Ayala v. Boston Housing Authority

• Decision Date: 20 April 1989
• Citation: 404 Mass. 689,536 N.E.2d 1082
• Parties: Betty AYALA et al. 1 v. BOSTON HOUSING AUTHORITY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1082

536 N.E.2d 1082

404 Mass. 689

Betty AYALA et al. ¹ v. BOSTON HOUSING AUTHORITY.

Supreme Judicial Court of Massachusetts Suffolk.

Argued Jan. 4, 1989.

Decided April 20, 1989.

Jeffrey M. Feuer (Karen L. Kruskal, Cambridge, & Dagmar Pollex, Jamaica Plain, with him), for plaintiffs.

John G. Ryan, Boston, for defendant.

Charles Harak, Nancy A. McCann, James M. McCreight & Susan M. Motika, Boston, for Massachusetts Union of Public Housing Tenants & others, amici curiae, submitted a brief.

Frederick U. Fierst, Northampton, for Massachusetts Non-Profit Housing Association, Inc., amicus curiae, submitted a brief.

Erik Lund, John Egan & Richard M. Rosenthal, Boston, for Lynn Housing Authority, amicus curiae, submitted a brief.

Before WILKINS, LIACOS, NOLAN, LYNCH and O'CONNOR, JJ.

LIACOS, Justice.

Amy and Starsky Ayala, children under the age of seven, and their mother, Betty Ayala (plaintiffs), ² brought an action against the defendant, Boston Housing Authority (BHA), for failing to inspect their apartment for lead paint hazards and for failing to enforce elimination of lead paint hazards. They alleged that the children were poisoned after they ingested lead paint in their apartment in Boston. A judge of the Boston Housing Court granted the defendant's motion for summary judgment and reported certain questions to the Appeals Court. We granted direct appellate review. We vacate the judgment of the Housing Court and remand the matter to that court for further proceedings. ³

1. Procedural history. The plaintiffs originally filed their action against the owner of the subject premises in 1983, and the case was transferred to the Boston Housing Court in February, 1984. In January, 1985, the plaintiffs amended their complaint to add the BHA and the city of Boston as defendants. The amended complaint, in counts 15-19, alleged that the BHA had been negligent and asserted violations of the plaintiffs' contractual third-party beneficiary rights, as well as violations of G.L. c. 93A (1986 ed.).

After a number of procedural developments not pertinent to the subject of this appeal, the BHA, on September 25, 1987, filed a motion for summary judgment as to counts 15-19 of the amended complaint. The BHA claimed in its motion that it owed no tort, contractual or other duty to the plaintiffs. A judge of the Housing Court, on November 3, 1987, ordered entry of summary judgment in favor of the defendant BHA on all counts and dismissed the plaintiffs' complaint as to the BHA.

On November 18, 1987, the plaintiffs filed a request to report the judgment and order of November 3, 1987, of the Housing Court for appellate review. The BHA, on that day, filed a motion for entry of separate and final judgment, the plaintiffs' claims against the city of Boston not having been settled. ⁴ On December 2, 1987, the plaintiffs filed a petition to a single justice of the Appeals Court, pursuant to G.L. c. 231, § 118 (1986 ed.), appealing the order of November 3, 1987, of the Housing Court. ⁵

On December 21, 1987, the Housing Court judge, in open court, allowed the motion for separate and final judgment for the BHA. On January 11, 1988, the judge issued a report of orders and questions. The following are the reported questions:

"1. Pursuant to the statutes, regulations and other requirements of the Section 8 Housing Assistance Payments Program (42 U.S.C., ss. 1437 et seq., 24 CFR Part 882, and 24 CFR Part 35), did the Boston Housing Authority owe any duties to the plaintiffs herein to inspect for, monitor, and/or enforce the elimination of lead paint hazards in the apartment which was rented to the plaintiffs through the Boston Housing Authority's Section 8 Program?

"2. If the answer to Question No. 1 is in the affirmative, can the plaintiffs recover damages from the Boston Housing Authority for a breach of those duties under the standards articulated in Irwin v. Town of Ware, 392 Mass. 745 (1984)?

"3. Do the plaintiffs, through their participation with the Boston Housing Authority in the Section 8 Housing Program, have any viable contract and/or third-party beneficiary claims for the damages alleged in the plaintiffs' complaint on which they can proceed to trial against the Boston Housing Authority?

"4. If the answer to Question No. 3 is in the affirmative, are the damages that may be recoverable under those contract or third-party beneficiary claims limited by the provisions of the Massachusetts Tort Claims Act, G.L. c. 258, ss. 1 et seq.?

"5. Do the plaintiffs, who claim to be third-party beneficiaries of the contract of insurance between the Boston Housing Authority and the Atlanta International Insurance Company, have standing, as non-parties to that contract, to seek an interpretation of the provisions of that insurance contract?

"6. If the answer to Question No. 5 is in the affirmative, and where the applicable insurance contract entered into by the Boston Housing Authority provided for coverage in excess of the tort liability limits imposed by the Tort Claims Act and where the policy also included the following clause:

" 'It is agreed that the [Insurance] Company shall not contend in the event of any claim, that the Named Insured [Boston Housing Authority] is not liable in tort by virtue of the fact that it is a governmental instrumentality or public body,'

has the Boston Housing Authority in this case waived the statutory limitations on recovery contained in the Tort Claims Act to the extent of the policy limits of its insurance policy?"

2. Procedural issues. We must, as a preliminary matter, determine whether this case is properly before us. Under Mass.R.Civ.P. 64, 365 Mass. 831 (1974), "[i]f the trial court is of opinion that an interlocutory finding or order made by it so affects the merits of the controversy that the matter ought to be determined by the Appeals Court before any further proceedings in the trial court, it may report such matter, and may stay all further proceedings except such as are necessary to preserve the rights of the parties." If separate and final judgment properly was entered against the plaintiffs, then it would not have been appropriate to report the questions under rule 64. In this case, the judge allowed the defendant's motion for separate and final judgment in open court, as the docket for December 21, 1987, notes. The plaintiffs sought to preserve their right to appeal from a final judgment by filing a petition to a single justice of the Appeals Court pursuant to G.L. c. 231, § 118. Apparently relying on the propriety of the judge's report, considering that we had accepted the reported questions for direct appellate review, the plaintiffs requested the Appeals Court to dismiss their petition. "In light of that reliance, fairness requires that we treat the claims ... as if they were here on appeal...." Alberts v. Devine, 395 Mass. 59, 65, 479 N.E.2d 113 (1985).

3. Facts. The defendant, in its motion for summary judgment, made the following statement: "[T]he plaintiffs have alleged that the Defendant was negligent in its inspections of the Plaintiffs' Section 8 apartment. There is no material dispute as to the Plaintiffs' allegations." ⁶ We summarize the facts based on the plaintiffs' allegations.

In October, 1978, the plaintiffs became tenants in an apartment at 239 Bowdoin Street in the Dorchester section of Boston. After December 28, 1978, Robert Abelow, as trustee of the Abelow Investment Trust (owner), owned and managed the apartment. The owner told the plaintiffs that the apartment was lead free. Nevertheless, throughout the tenancy, the apartment had a level of lead in the paint, plaster, and other materials on exterior and interior surfaces that was hazardous to the health and well-being of children.

The defendant BHA participates as an administrator in the Section 8 Housing Assistance Payments Program, 42 U.S.C. § 1437f (1982). In connection with this program, the defendant entered into an Annual Contributions Contract (ACC) with the United States Department of Housing and Urban Development. Under the terms of this contract, a Public Housing Authority (PHA), in this case the BHA, receives funds from the Federal government and subsidizes the rent of certain eligible low income families who are tenants in privately owned housing units. The PHA then enters into Housing Assistance Payments (HAP) contracts with the owners of the subject apartments.

On March 21, 1980, the defendant and the owner entered into a HAP contract, the purpose of which was to "Lease a Decent, Safe, and Sanitary dwelling unit" to the plaintiffs, with the assistance of subsidies paid to the owner by the defendant for the benefit of the tenant, Betty Ayala, who was specifically named. On April 1, 1980, the plaintiff Betty Ayala and the owner signed a Housing Assistance Payments Program Dwelling Unit Lease (lease). In the lease, the defendant signed a "certification" stating that "[t]he terms and conditions of this lease and the unit described herein meet or exceed the minimum standards of our program regulations: I therefore recommend the unit for inclusion in our program." ⁷

The defendant knew that children under six years of age would be living in the apartment. The defendant failed to inspect the apartment for lead before approving the premises for a rent subsidy and failed to inspect the apartment at any other time.

In August, 1980, the Ayala children were diagnosed as having elevated levels of lead in their blood. The Lead Poisoning Prevention Center of the city of Boston's department of environmental affairs (Center) received notice of the plaintiffs' elevated levels of lead in their blood. On August 22, 1980, the Center inspected the plaintiffs' apartment and certified that paint on the interior and exterior surfaces of the apartment and the building contained dangerous levels of lead. The Center notified the owner of the presence of dangerous levels of lead paint in the apartment.

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