Opinion ID: 2324034
Heading Depth: 2
Heading Rank: 2

Heading: The District Lacks the Authority to Deem the Tax Certificate Void Ab Initio in the Absence of Any Wrongdoing By Rupsha

Text: Although D.C.Code § 47-1355(a) gives the District authority to declare a Tax Certificate void, it permits this only in limited circumstances where there is evidence of wrongdoing on the part of the purchaser. Specifically, except as otherwise provided, a certificate of sale shall be void if: (1) the purchaser does not file suit to foreclose the right of redemption within one year of the date of sale; (2) the purchaser owes taxes to the District for which a property could be sold at a tax sale; (3) the foreclosure action is dismissed for lack of prosecution; (4) the purchaser fails to pay all other taxes owed on the property within 30 days of the final order; and (5) the sale is set aside because of the purchaser's fraud. See D.C.Code § 47-1355(a). The District does not contend that any of the above circumstances applies to Rupsha. However, the District asks us to interpret this list in § 47-1355(a) as non-exhaustive because, according to the District, there are statutory and regulatory provisions otherwise provided that allow it to void a Tax Certificate for administrative errors. The District cites two statutory provisions§§ 47-1355(c) [11] and -1377(b) [12]  that purportedly authorize the OTR to void a Tax Certificate resulting from its administrative error. However, these provisions do not give the OTR authority to void a sale beyond that provided in § 47-1355(a). Section 47-1355(c) does not grant an additional basis for voiding sales, but rather forbids the District from applying the forfeiture remedy to circumstances outside of the five delineated under § 47-1355(a). Additionally, § 47-1377(b) does not grant the District an additional basis for voiding a Tax Certificate, but rather explains that if a Tax Certificate is void, not only does the purchaser forfeit all payments made to the District, but he also cannot try to recoup these expenses from the redeeming party who later succeeds in redeeming the property. [13] Indeed, the District cannot point to any other provision in the statute to support its argument that the except as otherwise provided language of § 47-1355(a) indicates that there are other reasons to void a Tax Certificate outside the five enumerated. [14] As further support for declaring the Tax Certificate void ab initio, the District relies on the regulations promulgated under the Tax Sale Statute that purportedly give the District authority to void a Tax Certificate. The regulations provide certain rules and prerequisites to be followed when a Certificate of Sale is void based on failures by the tax sale purchaser, and/or invalid from the date of sale, based on administrative failures.  9 DCMR § 316.9 (emphasis added). For example, the regulations specify circumstances that may occur that may invalidate a Certificate of Sale . . . shall include . . . [a]ny other action taken by the OTR that may have inadvertently caused a sale of the real property tax lien. 9 DCMR § 316.9(b)(7). This circumstance squarely fits the situation of the parties in this case because the administrative error by the OTR inadvertently caused the sale of Ms. Banks's property to Rupsha. The District does not dispute the applicability of 9 DCMR § 316.9(b) to the circumstances in this case, [15] however it interprets the section to mean that the proper remedy is to void the Tax Certificate. Specifically, the District reasons that 9 DCMR § 316.9(b) makes a reference to section 316.9, and interprets this to be a reference back to § 316.9(a), which declares a certificate void and payments forfeited. This means that the District can void a sale on the basis of an administrative failure. Although we generally defer to the agency's interpretation of its own regulations, we cannot do so here. See Mallof v. District of Columbia Bd. of Elections and Ethics, 1 A.3d 383, 391 (D.C. 2010) (We must defer to [an agency's] interpretation of the regulation it has promulgated unless its interpretation is `plainly wrong or inconsistent with the governing statute.') (quoting Kuri Bros., Inc. v. District of Columbia Bd. of Zoning Adjustment, 891 A.2d 241, 244 (D.C.2006)); see also Washington Metro. Area Transit Auth. v. District of Columbia Dep't of Emp't Servs., 825 A.2d 292, 294-95 (D.C. 2003) (We defer if the decision is reasonable in light of the language of the statute (or rule)[.]) (citing Lincoln Hockey, LLC v. District of Columbia Dep't of Emp't Servs., 810 A.2d 862, 866 (D.C.2002)); Tenants of 738 Longfellow St., N.W. v. District of Columbia Rental Hous. Comm'n, 575 A.2d 1205, 1213 (D.C.1990) ([I]t is axiomatic that a regulation [must] be consistent with the statute under which it was promulgated.) (second alteration in original) (quoting District of Columbia v. Catholic Univ. of Am., 397 A.2d 915, 919 (D.C. 1979)) (internal quotation marks omitted). We reject the OTR's interpretation that 9 DCMR § 316.9(b) gives it authority to void sales resulting from administrative failures because the statute only gives the District authority to void tax sales in circumstances of purchaser wrongdoing. See D.C.Code § 47-1355(a). Agencies are creatures of statute and their authority and discretion are limited to that which is granted under their founding statutes. Therefore, regulations they enact pursuant to that statutorily provided authority cannot expand that authority. District of Columbia v. Brookstowne Cmty. Dev. Co., 987 A.2d 442, 449 (D.C.2010). The only statute giving the District authority to void a tax sale is found in D.C.Code § 47-1355(a). There are only five circumstances in which the District can void a sale, each of which involve purchaser wrongdoing. See D.C.Code § 47-1355(a)(1)-(5). The regulation regarding voiding sales lists the same instances of purchaser wrongdoing and clarifies that the remedy is forfeiture of all payments. See 9 DCMR § 316.9(a)(1)-(6). Interpreting 9 DCMR § 316.9(a) in this manner does not expand the District's power to void tax sales under the statute, but rather mirrors it. However, if, as the District suggests, we also interpret 9 DCMR § 316.9(b)the regulation regarding invalidating a sale due to administrative failuresas giving the District authority to void Tax Certificates under 9 DCMR § 316.9(a), this would greatly expand the District's power to void tax sales beyond that contemplated by statutes. It would allow the District to apply the extreme remedy of forfeiture in circumstances where there was no purchaser wrongdoing. This would directly contravene the statute. See D.C.Code §§ 47-1355(a) and (c). Thus, we are unpersuaded by the District's interpretation of the regulation. We also reject the OTR's interpretation of 9 DCMR § 316.9(b) because it is inconsistent with its prior interpretation. In 2009, the District agreed that 9 DCMR § 316.9(b) was intended to refer to Section 316.8 and not to Section 316.9. Rhea v. Capitol Homes & Cmtys., No.2008 CA 1279 (D.C.Super. Ct. June 1, 2009). While the trial court decision is not binding on this court, it has some persuasiveness, given that the District in that case interpreted the regulation to refer to § 316.8 rather than § 316.9(a). Such inconsistency in the District's interpretation of this regulation counsels in favor of according less deference to the interpretation of the regulation than the District asks us to adopt in this case. See Tenants of 738 Longfellow St., N.W., supra, 575 A.2d at 1213 (noting that the deference which courts owe to agency interpretations . . . plummets substantially when the interpretations are inconsistent and short-lived) (citing Superior Beverages, Inc. v. District of Columbia Alcoholic Bev. Control Bd., 567 A.2d 1319, 1326 (D.C.1989) (declining to defer to the District where the construction of the regulations at issue has been neither consistent nor of long standing.)). We hold that the more reasonable interpretation is that the regulation refers back to 9 DCMR § 316.8. Interpreting 9 DCMR § 316.9(b) to refer back to the rules governing cancellation of a sale in § 316.8 ensures that we do not give effect to a rule out of harmony with the statute. See Tenants of 738 Longfellow, supra, 575 A.2d at 1213 (quoting District of Columbia v. Jones, 287 A.2d 816, 818) (internal quotation marks omitted). This interpretation is consistent with the regulatory scheme in 9 DCMR § 316 since § 316.9(b) includes the phrase cancelled according to the rules in . . . and § 316.8 pertains to the rules and prerequisites for [c]ancellation of a Certificate of Sale by OTR. As noted earlier, under the Tax Sale Statute, cancellation is proper to prevent injustice to the owner. D.C.Code § 47-1366. Each of the circumstances listed in 9 DCMR § 316.9(b) is a specific illustration where injustice would result to an owner. See, e.g., 9 DCMR § 316.9(b)(1) (Taxes were paid prior to the tax sale); § 316.9(b)(5) (Payment applied to incorrect square/lot). Just as the statutory framework requires cancellation to prevent injustice to the owner, so, too, does the regulatory scheme, through 9 DCMR § 316.9(b). Additionally, interpreting 9 DCMR § 316.9(b) to require cancellation according to the rules in section 316.[8] brings consistency to the statute and its regulations, because the remedy for cancellations under the statute would be the same remedy for cancellations under the regulations. Under the statute, the purchaser receives the amount the purchaser would have received if the property had been redeemed, which includes the purchase price, statutory interest, refund of paid taxes that accrued after the date of sale, legal expenses, and attorney's fees. D.C.Code § 47-1366; see also §§ 47-1361 (a)-(d), -1377. Under our interpretation of the regulation, the purchaser is reimbursed in the same manner, and is refunded the purchase price, statutory interest, refund of paid taxes that accrued after the date of sale, legal expenses, and attorney's fees. 9 DCMR § 316.8(b). For the reasons discussed, we conclude that the District did not have the authority to declare the Tax Certificate void. The District's authority to declare a Tax Certificate void is limited to the five enumerated reasons found in § 47-1355(a), which contemplate wrongdoing on the part of the purchaser. The implementing regulations cannot be interpreted to expand the reasons set forth in the statute. The OTR's administrative error in mistakenly selling the Property after Ms. Banks paid the payoff amount could not serve as a basis for voiding the Tax Certificate. [16]