Opinion
21-P-668
09-28-2022
TONY ZEBROWSKI & another [1] v. MOBILE HOME RENT CONTROL BOARD OF SPRINGFIELD & another. [2]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass.App.Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Hayastan Industries, Inc. (Hayastan), the owner of a manufactured housing community in Springfield known as Bircham Bend Mobile Home Park (park), appeals from a judgment of the Housing Court vacating the 2017 rate setting decision of the Springfield Mobile Home Rent Control Board (board) and entering judgment, as a matter of law, in favor of the plaintiffs. For the reasons that follow, we affirm the judgment in part, vacate it in part, and remand the case for further proceedings.
Background.
In May 2016, Hayastan submitted to the board a petition (2016 petition), seeking a twenty-five dollar upward adjustment of maximum rent. After proper notice, the board held a public hearing on August 22, 2016 (public hearing). Several park tenants, including Paul Henault and Tony Zebrowski (plaintiffs), as well as Hayastan's president, Stephen Shahabian, testified at the hearing. Some tenants disputed that repairs had been made as represented by Hayastan and claimed that "park conditions were not acceptable." Shahabian was permitted to rebut the tenants' testimony, and he asserted that repairs were made and could be substantiated and that "nothing in the [p]ark is substandard." Henault's attorneys questioned a number of the claimed expenses as inappropriate or unsubstantiated.
Approximately thirty-five tenants attended the hours-long public hearing. As a result of malfunctioning equipment, the public hearing was not recorded. In addition, none of the subsequent meetings at which the board met to discuss Hayastan's 2016 petition were recorded. Minutes of the public hearing and of the meetings were added to the administrative record by the board during the course of the Housing Court proceedings.
Thereafter, as instructed by the board at the public hearing, Hayastan submitted additional documentation in September 2016 to support certain of its expenses. The board held the public hearing open until October 20, 2016, to allow the park tenants to file responses. After reviewing hundreds of pages of materials from Hayastan, Henault's attorneys submitted a detailed response challenging many of the claimed expenses; they also requested a new hearing.
On June 28, 2017, the board met and voted not to hold a second hearing because the board already "had sufficient information to make a decision." On September 27, 2017, the board met again to discuss the 2016 petition and first announced its intention to use the "2017 fiscal year" numbers in assessing whether a rent increase was justified; and notwithstanding its earlier statement about the sufficiency of the evidence before it, the board's attorney asked Shahabian for a copy of Hayastan's complete 2016 budget. On or about October 6, 2017, Shahabian provided additional documentation, including Hayastan's actual 2016 budget, to the board and to Henault's attorneys. However, these documents were not provided to Zebrowski or to any other park tenant who appeared to oppose the 2016 petition at the public hearing.
The board may also have discussed Hayastan's 2016 petition at its April 3, 2017, meeting. With the exception of Henault, the tenants were not given notice of any of the continued hearings on the 2016 petition.
In its actual 2016 budget, Hayastan reported total expenses of $404,035, up from $370,163 claimed in its 2016 petition, and increased the amount of rent it sought to $331.25 per month (a proposed $90.25 increase in monthly rent).
At its next meeting on October 25, 2017, the board reached an agreement on the 2016 petition; and on November 29, 2017, signed and issued its rate setting decision (2017 decision), approving a nonretroactive rent adjustment to $319.23 per month, plus an automatic rent increase of one percent over the next five years.
In its decision, the board credited Hayastan with $404,035 in "reasonable expenses," the exact amount listed by Hayastan in its actual 2016 budget that had not been provided to the tenants with the exception of Henault. As permitted by the board's decision, Hayastan began implementing the rent increases in January or February 2018. The tenants paid the rent increase for approximately two years, until judgment entered in their favor in this case.
On December 22, 2017, the plaintiffs filed a complaint seeking judicial review of the 2017 decision. Haystan was permitted to intervene with the assent of the board and the tenants. On May 2, 2018, the board filed the "complete" record on two discs.
As the judge observed, the administrative record filed with the court on that date was far from complete. So far as appears from our review, the board was never able to provide the judge with the documents that constituted the complete administrative record.
On May 13, 2020, a judge allowed the plaintiffs' motion to strike the May 5, 2019 affidavit of Shahabian "explicating the record," and denied Hayastan's motion to "support/supplement" the record with, inter alia, a second Shahabian affidavit. She subsequently denied Hayastan's motion for the court to take additional evidence. See G. L. c. 30A, § 14 (5). After further hearing, the judge ordered the board's decision vacated, denied Hayastan's motion for a remand, and ordered final judgment to enter in favor of the plaintiffs. This appeal followed.
Discussion.
The judge concluded that she was required to set aside the board's decision because it violated constitutional provisions and was made upon unlawful procedure.G. L. c. 30A, § 14 (7) (a), (d)-(e). See Slive & Hanna, Inc. v. Massachusetts Comm'n Against Discrimination, 100 Mass.App.Ct. 432, 436 (2021). We agree that the board's decision was made upon unlawful procedure and violated the tenants' due process rights and was properly invalidated on that basis.
The board's rules and regulations for mobile home park accommodations and rents of the city of Springfield (1986) (board's rules and regulations) incorporated the provisions of G. L. c. 30A and made the provisions of the statute applicable to the board as if it "were an agency of the Commonwealth." See § 6 of the board's rules and regulations. See also § 30-3 of the Revised Ordinances of the City of Springfield (1986) .
After the close of the public hearing, the board engaged in ex parte communications with Hayastan, obtained Hayastan's actual 2016 budget and substantiating documentation -- without notice to the tenants and without giving them an opportunity to review and to challenge that evidence -- and then expressly relied on that evidence in its decision to approve a rent increase that far exceeded the one sought in the 2016 petition. These actions violated several statutory provisions and regulations governing adjudicatory proceedings as well as the tenants' due process rights. See G. L. c. 30A, § 10 (board "shall afford all parties an opportunity for full and fair hearing"); G. L. c. 30A, § 11 (1) ("where subsequent amendment of the issues is necessary, sufficient time shall be allowed after full statement or amendment to afford all parties reasonable opportunity to prepare and present evidence and argument respecting the issues"); G. L. c. 30A, § 11 (4) ("All evidence ... in the possession of the agency of which it desires to avail itself as evidence in making a decision, shall be offered and made a part of the record in the proceeding, and no other factual information or evidence shall be considered"); 801 Code Mass. Regs. § 1.02(10)(f) (1998) ("[p]residing [o]fficer shall have the duty to conduct a fair hearing to ensure that the rights of all parties are protected . . .; and to reconvene the hearing with notice to the parties at any time prior to the decision being issued"); 801 Code Mass. Regs. § 1.02(10)(h)(2) (1998) ("[c]opies of any evidence [on which a decision is based] shall be provided to all other [p]arties"); 801 Code Mass. Regs. § 1.02(10)(h)(5) (1998) (agency may require any party "with appropriate notice to all other [p]arties, to submit additional evidence on any relevant matter" [emphasis added]); 801 Code Mass. Regs. § 1.03(6) (1999) (prohibiting ex parte communications). See also Rothman v. Rent Control Bd. Of Cambridge, 37 Mass.App.Ct. 217, 223 (1994) (fundamental principle of fair hearing that "whatever actually plays a part in the decision should be known to the parties and subject to being controverted" [citation omitted]).
The board conducted the proceeding in accordance with G. L. c. 30A, §§ 10-12, and 801 Code Mass. Regs. § 1.02 (1998), the informal rules of the standard adjudicatory rules of practice and procedure. See § 5(E) of the board's rules and regulations.
Although the judge was correct that the flawed 2017 decision cannot stand, we part ways with the judge on the choice of remedy. As the judge recognized, there were three potential remedies available: remand; a determination on the merits based on the existing record; or vacatur of the board's decision and entry of judgment for the tenants. We are not persuaded that entering final judgment for the tenants was the only "viable" one of these options; we are likewise not persuaded that doing so here was consonant with the interests of justice and fairness. Hayastan not only played no role in the events that lead to the deficient state of the record, but it also made efforts -- albeit unsuccessful -- to support and to supplement the administrative record. See G. L. c. 30A, § 14 (4), (5). The board's own attorney did not object to Hayastan's request for a remand. Moreover, a remand would not result in an unlawful retroactive rent increase, as the cases cited by Hayastan demonstrate. See, e.g., Palmer v. Rent Control Bd. of Brookline, 7 Mass.App.Ct. 110, 119-120 (1979).
We note that in the ordinary case, parties claiming evidentiary insufficiency in an agency decision have the burden of providing the court with a transcript of the evidence. See Covell v. Department of Social Servs., 439 Mass. 766, 782-783 (2003) .
In the unusual circumstances of the case, we conclude that a remand for the holding of a new public hearing after notice is the most appropriate course of action. Exhibit P to the board's 2017 decision (Hayastan's actual 2016 budget) and all supporting documentation shall be made available for examination by any interested party prior to the hearing. Both Hayastan and the tenants shall have the opportunity at the hearing to provide evidence and testimony, subject to cross-examination, about the 2016 budget, as well as testimony on any issues raised at the original public hearing. Based on the entire record compiled and made available to everyone, the board can make appropriate findings on disputed issues of fact and a determination on whether an increase in maximum rent increase is justified.
The reality is that given the passage of time and the turnover on the board, the administrative record cannot be adequately reconstructed. Although the judge offered her assistance in an attempt to overcome the procedural irregularities, the parties were unable to reach any type of agreement about the record or how to proceed.
The determination of rent on remand should date back to the board's original November 2017 decision. See Palmer, 7 Mass.App.Ct. at 119-120.
So much of the judgment of the Housing Court that vacated the November 29, 2017 decision of the board is affirmed. In all other respects the judgment is vacated and the case is remanded to the Housing Court with directions to remand the matter to the board for further proceedings consistent with this memorandum and order.
So ordered.
The panelists are listed in order of seniority.