Bernstein Management Corp. v. District of Columbia Rental Housing Commission, 952 A.2d 190 (2008)

The Rental Housing Act specifically allows for the imposition of treble damages “in the event of bad faith.” D.C.Code § 42-3509.01(a). We have defined “bad faith” as the “intent to deceive or defraud.” P’ship Placements, Inc. v. Landmark Ins. Co., 722 A.2d 837, 845 (D.C.1998) (quoting Robinson v. Audi Aktiengesellschaft, 56 F.3d 1259, 1266 (10th Cir.1995)). In its order affirming the imposition of treble damages, the Commission stated that “bad faith is equated with an ‘intent on the part of the housing provider to misrepresent the rent ceiling or defraud the tenants or to avoid detection by the RACD,’” quoting its decision in Velrey Properties v. Wallace, TP 20, 431 (RHC Sept. 11, 1989). We owe deference to the Commission’s interpretation of bad faith in the specific context of the Rental Housing Act. See Dorchester House Assocs. Ltd. P’ship, 938 A.2d at 702. In finding bad faith, the Rent Administrator placed great emphasis on the fact that, as a large property management company, petitioner “should have known” what the rules were pertaining to the recapture of rent adjustments, but also stated that petitioner “knew” that the increase of Ms. Sheppard’s rent beyond the then-authorized rent ceiling was unlawful. The Rent Administrator’s order is not without ambiguity (particularly its reference to what petitioner “should have known”) as to whether a finding was made that petitioner’s rent increases were made with the knowledge that they were in violation of the law. But we think that viewed in context, the better reading is that the Rent Administrator found that petitioner acted advisedly to raise rent above the rent ceiling, and, moreover, attempted to conceal that fact. On the first point, the Rent Administrator specifically discounted petitioner’s unsupported assertion that it believed it could further increase the rent under another (unspecified) unimplemented ceding adjustment. As to the second point, the undisputed record is that petitioner not only charged rent in excess of the rent ceiling but also, beginning in 1997, represented to the tenant and to RACD that the rent ceiling was increased beyond the level established in 1996, without — as the Rent Administrator found — any basis for doing so. Our reading of the Rent Administrator’s order is confirmed by the Commission’s order affirming imposition of treble damages under the bad faith standard, which underscored that “[p]roviding false/erroneous information concerning rents actually charged to avoid detection is an indicator of bad faith.” The record supports that petitioner “inten[ded] ... to misrepresent the rent ceiling,” Velrey Properties, supra, and therefore acted in bad faith, after having initially informed the tenant in the lease of the correct rent ceiling. See note 2, supra.10