Knutzen v. Eben Ezer Lutheran Housing Center

• Decision Date: 06 April 1987
• Docket Number: No. 85-2674,85-2674
• Citation: 815 F.2d 1343
• Parties: Ardis KNUTZEN, individually and as representative of persons similarly situated, Plaintiff/Appellant, and Melinda Nelson and Dorotea Herrera, individually and as representatives of persons similarly situated, Plaintiffs-Intervenors/Appellants, v. EBEN EZER LUTHERAN HOUSING CENTER, a Colorado corporation, Ruth Sagel, Barbara Trute, John Reffell, Robert Nelson, Richard Peterson, Lew Meissner, Harold Brokering, John Elling, all members of the Board of Directors of the Eben Ezer Lutheran Housing Center, Helen Herrboldt, Assistant Managing Agent of Tabor Apartments, Robert Herrboldt, Managing Agent of Tabor Apartments, Defendants/Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1343

815 F.2d 1343

Ardis KNUTZEN, individually and as representative of persons similarly situated, Plaintiff/Appellant and Melinda Nelson and Dorotea Herrera, individually and as representatives of persons similarly situated Plaintiffs-Intervenors/Appellants, v. EBEN EZER LUTHERAN HOUSING CENTER, a Colorado corporation Ruth Sagel, Barbara Trute, John Reffell, Robert Nelson Richard Peterson, Lew Meissner, Harold Brokering, John Elling, all members of the Board of Directors of the Eben Ezer Lutheran Housing Center, Helen Herrboldt, Assistant Managing Agent of Tabor Apartments, Robert Herrboldt, Managing Agent of Tabor Apartments, Defendants/Appellees.

No. 85-2674.

United States Court of Appeals, Tenth Circuit.

April 6, 1987.

Glenn Meyers, Colorado Rural Legal Services (Jacquie Higinbotham, Colorado Rural Legal Services, Fort Morgan, Colo., with him on briefs), Denver, Colo., for plaintiffs-appellants.

Neil Quigley, Quigley & Ross (Helena Schultz, Brandenburg & Schultz, Brush, Colo., with him on briefs), Denver, Colo., for defendants-appellees.

Catherine M. Bishop, Nat. Housing Law Project, Berkeley, Cal., amicus curiae in support of plaintiffs-appellants.

Suzanne M. Weiss, American Ass'n of Homes for the Aging, Washington, D.C., amicus curiae in support of defendants-appellees.

Before HOLLOWAY, Chief Judge, and ANDERSON, Circuit Judge, and BRIMMER, District Judge. ¹

BRIMMER, Chief District Judge.

This is an appeal from a judgment of the United States District Court for the District of Colorado granting the defendants' motion for summary judgment, denying the plaintiffs' motion for partial summary judgment, and holding that a federally funded housing project under Sec. 202 of the Housing Act of 1959, 12 U.S.C. Sec. 1701q, may consider for admission only one or some of the four categories of persons eligible for benefits provided by Sec. 202, where the needs of those considered for admission differ from the needs of those excluded. 617 F.Supp. 977.

Appellants argue that they are non-elderly mentally impaired and developmentally disabled adults who are eligible for residency in Sec. 202 housing projects. They claim that they are "high functioning" handicapped individuals who are capable of living independently with a minimal amount of services and that, in particular, they are capable of benefitting from the services provided, while living independently, in the appellees' housing project. Appellants contend that appellees' tenant selection criteria, which makes the project available to the elderly and the mobility impaired and categorically excludes from the project the mentally impaired and developmentally disabled, is not authorized by Sec. 202, constitutes unlawful discrimination in violation of Sec. 504 of the Rehabilitation Act of 1973, 29 U.S.C. Sec. 794; and violates their rights to equal protection under the Fourteenth Amendment. They further argue that memoranda by assistant secretaries for Housing in the Department of Housing and Urban Development ("HUD") which specifically sanction serving less than all of the eligible groups under Sec. 202 are void for failure to comply with the publishing requirements of the Administrative Procedure Act, ("APA"), 5 U.S.C. Secs. 552, 553. They seek, inter alia, declaratory and injunctive relief which would end the appellees' categorical exclusion of them from the housing project in question.

The appellees argue, for the first time, on appeal, that this Court lacks jurisdiction to consider the merits of the claims herein because the appellants' claims are moot and because HUD is a necessary party which has not yet been joined.

We hold that the appellees' categorical exclusion of all but the elderly and the mobility impaired is authorized by Sec. 202, that it does not discriminate against the handicapped in violation of Sec. 504 of the Rehabilitation Act, that it does not violate the appellants' rights to equal protection under the Fourteenth Amendment, and that HUD's failure to publish memoranda in question did not violate the APA. We additionally reject the appellees' jurisdictional challenge and hold that the appellants' claims are not moot and that HUD is not a necessary party. We are, thus, substantially in agreement with the opinion of the district court and for the reasons stated herein, we affirm its judgment.

Background

Appellee Eben Ezer Lutheran Housing Center ("Eben Ezer") is a nonprofit corporation which owns and operates the housing project at issue, commonly known as the Tabor Apartments ("Tabor"). Helen Herrboldt is the assistant managing agent of Tabor Apartments, Robert Herrboldt is the managing agent of Tabor and the remaining appellees are the members of the board of directors of Eben Ezer.

Tabor is a thirty-unit, three story apartment building which houses the elderly and the mobility impaired, offering federally subsidized rent and minimal services which enable its tenants to live independently. Tabor received development financing from HUD, pursuant to Sec. 202, and tenant rent subsidy funding pursuant to Sec. 8 of the United States Housing Act of 1937, 42 U.S.C. Sec. 1437f. Tabor opened for occupancy on February 15, 1984.

The creators of Tabor sought to build housing exclusively for the low income elderly; they agreed to include the mobility impaired in compliance with HUD's "Minimum Property Standards for Multifamily Housing," HUD Document 4910.1 (1984), which requires that 10 percent of the units, as well as the common areas, contain physical design features to permit residency by mobility impaired individuals. They consistently requested of HUD that Tabor be permitted to serve only the elderly or mobility impaired.

Appellants Ardis Knutzen and Melinda Nelson are handicapped and/or disabled individuals, as that term is defined in the HUD Occupancy Handbook, Dep't. of Housing & Urban Development, Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs (November, 1981) ("Handbook 4350.3"), and the regulations for Sec. 202, 24 C.F.R. Sec. 885.5. Both are under 62 years of age and suffer from mental impairments; Ms. Knutzen also has physical impairments, although she is not mobility impaired. Appellant Dorotea Herrera is handicapped and/or disabled as that term is defined, HUD Handbook 4350.3, Sec. 2.3 and 24 C.F.R. Sec. 885.5, within the definition of developmental disability because her disability is attributable to epilepsy.

At the time Tabor opened for occupancy on February 15, 1984, its tenant selection criteria had not been approved by the regional HUD office, as required by 24 C.F.R. Sec. 277.8. However, its proposed criteria limited eligible occupants to the elderly and the mobility impaired.

On March 6, 1984, Ms. Nelson moved into Tabor. Ms. Knutzen submitted a written application for admission to Tabor on March 14, 1984. She believed that the appellees were discriminating against her in processing her application because of her handicap and filed this lawsuit alleging the same, on April 6, 1984. The District Court issued a temporary restraining order on that date and subsequently issued a preliminary injunction directing the appellees to identify a unit suitable for Ms. Knutzen at Tabor and to set it aside for her. Consequently, on April 23, 1984, the appellees accepted Ms. Knutzen as a tenant; she moved into Tabor on April 24, 1984.

Both Ms. Nelson and Ms. Knutzen claim that while living at Tabor, the appellees discriminated against them and harassed them because of their handicaps to the point where they felt they could no longer live there. Ms. Nelson moved out of Tabor in August, 1984, and Ms. Knutzen left Tabor on September 1, 1984.

Appellant Herrera submitted a written application for admission to Tabor in April, 1984. She argues that the appellees discriminated against her because of her handicap, and initially denied her admission to the project on the false pretext that no units were available. Although the appellees informed Ms. Herrera of a vacancy in September, 1984, Ms. Herrera was unable to move to Tabor at that time.

Throughout this period, Ms. Knutzen continued her discrimination suit. Ms. Nelson and Herrera intervened in December, 1984.

In August, 1984, the regional HUD office rejected the appellees' tenant selection criteria, ruling that Tabor must consider all handicapped persons for admission; but in January, 1985, the regional HUD office reversed itself, approving appellees' original tenant selection criteria which categorically excludes the non-elderly, non-mobility impaired handicapped.

Appellants contend that, with the approval of this admissions policy, appellees' discrimination has merely become overt. They argue that their current housing constitutes a hardship to them and they would like to reside at Tabor where they would benefit from the services and the subsidized rent.

Section 202 of the National Housing Act of 1959

Appellants argue that Tabor's now stated policy of serving only the elderly and the mobility impaired is not authorized by Sec. 202 and is therefore improper. In light of the purpose, language and administrative interpretation of Sec. 202, we must disagree.

Section 202 is a loan program designed to enable non-profit, limited-profit or public agency sponsors to construct low cost housing which must also provide services necessary to facilitate the independent living of its tenants. 12 U.S.C. Sec. 1701q(a)(2). The Act authorizes HUD to make long-term, low-interest rate loans to any sponsor or developer who shows that it is otherwise "unable to secure the necessary funds from other sources upon terms and conditions equally as favorable" as those provided by the program. 12 U.S.C. Sec. 1701q(a)(2). Furthermore, sponsors must supply services for their tenants, commensurate with their needs, and must do so at their own expense. 12 U.S.C. Sec. 1701q(f). ²

A sponsor may apply to HUD to receive, on behalf of eligible low income...