Court Opinion

ID: 9953021
Source: CourtListenerOpinion
Date Created: 2024-03-21 14:02:52.647063+00
Date Added: 2024-06-11T14:45:36.404174
License: Public Domain

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             DISTRICT OF COLUMBIA COURT OF APPEALS

                                 No. 22-CV-0316

              BRIAN LOGAN REAL ESTATE, LLC, et al., APPELLANTS,

                                        V.

                        DISTRICT OF COLUMBIA, APPELLEE.

                         Appeal from the Superior Court
                          of the District of Columbia
                             (2020-CA-002912-B)

                       (Hon. Danya A. Dayson, Trial Judge)

(Submitted October 26, 2023                              Decided March 21, 2024)

      Vanessa Carpenter Lourie, for appellants.

      Brian L. Schwalb, Attorney General for the District of Columbia, Caroline S.
Van Zile, Solicitor General, Ashwin P. Phatak, Principal Deputy Solicitor General,
Thais-Lyn Trayer, Deputy Solicitor General, and Eric Levine, Assistant Attorney
General, were on the brief for appellee.

      Before EASTERLY and DEAHL, Associate Judges, and FISHER, Senior Judge.

      DEAHL, Associate Judge: The District of Columbia sued Brian Logan and

Brian Logan Real Estate for discriminating against holders of section 8 housing

vouchers. The suit stemmed from a rental property listing that expressly stated, “no
                                            2

vouchers.”     Logan answered the complaint, admitting that he posted the

advertisement but explaining that the qualification was not discriminatory, and

instead accurately reflected that the rental was not in fact eligible for vouchers. The

property’s owners—a diplomat and his wife—had not been accepted into the

voucher program because one of them apparently did not have a social security

number. After some further proceedings, discovery, and independent investigation

by the District, the District moved to voluntarily dismiss its suit.

      Logan opposed dismissal and sought attorneys’ fees on the basis that the

District initiated and maintained its suit in bad faith because it should have known

before filing its suit, and at the least some months before moving to dismiss it, that

he did not intend to discriminate on the basis of income, i.e., against voucher holders.

The Superior Court dismissed the case and denied Logan’s request for attorneys’

fees, finding that the District neither initiated nor pursued the litigation in bad faith.

Logan now appeals. We detect no clear error in the trial court’s conclusion that the

District did not act in bad faith, and so we affirm the denial of attorneys’ fees and

the suit’s dismissal.

                                        I. Facts

      Brian Logan and Brian Logan Real Estate posted advertisements for a rental

property.    The advertisements declared, “SORRY, NO VOUCHERS.                     THIS
                                         3

PROPERTY IS NOT IN THE PROGRAM.” Shortly thereafter, an investigator with

the Civil Rights Section of the D.C. Office of the Attorney General called Logan,

posing as a potential renter. The investigator and Logan had this exchange:

            Investigator: . . . I’m also part of a voucher program.

            Logan: Well, we have a voucher applicant that we’ve
            accepted and we’re waiting for the DC housing to approve
            the property but as you know it takes about 45 days for
            that to happen. So if we get a non-voucher person who
            wants it sooner we’ll take that. . . . If you’re a voucher
            person I’ve already got one of those . . . we’re happy with.

            Investigator: Ok. So you’re saying someone with a
            voucher has already applied for this property?

            Logan: Yup, and we’re in the process of trying to get the
            property approved and as you know it takes them about 45
            days to approve the property by the time they do all their
            paperwork and inspections.

            Investigator: Ok. I have a rapid-rehousing voucher that
            I’d like to apply to this property.

            Logan: Well, I’ve already accepted one voucher person, so
            there’s no need to have two. I’m only accepting at this
            point someone who is non-voucher and can take it sooner
            than later. . . .

            Investigator: Ok, ok. So basically because you have
            someone that’s already applied with a voucher . . .

            Logan: And we’ve approved them, they have good credit
            and they’re nice people.

            Investigator: So I wouldn’t be able to apply for it at this
            time? Is that what you’re saying?
                                           4

              Logan: That’s correct, unless you’re a non-voucher
              person.

              Investigator: I see. So you basically are looking for one
              voucher holder in this property?

              Logan: Well that’s all it will hold, it’s a single family
              house.

              Investigator: Ok. Alright, I appreciate it Brian.

        The District’s Housing Authority, or DCHA, later informed Logan that the

property would not be approved to accept vouchers because one of its owners did

not have a social security number. Logan then updated some of the property’s

advertisements to explain that “[t]he owners are foreign and one does not have a

social security number and DCHA will not accept the property into their program.”

The District was unaware of those updated advertisements when it later brought its

suit.

        The District filed a complaint against Logan and his company alleging, as

relevant here, discriminatory treatment and discriminatory advertising under D.C.

Code § 2-1402.21(a)(1), (5). Logan answered the complaint, explaining that the

property was simply ineligible to accept housing vouchers, as the DCHA had

informed him. Logan nonetheless responded to some of the District’s discovery

requests on May 21, 2021, providing documentary evidence that the DCHA had not

approved the property to accept vouchers. On July 13, 2021, the District responded
                                            5

with a deficiency letter, detailing omissions in Logan’s responses and seeking more

information. Logan never replied to the deficiency letter. Less than three months

later and after further independent investigation by the District, the District moved

to voluntarily dismiss its suit. Logan opposed and sought attorneys’ fees on the basis

that the District litigated in bad faith.

       In considering the motion, the trial court opined that the District had not acted

in bad faith when it initiated its suit. The court concluded that the advertisement and

phone call with the District’s investigator provided a good-faith basis to bring suit.

But the court had some doubts about the District’s deficiency letter and its

maintenance of the suit after Logan had explained that the property was ineligible to

accept vouchers, so the court ordered supplemental briefing on that topic. After

briefing, the court determined that “[t]he information the District requested” in its

deficiency letter “could be characterized” either “as ‘mitigating evidence’ sought in

order to decide whether to exercise its discretion to prosecute,” or “as information

necessary to assess whether the District could sustain its burden.” But “either way,”

the court concluded, the District did not file the deficiency letter in bad faith. And

when Logan failed to reply to the letter, the court reasoned that it was not indicative

of bad faith for the District to take a few months to conduct its own investigation

before opting to dismiss.
                                           6

      The court thus granted the District’s motion to voluntarily dismiss its suit and

denied Logan’s request for attorneys’ fees. Logan now appeals.

                                     II. Analysis

      “A trial court’s findings of bad faith are factual and reviewable under the

clearly erroneous standard.” Hundley v. Johnston, 18 A.3d 802, 806 (D.C. 2011).

A decision not to award attorneys’ fees “will be reversed only for abuse of

discretion.” Jung v. Jung, 844 A.2d 1099, 1108 (D.C. 2004). So “[o]ur review of

the trial court’s ultimate decision to deny attorneys’ fees is confined to a

determination of whether the [trial court] failed to consider a relevant factor, whether

[it] relied upon an improper factor, and whether the reasons given reasonably support

the conclusion.” Hundley, 18 A.3d at 806.

      “In general, parties before the District’s courts are responsible for paying the

costs and fees that their own attorneys incur during the course of litigation.”

Yeh v. Hnath, 294 A.3d 1081, 1087 (D.C. 2023). That is the “American Rule.” Id.

But the rule has three exceptions: “The prevailing party may recover fees and costs

from the losing party if authorized by statute, by contract, or by the court’s exercise

of equitable power ‘when the interests of justice so require.’” Cathedral Ave. Co-

op., Inc. v. Carter, 947 A.2d 1143, 1159 (D.C. 2008) (quoting Hall v. Cole, 412 U.S.

1, 5 (1973)). We have referred to the last exception to the American rule as the “bad-
                                            7

faith exception.” Yeh, 294 A.3d at 1089. Logan makes no argument that he is

statutorily or contractually entitled to attorneys’ fees, and instead contends only that

the trial court clearly erred when it concluded that the District did not litigate in bad

faith.

         The “conduct justifying an award of attorney[s’] fees under the bad faith

exception may be found either in the filing of a frivolous claim or in the manner in

which a properly filed claim is subsequently litigated.” Hundley, 18 A.3d at 810.

But “the standards for a showing of bad faith” under either scenario “are necessarily

stringent, precluding awards for attorneys’ fees in the absence of extraordinary

circumstances.” Jung, 844 A.2d at 1108. Because of this strict standard, a finding

of bad faith is warranted “only in a limited set of scenarios,” to wit:

               [W]here a lawyer knowingly violated the rules of
               professional conduct, a party committed a fraud upon the
               court in the course of litigation, a party wantonly failed to
               comply with a final court order, or a party’s claim had no
               basis whatever in the evidence to support it and was
               [clearly] brought for coercive purposes.

Yeh, 294 A.3d at 1089-90.

         Logan’s arguments that the trial court clearly erred in concluding that the

District did not act in bad faith vary somewhat as between the discriminatory

treatment and its discriminatory advertisement claims, so we address those claims in

turn.
                                           8

                  A. Bad Faith as to Discriminatory Treatment

      Logan argues that the District initiated its discriminatory treatment claim in

bad faith because it knew or should have known before filing its suit that he did not

intend to discriminate. Barring that, he argues that at the very least the trial court

erred in concluding that the District did not act in bad faith when it maintained its

suit after it was clearly apprised that the property’s owners could not accept section

8 vouchers. The District counters that it had a sufficient factual basis both for

initiating and maintaining its suit. 1 Its argument goes that it initially had reason to

think that Logan did intend to discriminate based on the face of the initial

advertisement and Logan’s subsequent phone call with an investigator, and that it

      1
         Under the DCHRA, it is “unlawful” to “refuse or fail to initiate or conduct
any transaction in real property” either “wholly or partially . . . based on the . . .
source of income . . . of any individual.” D.C. Code § 2-1402.21(a)(1). The statute
likewise makes it unlawful “[t]o make, print, or publish . . . any notice, statement, or
advertisement, with respect to a transaction, or proposed transaction, in real
property” that “indicates or attempts unlawfully to indicate any preference,
limitation, or discrimination based on . . . source of income.” Id. at § 2-1402.21(5).
And the statute specifically lists “monetary assistance provided to an owner of a
housing accommodation under section 8 of the United States Housing Act of 1937”
as “a source of income.” Id. at § 2-1402.21(e).
                                           9

did not maliciously protract the litigation once it came to light that Logan in fact

could not accept vouchers for the housing. 2

                               1. Initiation of the suit

      The Superior Court did not clearly err in finding that the District did not act

in bad faith when it brought its discriminatory treatment claim. Logan stresses that

he told the investigator during the phone call that the property had not been approved

to accept section 8 vouchers, but the investigator was under no obligation to accept

that explanation. Housing providers that discriminate on the basis of income will of

course not always openly admit to discriminating, and the face of the advertisement

itself and Logan’s refusal to accept voucher applicants provided some reason to

believe that he was acting in violation of the DCHRA.

      2
        The District further argues that it had a non-frivolous basis to believe that
Logan’s intent to discriminate was irrelevant to its discrimination claims, but we
doubt that. It is true, as the District points out, that is unclear whether a showing of
discriminatory animus is necessary to sustain a discrimination claim under the
DCHRA. See Burrello Grp, LLC v. District of Columbia, 303 A.3d 618, 625 (D.C.
2023) (citing Feemster v. BSA Ltd. P’Ship, 548 F.3d 1063, 1070-71 (D.C. Cir.
2008)). But it is beyond doubt that one cannot act “for a discriminatory reason”
against voucher holders if they lack any volitional choice and are simply unable to
accept vouchers. D.C. Code § 2-1402.21(a)(1). Neither Burrello nor Feemster cast
doubt upon that self-evident reading of the statute.
                                           10

      Even if the District should have known Logan had a valid and non-

discriminatory basis for refusing to accept vouchers, that does not equate to bad faith.

“[I]t is not enough for a defendant seeking sanctions from the initiation of an action

to establish that a plaintiff’s claim was entirely without color when brought.” Yeh,

294 A.3d at 1090. Rather, a defendant “must also establish by clear and convincing

evidence that [the action] was asserted wantonly, for purposes of harassment or

delay, or for other improper reasons.” Id. Thus, we recently reversed an award of

attorneys’ fees for bad faith even though “moderately diligent research

by . . . counsel would have shown that her evidence did not prove the required

assertion” because “[b]ad faith must be distinguished from, for example, negligence

or professional incompetence.” Id. at 1081. Logan’s assertion that the District

should have uncovered his valid basis for refusing to accept vouchers had it only

been more diligent amounts to nothing more than that the District acted less than

carefully in litigating its claims against him. But imperfect litigation tactics, or even

haphazard investigation (assuming for the sake of argument that the District’s

investigation could fairly be described as such), would not compel a finding of bad

faith. Those descriptors are perfectly consistent with the trial court’s finding that the

District did not act wantonly, maliciously, and in bad faith. They do not render that

finding clearly erroneous.
                                         11

                             2. Maintenance of the suit

      While the District’s maintenance of the suit is a marginally closer question,

the evidence still does not approach compelling a finding as a matter of law that the

District acted wantonly in protracting the suit beyond the point where it was clearly

non-viable. “A party’s bad faith in the maintenance of a colorable action . . . may

manifest itself through procedural maneuvers lacking justification or for an improper

purpose, such as harassment or delay.” Jung, 844 A.2d at 1108. Logan stresses that

his discovery responses in May 2021 “included documentation that the DCHA had

rejected the Property” from the voucher program, and yet the District “continued to

pursue the litigation, includ[ing] pressing for the additional discovery[,] claiming

deficiencies in the discovery responses that were wholly unrelated to the core issue,”

and only “mov[ing] to dismiss the case” several months later. We can agree that the

District should have more promptly investigated Logan’s seemingly valid defense

to the discrimination claim and sought to dismiss its suit earlier, but that is where

our agreement ends. That alone falls short of compelling a finding of bad faith.

      In truth, very little happened in the litigation between when Logan supplied

evidence that the property was not eligible for vouchers and when the District,

several months later, moved to voluntarily dismiss its suit. And none of what

transpired compels a finding of vexatious litigation. It was about two months after
                                          12

Logan’s discovery responses when, on July 13, 2021, the District notified him of

some deficiencies in his discovery responses and requested more information, and

Logan did not even respond to that request. There do not appear to have been any

hearings or substantive motions during the following months. The next thing of any

moment that happened in the litigation—setting aside some routine scheduling

motions and orders—was the District filing to dismiss its suit. None of that activity

compels a finding that the District acted in bad faith, or maliciously dragged Logan

through the judicial wringer. It falls short of compelling a finding that the District

“committed a fraud upon the court in the course of litigation,” or “wantonly failed

to comply with a final court order,” or acted “for coercive purposes.” Yeh, 294 A.3d

at 1089-90. And a finding of bad faith is not warranted short of that “limited set of

scenarios.” See id.

      In short, while we might fault the District for failing to more thoroughly

investigate its suit before bringing it, and for letting it linger beyond when more

diligent counsel might have dismissed it, its failures on those fronts are not

particularly indicative of bad faith litigation tactics. They simply do not establish

that the trial court clearly erred when it chalked them up to good faith.
                                            13

                        B. Discriminatory Advertisements

      Logan’s arguments with respect to the District’s discriminatory advertisement

claim are unavailing for similar reasons.

                                1. Initiation of the suit

      The trial court did not clearly err in concluding that the District filed its

discriminatory advertisement claim in good faith. Logan’s original advertisement

stated: “SORRY, NO VOUCHERS.                 THIS PROPERTY IS NOT IN THE

PROGRAM.” This alone provided a non-frivolous basis to believe that Logan had

“publish[ed]” a “notice, statement, or advertisement” that indicated “preference” for

non-voucher holders. D.C. Code § 2-1402.21(5). Logan counters that his initial

advertisements were “quickly modified to contain an explanation for why the

Property could not accept applications with government vouchers,” and “[t]hose

corrected advertisements were published prior to the lawsuits.” But even if the

District had known that Logan had updated his advertisements when it sued him—

and the trial court found it did not—that would not obviate the District’s prima facie

basis to believe that the initial advertisements violated the statute.
                                           14

                               2. Maintenance of the suit

         The Superior Court also did not clearly err in concluding that the District did

not act in bad faith when maintaining its discriminatory advertisement claim. In

discovery, Logan “admit[ted] that [he] posted the advertisements as alleged.” And

he claimed that “the advertisements were only posted after the District of Columbia

Housing Authority (‘DCHA’) informed the defendants that an application that had

been submitted for approval could not be accepted because one of the owners of the

property did not have a social security number.” But the evidence was to the

contrary, as Logan’s original advertisements were posted online in November

2019—the District’s investigator called him to follow up the following month—and

that was before the DCHA had determined in January 2020 that he could not accept

vouchers.

         More to the point, while Logan provided strong evidence by May 2021 that

he did not intend to discriminate, and instead had simply not been approved to accept

housing vouchers, we have already explained that the District’s moderate delay in

seeking to dismiss its suit after that became clear does not compel a finding of bad

faith.
                                  15

                                  III.

The trial court’s judgment is affirmed.

                                          So ordered.