Costa v. Fall River Housing Authority

Decision Date13 April 2009
Docket NumberSJC-10197.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

John Egan, Boston, for the defendant.

Kenneth W. Salinger, Assistant Attorney General, for the intervener.

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

The following submitted briefs for amici curiae:

James M. McCreight for Boston Tenants Coalition & others.

David B. Gleich for the Boston Housing Authority & others.

Michael J. Sullivan, United States Attorney, Anita L. Johnson, Assistant United States Attorney, Barbara C. Biddle, John S. Koppel, Thomas W. Rodick, & David M. Reizes for the United States.

Richard M. Bluestein, Janet Steckel Lundberg, & Anthony J. Cichello, Boston, for Massachusetts Nonprofit Housing Association, Inc.



After Gale Costa was arrested and charged with engaging in sexual conduct for a fee, G.L. c. 272, § 53A, and keeping a house of ill fame, G.L. c. 272, § 24, the Fall River Housing Authority (FRHA) notified her it was terminating her participation in the Section 8 rent subsidy program.2 Costa pursued and exhausted her administrative appeals, and thereafter brought an action pursuant to 42 U.S.C. § 1983 (2000) and G.L. c. 249, § 4, against the FRHA in the Housing Court, challenging the termination. Her complaint contained three counts. On cross motions for summary judgment, a judge in the Housing Court concluded that regulations promulgated by the United States Department of Housing and Urban Development (HUD) did not permit the FRHA to terminate a recipient's Section 8 rent subsidy benefits for "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," 24 C.F.R. § 982.551(l), and that the termination appeal hearing conducted by the FRHA, and its resulting decision, violated Costa's regulatory and constitutional right to due process of law.3 On the FRHA's appeal to the Appeals Court,4 that court reversed the Housing Court judge's decision with respect to the meaning of HUD's regulations, but agreed that the termination appeal hearing and decision in this case violated Costa's procedural due process rights in several respects, including the fact that the grievance panel conducting the hearing based its decision to terminate solely on hearsay evidence. Costa v. Fall River Hous. Auth., 71 Mass. App.Ct. 269, 881 N.E.2d 800 (2008) (Costa). We granted the FRHA's application for further appellate review.

We conclude that the applicable HUD regulations allow a public housing authority (PHA) such as the FRHA to terminate a recipient's participation in the Section 8 rent subsidy program for criminal activity beyond that which is violent or drug related, and in particular, for criminal conduct "that threatens the health, safety or right to peaceful enjoyment of other residents and persons residing in the immediate vicinity of the premises." 24 C.F.R. § 982.551(l). We also conclude that while a PHA such as the FRHA may permissibly base an appeal decision terminating Section 8 benefits on reliable hearsay evidence, in this case the grievance panel's decision failed to comply with applicable HUD regulations in several respects. We affirm the judgment of the Housing Court in part, reverse in part, and remand the case for further proceedings consistent with this opinion.5

1. Background. Gale Costa is a participant in the Section 8 rent subsidy program administered by the FRHA pursuant to 42 U.S.C. § 1437f and implementing HUD regulations. In September, 2003, Costa rented a single-family home in Fall River, using a housing voucher issued by the FRHA to subsidize approximately eighty-five per cent of her rent.

On June 24, 2004, Costa was arrested by officers of the Fall River police department. The police report, prepared by Detective Jay Huard, related the following narrative. On June 23, 2004, investigating suspected prostitution activity, Huard made an appointment to go to Costa's house at 9:30 P.M. the following evening. He arrived at her house at the appointed time, supported by an anticipatory search warrant and several other detectives. Huard was met by Costa and another woman, Judy Kaeterle, both wearing lingerie. Costa asked if Huard had the money, and Huard asked how much it would cost. Costa replied, "Well it costs $75.00 for the dominatrix session and if you want sex with me it will cost you another $25.00. If you want sex with Judy and me it will be $150.00 total." Huard summoned the other detectives, arrested Costa and Kaeterle and performed a search. Huard heard Costa state to Kaeterle, "I told you we should not have gotten into the sex thing. Charging money for the sex is what got us into trouble. DOM [charging for `dominatrix' services] is not illegal. We should have stuck to that."

On July 12, 2004, the FRHA notified Costa that it planned to terminate her participation in the Section 8 program because she had violated the "[f]amily [o]bligation,"6 set forth in 24 C.F.R. § 982.551, not to engage in "[c]rime by household members." An unsigned copy of Detective Huard's police report was attached to the notice. Costa exercised her right to appeal from the decision. On July 22, 2004, she was given an informal preliminary hearing—referred to in the FRHA grievance procedures as an "informal settlement conference"—before an FRHA hearings officer, Theresa Quental, who "affirmed" the FRHA's decision.

Costa then received a hearing before the FRHA grievance panel (grievance panel). Under the FRHA's grievance procedures, the appeal termination hearing to which a Section 8 recipient has a right under HUD regulations—referred to in those regulations as an "informal appeal hearing," see 24 C.F.R. § 982.555—is conducted by the grievance panel, consisting of two FRHA employees, two tenants, and one person who is neither an FRHA employee nor a tenant. In Costa's case, one of the two FRHA employees on the grievance panel was Quental, the hearing officer who had conducted Costa's preliminary hearing. Costa, represented by counsel, appeared before the grievance panel on August 3, 2004. The grievance panel had before it materials including the unsigned copy of Detective Huard's June 24, 2004, police report; a letter from Costa's treating physician, indicating that she suffered from bipolar disorder, which could result in "risky behaviors"; and a local newspaper article dated July 8, 2004, two weeks after the arrest. The article, titled "Police Close House of Prostitution Taking Orders Online," quoted a police "spokesman," Detective Lieutenant John DeMello. While substantially repeating the information contained in the police report, the article added the claims that "[p]olice have cracked a prostitution operation that a woman allegedly ran out of her home to clients who made appointments over the Internet," and that Huard's investigation was prompted by "information that Costa ... was `running a house of prostitution' at her home." The article was also, apparently, the only source of information before the grievance panel identifying the specific criminal charges against Costa.7

Costa testified at the grievance panel hearing. She stated that she had agreed to meet Huard in order to engage in "fantasy play" as a "dominatrix" for money; that Huard had pressured her to participate in sex acts, but she had refused; but that Kaeterle had agreed to engage in sex with Huard. Costa also offered two letters from her nearest neighbors, indicating that she was a good and quiet neighbor, and a letter from a treating therapist, stating an opinion that her behavior was unlikely to repeat if her mania could be stabilized. At the conclusion of the hearing, the grievance panel orally advised Costa that it had voted unanimously to uphold the FRHA's termination decision.

The grievance panel provided Costa with written notice of its decision in a letter signed by Quental and dated August 31, 2004. Also on August 31, 2004, Costa pleaded guilty in the District Court to both criminal charges against her, and was sentenced to eighteen months' probation. Costa appealed from the grievance panel decision to the FRHA's board of commissioners, which reviewed her file and notified her on October 14, 2004, that it had found enough evidence to warrant termination from the program, effective November 1, 2004. There is no evidence that the board of commissioners knew of Costa's guilty pleas.

Costa filed the present action against the FRHA in the Housing Court, seeking to enjoin her termination from the Section 8 program and to recover compensatory damages and attorney's fees pursuant to 42 U.S.C. §§ 1983 and 1988; she also sought certiorari review of the FRHA's termination decision pursuant to G.L. c. 249, § 4. The parties filed cross motions for summary judgment. After hearing, the Housing Court judge issued a decision allowing Costa's motion with respect to her claims brought under 42 U.S.C. § 1983, and dismissing her claim for certiorari review. The parties thereafter stipulated to damages in the amount of $1,950 for emotional distress, $11,000 for attorney's fees, and $235 for costs. The FRHA's appeal followed.

2. Discussion. (a) Standard of review. "An order granting or denying summary judgment will be upheld if the trial judge ruled on undisputed material facts and [her] ruling was correct as a matter of law." Massachusetts Bay Transp. Auth. v. Somerville, 451 Mass. 80, 84, 883 N.E.2d 933 (2008), quoting Commonwealth v. One 1987 Mercury Cougar Auto., 413 Mass. 534, 536, 600 N.E.2d 571 (1992). Here the material facts are not in dispute. "We review questions of statutory interpretation de novo." Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478, 481, 852 N.E.2d 1061 (2006).

(b) FRHA's regulatory authority. The...

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