Junior v. City of N.Y.
| Decision Date | 17 January 2013 |
| Docket Number | 12 Civ. 3846 (PAC) |
| Parties | KELLY ANN JUNIOR, VICTORIA OZERSKAYA, ANNA SANCHEZ, JOAN STAMPER, AND ON BEHALF OF ALL HOLDERS OF ENHANCED VOUCHERS SIMILARLY SITUATED IN THE CITY OF NEW YORK Plaintiffs, v. THE CITY OF NEW YORK, HOUSING PRESERVATION AND DEVELOPMENT CORP., HOUSING URBAN DEVELOPMENT, HUDSONVIEW TERRACE, INC. Defendants. |
| Court | U.S. District Court — Southern District of New York |
The dispute here arises out of the conversion of a Mitchell-Lama1 housing development, located on Tenth Avenue in what was formerly called "Hell's Kitchen" but now is renamed "Clinton," from its prior status as publically subsidized housing for moderate and middle income New Yorkers to unsubsidized, market rate housing. An owner is entitled to buy out of (voluntarily dissolve) the Mitchell-Lama program after the passage of time (twenty to thirty-five years) and the satisfaction of the subsidized mortgage. The conversion process has adverse impacts on the existing moderate and middle-income tenants who may no longer be able toafford market rents. Such tenants may be insulated from the full impact of the market rate conversion by obtaining housing vouchers which provide them with rental assistance.
Vouchers come in two forms and give the existing tenants a choice: to leave their buildings or to stay. If they leave their current residence, tenants may obtain a regular Section 8 voucher (a move voucher), which limits their rent at the new location to 30% of their income. If tenants choose to remain in the converted development, they may obtain a Section 8 enhanced voucher (a sticky voucher), where a formula promulgated by the U.S. Department of Housing and Urban Development ("HUD") calculates the tenants' share of the rent and the share the government will pay the owner (landlord) to make up the balance of the rent.
Kelly Ann Junior, Victoria Ozerskaya, Anna Sanchez and Joan Stamper (collectively "Plaintiffs") are tenants who received Section 8 enhanced vouchers, or sticky vouchers. They bring this action against HUD, the City of New York ("City") and the New York City Department of Housing Preservation and Development ("HPD") (collectively, "City Defendants"), and Hudsonview Terrace, Inc. (the owner of the Mitchell-Lama development), alleging illegality in that the rent recertification process resulted in increased rents.
Plaintiffs assert four claims: (1) City Defendants violated Plaintiffs' due process rights by failing to conduct an evidentiary hearing in connection with their rent recertification; (2) HPD failed to inform Plaintiffs of the consequences of their participation in the Section 8 voucher program; (3) a declaratory judgment that HUD failed to properly supervise the City Defendants in the latter's administration of the voucher program; (4) against Hudsonview Terrace, Inc., the private landlord, seeking reformation of the lease agreement between the landlord and Plaintiffs. Hudsonview Terrace, Inc. has asserted a counterclaim against Plaintiff Kelly Ann Junior for $17,118.30 in past due rent. (Hudsonview Terrace, Inc. Answer ¶ 8, ECF No. 8.)
HUD moves to substitute the United States as the proper named defendant and then to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief may be granted. For the reasons set forth below, HUD's Rule 12(b)(1) motion is granted; and the Court does not reach the 12(b)(6) motion.
Plaintiffs and City Defendants cross-move for summary judgment. The Court grants summary judgment to Defendants on Count 1, the due process claim. In light of these dismissals, the Court declines to exercise supplemental jurisdiction over the remainder of Plaintiffs' claims against City Defendants and Hudsonview Terrace, Inc. (Counts 2 and 4).
Plaintiffs reside at Hudsonview Terrace, located at 747-751 Tenth Avenue in New York (City Def. 56.1 ¶ 1), and have enjoyed the benefits of the Mitchell-Lama Program. (Am. Compl. ¶¶ 8-9.) Mitchell-Lama owners receive mortgage subsidies and real property tax exemptions in exchange for providing housing to moderate-and-middle-income families at affordable rents. (Id.) The Mitchell-Lama program provides that after the passage of a certain amount of time, property owners may pay off the mortgage, opt out of the program, and then raise rents to market rates. This privatization process is known as a "housing conversion action." (City Def. 56.1 ¶¶ 3, 5.) Existing tenants have a choice: they remain as tenants in the converted apartments and obtain "sticky vouchers" or they leave and obtain "move vouchers."
Under the Section 8 program, HUD contracts with local public housing authorities (PHAs) to monitor and administer the vouchers. (Am. Compl. ¶¶ 6, 7; 24 C.F.R. § 982.1.) The PHA for the City of New York is the New York City Department of Housing, Preservation andDevelopment. ("HPD"). (City Def. 56.1 ¶ 15.) HPD's Administrative Plan2 requires HPD to annually re-certify changes in tenants' family income and family composition. (Ruiz Dec. Ex. C HPD Housing Choice Voucher Program Administrative Plan, ("HPD Administrative Plan") § 13.1.) These recertifications may result in new family rental shares and correspondingly different housing assistance payments to the landlord. Id. Families are informed of these changes in a "rent breakdown letter." Id. In certain circumstances, tenants have the opportunity to request informal reviews, conferences, and informal hearings to "clarify, resolve, review, and appeal matters and decisions . . . ." (Id. § 16.)
Hudsonview Terrace, Inc. is the owner of the apartment complex on Tenth Avenue, where Plaintiffs live. (City Def. 56.1 ¶ 1.) Hudsonview is a Mitchell-Lama housing development which converted to market rate on December 13, 2003. (Am. Compl. ¶¶ 1-4, 9; City Def. 56.1 ¶ 7.) All four named plaintiffs chose to remain tenants and chose Enhanced Vouchers to remain at their current locations. (Am. Compl. ¶ 9; City Def. 56.1 ¶ 8.) In 2011-12, Plaintiffs went through the annual recertification of their rent, which resulted in rent calculations which took significant portions of their incomes. (Am. Compl. ¶¶ 1-4.)
At the time of the conversion action, all four Plaintiffs were paying the enhanced voucher minimum rent in accordance with a schedule set by HUD's Rent Order—this was a fixed dollar amount depending on the number of bedrooms and the location of the apartment in the complex. At some point, three of the four Plaintiffs, Junior, Ozerskaya, and Sanchez, experienced a significant decrease in their incomes, which triggered a shift in the method used to calculate their shares, allowing them to pay less than the enhanced voucher minimum rent. Their new share became the percentage of income that the Plaintiffspaid for rent at the effective date of the conversion. (Id. ¶¶ 24, 30, 35.) This percentage continued to bind Junior, Ozerskaya, and Sanchez in each subsequent rent recertification. When Junior's and Sanchez's incomes subsequently increased rather drastically (Ozerskaya's income increased less drastically),3 this resulted in their paying a greater dollar amount than the enhanced voucher minimum rent that they paid at the time of the conversion. (Id. ¶¶ 26-27, 35-36.) Plaintiff Stamper never experienced the significant decline that triggered the shift calculation that form the basis of the other Plaintiffs' grievances; she continues to pay the enhanced voucher minimum rent. (Id. ¶ 38.) Plaintiffs' shares now constitute between 40% and 60% of their incomes.4 In response to HPD's rent-breakdown letter, notifying the Plaintiffs their new shares, three of the Plaintiffs wrote letters to the HPD contesting their 2012 recertifications. (Id. ¶¶ 28, 32, 37, Ex. E, G, I.) HPD replied by letter, explaining the basis for its calculations. (Id. Ex. F, H.)
In Count 3, Plaintiffs "seek a declaration to the effect that HUD has been negligent in its training and supervision of [HPD] and [the City] . . . ." (Am. Compl. ¶ 32.) HUD argues that claims asserting negligent supervision and training against a federal agency are tort actions subject to the Federal Tort Claims Act, 28 U.S.C §§ 1346(b), 1402(b), 2401(b), and 2671-2680 (the "FTCA") and therefore the United States is the proper defendant. (Def. Br. at 1-2.)
Even though Plaintiffs do not specifically invoke the FTCA, claims asserting negligent supervision against a federal agency have been construed as tort actions analyzed under the FTCA. See, e.g., United States v. Gaubert, 499 U.S. 315, 318-19 (1991) (); K.P.M. Corp. v. U.S. Dep't of Hous. & Urban Dev., Civ. A. 86-4089, 1987 WL 16039, at *3 (E.D. Pa. 1987) (). There is no reason not to treat Plaintiffs' negligent supervision claim as a tort claim to which the FTCA would apply.5 Plaintiffs argue that their reference to HUD's conduct as "negligent" in the complaint was "by error," (P. Opp. at 2) but this does not change the fact that the underlying conduct is HUD's negligent supervision of HPD, which sounds in tort. (Am. Compl. ¶ 32.)
Rivera v. United States, 928 F.2d 592, 609 (2d Cir. 1991) (citing 28 U.S.C. § 2679(a)); C.P. Chem. Co. v. United States, 810 F.2d 34, 37 n.1 (2d Cir. 1987). 28 U.S.C. § 2679(a) provides that "[t]he authority of any federal agency to sue and...
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