This article discusses the circumstances under which a condominium unit owners association pursuing construction defect claims may be entitled to recover attorney’s fees, litigation expenses and treble damages under the District of Columbia Consumer Protection Procedures Act.
DC Condominium Association’s Can Recover Attorney’s Fees, Litigation Costs and Treble Damages in Construction Defect Cases Involving Misrepresentation
The District of Columbia Consumer Protection Procedures Act (“CPPA”) § 28-3905(k)(1)(A) creates a private legal claim (a/k/a “cause of action”) which can be asserted by a condominium unit owners association (“condominium association”) on behalf of two or more of its unit owner members who are misled by a condominium developer regarding the condition or quality of a newly constructed or newly converted condominium. Under the DC CPPA, a successful claimant is entitled to recover “treble damages” (i.e., three times the amount of damages it proves), plus recovery of “reasonable attorney’s fees” incurred in prosecuting the construction defect claim and “[a]ny other relief the court determines proper,” including non-attorney fee litigation expenses. DC CPPA § 28-3905(k)(2)(A), (B) and (F).
The CPPA Creates the Legal Claim that Allows a Condominium Associations to Recover Attorney’s Fees, Litigation Costs and Treble Damages
The DC CPPA is a consumer-oriented statute designed to protect Washington DC consumers misled in connection with the purchase of consumer “real estate,” including transactions involving the purchase of a condominium unit and interest in the condominium common elements. Typically, these cases involve the sale of a newly constructed or newly converted condominium, which, contrary to developer representations, contains latent construction defects.
The DC CPPA is a “remedial statute,” intended to be “applied liberally” by the courts protect consumers by establishing “an enforceable right to truthful information” about consumer real estate transactions in the District of Columbia. DC Code § 28-3901(c). One way in which the DC CPPA protects DC consumers of condominiums is by allowing for the recovery of treble damages and reasonable attorney’s fees so as to encourage private attorneys to take on consumer misrepresentation cases. District Cablevision Limited Partnership v. Bassin, 828 A.2d 714, 728 (D.C.2003).
Another way in which the DC CPPA protects DC consumers is by creating a statutory claim for misrepresentation and omission in the sale of a condominium that does not require proof of “intent to deceive” or “duty to disclose,” a traditional legal roadblock for consumers seeking to prove a common law fraud claim. Saucier v. Countrywide Home Loans, 64 A3d. 428, 442 (D.C.2012); Wetzel v. Capital City Real Estate, LLC, 73 A.3d 1000, 1004-05 (D.C.2013); Grayson v AT&T, 15 A.2d 129, 251 (D.C.2011). For example, to prevail on a claim under the DC CPPA, a consumer need only allege and prove that they suffered damages as a result of being misled by a misrepresentation of, or failure to state, a material fact. DC CPPA § 28-3904(e) and (f). Thus, there can be liability for misleading a unit owner in the sale of a condominium, even if the misrepresentation or omission by the declarant, developer, builder or other affiliate was unintentional.
Factual Scenarios Giving Rise to CPPA Claims in DC Condominium Construction Defect Cases
DC CPPA liability in condominium construction defect case arises when a newly constructed or newly converted condominium contains latent construction defects that are contrary to what the condominium developer represented about the condition and quality of the condominium when selling it to the public. The unsuspecting unit owners who becomes saddled with the expense of repairing the latent construction defects may have a CPPA claim against the developer and other responsible parties who mislead them by making untrue or misleading statements (misrepresentations), or by failing to disclose important facts (omissions), about the true condition of the condominium in connection with the sale of units. It is not necessary for a DC CPPA claimant to be in a contractual relationship with the person or entity who made the misrepresentation or omission of material fact in order to bring a claim for violation of the DC CPPA. Wetzel v. Capital City Real Estate, LLC, 73 A.3d 1000, 1004-06 (D.C.2013).
To qualify, however, the representations or omissions of fact must be “material,” that is, they would have would impacted the decision of an average consumer to purchase a unit and common element ownership interest in the condominium. See, Saucier v. Countrywide Home Loans, 64 A3d. 428, 440-446 (D.C.2012) (discussing “materiality” under the DC CPPA). Damages can consist of three times the proven cost of repairing the construction defects and damage caused thereby or the cost of obtaining the represented amenities and quality that were not delivered, plus reasonable attorney’s fees and litigation costs.
A condominium association can pursue a DC CPPA claim on behalf of two or more of its unit owner members if the subject of the misleading conduct and damage caused thereby is a “matter that affects the condominium.” DC Condo Act § 42-1903.08(a)(4). For example, if, in connection with a condominium conversion, a declarant represents to purchasing unit owners in a Public Offering Statement that the common element roof of the building had been completely removed and replaced with a brand new roof, when in fact the old deteriorate and leaking roof was merely covered with an extra layer of roofing material, this would be a matter affecting the condominium. As such, the condominium association could sue the declarant on behalf of the unit owners for violation of the DC CPPA and seek three times the cost of installing a “new roof” (i.e., treble damages) plus reasonable attorney’s fees and litigation costs.
Unfair or Deceptive Trade Practices Under the CPPA in Condominium Construction Defect Cases
A violation of the DC CPPA occurs when a person engages in an “unfair or deceptive trade practice.” The DC CPPA contains a non-exclusive list of specific examples of conduct that constitutes “unfair or deceptive trade practices.” These include making a misrepresentation about the condition or quality of construction of a condominium or failing to disclose material facts regarding problems with the condominium common elements as well as other conduct which is misleading to condominium purchasers. For example, if a condominium developer represents that the condominium is constructed in accordance with applicable building permits and it is not, that may be an unfair trade practice. Likewise, if the developer promises that it has and/or will make certain repairs or renovations in connection with the conversion of a condominium which it does not make, that may also be an unfair trade practice. If the condominium association and/or its unit owner members suffer actual damages as a result of relying upon such misrepresentations or omissions, they may bring a private cause of action under DC CPPA § 28-3905(k)(1)(A). Grayson v. AT&T, 15 A.3d 219, 244 (D.C.2011) (claimant asserting a private cause of action under the DC CPPA must shows an “injury-in-fact” to themselves or the persons they represent resulting from the unfair trade practice).
Quoted below are some of the specified “unfair or deceptive trade practices” set forth in the DC CPPA that condominium construction defect attorneys utilize as a legal basis for asserting a claim for treble damages and attorney’s fees under the DC CPPA in cases where condominium developers have misled unit owners about the condition of a condominium that contains latent construction defects:
“It shall be a violation of this chapter for any person to engage in an unfair or deceptive trade practice, …including to:
(a) represent that [newly constructed or converted condominiums or portions thereof] … have … approval, certification, accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have;
* * * * *
(c) represent that [a converted condominium or portions thereof] are … new if in fact they are deteriorated, altered, reconditioned, reclaimed, or second hand, or have been used;
(d) represent that [newly constructed or converted condominiums or portions thereof] are of particular standard, quality, grade, style, or model, if in fact they are of another;
(e) misrepresent … a material fact [concerning a newly constructed or converted condominium] which has a tendency to mislead;
(e-1) [r]epresent that a transaction [to purchase a newly constructed or converted condominium] confers or involves rights … which it does not have or involve… ;
(f) fail to state a material fact [concerning newly constructed or converted condominiums] if such failure tends to mislead;
(f-1) [u]se innuendo or ambiguity as to a material fact [concerning newly constructed or converted condominiums], which has a tendency to mislead;
(h) advertise or offer [newly constructed or converted condominiums] without intent to… sell [them] as advertised or offered;
* * * * *
(p) falsely state or represent that repairs, alterations, modifications, or servicing have been made [in connection with the conversion of an existing building into a condominium] and receiving remuneration therefor when they have not been made….”
DC CPPA § 28–3904.
Note that some of the above enumerated unfair or deceptive trade practices do require proof of intent, while others do not. Compare §28-3904(h) with §28-3904(e) and (f). Note also that the “unfair or deceptive trade practice” enumerated in DC CPPA § 28-3904 (quoted in part above) are examples only and not exclusive. Therefore, other conduct that misleads consumers, not specifically described in the statute may constitute and “unfair or deceptive trade practice” in violation of the DC CPPA, including any practices prohibited by other DC statutes and common law. Atwater v. District of Columbia Dep’t of Consumer Regulatory Affairs, 566 A.2d 462, 465-467 (D.C.1989); Osbourne v. Capital City Mortgage Corp., 727 A.2d 322, 325 (D.C.1999); District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 722-23 (D.C.2003). In determining what non specified conduct may constitute an “unfair or deceptive trade practice,” the statute requires DC Courts to give “due consideration and weight … to … interpretation by the Federal Trade Commission and the federal courts.” DC CPPA § 28-3901(d).
Proving Treble Damages Under the CPPA in a Condominium Construction Defect Case
Treble damages are recoverable in order to encourage private attorneys to take consumer protection act cases. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 745 (D.C. Cir. 2000); District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 728(D.C.2003). As such, treble damages under the DC CPPA have a remedial purpose and are not designed to punish. Id., at 725-729., Therefore, unlike punitive damages, a claimant is entitled to an award treble damages without having to make a showing of egregious conduct. District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 728 (D.C.2003). Once it is established that a consumer has suffered any monetary damage, the DC CPPA authorizes courts to treble those damages without any further findings. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 745 (D.C. Cir. 2000); Byrd v. Jackson, 902 A.2d 778, 782 (D.C.2006); District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 729 (D.C.2003).
Proving Attorney’s Fees and Litigation Costs under the CPPA in a Condominium Construction Defect Case
Generally, parties to a lawsuit are not entitled to recover their attorney’s fees and other litigation expenses in the absence of an applicable statute or contractual agreement which specifically allows for the recovery of such fees and expenses. The DC CPPA is such a statute because it permits a person seeking relief from an unfair or deceptive trade practice to recover their “reasonable attorney’s fees” and “any other relief which the court deems proper.” DC CPPA § 28-3905(k)(2)(B) and (F). To the extent that a person seeking redress under the DC CPPA has litigation expenses, other than attorney’s fees (e.g., court filing fees, expert witness fees, paralegal fees, deposition expenses), the court may award such expenses under the provision of the DC CPPA that permits a claimant to recover “[a]ny other relief which the court determines proper.” DC CPPA § 28-3905(k)(2) (F) ; In Re Inphonic, Inc., Wireless Phone Rebate Litigation, United States District Court for the District of Columbia, No. 06-0507 (ESH), Memorandum Opinion and Order, 5-6 (MDL docket number 1792).
Allowing for the recovery of reasonable attorney’s fees is designed to encourage private attorneys to take consumer protection act cases. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 745 (D.C. Cir. 2000). Therefore, to ensure that this purpose is not defeated, DC Courts have rejected the argument that the amount of claimant’s attorneys fee claim can be attacked as unreasonable solely because it is disproportionate to, or even far greater than, the amount of compensatory damages actually awarded. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 747 (D.C. Cir. 2000) (rejecting the “rule of proportionality” with regard to attorney’s fees awarded under the DC CPPA). Allowing attorney fees awards to be defeated or reduced on grounds that they are disproportionate to the damages recovered, would discourage, not encourage, private attorneys from taking consumer protection cases, making it “‘difficult, if not impossible for individuals with meritorious … claims but relatively small potential damages to obtain redress from the courts.’” Id.; In Re Inphonic, Inc., Wireless Phone Rebate Litigation, United States District Court for the District of Columbia, No. 06-0507 (ESH), Memorandum Opinion and Order, 15-16 (MDL docket number 1792).
It is also not a ground for reducing the amount of reasonable attorney’s that a claimant’s attorney’s fees are attributable to proving other, non-DC CPPA claims, such as negligent misrepresentation, breach of contract, negligent construction, breach of warranty against structural defects. Rather, all reasonable attorney’s fees pursuing a case are recoverable so long as the other claims sufficiently overlap the CPPA claim and arise out of a common core of facts such as the defective construction or renovation of a condominium. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 746-747 (D.C. Cir. 2000); In Re Inphonic, Inc., Wireless Phone Rebate Litigation, United States District Court for the District of Columbia, No. 06-0507 (ESH), Memorandum Opinion and Order, 10-11 (MDL docket number 1792). This applies even if the claimant is not successful on the other, non-DC CPPA claims. Williams v. First Gov’t Mortgage & Investors Corp., 255 F.3d 738, 746 (D.C. Cir. 2000) ( “‘fees for time spent on claims that ultimately were unsuccessful should be excluded only when the claims are distinctly different in all respects, both legal and factual from plaintiffs successful claims’”).
Punitive Damages Under the CPPA in a Condominium Construction Defect Case
If it can be proven with “clear and convincing evidence, that an unfair or deceptive trade practice perpetrated on unit owners involved “outrageous or egregious” wrongdoing in which the condominium developer or declarant acted with “evil motive, actual malice or willful disregard for [their] rights,” then a DC condominium association, on behalf of its unit owner members, may recover punitive damages under DC CPPA § 28-3905(k)(2)(C), in addition to treble damages. District Cablevision Limited partnership v. Bassin, 828 A.2d 714, 725 -729 (D.C.2003) (under the DC CPPA, punitive damages are designed to punish intentional wrongdoers and thus cannot be awarded without the requisite evidentiary showing, whereas treble damages are remedial in nature and require no evidentiary showing).
Note about Definition of “Goods and Services”
Where the statutory language quoted above refers “goods and services,” I have inserted in brackets, the terms “newly constructed or converted condominiums” which is the subject matter of this article. The definition of “goods and services,” under DC CPPA §28-3901(a)(7), includes “real estate transactions, and consumer services of all types,” thereby including the sale of residential condominiums and represented services and amenities offered in connection with the sale of residential condominiums. See Saucier v. Countrywide Home Loans, 64 A3d. 428, 442 (D.C.2012) (suit by condominium association for violation of DC CPPA arising out of construction defects); Wetzel v. Capital City Real Estate, LLC, 73 A.3d 1000, 1004-05 (D.C.2013) (suit by condominium unit owner for violation of DC CPPA arising out of construction defects).
Note about 2018 Amendment to the CPPA: New terminology (“Unfair and Deceptive Trade Practices”) and Incorporation of Federal Trade Commission Precedent
Effective July 17, 2018, the DC CPPA was amended to make it consistent with similar statutes in other states and federal trade commission law. The amendment changed the statutory terminology, in that the term “unlawful trade practices” was replaced with “unfair and deceptive trade practices.” This amendment was intended to make the CPP a consistent with similar statutes in other states and federal trade commission law. The amendment also provides that that courts should consider interpretations by the Federal Trade Commission and federal courts when interpreting or deciding what action to take with regard to “unfair or deceptive act or practice.” DC CPPA §28-3901(d).
This is the terminology and interpretation guidance used in many other state consumer protection acts, including Maryland’s Consumer Protection Act, Maryland Commercial Law Article §§ 13-105 and 13-301. For example, The Maryland Court of Appeals, relying upon “the interpretations of the Federal Trade Commission Act by the Federal Trade Commission and the federal courts,” held that “[i]mplicit in any advertisement and rental of an apartment is the representation that the leasing of the apartment is lawful” and in compliance with licensing laws. Golt v. Phillips, 308 Md. 1, 9-10, fn. 3 and accompanying text (Md. 1986) (“[f]or consumer protection purposes, the meaning of any statement or representation is determined not only by what is explicitly stated, but also by what is reasonably implied”). Likewise, it is implicit in the sale of a newly constructed condominium in the District of Columbia that the condominium complies with applicable building codes and laws requiring compliance with approved plans and specifications submitted to the Department of Buildings. For an article discussing the Maryland Consumer Protection Act, See “Condominium Association’s Right to Recover Attorney’s Fees in Construction Defect Cases,” by Nicholas D. Cowie.
Practical Tips
When faced with a construction defect matter, misrepresentation claims such as violation of the DC CPPA should not be overlooked. For an article providing an overview of other legal claims that can be brought in connection with a condominium construction defect case, see “Resolving Condominium Construction Defect Claims in Washington DC,” by Nicholas D. Cowie. For an article discussing how the DC warranty against structural defect works and how to make claims against a Declarant’s security Bond or Letter of Credit to fund warranty repairs, see “The Condominium Warranty Against Structural Defects In Washington DC”, by Nicholas D. Cowie.
Note About Author
Nicholas D. Cowie is a condominium lawyer and construction defect litigation attorney practicing law throughout Washington DC and the State of Maryland. Mr. Cowie established the “Construction Law” course at the University of Baltimore School of Law where he served as an adjunct professor of construction law and is highly regarded for his knowledge and practice of construction law and construction defect litigation. Mr. Cowie also is the instructor for the Community Association Institute CRC course entitled “Successful Strategies for Resolving Construction Defect Claims With Condominium Developers.” and the law firm of Cowie Law Group have extensive experience representing condominium associations asserting consumer protection act claims. Mr. Cowie served as trial counsel in a case where the court awarded $500,000 in attorney’s fees for violation of the Maryland Consumer Protection Act following entry of a $6,600,000 jury verdict against a developer and builder of a condominium for construction defects. Milton Company v. Council of Unit Owners of Bentley Place Condominium, 121 Md. App 100, 121 (1998),aff’d, 354 Md. 264 (1999).
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NOTE ON LEGAL ADVICE: This Article should not be relied upon as a legal advice applicable to any specific case the application of the District of Columbia Consumer Protection Procedures Act to a Washington DC condominium construction defect claim. Rather, it is a general statement of legal principles that may or may not apply to your Washington DC condominium. The individual facts of each case need to be analyzed to determine the application of law. Contact one of the experienced Washington DC Condominium Construction Defect Attorneys at Cowie Law Group, P.C. for a consultation relative to your condominium’s specific situation.
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