Opinion ID: 2321014
Heading Depth: 3
Heading Rank: 1

Heading: Ms. Anderson Received the Benefit of Her Bargain.

Text: Ms. Anderson contends that the landlord's breach of the implied warranty of habitability deprived her of the benefit of her bargain. Ms. Anderson argues that what she bargained for in this lease was a decent and clean unit, free of code violations, and valued at $1,350 per month, not $234. Whether she paid all or just a portion of the rent is irrelevant, she argues. However, we reject that argument in circumstances where a public agency such as DCHA has asserted a claim to payments it has made on Ms. Anderson's behalf. District of Columbia law implies into all residential leases a warranty of habitability, requiring the landlord to maintain the premises in compliance with the District of Columbia Housing Code. See 14 DCMR § 301.1 (1991); [11] see also Javins v. First Nat'l Realty Corp., 138 U.S.App. D.C. 369, 370-71, 428 F.2d 1071, 1072, cert. denied, 400 U.S. 925, 91 S.Ct. 186, 27 L.Ed.2d 185 (1970) ([A] warranty of habitability, measured by the standards set out in the Housing Regulations for the District of Columbia, is implied by operation of law into leases of urban dwelling units covered by those Regulations and breach of this warranty gives rise to the usual remedies for breach of contract.). Appellant was awarded an abatement because the trial court found that the landlord breached the implied warranty of habitability by failing to maintain the premises free of housing code violations. The trial court found that, due to housing code defects, the leased premises were valued at far less than the amount the landlord was receiving, and as a result, the rent should have been substantially less than the total amount the landlord received in rent for the unit. See, e.g., Javins, supra, 428 F.2d at 1082 ([T]he tenant's obligation to pay rent is dependent upon the landlord's performance of his obligations, including his warranty to maintain the premises in habitable condition.); Abidoye I, supra, 824 A.2d at 44 (finding that as between a landlord who failed to maintain the leased premises and a tenant who did not receive what she bargained for, the landlord should not profit from his breach of the implied warranty of habitability). Appellant mistakenly relies on Multi-Family Mgmt. v. Hancock, 664 A.2d 1210 (D.C.1995) and Cruz Mgmt. Co. v. Wideman, 417 Mass. 771, 633 N.E.2d 384 (1994), in support of her contentions. In Multi-Family, the landlord sued the tenant for possession of the apartment based on failure to pay rent and the tenant filed a counterclaim, alleging the existence of housing code violations. The trial court found that there were housing code violations and, acting sua sponte, ordered rent abatements and apportioned between the tenant and HUD a percentage representing the portion of the rent each paid for the unit. The court then ordered the landlord to pay these respective amounts to the tenant and to HUD, even though HUD was never a party to the litigation. The tenant in Multi-Family appealed the trial court's decision, claiming the right to 100% of the abatement on two alternative grounds. First, the tenant claimed he was entitled to the benefit of his bargain by receiving rent abatements based on the rent called for in the lease, not on the lower amount he actually paid as a participant in the Section 8 Program. Second, the tenant claimed entitlement to the abatement as a third party beneficiary of the HAP contract between the landlord and HUD. Multi-Family, supra, 664 A.2d at 1212. In Multi-Family, [12] we remanded the case to invite HUD to assert its rights, if any, to the abatement funds. Judge Ferren, in his dissent, recognized that because HUD contributed a major portion of the rent, it may have been entitled, if it sought it, to recover from the tenant the portion of the abatements attributable to HUD subsidies, based on an unjust enrichment theory. Multi-Family, supra, 664 A.2d at 1222 (Ferren, J., dissenting). However, absent a claim asserted by HUD or DCHA, as between the landlord and the tenant, Judge Ferren noted that the tenant was entitled to 100% of the court-ordered abatements, including the portion the court ordered paid to HUD. Id. at 1221. In sharp contrast to Multi-Family, here DCHA has asserted its rights to the portion of the rental abatement corresponding to the payments it made toward's appellant's rent, and DCHA is a party to this matter. Allocating 100% of the abatement to Ms. Anderson would award to her an amount exceeding what she paid to the landlord and arguably would constitute the unjust enrichment contemplated by Judge Ferren in his dissent in Multi-Family. DCHA is entitled to recover the portion of the abatement attributable to the HUD subsidy it paid on Ms. Anderson's behalf, namely $5,976. Another important factor that distinguishes this case from Multi-Family is the fact that DCHA notified the landlord of the housing code violations and gave the landlord time to cure these violations. When the landlord failed to cure the violations, DCHA advised the landlord on June 13, 2001 that the Section 8 payments he received for the unit were suspended effective June 7, 2001. Eight days later, in a letter dated June 21, 2001, DCHA advised the landlord that a subsequent inspection of the property revealed that the housing deficiencies were not resolved and therefore, effective August 31, 2001, DCHA was terminating rent subsidy payments for failure to meet the Housing Quality Standards (HQS) in compliance with the HAP contract. In Multi-Family, no action was taken by DCHA to enforce its rights under the HAP contract. As such, appellant's reliance on Multi-Family is misplaced. Appellant's reliance on Cruz Mgmt. Co. v. Wideman, supra, is similarly misplaced. [13] In Cruz, a Section 8 tenant filed a counterclaim against her landlord for breach of the implied warranty of habitability, alleging various housing code defects. Finding that the landlord had breached the warranty of habitability, the trial court awarded damages to the tenant for the breach, measured by the difference between the value of the dwelling as warranted (the rent provided for in the lease) and the value of the dwelling as it existed in its defective condition. The Massachusetts Housing Finance Agency (MHFA) was not a party to the litigation during trial, but moved to intervene after the trial had been completed. MHFA appealed alleging that the trial court should have limited the tenant's breach of warranty damages to the portion of the rent the tenant personally paid to the landlord. Cruz, supra, 633 N.E.2d at 387. The Massachusetts court held that since MHFA intervened after the trial had been completed, the record furnished no indication of which rights, if any, MHFA attempted to assert against the landlord. Id. at 389. The court found significant that the record, for example, did not show whether MHFA notified the landlord that conditions in the tenant's apartment were unsafe and unsanitary, or whether MHFA had advised the landlord that it intended to terminate or suspend subsidy payments on the tenant's behalf because of the landlord's failure to correct the violations. Id. The Cruz court further noted: The terms of the HAP contract, and the applicable Federal regulation, clearly require a State housing agency, like MHFA, to provide notice and an opportunity to cure a default before subsidy payments may be abated. Since the record does not permit us to conclude that MHFA has properly asserted its rights, there is no basis in this case to conclude that a full award of damages [to the tenants] will affect MHFA's position or rights under its contracts or Federal regulations. Cruz, supra, 633 N.E.2d at 389 (emphasis added). MHFA intervened only to assert its position that the tenant's recovery should be limited to the amount of rent the tenant personally paid to the landlord. MHFA never asserted any rights to any portion of the breach of warranty damages awarded to the tenant. In contrast, DCHA has asserted its rights to the portion of the abatement representing the money it paid to the landlord on behalf of Ms. Anderson. See Cruz, supra, 633 N.E.2d at 387 n. 7. In accordance with the terms of the HAP contract, DCHA twice notified the landlord, in writing, of its failure to comply with HQS. DCHA gave the landlord time to cure the housing defects before ultimately terminating the HAP contract on August 31, 2001. The actions taken by DCHA are in sharp contrast with those taken by MHFA in Cruz, despite the fact that the HAP contract between MHFA and HUD contains similar, if not identical, provisions to those contained in the HAP contract in this case. Thus, this court is not faced with the uncertainty found by the Massachusetts court in Cruz regarding what rights, if any, DCHA attempted to assert against the landlord. Unlike in Cruz, where the Massachusetts court was faced with determining the proper measure of damages that the landlord had to pay for breach of its obligations to the tenant, see 633 N.E.2d at 387 n. 7, here the question is one of allocation of those damages as between the tenant and DCHA. Neither the Cruz court, nor the court in Multi-Family, contemplated awarding to a tenant a rental abatement that represented more than what the tenant actually paid in rent where the public housing agency also claims contract damages for the same breach. [14] Although we agree with Ms. Anderson, as did the trial court, that she was entitled to a unit in a habitable condition, and that as a result of numerous housing code violations in her unit, she did not receive the benefit of her bargain, vis-a-vis DCHA, she is not entitled to receive moneys paid by DCHA pursuant to the Section 8 Program, regardless of the diminished value of the unit she occupied.