SUPERIOR COURT OF THE DISTRICT OF COLUMBIA CIVIL DIVISION 500 Indiana Avenue, NW Washington, DC 20001
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1 SUPERIOR COURT OF THE DISTRICT OF COLUMBIA CIVIL DIVISION 500 Indiana Avenue, NW Washington, DC ) [Various Tenants] ) ) Plaintiffs ) ) v. ) Case No. ) [Landord] ) ) Defendant ) ) MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS MOTION FOR A PRELIMINARY INJUNCTION OR, IN THE ALTERNATIVE, FOR AN ORDER TO COMPEL COMPLIANCE WITH AN ADMINISTRATIVE ORDER I. Statement of the Case On [date], Plaintiffs filed a Tenant Petition/Complaint (the Tenant Petition ) with the Office of Administrative Hearings against Defendant, Case No. [case number], claiming violations of the Rental Housing Act of 1985 (the Act ). One claim was the elimination of a service without prior approval of the Rent Administrator (now an Administrative Law Judge in the Office of Administrative Hearings). Specifically, pursuant to records on file with the Rental Accommodations Division ( RAD ), Respondent (Defendant in the instant case) was responsible for providing all utilities related to the apartments, including electricity. On or about [date], Defendant ceased paying the electric bill and demanded that each tenant contact Potomac Electric Power Company ( PEPCO ) to establish individual accounts and pay for electricity directly.
2 On [date], Plaintiffs counsel filed a Motion for Summary Judgment in the Tenant Petition case. A hearing on the Motion for Summary Judgment was held on [date]. On [date], the Administrative Law Judge assigned to the case in the D.C. Office of Administrative Hearings issued an Order Granting Partial Summary Judgment in the Tenant Petition case. [The Administrative Law Judge] found that the Defendant had violated the Act by eliminating a related service without the prior approval of the Rent Administrator. [The Administrative Law Judge] held that electricity is a service that Respondent is legally required to provide for Petitioners. (Order at 21.) 1 II. Argument A preliminary injunction is appropriate relief when it has been clearly demonstrated (1) that there is a substantial likelihood the moving party will prevail on the merits; (2) that the moving party is in danger of suffering irreparable harm during the pendency of the action; (3) that more harm will result to the moving party from the denial of the injunction than will result to the opposing party from its grant; and, (4) that the public interest will not be disserved by the issuance of the requested order. In re Estate of Reilly, 933 A.2d 830, 834 (D.C. 2007) (quoting Feaster v. Vance, 832 A.2d 1277, 1287 (D.C. 2003). A party need not meet a specific threshold for each of these factors, rather [i]f the arguments for one factor are particularly strong, an injunction may issue even if the arguments in other areas are rather weak. CityFed Fin. Corp. v. OTS, 58 F.3d 738, 747 (D.C. Cir. 1995). If irreparable harm is shown through a high probability of success and some injury, or some probability of success and serious injury, then the moving party 1 A copy of [the Administrative Law Judge s] [date] Order is attached as Exhibit A hereto. Plaintiffs will provide a certified copy of the Order at the hearing on this motion. 2
3 may prevail with a substantial case on the merits. Akassy v. William Penn Apartments Ltd. Partnership, 891 A.2d 291, 310 (D.C. 2006). A. Plaintiffs have a substantial likelihood of succeeding on the merits. i. Plaintiffs are seeking an enforcement of an administrative order. In their Complaint, Plaintiffs are asking this Court to enforce an Order of the Office of Administrative Hearings, as permitted by D.C. Code This provision allows affected tenants to commence a civil action in Superior Court to enforce any rule or decision issued under [the Act] (emphasis added). [The Administrative Law Judge s] Order, while styled as granting partial summary judgment, decided the issue of which party is responsible for paying the electric bills for the subject apartments, and [the Administrative Law Judge s] order regarding responsibility is a final ruling on liability. Pursuant to Super. Ct. Civ. R. 56 (d), [the Administrative Law Judge] intends to conduct further proceedings on the issues that remain in dispute, namely, damages. (Order at 26.) It is well established that courts will show deference to an agency's interpretation of the statute that it is responsible for administering. Hotel Tabard Inn v. D.C. Dept. of Consumer & Regulatory Affairs, 747 A.2d 1168, 1174 (D.C. 2000). Agency decisions should not be overturned by the Court unless they are arbitrary, capricious or an abuse of discretion, and should be upheld if they are reasonable and not plainly wrong or inconsistent with its legislative purpose and supported by substantial evidence. Id. [The Administrative Law Judge] issued his Order after considering hundreds of pages of evidence submitted by both sides in the Tenant Petition case, as well as conducting a full hearing on the Motion for Summary Judgment. The evidence before 3
4 him showed that the Defendant s predecessor had filed a Landlord Registration Form with the RAD that indicated that the landlord was responsible for providing electricity as a service related to rent payment and that Defendant had never applied to the Rent Administrator to change this. The Act requires prior approval by the Rent Administrator for all changes affecting the amount of rent charges, with only two exceptions, namely, the annual Increase of General Applicability and a Vacancy Increase. D.C. Code , D.C. Code [The Administrative Law Judge s] ruling that the Defendant is responsible for providing electricity for the Plaintiffs until such time as the Defendant receives approval to change this is a reasonable interpretation of the Act, and is supported by the evidence. Plaintiffs have a substantial likelihood of succeeding in their efforts to permanently enforce [the Administrative Law Judge s] Order. ii. Case law supports the proposition that Administrative Law Judges have the authority to order equitable relief. In 2005, the D.C. Court of Appeals reversed a ruling by an administrative law judge that he did not have the authority to order equitable relief. Paschall v. D.C. Dept. of Health, 871 A.2d 463, 468 (D.C. 2005). The case involved violations of the procedural requirements of the Nursing Home and Community Residence Facility Residents Protection Act of 1985 (the NHCRFRPA ), D.C. Code et seq. This law requires that a nursing home give a resident 30-day advance notice of a transfer or discharge, or an explanation of why the circumstances allowed the nursing home to be excused of the 30-day requirement. The notice must also comply with other procedural requirements, such as a statement regarding where and when the resident will be transferred. 4
5 Mr. Paschall was transferred from the nursing home in which he resided to Walter Reed Army Hospital because he was experiencing abdominal pain. Two weeks after this transfer, while he was still being treated at the hospital, the nursing home issued an Advance Notice of Discharge advising Mr. Paschall that he would not be allowed to come back to the nursing home. Administrative Law Judge Poindexter ruled that the Advance Notice failed to comply with the substantive components of the notice requirements and, therefore, that the nursing home could not discharge Mr. Paschall based on it. Id., at 465. Judge Poindexter further ruled that the nursing home was not barred from discharging Mr. Paschall at all, but was free to issue a new Notice that complied with the notice requirements. Id. The nursing home, however, did not readmit Mr. Paschall because his bed was no longer available. When Mr. Paschall requested that the Judge require the nursing home to put him at the top of the waiting list, Judge Poindexter ruled that he lacked the authority to direct the nursing home to readmit Mr. Paschall because the NHCRFRPA expressly gave the power to order equitable relief to the Superior Court. The D.C. Court of Appeals disagreed. It found that the requirement of an advance notice of discharge was integral to the statutory scheme because a resident who received such a notice had the right to an administrative hearing to challenge the discharge, which would have the effect of staying the discharge pending the hearing. Additionally, the NHCRFRPA provides that the hearing examiner can order a resident to be returned to a facility if he determines the discharge to be unlawful, without the necessity of a court order. The D.C. Court of Appeals held that an administrative law 5
6 judge could do the same where he invalidates the discharge at the threshold because of a failure to provide legally sufficient notice. Id. at 468. Requiring a landlord to receive approval from the Rent Administrator prior to eliminating a related service is integral to the statutory scheme of the Rental Housing Act. The Act s legislative intent was to protect low- and moderate-income tenants from the erosion of their income from increased housing costs. D.C. Code (1). An additional intent of the Act was to maintain moderately priced, affordable housing while at the same time allowing housing providers a reasonable return. D.C. Code (5). It is to balance these interests that the Act requires the approval of the Rent Administrator before any adjustments in the level of the rent charged. D.C. Code The Act specifically takes the power to set rent levels for affordable housing away from the landlords and the tenants and gives it to an impartial third party. Requiring a housing provider to present evidence to the Rent Administrator proving the value of the services provided and the necessity of shifting the responsibility for such services from the housing provider to the tenants is indispensible if the Rent Administrator is to balance the interests of all parties. D.C. Code Requiring that this be done before an increase in rent or the elimination of a related service puts the burden of proof on the landlord, the party in possession of the records relating to the value of the service, and protects the tenants from what could be a significant hardship. B. Plaintiffs are suffering, and will continue to suffer, irreparable harm due to Defendant s actions. The usual remedy in cases involving landlords who do not comply with the procedural requirements before increasing rent levels is for the Rent Administrator to roll 6
7 the levels back to the last legal rent level within the Statute of Limitations. D.C. Code (a). In other words, once it is determined that a landlord has violated the provision of the Act regarding allowable increases in the rent level, the remedy most often used is to restore the status quo ante. An elimination of a related service is the equivalent of a rent increase in that a tenant has to expend funds subsequent to the elimination of the service by the landlord in order to maintain the same level of services. In most cases, it will be difficult, if not impossible, to set a specific dollar amount that a tenant would have to pay to replace the eliminated service. See, e.g., Daro Realty, Inc. v th Street Tenants Assoc., 1988 D.C. Rental Housing Comm. LEXIS 334 (1988) in which one of the alleged reduction in services was the loss of the use of a roof garden. This is why the Rent Administrator has the authority to decrease the rent charged to reflect the proportional value of the service. D.C. Code However, when a landlord demands that a tenant pay directly for utility services that had previously been included in the rent, the tenant is incurring actual, measurable damages in the amount of the monthly utility bills. Unlike rent levels that can be increased only once in twelve months, in which case monthly damages would remain constant until the next rent increase, the Plaintiffs monthly damages (their electric bills) vary each month, meaning that an order by the Rent Administrator to pay past electricity bills is inadequate because it cannot account for the damages incurred by the Plaintiffs subsequent to the closing of the record. Plaintiffs would have to file a second Tenant Petition to claim these damages, and might have to file a third Tenant Petition to claim the damages that accrue during the pendency of the second Tenant Petition, and so forth. 7
8 Additionally, damages will continue to accrue through the pendency of any appeal, delaying any relief for the Plaintiffs for a significant time. The Rental Housing Commission (the RHC ) did not issue any decisions for several years while seats were left vacant. On April 5, 2011, the D.C. Council passed an emergency resolution authorizing the one sitting Commissioner to conduct the business of the RHC by himself. It could take years for [the Administrative Law Judge s] final order to be affirmed on appeal. In such cases, the only way to control the constantly increasing damages is to restore the status quo ante and order the landlord to resume paying for the eliminated service. Although courts justifiably should be reluctant to step into a dispute in which all issues have not been fully resolved by the administrative agency, this reluctance is based on the concern that such interference usually disrupts the administrative process. District of Columbia v. Group Ins. Admin., 633 A.2d 2, (D.C. 1993). In this case, however, the issuance of the injunctive relief requested will actually facilitate the administrative process by fixing the date through which damages will accrue, so that any final order regarding damages that [the Administrative Law Judge] issues will have an accurate and definitive amount for damages. C. Defendant would not be substantially harmed by the injunction requested. Defendant purchased the property in [year] and provided electricity for the entire building from that date through [later date]. At no time did Defendant feel that so providing was such a burden as to constitute grounds for filing a Hardship Petition with the Rent Administrator. Furthermore, Petitioners occupy only 55% of the units in the 8
9 building, making it even less of a burden on Defendant than when it provided electricity for the entire building. D. The public interest would not be disserved by granting the injunction. The D.C. Council has considered the problem of affordable housing for decades, and has passed a series of laws to address this problem. The Rent Stabilization Program (the Program ) assures that the interests of both the housing providers and the tenants, especially low- and moderate-income tenants, are taken into consideration, and has worked well to achieve the goal of maintaining affordable rental housing in the District of Columbia. D.C. Code The cornerstone of the Program is the authority of the Rent Administrator to decide what amount the tenants should have to pay for their housing needs, balanced with the interests of the housing provider, and the authority to correct any imbalance ordering a rollback for any illegal increases and restoring the status quo ante. It is an important public interest that the provisions of the Act be followed so that the legislative intent to maintain affordable rental housing can be fulfilled. E. Defendant should be compelled to comply with the requirements of the Order Granting Partial Summary Judgment. [The Administrative Law Judge] ordered that the Defendant is legally required to provide electricity to the Plaintiffs. Pursuant to D.C. Code (e), a party in interest in an adjudicated case may apply to the Superior Court for any equitable remedy authorized by law to compel compliance with an order of an Administrative Law Judge, and may request that a person be ordered to show cause regarding any refusal to comply. As noted above, [the Administrative Law Judge s] Order adjudicates the issue of which 9
10 party is to pay for the electricity and, pursuant to that Order, Defendant should be compelled to pay Plaintiffs electricity bills. F. Plaintiffs should not be required to give security before being granted injunctive relief. Although Super. Ct. Civ. R. 65 (d) appears to require the giving of security by the party requesting injunctive relief, the amount of that security is within the discretion of the Court. L Enfant Plaza Properties, Inc. v. Fitness Systems, Inc., 354 A.2d 233, 237 (D.C. 1976). Security is set with regard to the comparative injury to the parties if the injunction is or is not granted. It is within the Court s discretion to decide that the injury to the Defendant if the injunction is wrongfully granted is slight compared to the injury to the Plaintiff if the injunction is not granted, and set the surety at zero. Id. There are a number of factors why the Court should use this discretion and waive the required security in this case. First, Plaintiffs are not seeking injunctive relief prior to any decision on the merits of their case, but rather to enforce a decision that has already been made by the administrative agency tasked with enforcing the provisions of a law of the District of Columbia. Second, an accurate accounting of the possible material harm to the Defendant is not possible, since the duration of the injunction is within the Defendant s control, namely, until such time as the Defendant applies for and receives approval from the Rent Administrator. Third, imposition of a bond would be a hardship on the Plaintiffs who are low- and moderate-income tenants. Plaintiffs are already paying amounts to the Defendant that [the Administrative Law Judge] had determined are in excess of the legal rent levels due to illegal rent increases, in addition to the amounts Plaintiffs are now paying for electricity. (Order at 25). Requiring Plaintiffs to post a bond as additional security in this case would be a financial burden that would preclude 10
11 Plaintiffs from pursuing this relief, which would further delay the relief the Plaintiffs have been seeking since July III. Conclusion For the foregoing reasons, this Court should order that Defendant immediately resume providing electricity to the Plaintiffs apartment and pay all charges for electricity until such time as it complies with the provisions of the Act. Additionally, this Court should waive the giving of security required under Super. Ct. Civ. R. 65 (d). Respectfully submitted, Alysia Robben, D.C. Bar # Sarah Bardos, L.S. #12475 Edward Allen, D.C. Bar # University of the District of Columbia David A. Clarke School of Law 4200 Connecticut Ave. NW Building 38, 2nd Fl. Washington, DC (202) (202) (Fax) Counsel for Plaintiffs 11
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