NITZA I. QUIÑONES ALEJANDRO, USDC J.
This is an action seeking declaratory judgment and injunctive relief under the United States Housing Act of 1937 (the "Housing Act"), as amended, 42 U.S.C. § 1437f. Presently, before this Court are the parties' cross-motions for summary judgment filed pursuant to Federal Rule of Civil Procedure 56, [ECF 16 and 17], which have fully briefed the issues.
For the reasons set forth, Plaintiffs' motion for summary judgment is denied, and Defendant's motion for summary judgment is granted.
The relevant facts in this case were drawn from the "Statement of Undisputed Facts," submitted by Plaintiffs, [ECF 16-1], which Defendant does not contest but, instead, supplements with additional facts.
The HAP Contract similarly restricts the grounds on which an owner can terminate the Lease.
Rule 56 governs the summary judgment motion practice. Fed. R. Civ. P. 56. Specifically, this rule provides that summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Id. A fact is "material" if proof of its existence or non-existence might affect the outcome of the litigation, and a dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Under Rule 56, the court must view the evidence in the light most favorable to the non-moving
Rule 56(c) provides that the movant bears the initial burden of informing the court of the basis for the motion and identifying those portions of the record which the movant "believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This burden can be met by showing that the nonmoving party has "fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case." Id. at 322, 106 S.Ct. 2548.
After the moving party has met its initial burden, summary judgment is appropriate if the nonmoving party fails to rebut the moving party's claim by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials" that show a genuine issue of material fact or by "showing that the materials cited do not establish the absence or presence of a genuine dispute." See Fed. R.C.P. 56(c)(1)(A-B). The nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The nonmoving party may not rely on bare assertions, conclusory allegations or suspicions, Fireman's Ins. Co. of Newark v. DuFresne, 676 F.2d 965, 969 (3d Cir.1982), nor rest on the allegations in the pleadings. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. Rather, the nonmoving party must "go beyond the pleadings" and either by affidavits, depositions, answers to interrogatories, or admissions on file, "designate `specific facts showing that there is a genuine issue for trial.'" Id.
Here, the parties agree that there are no genuine issues of material fact; however, they each argue that the undisputed facts require the entry of judgment in their respective favor. The parties' dispute is premised upon their differing interpretation of their respective rights and obligations under various provisions of the Housing Act. Specifically, Plaintiffs argue that the "enhanced voucher" provision in Section 8 of the Housing Act, 42 U.S.C. § 1437f(t)(1)(B), which was implicated on January 9, 2008, when the Property's previous owner provided Plaintiffs the requisite one-year notice of its intention to opt out of the Section 8, project-based assistance contract and lease, affords them the right to remain in the Property for as long as it remains a rental property and, thus, Defendant is prohibited from evicting them. In the alternative, Plaintiffs argue that under the Housing Act their lease can only be terminated for cause.
Defendant refutes Plaintiffs' arguments and contends that he is bound only by the terms of the tenant-based Housing Assistance Payment (HAP) Contract and related lease that he entered into with Plaintiffs and the PHA, and is not bound by any additional statutory and/or regulatory requirements for Section 8 housing arrangements. Defendant relies on the fact that he acquired the Property clear of any restrictions or encumbrances (as evidenced by the recorded deed), without any government funding assistance, and after the previous owner had provided notice of its intention to opt out from the project-based Section 8 program. Defendant also argues that nothing in the statute or regulations prohibit him from effectively opting out of the tenant-based program at the end of the applicable contract and lease terms.
To better understand the issues involved and to address the parties' respective arguments,
The Housing Choice Voucher Program, also part of the Section 8 program, is a federal program administered by the United States Department of Housing and Urban Development ("HUD"), pursuant to the Housing and Community Development Act of 1974, 42 U.S.C. § 1437f, "[f]or the purpose of aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing, assistance payments may be made with respect to existing housing in accordance with the provisions of this section." Id. at § 1437f(a). The statute authorizes two primary forms of assistance payments: "project-based" and "tenant-based." See 24 C.F.R. § 982.1(b)(1). In project-based programs, the federal government makes payments to owners of specific housing developments or units on behalf of eligible low-income tenants. Id. Under the tenant-based program (commonly, referred to as the "voucher" program), the assistance payments follow a particular tenant if he or she moves. 42 U.S.C. § 1437f(o) and (r); 24 C.F.R. § 982.1(b)(1). Public housing authorities (such as, the PHA) locally administer the tenant-based voucher assistance payments. In the project-based voucher program, tenants pay a statutorily capped portion of their income toward rent, and HUD pays the remainder up to the approved rent as determined in the housing assistance payment ("HAP") contract between HUD and the owner/landlord. 42 U.S.C. § 1437a(a)(1). In the tenant-based voucher program, the tenant's rent contributions are regulated by statute, but could exceed 30 percent of the tenant's income if the rent for the unit exceeds the PHA-established payment standard. The PHA pays the remainder pursuant to the HAP contract with the owner/landlord. 42 U.S.C. § 1437f(o)(2)(c).
In the wake of various legislative changes which started in the mid-1990s, a growing number of HUD-subsidized and project-based Section 8 owners became eligible to prepay their subsidized mortgages, and/or to terminate or not renew their contracts with HUD. See Barrientos v. 1801-1825 Morton LLC, 583 F.3d 1197, 1202-03 (9th Cir.2009). In order to protect subsidized or assisted tenants, Congress enacted new laws regulating how former HUD-subsidized or project-based Section 8 owners could prepay their mortgages or opt out of their Section 8 housing contracts. See, e.g., Emergency Low Income Housing Preservation Act of 1987, Pub. L. No. 100-242, Title II, 101 Stat. 1815, 1877-91 (1988); Low Income Housing Preservation and Resident Homeownership Act of 1990, Pub. L. No. 101-625, § 601(a), 104 Stat. 4079, 4249 (1990); Multifamily Assisted Housing Reform and Affordability Act, Pub. L. No. 105-65, Title V, §§ 501-579, 111 Stat. 1344, 1384-1424 (1997) (codified at 42 U.S.C. § 1437f note); Pub. L. No. 105-276, § 219, 112 Stat. 2461, 2487-88 (1998) (uncodified). Under the current version of the applicable statute, for project-based Section 8 properties, an owner must provide the tenant and the Secretary of HUD with an opt-out notice at least one year before terminating or not renewing the contract, cannot evict tenants or increase
In 1999 and again in 2000, Congress undertook additional steps to provide and clarify protections for affected low-income families residing in project-based Section 8 housing, and enacted legislation that created enhanced vouchers. Pub. L. No. 106-74, § 538, 113 Stat. 1047, 1122-24 (1999) (codified at 42 U.S.C. § 1437f(t)); Pub. L. No. 106-246, § 2801, 114 Stat. 511, 569 (2000) (codified as amended at 42 U.S.C. § 1437f(t)). These amendments allowed landlords to prepay their mortgages, and also increased the available subsidy to fair market value so as to allow the enhanced voucher tenants the option of remaining in the same property after the owner's prepayment. That is, enhanced voucher recipients were provided larger subsidies to meet an opting-out owner's likely increase in rent. An enhanced voucher is provided to a tenant following an "eligibility event," which includes the "termination or expiration of the contract for rental assistance under this section for such housing project...." 42 U.S.C. § 1437f(t)(2).
Here, the issues presented center on the parties' disagreement over their respective rights and obligations under various provisions of the Housing Act. Before addressing each parties' rights and obligations under the applicable statute, this Court will first address Defendant's argument that he is not bound by the Section 8 enhanced voucher provisions because he acquired the Property free and clear of encumbrances, without any federal funding assistance, and after the previous owner had provided notice of its intention to opt out from the Section 8 program.
Defendant's argument is incorrect since he fails to take into consideration the clear language of the Lease he admittedly entered into with Plaintiffs, which expressly references both the Housing Choice Voucher ("HCV") Program and the HAP Contract throughout. For instance, the Lease defines both of these terms as follows:
(Exhibit I, Model Lease Agreement, ¶ 2). The Lease expressly provides that "[t]he Owner [Phillip E. Harvey] will enter into the HAP contract with PHA under the HCV program. The purpose of the HAP contract is to assist the Tenant to lease this dwelling unit from the Owner for occupancy by the family with the Tenant-based assistance under the HCF Program." (Id. at ¶ 3; see also ¶ 20). Defendant admittedly entered into a HAP Contract, portions of which he attached to his brief as Exhibit S. As such, contrary to Defendant's argument and notwithstanding the fact that he purchased the Property without encumbrance from the previous owner who had opted out of the original project-based Section 8 contract/program, Defendant's tenant-based HAP contract and related Lease with Plaintiffs are governed by and subject to, inter alia, the Section 8 statute.
Though Defendant, as a party to a tenant-based HAP contract and related lease,
Turning to the heart of the parties' disagreement, it is undisputed that Plaintiffs received and utilized tenant-based assistance enhanced vouchers after the Property's previous owner provided Plaintiffs the required one-year notice of its intention to not renew the then existing and governing project-based assistance contract. It is also undisputed that Plaintiffs continued to receive and utilize these enhanced vouchers after Defendant purchased the Property and Defendant entered into a new HAP Contract with the PHA under the Section 8 Tenant-Based Assistance Housing Choice Voucher Program.
Plaintiffs argue that § 1437f(t), which governs "enhanced vouchers," provides them the unfettered right to remain in the Property as long as the Property remains a rental property. The relevant portion of § 1437f(t) provides:
Id. 1437f(t)(1)(B).
Plaintiffs assert that this enhanced vouchers provision has created for enhanced voucher tenants, such as Plaintiffs, a right to remain in their rental homes using their enhanced vouchers for as long as they remain voucher-eligible and in occupancy, regardless of the desires of an owner to cease participating in the program. In so arguing, Plaintiffs are essentially contending that they are the beneficiaries of an endless or perpetual lease that must be renewed and can only be terminated by the owner/landlord for cause. Defendant disagrees and argues that no such unfettered right to remain in the Property exists, particularly where Defendant has effectively opted out of the tenant-based HAP Contract and related lease by having provided written notice of his intention not to renew the contracts at the April 30, 2015 expiration date. While neither party has pointed to any binding case law directly on point, it is this Court's opinion that Plaintiffs' argument is misplaced and finds no support in, but rather is contradicted by, the statute itself and its legislative history.
Subsection (t) of § 1437f, on which Plaintiffs rely to create and support their unfettered and perpetual right to remain in the Property, provides no such support. What this subsection provides in an enhanced voucher situation is that a tenant "may elect to remain in the same project...." If the tenant so elects, and the rent for the property "exceeds the applicable payment standard established pursuant to subsection (o)" of the section, the Secretary
Notably, while the current version of the statute, and in particular those subsections dealing with the enhanced vouchers, is silent as to any obligation on the part of an owner/landlord opting out of a project-based contract to renew a lease with an enhanced voucher recipient, previous versions of the statute, prior to its amendment in 1996, contained what was deemed and called the "endless lease" provision. The then so-called "endless lease" provision prevented owners/landlords from refusing to renew the leases of Section 8 tenants at the conclusion of a lease period, "except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State or local law, or for other good cause." 42 U.S.C. § 1437f(d)(1)(B)(ii) (repealed 1996). This provision — as well as a "take one, take all" provision — was considered onerous and thought to diminish landlords' incentives to provide Section 8 housing. Significantly, and as noted by the Ninth Circuit Court of Appeals in Barrientos, the current version of § 1437f(o)(7)(C), was part of a number of amendments to the statute intended to eliminate the so-called "endless lease" provision by removing the "good cause" requirement for nonrenewal, though retaining the "good cause" requirement for termination of a tenancy during the term of the lease. 583 F.3d at 1205; see also Park Village Apartment Tenants Ass'n v. Mortimer Howard Trust, 636 F.3d 1150, 1161 (9th Cir.2011) (noting "Congress's clear intention in the 1996 amendment to the Act to end so-called `endless leases,' under which owners could not refuse to renew the leases of Section 8 tenants at the conclusion of a lease term ...."). In this Court's opinion, Congress' retraction of the "endless lease" provision signals Congress' intent that an owner/landlord, opting out of a Section 8 housing contract, is not obligated to renew a lease for either a voucher recipient or an enhanced voucher recipient, after the contract's term has ended.
§ 1437f(8)(A)-(B) (emphasis added). As supported by the highlighted language, in enacting this statute, Congress expressly contemplated situations where an owner would and could decide not to renew a lease at its natural expiration. The statute provides that the owner "
The statute also defines "termination" of a HAP contract to include "
Like in PEH, Plaintiffs here effectively have been provided the sole remedy to which they might be entitled.
Notwithstanding, the one-year notice provision in § 1437f(c)(8)(A), by its own express terms, does not apply in an enhanced voucher situation like this case. The relevant portion of § 1437f(c)(8)(A) provides: "[n]ot less than one year before termination of any contract under which assistance payments are received under this section,
Plaintiffs' argument that their "right to remain" can only be terminated if the assisted family moves from the project or if the voucher is made available for use by any family other than the original family is also misplaced. Section 1437f(t), on which Plaintiffs rely for support, actually refutes Plaintiffs' argument. This subsection, entitled "Enhanced Vouchers," expressly provides that enhanced vouchers "shall be voucher assistance under subsection (o) of this section ...." Subsection (t) goes on to provide a limited set of additional requirements that do not otherwise apply to ordinary vouchers. These additional requirements, however, merely provide a different set of criteria for calculating the assisted tenant's portion of the rent, the reasonable amount of rent, and the amount of rental assistance to be provided to the tenant. See § 1437f(t)(1)(A)-(D). Again, they are silent as to any obligations on the part of an owner/landlord who has provided notice of his intent not to renew a tenant-based HAP contract and lease.
In any event, subsection (o) of the statute applies to enhanced vouchers.
This Court opines that this language evidences Congress' intent (also evidenced in other subsections of the statute discussed above) that a participating owner/landlord can effectively end his/her participation in Section 8 housing at the natural expiration of a Section 8 housing lease. In particular, this subsection's reference to "a term of not less than 1 year" clearly implies that a participating owner/landlord can enter into an enforceable one-year lease.
Plaintiffs' alternative argument that Defendant was precluded from terminating the lease in the absence of "good cause" is also misplaced. The applicable subsection on which this argument is based, § 1437f(o)(7)(C), quoted above, only applies "during the term of the lease." Inclusion of this clause, i.e., "during the term of the lease," clearly implies that the prohibition on termination of the lease does not apply where the lease has reached the end of its term. As such, neither the voucher subsections nor the enhanced voucher subsections of the statute prohibit a landlord/owner from evicting or not renewing a lease at the end of the lease's term. Again, by its own plain meaning and terms, the prohibition only applies "during the term of the lease."
In addition, the non-binding cases on which Plaintiffs rely provide no support for their arguments. In those cases, the courts addressed the rights and obligations of owners/landlords and their tenants in situations where the owner/landlord was opting out of a
Plaintiffs' cases, none of which are binding on this Court, are inapposite here where it is undisputed that Defendant was never a party to a "project-based" assistance contract or lease. Rather, the previous owner of the Property was party to the original "project-based" assistance contract and lease, but opted out of that project-based
In summary, it is undisputed that Defendant provided Plaintiffs with written notice of Defendant's intention not to renew either the tenant-based assistance contract with the PHA or the related lease with Plaintiffs, both of which expired by their own terms on April 30, 2015. Although the one-year notice provision on which Plaintiffs rely does not apply here, the notice provision was satisfied here, nonetheless, since more than a year has passed since Defendant gave Plaintiffs written notice of his intent not to renew the lease. Under the circumstances, Defendant is entitled to have the Plaintiffs, within a reasonable period of time, vacate the Property, and if they refuse to comply, proceed through local eviction proceedings.
Based upon the review of the undisputed facts and careful consideration of the Housing Act, for the reasons set forth herein, Plaintiffs' motion for summary judgment is denied, and Defendant's motion for summary judgment is granted. An Order consistent with this Memorandum Opinion follows.