City Center Real Estate, LLC v. 1606 7th Street NW, LLC ( 2021 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
Nos. 18-CV-95 & 18-CV-271
CITY CENTER REAL ESTATE, LLC, APPELLANT,
V.
1606 7TH STREET NW, LLC, ET AL., APPELLEES.
Appeals from the Superior Court
of the District of Columbia
(CAB-6624-16)
(Hon. Michael Rankin, Motions Judge)
(Argued May 16, 2019 Decided December 2, 2021)
Kenneth C. Crickman¸ with whom Robert C. Cooper was on the brief, for
appellant.
Gwynne L. Booth, with whom Richard W. Luchs was on the brief, for
appellees 1606 7th St NW, LLC, and Donnie V. Hinton.
Timothy G. Casey for appellee Linda M. Low.
Mark H.M. Sosnowsky, with whom Allen V. Farber and Jonathan H. Todt
were on the brief, for appellee Richard L. McCormack.
Before BECKWITH, Associate Judge, and RUIZ and FISHER, Senior Judges. ∗
∗
Judge Fisher was an Associate Judge at the time of submission. His status
changed to Senior Judge on August 23, 2020.
2
BECKWITH, Associate Judge: Sultan Gabre held a lease to 1606 7th Street
NW, where he owned and operated a store on the ground floor. After living on the
second floor with his family for a few months, Mr. Gabre subleased one of the two
rooms, keeping the other room for his personal use. The central question of this case
is whether Mr. Gabre continued to use that room as a residential tenant, which would
entitle him to rights under the Tenant Opportunity to Purchase Act (TOPA)—a
legislative scheme that gives eligible tenants a right of first refusal. 1
Richard McCormack, the now-deceased owner of the property, entered an
agreement to sell the property to Alex Associates, Inc. (AAI), a sole proprietorship
owned by Devin Hinton. In an effort to meet the TOPA requirements, and after
consulting his real estate agent, appellee Linda Low, Mr. McCormack submitted an
offer of sale to Mr. Gabre and his subtenants. One subtenant assigned his TOPA
rights to the appellant, City Center Real Estate, LLC (City Center), and Mr. Gabre
assigned his purported TOPA rights to Alex Associates, Inc. Mr. McCormack
accepted the bid from Alex Associates, Inc., which assigned the purchase contract
to appellee 1606 7th Street NW LLC (1606 LLC), a sole purpose entity co-owned
1
D.C. Code § 42-3404.01 (2020 Repl.). “TOPA is a remedial statute, and it
is to be generously construed ‘toward the end of strengthening the legal rights of
tenants or tenant organization to the maximum extent permitted under law.’”
Richman Towers Tenants’ Ass’n, Inc. v. Richman Towers LLC, 17 A.3d 590, 601
(D.C. 2011) (quoting D.C. Code § 42–3405.11 (2008)).
3
by Devin Hinton and his father, appellee Donnie Hinton.
City Center filed a complaint alleging that because Mr. Gabre was only a
commercial tenant, he was not a tenant for TOPA purposes and thus had no TOPA
rights to assign to 1606 LLC. The trial court granted summary judgment against
City Center, ruling that Mr. Gabre used the upstairs floor for residential occupancy
and that there was no genuine dispute of material fact that would require a jury to
address the question. We reverse.
I. Background
The record on appeal shows the following facts. Mr. McCormack leased the
property, a two-story building, to Mr. Gabre in 2012. The written lease was not
produced for the litigation of this case, 2 but it is undisputed that the lease gave Mr.
Gabre the right to operate a grocery store on the ground level of the building. The
parties agreed that the second story consisted of two rooms, and Mr. Gabre testified
that one of the rooms was larger than the other. There was no dispute that for the
first six months of his tenancy, Mr. Gabre and his family—his three children and
their mother—resided in the larger room. Mr. Gabre and his family then moved and
rented the larger room to Solomon Woldegebriel and Grmay Temesgen.
2
Appellee 1606 LLC has represented that Mr. McCormack passed away
before producing the lease, and that his Estate was unable to find it.
4
A couple of years later, Mr. McCormack entered into a contract to sell the
property to Alex Associates, Inc. for $830,000. 3 Email correspondence between Mr.
McCormack, Devin Hinton, and their real estate agents, “The Linda Low Team”
from Long & Foster Real Estate, Inc. (L&F), show the following facts. L&F initially
stated that the property was “subject to TOPA” with respect to Mr. Woldegebriel
and Mr. Temesgen, but expressed doubt about whether Mr. Gabre lived in the
building. Devin Hinton told L&F that Mr. Gabre “claims he is living there with his
wife,” but the L&F team responded that “according to the two other fellows upstairs
he is not living there.” L&F later told Devin Hinton that TOPA notice “ha[d] to be
issued” to Mr. Gabre because he claimed he was living there. L&F therefore issued
an Offer of Sale and Tenant’s Opportunity to Purchase to Mr. Gabre, Mr.
Woldegebriel, and Mr. Temesgen.
Sima Tessema, the sole owner of City Center, testified that he spoke with Mr.
Woldegebriel about the sale of the building, after which Mr. Woldegebriel assigned
his TOPA rights to Mr. Tessema. Mr. Tessema agreed to pay Mr. Woldegebriel in
3
Devin Hinton, who is not a party to this appeal in his personal capacity,
established and owns Alex Associates, Inc. Appellee Donnie Hinton is a partner at
a general partnership called Alex Associates—which has no relation to Alex
Associates, Inc. Donnie Hinton and Devin Hinton co-own 1606 LLC, to which Alex
Associates, Inc. assigned its purchase contract. Donnie Hinton swore in an affidavit
that neither he nor Alex Associates was involved with the purchase of the property
“with the exception of providing funds to 1606 LLC to make said purchase.”
5
exchange for the assignment, contingent on closing. Mr. Woldegebriel notified L&F
that he had assigned his right to purchase to City Center. City Center then notified
L&F and Mr. McCormack of its status as a TOPA assignee and its interest in
exercising its right to purchase the property. City Center provided a purchase
contract for $830,000 to match the third party contract. Meanwhile, Mr. Gabre asked
the D.C. Department of Housing and Community Development (DHCD) whether he
had any rights under TOPA. Mr. Gabre stated in an email that he had a business on
the first floor and a “residence” on the second floor and that the realtors had
“threaten[ed]” him. DHCD informed Mr. Gabre that he was entitled to TOPA rights
if he lived in the residential part of the building. Mr. Gabre forwarded this email
exchange to Mr. McCormack, who shared it with the L&F team. L&F forwarded
the exchange to Devin Hinton.
Mr. Gabre testified that Devin Hinton came into the store and discussed the
sale of the building with Mr. Gabre, who told Mr. Hinton that he lived in the smaller
room and that two other renters lived in the larger room. Soon thereafter, Mr. Gabre
assigned his TOPA rights to Alex Associates, Inc. in exchange for $30,000. Alex
Associates, Inc. notified Mr. McCormack that it wished to exercise its TOPA rights
as Mr. Gabre’s assignee. Alex Associates, Inc. negotiated the purchase price to
$850,000. Mr. McCormack selected Alex Associates, Inc.’s bid and the parties
ratified a contract for a purchase price of $850,000. Alex Associates, Inc. later
6
assigned the contract to 1606 LLC—the current owner of the property.
City Center filed a complaint against 1606 LLC, Alex Associates, Inc., 4
Donnie Hinton, Mr. McCormack, Ms. Low, and Mr. Gabre, alleging common law
fraud, civil conspiracy, intentional interference with contractual relations, violations
of the District’s Consumer Protection Procedures Act, intentional interference with
business relations, and violations of TOPA. The crux of City Center’s complaint
was that the parties worked together to falsely represent Mr. Gabre’s tenancy as
residential, rather than commercial, so that Alex Associates, Inc. would win the
contract over Mr. Tessema.
The defendants filed motions for summary judgment, arguing that City Center
could not prevail on any of its claims because every claim rested on the theory that
Mr. Gabre was not a residential tenant entitled to TOPA rights. 5 The trial court
granted the motions for summary judgment, ruling that there was no dispute that the
4
The court dismissed City Center’s claim against Alex Associates, Inc.
because it was not a proper party in the matter.
5
The appellees also argued that City Center could not prevail on any of its
claims at trial because it had adduced no evidence of damages. In addition, 1606
LLC and Donnie Hinton argued that Donnie Hinton was not a proper party to the
case. The trial court’s ruling on the motion for summary judgment did not explicitly
address either argument.
7
“second floor of the property was used exclusively as residential property,” that the
tenant before Mr. Gabre had used the upstairs “solely for residential purposes,” or
that Mr. Gabre had “separated the upstairs after moving his family to Virginia so
that he could sublet a room to his ‘friends’ while maintaining a residence for his own
use or occupancy.” This appeal followed. 6
II. Analysis
City Center argues that there was a genuine dispute over Mr. Gabre’s
purported status as a residential tenant, which bears on the question whether Mr.
Gabre had TOPA rights that could be assigned to Alex Associates, Inc. Answering
that question requires first determining what it means to be a tenant under TOPA.
The question whether summary judgment was properly granted is a question
of law, which we review de novo. Allman v. Snyder, 888 A.2d 1161, 1165 (D.C.
2005). Summary judgment is appropriate when, viewing the facts in the light most
favorable to the non-moving party, the court determines there is no genuine dispute
6
City Center does not appeal the Superior Court’s dismissal of City Center’s
claims for common law fraud and civil conspiracy, intentional interference with
contractual relations, and interference with business relations with respect to Mr.
McCormack and Ms. Low. City Center appealed those claims only with regard to
1606 LLC and Donnie Hinton.
8
of material fact and that the moving party is entitled to judgment as a matter of law.
See, e.g., Cormier v. District of Columbia Water & Sewer Auth., 959 A.2d 658, 663
(D.C. 2008). “If a moving defendant has made an initial showing that the record
presents no genuine issue of material fact, then the burden shifts to the plaintiff to
show that such an issue exists.” Beard v. Goodyear Tire & Rubber Co., 587 A.2d
195, 198 (D.C. 1991) (citation omitted). The non-moving party cannot meet that
burden and avoid summary judgment “‘merely by impugning [the] honesty’ of the
moving party’s witness”. See Bradshaw v. District of Columbia, 43 A.3d 318, 323
(D.C. 2012) (citing McCullough v. Wyandanch Union Free Sch. Dist., 187 F.3d 272,
280 (2d Cir. 1999)) (alterations in original).
TOPA extends a panoply of rights to residential tenants whose landlord
proposes to sell the property or discontinue its use as rental housing. See 1836 S St.
Tenants Ass’n, Inc. v. Estate of B. Battle, 965 A.2d 832, 838 (D.C. 2009).
Such rights include the right of first refusal on any sale contract the landlord
negotiates with a third party and the right to assign one’s TOPA rights to a third
party. See D.C. Code § 42-3404.08 (2020 Repl.); Allman, 888 A.2d at 1167. These
rights align with one of the District of Columbia Council’s stated purposes of
enacting TOPA: “To discourage the displacement of tenants through conversion
or sale of rental property, and to strengthen the bargaining position of tenants
toward that end . . . .” Id. § 42-3401.02(1). The Council aimed to empower “tenants
who are most directly
9
affected by the conversion” of rental housing units into condominiums or
cooperatives, and to “more effectively assure that housing will be preserved at a cost
which can be afforded by current tenants who would otherwise be involuntarily
displaced.” Id. § 42-3401.01(7).
The issue in this case is if Mr. Gabre was a “tenant” entitled to TOPA rights.
Under the definitions that apply to TOPA, a “tenant” is any person “entitled to the
possession, occupancy or benefits of a rental unit within a housing accommodation.”
Id. § 42-3401.03(17). A “housing accommodation” is “a structure . . . containing 1
or more rental units and the appurtenant land.” Id. § 42-3401.03(11). A “rental unit”
is “that part of a housing accommodation which is rented or offered for rent for
residential occupancy and can be an apartment, efficiency apartment, room, suite of
rooms, and single-family home or duplex, and the appurtenant land to such rental
unit.” Id. § 42-3401.03(16).
Two key concepts lack statutory definitions: “residential occupancy” for
purposes of defining the “rental unit,” and “entitle[ment] to possession, occupancy,
or benefits” of the rental unit. Though it is clear that commercial tenants are not
protected by TOPA, see Pelkey v. Endowment for Cmty. Leadership, 841 A.2d 757,
760 (D.C. 2004); 14 DCMR § 4711.7 (2020) (“Commercial tenants shall not be
10
entitled to the first right to purchase.”), very few TOPA cases discuss these terms. 7
When interpreting a statute, this court may take guidance from other statutes with
similar language. See Jeffrey v. United States, 892 A.2d 1122, 1129 (D.C. 2006)
(taking guidance from the “almost identical” drug-free zone statute to interpret the
District’s gun-free zone statute). The definitions of “tenant,” “housing
accommodation,” and “rental unit” that apply to TOPA are identical to the
definitions in the Rental Housing Act of 1980 (RHA). See D.C. Code §§ 42-
3501.03(14), (33), (36). Cases interpreting the RHA have looked to the case law of
the Rent Control Act of 1941 (RCA) as persuasive. See, e.g., Revithes v. District of
Columbia Rental Hous. Comm’n, 536 A.2d 1007, 1015 (D.C. 1987) (citing White v.
Allan, 70 A.2d 252 (D.C. 1949)). The RCA and TOPA use similar language when
addressing residential tenancy. Compare D.C. Code § 45-1611(f) (1941) (defining
“tenant” as any person “entitled to the use or occupancy of any housing
accommodation”), and id. § 45-1611(a) (defining “housing accommodations” as any
“building, structure, or part thereof . . . rented or offered for rent for living or
dwelling purposes”), with D.C. Code § 42-3401.03(17), and id. §§ 42-3401.01(11),
7
In Pelkey, the only case analyzing whether a person was a commercial or
residential tenant for TOPA purposes, this court took as a given that the plaintiff’s
use of “an office for his consulting business” was not residential occupancy under
TOPA. See 841 A.2d at 760. Additionally, as discussed further below, one case
analyzing what it means to be “entitled to the possession, occupancy, or benefits” of
a rental unit under TOPA determined that the possession must be “lawful.” See
Redman v. Potomac Place Assocs., 972 A.2d 316, 320–21 (D.C. 2009).
11
(16) (defining “housing accommodations” in relation to “rental units,” which are
defined as units “rented or offered for rent for residential occupancy.”).
To determine whether a particular unit is rented for “residential occupancy”
in both the RHA and RCA contexts, this court has employed a factual, totality-of-
the-circumstances analysis. See Revithes, 536 A.2d at 1013; Ontell v. Capitol Hill
E.W. Ltd. P’ship, 527 A.2d 1292, 1294 n.2 (D.C. 1987); Bellmore v. Baum, 68 A.2d
588, 591 (D.C. 1949) (“Whether property is commercial and therefore free from
[rent] control [under the RCA], or whether it is partly residential is ordinarily a
question of fact.”). Of primary importance is the tenant’s “actual use and
occupancy” of the space as a residence. See Revithes, 536 A.2d at 1015; cf. District
of Columbia v. Beatley, 665 A.2d 204, 206 (D.C. 1995) (concluding that it was
permissible for assessor to determine a property was commercial based on the fact
that the property “was zoned for commercial use and was actually being used for
commercial purposes”). In one RHA case where a landlord attempted to argue that
she had commercial leases with two of her six tenants, the court emphasized that
those tenants labeled the space an “apartment” that they “occupied” and that the
tenants had items such as “household goods” in the space. Revithes, 536 A.2d at
1015. Similarly, in an RCA case, the court emphasized that the tenant’s “actual use”
of a building as a rooming house controlled, even where her lease was commercial
on its face. White, 70 A.2d at 254. Conversely, we determined that a tenant’s use
12
of his space to “conduct[] a law practice from the premises” excluded him from the
protections of the RHA. Ontell, 527 A.2d at 1294 n.2; see also Espenschied v.
Mallick, 633 A.2d 388, 389 (D.C. 1993) (noting that a tenant was not protected under
the RHA because she had a commercial lease to “operat[e] a bookstore in a mixed-
use building”); Pelkey, 841 A.2d at 760 (“Given his business reason for occupying
the unit, [Mr. Pelkey’s] arguments on appeal relating to the protections of
[TOPA] . . . are unavailing.”).
The residential characteristics of the physical unit are also significant. In
Revithes, the court emphasized that the units had residential areas such as a “living
room,” “bedroom,” and “bathroom,” and that the units contained furnishings such
as a “mantel,” a “fireplace,” “shelving,” “refinished floors,” and a “living room
chandelier.” 536 A.2d at 1015. In the context of the RCA, this court noted that
“such elements as single or multiple toilet facilities, entrances, kitchens, heating
systems, and gas, water and electric meters” would inform the determination
whether a property qualifies as a residential unit. Bellmore, 68 A.2d at 591.
This court has stated that the term “tenant” in the RHA “inescapably means
the leaseholder” and does not extend to a person who simply “occupies” a space in
a residential way. Tenants of 1460 Euclid St., N.W. v. District of Columbia Rental
Hous. Comm’n, 502 A.2d 470, 472 (D.C. 1985). For that reason, we have concluded
13
in the TOPA context that one who is not a “lawful tenant” does not enjoy TOPA
rights. Redman, 972 A.2d at 321; cf. Crockett v. Deutsche Bank Nat’l Tr., 16 A.3d
949, 951 (D.C. 2011) (concluding that a landlord-tenant relationship does not arise
by “mere occupancy” and that a squatter is not entitled to protections under a
Superior Court rule applicable to leaseholders). Something more than mere
occupancy is required, but there is no requirement that a person have a formalized
“contractual relationship” with a landlord in order to be a tenant. Adm’r of Veterans
Affairs v. Valentine, 490 A.2d 1165, 1168–69 (D.C. 1985). This court has regularly
employed a fact-based inquiry to determine the lawfulness of someone’s occupancy.
See, e.g., Young v. District of Columbia, 752 A.2d 138, 143 (D.C. 2000) (using a
factual analysis based on “the payment of rent and other conditions of occupancy
between the parties” to determine if a person was a subtenant entitled to RHA
eviction protections).
The landlord’s actual knowledge of and acquiescence to a tenant’s use of
space for residential occupancy is the key factual question in the analysis. In
Revithes, the court stated that where the landlord has “actual knowledge” of the
residential use of the space, such as if a tenant informs the landlord that she is using
the space for living purposes, formal labels such as a commercial lease do not
control. See 536 A.2d at 1015; see also White, 70 A.2d at 254 (“[T]he tenant, with
the knowledge of the landlord, proceeded to use the premises as a rooming house.”).
14
We concluded similarly in White, where the parties’ lease contained a covenant that
the lease be used for commercial purposes, but the landlord “consented” to the
residential use. 70 A.2d at 254; see also Richman Towers Tenants’ Ass’n v. Richman
Towers LLC, 17 A.3d 590, 601 (D.C. 2011) (“[T]he courts will not permit
themselves to be blinded . . . by mere forms . . . but, regardless of fictions, will [deal
with] the substance of the transaction . . . as the justice of the case may require.”)
(quoting Chicago, M. & St. P. Ry. Co. v. Minneapolis Civic & Commerce Ass’n, 247
U.S. 490, 501 (1918)) (omissions in original).
When determining whether a person is a “tenant” entitled to possess, occupy,
or benefit from a “rental unit,” courts should take into account whom the statute is
“designed to protect.” Valentine, 490 A.2d at 1168 (RHA context); see also
Richman Towers, 17 A.3d at 602 (TOPA context). TOPA and the RHA were both
enacted as part of a “comprehensive legislative scheme to protect the rights of
tenants,” and thus we have stated that both statutes should be “construed liberally”
to effectuate their purpose. Valentine, 490 A.2d at 1168; see also Richman Towers,
17 A.3d at 602 (stating in TOPA context that “[c]ourts deal with the substance rather
than the form of transactions and will not permit important legislative policies to be
defeated by the artifices affecting legal title but not the practical consequences of the
existing situation”) (internal citations omitted); D.C. Code § 42-3405.11 (“The
purposes of this chapter favor resolution of ambiguity . . . toward the end of
15
strengthening the legal rights of tenants or tenant organizations to the maximum
extent permissible under law.”). In Valentine, a woman rented an apartment from a
mortgagor whose property was foreclosed by the bank and sold to the Veterans
Administration (VA). 490 A.2d at 1166. This court had previously concluded that
statutory eviction restrictions in the RHA did not protect a defaulting mortgagor.
Simpson v. Jack Spicer Real Estate, Inc., 396 A.2d 212 (D.C. 1978). Based on that
holding, the VA argued that the woman renting an apartment from the defaulted
mortgagor likewise had no rights as a tenant under the RHA. Valentine, 490 A.2d
at 1168. The court rejected the VA’s argument, concluding that the VA’s proposed
definition of “tenant” was too “rigid[]” and failed to take into account whom the
RHA was “designed to protect.” Id. In this way, when conducting statutory
interpretation of the definition of “tenant” in the RHA and TOPA, courts need not
be wedded to “the technical precepts of real property law.” See id. at 1170.
In sum, under TOPA, whether one is a “tenant”—a person “entitled to the
possession, occupancy, or benefits of a rental unit” that is rented for “residential
occupancy,” D.C. Code § 42-3401.03(17)—is a highly fact-based inquiry, requiring
courts to take into account the person’s actual use of the space, the characteristics of
the space itself, and the landlord’s acknowledgement of the residential use. The
formal labels in a lease, while relevant, do not supersede a factual determination of
the actual relationship between the landlord and the tenant. And again, when
16
interpreting TOPA, we are guided by TOPA’s purposes of protecting and
“strengthening” the rights of tenants. D.C. Code § 42–3405.11
With these principles in mind, we turn to City Center’s argument that the trial
court wrongly granted summary judgment despite a genuine dispute over whether
Mr. Gabre was a TOPA tenant—that is, truly a residential tenant.
1.
We first examine the evidence regarding Mr. Gabre’s actual use of the smaller
upstairs unit and the property as a whole. The trial court ruled that there was no
genuine dispute of fact that Mr. Gabre used the unit “exclusively as residential
property . . . for residential purposes.” Appellees argue that Mr. Gabre’s deposition
testimony demonstrated that he “actual[ly] use[d]” the smaller room as a residence.
See Revithes, 536 A.2d at 1015. Mr. Gabre stated, for example, that he slept there
“three or four days” per week and that he had a mattress, sheet, rug, blanket, and
hanging clothes in the room. Appellees also point out that Mr. Gabre’s testimony is
supported by interrogatory answers given by 1606 LLC, which stated that when
Devin Hinton toured the property, Mr. Gabre and his family were present and
“appeared to be living there.”
The record includes plenty of evidence that conflicts with appellees’
17
contention that Mr. Gabre actually used the property for residential occupancy.
First, Mr. Gabre’s testimony that he resided upstairs was not undisputed; Mr.
Tessema contradicted Mr. Gabre’s claim. Mr. Tessema stated that at some point
shortly after learning of the Offer of Sale, Mr. Tessema spoke with Mr. Gabre about
the possibility of selling his TOPA rights and Mr. Gabre responded that he was not
a residential tenant. 8 This presents a factual dispute that should not have been
resolved by summary judgment.
City Center also contends that Mr. Gabre admitted to residing in Virginia in
the Foxchase Apartments, having a Virginia driver’s license and car registration, and
sending his children to school in Virginia. The trial court understood City Center to
be arguing that a person cannot have more than one residence and rejected that
argument, stating that “Plaintiff appears to confuse the concept of domicile, of which
a person has only one, and the concept of residence, where persons can have multiple
residences.” But City Center does not argue that a TOPA tenant cannot receive
8
Mr. Tessema also stated that Mr. Woldegebriel reported to him that Mr.
Gabre “apparently brought his [family] in from his home in Virginia, placed them in
his (Solomon’s) apartment unit, laid out a bunch of kid’s [sic] toys on the floor, and
then paraded the real estate agents through their [sic], pretending that Solomon’s
apartment was actually Sultan’s.” 1606 LLC characterizes this statement as
“nothing more than hearsay.” The parties have not fully briefed this question, and
the statement itself is not necessary to our determination that there remains a factual
dispute regarding whether Mr. Gabre was a residential tenant. If the question arises
again on remand, the trial court should resolve it in the first instance.
18
protections in regards to his second residence. City Center argues that a jury could
have taken into account Mr. Gabre’s admissions that the smaller room was not his
primary residence as the jury evaluated Mr. Gabre’s actual use of the property, and
could have determined that Mr. Gabre was not in fact actually using the smaller room
as a residence.
2.
We turn next to the arguments regarding the characteristics of the unit. The
record shows a genuine dispute over whether the smaller room had any of the
traditional characteristics of a residential space. 9 First, there is conflicting testimony
on the structure of the second floor. In an answer to an interrogatory, appellee
Donnie Hinton stated that the upper floor consisted of two rooms that were not
connected to each other, and that the larger room was connected to a living room
and contained a bathroom. Mr. Gabre also indicated in his deposition that the
smaller room was not connected to a kitchen or a bathroom. Mr. Tessema testified,
to the contrary, that the second floor consisted of a single unit with two bedrooms, a
kitchen, and a living room, all accessible through a single door. The record does not
contain any floor plans that would help to resolve the dispute.
9
The parties do not dispute that the larger room was a residential unit.
19
A small room unconnected to a bathroom or kitchen is not necessarily
“exclusively residential property” as the trial court concluded. In the RHA and RCA
contexts, this court has regarded bathrooms as relevant to its appraisal of a particular
unit. See Revithes, 536 A.2d at 1015 (noting that the unit had residential features
such as a bathroom); Bellmore, 68 A.2d at 591 (noting the relevance of “such
elements as single or multiple toilet facilities”). The District’s housing code is a
fitting guide for the court’s analysis, for TOPA purposes, of the qualities of a
residential unit, as the housing code provides that “[n]o owner, licensee, or tenant
shall occupy or permit the occupancy of any habitation in violation of this subtitle.”
14 DCMR § 400.1. If the second floor was a residence, then the owner of the
building would be required to adhere to these regulations. The housing code requires
that bathrooms “shall be accessible to the occupants of rooming units without the
necessity of occupants going through . . . [a]nother rooming unit . . . [a] sleeping
room which is part of another habitation; or . . . a commercial or industrial
establishment.” 14 DCMR § 401.3(a)–(d). Mr. Gabre’s and Donnie Hinton’s
testimony would therefore support a finding that the second-floor room Mr. Gabre
used was not a residential unit. Mr. Gabre himself testified at one point during his
deposition that he and his family had to go “downstairs” to use the bathroom,
meaning they had to pass through “a commercial or industrial establishment.” Even
if Mr. Gabre used the bathroom in the larger unit, as he occasionally used the kitchen,
20
he still would not have been able to access it without “going through . . . [a]nother
rooming unit.” 14 DCMR § 401.3(a). These facts demonstrate a genuine dispute
about this factor in residential occupancy analysis, which is material to a TOPA
analysis.
3.
Finally, the evidence that Mr. McCormack knew of and acquiesced to Mr.
Gabre’s residential use of the smaller room is conflicting. On the one hand, the
appellees argue that Mr. McCormack’s decision to send Mr. Gabre TOPA notice that
labeled the property as a “Single Family House” proves that Mr. McCormack
acknowledged Mr. Gabre as a residential tenant. But the record also shows that Mr.
McCormack’s team struggled for days to determine whether TOPA required Mr.
McCormack to notify Mr. Gabre—and in fact, L&F told the title company that it
needed to contact DHCD to determine whether L&F needed to issue TOPA notice
to “all three” occupants. That L&F issued TOPA notice to all three men, though
plainly relevant, does not necessarily amount to an admission that L&F deemed Mr.
Gabre to be a TOPA tenant. This ambiguity constituted genuine dispute over a
material fact: whether Mr. Gabre was a TOPA tenant.
Viewing the record in the light most favorable to City Center, Cormier, 959
A.2d at 663, we conclude that a reasonable jury, considering all of the evidence
21
related to residential occupancy, could have found that Mr. Gabre did not use the
property as a residence, that the smaller unit on the second floor did not possess the
characteristics of a residential unit, or that the landlord did not acquiesce to Mr.
Gabre’s residential use of the unit. These amount to genuine disputes of fact of
whether Mr. Gabre was a residential tenant, which are conducive to resolution by a
jury. 10 For these reasons, we conclude that the trial court’s finding that there was no
genuine dispute as to Mr. Gabre’s residential tenancy was erroneous and remand for
further proceedings consistent with this opinion. 11
10
City Center suggested that, as a matter of law, Mr. Gabre could not be a
residential tenant and a commercial tenant at the same time. Because we remand on
City Center’s factual claim, we do not address this argument. Nevertheless, it bears
mention that the cases cited by City Center stand only for the proposition that a
single unit cannot be both commercial and residential at the same time. See Ontell,
527 A.2d at 1294 n.2; Espenschied, 633 A.2d at 389. Neither case supports City
Center’s argument that a person cannot have one commercial unit and one residential
unit in a mixed-use building.
11
Accordingly, we vacate the award of costs to 1606 LLC that were based on
the attorney fee provision of TOPA. D.C. Code § 42-3405.03. Appellees argue that
City Center produced no evidence of monetary damages, which should be “fatal” to
City Center’s opposition to summary judgment. See, e.g., Basiliko v. Pargo Corp.,
532 A.2d 1346, 1348 (D.C. 1987). But City Center’s complaint requested both
monetary compensation and equitable relief, including a request to enjoin the
appellees from interfering with City Center’s TOPA rights and to declare that the
transfer of title between Mr. McCormack and 1606 LLC was null and void. As we
discuss below, Mr. Woldegebriel could transfer his TOPA rights to City Center
regardless of Mr. Gabre’s status. Thus, City Center could be entitled to specific
performance. “Specific performance is an extraordinary equitable remedy, and the
determination whether or not to order specific performance is confided to the ‘sound
22
Appellees argue that if Mr. Gabre’s occupancy was not residential, then
neither Mr. Woldegebriel nor Mr. Temesgen—Mr. Gabre’s subtenants—can be
residential tenants, because Mr. Gabre could not give what he does not have.
Assuming this premise is correct, they argue that the initial contract for sale between
Mr. McCormack and Alex Associates, Inc.—before the TOPA notices were
issued—would become binding, and appellees would prevail.
Mr. McCormack and Ms. Low argue this for the first time on appeal.
Normally, we would not consider an issue raised for the first time on appeal. See,
e.g., Easter Seal Soc’y for Disabled Child. v. Berry, 627 A.2d 482, 488 (D.C. 1993).
Nevertheless, this principle is “one of discretion rather than jurisdiction.” District
of Columbia v. Helen Dwight Reid Educ. Found., 766 A.2d 28, 33 n.3 (D.C. 2001).
We have noted that we may consider an issue raised for the first time on appeal in
“[e]xceptional cases where injustice might otherwise result.” Easter Seal, 627 A.2d
at 488. We have also stated that we may consider a new issue that is “purely one of
law, particularly if the factual record is complete [on that question] and a remand for
and informed discretion’ of the trial court.” Indep. Mgmt. Co. v. Anderson &
Summers, LLC, 874 A.2d 862, 867–68 (D.C. 2005) (quoting Drazin v. Am. Oil Co.,
395 A.2d 32, 34 (D.C. 1978)). We find it is “premature to reach and resolve the
issues” of damages given our remand on the TOPA tenant issue. Saunders v.
Hudgens, 184 A.3d 345, 351 n.19 (D.C. 2018).
23
further factual development would serve no purpose.” Dwight Reid, 766 A.2d at 33
n.3; see also Beard v. United States, 535 A.2d 1373, 1377 (D.C. 1988) (“Because
several of the other issues raised by appellant will inevitably arise at the new trial,
we address them now.”). Because the purely legal argument urged by the appellees
will inevitably arise during trial and the factual record on Mr. Woldegebriel’s and
Mr. Temesgen’s subtenancies is sufficient to resolve this question, it is in the interest
of judicial efficiency to address the legal merits now.
Neither appellee raising this claim cites case law in support of their argument.
Rather, their contention appears to rest on a foundational tenet of property and
contract law, “Nemo plus juris ad alium transferre potest quam ipse habet,” meaning
“No one can transfer more right to another than he has himself.” See, e.g., Nemo
plus juris ad alium transferre potest quam ipse habet, Black’s Law Dictionary (5th
Ed. 1979); see also Ventress v. Smith, 35 U.S. 161, 175 (1836). We have stated that
a contract assignee possesses the same rights and remedies as those possessed by the
assignor, but no greater. LeRoy Adventures, Inc. v. Cafritz Harbour Grp., Inc., 640
A.2d 193, 199 (D.C. 1994), modified on reh’g, 660 A.2d 908 (D.C. 1995) (citing
Fox-Greenwald Sheet Metal Co. v. Markowitz Bros., 452 F.2d 1346, 1357 n.69 (D.C.
Cir. 1971)). The crux of the appellees’ argument, appearing to draw from those
principles, is that “if [Mr.] Gabre could only be a commercial tenant under City
Center’s analysis, all [Mr.] Gabre could offer as a sublandlord to [Mr.] Woldegebriel
24
was a commercial tenancy, and, ergo, no TOPA rights could be assigned to City
Center from [Mr.] Woldegebriel.”
TOPA rights are not derived from property or contract law, however. They
are instead statutory rights provided by the D.C. Council to protect renters and
prevent the conversion of rental housing into other uses. Richman Towers, 17 A.3d
at 601. The plain language of “tenant” under TOPA includes both “tenant[s]” and
“subtenant[s],” indicating that a subtenant derives her statutory TOPA protections
independently from her sublease. See D.C. Code § 42-3401.03(17).
This court in fact addressed and rejected a similar argument in the RHA
context. Valentine, 490 A.2d at 1168. In Valentine, the VA had purchased a
property after a defaulting mortgagor foreclosed on it, and argued that the existing
tenant of the defaulting mortgagor would not be protected by the RHA because the
RHA exempts defaulting mortgagors from its protections. 490 A.2d at 1168.
Because the tenant’s rights flowed from the defaulting mortgagor, the VA argued,
the tenant would be similarly unentitled to RHA protections. Id. In rejecting the
VA’s argument, the court stated the VA had “succumbed to the . . . fallacy” of
asking the court to apply an inflexible approach based “solely according to the
technical precepts of real property law.” Id. at 1168, 1170. The RHA, which is a
“remedial” statute that should be “construed liberally,” is part of a comprehensive
25
legislative scheme meant to protect the rights of people who rent. Id. at 1168. This
court determined that the RHA, “in the context of the District’s rent control statutes,”
would protect the tenant even though her occupancy rights were based solely on a
lease with the defaulting mortgagor whose own rights to the property were
extinguished by foreclosure. Id. at 1169.
Mr. Woldegebriel and Mr. Temesgen, whose entitlement to possess the larger
room for residential purposes was not disputed, were entitled to TOPA protections
at the time of sale even if Mr. Gabre was not. 12 As we stated at the outset, one of
the Council’s purposes in enacting TOPA was “[t]o discourage the displacement of
tenants through conversion or sale of rental property, and to strengthen the
bargaining position of tenants toward that end.” D.C. Code § 42-3401.02(1). Mr.
Woldegebriel and Mr. Temesgen’s entitlement to the possession and occupancy of
the larger unit for residential purposes was not disputed in the Superior Court. Both
men were actually using it for residential purposes. Their unit included a bathroom
and a kitchen, and their rooms contained beds. Valentine indicates that even if Mr.
Gabre was not a residential tenant for purposes of TOPA, his subtenants could be.
12
This court would confront a different question if it were unclear whether
Mr. Woldegebriel and Mr. Temesgen’s subtenancy was lawful. TOPA protects
residential tenants whose tenancy itself is lawful. We can imagine, but do not in this
case confront, facts where an improper subtenancy agreement could throw the TOPA
status of the subtenants into doubt. Here, however, it is undisputed that Mr.
Woldegebriel and Mr. Temesgen were lawful residential subtenants.
26
490 A.2d at 1168–70. Because it is undisputed that they actually resided in the
space, they were at risk of displacement from the initial sale. We therefore disagree
with the appellees’ argument and conclude that City Center’s purchase of Mr.
Woldegebriel’s TOPA rights would give City Center a viable claim to the property
even if a jury found Mr. Gabre was not a residential tenant.
III.
Given the genuine factual dispute over whether Mr. Gabre’s use of the upstairs
unit entitled him to TOPA rights, we reverse the trial court’s grant of summary
judgment to the appellees and remand for further proceedings.
So ordered.