UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
JAMES BROWNING, et al.,
Plaintiffs,
v.
:
Civil Action No: C-1-01-152
:
(Judge Beckwith)
(Magistrate Sherman)
:
MEL MARTINEZ,
as Secretary of HUD, et al.,
:
:
Defendants.
________________________________________________________________________
PLAINTIFFS’ MEMORANDUM IN OPPOSITION
TO FEDERAL DEFENDANT’S MOTION TO DISMISS
________________________________________________________________________
Thomas R. Seel, Esq.
Edward E. Santen, Esq.
Trial Attorneys for Plaintiffs
Legal Aid Society of Greater Cincinnati
215 East Ninth Street, Suite 200
Cincinnati, Ohio 45202
(513) 241-9400
Now come Plaintiffs and submit the following Memorandum in Opposition to the Motion
to Dismiss of Defendant Mel Martinez, Secretary of Housing and Urban Development (“HUD”).
As urged below, Plaintiffs have standing in this case, and HUD’s Motion should be overruled.
This Memorandum is supported by the Second Amended Complaint filed herein (the
“Complaint”), the Affidavit of Bill Duncan, Director of Clermont County Metropolitan Housing
Authority, and the Affidavits of Plaintiffs.
These Affidavits have been filed
contemporaneously with this Memorandum under separate cover, entitled “Plaintiffs’ Exhibits in
Support of Memorandum in Opposition to Federal Defendants’ Motion to Dismiss,” and referred
to hereinafter as “Plaintiffs’ Exhibit.”
MEMORANDUM
I.
STATEMENT OF THE CASE
In this case, the private Defendants, the current and former owners of the rental complex
formerly called Audobon Park, withdrew from Defendant HUD’s Section 236 subsidized rental
housing program by prepaying the mortgage in March, 1999. Plaintiffs are present and former
tenants of the complex. Previously, withdrawal from the program by prepayment was generally
not permitted under federal housing laws. Rental projects were to remain subsidized for the full
term of the low-interest mortgage loans. However, prior to the prepayment in 1999 in this case,
Congress changed the law to permit prepayment, subject to specific protections for low-income
tenants of the projects.
Under the new legal framework, HUD could approve prepayment from owners of
projects like Audobon Park, but HUD was required by law to provide Section 8 rental vouchers
to low-income tenants, and the owners were required to accept the rental vouchers and permit
tenants to remain at the rental complex.
In this case, the private Defendants prepaid the mortgage in March 1999 and increased
rents, but HUD failed to provide Section 8 rental vouchers until September 1999. When HUD
finally did say that 47 rental vouchers were available, it failed to actually provide the rental
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vouchers to some eligible tenants. Plaintiffs Carter and the Woolseys never received rental
vouchers even though they were eligible and should have. Although seven tenants received rental
vouchers belatedly, including four of the Plaintiffs herein, the Defendant Owners refused to
accept the rental vouchers from the tenants who received them, and HUD did nothing to protect
the tenants.
Rather, HUD pre-approved the mortgage prepayment without conditioning its
approval on, or taking any steps to protect, the tenants’ right remain in the project and use rental
vouchers.
Because HUD failed to provide rental vouchers in a timely manner, all Plaintiffs had to
pay increased rent. Six of the Plaintiffs, Larsen, the Woolseys, the Brownings, and Howard
were unable to pay and had to move and incurred economic and other damage. Jansen and Carter
continue to reside in the complex and bear the unfair burden of the increased rent.
In its Motion to Dismiss under Rule 12(b)(1), HUD disputes the facts as alleged by
Plaintiffs in the Complaint; HUD then relies on its own version of the facts as grounds to support
its claim that Plaintiffs lack standing. This is improper. In considering HUD’s Motion, the
Court must accept the allegations in the Complaint as true, and the allegations in the Complaint
are more than sufficient to confer standing: 1) HUD permitted the prepayment without following
applicable law and procedures; 2) HUD failed to provide rental vouchers to Plaintiffs in a timely
manner; and 3) HUD failed to otherwise carry out its obligations to protect the tenants, causing
injury to Plaintiffs, proper relief for which is sought from this Court.
Taking the allegations of the Complaint as true, as the Court must, the Plaintiffs have
standing to seek redress for the injuries caused by Defendants’ blatant evasion of law. Among
other things, Plaintiffs seek damages from the Owner Defendants and an injunction requiring the
owner to accept rental vouchers. With regard to HUD, Plaintiffs seek an order requiring HUD
to provide rental vouchers, so the Plaintiffs can use them to live at Audobon Park, or other
housing of their choosing. Plaintiffs have been injured by Defendants’ acts and omissions;
Plaintiffs seek remedies which will redress those injuries. In short, Plaintiffs have standing.
II.
ARGUMENT
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A.
The Test For Standing.
As the Supreme Court recently reiterated in Friends of The Earth v. Laidlaw
Environmental Services, 528 U.S. 167, 120, 180-181, S. Ct. 693, 704 (2000):
to satisfy Article III’s standing requirements, a plaintiff must
show (1) it has suffered an “injury in fact” that is (a) concrete and
particularized and (b) actual or imminent, not conjectural or
hypothetical; (2) the injury is fairly traceable to the challenged
action of the defendant; and (3) it is likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.
See, also, Warth v. Seldin, 422 U.S. 490, 95 S. Ct. 2197 (1975).
In ruling on a motion to dismiss for lack of standing, the Court must accept as true all
material allegations of the complaint and must construe the complaint in favor of the
complaining party. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 109-110, 99 S. Ct.
1601, 1613 (1979) (“As did the courts below and the parties themselves, we accept as true the
facts contained in these discovery materials for the purposes of the standing issue.”); Warth v.
Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206 (1975) (court must “accept as true all material
allegations of the complaint, and construe the complaint in favor of the complaining party”).
Further,
standing does not depend on the merits of the plaintiff’s contention that
particular conduct is illegal. Warth v. Seldin, 422 U.S. 500, 95 S. Ct. at 2206; Flast v. Cohen,
392 U.S. 83, 88, S. Ct. 1942, 1952-53 (1968). Therefore, the Court must presume that, as
alleged in the Complaint, HUD’s acts and omissions were contrary to law.
As demonstrated below, HUD’s conduct was unlawful, and Plaintiffs meet all three parts
of the test for standing: 1) they suffered actual injury, 2) which is fairly traceable to HUD’s
actions and 3) which can be and will likely be redressed by a final judgment in Plaintiffs’ favor.
B.
Congressional Protections Applicable to the Audobon Park Tenants
Upon Prepayment.
Although the Court must assume that HUD’s conduct was unlawful in analyzing
standing, id., it should be noted, nevertheless, that in prepayment situations like the one at bar,
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federal law is clear: Pub. Law 104-204, September 26, 1996, 110 Stat 2884-5 (cited hereinafter
as “PL 104-204" and now codified at 42 U.S.C. §1437f(t)), provides low-income tenants the
right to receive Section 8 rental vouchers from HUD and the right to use them and remain in the
project. As correctly stated by HUD in its Motion, in the years prior to 1997, Section 236
project owners generally could not prepay or withdraw from the program before the end of the
mortgage term. In 1996-1998, Congress amended the law twice to permit prepayments. See,
e.g., Pub. Law 105-276, Sec.219; 112 Stat 2488.
But Congress also imposed additional
restrictions when prepayment occurred, including those eventually codified at 42 U.S.C.
§1437f(t). These were first enacted in PL 104-204.
PL 104-204 is critical in this case; it contains the provisions that HUD violated.
It is the statute which required HUD to provide rental vouchers to low-income Audobon tenants
and which established their right to remain in the complex. Yet HUD’s Motion fails to address
this pivotal statute at all. PL 104-204 states in relevant part:
Notwithstanding any other provision of law, subject to the availability of
appropriated funds, each low income family, and moderate income family
who is elderly or disabled or is residing in a low vacancy area, residing in
the housing on the date of prepayment or voluntary termination, and
whose rent, as a result of a rent increase occurring no later than one year
after the date of the prepayment, exceeds 30 percent of adjusted income,
shall be offered tenant-based assistance in accordance with Section 8 or
any successor program, under which the family shall pay no less for rent
than it paid on such date: Provided further, That any family receiving
tenant-based assistance under the preceding proviso may elect (1) to
remain in the unit of the housing ... (emphasis added)1
Thus notwithstanding HUD’s somewhat torturous (and largely irrelevant) recitation of
the history of the law of subsidized mortgage prepayments, the law in effect in March 1999,
Pub. Law No.104-204, September 26, 1996, 110 Stat 2884-5. This is the so called “enhanced rental voucher”
provision. It was extended into fiscal year 1999 by Pub. Law No. 105-276, October 21, 1998, 112 St. While the
provision has undergone several subsequent amendments, the law has provided and Congress has always intended
that low-income tenants have the right to receive Section 8 rental vouchers and remain as tenants. H. Rep. 106-710,
p. 164, accompanying § 2801 of Pub. Law 106-246. These provisions, i.e., PL 104-204, PL 105-276 and H. Rep.
106-710 are attached hereto as Appendix 1. Thus, Appendix 1 contains the enhanced voucher provisions in effect
in March 1999 and as currently codified primarily at 42 U.S.C. § 1437f(t). In addition, 12 U.S.C. § 4113 also
provides the right of tenants in prepayment situations like Audobon Park, to receive rental vouchers form HUD.
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when the prepayment at bar occurred, was clear: tenants had the right to remain in the complex
and to receive and use vouchers there. Even if the law were less clear, the Court would still need
to assume that, as alleged in the Complaint, HUD’s conduct was not in compliance with
applicable law. Warth v. Seldin, supra; Flast v. Cohen, supra.
C.
Plaintiffs Suffered Actual and Concrete Injury
The Plaintiffs have alleged injury in fact sufficient to meet the first part of the standing
test. The standing of low-income tenants, like Plaintiffs in this kind of case, is well established.
The federal courts have found standing in cases involving federal housing programs where the
injury suffered was similar to, and in some instances significantly less concrete than, the injury
suffered by Plaintiffs herein.
In Price v. Pierce, 823 F. 2d 1114 (7th Cir. 1987), prospective tenants were on the waiting
list for tenancy in a HUD subsidized rental project; they challenged HUD’s approval of a
reduction in the number of subsidized units in the project. The Seventh Circuit, per Posner, J.,
held that the applicants’ allegation that their admission was being delayed was sufficient to
confer standing to challenge HUD’s approval of the reduction in the number of subsidized units.
Price, 823 F. 2d at 1118 -1119. The court held that “a reasonable probability that a plaintiff will
get an apartment that he wants sooner if he wins is sufficient tangible expected benefit to confer
standing * * * as is demonstrated by Village of Arlington Heights v. Metropolitan Housing
Development Corp., 429 U.S. 252, 264, 97 S. Ct. 555, 563, 50 L. Ed. 2d 450 (1977), a factually
similar case.” Price, 823 F. 2d at 1118-1119.
In Allen v. Pierce, 689 F. 2d 593 (5th Cir. 1982) prospective tenants had standing to sue
HUD for injunctive relief to implement a rent subsidy at three Section 236 rental housing
projects. The plaintiffs alleged that if the rents were subsidized, they would apply for housing at
the projects. Allen, 689 F. 2d at 599, fn. 5. Accord, Rocky Ford Housing Authority v. U.S.
Dept. of Agriculture, 427 F. Supp.118, 123-24 (D.D.C. 1977) (Substantial probability that
plaintiffs could afford to live in rental project if rent subsidies were available was sufficient to
establish standing).
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In 215 Alliance v. Cuomo, 61 F. Supp. 2d 879 (D. Minn. 1999), tenants and a housing
advocacy organization sued HUD over prepayment of a Section 236 mortgage and termination of
rental subsidies. HUD argued that because the rent increase had not yet been imposed, the
tenants had not suffered injury, and the case was not ripe. The plaintiffs sought relief under the
same statute as in the case at bar, and also as in the case at bar, HUD failed to provide Section 8
rental vouchers as required by law. The Court held that the threat of the rent increase was
sufficient injury to make the case justiciable. 215 Alliance, 61 F. Supp. 2d at 885.
In Russell v. Landrieu, 621 F. 2d 1037 (9th Cir. 1980), the plaintiffs were tenants in a
Section 236 project, and HUD foreclosed on the mortgage. HUD sold the project and the
purchaser announced rent increases. The tenants sued to enjoin the proposed rent increases.
Even though the applicable law did not contain an absolute requirement that the project remain a
subsidized rental program after foreclosure, the tenants had standing against HUD; the fact that
they were losing their subsidized rents constituted an allegation of injury in fact. Russell, 621 F.
2d at 1039.
Applying the law to the facts of the case, just as in Russell and 215 Alliance, the
Plaintiffs herein were residents of the subsidized rental housing project. The Plaintiffs’ rent was
actually increased, not just proposed to be increased. HUD failed to provide Section 8 rental
vouchers in a timely manner, and Plaintiffs had to choose between paying rent increases they
could not afford, moving if they could find alternative housing, or being evicted. (Complaint,
Para. 7). They all paid the rent increases for some time.
Plaintiffs Carter and the Woolseys never received Section 8 rental vouchers even though
they were eligible for them. The Defendant Owners terminated the Woolseys’ tenancy and
evicted them without good cause before they ever learned they could get a rental voucher.
(Complaint, Paras. 31-33).
Plaintiff Carter knew the Owner Defendants would not accept
Section 8 rental vouchers; she remained at Audobon and paid the undue rent burden caused by
the rent increases. (Complaint, Paras 23-25). She was and is eligible for a rental voucher.
(Complaint, Para. 25).
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Plaintiffs Jansen, Larsen, and the Brownings received rental vouchers six months after
the prepayment, but the Owner Defendants would not accept them. Jansen remained at Audobon
Park and her voucher expired; she has continued to pay the burdensome rent increases even
though she was entitled to a rental voucher to assist her with the rent. (Complaint, Para. 15 &
16). Larsen wanted to stay at Audobon, but the Owner Defendants refused to accept her rental
voucher, so she was forced to move. (Complaint, Paras. 20-22). Plaintiff Brownings received a
rental voucher but the Owner Defendants refused to accept it. (Complaint, Paras. 36 and 37). The
Brownings moved to less desirable housing elsewhere. (Complaint, Para. 38).
HUD claims it provided vouchers to all eligible tenants. The Complaint alleges the
opposite.
HUD disputes some of the material facts alleged in the Complaint and
mischaracterizes others, but allegations in the Complaint must be taken as true and construed in
favor of Plaintiffs in considering the Motion. HUD does admit it failed to provide rental
vouchers when it should have. (HUD’s Motion, p. 5) As described above, some of the Plaintiffs
received vouchers but not before injury occurred. They were unable to use the rental vouchers at
Audobon Park and the vouchers expired. They should be given rental vouchers and made whole.
Other Plaintiffs should have received rental vouchers but never did. All of the Plaintiffs should
be returned to the status to which they were entitled at the time of the prepayment: they should
receive rental vouchers, which, as required by PL 104-204, must be effective as of the date of the
rent increase, and the opportunity to use the vouchers and live at Audobon.
All Plaintiffs paid more rent than they would have paid if HUD had timely and properly
issued vouchers. Plaintiffs, as residents and excluded former residents of Audobon Park, have
more concrete and specific injuries than the applicants for housing in the Price and Allen cases.
The Plaintiffs have direct injury much more concrete than the tenants in 215 Alliance. Their
injuries are not hypothetical or speculative like those alleged by the Plaintiffs in Warth v. Seldin,
supra, and the other cases cited by HUD. Plaintiffs have alleged sufficient injuries to confer
standing.
D.
Plaintiffs’ Injuries Are Fairly Traceable to HUD.
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The second part of the test for standing is whether the Plaintiffs’ injuries are fairly
traceable to the challenged action of the Defendant.
Friends of the Earth v. Laidlaw
Environmental Services, supra; Warth v. Seldin, supra.
As alleged in the Complaint, in approving the prepayment of the Section 236 mortgage in
this case, HUD had a legal obligation to provide rental vouchers to low-income residents of
Audobon Park and to ensure that the owners accepted the vouchers. Instead, HUD delayed six
months before funding 47 vouchers and failed to provide the vouchers to many tenants. At pages
5-6 of its Motion, HUD admits it failed to provide rental vouchers in a timely way. Plaintiffs
Carter and the Woolseys never received a voucher even though they should have. Plaintiffs
Jansen and the Brownings received rental vouchers but the Owner Defendants refused to accept
rental vouchers, and the vouchers expired unused. Plaintiff Larsen received a voucher, was
prevented from using it at Audobon Park, and moved to other housing.
The fact that HUD asked the Clermont Metropolitan Housing Authority (“CMHA”) to act
as its agent in administering the 47 rental vouchers does not reduce HUD’s obligation to provide
useable rental vouchers to Plaintiffs. HUD has the ultimate responsibility, and HUD’s own
failure to fund the vouchers timely prevented CMHA from being able to get the rental vouchers
to most low-income families from Audobon Park. Instead, forty of those rental vouchers were
given to families who never lived at Audobon Park. (Affidavit of Bill Duncan, Director of
Clermont Metropolitan Housing Authority; Plaintiffs’ Exhibit A).
As in the case of Russell v. Landrieu, supra, the Plaintiffs in this case were residents
of the apartment complex and lost the benefit of subsidized housing as a direct result of HUD’s
permitting the sale. Russell, 621 F. 2d at 1039. In the case at bar, HUD was obligated to
provide rental vouchers to the Audobon Park residents, not other people, but failed to do so.
Plaintiffs have suffered injuries directly caused by HUD.
E.
It Is Likely that Plaintiffs’ Injury Will Be Redressed by a Favorable
Decision.
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The third part of the test for standing is whether “it is likely, as opposed to merely
speculative, that the injury will be redressed by a favorable decision.” Friends of the Earth, 120
S. Ct., 704.
In this case, Plaintiffs “allege specific, concrete facts demonstrating that the challenged
practices harm him, and that he personally would benefit in a tangible way from the court’s
intervention.” Allen v Pierce, 689 F. 2d, at 599, fn. 5 (quoting Warth v. Seldin, supra.). In their
prayer for relief, Plaintiffs seek an order that HUD issue additional rental vouchers and provide
them to eligible families, including Plaintiffs, as well as an order requiring the present Owner
Defendants to accept the vouchers. Thus, if HUD provides the vouchers to Plaintiffs, they will
the opportunity to “elect to use their rental vouchers at the former Audobon Park.” (Complaint,
Para 57; See also, Plaintiffs’ Affidavits, Plaintiffs’ Exhibits B-E.
In Russell v. Landrieu, supra, applicable law did not require HUD to keep the housing
subsidized but only to consider various options, including the option to continue subsidies.
Russell, 621 F. 2d at 1041. Because there was a reasonable possibility that the tenants would
benefit from the court ordering HUD to do a proper analysis and consider the option of
continuing the subsidies, the plaintiffs had standing. Id. In the case at bar the Plaintiffs allege
that they are entitled by law to receive rental vouchers from HUD. If the Court orders the relief
sought against HUD and the Owner Defendants, Plaintiffs will have “a reasonable probability of
benefitting from a successful conclusion to this suit,” Price v. Pierce, 823 F. 2d 1118. Indeed,
Plaintiffs will unquestionably benefit if they prevail on their claims. They will have rental
vouchers, affordablerent, and the opportunity use their vouchers to cover their rent at Audobon
or elsewhere. Therefore, Plaintiffs satisfy the third part of the test for standing.
III.
CONCLUSION
All of the Plaintiffs were injured by HUD’s actions. A favorable decision will put
Plaintiffs in the position they should have been in in March 1999. They will have rental
vouchers and be able to use them at Audobon Park or elsewhere. The Plaintiffs have standing
and they request that HUD’s Motion be denied.
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Respectfully submitted,
Thomas R. Seel, Esq. (#0044052)
Edward E. Santen, Esq. (#0040846)
Trial Attorneys for Plaintiffs
Legal Aid Society of Greater Cincinnati
215 East Ninth Street, Suite 200
Cincinnati, Ohio 45202
(513) 241-9400
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CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing was mailed by regular U.S. mail this
10th day of August, 2001, to the following:
Jan M. Holtzman, Esq.
Assistant U.S. Attorney
Attorney for Defendant Mel Martinez
Room 220, Potter Stuart U.S. Courthouse
100 E. 5th St.
Cincinnati, Ohio 45202
Joseph L., Trauth, Jr., Esq.
Thomas M. Tepe, Jr., Esq.
Attorneys for Defendant Western Avenue
Keating, Muething & Klekamp PLL
1400 Provident Tower
One East Fourth St.
Cincinnati, OH 45202
Phillip J. Smith, Esq.
Attorney for Defendant Henry Gallenstein
Vorys Sater Seymour & Pease LLP
221 E. 4th St., Suite 2100, Atrium Two
Cincinnati, OH 45202
Thomas R. Seel, Esq.
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