Summary
In Litsey, the court found that the hearing officer considered information supplied by the beneficiary's landlord to be "essential to its decision to terminate."
Summary of this case from Young v. Maryville Housing AuthorityOpinion
Civil Action No. 3:99CV-114-H
April 1, 1999
MEMORANDUM OPINION
Plaintiff Saretha Litsey qualified for and received rental certificates for a federal housing subsidy available to low-income families under Section 8 of the Housing Act of 1937. 42 U.S.C. § 1437f. In October of 1998, the Housing Authority of Bardstown (the "Housing Authority"), terminated Plaintiff's certificate based on a belief that Plaintiff's boyfriend lived with her in violation of Section 8 program regulations. She filed her federal court action under 42 U.S.C. § 1983 seeking various forms of relief, including injunctive relief, a declaration that her termination of benefits was unlawful, and sufficient damages to pay any rent, late fees or penalties for missed rental payments.
Because Plaintiff faces eviction depending on the outcome of this case and a related state court case, she moved for a temporary restraining order. The Court heard oral argument on the motion on March 11, 1999. In addition to the pleadings and their attached exhibits, the Court accepted into the record a transcript of the Plaintiff's pre-termination hearing before the Housing Authority and copies of the evidence submitted to the Housing Authority hearing officer.
Plaintiff filed a similar action in state court. The state court dismissed Plaintiff's motion for a temporary injunction on the grounds that it lacked subject matter jurisdiction. Uncertain where this left resolution of Plaintiff's constitutional claims, she filed this action in federal court. The Court understands that the landlord has not continued forcible detainer proceedings pending the outcome of this case and/or the related state court case.
Plaintiff has moved for preliminary injunction. Fed.R.Civ.P. 65. The full record being available, the Court has considered whether to decide this case on the merits. The Court has finally concluded that a number of sound reasons counsel against doing so. The difficulty of the issues, the uncertainty of the appropriate final relief, and the apparent pendency of an action in state court are just a few of those reasons. Therefore, the Court will address only Plaintiff's motion for preliminary injunction.
I.
The pertinent facts of the case are these.
Plaintiff and her three children live at 248 Marvin Downs in Bardstown, Kentucky. The Housing Authority paid the rent pursuant to Plaintiff's Section 8 certificate. Last year, her boyfriend, Andre Lydian, became the subject of complaint letters from Plaintiff's landlord. These complaints apparently caused the Housing Authority to begin its own investigation.
The first letter, dated June 16, 1998, informed Plaintiff she was in substantial violation of several lease provisions for "allowing Mr. Lydian to stay with [her]" at the apartment and permitting him and his guests to "congregate outside, yelling, playing their car stereo very loud, and harassing other residents." The letter gave her a two-week period to cure the violations, informed her of steps for contacting management to resolve the problem, and advised her that failure to cure could result in eviction or judicial action to terminate her lease. Immediately upon receipt of this letter, Plaintiff complained to her landlord, disputing not only that Lydian lived with her, but also some of the accusations in the letter. She also offered to let her landlord search her apartment for proof that Lydian lived there.
A copy of the Plaintiff's lease is not before the Court; therefore, the Court has no way of knowing what provisions of the lease were supposedly violated.
The second letter, dated June 17, 1998, indicated that the presence of Lydian's unregistered, inoperable car at the a site was also a violation of the lease, and that Lydian had flouted the warnings given him indicating that the car would be towed if not removed by him. This second letter did not threaten eviction but instead notified Plaintiff that the towing would be at her expense as per terms of the lease.
The lease provision states ". . . Inoperable or unregistered vehicles will be removed from the complex ant [sic] the registered owner's expense if said vehicle is not removed after the LESSOR has given the owner of said vehicle forty-eight (48) hours written notice, by attaching a copy of said notice on said vehicle or otherwise." Mr. Lydian had torn up two notices placed on the car pursuant to that provision and placed the torn up notices under the landlord's door. See Letter from Landlord, June 17, 1998.
The landlord sent copies of each letter to the Housing Authority and on June 24, 1998, the Housing Authority followed up with an Address Information Request to the Postmaster of the Bardstown, Kentucky post office. The Postmaster responded that Lydian was currently receiving mail at 248 Marvin Downs, Plaintiff's address. Based on that information, and on Plaintiff's failure to contradict that information, on July 21, 1998, the Section 8 Coordinator for the Housing Authority sent a letter to Plaintiff terminating her Section 8 assistance, effective August 31, 1998. The letter stated specifically:
On June 24, 1998, a letter was sent to you concerning Mr. Andre Lydian residing in your household, giving you the opportunity to add Mr. Lydian or provide information on his residence. I have documentation that he does reside at 248 Marvin Downs. Be advised that effective August 31, 1998, all assistance on your behalf will be terminated.
Plaintiff's Exhibit C, Notice of Termination, Jule 21, 1998. According to the letter, Plaintiff would be responsible for her rent beginning September 1, 1998. The letter also indicated that she had five (5) working days to request a hearing on the matter.
Plaintiff requested and received an informal review of her termination, which took place August 6, 1998 before hearing officer Faye Keeling. In a letter from Ms. Keeling to Plaintiff dated August 18, 1998, the hearing officer summarized the hearing and the evidence before her and affirmed the decision to terminate Plaintiff's Section 8 benefits. Defendant's Exhibit B. The letter also informed Plaintiff that she could request a hearing within five working days of receiving the letter.
Regarding the evidence, the August 18, 1998 letter stated:
The Housing Authority received verification from the U.S. Post Office that Andre Lydian's mail is delivered to your address. At the hearing, you stated that Andre did stay overnight at your unit, 248 Marvin Downs Road, at least three nights a week. You stated that he did not live with you and he received his mail at his mother's. I explained that you needed to bring verification of where he lived and where he received his mail. You also stated that he was on his mother's lease at 157 Caldwell and you would bring copies of his mail and a copy of his mother's lease into me before I made my decision of your informal hearing. On August 11, 1998, you brought into the office six envelopes with Andre Lydian's name on them. On two of these envelopes there was a question mark on them. I contacted the Post Office on August 13, 1998, and asked why the question mark was put on the letter. The Post Office informed me that there was a question as to whether this person lived at this address. You also brought a signed letter from Mayme Rice, Andre's Mother, that stated Andre's address was 157B Caldwell Avenue in Bardstown. There was no docuemntation as to where Andre lived; only where he received his mail. You admitted to having a relationship with Andre Lydian whereby he did spend three nights a week in the unit. Information was received that Andre Lydians mail was received at your unit. Therefor, it is the findings [sic] and conclusion of this hearing officer that the action taken by the Housing Authority in reference to the notice of termination of lease is hereby affirmed.
Defendant's Exhibit B.
Plaintiff received such a hearing on September 15, 1998 before Sheri D. Lee. Witnesses before the hearing officer were Plaintiff, Andre Lydian, and Jackie Reed, assistant executive director of the Housing Authority, who issued the initial, written notice of termination from July 21, 1998.
Documentary evidence at the hearing included: (1) the Postal Service form indicating Lydian received mail at Plaintiff's address; (2) the two letters from Plaintiff's landlord; (3) a rental/credit application signed by Lydian and his mother pertaining to his mother's apartment on Caldwell Street in Bardstown; (4) six pieces of mail provided by Plaintiff; and (5) four signed, handwritten statements that Lydian did not reside at Plaintiff's apartment from Lydian's mother, two neighbors, and a friend of Plaintiff. The mail evidence included two pieces of mail addressed to Lydian at Plaintiff's address and four pieces of mail addressed to Lydian at his mother's address.
In addition to the documents presented were Plaintiff's and Lydian's oral testimony. Plaintiff explained that the two pieces of mail addressed to Lydian at her address were related to medical bills for one of his children. She explained that when she brought the infant to Louisville for medical treatment, she used Lydian's insurance card and listed him as the responsible party. Thus, medical bill information was addressed to him. It was not refuted that these were the only two pieces of mail that Lydian received at her address.
Lydian was the father of two of Plaintiff's children.
The Court notes that at least three of the four pieces of mail addressed to Lydian at his mother's apartment were arguably important, personal mail — statements regarding Lydian's own medical bills and credit union account statements. The hearing officer appears to have taken no particular notice of or given any weight to the importance of these documents.
Plaintiff also testified regarding the frequency and duration of Lydian's overnight stays. Plaintiff and Lydian both denied that he lived at the Marvin Downs apartment. They conceded that he did visit almost daily and that he stayed over night up to two nights per week. Faye Keeling, at the interim hearing, found that Lydian stayed three nights per week. Plaintiff explained at the final hearing that she stated to Keeling that the longest he had ever stayed was three nights and that was after she came home from the hospital following C-section delivery of her youngest child. Apparently, hearing officer Sheri Lee accepted Plaintiff's explanation at the final hearing and she acknowledged that such overnight stays were within the limits of the Housing Authority's policy on overnight guests.
Giving great weight to the Post Office's form and the landlord's letters, and discounting or ignoring all other contrary evidence, the hearing officer upheld termination of Plaintiff's benefits.
II.
In exercising its discretion with respect to a motion for preliminary injunction, a district court must give consideration to four factors: (1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether the issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by issuance of the injunction. Rock Roll Hall of Fame Museum, Inc. v. Gentile Prods., 134 F.3d 749, 753 (6th Cir. 1998). The four considerations applicable to the preliminary injunction decisions are factors to be balanced, not prerequisites that must be met. In re DeLorean Motor Co., 755 F.2d 1223, 1229 (6th Cir. 1985).
Consequently, the Court will examine these four factors to determine whether Plaintiff is entitled to preliminary injunctive relief. Of all the factors, the most important is whether Plaintiff can show a strong or substantial likelihood or probability of success on the merits. In the end, the Court concludes that the most important and critical of the legal issues are likely to be resolved favorably to Plaintiff.
A.
Filing suit under 42 U.S.C. § 1983 is an appropriate vehicle to challenge actions under the Housing Act of 1937 and its implementing regulations. Wright v. Roanoke Redevelopment and Housing Authority, 479 U.S. 418 (1987). Though Plaintiff does attack the factual findings of the hearing officer, she also challenges the manner in which the Housing Authority concluded that Lydian is a member of Plaintiff's household. That is, Plaintiff challenges the Housing Authority's termination of benefits because it denied "Plaintiff an opportunity to confront witnesses who supplied information on which Defendant based its termination. . . . [it was] a decision which was not based on a preponderance of the evidence . . . [and it was] based on the conduct of a guest . . . [which] was not in accord with the exclusive grounds for termination specified at" 24 C.F.R. § 982.552. Complaint ¶¶ 14-16. Stated more simply, she alleges that the Housing Authority failed to follow its own procedures and federal regulations when terminating her benefits.
The mixed nature of Plaintiff's allegations raise an important and subtle issue concerning the appropriate standard of review in these circumstances. Not surprisingly, Plaintiff's counsel, contending all claims were purely constitutional in nature, insists on a de novo review; Defendant's counsel, viewing this action as appeal of factual findings, argues that deferential review is more suitable.
A recent Fourth Circuit case, Clark v. Alexander, 85 F.3d 146 (4th Cir. 1996), is instructive. In Clark, the Fourth Circuit attempted to determine what standard of review applies "in federal civil rights cases challenging the decisions of local housing authorities implementing the federal low-income housing assistance program." Clark, 85 F.3d at 148. Stacey Clark, a Section 8 certificate recipient, had her benefits terminated for failing to meet a family obligation. In that case her family members had engaged in illegal drug activity. As here, Clark could not challenge the regulations themselves as procedurally deficient; nor could she assert the agency violated its own regulations. Id. at 150-51. Instead, the court concluded, Clark's § 1983 claim was strictly one challenging the Housing Authority's fact finding. Id. at 151. The Fourth Circuit concluded the proper result would be to give a deferential view to the agency's fact finding. Id.
Clark's estranged husband and father were arrested on drug charges when police found them in her apartment along with quantities of heroin, drug paraphernalia and other drug-related evidence. Clark, 85 F.3d at 149. The arrest and search of the apartment were based on probable cause provided by a confidential informant. Id. The husband was found to be a member of the household.
This Court agrees with the general proposition that factual findings of administrative agencies are due significant deference from the courts. See, e.g., Ritter v. Cecil County Office of Housing and Community Development, 33 F.3d 323, 327-28 (4th Cir. 1994). Thus, in cases such as this, courts should be inclined to uphold the agency. Where procedural flaws are alleged, however, such deference should give way to appropriate inquiry from the Court.
B.
As a first step the Court must review the regulatory scheme adopted by Department of Housing and Urban Development ("HUD") implementing the Section 8 certificate program. Those regulations are fairly detailed. See 24 C.F.R. Part 982. For the most part the Housing Authority followed them in exemplary fashion.
The portion governing termination and procedural rights upon termination at issue here is found at 24 C.F.R. § 982.551 through § 982.555. The ten grounds for terminating assistance are found under 24 C.F.R. § 982.552(b). The one applicable here is violation of family obligations found at 24 C.F.R. § 982.551. The obligation allegedly violated here pertains to use and occupancy of the housing unit under 24 C.F.R. § 982.551(h)(2). Specifically, the Housing Authority must approve family composition and the family must inform the Housing Authority promptly of any changes in family composition (e.g., birth, adoption, custody award). The Housing Authority must approve any additional family member. No other person outside members of the assisted family may reside in the unit. 24 C.F.R. § 982.551(h)(2). The Housing Authority's policy is that overnight stays of three nights or more indicates residence or a change in family composition. The parties agree that proof that Lydian resided at the Marvin Downs apartment would adequately show Plaintiff had failed to meet her regulatory obligation, justifying termination of her benefits.
The ten grounds are:
(1) violation of family obligations found at 24 C.F.R. § 982.551.
(2) a member of the family having been evicted from public housing.
(3) any member of family ever having had housing assistance terminated.
(4) any member of family having been convicted of drug charges or violent criminal activity.
(5) any member having committed fraud, bribery or any other corrupt or criminal act in connection with any federal housing program.
(6) the family's currently owing rent or other amount to housing authority ("Housing Authority")in connection with Section 8 assistance.
(7) the family's not having reimbursed any Housing Authority for amounts paid to an owner under a HAP contract for rent, damages to the unit, or other amounts owed under the lease.
(8) the family's breaching an agreement with Housing Authority to pay amounts owed to an Housing Authority or amounts paid to an owner by Housing Authority.
(9) the family's failure to comply with a contract for a family self-sufficiency (FSS) program without good cause.
(10) the family's engaging in or threatens abusive or violent behavior toward Housing Authority personnel.
The regulatory scheme not only gives rules for the Section 8 certificate recipient, but also lists rules governing the Housing Authority's actions. Specifically, the regulations describe when a hearing is required and the procedures for such hearings. An informal hearing is required to determine if a decision to terminate benefits "because of a family's action or failure to act" is "in accordance with the law, HUD regulations and Housing Authority policies." See 24 C.F.R. § 982.555 (a)(v). The Housing Authority's own administrative plan must set out the procedures to be followed in the informal hearing process. The HUD regulations provide basic requirements to be followed in the informal hearing, including the right to representation, the right to present evidence, and the right to question any witnesses. See 24 C.F.R. § 982.555(e); see also Defendant's Exhibit B, Housing Authority of Bardstown Section 8 Program Informal Review or Hearing Procedure, ¶ III (A). Furthermore, the hearing officer "must issue a written decision, stating briefly the reasons for the decision," and the officer's factual findings about the family must be "based on a preponderance of the evidence presented at the hearing." 24 C.F.R. § 982.555(e)(6).
In this case the Housing Authority gave Plaintiff two separate hearings and plenty of opportunity to be heard. Though the Court might question whether the Housing Authority should place the burden on Plaintiff to show evidence of Lydian's address, the Housing Authority did give her plenty of opportunity to submit such evidence. Without doubt, in most respects, the Housing Authority did more than procedural due process requires. No amount of process, however, can make up for the absence of evidence or for the reliance on critical evidence in violation of federal regulations or the agency's own procedures. The Court must consider whether the decision so failed to rest on sufficient evidence that it was arbitrary, and thus, a clear violation of Plaintiff's rights. As the Court's analysis reveals, there seems a substantial likelihood that it was.
C.
The last paragraph of Housing Authority's decision lists the hearing officer's three reasons for affirming termination of benefits:
Because no written, reliable verification has been submitted to the Housing Authority as to where Mr. Lydian lives; and because the most recent verification as to his address comes from the Post Office listing 248 Marvin Downs as his current address; and because Ms. Litsey has received letters from her landlord as a result of Mr. Lydian and his friends congregating and disturbing other neighbors, my decision is to uphold the Housing Authority's termination of assistance notice.
The Court must focus its attention on this paragraph.
The hearing officer's first reason, that "no written, reliable verification has been submitted to the Housing Authority as to where Mr. Lydian lives, " is at best a conclusory, misstatement of the mail evidence. Plaintiff did provide some reliable verification; the hearing officer chose without explanation to ignore it. The Housing Authority also seems to put great weight on Plaintiff's failure to provide a lease with Lydian listed as tenant. The lack of such a lease was used against her; but the Housing Authority did not provide a lease proving his residence either.
The officer's second reason, that "the most recent verification as to his address comes from the Post Office listing 248 Marvin Downs as his current address," also grossly misstates the evidence. The Post Office form does not state where Lydian lives. It merely confirmed that Lydian received some mail at Plaintiff's address. The Housing Authority did not refute the explanation for Lydian's receiving medical bills related to his children at Plaintiff's apartment; nor did the Housing Authority refute that those two pieces of mail were the only ones addressed to Lydian at Plaintiff's apartment. Furthermore, at least one piece of mail related to Lydian's employment benefits is addressed to Lydian at his mother's apartment and either post-dates or is contemporary with the Post Office form. Thus, it directly contradicts the Post Office form. Even giving every deference to the Housing Authority, the postal evidence is inconclusive.
The Court notes also that the piece of mail postmarked June 29, 1998 from Lydian's employment benefits administrators did not have a question mark on it. Other pieces of mail with question marks on them motivated hearing officer Keeling to make inquiries at the post office after the interim hearing. See footnote 4 supra. The pieces of mail that motivated such inquiry date from February and April, long before the post office form was submitted in this case.
The hearing officer clearly relied on letters from the Plaintiff's landlord to support the decision. This the Court finds most troubling. These letters prove nothing about Lydian's residence. Even if Plaintiff stipulated to the facts supported by the letters — that he was there disturbing neighbors, or that he left his car on the premises in violation of Plaintiff's lease — they would suggest nothing about residence. In the face of contradictory mail evidence, the landlord's letters appear to have tipped the scale against Plaintiff, and not justifiably so. First, it simply is not clear how the hearing officer used the landlord's letters. Her commentary about the letters focuses on Lydian's behavior, not on their value as evidence of his residence. Lydian's behavior while visiting Plaintiff is not a permissible reason to terminate Plaintiff's benefits. See note 6, supra.
If, on the other hand, the hearing officer was trying to infer from the letters' content that Lydian lived with Plaintiff, the Plaintiff had a right to question the landlord. The Court concedes that hearsay evidence is permissible under the regulations. 24 C.F.R. § 982.555(e)(5). However, these letters were not even hearsay in the traditional sense. They were not offered or used to prove the truth of what they asserted. To qualify for that, they would have had to assert Lydian lived with Plaintiff. Instead, they are evidence that as a guest of plaintiff, he broke the rules of the apartment complex. If the hearing officer was attempting to infer from the letters that Lydian lived with Plaintiff, she went too far. The letters support no such inference. The remaining evidence cannot support the result.
The Court concludes that the landlord supplied information which the Housing Authority found essential to its decision to terminate the Section 8 certificate. The regulations and the Housing Authority's own administrative plan mandate Plaintiff be able to question such a party. Cf. Davis v. Mansfield Metropolitan Housing Authority, 751 F.2d 180, 185 (6th Cir. 1984) (case predating current regulations concluding that process due Section 8 certificate recipients at termination includes right to cross-examine witnesses); Edgecomb v. Housing Authority of the Town of Vernon, 824 F. Supp. 312, 315-16 (D.Conn. 1993) (when termination based solely on hearsay, Section 8 recipient is entitled to cross-examine witnesses who supplied hearsay evidence). In these circumstances, this omission amounts to a denial of due process.
D.
To give substantial deference must have a practical meaning. Courts should never merely insert their own view for the considered decision of those who retain the day-to-day responsibility of administering complex, federally-funded programs. Courts must be most cautious when, as here, such a possibility arises. Even bearing in mind this admonishment, the evidence here seems to fail clearly in several crucial ways. First, the evidence relied on lacks probative value. In other words, the decision was not based on substantial evidence. Second, at least one piece of evidence relied on heavily by the Housing Authority was supplied by a witness the Plaintiff did not have a chance to question. Without the unfair inferences from the landlord's letters, the record contains no evidence that Lydian lived with Plaintiff at least three days a week on a regular basis. Thus, the evidence relied upon does not come close to showing that Lydian resided at 248 Marvin Downs. For reasons not apparent to the Court, the hearing officer seemed to ignore all Plaintiff's evidence and place complete and unwarranted faith in other evidence. The record on the whole indicates that Plaintiff's procedural rights were compromised and demonstrates a substantial likelihood that her Section 8 benefits were improperly terminated.
"Substantial evidence has been defined as being that of substance and relative consequence, while the test of substantiality has been set forth in Kentucky State Racing Commission v. Fuller, Ky., 481 S.W.2d 298, 308 (1972), as being: `. . . whether when taken alone or in the light of all the evidence it has sufficient probative value to induce conviction in the minds of reasonable men.'" Starks v. Kentucky Health Facilities, 684 S.W.2d 5, 7 (Ky.Ct.App. 1984).
IV.
Having concluded that Plaintiff is substantially likely to succeed on the merits, the Court must now balance the other factors before deciding whether a preliminary injunction is appropriate.
Plaintiff did not seek relief immediately. She waited until the absence of Section 8 benefits now threatens her ability to remain in her apartment. If the Court fails to act now, Plaintiff may soon be evicted from that apartment. Thus, at this point in time, the denial of the right causes an irreparable injury to Plaintiff. Moreover, the continued denial of those benefits represents a further irreparable injury to Plaintiff.
A preliminary injunction would harm the Housing Authority because it may be required to subsidize Plaintiff's Section 8 benefits from its own resources if the Section 8 certificate is already reassigned. However, considering the rights involved and the Housing Authority's presumed financial ability, this harm does not seem substantial. Moreover, the harm need not be permanent as the Housing Authority could reassign to Plaintiff any Section 8 certificate which subsequently becomes available.
The Court concludes that preliminary injunction will prevent irreparable injury to Plaintiff under circumstances in which her Section 8 certificate was terminated unfairly. This injunction will ensure an immediate reinstatement of those benefits and, eventually, a fair reassessment of the Housing Authority's decision. For these reasons, the Court believes that the issuance of a preliminary injunction serves the public interest.
The Court will enter an order consistent with this Memorandum Opinion.
ORDER AND PRELIMINARY INJUNCTION
The Plaintiff has moved for injunctive and declaratory relief and payment of rental subsidies with regard to the improper termination of benefits under Section 8 Certificate Program under the Housing Act of 1937. 42 U.S.C. § 1437f. The Court has heard oral argument and reviewed the record from the Housing Authority of Bardstown ("Housing Authority"). The Court being otherwise sufficiently advised,
IT IS HEREBY ORDERED Defendant's motion to dismiss, remand, stay, or remove this case from the Court's active docket is DENIED.
IT IS FURTHER ORDERED that Plaintiff's motion for a preliminary injunction is SUSTAINED and the Housing Authority shall make rental payments to Plaintiff's Landlord pursuant to Plaintiff's former Section 8 housing certificate from this date forward unless and until Plaintiff's Section 8 housing certificate is properly terminated or adjusted in accordance with federal and agency procedures, or the Housing Authority's obligation to make Section 8 certificate-based rental payments is otherwise lawfully terminated.
IT IS FURTHER ORDERED that Defendant is enjoined from terminating Plaintiff's Section 8 Certificate on the basis of the previously established record.
IT IS FURTHER ORDERED that Plaintiff cooperate with the Housing Authority in undertaking a complete reexamination of her income and family composition.
IT IS FURTHER ORDERED that Plaintiff shall post security in the amount of $10 as a consequence of this injunction.
Nothing in this Order shall be construed to limit the Housing Authority's right, power, or obligation to monitor, re-examine, re-evaluate, adjust, or terminate Plaintiff's eligibility for Section 8 rental certificate as provided for under 24 C.F.R. Part 982 or pursuant to the Housing Authority's administrative plan.