Costa v. Fall River Housing Authority, 06-P-1094.

Citation71 Mass. App. Ct. 269,881 N.E.2d 800
Decision Date27 February 2008
Docket NumberNo. 06-P-1094.,06-P-1094.
PartiesGale COSTA v. FALL RIVER HOUSING AUTHORITY.
CourtAppeals Court of Massachusetts

Deborah G. Roher, Fall River, for the plaintiff.

Present: LENK, GREEN, & SIKORA, JJ.

SIKORA, J.

Police arrested Gale Costa and charged her with soliciting sex for a fee and keeping a house of ill fame at her federally subsidized apartment. Subsequently the Fall River Housing Authority (housing authority) terminated her subsidy pursuant to Federal housing regulations. Costa challenged the housing authority's decision by means of an action in the Southeastern Division of the Housing Court Department. Her complaint presented three claims: (1) that the housing authority had terminated her subsidy upon a ground unauthorized by the governing regulations of the Federal Department of Housing and Urban Development (HUD) so as to violate 42 U.S.C. § 1983 (2000)1; (2) that it had denied her procedural due process afforded by the pertinent HUD regulations and the Fourteenth Amendment to the United States Constitution, again in violation of 42 U.S.C. § 1983; and (3) that the termination decision constituted an error of law remediable by certiorari review as authorized by G.L. c. 249, § 4.

The Housing Court preliminarily enjoined the termination. Upon subsequent cross motions for summary judgment, a judge of that court concluded that the housing authority had acted without regulatory authority and without procedural due process. She entered a judgment and an order in favor of Costa effectively preserving her rental subsidy, awarding her damages of $1,950 for emotional distress compensable under § 1983, awarding her costs of $235, and awarding her attorney's fees of $11,000 recoverable under 42 U.S.C. § 1988 (2000).2,3

Upon review, we reverse the judge's ruling that the housing authority lacked legal grounds to terminate the subsidy but we affirm the ruling that it accomplished the termination without procedural due process. We remand the case for further action.

Facts. Costa rents a single-family house on a residential street in Fall River. She participates in the Federal Housing Choice Voucher Program popularly known as "section 8" assistance.4 Under its terms, Costa qualified as a low-income recipient of rental assistance from a local public housing authority (PHA). Under the appropriate formula, the housing authority at the time of these events paid her private landlord $395 of the $463 monthly rent (85.3%).

The arrest of Costa occurred on the evening of June 24, 2004, on charges of engaging in sexual conduct for a fee under G.L. c. 272, § 53A, and of keeping a house of ill fame under G.L. c. 272, § 24. By letter of July 12, 2004, the housing authority notified her of its intent to terminate her assistance as of September 1, 2004, pursuant to 24 C.F.R. § 982.551 (2007), for violating a recipient's "family obligation" not to engage in "criminal activity that threatens the health, safety or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises."

The letter referred her to an enclosed copy of a police report of her arrest. The report gave the following account. On June 23, 2004, a detective using the name "Jay" made an appointment with Costa. The next day, armed with an anticipatory search warrant, Jay came to Costa's apartment at the scheduled time of 9:30 P.M. Costa and her friend Judy, both dressed in lingerie, greeted Jay and invited him to Costa's bedroom. She informed him that the price for a. "dominatrix session" was seventy-five dollars, and for sex another twenty-five dollars. Sex with both women would cost $150, with Judy and Costa receiving seventy-five dollars each. Jay went outside to "get the money." At that point, other detectives entered the house and arrested Costa and Judy. After the arrest, Costa told Judy, "I had a feeling he was a cop. [W]e should not have gotten into the sex thing. Charging money for ... sex is what got us into trouble. DOM [charging for a dominatrix session] is not illegal." Among other items, the police recovered an appointment book with men's names and dates. The appointment book listed Jay's engagement for June 24, 2004, at 9:30 P.M.

Costa requested a "preliminary appeal hearing" with the housing authority to challenge the decision to terminate her subsidy. On July 22, 2004, housing authority hearing officer Theresa Quental conducted that session. She affirmed the housing authority's decision. Costa appealed to the housing authority's grievance panel. Two members of the housing authority two members of the housing authority joint tenants council, and a fifth member chosen by the agreement of the other four members comprised the panel. Quental was a member of the panel. A housing authority employee read the police report into the record. The panel also received a newspaper article about Costa's arrest, which summarized the police report with some editorializing.

The article quoted a detective lieutenant serving as "[p]olice spokesman" to the effect that the police department's expert would try to extract more evidence from Costa's seized "computer system" and that the police might confront Costa's identifiable customers for evidence as part of an ongoing investigation. A headline and subheading announced, respectively, "Police close house of prostitution taking orders online" and "Cops say operation combined latest technology, oldest profession." At the hearing before the grievance panel, Costa had representation by counsel. She testified that she was a dominatrix and that she used Internet chat rooms to meet people inclined to participate in fantasy play. She had agreed to meet Jay for a dominatrix session and had expected to receive a fee. When Jay pressured her to have sex, she had refused. A friend had been present at her home who was willing to have sex with Jay. Costa denied statements attributed to her in the police report that she had offered to have sex with Jay for a fee and that she had regretted involvement in prostitution. She offered letters from two nearby residents who vouched for her reputation as a good neighbor. She also offered letters from a therapist and a physician stating that she suffered from bipolar disorder and acted on impulses when she was in a manic state.

At the end of the hearing the panel voted unanimously to terminate Costa's subsidy. On August 31, 2004, the housing authority formally notified her of that decision in writing. It included the grounds for termination: "This determination is based on the following: the preponderance of evidence of criminal activity that includes—police report from the Fall River Police Department dated June 24, 2004 of your arrest and a newspaper article from the Fall River Herald News dated July 8, 2004."

Also on August 31, 2004, Costa pleaded guilty to both criminal charges against her, and received a term of probationary conditions through March 1, 2006.

Discussion. 1. Standard of review. In review of a grant of summary judgment, the appellate court examines the factual materials in the light most favorable to the losing party and determines the correctness of the law applied to them. See Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120, 571 N.E.2d 357 (1991). It works de novo from the same record as the motion judge. See Matthews v. Ocean Spray Cranberries, Inc., 426 Mass. 122, 123 n. 1, 686 N.E.2d 1303 (1997). In this instance the material facts are undisputed. Our task is to resolve two issues of law, one of substance and one of procedure: (1) whether the pertinent HUD regulations furnished grounds for termination of section 8 assistance; and (2) whether the housing authority undertook termination by a fair process required by HUD regulations and due process standards of the Fourteenth Amendment to the United States Constitution.5 See, e.g., Atlanticare Med. Center v. Commissioner of the Div. of Med. Assistance, 439 Mass. 1, 6, 785 N.E.2d 346 (2003); Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478, 481, 852 N.E.2d 1061 (2006) (questions of statutory construction [and by analogy the interpretation of administrative regulations] receive de novo review). See also Anastos v. Sable, 443 Mass. 146, 149, 819 N.E.2d 587 (2004) (unrestrained review will apply to legal conclusions).6

2. The authority to terminate assistance. The power of the housing authority to terminate Costa's section 8 subsidy hinges on the integrated interpretation of three HUD regulations. The provisions governing program admittance, denial, participation, and termination appear in subpart L of part 982 (Section 8 tenant based assistance: housing choice voucher program) of the Code of Federal Regulations at 24 C.F.R. §§ 982.551-982.555 (2007).

The first provision of our concern, § 982.551, sets out "the obligations of a participant family." Section 982.551(l) addresses the duty to refrain from criminal conduct (emphasis supplied):

"Crime by household members. The members of the household may not engage in drug-related criminal activity or violent criminal activity or other criminal activity that threatens the health, safety or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises (see § 982.553)."

The second pertinent provision, § 982.552, addresses the sanction of "termination of assistance for [a] family." Section 982.522(c)(1)(i) reads as follows (emphasis supplied):

"(1) Grounds for denial or termination of assistance. The PHA may at any time ... terminate program assistance for a participant, for any of the following grounds:

"(i) If the family violates any family obligations under the program (see § 982.551). See § 982.553 concerning denial or termination of assistance for crime by family members."

Finally, § 982.553 addresses the sanction of "termination of...

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