Feemster v. Bsa Ltd. Partnership

• Decision Date: 14 November 2008
• Docket Number: No. 07-7166.,No. 07-7156.,07-7156.,07-7166.
• Citation: 548 F.3d 1063
• Parties: Bridgette FEEMSTER, et al., Appellees/Cross-Appellants v. BSA LIMITED PARTNERSHIP, Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

548 F.3d 1063

Bridgette FEEMSTER, et al., Appellees/Cross-Appellants v. BSA LIMITED PARTNERSHIP, Appellant/Cross-Appellee.

No. 07-7156.

No. 07-7166.

United States Court of Appeals, District of Columbia Circuit.

Argued September 16, 2008.

Decided November 14, 2008.

Appeals from the United States District Court for the District of Columbia (No. 04cv01901).

Robert E. Greenberg argued the cause and filed the briefs for appellant/cross-appellee.

Julie H. Becker argued the cause for appellees/cross-appellants. With her on the briefs were Barbara McDowell and Clifford J. Zatz. Eliza T. Platts-Mills entered an appearance.

Before: GINSBURG, GARLAND, and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge GARLAND.

GARLAND, Circuit Judge:

Current and former tenants in properties owned by BSA Limited Partnership contend that BSA unlawfully refused to accept their federal vouchers as payment for rent, in violation of federal housing statutes and the District of Columbia Human Rights Act. The district court granted summary judgment for the tenants on the federal claims and for BSA on the Human Rights Act claim. We affirm the judgment in favor of the tenants but reverse the judgment in favor of BSA.

I

BSA has owned and managed a set of residential properties in northwest Washington, D.C., known as the Bates Street Townhomes, since the early 1980s. The development contains thirty-seven units spread across thirty buildings on five streets. From 1982 to 2004, BSA participated in the Section 8 rental assistance program administered by the United States Department of Housing and Urban Development (HUD).¹ Throughout that period, BSA contractually agreed to limit a tenant's portion of the rent to a percentage of the family's income and to accept the remainder from HUD in the form of a "project-based" subsidy. HUD also provided BSA with mortgage insurance for the Bates Street Townhomes. All nine plaintiffs in this case received rental assistance through the Section 8 program. Several have lived in the Bates Street Townhomes for over twenty years.²

Following the expiration of its Housing Assistance Payments Contract in 2002, BSA decided to opt out of the Section 8 program. It prepaid its HUD-insured mortgage, sent a one-year notice to tenants on September 30, 2003, and allowed its final contract extension with HUD to expire on September 30, 2004. In the summer of 2004, BSA employees began to encourage — and then to press — tenants to vacate their units, offering financial compensation to those who agreed to leave. At the time of its opt-out, BSA had arranged to sell the Bates Street Townhomes to a third-party developer. Although the initial deal fell through, BSA continued its efforts to sell the properties and in 2005 found a new buyer, TMS Investments, LLC. The contract with TMS expressly conditioned the purchase of individual units on their being vacant at the time of closing. BSA has not accepted new tenants at the Bates Street Townhomes since January 2003.

Under federal law, when an owner opts out of a project-based Section 8 contract, assisted families in that project may elect to remain in their units and receive "enhanced vouchers." See 42 U.S.C. § 1437f(t). With such a voucher, the tenant's rent subsidy may be "enhanced" (pursuant to a formula) to cover the difference between the previous rent and the new market rent. Id. Alluding to the enhanced voucher provision, BSA's opt-out letter to its tenants stated:

Federal law allows you to elect to continue living at this property provided that the unit, the rent, and we, the owners, meet the requirements of the Section 8 tenant-based assistance program. As an Owner, we will honor your right as a tenant to remain at the property on this basis as long as it continues to be offered as rental housing, provided that there is no cause for eviction under Federal, State or local law.

J.A. 670.

In conjunction with BSA's opt-out, the District of Columbia Housing Authority (DCHA), which administers the Section 8 program in the District, determined that the tenants were eligible for enhanced vouchers. When tenants tried to use their vouchers for rental payments, however, BSA refused to accept them or to execute the necessary lease agreements. Starting in September 2004, BSA wrote letters to the tenants declaring that it would not sign the paperwork required for use of the vouchers, but stating that, "provided you pay the rent charged and otherwise abide by the terms of your tenancy, you may continue to reside in the property which you currently lease until such time as [you] may be required to vacate upon appropriate notice." J.A. 673-78. Each letter specified the "current rent" for that tenant's unit. Id. Thereafter, the tenants "continued to pay rent each month to BSA, either at the full market amount or at the [lower] amount established by the project-based Section 8 program." J.A. 594 (Plaintiffs' Statement of Material Facts Not in Dispute ¶ 15).

On November 2, 2004, the tenants filed their initial complaint in this action, together with an application for a temporary restraining order (TRO). The district court granted a TRO two days later, requiring BSA "to initiate the process of accepting [the tenants'] enhanced vouchers, to wit: immediately sign, complete, and submit any necessary papers to the District of Columbia Housing Authority to begin the `lease-up' process so that [the tenants] will be able to use their enhanced vouchers at their current homes." Feemster v. BSA Ltd. P'ship, No. 04-1901, TRO at 2, 2004 WL 2884434 (D.D.C. Nov. 2, 2004). BSA initiated the lease-up process with DCHA as ordered, but refused to complete the paperwork that DCHA required to pay the rent subsidy on behalf of the tenants.

Shortly after the court issued the TRO, BSA offered the tenants the opportunity to buy their homes, in accordance with the District of Columbia's Tenant Opportunity to Purchase Act, D.C.Code § 42-3404.02 et seq. With assistance from a local nonprofit housing developer, four tenants negotiated contracts for sale. On the day before closing, BSA informed the tenants that it would not complete the sales unless they reimbursed it for approximately $37,000 in rent they allegedly had not paid since the commencement of the litigation — rent that would have been covered by the enhanced vouchers had BSA been willing to accept them. To allow the sales to go forward, the district court facilitated an arrangement under which the tenants agreed to place the disputed sum in an escrow account administered by a settlement attorney.³

In January 2005, BSA served the remaining tenants with 180-day eviction notices. When the tenants refused to move out at the end of the 180 days, BSA brought an action to evict them in District of Columbia Superior Court. On August 28, 2007, the Superior Court ruled that BSA's eviction notices were "inadequate as a matter of law" and that the tenants were entitled to remain in their units. Hawkins v. BSA Ltd. P'ship, No. 04-6839, Order at 4 (D.C.Sup.Ct. Aug. 28, 2007). BSA has filed an appeal from that judgment in the District of Columbia Court of Appeals, where it is currently pending.

In their U.S. District Court complaint, the tenants argued that BSA was required to accept their enhanced vouchers until their tenancies were validly terminated under District of Columbia law, and that its refusal to do so violated both federal housing statutes and the District of Columbia Human Rights Act. On January 12, 2007, the district court granted summary judgment for the plaintiffs on their federal claims, finding it "clear that `families renting at the time of the termination of [a] project-based subsidy contract [have] the right to remain in their units, using enhanced vouchers, for so long as the tenant remains eligible for the vouchers or until the tenant is evicted.'" Feemster v. BSA Ltd. P'ship, 471 F.Supp.2d 87, 98 (D.D.C. 2007) (quoting Jeanty v. Shore Terrace Realty Ass'n, No. 03-8669, 2004 WL 1794496, at *3 (S.D.N.Y. Aug.10, 2004)). On the D.C. Human Rights Act claim, however, the district court granted summary judgment in favor of BSA, finding that the plaintiffs failed to show "that an impermissible factor played a motivating or substantial role" in BSA's refusal to accept their enhanced vouchers. Id. at 102.

BSA now appeals the district court's grant of summary judgment in favor of the tenants on the federal housing law claims. The tenants cross-appeal the court's grant of summary judgment in favor of BSA on the D.C. Human Rights Act claim.⁴ We review grants of summary judgment de novo. Waterhouse v. District of Columbia, 298 F.3d 989, 991 (D.C.Cir.2002). Under Federal Rule of Civil Procedure 56(c), summary judgment is appropriate only if "there is no genuine issue as to any material fact and ... the movant is entitled to judgment as a matter of law." FED. R.CIV.P. 56(c).

II

The United States Housing Act of 1937, as amended by the Multifamily Assisted Housing Reform and Affordability Act of 1997 and subsequent legislation, gives a family that receives an enhanced voucher the right to "elect to remain in the same project in which the family was residing on the date" that the project owner's Section 8 contract expires. 42 U.S.C. § 1437f(t)(1)(B).⁵ BSA does not dispute that § 1437f(t) gives tenants the right to remain in their units despite an opt-out; it does not dispute that, under appropriate circumstances, an opting-out project owner must permit its tenants to use enhanced vouchers for rental payments; and it does not dispute that the tenants may sue to enforce their § 1437f(t) rights in federal court. "This is a single issue case," BSA informs us, and that issue is whether its units were being "offered for rental housing" at the time it refused the tenants' enhanced vouchers. Appellant's Br. 7; see Oral Arg. Recording at 10:48.

According to BSA, tenants have the right to remain in their units, and landlords have a...