Peterson v. Oklahoma City Housing Authority

Decision Date01 December 1976
Docket NumberNo. 75-1617,75-1617
Citation545 F.2d 1270
PartiesCoye PETERSON et al., Plaintiffs-Appellants, v. The OKLAHOMA CITY HOUSING AUTHORITY, a Public Corporation and State Agency, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Tenth Circuit

Wesley G. Gibson, James H. Hiatt, and Stan L. Foster (The Legal Aid Society of Oklahoma County, Inc.), Oklahoma City, Okl., for plaintiffs-appellants.

William B. Rogers, Oklahoma City, Okl., for defendants-appellees.

Before BARRETT and DOYLE, Circuit Judges, and STANLEY, Senior District Judge *.

ARTHUR J. STANLEY, Jr., Senior District Judge.

The defendant-appellee, Oklahoma City Housing Authority, (the Authority) is a public corporation which manages and controls federally financed low-rent housing units in Oklahoma City. 1 Some of the residents are "general occupancy tenants" and some are "elderly tenants".

The plaintiffs-appellants (Tenants) are elderly occupants of units under leases which, prior to January 1, 1975, contained no provision for maintenance or security deposits. On December 18, 1974 the Governing Board of the Authority adopted a resolution, effective January 1, 1975, providing for new leases containing a provision that all tenants be required to pay a deposit of $50.00, payable in lump sum or in installments of $5.00 or $10.00 per month. 2 By a memorandum to all tenants they were notified that at the termination of their tenancy the deposit would be refunded provided that "any charges left unpaid, or any damage to the unit (other than normal wear and tear) will be deducted from the maintenance deposit". By another resolution adopted by the Authority January 22, 1975, it was provided that the deposits be segregated and kept in an interest-bearing account, the earned interest to be used for tenant services or activities.

The Tenants brought this action, alleging that the deposit provision was applied to elderly residents without notice to them or an opportunity for them to comment; that its implementation would work a lasting and irreparable economic hardship upon them; that the elderly tenants do little or no damage; that imposition of a deposit requirement was arbitrary and capricious; that the amount of the deposit was excessive and unreasonable; that the Tenants' old lease was still in full force and effect; and that the payment of the deposit increased their rent to an amount violating the "Brooke Amendment". (42 U.S.C.A. § 1402). In an amendment to the complaint the issues were expanded to include allegations that the "new lease" and the deposit requirement was violative of Department of Housing and Urban Development Circulars; and that the Authority had violated the Tenants' due process rights by failing to provide them with adequate notice of the proposed changes in the new lease.

After an evidentiary hearing the trial court entered judgment for the defendants and found:

"1. That the maintenance deposit required by Defendants as a condition precedent to occupancy of Oklahoma City Housing Authority dwelling units is a valid returnable 'deposit' and is not in the nature of a 'rent'.

"2. That the maintenance deposit is neither excessive in amount nor discriminatory in its application.

"3. That those minimum standards for Housing Authority leases required by the Department of Housing and Urban Development are embodied in the lease to which Plaintiffs have objected.

"4. That tenants of the Oklahoma City Housing Authority were given adequate notice of proposed lease changes and adequate tenant grievance mechanisms have been established.

"5. That the imposition of said maintenance deposit does not arbitrarily or unreasonably deprive Defendants (sic) of their property.

"6. That imposition of said maintenance deposit is neither arbitrary, capricious, irrational, excessive nor unreasonable.

"7. That Clause 3.05 of said lease, pertaining to the maintenance deposit, is not so vague that a reasonable person of ordinary intelligence would not understand the rights and duties of the parties to the lease.

"8. That the Oklahoma City Housing Authority Board of Commissioners was a properly constituted body in accordance with Oklahoma law at the time said maintenance deposit was approved.

"9. That named Plaintiffs failed to meet the burden of demonstrating requisite qualification to maintain their cause as a representative or class action as provided in Rule 23, of the Federal Rules of Civil Procedure. More specifically, the named Plaintiffs failed to show either that the elderly tenants of the Oklahoma City Housing Authority constituted a distinct class of persons for purposes of maintaining representative suit, that named Plaintiffs adequately represented the interests of such elderly tenants, that such tenants with whom named Plaintiffs might show an interest constituted a class so large as to make their joinder impractical, or that a class action would provide a superior method of adjudicating the controversy."

We turn to the trial court's determination that the action was not maintainable as a class action. The Tenants had moved to proceed as representatives of a class consisting of all elderly residents of public housing owned and operated by the Authority and all elderly persons who should subsequently be admitted to such housing. The trial court, after an evidentiary hearing, denied the motion and found that the Tenants did not meet the requirements of Rule 23(a), Fed.R.Civ.P., in that they had failed to show that the proposed class was so numerous that the joinder of all members was impracticable or that they would adequately protect the interests of the proposed class.

The Tenants argue that the action "represents a classic type of a Rule 23(b) (2) class action". Rule 23(b) does not stand alone. In order for an action to proceed as a class action it must meet all requirements of Rule 23(a) regardless of what subdivisions of Rule 23(b) it might otherwise fall under. Tolbert v. Daniel Construction Co., 332 F.Supp. 772 (D.S.C.1971); National Auto Brokers Corp. v. General Motors Corp., 60 F.R.D. 476, 489 (S.D.N.Y.1973). The burden is upon plaintiffs seeking to represent a class to establish that the class is so numerous as to make joinder impracticable. Williams v. Wohlgemuth, 366 F.Supp. 541 (W.D.Pa.1973); Tuma v. American Can Co., 367 F.Supp. 1178 (D.N.J.1973). Unless abuse is shown, the district court's determination is final. Arkansas Educ. Ass'n. v. Board of Educ., 446 F.2d 763 (8th Cir. 1971); Hill v. American Airlines, Inc., 479 F.2d 1057 (5th Cir. 1973). We have held that "the question of whether to allow a suit to proceed as a class action is one primarily for the determination of the trial judge. If he applies the correct criteria to the facts of the case, the decision should be considered to be within his discretion. Gold Strike Stamp Co. v. Christensen, 436 F.2d 791 (10th Cir. 1970); Rossin v. Southern Union Gas Co., 472 F.2d 707 (10th Cir. 1973).

Here there was evidence that out of 830 public housing units occupied by elderly tenants, 811 had, without objection, executed the new leases requiring deposits, and that 794 had either paid or agreed to pay the deposit; that many of them had stated that they did not object to the requirements of the new lease and did not support the action, believing that the practice of requiring deposits would benefit them by encouraging better upkeep of neighboring units. The interest of these would be antagonistic to the interests of the plaintiffs-appellants. The record convinces us that the evidence before Judge Chandler supports his finding that the proposed class was overbroad and that the named plaintiffs failed to show that they could fairly and adequately protect the interests of residents who accepted the deposit requirement as beneficial to them and to like-minded elderly tenants. In our judgment the trial judge applied the correct criteria to the facts and did not abuse his discretion in determining that the case should not proceed as a class action.

The plaintiffs' principal attack is on the implementation of the Authority's resolution requiring the $50.00 deposit. They contend that the requirement that the Tenants make the deposit in addition to the payment of their rent amounts to an increase in that rent in violation of 42 U.S.C.A. § 1402 (the Brooke Amendment) limiting rental to 25 percent of a tenant's monthly income.

Assuming that the sum of the rent and the security deposit exceeds 25 percent of the Tenants' income the question then is whether the payment of the maintenance deposit should be considered as additional rent. Rent is a compensation or income which the owner of land receives from a tenant for the use or occupation of the land. United States Steel Corp. v. United States, 270 F.Supp. 253 (S.D.N.Y.1967); Gentry v. Bodan, 347 F.Supp. 367 (W.D.La.1972). Upon the payment of rent the title to the money so paid passes to the landowner. Money deposited as security for the performance by a tenant of the conditions of his lease, here the obligation to pay the rent and to maintain the premises in good condition, 3 is in the nature of a trust fund with the tenant as beneficiary. See In Re Pal-Playwell, Inc., 334 F.2d 389 (2d Cir. 1964). 4

In their pleadings and briefs the Tenants refer to the required deposit variously as "maintenance and security deposit", "security deposit" and "maintenance and security deposit" and the Authority similarly uses the terms without distinction. In the resolution establishing the requirement for a deposit it is referred to as a "maintenance deposit", as it is in the "new lease" itself and in the Authority's resolution providing for segregation of the deposits in a separate account. The obligations and rights of the Tenants and the Authority are not fixed by the label used by the parties in the pleadings or briefs, in the resolutions, or even in the lease itself.

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