Opinion
Civ. File No. 03-6096 (PAM/RLE).
December 7, 2004
MEMORANDUM AND ORDER
This matter is before the Court on cross-Motions for Summary Judgment. For the reasons that follow, Defendants' Motion is granted and Plaintiff's Motion is denied.
BACKGROUND
Plaintiff Kimberly Whitfield and her three children were residents of the Mount Airy public housing complex in Saint Paul from July 1999 to June 2003. On March 25, 2003, an Assistant Resident Services Manager for Defendant Public Housing Agency of the City of Saint Paul ("PHA") issued a Notice of Termination of Tenancy to Whitfield. The Notice stated that Whitfield's tenancy was being terminated because she had repeatedly failed to comply with housekeeping and yard maintenance standards.
Pursuant to regulations promulgated by the Department of Housing and Urban Development ("HUD"), the PHA provides a grievance procedure for all disputes between tenants and the PHA. This grievance procedure consists of two parts. First, there is an informal conference between the tenant and the PHA. If the dispute is not resolved in the informal conference, the matter proceeds to a formal hearing before a hearing officer.
Whitfield and PHA employees attended an informal conference in April 2003. The parties were unable to resolve their dispute at the informal conference, and the PHA convened a formal hearing on May 22, 2003. Whitfield was represented by counsel at this hearing. After several hours of testimony, the hearing officer temporarily adjourned the hearing to allow the parties to discuss a settlement of the issues. The parties eventually reached a settlement, which was signed by Whitfield, a PHA employee, and the hearing officer.
Under the settlement agreement, Whitfield agreed to allow the PHA to inspect her apartment monthly for three months beginning June 2, 2003. Whitfield promised that she would pass all inspections, and agreed that the PHA could reinstate the termination of tenancy if she failed one housekeeping inspection. In addition, Whitfield waived her right to continue the May 22 grievance hearing, as well as her right to a grievance hearing regarding any reinstatement of tenancy termination proceedings. The settlement agreement also required Whitfield to move within seven days if the termination proceedings were reinstated. The PHA agreed to provide the assistance of a Human Services Coordinator. It also agreed to suspend the termination proceeding, and to cancel the proceeding if Whitfield complied with the agreement for one year.
Two PHA inspectors visited Whitfield's home on June 2, 2003, and noted a number of deficiencies. As a result, the PHA reinstated the March 25, 2003, termination of tenancy, and informed Whitfield that she would be required to move out by June 12, 2003, or face eviction proceedings. Whitfield vacated the home, but claims that the alleged violations were frivolous and immaterial. She was not allowed to grieve the June 2, 2003, inspection or the consequent termination of her lease.
Whitfield commenced this action in November 2003. On May 19, 2004, the Court dismissed Whitfield's disability discrimination claims, as well as her claims that the PHA coerced her into waiving her grievance proceeding rights and retaliated against her by reinstating the termination proceedings. However, the Court found that Whitfield had stated a cognizable claim that the PHA unlawfully required her to waive her rights to a grievance proceeding with respect to the PHA's determination that Whitfield did not comply with conditions in the settlement agreement. This Motion relates that claim.
In the May 19, 2004, Order, the Court also held that Whitfield stated a breach of contract claim based on an implied covenant of good faith and fair dealing. (See May 19, 2004, Order at 12.) The parties entered a settlement agreement on July 13, 2004, resolving all claims except for the legal question relating to the waiver issue.
DISCUSSION
A. Standard of Review
The parties move for summary judgment pursuant to Rule 56(c), which provides that such a motion shall be granted only if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The burden of demonstrating that there are no genuine issues of material fact rests on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The Court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the non-moving party.Enter. Bank v. Magna Bank, 92 F.3d 740, 747 (8th Cir. 1996). However, the nonmoving party may not merely rest upon allegations or denials in its pleadings — it must set forth specific facts showing that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
B. The Statutory Right to a Grievance Proceeding
Congress enacted the United States Housing Act, 42 U.S.C. § 1437 et seq., to provide decent, safe, and affordable housing to low income families. 42 U.S.C. § 1437. To encourage the construction and operation of low income housing, the Act authorizes HUD to provide grants, low interest loans, and tax exemptions to local public housing agencies. Because they receive federal subsidies, the local agencies can charge below-market rent to eligible tenants. In exchange for receiving public funding, the local agencies are required to operate public housing in compliance with the provisions of the Act. See 42 U.S.C. §§ 1437a- 1437d.
The parties agree that the Act and its implementing regulations require the PHA to provide a tenant with a grievance procedure to dispute an adverse action by the PHA. See 42 U.S.C. § 1437d(k); §§ 966.50-966.57; see also Samuels v. Dist. of Colum., 770 F.2d 184, 190 (D.C. Cir. 1985) ("The final regulations unequivocally require each PHA to establish and implement a grievance process that provides tenants a hearing if they dispute any PHA action or failure to act concerning lease provisions, local regulations or federal regulations."). The mandated grievance procedure includes an informal settlement conference, as well as a formal hearing if the settlement conference fails. See 24 C.F.R. §§ 966.54-966.56. During these proceedings, a tenant has the right to be represented by counsel, to confront and cross-examine witnesses, and to present any affirmative legal or equitable defense the tenant may have. See 42 U.S.C. § 1437d(k); 24 C.F.R. § 966.56. Finally, the PHA must provide the tenant with a written decision on the merits. See 42 U.S.C. § 1437d(k); 24 C.F.R. §§ 966.56-966.57.
The only exception to the administrative grievance procedure requirement is set forth in 29 C.F.R. § 966.51, which provides that the administrative grievance procedure may be bypassed if HUD has determined that state law requires that the tenant be given opportunity for a hearing in court, and if criminal activity is the reason for the termination of tenancy or eviction. It is undisputed that the exception is inapplicable here.
C. Prospective Waiver of a Future Dispute
The parties dispute whether a tenant may contractually waive his or her due process rights to prospective grievance proceedings. Whitfield contends that the prospective waiver isper se illegal. Neither the Act nor HUD regulations directly address whether a tenant may waive due process rights as part of a settlement agreement. Moreover, neither the parties nor the Court has found case law directly on point. The Court therefore relies on case law which addresses the waiver issue in other contexts.
HUD regulations prohibit waiver provisions in leases that allow the PHA to evict the tenant "without notice to the tenant or any determination by a court of the rights and liablity of the parties." 24 C.F.R. § 966.6. In this case, it is undisputed that the lease between the PHA and Whitfield complied with this mandate, and that the PHA satisfied the grievance process as it relates to the initial termination of tenancy. At issue is whether the settlement agreement may include a waiver of future due process rights relating to the initial termination proceeding. Although HUD regulations do not address settlement agreements directly, they do provide that a lease may be modified by written agreement between the PHA and the tenant. See 24 C.F.R. § 966.4.
The United States Supreme Court has explicitly recognized that due process rights to notice and a hearing may be waived. D.H. Overmyer Co., Inc. v. Frick Co., 405 U.S. 174, 184-85 (1972);Boddie v. Connecticut, 401 U.S. 371, 378-79 (1971); see also Town of Newton v. Rumery, 480 U.S. 386 (1987) (settlement agreement, wherein a defendant released his right to file a 42 U.S.C. § 1983 action in return for a prosecutor's dismissal of criminal charges against him, is enforceable). Indeed, in D.H. Overmyer, the United States Supreme Court recognized that an individual may waive his due process rights regarding a future dispute. 405 U.S. at 184-85. And in Town of Newton, the Supreme Court recognized that an agreement, which purported to waive a right to sue conferred by a federal statute, was enforceable. In doing so, the Court rejected a per se rule invalidating the waiver, relying on the "well-established" principle that "a promise is unenforceable if the interest in its enforcement is outweighed in the circumstances by a public policy harmed by the enforcement of the agreement." 480 U.S. at 392. Ultimately, the Court found that the settlement agreement furthered legitimate public policy and was therefore valid. Id. at 393-97; see also Justine Realty Co. v. American Nat'l Can Co., 976 F.2d 385, 391 (8th Cir. 1992) ("Settlement agreements are generally encouraged and favored by the courts. In the absence of mistake or fraud, a settlement agreement will not be lightly set aside."); Worthy v. McKesson Corp., 756 F.2d 1370, 1373 (8th Cir. 1985) ("parties to a voluntary settlement agreement cannot avoid the agreement simply because the agreement ultimately proves to be disadvantageous") (citation omitted).
Likewise, courts recognize that a claimant may waive statutory rights relating to grievance proceedings in other contexts. See McCall v. United States Postal Serv., 839 F.2d 664 (Fed. Cir. 1998) (enforcing an employee's waiver of his right to appeal any disciplinary action that occurred within one year of the settlement agreement); see also United States v. Torres-Sanchez, 68 F.3d 227, 230-31 (8th Cir. 1995) (defendant waived his statutory right to counsel in deportation proceeding and was not deprived of counsel in violation of his right to due process); Binion v. Shalala, 13 F.3d 243, 245 (7th Cir. 1994) (a claimant may waive her statutory right to counsel at a Social Security disability hearing).
Although McCall arose in an employment context, the case is analogous to this case, and therefore warrants a detailed discussion. After being removed from his position as mail handler with the United States Postal Service, McCall appealed his removal to the Merit Systems Protection Board ("Board"). During the pendency of the appeal, McCall and the Postal Service settled the removal action. Pursuant to the settlement agreement, McCall withdrew his appeal and was reinstated to his position. In the settlement agreement, McCall agreed to "maintain satisfactory punctuality, attendance and good work habits that are acceptable to management during a 1 year probationary period." 839 F.2d at 665. He also agreed that his appeal rights to the Board were waived during the probationary period on any disciplinary action against him.
Later that year, the Postal Service issued a notice of removal to McCall based on irregular attendance and failure to comply with the settlement agreement. McCall filed an appeal with the Board challenging his removal. The administrative judge dismissed the appeal, finding that McCall's waiver of his appeal rights was valid and enforceable. McCall appealed the decision to the Federal Circuit Court of Appeals, asserting that 5 U.S.C. § 7701, which confers on a federal employee the right to appeal a removal decision to the Board, rendered his waiver unenforceable.
McCall relied on many of the same arguments that Whitfield advances in this case. First, he argued that the provision of the settlement agreement that required him to maintain satisfactory attendance "acceptable to management" opened the door to a completely subjective evaluation by the agency. Thus, accordingly to McCall, management could act in bad faith, abuse its discretion, and engage in prohibited personnel practices or discrimination without recourse. While the Court of Appeals recognized that the phrase "acceptable to management" introduced an element of subjectivity into the agreement, it ultimately found that the agency could not act arbitrarily against McCall because of the implied covenant of good faith and fair dealing. Thus, the phrase providing the agency with some discretion did not justify a rule that settlement waiver agreements are per se invalid. Id. at 667.
Second, McCall argued that waiver agreements are inherently coercive because of the unequal bargaining power between the parties. The Court of Appeals disagreed. Recognizing that parties "are often forced to make difficult choices which effectively waive statutory right or even constitutional rights," the Court held that the mere possibility of intimidation cannot justify invalidating all waiver agreements. Id.; see also City of Newton, 480 U.S. at 393-94 (refusing to adopt a per se rule invalidating release-dismissal agreement for the same reason).
As in McCall, this Court finds that the waiver of Whitfield's statutory right to a grievance proceeding does not violate public policy. Whitfield, while represented by counsel, could have refused the waiver condition and either negotiated different settlement terms or continued the initial grievance hearing. Instead, Whitfield agreed to give up her statutory right in exchange for the substantial benefits of retaining her housing and the opportunity to demonstrate satisfactory maintenance and upkeep. The Court therefore finds that Whitfield voluntarily and knowingly waived her right to a grievance proceeding. Thus, the enforcement of the settlement agreement is not void as a matter of public policy.
CONCLUSION
Although the Housing Act provides Whitfield with a statutory right to grieve a dispute relating to PHA action, Whitfield waived that right when she executed the settlement agreement. Accordingly, IT IS HEREBY ORDERED that:
1. Defendants' Second Motion for Summary Judgment (Clerk Docket No. 31) is GRANTED; and
2. Plaintiff's Motion for Summary Judgment (Clerk Docket No. 34) is DENIED.
LET JUDGMENT BE ENTERED ACCORDINGLY.