Desuze v. Ammon

• Decision Date: 09 March 2021
• Docket Number: No. 20-1141,August Term, 2020,20-1141
• Citation: 990 F.3d 264
• Parties: Mary DESUZE, Louis Grant, Petra Montgomery, Carlota Brown, Leonard Andre, Renee Avent, Arlene Hipp, Deborah Priester, Angela Jones, Elvia Scharschmidt, Pamela Lockley, for themselves and other similarly situated current or former tenants of Linden Plaza, Plaintiffs-Appellants, v. Matt AMMON, Acting Secretary of the United States Department of Housing and Urban Development, United States Department of Housing and Urban Development, Linden Plaza Preservation L.P., Linden Plaza Associates, L.P., New York City Department of Housing Preservation and Development, City of New York, Defendants-Appellees
• Court: U.S. Court of Appeals — Second Circuit

990 F.3d 264

Mary DESUZE, Louis Grant, Petra Montgomery, Carlota Brown, Leonard Andre, Renee Avent, Arlene Hipp, Deborah Priester, Angela Jones, Elvia Scharschmidt, Pamela Lockley, for themselves and other similarly situated current or former tenants of Linden Plaza, Plaintiffs-Appellants,

v.Matt AMMON, Acting Secretary of the United States Department of Housing and Urban Development, United States Department of Housing and Urban Development, Linden Plaza Preservation L.P., Linden Plaza Associates, L.P., New York City Department of Housing Preservation and Development, City of New York, Defendants-Appellees,^*

No. 20-1141

August Term, 2020

United States Court of Appeals, Second Circuit.

Argued: December 10, 2020

Decided: March 9, 2021

Adam Meyers, Communities Resist, Brooklyn, NY, for Plaintiffs-Appellants.

Edward K. Newman (Varuni Nelson, on the brief) for Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, Brooklyn, NY, for Defendants-Appellees Matt Ammon and U.S. Department of Housing and Urban Development.

Zoe Phillips (Peter C. Neger, on the brief), Morgan, Lewis & Bockius LLP, New York, NY, for Defendants-Appellees Linden Plaza Preservation L.P., and Linden Plaza Associates, L.P.

Amy McCamphill (Richard Dearing, John Moore, on the brief) for James E. Johnson, Corporation Counsel of the City of New York, New York, NY, for Defendants-Appellees New York City Department of Housing Preservation and Development and City of New York.

Before: Cabranes, Park, and Nardini, Circuit Judges.

William J. Nardini, Circuit Judge:

Plaintiffs-Appellants (the "Tenants") are current and former tenants of Linden Plaza, a privately owned affordable housing complex in Brooklyn, New York. In 2007 and 2008, federal and local authorities granted Linden Plaza's application to raise rents, over vocal objections by the Tenants. Years of litigation followed. In this action, the Tenants came to federal court claiming that, back in 2007, Linden Plaza failed to give them notice of important financial details that the project owner had provided housing authorities to justify the proposed rent increases. Had they known about these details, the Tenants say, they would have had even stronger grounds to contest the rent hikes. The Tenants also complain that, as they read the governing regulations, local authorities were supposed to review the rent proposal before it went to the federal authority. The biggest problem for the Tenants’ case is that they filed this lawsuit a decade after the rent increases were approved. The statutes of limitations for their claims are much shorter: only three or six years, depending on the claim.

The Tenants’ complaint, filed in 2018, alleged claims under state law against Linden Plaza; under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 551 et seq. , against the U.S. Department of Housing and Urban Development ("HUD") and its Secretary; and under 42 U.S.C. § 1983 against New York City and its Department of Housing Preservation and Development ("HPD"). The United States District Court for the Eastern District of New York (Nicholas G. Garaufis, Judge ) granted Defendants-Appellees’ motions to dismiss under Fed. R. Civ. P. 12(b)(1) and (6), holding that the Tenants lacked standing to bring one of their APA claims and that all of the Tenants’ federal claims were time-barred. The court declined to exercise supplemental jurisdiction over the state-law claims.

The Tenants contest the district court's holding that they lack standing to challenge HUD's process for approving Linden Plaza's application. They further contend that all of their APA claims were timely brought, or at least should be subject to equitable tolling, and that their Section 1983 claims were timely under the continuing violation doctrine. As explained in more detail below, we hold that the Tenants lack standing for one of their APA claims, and that in any event all of their federal claims are untimely. In particular, we write to clarify that 28 U.S.C. § 2401(a) — the statute of limitations for civil claims brought against the United States — is a claims-processing rule rather than a jurisdictional bar, although that does not help the Tenants because they are not entitled to equitable tolling. We therefore affirm the judgment of the district court.

I. Background

In 2007, the Tenants received notice of, and attended a hearing on, Linden Plaza's June 2007 application for approval from HPD and HUD to increase rents (the "HPD Application"). The Tenants did not receive notice of a separate application (the "HUD Application") that Linden Plaza submitted to HUD's Multifamily Regional Center in conformity with then-relevant agency guidance. See U.S. Dep't of Hous. & Urb. Dev., Notice H 00-8 (May 16, 2000) ("Notice H 00-8"). The HUD Application contained more detail about the basis for the rent increase, including approximately $140 million in "decoupling" expenses, a term for costs linked to the refinancing of a previously HUD-insured public housing project.¹ The Tenants claim that they were provided only the figures submitted in the HPD Application, and therefore never had notice or an opportunity to comment on the proposed basis for the rent increase submitted separately to HUD — a basis they argue was improper.

In December 2007, HUD approved Linden Plaza's application, and HPD followed suit in March 2008, permitting significant rent increases based in part on the decoupling expenses included in the HUD Application. In April 2011, during discovery in a state-court action challenging these rent increases, Tenants DeSuze and Grant learned that the rent increases were attributable in part to the decoupling expenses in Linden Plaza's HUD Application. In August 2013, during further litigation, the Tenants learned from HUD about specific decoupling-related costs that Linden Plaza had used to justify the higher rents.

On January 11, 2018, the Tenants filed their Complaint in the current litigation, and on June 16, 2018, they filed an Amended Complaint. In addition to New York statutory and common-law claims against Linden Plaza, the Tenants alleged that HUD departed from agency regulations and violated the APA by approving Linden Plaza's application without pre-approval from HPD, and that New York City and HPD employed a discriminatory policy or practice of favoring preservation transactions at the expense of affordable housing, in violation of Section 1983. Defendants-Appellees filed motions to dismiss, which the district court granted, entering judgment on March 9, 2020. The Tenants filed a timely notice of appeal.

"We review de novo a district court's grant of a motion to dismiss, including its legal interpretation and application of a statute of limitations." Deutsche Bank Nat. Tr. Co. v. Quicken Loans Inc. , 810 F.3d 861, 865 (2d Cir. 2015). When a district court determines that equitable tolling is inappropriate, we review the legal premises for that conclusion de novo , the factual bases for clear error, and the ultimate decision for abuse of discretion. Phillips v. Generations Family Health Ctr. , 723 F.3d 144, 149 (2d Cir. 2013).

II. APA Standing to Assert Procedural Rights under 24 C.F.R. § 245.330

Section 706 of the APA instructs reviewing courts to hold unlawful and set aside agency action that fails to observe procedure required by law. 5 U.S.C. § 706(2)(D). A party who has suffered an injury from an adverse agency action has standing to challenge the agency's violation of "procedures [that] are designed to protect some threatened concrete interest of his that is the ultimate basis of his standing." Lujan v. Defs. of Wildlife , 504 U.S. 555, 573 n.8, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "[T]o determine whether a procedural violation manifests injury in fact, a court properly considers whether Congress [or the agency] conferred the procedural right in order to protect an individual's concrete interests." Strubel v. Comenity Bank , 842 F.3d 181, 189 (2d Cir. 2016). The question, therefore, is whether the Tenants have such a vested procedural right that is designed to protect their concrete interests.

As relevant here, Section 236 of the National Housing Act of 1934 ("NHA") authorizes the HUD Secretary to ensure continuing affordability for tenants by reviewing rent increase proposals from private owners who have refinanced the original mortgage on an affordable housing project. See 12 U.S.C. § 1715z-1(a), (e)(1–2). In particular, the Secretary "shall assure" that (1) "tenants have adequate notice of, reasonable access to relevant information about, and an opportunity to comment on [an owner's request for rent increase,]" and (2) "such comments are taken into consideration." 12 U.S.C. § 1715z-1b(b)(1).² HUD regulations further specify that certain owners of housing projects not insured by HUD must provide notice to tenants of proposed rent increases, and should initially submit such proposals to the local housing authority rather than to HUD. See Tenant Participation in Multifamily Housing Projects, 50 Fed. Reg. 32,396 -01, at 32,404 (Aug. 12, 1985) (codified at 24 C.F.R. § 245.330(a)(2) ). If the local housing authority approves the request, it submits the application materials to HUD for review along with a certification that tenants received notice and consideration. 24 C.F.R. § 245.330(b). In 2000, HUD issued Notice H 00-8, which allows certain owners to flip the order of approval and start with HUD; these owners apply for decoupling (and thus rent increases) "by providing a written proposal to the [HUD] Multifamily Hub having jurisdiction for the project" first, followed by approval from the local housing authority. Notice H 00-8 ¶ 9.³

The Tenants complain that, in following the procedure set forth in Notice H 00-8, HUD short-circuited initial approval from the local housing authority as required by 24 C.F.R. § 245.330.⁴ The Tenants do not suggest that their written comments were not forwarded to HUD or considered by...