the same time. Id. ¶¶ 144–46. As work began, Gilmore revised his

cost estimate upwards. Id. ¶¶ 147–49. He also declined to amend his plan at Jefferson’s request,

even though Jefferson pointed out that some of the planned work (such as replacing the

building’s boiler rather than installing a central climate control system) would preclude future

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