Hawkins v. U.S. Dep't of Hous. & Urban Dev.

• Decision Date: 13 October 2021
• Docket Number: No. 20-20281,20-20281
• Citation: 16 F.4th 147
• Parties: Kenneth Wayne HAWKINS; Cheryl Brown Potts; Kimanisha Myles; Reba Curren Jeffery; Stephanie Winn; Loretta Gulley ; Jeannie Ware; Jamie Wasicek; Shealisha Adams, Plaintiffs—Appellants, v. The United States DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendant—Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

16 F.4th 147

Kenneth Wayne HAWKINS; Cheryl Brown Potts; Kimanisha Myles; Reba Curren Jeffery; Stephanie Winn; Loretta Gulley ; Jeannie Ware; Jamie Wasicek; Shealisha Adams, Plaintiffs—Appellants,

v.The United States DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendant—Appellee.

No. 20-20281

United States Court of Appeals, Fifth Circuit.

FILED October 13, 2021

Kimberly Myles, Velimir Rasic, Esq., Lone Star Legal Aid, Houston, TX, Laura Beth Beshara, Michael Maury Daniel, Daniel & Beshara, P.C., Dallas, TX, for Plaintiffs—Appellants.

Jeffrey Eric Sandberg, Attorney, Abby Christine Wright, U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, for Defendant—Appellee.

Before Wiener, Dennis, and Duncan, Circuit Judges.

Wiener, Circuit Judge:

This case concerns tenants living in substandard conditions in a Houston, Texas "Section 8" housing project. Those tenants sought relocation assistance vouchers from the Department of Housing and Urban Development ("HUD") in the belief that HUD was obliged under federal law to provide such assistance. After HUD failed to do so, the tenants sued in federal court to compel HUD to provide the relocation assistance vouchers.¹

HUD has a menu of statutory options when a Section 8 landlord refuses to correct deficiencies in housing conditions within a specified time period after being notified by HUD of such deficiencies.² HUD may, among other options, require "immediate replacement of project management," impose "civil money penalties" on the owner, and pursue "exclusionary sanctions, including suspensions ... from Federal Programs."³ At the end of this menu, the 2018 Appropriations Act allows HUD to "take any other regulatory or contractual remedies available as deemed necessary and appropriate by the Secretary."⁴

In December 1979, the Secretary bound himself pursuant to this statutory authority to provide "assistance"—e.g. , relocation vouchers—"[i]f ... the family wishes to be rehoused in another dwelling unit."⁵ Because we hold HUD to its self-imposed obligation, we rule that the district court has jurisdiction over the tenants’ Administrative Procedure Act ("APA") and Fair Housing Act ("FHA") claims and thus erred in dismissing those claims. We therefore reverse the district court's dismissal of those claims and remand for further proceedings consistent with this opinion.

We agree with the district court, however, that the tenants failed to state a claim for which relief can be granted on their Fifth Amendment equal protection claim. We therefore affirm the district court's dismissal of that claim.

I.Factual Background

Plaintiffs-Appellants are African-American tenants who live in Coppertree Village, a privately owned apartment complex in Houston. Defendant-Appellee HUD's relationship with Coppertree dates to the early 1980s, when the agency first signed a housing assistant program ("HAP") contract with Coppertree's then-owner. HUD's most recent renewal of its contract relationship with Coppertree was in 2013.⁶ The HAP contract requires the owner to maintain the rental units in a "decent, safe, and sanitary" condition.

Two HUD inspections (in June and September 2018) revealed "serious deficiencies" in many of Coppertree's rental units and in the property's common features.⁷ These wide-ranging problems included infestations of cockroaches and spiders, leaky roofs that spawned colonies of mold, widespread lack of operable locks, and missing or nonfunctioning smoke detectors. As a result, HUD issued two Notices of Default ("NOD") to Coppertree's owner. The NODs instructed the owner to take corrective action and warned that failure to comply could result in HUD exercising "any and all available remedies." In response, Coppertree's owner submitted a survey of the property and began undertaking repairs.⁸

After the first inspection, Plaintiffs sued in federal court. The second inspection revealed ongoing problems, so Plaintiffs filed an amended complaint. In these pleadings, Plaintiffs criticized HUD's decision to maintain the HAP contract with Coppertree and the agency's focus on correcting the deficiencies revealed by the inspections. Plaintiffs also contended that because Coppertree remained in a state of disrepair, HUD was obligated to provide "assistance for relocation" in the form of vouchers, which would help Plaintiffs move elsewhere. Specifically, they alleged that HUD's failure to issue them vouchers was arbitrary and capricious under the APA.⁹ Plaintiffs further alleged that HUD's inaction amounted to race-based discrimination in violation of the FHA¹⁰ and the equal protection component of the Fifth Amendment.¹¹ Contrasting Coppertree with Section 8 properties elsewhere in Houston, Plaintiffs alleged that HUD's failure to provide vouchers was done with the discriminatory motive of "maintain[ing] racial segregation and ... disadvantag[ing] a group of minority households."

HUD moved to dismiss Plaintiffs’ claims under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The agency alleged specifically that Plaintiffs had not challenged any final agency action, a prerequisite for APA review. The agency also contended that its selection of one enforcement remedy from the available options was a decision committed to its discretion and thus unreviewable. To the extent that these barriers did not preclude review of Plaintiffs’ claim of racial discrimination, HUD insisted that Plaintiffs did not plausibly allege any discriminatory motive or purpose.

The district court granted HUD's motion and dismissed all of Plaintiffs’ claims. As to their APA claims, the court reasoned that HUD's decision to take "a less draconian enforcement action" than abatement and instead to seek to "secure compliance with [its] regulations through additional inspections and other ... enforcement actions" was a choice "committed to HUD's discretion by law" and therefore "not reviewable." That court ruled that HUD's "tacit rejection" of other enforcement options did not constitute reviewable final agency action. According to the district court, HUD was taking a "wait and see" approach, holding abatement in reserve should the agency's chosen enforcement method not "ultimately ... br[ing] [Coppertree] into compliance with [the] applicable housing regulations." As to the claim of discrimination in violation of the FHA, the court concluded that Plaintiffs could pursue that claim only through the APA so that the lack of APA jurisdiction barred it.

The district court did, however, review Plaintiffs’ Fifth Amendment claim on the merits and dismissed it for failure to state a claim. The court specifically found that "Plaintiffs fail[ed] to allege the existence of a [Section 8] property in a comparably deplorable condition where White non-Hispanic residents were issued housing vouchers." Absent any "comparator property or comparator residents who were treated more favorably," Plaintiffs failed to state a Fifth Amendment equal protection claim "based on the non-issuance of housing vouchers."

Plaintiffs timely appealed.

II.Standard of Review

We review a district court's grant of a motion to dismiss de novo .¹² "To survive a motion to dismiss, a complaint must contain sufficient factual matter which, when taken as true, states a claim to relief that is plausible on its face."¹³ "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."¹⁴

A motion to dismiss contesting jurisdiction should be granted if "the court lacks the statutory or constitutional power to adjudicate the case."¹⁵ The burden lies with the party asserting jurisdiction to establish "that jurisdiction does in fact exist."¹⁶

III.Analysis

The district court found two barriers to Plaintiffs’ APA and FHA claims. First, the APA precludes judicial review of agency action "committed to agency discretion by law."¹⁷ Second, the APA provides judicial review of "final agency action" only.¹⁸ On appeal, Plaintiffs contend that the district court erred on both points. We consider each in turn.¹⁹

A.Exceptions to Judicial Review

The APA affords a right to judicial review of a federal agency action,²⁰ "except to the extent that (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law."²¹ The second exception, the one at play here, has been read "quite narrowly, restricting it to those rare circumstances where the relevant statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion."²² One such circumstance is "a decision not to institute enforcement proceedings."²³ In those cases, "the decision is only presumptively unreviewable; the presumption may be rebutted where the substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers."²⁴ "Thus, in establishing this presumption in the APA, Congress did not set agencies free to disregard legislative direction in the statutory scheme that the agency administers."²⁵

We begin our analysis with the text of the 2018 Appropriations Act, followed by an analysis of the text of the relevant regulation. We conclude that jurisdiction exists because (1) the text of 24 C.F.R. § 886.323(e), as authorized by the 2018 Appropriations Act, is not discretionary, and (2) Plaintiffs adequately alleged final agency action in their amended complaint.

The 2018 Appropriations Act provides $85 million to HUD "for section 8 rental assistance for relocation and replacement of housing units ...."²⁶ The Supreme Court has instructed that "[t]he allocation of funds from a lump-sum appropriation is ... [an] administrative decision traditionally regarded as committed to agency discretion."²⁷ "After all, the very point of a lump-sum appropriation is to give an agency the capacity to adapt to changing circumstances and meet its statutory...