Baum v. Yeutter, C88-234A.

• Decision Date: 29 June 1990
• Docket Number: No. C88-234A.,C88-234A.
• Citation: 750 F. Supp. 845
• Parties: Robin BAUM, et al., Plaintiffs, v. Clayton YEUTTER, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

750 F. Supp. 845

Robin BAUM, et al., Plaintiffs, v. Clayton YEUTTER, et al., Defendants.

No. C88-234A.

United States District Court, N.D. Ohio, E.D.

June 29, 1990.

Robert Harold Bonthius, Jr., Peter M. Iskin, Legal Aid Soc. of Cleveland, Cleveland, Ohio, for Robin Baum, Emma Detillion, Sheila Lawson.

Kathleen Ann Sutula, Michael Anne Johnson, Alexander A. Rokakis, Office of The U.S. Atty., Cleveland, Ohio, for Clayton Yeutter.

Alan P. Schwepe, Office of The Asst. Atty. Gen., Columbus, Ohio, for Roland T. Hairston.

Kent M. Graham, Office of The Pros. Atty., Ravenna, Ohio, for John J. Witkosky.

MEMORANDUM OPINION

DOWD, District Judge.

I. INTRODUCTION

Before the Court are the parties' cross motions for summary judgment as to all counts of the plaintiffs' complaint. To summarize, plaintiffs seek review of the Secretary of Agriculture's practice whereby the Secretary counts as income for the purposes of determining food stamp benefits¹ reimbursement payments the plaintiffs receive for home utilities expenses pursuant to the Housing Act, 42 U.S.C. § 1401, et seq., as administered by the Department of Housing and Urban Development ("HUD").²

Plaintiffs, as public housing tenants, pay "rent" in the amount of 30% of the tenant's adjusted monthly gross income. Plaintiffs' public housing rent, whatever that figure is determined to be, automatically includes a predetermined amount for reasonable utilities consumption, known as a utilities allowance. Plaintiffs pay no more than 30% of their adjusted monthly gross income for rent, which includes the predetermined amount for utilities.

Unlike other public housing tenants, plaintiffs pay some or all of their costs for utilities directly to the utility suppliers. For reasons described infra, the amount plaintiffs pay directly for utilities exceeds the total monthly amount plaintiffs' owe to the local Public Housing Authority ("PHA"), in essence plaintiffs' landlord. The PHA reimburses plaintiffs the difference between plaintiffs' rent obligation and the utilities allowance in the form of a check made payable to plaintiffs.

When public housing tenants receive an allowance for utilities expenses and the utilities are paid by the PHA, the Secretary of Agriculture excludes the benefit tenants receive from household income for purposes of determining food stamp awards. However, the Secretary counts the "utility reimbursement payments" plaintiffs receive as household income. The calculation of food stamp benefits are based on plaintiffs' relative levels of household income: the lower the income level, the more food stamps the household is entitled to receive and vice versa. Because these utility reimbursement payments are included in plaintiffs, income for purposes of determining food stamp awards, plaintiffs receive a smaller award of food stamps than they would receive if the income was excluded.

Plaintiffs' first claim is that the reimbursements for amounts paid by a tenant for utility costs should be excluded from the plaintiffs' household income pursuant to one of several exclusions for determining household income listed in 7 U.S.C. § 2014(d), specifically, § 2014(d)(1), § 2014(d)(5) or § 2014(d)(6).

Plaintiffs next allege that the government has violated the Brooke Amendment to the Federal Housing Act of 1937 and seeks a remedy based upon two separate legal theories, a Cort v. Ash 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) constitutional tort theory and a claim under 42 U.S.C. § 1983.

Finally, plaintiffs claim that the government has violated the Administrative Procedure Act, 5 U.S.C. § 701-706 by crediting plaintiffs with income for their utility reimbursement monies.

Plaintiffs seek declaratory and injunctive prospective relief in addition to retrospective relief in the amount of benefits denied to them due to what plaintiffs claim are inflated determinations of household income. For the reasons that follow, the plaintiff's motion for summary judgment is granted, and the defendants' motion for summary judgment is denied.³

II. FACTUAL BACKGROUND

Although the facts are not in dispute, the following background will be helpful to an understanding of the nature of the claims and defenses.

A. The Federal Housing Subsidy.

Plaintiffs live in federally assisted rental housing in Portage County and Pike County, Ohio. According to what is commonly known as the Brooke Amendment, lower income families living in federally assisted public housing are charged rent based upon a formula that takes into consideration a household's income. 42 U.S.C. § 1437a(a). As a practical matter, plaintiffs are required to pay monthly rent in the amount of 30 percent of a household's monthly adjusted income. The amount of HUD's contribution is equal to the difference between the contract rental and the amount the household is required to pay. 42 U.S.C. § 1437f(c)(3). Included as "rent" are the reasonable amounts paid for utility services ("utilities") which are defined to include the costs for electricity, gas, heating fuel, water and sewage service, and trash collection. 42 U.S.C. § 1437f(c)(1); 24 C.F.R. § 965.472 (1989). The local PHA determines a community-wide utility allowance ("UA"), and adds that figure to each public housing tenant's rent, irrespective of the actual amount spent on utilities consumption, although a household that spends more than the UA is usually required to pay for the cost of the excess usage. 24 C.F.R. § 965.470-482 (1989). The UA is established at a level equal to "the monthly cost of a reasonable consumption of such utilities and other services for the unit by an energy-conservative household of modest circumstances." 24 C.F.R. § 913.102 (1989).

Prior to 1981, the utilities in multi-resident apartment buildings were metered on an aggregate basis, and individual households did not pay for their own utilities separate from the monthly rent which included an allowance for utilities. In 1981, HUD began requiring local PHA's to install individual utility meters so that each household would pay all or a part of the monthly utility expense. As it now stands, three different methods for collection and payment of utilities in public housing exist. First, in older public housing units, the PHA may purchase the utilities directly and add the monthly costs of the utilities to the tenant's rent obligation, without use of a UA. The household pays only its Brooke Amendment rent obligation subject to additional flat fee charges for certain appliances. 24 C.F.R. § 965.471(b); 965.477(b) (1989).

Second, the PHA again purchases the utilities directly. A UA is determined for the housing project and that figure is added to a tenant's monthly rent owed without regard to whether or not a tenant may in fact have used less of the allocated utilities amount. A tenant's utility usage is monitored by a "checkmeter," which assesses a tenant a surcharge if the tenant exceeds the allocated amount for utilities. The surcharge is a payment owed in addition to the Brooke Amendment rent charge. 24 C.F.R. § 965.470-472 (1989).

The third utility payment method gives rise to the claims before the Court. An individual meter for utility consumption is installed at the dwelling unit and the resident purchases the utility services directly from the utility supplier. Again, the tenant is granted a certain utility allowance ("UA"). Rather than examining a tenant's actual utility expenses in a given month, the PHA assumes that a tenant has spent the entire UA for the month. Because of this assumption, for many low income public housing families the figure represented by the UA is used as a credit against rent owed to the PHA and the tenants merely pay the residual. However, plaintiffs' income is so low that the UA covers plaintiffs' rent and results in an additional amount owed by the PHA to the tenant, defined as the "utility reimbursement." 24 C.F.R. § 813.102 (1989). The PHA reimburses the plaintiffs the difference between the monthly rent owed and the UA. Appendix I, which is reproduced from the recent Third Circuit decision in West v. Bowen, 879 F.2d 1122, 1129-30 (3rd Cir. 1989), compares two otherwise similar tenants except that one tenant lives in a public housing unit with group metering and the utilities are paid by the local PHA while the other tenant pays for utilities directly and receives a utility reimbursement payment from the local PHA.

B. The Food Stamp Program

The Secretary of Agriculture currently includes utility reimbursements as "income" for computation of food stamp eligibility. The calculation of food stamp benefits are based on plaintiffs' relative levels of household income: the lower the income level, the more food stamps the household is entitled to receive and vice versa. 7 U.S.C. § 2017(a). In a phrase reminiscent of the Internal Revenue Code, household income is defined to include "all income from whatever source." Income eligibility limits for food stamp benefits is based upon a household's net income. In order to determine a household's net income, certain amounts of income are simply not counted or "excluded" pursuant to 7 U.S.C. § 2014(d). Further reductions in the amount of net income are accomplished by various deductions, including, when applicable, the household's "excess shelter deduction." 7 U.S.C. § 2014(e). If income is not properly excluded from a determination of household income, then a recipient is denied the benefit of food stamps the recipient would have received given the correlation between lower net income leading to an increased award of food stamps.

C. The Utilities Allowance and the Issue of Whether Plaintiffs are Reimbursed for Utilities They did not Purchase

For the purpose of determining whether the utility reimbursement payment is income to plaintiffs, an important factual issue is whether plaintiffs in a given month actually purchase utilities in an amount that equals or exceeds the utility reimbursement payment. The...