ALAZAN-APACHE RESIDENT v. San Antonio Housing Authority

• Decision Date: 31 January 1995
• Docket Number: Civ. No. SA-94-CA-0106.
• Citation: 885 F. Supp. 949
• Parties: ALAZAN-APACHE RESIDENT ASSOCIATION, et al., Plaintiffs, v. SAN ANTONIO HOUSING AUTHORITY, et al., Defendants.
• Court: U.S. District Court — Western District of Texas

885 F. Supp. 949

ALAZAN-APACHE RESIDENT ASSOCIATION, et al., Plaintiffs, v. SAN ANTONIO HOUSING AUTHORITY, et al., Defendants.

Civ. No. SA-94-CA-0106.

United States District Court, W.D. Texas, San Antonio Division.

January 31, 1995.

COPYRIGHT MATERIAL OMITTED

Thomas A. Guajardo, Law Offices of T.A. (Tony) Guajardo, San Antonio, TX, Clint Bolick, U.S. Dept. of Justice, Civ. Rights Div., Educational Opportunity Div., Washington, DC, Scott G. Bullock, William H. Mellor, III, Institute for Justice, Washington, DC, for Alazan-Apache Resident Ass'n, Our Casas Resident Management Council, Inc., Diana Castillo, Elva Barajas, Blanca Ozuniga, Mary Alice Maciel.

Timothy J. Daniels, San Antonio, TX, Ricardo J. Navarro, Denton, McKamie & Navarro, San Antonio, TX, Victoria Guerra, Denton, McKamie & Navarro, P.C., San Antonio, TX, for San Antonio Housing Authority, Christina L. Garcia, Charles C. Andrews, Jr., Kenneth H. Willenberg, Pablo Escamilla, Laura Calderon, Apolonio Flores, Frank E. Hornsby, Jr.

Winstanley F. Luke, U.S. Attys. Office, San Antonio, TX, for Henry G. Cisneros, Joseph Schuldiner.

ORDER

ORLANDO L. GARCIA, District Judge.

On this date came on to be considered the United States Magistrate Judge's Memorandum and Recommendation, filed in this cause on November 30, 1994; and plaintiffs' objections filed December 15, 1994.

When a party objects to a Memorandum and Recommendation the Court is required to "make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1)(C). See also Longmire v. Guste, 921 F.2d 620, 623 (5th Cir.1991) (party is "entitled to a de novo review by an Article III judge as to those issues to which an objection is made"). Such a review means that the Court will examine the entire record, and will make an independent assessment of the law.

Plaintiffs are the Alazan-Apache Resident Association (AARA), Our Casas Resident Management Council (Our Casas), and four residents of the Alazan-Apache Courts who are also officers of AARA. Plaintiffs brought the present suit seeking to manage and ultimately to own the Alazan-Apache Courts, a public housing development, pursuant to Sections 20 and 21 of the United States Housing Act of 1937, 42 U.S.C. §§ 1437r and 1437s (the Act). Plaintiffs sued the San Antonio Housing Authority and its officials (SAHA) alleging SAHA had unlawfully denied Plaintiffs' rights to resident management of the Alazan-Apache Courts. Plaintiffs also sued the Secretary of the Department of Housing and Urban Development and the Assistant Secretary for Public and Indian Housing (HUD) alleging that they had failed to intervene to vindicate plaintiffs' rights to resident management pursuant to their duties under 24 C.F.R. § 964.9 (1994). Plaintiffs ask this Court, inter alia, to declare that they have the right to assume resident management duties and to direct defendants immediately to undertake good faith negotiations with plaintiffs leading to resident management.

The parties agreed to submit legal issues which they say must be resolved initially by the Court. These legal issues are addressed in plaintiffs' Motion for Partial Summary Judgment, SAHA's Motion for Summary Judgment and Motion to Dismiss, and HUD's Motion to Dismiss.

Plaintiffs argue (1) that the Act creates an enforceable federal right of public housing residents to manage their developments; (2) that the Act requires public housing authorities and HUD to facilitate such management operations; (3) that the legislative history and administrative interpretation of the Act demonstrate that Congress intended to confer certain rights upon plaintiffs through the Act; (4) that the Act creates a private right of action against both the federal and non-federal defendants; and (5) that plaintiffs have a claim against the non-federal defendants under 42 U.S.C. § 1983.

Defendants argue that the Plaintiffs are not eligible under the Act to participate in resident management. Defendants also argue that the Act imposes no duties on them and creates no private right of action. They interpret the legislative history to reflect that Congress merely preferred certain activities rather than intended to create an enforceable right. Defendants also argue that plaintiffs have failed to exhaust administrative remedies and that plaintiffs must bring their claim under the Administrative Procedure Act. The Magistrate Judge concurred with defendants' arguments.

FED.R.CIV.P. 12(b)(6) authorizes the filing of a motion to dismiss a case for failure to state a claim upon which relief can be granted. A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Doe v. State of Louisiana, 2 F.3d 1412, 1416 (5th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1189, 127 L.Ed.2d 539 (1994). The motion will be granted when "the pleader makes some allegations that show on the face of the complaint some insuperable bar to relief." United States v. Uvalde Consolidated Indep. Sch. Dist., 625 F.2d 547, 549 n. 1 (5th Cir.1980), cert. denied, 451 U.S. 1002, 101 S.Ct. 2341, 68 L.Ed.2d 858 (1981).

The Act provides:

As a condition of entering into a resident management program, the elected resident council of a public housing project shall approve the establishment of a resident management corporation.... The corporation shall be a nonprofit corporation organized under the laws of the State in which the project is located, and the tenants of the project shall be the sole voting members of the corporation.

42 U.S.C. § 1437r(b)(1). Only qualifying resident management corporations may contract for management responsibilities or home ownership. 42 U.S.C. §§ 1437r(b)(4), 1437s(a)(1). The regulations are in accord. See 59 Fed.Reg. 43622, 43637 (1994) (to be codified at 24 C.F.R. § 964.7) (resident management corporation is the entity that proposes to enter into a contract to manage one or more management activities of a housing authority); 59 Fed.Reg. 43622, 43637 (1994) (to be codified at 24 C.F.R. § 964.11) (as long as proper procedures are followed, the housing authority shall recognize the resident council); 59 Fed.Reg. 43622, 43642 (1994) (to be codified at 24 C.F.R. § 964.225) (resident councils interested in contracting with a housing authority must establish a resident management corporation that meets the requirements for such a corporation; housing authorities shall negotiate with corporations seeking to contract to provide management services).

Plaintiffs' complaint affirmatively states that Our Casas is a corporation whose board of directors consists "of individuals from public housing developments throughout San Antonio." Plaintiffs' Complaint at 3 and 9. Our Casas' articles of incorporation state that the board of directors shall be voting members. Therefore, tenants outside the Alazan-Apache Courts are voting members of the corporation in violation of 42 U.S.C. § 1437r(b)(1). Plaintiffs' complaint also states that the AARA is not a corporation at all, but an unincorporated association. Plaintiffs' Complaint at 2.

The Court therefore concludes that no plaintiff in this cause is eligible to commence management operations or even to negotiate for management operations because no plaintiff is a Texas nonprofit corporation whose sole voting members are tenants of the Alazan-Apache Courts.

Plaintiffs argue in their objections that the Magistrate Judge overlooked the factual basis of their complaint: that SAHA had continually and unlawfully thwarted plaintiffs' right to create a resident management corporation, primarily by failing to provide free office space for the resident council at the Alazan-Apache Courts. Assuming the truth of this assertion, at the most it shows that SAHA has not consulted with the tenants or provided appropriate guidance to assist them in establishing and maintaining a tenant management corporation. See 24 C.F.R. §§ 964.11, 964.17; 59 Fed.Reg. 43622, 43637 (1994) (to be codified at 24 C.F.R. § 964.11. Neither the Act nor the regulations require that the housing authority provide free office space to tenant organizations. Nor do they provide any exception to the requirement that only a qualified resident management corporation can enter into a resident management contract. 42 U.S.C. § 1437r(b)(4). Further, plaintiffs do not allege that SAHA's failures to provide free office space or to provide guidance to the resident groups have prevented plaintiffs from filing articles of incorporation and by-laws of the type required by the Act. Plaintiffs are certainly free to organize in whatever manner they wish. They have chosen organizational structures, however, that render them ineligible to participate in management.

Plaintiffs assert that HUD's dereliction was to fail to require SAHA to negotiate with plaintiffs as required by 24 C.F.R. § 964.9(b). That regulation, however, applies only if a housing authority fails to negotiate with a resident management corporation. This is consistent with the Act and other regulations requiring the formation of a resident management corporation as a prerequisite to management negotiations.

The bulk of plaintiffs' objections concern their argument that Congress intended the Act to create an enforceable federal right to resident management and ownership of public housing. Although the arguments on each side are fascinating and it is tempting to wade into them, the Court need not engage in the rigorous exercise of divining Congressional intent. The Act clearly details the requirements for the resident management program and the entities that are qualified under the program to negotiate for and enter into a management contract. Because plaintiffs have not shown that they have...