Hyland v. Office of Hous. & Cmty. Dev.

Decision Date16 March 2016
Docket NumberCIVIL 15-00504 LEK-RLP
PartiesLANRIC HYLAND, Plaintiff, v. OFFICE OF HOUSING & COMMUNITY DEVELOPMENT, ET AL., Defendants.
CourtU.S. District Court — District of Hawaii
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS OFFICE OF HOUSING & COMMUNITY DEVELOPMENT, COUNTY OF HAWAII'S MOTION TO DISMISS; AND GRANTING IN PART AND DENYING IN PART DEFENDANT HAWAII AFFORDABLE PROPERTIES, INC.'S SUBSTANTIVE JOINDER

Before the Court are: Defendants Office of Housing & Community Development and the County of Hawaii's ("the County Defendants") Motion to Dismiss ("Motion"), filed on December 14, 2015; and Defendant Hawaii Affordable Properties, Inc.'s ("HAPI") substantive joinder in the Motion ("Joinder"), filed on December 18, 2015. [Dkt. nos. 4, 9.] Pro se Plaintiff Lanric Hyland filed his memorandum in opposition to the Motion on December 29, 2015, and his memorandum in opposition to the Joinder on December 30, 2015. [Dkt. nos. 21, 22.] On January 11, 2016, Defendant Ainakea Senior Residences LLLP ("Ainakea") filed a statement of no opposition to the Motion. [Dkt. no. 27.] The County Defendants filed their reply on January 14, 2016, and HAPI filed its reply on January 16, 2016. [Dkt. nos. 29, 30.]

On January 27, 2016, this Court issued an entering order finding these matters suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). [Dkt. no. 33.] After careful consideration of the Motion, Joinder, supporting and opposing memoranda, and the relevant legal authority, the County Defendants' Motion and HAPI's Joinder are HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.

BACKGROUND

On August 11, 2015, Plaintiff filed his "Verified Complaint of Lanric Hyland; Complaint for Complaint for [sic] Declaratory & Injunctive Relief; Appeal from Declaratory Petition" ("Complaint") in the Circuit Court of the Third Circuit, State of Hawai`i. [Notice of Removal, filed 12/9/15 (dkt. no. 1), Decl. of Melody Parker, Exh. A.] The County Defendants removed the case to this district court based on federal question jurisdiction.1 [Notice of Removal at ¶ 4.]

According to the Complaint, Plaintiff is a seventy-six year-old retiree who lives in the County of Hawai`i. [Complaint at 7, § IV.] He "liv[es] in housing funded by Low Income Housing Tax Credits [("LIHTC")] and Section 8 subsidies." [Id.] Thehousing project that Plaintiff lives in is called Ainakea Senior Residences ("ASR"). [Id. at 3, § II.] Ainakea is the owner/landlord of ASR, and HAPI is the property manager. The County Defendants administer federal housing funds pursuant to federal statutes, rules, and regulations.2 [Id. at 7, § IV.] ASR is located next to another senior living facility, Ainakea Elderly Project ("AEP"). AEP is owned by Kohala Union Housing Corp. and managed by Bob Tanaka, Inc. AEP is federally subsidized through Section 202 of the Housing Act of 1959, 12 U.S.C. § 1701q, et seq., and Section 8 of the Housing Act of 1937. [Id. at 8, § V.B.]

Plaintiff apparently challenges the increase in the contract rent between the County Defendants and Ainakea for the 2015-2016 lease year. Plaintiff states that contract rents for federally subsidized housing are calculated each year based on the United States Department of Housing and Urban Development's ("HUD") determination of the fair market rent ("FMR") for apartments of similar size and location. The County Defendants enter into a Housing Assistance Payment ("HAP") contract with the landlord/owner for each housing project. Pursuant to the HAP contract, the tenant pays approximately thirty percent of his monthly income as rent, and the County Defendants pay thelandlord/owner the difference between the tenant's portion of the rent and the contract rent. Plaintiff states that, for the 2014-2015 lease year, the contract rent for his unit was $800, and his portion of the rent was $197. For the 2015-2016 lease year, the contract rent is $981, and his portion of the rent is $202. Plaintiff argues that the current contract rent is exorbitant, and he challenges the increase in his portion of the rent and the increase in ASR tenants' security deposit from $800 to $981. [Id. at 12, § V.F.] However, he acknowledges that tenants who were living at ASR in October 2014 are not subject to the increased security deposits; their deposits are "frozen at $800." [Id. at 12 n.5.]

Plaintiff argues that the HAP contract provides that each lease between the facility's landlord/owner and a family receiving federal housing assistance must comply with HUD requirements. 24 C.F.R. § 983.301 governs the initial determination of subsidized housing rent, as well as the redetermination of rent; and 24 C.F.R. § 983.303 governs the determination of the amount of a "reasonable rent."3 Plaintiffpoints out that the County Defendants would not disclose to him the rent for the comparable unassisted units that they used to support the increase. [Id. 12-13, § V.G.] He argues that, for the past three fiscal years, Ainakea has requested - and the County Defendants have approved - a contract rent for ASR units that is the same as the amount determined according to § 983.301(b)(1). Plaintiff contends that the County Defendants have failed to determine whether a "reasonable rent" would be lower than the amount that Ainakea requested. He argues that this is an abuse of discretion and, if the County Defendants had determined the "reasonable rent," that amount would likely have been lower and that amount would have become the contract rent. [Id. at 14, § V.H.] Plaintiff apparently contends that the County Defendants improperly inflated the contract rent by calculating it based on rents for "Kailua-Kona 'gated community' apartments" that have "pools and views" that were not indicative of "a reasonable rent for a North Kohala apartment" like the units in ASR. [Id. at 16, § V.H.] Plaintiff also challenges HAPI's eviction of ASR tenant Margaret "Peggy" Wilhelm in 2012. According to the Complaint, During her second lease term, Ms. Wilhelm received a Rules Violation Notice dated November 7, 2011. On November 5, 2011 at 7:05 a.m., Ms. Wilhelm allegedly pounded on another tenant's wall and yelled offensive language at her. On March 9, 2012, Ms. Wilhelm was informed that HAPI was terminating her lease. On April 24, 2012, the County Defendants - without conducting any investigation of their own - informed Ms. Wilhelm that her lease and contract would be terminated effective May 31, 2012. [Id. at 16, § V.I.] The reason provided for the termination was: "'Material non-compliance' (e.g. one or more substantial violations of the lease/rental agreement, non-payment or repeated late payments, etc.) with the terms of your rental/lease agreement." [Id., App'x D-1.] Plaintiff argues that Ms. Wilhelm was never given the opportunity to respond to the allegation that she violated the rule prohibiting noise before 8:00 a.m., and he argues that the other tenant was not cited for her violation of the same rule - she was making noise while grinding coffee beans. Plaintiff argues that HAPI should not be allowed to act as "judge, jury and executioner" and, even accepting HAPI's version of events, it was fundamentally unfair to evict Ms. Wilhelm "for such non-threatening, inoffensive behavior." [Complaint at 17, § V.I.] Plaintiff asserts that the County Defendants are notexercising sufficient supervisory control over HAPI, as evidenced by the fact that there were four other seniors, in addition to Ms. Wilhelm, that were "driven out" of ASR by HAPI over a one-year period. [Id.] Plaintiff also argues that 24 C.F.R. § 983.257 governs termination of tenancy and eviction from federally subsidized housing, and Defendants "routinely ignore" the applicable provisions when terminating tenancy, such as in Ms. Wilhelm's case. [Id. at 17, § V.J.] He argues that Jane Tabra and Eliza Roze also had their leases wrongfully terminated, and "Sydney L" and "Barbara" were constructively evicted. [Id. at 17-18, § V.J.]

In addition, Plaintiff argues that Defendants have wrongfully denied him the following rights: "to legally form and participate in a tenants organization"; "to participate in the redetermination of rent"; "to due process in rule-making through public participation"; and "to due process in decisions to terminate tenancy." [Id. at 18, § VI.]

Plaintiff asserts the following claims: a violation of his right to due process under the United States Constitution and the Hawai`i State Constitution because of the increase in the contract rent, security deposit, and his portion of the rent, and because his lease could be terminated for a rule violation without due process ("Count I"); a violation of his right to equal protection under the United States Constitution and theHawai`i State Constitution because he and other tenants at ASR are treated differently than the tenants at AEP ("Count II"). He prays for: various forms of declaratory relief; various forms of temporary and/or preliminary injunctions; and any other appropriate relief. In addition to his own claims, Plaintiff seeks to bring similar claims on behalf of other current and former ASR tenants ("Representative Claims").

In the instant Motion, the County Defendants ask this Court to dismiss all counts against them because Plaintiff fails to state a claim upon which relief can be granted. As to Plaintiff's claims based upon lease terminations, the County Defendants argue that Plaintiff has not suffered any injury, and he lacks standing to bring the Representative Claims based on the eviction of other tenants. Even if Plaintiff could bring a claim based on Ms. Wilhelm's eviction, it is barred by the statute of limitations, and the claim would fail on the merits because Defendants complied with all applicable laws when they evicted her. As to Plaintiff's claims based on the five-dollar increase in...

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