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A D.C. hospital operator's effort to get its HVAC system upgraded has backfired in nightmarish fashion for the operator.

Hospital operator DCA leased its Northeast D.C. premises from Capitol Hill Group starting in late 2014.



Shortly before the lease was signed, Capitol Hill Group had broken off a portion of the building as a residential property and decoupled the existing HVAC system, which involved installing HVAC components in the remaining hospital premises. The DCA lease acknowledged that Capitol Hill Group “has installed a new HVAC system within the [b]uilding.” Upon occupying the premises, DCA came to believe that this “new HVAC system” did not adequately heat, cool, and ventilate the hospital.

The alleged inadequacy related to the fact that Capitol Hill Group had installed only new boilers, chillers, and pumps, not new distribution components ( i.e. , air handlers and fan-coil units).

After fruitlessly complaining to Capitol Hill Group about the alleged inadequacy of the HVAC system, DCA began to withhold rent payments over the issue (and other issues not relevant here). This led to litigation, initially filed by Capitol Hill Group to recover the unpaid rent. The lawsuit turned on whether the lease required Capitol Hill Group to install new distribution components as part of the “new HVAC system.

” The courts – ultimately including the D.C. Court of Appeals, in an opinion decided March 6, 2025 – concluded that the lease did not require new distribution c.

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