*1 MANAGEMENT, MULTI-FAMILY
INC., Appellant/Cross-Appellee, HANCOCK, Appellee/Cross-
Robert
Appellant. 93-CV-346,
Nos. 93-CV-383.
District Appeals. Columbia Court of
Argued June 1994.
Decided Aug. *2 FERREN, STEADMAN, and
Before FARRELL, Judges. Associate Judgment Per Curiam. dissenting concurring part in
Opinion and p. FERREN at part by Judge in Associate 1211. Judge
Separate opinion Associate p. at 1224. STEADMAN Judge Separate opinion Associate p. 1225. FARRELL PER CURIAM: I., II., of and III.B. Pursuant to Parts FERREN, joined in this opinion Judge of STEADMAN, by Judge the order regard insofar as orders appealed from is reversed of by plaintiff Department payment Development. Pursuant Housing and Urban STEADMAN, joined Judge opinion of FARRELL, the case regard by in consis- proceedings for further is remanded tent therewith.
FERREN, concurring in Judge, Associate dissenting part: in part and landlord, began Multi- This when the case Inc., Family Management sued the Bethesda, Schuman, MD, for Sheldon P. Hancock, possession for of Hancock’s Robert appellant. pay apartment on failure to rent. based protective requir- entered a order trial court Wanger, Attorney, Supervising A. David his the court pay Hancock to rent into Delaney, with whom Michael A. Law Student “during pendency of registry month each Counsel, Hay, Di- and Aim Marie Executive filed an answer and this case.” Hancock Court, rector, D.C. Law Students Wash- counterclaim, alleging housing code violations DC, brief, ington, appellee. on the for were areas apartment and common were Attorney judge The trial found there Hunger, building. Frank W. Assistant accordingly ordered rent General, Holder, Jr., and H. code violations Eric United States Housing Assis- Pursuant Attorney, Jay Singer and Jef- abatements. and Michael (HAP) Staff, contract1 between Clair, Attorneys, Payments frey Appellate Civil tance Housing Department of Division, Department Jus- the United States United States (HUD) and the Development DC, tice, Washington, a brief and Urban submitted however, paid the landlord, HUD in effect curiae. as amicus United States contract, Multi-Family ef- this HAP contract agrees entered into standard Under this pursuant the Section subsidy fective October the landlord order a tenant program, enact- give greater opportunity 8 low assistance income lower-income families Community decent, safe, Devel- sanitary housing. and tenant ed and A 93-383, 88 Stat. 633. pay, opment Pub.L. Act assigned a amount of rent to is thus certain scattered sections 8 is codified in percentage income. The Section on a of his or her based 31, 42, 5, 12, 20, the United apartment Titles is then ascer- rental value fair particular issue in statute at Code. The pays between this States the difference tained (1976). paid is 42 U.S.C. 1437f this case the tenant. value bulk apartment private apart- rentals this awardable full to the tenant recognition market, open landlord received. In been this dual had rented on the payment regime, subsidy program.3 the trial court divided the not under rent abatements between the tenant and *3 Focusing jurisdictional a first on threshold HUD, apportioning percentage each to the issue, opinion I in the conclude that follows representing portion the of the each had rent indispensable party. that HUD is not an paid for the unit. The court then ordered Next, appear it would least to this —at pay respective the landlord to these amounts judge that, party, a because HUD was not — HUD, though the tenant and even authority the trial court had no to award party litigation. was never a to the Both (the portion HUD a of the abatements total parties now appeal.2 unchallenged). amount of which is But even
Hancock,
tenant,
right
authority,
the
claims the
if the court had such
the court
abatements,
100% of the
on two alternative
should not have made that award because it
First,
grounds:
beneficiary
of
legal
the
a lease
is not at all clear that
had a
claim
provides
that
the tenant with a substantial
any portion
of the rent
Fi-
abatements.
bargain i.e.,
apartment
a
his
landlord,
$560/month
for
nally,
as between tenant and
con-
—
$168/month rental —the tenant is entitled to
persua-
clude that the terms of the lease and
bargain by
from
receiving
benefit
that
rent
sive
awarding
case law favor
the tenant 100%
apartment’s
abatements
on
full
based
the
of the abatements attributable to the deterio-
($560)
value,
on
rental
not
lesser
the
value
apartment,
rated condition of his
rather than
($168)
actually paid.
he
rent
See Cruz
leaving
portion
the
of
with
landlord the
the
Wideman,
Management
Co.
Mass.
abatement funds attributable to
sub-
HUD’s
(1994). Second,
supra 4. note particular Given HUD’s role this obligates relationship The HAP contract the landlord landlord-tenant under its HAP operate landlord, to “maintain and question the contract units contract with the the first decent, (or, provide and related facilities so as to is accurately, whether HUD more the States) sanitary housing safe and by defined an indispensable party United is un- provisions 5. These Agreement, including right lease are: occupy the the unit.... 3. ... The Tenant understands that this added.) (Emphasis The italicized clause de- (unsubsi- monthly rent is than less the market subsidy arrangement scribes in this case. dized) rent due on this unit. lower rent is Although initially the HAP contract was not mortgage available either because the on this record, Multi-Family of the trial submitted project [HUD] subsidized because and/or post-trial it to the trial asked court when monthly payments HUD makes to the Landlord memoranda. on the Tenant.... behalf of 17(a). ... The Tenant understands that assis- obligates 7. The HAP contract further the land- may tance made available on behalf be his/her "pay monthly family lord to to the the amount of any following hap- if terminated events Family the Net Net Contribution when the Fami- pen. Termination of assistance means that the words, ly negative.” Contribution other may Landlord make the assistance available to some circumstances the HUD-financed landlord another Tenant and the will Tenant's rent be actually have to make cash contributions to recomputed.... a tenant whose financial circumstances are so 17(c). poor require ... Termination of assistance subsidy beyond fully shall subsi- rights apartment. affect the Tenant’s other under this dized 19(a) meaning Rule juris- within Super.Ct.Civ.R. threshold interest der —a note, first, Multi-Family 19(a)(2),9 HUD’s absence for the raised we dictional issue “impair impede,” will not or appeal:8 from lawsuit first time on 19(a)(2)(i), ability to Super.Ct.Civ.R. 19(a) provides: Rule can its enforce protect its interest. (a) A joined be Persons to feasible. if landlord under rights own subject process person who is to service contract, note and no HAP deprive joinder will not and whose case, not a to which HUD is judgment in this subject jurisdiction mat- Court over preclusive those effect on party, can have joined as a party shall ter action Jen- rights. generally Smith v. contract (1) in person’s in the absence action (D.C.1989); kins, Rhema A.2d among complete cannot be accorded relief Zoning Adjust- Christian Ctr. Board of already parties, person those or (D.C.1986); ment, A.2d 192-93 subject relating claims interest Bros., 439 A.2d v. Snider Henderson dispo- action is so that the situated (en banc); (D.C.1981) Restatement, 484-85 person’s sition of the action absence Judgments 34(3) (1982). (Second), (i) impair practical as a matter ability protect impede person’s is, finally, Su under There (ii) persons interest or leave 19(a)(2)(ii) impact per.Ct.Civ.R. already subject to a substantial risk from HUD’s absence landlord:10 whether double, incurring multiple, or otherwise “subject Multi-Family the lawsuit will leave obligations by reason of the inconsistent double, incurring mul risk of substantial If person claimed interest. tiple, obligations inconsistent or otherwise *6 joined, so the Court shall order that been claimed interest.” [HUD’s] reason of person person party. made a If the Focusing potentially on “no.” first answer is join plaintiff should as a but refuses to do id., points obligations,” amicus “inconsistent so, defendant, person may be made a brief, agree, “the D.C. out in and we that its or, case, involuntary plain- proper a imposed on the Housing standards Code tiff.... hous landlord do not conflict with federal Laster, 393, Flack 417 A.2d 399-400 See v. imposed by proper ing HUD on standards (D.C.1980) (noting indispensable party that if receiving project-based Section 8 assis ties 19(a), joined cannot be under Rule action (hous § Compare 24 C.F.R. 886.113 tance.” dismissed). must be standards) ing with 14 DCMR quality code). such (housing §§ Absent joinder one claims that is re- 400.1-899.1 No therefore, conflict, be sub the landlord will quired “complete relief’ as between afford law; in this ject local federal and Super.Ct.Civ.R. tenant. to both and 19(a)(1). preemption. is no See begins with context there federal The Rule 19 issue Su- Co., 19(a)(2) 389- N.E.2d at initially Management 633 concerns Cruz per.Ct.Civ.R. Scott, 90; 137 Newark v. certainly Auth. which “an interest relat- has 110, 195, id., (App.Div. action,” A.2d 198 subject namely N.J.Super. 348 ing to the 1975). the tenant and HUD This means that potential landlord for an claim separately to enforce District litigate can financial contribution abatement of HUD’s standards, housing re Putting apartment. aside Columbia and for the tenant’s Co., Management 633 actually spectively. See Cruz question whether HUD “claims” (2d § at ed. having 1393 773 without court cannot resolve a case 8.A Procedure Practice Accordingly, jurisdic jurisdiction. questions 1990). present purposes We assume for appeal. on for the time 19(a) tion be raised first jurisdictional nature. is Rule violation Columbia, Hosp. Capitol v. See Hill District of 793, (D.C.1991); v. Board A.2d 800 Mannan 600 posi- and amicus takes 9. HUD is not 329, (D.C.1989); Medicine, A.2d n. 11 558 333 of Smith District "indispensable” within HUD not tion that Dep’t Employ Columbia of (D.C.1985); 19(a). meaning of Rule Servs., 1340, A.2d (D.C.1975); Dapolito, 331 A.2d Estate of Paton v. District of comes the tenant’s interest Columbia, 10. No one contends 180 A.2d 19(a)(2)(ii). (D.C.1962); within Rule C. & A. 5A Wright Miller, Federal But, N.E.2d at signifi- out, 389-90. of critical points sovereign immunity amicus here, cance subject dual lawsuits would not might such an if inhibit effort HUD were to the landlord to obligations inconsistent joinder. note, important resist It is how- decent, safe, provide sanitary housing; ever, Multi-Family only is the —which both the tenant and HUD would cite essen- party claiming appeal that HUD is an tially requirements. the same code indispensable party sought join —never id.; compare § 24 C.F.R. 886.113 Therefore, with HUD at trial. but for the untest- §§ 14 DCMR 400.1-899.1. possibility might ed that HUD have resisted joinder, Multi-Family has no excuse for rais- The next concern is whether the landlord recovery the double issue for the first confronts a incurring “substantial risk of appeal. arguably that, time on It follows obligations” double ... to the tenant and to insofar as the landlord’s interest issue HUD for code violations. Su- 19(a)(2)(ii), under Rule that interest has been 19(a)(2)(ii) per.Ct.Civ.R. added). (emphasis Supreme waived. As the Court noted in major significance Of is the fact that HUD elaborating on Federal Rule 19: cannot seek a rent pro- abatement from the may properly [T]he defendant wish to ject owner-landlord giving without first multiple litigation, avoid of, inconsistent re- cure, opportunity owner notice and an lief, responsibility liability or sole for a he alleged code violations. See 24 C.F.R. trial, 886.123(a) [or she] shares with another. (d); § contract, & HAP supra After however, 26b; Co., note Management Cruz defendant failed interest, quite proper assert this it is N.E.2d at 389. Both in a memorandum to consider it the trial court post-argument its brief foreclosed. court, note Provident Tradesmens Bank & Trust v.Co. represented that HUD has never notified the Patterson, 102, 110, 390 U.S. 88 S.Ct. action, landlord about the need for corrective 738,19 added). (emphasis L.Ed.2d 936 (as and neither the landlord nor HUD ami- effectively argue The landlord cannot ) otherwise, cus has despite unques- claimed 19(a)(2)(ii) against a Rule waiver on the opportunity Furthermore, tioned to do so. ground that there was no reason to believe that, date, no one claims at this late HUD court would order 100% abatements *7 piggyback could Multi-Family on the notice tenant, paid to the and thus that there was has received from litiga- the tenant in this try implead no reason to HUD avoid especially because the tenant’s notice tion — possibility leading of a suit later dou- in the form of a defense and in counterclaim recovery by ble the tenant and HUD— — the eviction give action did not the landlord of the abatements allocable to HUD’s subsi- opportunity an to cure. See 24 C.F.R. dy. below, As elaborated the landlord —as 886.123(d). expressly ruling Without on Multi-Family every itself contends —had rea- (who rights party) is not under son might to be concerned that the trial court contract, nonetheless, I say, can from this properly award a of the abate- analysis Multi-Family, “notice” that the land- HUD, non-party litigation. ments to here, lord does not face a “substantial” risk Consequently, the landlord also had reason obligation a “double” for rent abatements that, to know as tenant and land- between HUD, payable to the tenant and to if even we lord, picture, with HUD out of the there were to rule that is entitled to arguments awarding were sound for 100% of 100% of the abatements the trial court or- the abatements to the rather than ($4,218.35). dered note 4. permitting the landlord to retain all of having reach this conclusion without payments to HUD’s in to unsafe —allocable rely proposition on the that unsanitary premises unquestionably the landlord or —that implead during could the abatement would be refundable as rent abatements to phase proceeding of the eviction worried the tenant if the were subsidized recovery. recognize, about a double party.11 We a third (without on) agree relying pursuing Multi-Family 11. We also tend to or other Section 8 ’ country amicus assertion that the likelihood of HUD's landlord from around the for
1217
essentially
sum,
government’s
equitable injunc-
neither HUD’s nor
landlord’s
—
way
included
adversely
powers
in
under the statute also
will be
affected
interests
tive—
non-party
un-
ten-
indispensable
authority
HUD an
that makes
to seek rebates
19(a).
rele-
had
Having
Rule
considered all
landlord
der
ants of
rents the
excessive
Rule, I
majority
conclude
au-
vant elements
such
charged
The
found
them.
properly
forward without
equity
this action
went
thority in the trial court’s inherent
States).
(the
United
jurisdiction
under
autho-
a statute
exercised
injunction,
temporary
rizing “a
permanent
”
Compensation
III. Court Ordered
order,
Id. at
or other order.
restraining
Non-Party
(Hud)
397,
found
The dissenters
66
at 1089.
S.Ct.
remedy, given
statuto-
another
no restitution
A.
authorizing
them-
ry provision
the tenants
initially may appear
The
court’s order
rebates,
thirty days
seek
selves—within
—to
allocating
pay-
in
rent abatement
failing
government
seek such
which the
could
HUD, respective-
to the tenant and to
ments
403,
Treasury.
at
66
Id.
rebates for the U.S.
ly, according
percentage
total
also
States
S.Ct.
1091-92. See
United
landlord
paid
amount each
for the
524,
Moore,
L.Ed.
340 U.S.
S.Ct.
is, however,
apartment.
tenant’s
There
(citing
ruling
Porter
that United
question
judge
least as this
sees
serious
—at
authority under “other order”
States had
authority
the trial court had
it—whether
provision
and Rent Act
pay anything
order
landlord to
amended,
of overceil-
to order restitution
beyond
scope
not because
order was
tenants).
ing rentals to
but,
parties
requested12
of relief
had
fundamentally,
par-
because HUD was not a
above,
HAP
has an
As
contract
noted
litigation.
ty to the
under
provision
perhaps,
“other
relief’
Moore, could
as the basis
Porter and
serve
authority
seminal
on this
States)
(the
for HUD
United
to seek
Supreme
Court’s decision
Porter v.
tenants,
such as Hancock
Co.,
abatements for
Holding
328 U.S.
Warner
S.Ct.
here,
(1946).
federally subsi-
case,
live in substandard
L.Ed.
In that
who
HAP con-
housing.
dized
But HUD and its
of Price
Administrator
the Office
Adminis-
Multi-Family
not at issue
tract with
are
compliance
tration filed
action to enforce
case;
only
law
with a common
Emergency
Price Control Act of
we deal
specifically
defense and counterclaim
to order restitution of rents
rent abatement
action.
third
a local
and tenant eviction
collected
landlord
providing
permissible
The There
no relevant statute
excess
máximums.
Thus,
*8
question be-
dispute
centered
rent abatements.13
on the
whether
12. The trial
monetary
speculative.
resolution
cert.
v.
the more
ties should
U.S.
Tobacco Workers Int’l
rule
action
case,
code violations
L.Ed.2d
"court believes that this is
56.62,
Lorillard
defense of
[6]
that "a
dismissed,
1007,
the tenants
has
invoking
James
655
at
original
award to HUD
general
not be
92 S.Ct.
1208
Corp.,
court, acting
remedy
(1971)
It
summary
William Moore,
local,
404 U.S.
appears
(2d
themselves,
issue,” contrary
forced
444 F.2d
general
proposition
and cert.
particular
651,
ed.
desired
Union v.
eviction
1969).
upon
comes whether the trial court has Id. at 66 inherent S.Ct. at equitable authority ease, contrast, pay- present to allocate and order the rent abatement ment of equitable adjunct some of the rent abatements order is not “an to an non-party, simply decree,” 399, a “court injunction because the id. at 66 S.Ct. at equitable 1089; believes that this is a fair and grew the abatements out of the land resolution of issue.” note 12. legal unpaid rent lord’s action for and the corresponding legal tenant’s action to recover appear The court would to have no such overpayments deposited of rent in the court authority. justified Porter the court-ordered registry or held the landlord.14 Nor is eq- refunds in because “inherent provision authorizing there a rent abate- Court,” powers uitable of the District way “enforc[ing] compliance,” ments as a 398, 1089, especially U.S. at 66 S.Ct. at and 1090, statute; 400, id. at S.Ct. public because “the interest involved in [was] remedy. the abatements are a common law But, proceeding of this nature.” Id. Accordingly, statutory trial court had no significance, Supreme critical Court tied source, thus, seem, authority, no equitable jurisdiction to the statute: ordering Multi-Family rent abate- An recovery order for the and restitution Lo ments to HUD. See State v. Jonathan illegal proper rents be considered a Inc., (1984) 63, gan, 301 Md. 482 A.2d “other order” on either of two theories: (statute authorizing bring state to civil action (1) may equita- It be considered as an enjoin antitrust violations did not autho adjunct injunction ble to an decree.... enjoined price equity rize court of to order
[*]
[*]
[*]
[*]
[*]
[*]
ution to retail
fixer to
pay damages
purchasers);15
to state for redistrib
FSC Sec.
Corp.
(Miss.1994) (en
McCormack,
It
v.
be considered as an order
1219 of, give to the landlord notice Mississippi party).16 not a HUD’s failure because state was cure, alleged housing opportunity and an to can I therefore do not believe this court violations, by the HAP con- required code statute, say, the authorizing absent an that 24 regulations. tract and equitable power court inherent to had 886.123(d). may be for § It difficult C.F.R. damages payable relief in the form order of cure, about, give to HUD learn and notice HUD, non-party. direct relation- code without some violations B. hand, ship the other the tenant. On with must the HAP contract thus HUD wrote court, if the trial as a court of Even example, could live its terms. for jurisdiction, general equitable authority had notify required have the owner-landlord to portion of to order a the rent abatements alleged violations were HUD whenever code paid non-party, important rea there are way for thereby created a why have so. could have sons the court should not done suggested risk place, party police In the first neither the HAP contract without HUD to proper recipi trial court that HUD the was losing important rights. of supra of note 12. While this ent relief. See significance, it
fact is not of utmost at least entirely Finally, it is clear under not caution; signals especial court should comprised matrix of the lease contractual effect, an ly becoming, careful before in advo 5, supra note premises, see party for in cate a third not involved 1, contract, HAP note that HUD lawsuit. right abatements Second, argues, for II., the tenant. The tenant in Part vis-a-vis as discussed above beneficiary party that he is a third apparently example, that not record indicates HUD is against HUD and monetary entitled to of the HAP contract between claim case, landlord for a rent abatement landlord.17 If that were because FSC, 1294, (3d Cir.1989) (third-party primarily 16. In the trial court had relied 889 F.2d 1299 71, stipulation substantively beneficiary had which of court-ordered Miss.R.Civ.P. similar Berger Super.Ct.Civ.R. standing ler, stipulation); v. Heck- to Fed.R-Civ.P. 71 and The to enforce 71. 1556, (2d Cir.1985) (non- provided Mississippi part: rule an 771 F.2d 1565-67 in "When regarding eligi- person original order is made in favor of a who consent decree is not Security Supplemental party bility action ... certain aliens for [or she] he enforce decree); process seek to enforce obedience to the order the same as if Income benefits could Dollar, 42-43, 38, U.S.App.D.C. party....” Supreme Sawyer 89 190 [or he were a v. she] 623, (1951) (even Secretary Mississippi authority though Court of no 627-28 could find F.2d action, court, party sponte, to district this rule for the trial sua turn a Commerce state, "solely non-party, party an order to return into a was directed to enforce for gained pos- sharing punitive damage against Secretary, who purpose had stock award"; statutory ac- named defendant after either common law or author- session of stock from FSC, initiated). ity required purpose. tion been 630 So.2d had Super.Ct.Civ.R. While 71 could be 989. Pierce, U.S.App.D.C. Compare imply a court Ashton v. read make award in (as (1983) by 232 non-party, only true F.2d 56 amended favor of a that will be (1983)) (in doing U.S.App.D.C. action jurisdictional 723 F.2d there is a so. All basis components challenging Lead- rely the cases found on Fed.R.Civ.P. I have Act, Poisoning 42 U.S.C. non-party Based Paint Prevention 71 concern situations which a who (1976), third-party §§ are judge’s tenants from a order is a third- 4801-4846 benefit Con (ten party beneficiary attempting of HUD Annual Contributions to enforce an order beneficiaries Holbrook, Furthermore, (ACC)) 643 F.2d statute. most of tract authorized contract pertain ants are intended beneficiaries these cases to consent decrees to simi- compo orders, Special money Allocations under contrast with the award in with landlords lar 1437f, See, spite of HUD’s present e.g., Line nent of Section case. Beckett Air Ass’n, 380, 386-89, only bene U.S.App.D.C. incidental contention that tenants are Pilots contracts) New and McNeill v. (although to such ficiaries F.2d 286-89 *10 Auth., (S.D.N.Y. decree, F.Supp. permitted City pilots 719 233 were York Hous. consent non-union union); 1989) (tenants party are beneficiaries against v. third to enforce decree Hook State of Arizona, 1012, housing Corrections, au against local in suit Dep’t (9th 972 F.2d HAP contracts Co., Cir.1992) Property (inmates No. thority) 415, v. Lincoln 500, entitled en- and Zakaria 1014-15 669, Cal.App.3d Cal.Rptr. 674 229 governing prison 185 force earlier consent decree White, (1986) (tenant certificates regulations); Hosp. of Section 8 Washington v. holders mail 1220 relinquished rights
would have
all
reg-
in the ment of
funds from the court
subsidy
istry,
funds to the tenant to enable him to
or from
own
the landlord’s
bank ac-
consequence,
count,
the rent. As a
HUD would
when the court allocates to HUD a
relinquished
subsidy
have
payment
with each
portion of
overpayments
for the sub-
any
any eventual lien —based on rent
premises.
standard
claim—
housing
abatements attributable
code vio
situation,
clarify
HUD’s failure to
present
lations. Because
tenant did not
therefore,
propri-
doubt on
casts further
court,
theory
this
prop
I
cannot
ety
asserting
behalf,
of the court’s
on HUD’s
erly resolve its merits here. See President &
sponte,
sua
equitable
lien on the escrowed
Georgetown College
George
Directors of
(as
rents in
registry
well
court’s
as
Diavatis,
1248,
town Univ. v.
470 A.2d
1251
account) in
purely legal
landlord’s bank
this
(D.C.1983)
Avirom,
(citing
v.
Miller
127
action,
14,
supra
see
note
between landlord
(1967)).18
U.S.App.D.C. 367,
Ashton.") Perry Housing Kenin, Fighting Auth. Charles Deborah Housing Crisis, ton, (4th Cir.1981) (relying 664 F.2d (citing Contemp. Dept, L. at 92 Wash.U.J.Ukb. & law, prior on "clear” case concluded that Development Housing and Urban Public tenants are not third Agency beneficiaries of ACC Handbook Administrative Practices For (Nov. §§ seq.) Washington under 1437 et and Smith v. 7420.F Section Existing Housing Program, Ltd., 2, 1979) 26-A). Heights Apartments, F.Supp. app.
1221
Payable
perceive
no sound basis
place,
In the first
IV.
Rent Abatements
liability
private landlord from
shielding
for
a
to
Tenant
Subsidized
have, in the
would
the landlord otherwise
down
the
This case therefore comes
to
tenancy,
pro-
when
absence
a subsidized
whether,
and
as between tenant
housing; as between
viding substandard
(1)
landlord,
to
the landlord shall be
ordered
tenant,
certainly fairer to
“it is
landlord and
pay the tenant 100% of the abatements which
to
fully
it is
compensate
tenant]
than
[the
(and
appropriate
found
are not
the court
landlord],
act dili-
which failed to
[the
allow
here)
questioned
based on the reduced value
landlord, to re-
responsibly as a
gently and
(measured
tenancy
by
to its
of the
reference
tenant’s]
made
payments
[the
tain rent
on
monthly
value)
thereby
fair market
total
—
Co.,
Management
633 N.E.2d
behalf.” Cruz
crediting the
the amounts the
tenant with
tenant
(federally
8
at 388
subsidized Section
allocable,
to
respectively,
the ten-
court found
on full rent received
awarded 50% abatement
HUD;
to
to
ant and
or instead
ordered
just
by
tenant
landlord from
and
pay
only
tenant
the
the court
the
abatements
tenant).
portion paid by
on
solely
to
allocable
the
based
found
Second,
the
bargained
the tenant
with
monthly
paid thereby allow-
the
rentals he —
apart-
a lease for an
landlord and executed
money
ing
keep
repre-
landlord
the
the
to
reflecting
of the
the value
expressly
senting
the abatements the
court had
subsidy com-
tenant’s
and HUD’s
rentals
paid to
ordered
HUD.
By signing
5.
bined.
note
See
lease,
recognized
tenant’s
landlord
The tenant claims 100%
rent abate-
to,
alternative,
for,
though
eligibility
right
thus his
proffering
$560/
ments
two
month-,
$168/month-,
similar,
quality apart-
at the
theories summarized
outset of
that,
“benefit-of-the-bargain”
opinion:
ment.
follows
between tenant
this
It
landlord, compensation for landlord-caused
party beneficiary.”
“third
For
reasons
follow,
bargained-for value should
theory
the first
for
diminution in the
works
the tenant
otherwise,
tenant;
that,
payable in full to the
the landlord.
I conclude
be
vis-a-vis
permitted
deliver
parties,
would be
between the
entitled to
abatements,
receiving
without
a corre-
promised
in-
less than
100%
court-ordered
sponding
in rent.
Man-
cluding
paid
reduction
See Cruz
ordered
Co.,
agement
N.E.2d at 388.20
HUD.
10%) would, theoretically,
taken off
important
have to be
It is
understand that the alloca-
top,
hypothetical $500
case the
housing,
in which
rent
in Section 8
tion of
abatements
$450, leaving the
apartment
valued at
parties tenant,
would be
potential
where there are three
—
$100
landlord,
pay
or her
without benefit
tenant to
his
private
significantly
HUD—differs
per-
applied the
The courts therefore
abatement.
centage
analysis when
from rent abatement
traditional
to each
below-market
abatement
tenants’
housing
public
and the
are
is at issue
units
rent, resulting,
hypothetical
the above
situa-
government-landlord.
In the latter
owned
tion,
$100
$90.
reduction from
rent
10%
situation,
public housing authority, typi-
the local
“
‘It would frustrate
The courts concluded:
cally
funding,
posi-
is in a
subsidized
housing
needy] to
objective
decent
[of
government-owned
tion to build and rent
hous-
higher,
theoretical
allow a "rebate”
ing
rents
fit the
units
below-market
requiring the tenant
result in
rent which would
budgets
persons.
of low-income
two cases
"
housing.'
original
to
Melvin,
standard
public housing
the courts
that such
where
found
at 1294
at
507 N.E.2d
107 Ill.Dec.
housing
require-
code
units failed meet local
ments,
Scott,
199).
(quoting
A.2d at
taken
the courts ordered rent abatements
rents,
against the
market
rather
tenants' below
help
public
inform
The
model does not
against higher,
rent levels at
than
theoretical
case, except to
this Section 8
our decision in
value
hous-
which free-market forces would
public policy that rent abate-
underscore
per-unit
(reflecting
government’s
units
Even if
ments
to benefit
tenant.
are
rentals).
plus the
imputed
tenants’
subsidies
courts were to have
Melvin and Scott
Melvin,
Ill.App.3d
($500)
E. St. Louis v.
Auth.
units
values
free market rental
920, 925,
complicated
clearly,
107 Ill.Dec.
N.E.2d
a most
exercise—and
issue—
(1987); Scott,
($50),
govem-
at 199.
courts
348 A.2d
awarded a 10%
$40,
that,
monthly
even
free-market
were concerned
if a
entitled
ment-as-subsidizer
govemment-as-landlord
entitled
public housing
would be
imputed
were
unit
if the
rent level
case,
$100),
howev-
(say
nothing.
In a Section
(say $500
the abatement
instead of
*12
The fact that HUD has contributed
party
a ma
ant was a
beneficiary
third
of the HAP
jor portion
may
of the rent
entitle
if it
relinquished
contract to whom HUD had
all
it,
wants to seek
to recover from the tenant
right to the abatements.
portion
of the abatements attributable to
Finally,
there is
caveat. The facts here
subsidies,
HUD
unjust
based on an
enrich
opinion
limit this
to a situation where the
argument.
Under the benefit-of-the-
value,
abatement based on the fair market
bargain theory, therefore,
permits
which
reflecting
subsidy
the HUD
and tenant rent
tenant to recover from the landlord 100% of
combined,
payable
will not exceed the rent
abatements,
equitable
have an
example,
the tenant. For
a 25% abate-
lien on a
of the abatements. But
ment,
4,
supra
see
monthly
note
based on the
way
there is no
that the landlord could be
market
rent would be
$560
When
$140.
said to have
equity
retained such an
vis-a-vis
applied
rent,
monthly
to the tenant’s
$168
the tenant.
generally
Javins v. First
abatement would leave
in tenant rent
$28
Realty Corp.,
Nat’l
U.S.App.D.C.
If,
hand,
due.
on the other
there were a 50%
denied,
F.2d
cert.
400 U.S.
abatement, the
yield
same market rent would
(1970).
S.Ct.
STEADMAN,
Judge:
Associate
the absentee.
I, II,
Judge
IIIB
Ferren
Parts
advisory committee’s note.
Fed.R.Civ.P. 19
convincingly
opinion points
quite
of his
out
Limmer,
In Fernandes v.
1. I
Court,
general jurisdiction, has
a trial court of
Id. government to the repayment court order why a trial court should I no reason even the abated rent rata share of pro its similarly to invite a have the discretion landlord and not a though it is If Rule 24. the nonparty to intervene under answers, Judge Ferren litigation? tenant invitation, then, inas nonparty declines the “no,” and in categorically, more or less Fernandes, may as- I think the trial court in the reject disposition would that event nonparty protect its sume that the intends Steadman, Judge of this case. circumstances interests, pro- any, in manner and if another judge me that the trial agreeing with while dispose of the case as one between ceed to monetary payment authority to order has the Here, that would mean alone. the case for nonparty, remand to a to the ten- payment of the entire rebate may or “legal that obstacles” resolution of ant, in Judge Ferren sets forth his as being from government prevent IV. judg- affirm the money. I would repaid its suggested approach that such an It be judge trial outright, I believe the ment practice in to the involvement will lead relief authority to award the both had every garden-variety landlord-ten- discretion not abuse her she did and did project. dispute in a HUD-subsidized ant judgment there be a doing In order that so. case. As Ferren This need not be the next, happens concerning what of this court out, fully position in a points HUD is however, join Judge reluctantly Steadman’s I right propor- protect its establish for a remand. call through appropriate contract tional rebate protection regulatory provisions and with I. right supremacy clause. With established, Judge Far- clearly agree federal received in this case The tenant trial power of the rell 8 hous- Section under HUD’s rent assistance pay- such justify an order that court would in the The assistance ing program. landlord. be made ment pro- a subsidy under project-based form of a Loan-Manage- as the Section gram known however, I posture, believe present In finan- Program, reserved ment Set Aside appellate inappropriate for quite it financing housing built with cially troubled attempt to re- instance to court in the first Housing Administra- by the Federal insured rights in nonparty’s question of solve the loan on their projects default tion. If such present- litigation. should first be Those "involuntary plaintiff." Fed.R.Civ.P. plaintiff or as a potential who refuses 3. Under rule 19(a). voluntarily joined a defendant join can be obligations, mortgage FHA centage insurance reduction value attributable to the programs exposed liability. will be HUD housing code violations to tenant’s share will contrast, therefore make available Section 8 rental of the rent. The asserted residing assistance for tenants that the amount of him due projects government where the federal by applying per- should determined financially at if the on a risk owner defaults centage reduction in value the entire rent mortgage. This assistance serves the twin premises. for the goals improving project’s economic judge remedy, The crafted different condition, thereby reducing the risk de- effectively pro one made rata alloca- government mortgages, fault on insured tion of the net dollar amount of rent abate- decent, safe, improving availability the tenant and HUD. The between sanitary housing for low income tenants. See agreed judge that the tenant would be un- (1994). 24 C.F.R. 886.101 if justly enriched his rent abatement were ease, In this the tenant’s with the lease percentage applying calculated reduc- required pay from apartment’s tion in value to the entire per month as his rent. HUD’s $151 $168 premises. for the rent due On the other required contract with it to the landlord hand, the landlord would receive windfall the difference between that amount and the allowed to the full were retain fair property. market value subsidy having provided rental without habit- monthly payments ranged to the landlord housing. judge able therefore ordered *16 from $272 $409. be abated to the tenant and to both sought The landlord to evict though party was not even nonpayment of the tenant’s share of the rent requested the case and had not such relief. brought suit The tenant. judge The thus ordered tenant’s rental however, judge, found that the landlord (i.e., rent) obligation the tenant’s share of the kept apartment compliance had not in by equal percent- an amount reduced Code, with the defi D.C. that these by age housing in reduction value caused warranty an implied ciencies breached And ordered the code violations. she land- lease, habitability every into read residential equivalent percent- lord to return to an Corp., Realty see Javins v. First Nat’l 138 age of the federal rental subsidies received 369, 1071, U.S.App.D.C. 428 cert. F.2d de period. for the same time nied, 925, 186, 400 91 L.Ed.2d U.S. S.Ct. 27 (1970), 185 and that the tenant was therefore II. (i.e., entitled to a reduction rent abatement landlord) in the amount of rent due to the Ferren, I have no Unlike doubt that remedy for the landlord’s breach. judge authority the trial her within calculating judge The turned to then remedy though order this even HUD was not First, amount of she the rent be abated. principles to the action. Settled compared apartment as war- the value equity jurisprudence that a court teach ranted in a habitable condition to the “actual” non-parties fashion remedies that benefit apartment value of the in its substandard equi- that would the interests of where serve Second, per- condition. she calculated ty public rights. important and vindicate centage in value caused reduction Co., 395, Holding v. Warner 328 U.S. Porter housing Finally, code violations. she used 1086, (1946), 1332 66 90 L.Ed. is an S.Ct. percentage this calcu- reduction value to govern- illustration. In Porter the federal late the of rent dollar amount that should sought against private enforce land- abated. regulations lords rent control ad- war-time step the rent calcu- the federal Office of This last ministered Price generated government, lation The after es- the issues that divide Administration. tablishing Emergency court. violations of The landlord asserted that the total Price (the Act), sought amount tenant Act of of rent abatement due the Control 1942 by applying per- compelling should landlord to be determined order defendant
1227
housing
require that
code
of Columbia’s
The Su-
trict
to the tenants.
restitution
make
habitability be
warranty of
a non-waivable
could be
held that restitution
preme Court
housing in
all residential
implied in leases for
though
tenants were
ordered even
holding, the court was
In so
the District.
reasoned
the suit. The Court
parties to
[well-docu-
profoundly
“[t]he
influenced
sitting
equity
“mould
a trial court
bargaining power be-
inequality
particu- mented]
to the necessities
each decree
landlord and tenant”:
competing
tween
“adjust
and reconcile
lar case”
justice
all
full
... so as to accord
leverage
claims
to en-
very little
have
Tenants
398,
Id. at
66
parties in interest.”
housing.
the real
Various
for better
force demands
(internal
cita-
quotations and
at 1089
S.Ct.
rental
competition
impediments to
omitted).
tions
market,
and class
such as racial
leas-
form
and standardized
discrimination
jurisdiction
district court’s
in a
es,
place tenants
mean that landlords
express
rested on the
stat-
invoked in Porter
The increas-
leave it situation.
take
enjoin
authority
“to
utory
the Act conferred
shortage
adequate
ingly
severe
illegal by the Act
practices made
acts and
bargaining
landlord’s
increases the
further
the Act.” Id.
compliance with
and to enforce
for maintain-
the need
power and escalates
397-98,
As the statute
66
at 1089.
at
S.Ct.
existing stock.
improving the
otherwise, “all the inherent
provide
did
(footnotes
377,
[were]
District Court
omit-
equitable powers of the
F.2d at 1079
Id. at
ted).
proper
complete exer-
available for the
398,
jurisdiction,”
id. at
S.Ct.
cise of that
the lead
had informed
Identical concerns
1089,
ability
relief to
including the
to order
decision, Henning sen v.
liability
ing products
existence,
course,
indeed
non-party.
Of
Inc.,
358,
Motors,
N.J.
Bloomfield
requirement,
statutory
of a
basis for the
(1960),
69,
the Javins
to which
A.2d
powers
inherent
court’s exercise
its
analogy.
by way of
repeatedly
looked
unremarkable,
federal courts
Porter is
since
n.
378 n.
U.S.App.D.C. at 374
jurisdiction marked out
“are courts of limited
1080 n. 49.
*17
at 1076 n.
428 F.2d
Howard, 427
by Congress.” Aldinger v.
U.S.
dis
rejecting
manufacturer’s
an automobile
2413, 2420,
1, 16,
justice
all the real
161
that are available.”
equitable doctrines
Porter,
398,
at 1089.
at
66 S.Ct.
328 U.S.
For,
tradition
“[t]he
whereas
A.2d at 85-86.
bargaining of
of free
contract is the result
authority
equity
in
to “do al
of courts
play
id.,
brought together by the
justice,”
parties who are
than truncated
complete rather
market,
other on
who meet each
evolving
in the
of the
more visible than
is nowhere
in
equality,”
approximate economic
footing of
and tenant
judicial treatment of the landlord
life the standard
Javins,
“present-day commercial
estab-
relationship.
supra, which
appeared” and “is
ized mass contract
of rent
basis for abatement
lished the
strong
by enterprises with
violations,
equi-
primarily
used
suffused with
housing code
is
161
position.”
Id.
bargaining power and
held that both
considerations.
Javins
table
Henningsen,
Like
Javins
A.2d at 86.2
principles and the Dis-
evolving common law
effect,
ll~921(a) (1995).
of manufacturer.
unilateral act
is the
§
1. See D.C.Code
industry is
automobile
of the
The status
say:
court went on
2. The
number and
unique.
are few in
Manufacturers
of
bargaining position. In the matter
strong in
judiciary
to administer the
The task of
products,
...
of their
on the sale
On
warranties
of the law.
spirit as well as the letter
[fjrom
purchaser,
one,
standpoint
there
present
of that
as the
issues such
length negotiating on the sub-
ordinary
be no arms
can
protect the
man
is to
burden
what,
ject.
rights through
important
of
the loss
rectify
481,3
an effort to
through
strong
this imbalance
an F.2d at
but
found
countervail-
application of
principles reflecting
contract
Consequently,
considerations as well.4
“generally prevailing
honesty
standards of
having “little doubt that
the Landlord and
Javins,
dealing.”
and fair
U.S.App.D.C.
Tenant Branch of the
Court of
[then]
General
56,
at
n.
Two before the federal court tage during period litigation,” of had made similar in holding observations prepayment held “the of that retaliation rent re- could be asserted the ten- quirement ant protecting as a defense to the landlord’s suit as a method of possession: employed be limited fash- 109, ion.” Id. at 430 F.2d at (emphasis In trying Congress to effect of the will added). equity responsi- as a court we have the bility to consider the social context These decisions are testament to the au-
which
operational
our decisions will have
thority
Superior
judges,
espe-
Court
most
light
appalling
effect.
condition
cially perhaps in landlord and tenant mat-
shortage
in Washington,
ters,
employ
adjust
equity
“to
and recon-
expense moving,
inequality
competing
cile
claims and ...
to accord full
bargaining power between tenant and
justice
to ...
the real
interest.”
landlord, and
social
and economic im-
Porter,
398,
4. Given abatement, adopts as the soundest measure advantage "landlord has lost the the [former] preserve parties' “origi- whose "effect” is to summary proceeding possession] [for and is in- bargain possible." exposed prolonged period nal in so far as litigation stead Restatement Property U.S.App.D.C. reporter's without rental income.” 139 at 11.1 cmt. c & (Second) 108, 109, 430 F.2d at note 4. so, laying since each was Moreover, any incentive to do just public policy consider- rent, of the abated “implied at claim to HUD’s share Javins’ ations were central “should the trial court warranty, fashioning suggestion of an abate- The so the law” becoming, in ef- contemplated before remedy especially in a careful ment situation be not in- fect, third government as- advocate for a Javins where the federal an 1219; ante lawsuit,” also major obligation of the rental in the sumes volved Steadman), purposes (opinion Judge into account the ante should take at 1224 interests of the as a “third subsidy program unique and the status of HUD ignores the as ami- government public interests taxpayers. important The party” federal join- cus argues that routine persuasively this remedial issue. affected disputes in local landlord-tenant der of HUD Second, that HUD Judge Ferren states discharge of its seriously impair the monetary “apparently is not entitled functions, statutory given the vast nationwide abate- landlord for a rate claim provides households with number of give failure to because of HUD’s ment Yet, annually. if HUD’s rental assistance of, opportunity to notice and an parly meant that the entire rent absence as violations, cure, as re- alleged code tenant, were to be remitted to the HAP contract and quired by the surely granting HUD would hesitate before regulations.” Ante (emphasis at 1219 add- perceives it assistance cases where ed). concededly colleagues, My while taxpayer money will unacceptable risk that reading the HAP contract of this certain ultimately dispensed in unintended enough to regulations, are confident fashion. reversing primary it reason cite view, therefore, my judge’s trial equitable authori- judge’s exercise of remedy proper power of her was exercise seriously the stand- ty But I here. fair to the real to structure relief my colleagues ing of the whom both parties in interest and would best serve the recipient entire rent re- as the favor policies underlying the federal assis- share, to if not recover its bate HUD program. tance noncomplianee as- challenge of notice to the contractual duties sumed III. recoup- HUD could seek rent landlord before My colleagues particular find obstacles to proceed- or court in an administrative judge’s in this return of rent against the landlord. More- brought decisive; Judge case. For Ferren these are over, practically speaking, HUD was never they a re- Steadman necessitate notify the landlord of deficien- position mand so that HUD “make its case no evidence that the tenant cies since there is Ante at 1224. obstacles seem to court.” complained to HUD of the substandard ever which, legal me at best matters as to we asserting code violations conditions —instead treatment of were dissatisfied with HUD’s to the land- time as a defense for the first far,6 easily supple- we could seek them so ap- possession. Judge Ferren suit for lord’s briefing by HUD and the mental of the con- parently recognizes the harshness *19 than the trial court with an- rather burden in waived entitle- clusion that HUD effect litigation. But I do not other round of this reimbursement, only stating to any in event as sufficient view these concerns thus HAP contract and wrote the “HUD disturbing judge’s trial exer- warrant may terms.” But HUD must live with its cise of her discretion. terms,” its and one very not “live with well consequences point may well ask who will bear the factual Judge Ferren first makes terms or significant revision of those judge party suggested to the that neither a landlord’s screening criteria. In proper recipient of relief. of HUD’s that HUD was a leading finding that to a possession party neither had suit The answer to this is that both matters that now trouble participation to discuss the in this court as it 6. We invited HUD’s curiae, several and asked it to answer my colleagues. amicus questions, my upon in view called none of which enriched, unjustly I he has been do not see complain ASSOCIATES,
how either landlord or tenant can FRY & WELCH remedy including P.C., Petitioner, about HUD in the of rent proportion paid it rent. abatement as v. Further, Judge Ferren reasons that “it is DISTRICT OF COLUMBIA CONTRACT entirely right clear” that “has the HUD BOARD, Respondent. APPEALS of the abatements vis-a-vis the party beneficiary tenant.” Under third No. 94-AA-130. theory, example,” “for have relin Appeals. District of Columbia Court of quished right that a the tenant its rent paid. have court determines should not been May Argued 1995. But, acknowledges, as this the Ferren Sept. Decided judge, ory presented to the trial never I do can and thus not see how she be said failing abused her discretion in to con
have beneficiary party analysis it.
sider Third
essentially contracting parties asks what the general it is
intended. While reasonable Congress permit tenants assume meant rights
to sue to enforce under HAP con Pitt,
tracts, e.g.,
v.
(7th Cir.1981) (tenants may sue to recover from
retroactive benefits HUD third Pierce,
beneficiaries); Ashton (1983) (ten
U.S.App.D.C.
ants sue to enforce duties — paint obligations
lead abatement —under contracts), quite thing it is a different say Congress, in Section intended government-paid simply rents would
transferred from landlord to sort damages, whenever a
ordered under state law. That difficult issue our in case
should influence decision preserved
which the tenant has not
trial court. sum, disturbing I find no basis judge’s author- exercise her
ity result in this that ac- to achieve a case design goals of
cords with the just her.
program and is before That, however, outright.
I would affirm judgment leave no of the court us with
concerning proceedings this case. future therefore,
Reluctantly, join Judge Stead- remanding proposed disposition
man’s *20 by the trial
case for further consideration
court. notes I cannot negative Family subsidize a Net Contribution ignore tenant, the fact that the as a matter of rent, note or otherwise law, may party beneficiary be a third of the would liability extend the abatement that far. HAP contract between HUD and the land- possibility, lord. This like the benefit-of-the- bargain analysis, reinforces an unassailable explained For the reasons above and sum- proposition: entitlement to abatements allo- opinion, marized at the outset of this I would cable to code violations in Section 8 subsi- judgment reverse the and remand the case housing dized deciding is a matter of be- entry of an awarding order the rent tenant; tween HUD and the the landlord is tenant, abatements full to the Hancock. among potential included claimants under any proffered legal theory premised on V. POSTSCRIPT abatements attributable to conceded Judge appears agree STEADMAN code violations. foregoing analysis, except for Part III.A. indicated, already moreover, As any action disposition and the in Part IV. He would have the landlord under proceedings remand for further rather than very the HAP contract faces difficulties that awarding the entire abatement to the tenant. may preclude well recovery against double My because, colleague’s remedy is unsound event, landlord. if that were to effect, practical ruling it is a that HUD is occur —if right HUD had the to abate Sec- indispensable party, which subsidy payments tion 8 and were to seek agrees legally STEADMAN himself is not them pre- from the landlord —the landlord the situation. sumably implead could the tenant as another defendant, contending either A ruling remand here means the properly claim was more directed at the ten- plainly the trial court erred —caused a ant as an miscarriage justice lien reserved under the failing to exercise —in theory, bargain benefit-of-the or that the ten- its discretion to invite HUD to intervene er, where the subsidizer and the landlord are because I conclude that the landlord should be parties, present- get any different we face a the last of the three interested who, public abatement, ed in leaving gov- model: as between room for get separate landlord and should receive the abate- ernment subsidizer to its share in a acknowledged ment on the proceeding fair-market value of unless the tenant is held to be a third- apartment? prevail parly beneficiary subsidy. I think the tenant must point, very Super.Ct.Civ.R. But even more to the proceeding pursuant