Ms. Pearline Peart (“Ms.Peart”) brought a successful rent abatement action alleging Housing Code violations against her Section 8 landlord, Ms. Nicole Jackson (“Ms.Jaekson”) and won a rent abatement award of over $15,000. However, the District of Columbia Housing Authority (“DCHA”) intervened and successfully asserted a- derivative right to all of this award. Ms. Peart concedes that DCHA is entitled to the rent abatement, but con
I. Factual and Procedural Background
Ms. Peart was the lessee from Ms. Jackson of a three-bedroom apartment. The lease was made pursuant to the federal government’s Department of Housing and Urban Development . (“HUD”) Housing Choice Voucher Program (“HCVP”), otherwise known as the “Section 8” program. Under the HCVP program, HUD distributes federal funds to local public housing agencies, in this case DCHA, to provide rental assistance to low-income families. 42 U.S.C. § 1437f (2006). To receive HCVP funds for renting the apartment, Ms. Jackson entered into a Housing Assistance Payment (“HAP”) contract with DCHA. DCHA may pay all or some of the rent on behalf of low-income residents; Ms. Peart was a “zero rent tenant.” 24 C.F.R. § 982.451. Thus, DCHA paid the entirety of Ms. Peart’s rent on her behalf.
After Ms. Peart challenged an unauthorized rent increase, 1 Ms. Jackson filed a complaint for possession and non-payment of rent against Ms. Peart in the Landlord Tenant Branch of the Superior Court. Ms. Peart, through counsel, filed an answer, counterclaim and recoupment seeking the return of moneys she paid to 'Ms. Jackson pursuant to the unauthorized revised lease, as well as the “rent paid to [Ms. Jackson] from the beginning of her tenancy to the present based on [Ms. Jackson’s] breach of the implied warranty of habitаbility.”
After Ms. Jackson twice failed to appear or answer the counterclaim, the trial court dismissed her complaint and entered a default judgment on Ms. Peart’s counterclaim. The court scheduled an ex parte proof hearing to hear evidence on the amount of rent to be abated. A month prior to the hearing, counsel for Ms. Peart sent a letter to DCHA alerting it that Ms. Peart intended to seek abatement of all rent moneys that she and DCHA had paid to Ms. Jackson during her tenancy. Two days before the proof hearing, DCHA intervened by filing a Complaint for Declaratory Judgment (“Complaint”) and claimed “100% of the amount [the] cоurt determines is to be abated due to ... [Ms. Jackson’s] breach of warranty of habitability.” The Complaint’s claim to funds was, by its own terms, entirely derivative. DCHA sought to recover the funds “only in the event [the court determines] Ms. Peart is entitled to the relief sought in her counterclaim.”
At the proof hearing, Ms. Peart presented evidence, including thirty-seven exhibits, that Ms. Jackson failed to properly maintain the apartment. The evidence showed “substantial” violations of the Housing Code warranting a rent abatement of 30%, or $15,670. Counsel for DCHA was present at the hearing, but offered no evidence and made no argument relating to the extent and nature of the violations, and expressed no opinion on the appropriate percentage of abatement.
On appeal, Ms. Peart correctly does not challenge the trial court’s ruling awarding the abatement to DCHA.
Anderson II
establishes that, to the extent an abatement award is based on rent paid by DCHA, the abatement has the character of “public funds” and, where DCHA makes a claim to the аbatement, it prevails over the competing claim of the tenant.
Id.
at 864. On the other hand,' absent such a claim by DCHA, the funds belong to the tenant, a principle established by our prior holding in
Multi-Family Mgmt., Inc. v. Hancock,
Ms. Peart is correct, then, in her assertion that her right to compensation for attorneys’ fees and costs remains an open issue for us now to decide. 2 She contends that she is entitled to such recovery both under the common-fund doctrine exception to the “American Rule” on award of attorneys’ fees and оn equitable principles of unjust enrichment. We turn to those arguments. We first review the legal principles underlying Ms. Peart’s claim to recovery in unjust enrichment, and then discuss the related common-fund doctrine which informs our analysis.
II. Unjust Enrichment
“Unjust enrichment occurs when: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains the benefit; and (3) under the circumstances, the defendant’s retention of the benefit is unjust.”
News World Commc’ns, Inc. v. Thompsen,
As we explained in
Jordan Keys & Jessamy, LLP v. St. Paul Fire & Marine Ins. Co.,
We conclude that Ms. Peart stated a valid equitable claim under unjust еnrichment. We are guided by several considerations. First, the manner in which DCHA profited' from 'Ms. Peart’s action against her landlord convinces us that equity requires DCHA to compensate her for her efforts. Second, we are unpersuaded by DCHA’s arguments that it was not unjustly enriched. Finally, the analogies we draw between the facts of the present case and examples drawn from property law support Ms. Peart’s recovery. We discuss each of these considerations in turn.
The facts of this case, as we understand them, demonstrate Ms. Peart’s virtual sin-glehanded efforts in obtaining the moneys that enriched DCHA. Ms. Peart informed DCHA by letter a month before the hearing that she would seek abatement of rent moneys based on the landlord’s violation of the Housing Code. Not until two days before the hearing did DCHA respond by filing its complaint for declaratory judgment and asserting its claim to the abatement. DCHA then entered an appearance at the proof hearing, but did so solely to protect its own contingent right to any moneys that might be recovered. It is unconstested that DCHA did nothing at the trial level to assist Ms. Peart in establishing the facts and amount of the rent abatement. Ms. Peart thus conferred a two-fold benefit on DCHA: not only did Ms. Peart’s efforts produce a fund that DCHA recovered to аpply to the HCVP program, but more importantly, it also saved DCHA from the expense of prosecuting the action itself, or of pursuing available administrative remedies to recover the abatement. 3 See Rest. Restitution § 1, cmt. b (noting that a party confers a benefit on another where it produces not only an affirmative pecuniary advantage, but also “saves the other from expense or loss”). DCHA knowingly accepted Ms. Peart’s services, and explicitly relied on her efforts to secure a recovery for itself.
Second, DCHA argues that it was not unjustly enriched by Ms. Peart’s successful efforts to secure the rent abatement because its purpose in intervening in the litigation was not to recover the abatement, but rather to protect public funds. This contention is not persuasive. Operating under a mandate to aid “low-income families in obtaining a decent place to live,” DCHA necessarily has an interest in recovering rent abatements resulting from landlord violations of housing codes and thus furthering the statutory aim. 42 U.S.C. § 1437f. 5
Third, DCHA makes the related claim that Ms. Peart conferred no benefit on it because DCHA can recover rent abаte-ments from the landlord directly under the federal regulatory scheme governing HAP contracts by various means, including, for example, withholding of future rent payments.
6
DCHA’s argument that it had alternative means of obtaining rent abatement in this case, if true, bolsters, rather than weakens, Ms. Peart’s case. Informed that Ms. Peart would counterclaim for a rent abatement against Ms. Jackson, DCHA did not join in Ms. Peart’s action as a plaintiff. Despite the administrative avenues available to DCHA to withhold or recoup rent moneys paid to Ms. Jackson
As we have previously noted, Ms. Peart is no meddlesome interloper here.
See Irvine v. Angus,
Rather, Ms. Peart and DCHA together have a property interest in the rent abatement, with DCHA holding the greater claim in event of conflict.
See Anderson I, supra,
“The finder of lost goods is entitled to recover from the owner his or her necessary and reasonable expenses incurred in the recovery and preservation of the goods.” 36A C.J.S.
Finding Lost Goods
§ 4 (2003) and cases cited.
See also Chase v. Corcoran,
Restitution will also obtain where a party takes protective action that benefits another — such as paying taxes due on property — merely to protect his own interest in that property, and even where his interest is disputed at the time of payment.
See Irvine, supra,
All the foregoing considerations move us to conclude that Ms. Peart has made out a cognizable claim in unjust enrichment. Equity demands that the trial court consider it.
III. Common-Fund Doctrine
It is true that requests for contribution to attorneys’ fee expenditures are often analyzed under the so-called common-fund or common-benefit doctrine. This doctrine, which may fairly be viewed as a subcategory • of unjust enrichment, constitutes an exception to the “American Rule” .that each party to litigation bears its own attorneys’ fees. The doctrine “permits an award of attorneys’ fees to a person who preserves or.recovers a fund or property for the benefit of others,”
Passtouy, Inc. v. Spring Valley Ctr.,
The doctrine classically applied to cases in which the litigation actually produced or preserved a common fund for the benefit of a group of which the attorneys’ fee claimant was a member.
See, e.g., Trustees v. Greenough,
DOHA argues that the present case is different because the positions of Ms. Peart and DOHA were adverse as to rights to the fund created by the rent abatement, citing
Hobbs v. McLean,
A useful illustration can be found, in insurance subrogation cases, where courts regularly make common-fund awards. In that context, the plaintiff can recover attorneys’ fees from the insurance company who is subrogated tо his recovery “based on the equitable notion that, because an insurer is entitled to share, to the extent of its subrogation interest, in any recovery its insured achieves against a tortfeasor, the insurer should share a proportionate share of the burden of achieving that recovery— including a pro rata share of the insured’s attorney fee.”
Gov’t Employees Ins. Co. v. Capulli,
IV. The Proper Measure of Recovery
For the foregoing reasons, we are quite satisfied that the trial court had the authority to make an award to Ms. Peart. It does not inexorably follow, however, that the amount of that award must fully equal her reasonable attorneys’ fees and costs. Such an approach would measure her recovery based on the loss she incurred in procuring the benefit DCHA accepted and from which it profited. An award basеd on the value of her services would amount, in effect, to damages under a contract implied in fact.
Where there has been an unjust enrichment, the plaintiffs remedy is restitution, which is typically measured by reference to the defendant’s
gain
rather than the plaintiffs
loss. Slick v. Reinecker,
Accordingly, Ms. Peart’s restitution interest is to be measured by reference to the value of her services
to
DCHA, not by reference to the actual costs Ms. Peart incurred in providing thеm. To be sure, it would appear that ordinarily measuring that benefit by the actual cost to the claimant will provide a reasonable approximation of an appropriate award. Technically, however, the restitution interest is measured here by the reasonable value to DCHA of Ms. Peart’s services in terms of what it would have cost DCHA to furnish the services itself.
See
Restatement (Seo-ond) of Contracts § 371 (1981). Such a calculation should also reflect the services that DCHA actually provided in securing the award
16
as well as an appropriate allo
The order denying any award to Ms. Peart is vacated and the case is remanded for further proceedings consistent with this opinion.
So ordered.
Notes
. Ms. Peart paid the additional $127 due under the rent increase out of her own pocket for three months before becoming aware that the increase was illegal. The trial court's judgment included a refund of these payments to Ms. Peart, plus the refund of a fifty dollar late fee, and reimbursement for Ms. Peart’s expenses in making repairs. Her right to receive and retain the rеfund for the rent that she paid and the repair expenditure is not in issue.
. The fact that the abatement moneys are "public funds” does not mean that a tenant can assert no lawful claim relating thereto. The federal and state governments routinely pay successful litigants from the public treasury, and the public character of the funds stands as no obstacle.
See, e.g., Niagara Mohawk Power Corp. v. Bankers Trust Co. of Albany,
. DCHA acknowledged at oral argument, however, that where withholding future rent payments as a means of recovering an abatement are unavailable (such as where the HCVP tenancy has ended), DCHA would be forced to sue the landlord in court, much as Ms. Peart did in this case.
. DCHA also contends in its brief that a party is not' unjustly enriched when it ’ pursues a "claim to get something belonging to someone else.” DCHA mistakes our decisions in
Multi-Family
and
Anderson I,
which make clear that a HAP tenant may recover abated rent if DCHA does not intervene to claim it. Thus, it is not accurate to suggest that the HAP tenant has
no
claim to abated rent.
See Anderson I, supra, 824
A.2d at 44 (citing
Multi-Family, supra,
. Procuring rent abatements from participating landlords who receive federal money in exchange for deficient housing not only recaptures those moneys for use in providing housing for other low-income families, but also avoids squandering federal funds on landlords who provide substandard housing. Indeed, HUD "pays rеntal subsidies so eligible families can afford decent, safe and sanitary housing.” 24 C.F.R. § 982.1(a)(1). HAP tenants receive assistance to “rent units that meet program housing quality standards.” Id. at (a)(2). HUD prescribes extensive quality standards which guarantee the unit is habitable, sanitary and safe. See 24 C.F.R. § 982.401. HUD regulations require the local housing agency administering the contract (in this case DCHA) to take "prompt and vigorous action to enforce” the owner’s obligations, and specifies that it "must not make any housing assistance payments for a dwelling unit that fails to meet” the housing quality standards. 24 C.F.R. § 982.404(a).
.DCHA’s enforcement rights against HAP tenants "include recovery of overpayments, abatement or other reduction of housing assistance payments, termination of housing assistance payments, and termination of the HAP contract.” 24 C.F.R. § 982.453 (emphasis added).
. DCHA stated at oral argument that it had withheld rent payment from Ms. Jackson for housing deficiencies in the past, but had not done so during the period in question. It is unclear that DCHA could have done so in this case, because although it appears that Ms. Peart was in her unit at the time of the ex parte proof hearing in April 2007, it also appears that she had vacated by July of that year.
. Of course, DCHA was not unjustly enriched with respect to the $487.86 she recovered, and was allowed tо personally retain, representing the amount she overpaid to Ms. Jackson and spent to fix the violations. That she recovered some money for herself, which pales in comparison to the $15,670 to which DCHA was entitled, does not operate to forfeit her unjust enrichment claim. The trial court is clearly competent to consider Ms. Peart's personal recovery in calculating the value of her services.
.The law is reluctant to “force a person to pay for a benefit which he did not bargain to receive'or pay for,” and a party is not unjustly enriched for receiving "the unavoidable consequence of action taken by the plaintiff in pursuit of his own interests.” II George Palmer, The Law of Restitution § 10.7, at 417 (1978).
. Tentative Draft No. 2 of the Restatement (Third) of Restitution and Unjust Enrichment § 24, states:
If one person’s reasonable and necessary expenditure to maintain or protect an interest in property relieves a second person of an obligation, or spares the second person and otherwise necessary expense, by virtue of the second person's interest in the same property, the first person has a claim in restitution against the second as necessary to prevent unjust enrichment.
The Draft notes that ”[t]he required nexus between the property interests of the restitution claimant and defendant may also exist where the interest of one or both, parties is less than full ownership, notably where it is equitable rather than legal.” Id. cmt. c. The Draft also extends the right to restitution to cases in which the "interest in property that the claimant acts to protect may be contingent” or "disputed at the time of the expenditure, with the result that it is revealed, in hindsight, to have been no interest at all...." Id. cmt. d.
.
See Crompton v. Jenson,
. The court in
Hillenbrand v. Meyer Medical Group, S.C.,
.
See Hillenbrand, supra
note 12,
. As the Supreme Court of Illinois noted in
Baier v. State Farm Ins. Co.,
The fee, if any, which an attorney receives from a subrogee under the fund doctrine is in partial payment for his services in creating the fund from which the subrogee benefits. In the creation of the fund the client and the subrogee are not adverse litigants; rathеr they have the same common interest in creating the fund from which each will benefit. Concededly after the fund is created, conflicts may arise between the subro-gor and subrogee as to whether, or how much, the subrogee is entitled to recover, or as here between the attorney and the subrogee as to the attorney’s right to, or the amount of, a fee. A conflict which arises in the distribution of the fund, however, does not involve the type of adverse interest which would preclude an attorney from properly representing both the subrogor and subrogee.
. DCHA also argues that the common-fund doctrine does not apply here because Ms. Peart could not trace the benefit of the fund to HCVP recipients. We fail to understand the logic of such a position. DCHA is the beneficiary of the fund, even if it were then to distribute the money to Section 8 tenants. DCHA, not those unknown HCVP recipients, received the benefit of Ms. Peart's services, and would have been the one to seek the abatement, and to incur costs in so doing.
. In challenging any award to Ms. Peart, DCHA claims that the services it provided in bringing about the recovery constitute an absolute bar to any award. At best we can tell, these services were relatively minimal. The mere retention of an attorney will not necessarily defeat a common-fund award where counsel did nothing to procure the award, and merely directed his or her efforts towards protect the party's interest in the fund.
See, e.g., Draper v. Aceto,
