McWaters v. Federal Emergency Management Agency, Civil Action No. 05-5488.

• Decision Date: 16 June 2006
• Docket Number: Civil Action No. 05-5488.
• Citation: 436 F.Supp.2d 802
• Parties: Beatrice B. McWATERS, et al. v. FEDERAL EMERGENCY MANAGEMENT AGENCY, et al.
• Court: U.S. District Court — Eastern District of Louisiana

436 F.Supp.2d 802

Beatrice B. McWATERS, et al. v. FEDERAL EMERGENCY MANAGEMENT AGENCY, et al.

Civil Action No. 05-5488.

United States District Court, E.D. Louisiana.

June 16, 2006.

COPYRIGHT MATERIAL OMITTED

John K. Pierre, Attorney at Law, Baton Rouge, LA, Daniel Lawrence Greenberg, Howard Owen Godnick, Jeffrey Sabin, Michael Samuel Chernis, Sena Hae Won Kim-Reuter, Schulte, Roth & Zabel, New York, NY, John C. Brittain, Lawyers Committee for Civil Rights Under Law, Washington, DC, Steve Ronfeldt, Public Interest Law Project, Oakland, CA, for Beatrice B. McWaters, et al.

Michael Sitcov, Elisabeth Layton, W. Scott Simpson, U.S. Department of Justice Civil Division, Washington, DC, for Federal Emergency Management Agency, et al.

ORDER AND REASONS

DUVAL, District Judge.

Before the Court is defendants' Motion to Dismiss under Rule 12(b)(1) and Rule 12(b)(6) (Rec.Doc. No. 32), as well as plaintiffs' Motion for Injunction (Rec.Doc. No. 22). Having reviewed the pleadings, memoranda, and having heard oral argument, the Court now GRANTS in part and DENIES in part the motions as follows.

Background

Defendants filed the instant Motion to Dismiss under Rule 12(b)(6) on December 5, 2005 in response to plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction (Rec.Doc. No. 22) and November 28, 2005 Motion for Temporary Restraining Order and Preliminary Injunction (Rec.Doc. No. 26). The Court partially granted plaintiffs' request for a temporary restraining order on December 12, 2005 and amended said Order on January 12, 2006. Pursuant to agreement of the parties, the Court held over defendants' Motion to Dismiss until the hearing on plaintiffs' injunction Motion was held on February 23-24, 2006. Under Federal Rule of Civil Procedure Rule 65 and with consent of the parties, this hearing also served as the trial on the merits, and after post-trial briefing was received, these motions were submitted on March 31, 2006. Because the Court held oral argument on both motions simultaneously, and in the interests of efficient adjudication of the totality of plaintiffs' claims, the following opinion addresses of both defendants' Motion to Dismiss and plaintiffs' Motion for Permanent Injunction.

A. Plaintiffs' Third Amended Complaint¹ and Incorporated Claims²

Plaintiffs commenced this putative class action on November 10, 2005 by filing a Class Action Complaint (Rec.Doc. No. 1) on behalf of thirteen named plaintiffs, all of whose homes were destroyed due to Hurricane Katrina and all of whom have applied for and, as of the date of filing, had failed to receive, any disaster related housing assistance from FEMA. Plaintiffs' subsequently amended their Complaint (See Rec. Doc. Nos. 21, 29, 105). The putative class consists of:

All persons who, as of August 29, 2005, (i) resided in either Louisiana, Mississippi, or Alabama; (ii) resided in areas declared to be Federal Disaster Areas; (iii) were displaced from their pre-disaster primary residences or whose predisaster primary residences have been rendered uninhabitable as a result of damage caused by Hurricane Katrina; and (iv) have applied for or will apply, for Temporary Housing Assistance under the Stafford Act, pursuant to 42 U.S.C. § 5174 and the federal regulations promulgated thereunder, and (v) have applications for Temporary Housing Assistance or Continued Rental Assistance that (a) are still pending; (b) were or will be erroneously denied under the Shared Household Rule; (c) have been or will be delayed due to the SBA loan application requirement; (d) were or will be otherwise erroneously denied; or (e) have been or will be granted, but who have received or will receive Temporary Housing Assistance or Continued Rental Assistance which is not adjusted to reflect the current fair market rental rates for the accommodations.³, ⁴

Plaintiffs allege, inter alia, seventeen causes of action, including statutory and constitutionally based claims, all stemming from FEMA's response (or lack thereof) in the aftermath of Hurricane Katrina. Plaintiffs seek only declaratory and injunctive relief, including permanent injunctive relief mandating that defendants abide by the requirements of the Stafford Act and the Due Process Clause of the Fifth Amendment by providing assistance to eligible applicants. Plaintiffs aver that they are eligible for assistance under the Stafford Act because they are persons who are "displaced from their pre-disaster primary residences or whose pre-disaster primary residences are rendered uninhabitable as a result of damage caused by a major disaster." 42 U.S.C. § 5174(b). Besides challenging FEMA's authority to unilaterally terminate the Short-Term Lodging Program,⁵ the Complaint alleges several violations of the Stafford Act made by FEMA in conjunction with its Katrina relief efforts.

Specifically, plaintiffs challenge the socalled "Shared Household Rule⁶" whereby many disaster victims have been denied assistance from FEMA on the basis that they lived or shared the same address or phone number of another applicant.⁷ Adtionally plaintiffs continue to allege that persons have been denied assistance on the basis that they were told to apply for Small Business Administration (SBA) Loan and that failure to do so would prevent them from receiving any Temporary Housing Assistance, a clear violation § 5174(a)(2) of the Stafford Act.⁸ Plaintiffs also bring several lack of "notice claims," arguing, inter alia, that many persons receiving the first three-month payment of $2358 in rental assistance⁹ under the Temporary Housing provisions of the Stafford Act were either given no notice that such monies were to be spent solely on rent and that failure to do so would prevent the applicant from receiving further assistance from FEMA, or that such notice came too late, and as a result, plaintiffs spent the money on other necessary items, like food and clothing.¹⁰ Plaintiffs also allege that despite FEMA's statements to the contrary, many similarly situated persons are still waiting for an adjudication of their claim for assistance.¹¹ Plaintiffs argue such a delay is an unlawful violation of both the Stafford Act and the Due Process Clause.

As to the Short-Term Lodging Program, plaintiffs ask that this Court order relief such that no eligible applicant who has applied for benefits whose application has yet to be processed—that is any applicant who has yet to either be denied or receive any temporary housing assistance payment, and thus is listed as "pending"— be evicted from their hotel or motel until fifteen (15) days after that disposition.¹²

Regarding the Shared Household Rule, plaintiffs ask defendants be ordered to notify all applicants whose cases are "pending" or have been denied based upon (a) the Shared Household Rule or (b) duplicate information on their application with that of another applicant, that they are eligible to establish a separate household in a different geographic location after the disaster. Plaintiffs request this notice be provided by the use of, at a minimum, public service announcements, television, radio, and newspaper ads.¹³

With regards to the SBA Loan application requirement issue, plaintiffs request an injunction and order requiring defendants to notify, in same manner as above, those evacuees whose applications are "pending" due to a faulty or unnecessary SBA loan application, or those evacuees who may not have pursued assistance because they believed or were told that an applicant must apply for a SBA loan in order to obtain temporary housing assistance, that no such requirement exists and the applicant is eligible for assistance.

As to those who received the initial $2358 rental payment in Temporary Housing Assistance but, due to a lack of notice as to its restrictions, spent it on necessary sundries instead of rent, plaintiffs also request greater dissemination of FEMA's waiver of this restriction through methods similar to those described above so that if an applicant used the money on something other than housing rent they are still eligible for Continued Rental Assistance.

In their Third Amended Complaint, plaintiffs also allege claims under the Stafford Act and the Due Process Clause for Fair Market Rent ("FMR"), based on FEMA's alleged failure to provide notice of Increased Temporary Housing Assistance. See Rec. Doc. No. 105, ¶¶ 189-203. In support, plaintiffs point to 42 U.S.C. 5174(c)(1)(A)(ii), which states "the amount of assistance ... shall be based on the fair market rent for the accommodation provided plus the cost of any transportation, utility hookups, or unit installation not provided directly by the President." Id. Plaintiffs argue that under this mandatory language FEMA must not only provide notice that such rental assistance is available, but also that the amount of such assistance must equal the fair market rent for the areas in which recipients are living. Also implicated is 44 C.F.R. § 206.117(b)(1)(i)(B) which states, "FEMA will base the rental assistance on the Department of Housing and Urban Development [HUDj's current fair market rates for existing rental units. FEMA will further base the applicable rate on the household's bedroom requirement and the location of the rental unit." Id. Plaintiffs aver that while FEMA has no discretion under the Stafford Act to refuse to provide fair market rental assistance to eligible persons, FEMA does have discretion as to the determination of that amount, such that FEMA is not bound to use the HUD calculations. Consequently, if FEMA's use of the HUD rates are found to be lacking, i.e. are of an inadequate amount for the location in which recipients live, then per the mandate of the Stafford Act, FEMA must adjust those rates regardless of whether they deviate from the HUD standard. In support plaintiffs presented evidence that the $2358 payment provided by FEMA as rental assistance, which was designed to cover the first three-months of rent on a...