Opinion ID: 2167433
Heading Depth: 2
Heading Rank: 1

Heading: Need for a Drayton Stay

Text: The tenant and amicus argue that the trial court erred in failing to enter a stay of the proceeding while the tenant's petition challenging the rent increase was pending before the RACD. [12] They contend that the RACD had primary jurisdiction over the question of the legality of the rent increase, the non-payment of which formed the sole basis for the landlord's claim that the tenant had breached the terms of the consent judgment. Any other procedure, they contend, had the potential for resulting in the tenant's eviction solely because he failed to pay an illegal rent increase. In support of their argument, the tenant and amicus rely upon this court's decision in Drayton, supra, 462 A.2d at 1115. In Drayton, this court held that [a]pplication of the doctrine of primary jurisdiction requires that when there is pending before the Administrator or the [Rental Housing Commission] RHC a challenge to a rent increase that bears upon the amount of rent owed by a tenant defending a possessory action brought for nonpayment of rent, the [Landlord & Tenant] Judge should stay the action to await the ruling of the Administrator or, if an appeal is taken to the RHC, then of that body. [13] Id. at 1120 (footnote omitted). In addition, the trial court should await the disposition of any appeal taken to this court from the agency's final decision. Id. at 1120 n. 2 (citing Pennsylvania R.R. Co. v. United States, 363 U.S. 202, 80 S.Ct. 1131, 4 L.Ed.2d 1165 (1960)). In Drayton, which involved a suit for possession for non-payment of rent, the tenants claimed in the trial court that the rent was not due in the amount claimed because rent increases taken by the landlord were illegal. Id. Although the tenant did not file a petition with the administrative agency challenging the rent increase before or after it went into effect, this court held that the trial court erred in determining the validity of the rent increases. Id. at 1120. We instructed that, in the exercise of its discretion, the trial court should have either given the tenants a reasonable time to file a challenge with the agency or assumed the validity of the increase absent such a challenge. [14] Id. at 1120-21. We reasoned that it is inconsistent with the summary nature of [Landlord-Tenant] proceedings as well as the doctrine of primary jurisdiction to require that such matters be adjudicated in [the L & T] branch. Id. at 1120. In this case, as previously stated, the parties' agreement did not preclude the tenant from filing a challenge to the legality of future rent increases. The tenant, in fact, filed a challenge with the agency shortly after the landlord moved to vacate the stay provided for in the settlement agreement based upon its claim that the tenant had failed to pay the full amount of the rent. The tenant brought to the trial court's attention that his challenge to the increase was pending before the agency. While acknowledging that the tenant was entitled to pursue [his] petition to challenge the rent before [the] RACD, the trial court declined to stay the proceeding, thereby allowing the landlord to evict the tenant for failure to pay the challenged rental increase. Since the tenant had tendered all of the rent due except for the challenged increase, whether the tenant was in violation of the pay-on-time provision of the consent judgment depended upon the legality of the increase charged by the landlord. [15] Amicus, joined by the tenant, argues that, under these circumstances, under Drayton, the trial court had no authority to grant the landlord's motion to set aside the stay and to authorize the eviction to proceed. The Drayton proscription against judicial determination of rent increases seeks to prevent the courts from intruding unduly into the province of the Rental Housing Commission, whose primary authority flows directly from the rent control laws. Mullin, supra note 10, 712 A.2d at 493. We agree that the principles enunciated in Drayton apply to this situation. In Drayton, we said that the procedure outlined should be followed in all actions in the L & T Branch, in which the legality of rent increases is raised. . . . 462 A.2d at 1121 n. 12. That the question of the legality of the rent increase here arose in a context different from the Drayton case does not alter the result. The circumstances are analogous, and we see no basis to distinguish the two situations. Here, as in Drayton, the landlord's right to possession of the property depended ultimately upon the legality of the rental increase it demanded. The tenant tendered the amount due under the consent agreement with the exception of the challenged increase. If the landlord could not lawfully demand the increase, then it could not claim that the tenant breached the agreement by refusal to pay it. Thus, the tenant's pending petition challenging the legality of the rent increase bore directly upon the issue before the court, i.e., whether the tenant breached the consent judgment by withholding the amount of the increase demanded by the landlord. The only way to conclude that the tenant was in breach of the agreement was for the court to find that the tenant was obligated to pay the increased amount. Thus, without expressly finding that the tenant had failed to pay the lawful rent for the unit, the court's ruling effectively did so. Absent a stay, the eviction remedy was authorized to proceed before the agency could determine the legality of the rental increase that formed the basis for the claim of breach. Thus, the court's action on the landlord's motion would terminate finally the tenant's right to possession. Such a procedure would defeat primary jurisdiction of the agency to determine the validity of the rent increase and render meaningless the tenant's right to challenge the increase before the agency. While a refund or damages might compensate the tenant for his financial losses, actual eviction from his home for what may be determined to be illegal charges is essentially irreparable. This is the type of final action to which the Drayton proscription against judicial determinations applies. See Mullin, supra, 712 A.2d at 493-94. [16] Although the trial court viewed its ruling setting aside the stay as leaving open for future determination by the agency the question of the legality of the rental increase, the practical effect of its ruling was to assume the validity of the increase. Otherwise, there was no basis for concluding that the tenant was in breach of the agreement for withholding the increase. Therefore, where, as here, the determination of whether a breach has occurred rests solely upon the legality of the rent charged, the rule from Drayton is implicated, and the court should refrain from ruling thereon. The proper course for the trial court, under the circumstances, was to impose a stay under Drayton. [17] As amicus points out, the court's failure to enter a Drayton stay, subjects the tenant to eviction solely for failure to pay the challenged increase, the validity of which remains under consideration by the agency. While the tenant is protected from eviction as long as the stay pending appeal is in effect, upon final disposition of the present appeal, unless the tenant prevails, the landlord has the potential to evict him based on what the agency may determine finally was an illegal rental charge. Thus, the Drayton stay is the appropriate course where, as here, the tenant has filed a challenge with the agency having primary jurisdiction of an issue that is outcome determinative of the litigation before this court. The case must be remanded for entry of a stay under Drayton and for consideration of the impact of the final agency order, when entered, on the landlord's claim that the tenant breached the agreement. The tenant and amicus argue that any protective order payment entered in connection with the Drayton stay should not include the contested portion of the rent. They contend that forcing the tenant to pay the higher rent pending the outcome of the administrative challenge to its legality would defeat the purpose of Drayton and the rent control statute. The Drayton proscription against judicial determination of rent increases seeks to prevent the courts from intruding unduly into the province of the Rental Housing Commission, whose primary authority flows directly from the rent control laws. Mullin, supra note 10, 712 A.2d at 493 (citations omitted). Its purpose is to promote the policy of greater uniformity of result and the utilization of the specialized and expert knowledge of the agency. Id. at 492 (citing District of Columbia v. Thompson, 570 A.2d 277, 287 (D.C.1990)). To that end, it operates to leave to the agency, not the court, the adjudication of the legality of a rent increase. See id. at 492. A protective order is an equitable remedy that the courts have devised to ensure that the landlord is not exposed to a prolonged period of litigation without rental income while the tenant remains in possession [of the property] pending the outcome of a suit for possession.  Id. at 493 (quoting R & A, Inc. v. Kozy Korner, Inc., 672 A.2d 1062, 1071 (D.C.1996) (quoting Davis v. Rental Assocs., Inc., 456 A.2d 820, 823 (D.C.1983) (en banc)) (internal quotation marks omitted) (emphasis added)). Such orders are intended to preserve the status quo until the merits determination, with the view toward maintain[ing] the proper balance, pendente lite, in the unique arena of landlord-tenant litigation. Id. (quoting Davis, 456 A.2d at 829 (other citation omitted)). Thus, in Mullin, this court held that modification of a protective order to reflect a rental increase not yet finally approved by the Rental Housing Commission is not an adjudication of the merits of the rent increase under Drayton. Id. at 492. Therefore, a protective order that includes the disputed rental increase does not interfere with the agency's primary role that is protected by the Drayton rule. See id. at 493. The tenant argues that the court can preserve the status quo during the Drayton stay only by setting the protective order in the undisputed amount rather than at the increased rent level. However, he acknowledges that the court must make its decision in this regard on a case-by-case basis, considering various relevant factors. In Bell v. Tsintolas Realty Co., 139 U.S.App.D.C. 101, 430 F.2d 474 (1970), recognized as the seminal case allowing protective orders, [18] the court identified among the factors for consideration: the amount of rent alleged to be due, the number of months the landlord has not received even a partial rental payment, the reasonableness of the rent for the premises, the amount of the landlord's monthly obligations for the premises, whether the tenant has been allowed to proceed in forma pauperis, . . . whether the landlord faces a substantial threat of foreclosure[,] and the landlord's need for the order and the merits of the tenant's asserted defenses. 139 U.S.App.D.C. at 111, 430 F.2d at 484. While Bell involved suits for possession for non-payment of rent and tenants' defenses of housing code violations, rather than a suit that had reached the consent judgment stage with a disputed contractual issue, some of the same considerations are relevant to the protective order amount for a Drayton stay. See Stets v. Featherstone, 754 A.2d 292, 297 (D.C.2000) (holding that the trial court erred in setting the terms of a new protective order under Drayton, in part, because it failed to inquire into either the merits of the tenant's claims of rent ceiling and housing code violations or the exigencies confronting the landlord.) (footnote omitted). However, Bell is instructive in suggesting that the preferable course is to leave the decision on a case-by-base basis to the discretion of the trial judge. Bell, 139 U.S.App.D.C. at 110, 430 F.2d at 483; see also Stets, 754 A.2d at 296 (observing that a protective order is an equitable device requiring the exercise of sound discretion on a case-by-case basis.) (citation and internal quotation marks omitted). In light of these considerations, we decline to adopt a rigid rule that would limit the protective order amount to the undisputed amount of the rent. Moreover, it is not uncommon for protective orders to require the tenant to deposit disputed rental payments into the registry of the court. Stets, supra, 754 A.2d at 295. The protective order does not dispose finally of the parties' rights to the money paid under it. Id. at 296. The court cannot disburse the funds until conclusion of the action and a determination of the parties's respective rights to the funds. Id. (citing McNeal v. Habib, 346 A.2d 508, 514 (D.C.1975)) (other citation omitted). While the court has discretion to order release of the uncontested portion of the rent to the landlord under some circumstances, we can conceive of no circumstances where the disputed portion of the rent will be released before it is determined to whom it rightfully belongs. Id. at 296-97. Such an order protects the landlord from financial losses when the tenant continues in possession pending the outcome of the litigation, and [i]t also protects tenants successful in their litigation from forfeiting their lease at the conclusion of the litigation because they cannot make up for an unpaid deficiency. Id. at 295 (quoting Dameron v. Capitol House Assocs. Ltd. P'ship, 431 A.2d 580, 584 (D.C.1981) ( rev'd on unrelated grounds ) (other citation omitted)). Therefore, we leave it to the trial court to set the Drayton stay protective order amount at a level, which in its discretion, is warranted by the circumstances, considering all relevant factors.