People to End Homelessness v. Develco Singles, 02-2675.

• Decision Date: 31 July 2003
• Docket Number: No. 02-2675.,02-2675.
• Parties: PEOPLE TO END HOMELESSNESS, INC., Plaintiff, Appellant, Develco Tenants Association, Plaintiff v. DEVELCO SINGLES APARTMENTS ASSOCIATES; Develco Modern Apartments Associates; Develco Apartments, Inc.; Develco Family Apartments Associates; Hedco, Ltd.; Woonsocket Housing Authority; Mel Martinez, in His Official Capacity As Secretary, UNITED STATES Department of Housing and Urban Development; UNITED STATES Department of Housing and Urban Development, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

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339 F.3d 1

PEOPLE TO END HOMELESSNESS, INC., Plaintiff, Appellant Develco Tenants Association, Plaintiff v. DEVELCO SINGLES APARTMENTS ASSOCIATES; Develco Modern Apartments Associates; Develco Apartments, Inc.; Develco Family Apartments Associates; Hedco, Ltd.; Woonsocket Housing Authority; Mel Martinez, in His Official Capacity As Secretary, UNITED STATES Department of Housing and Urban Development; UNITED STATES Department of Housing and Urban Development, Defendants, Appellees.

No. 02-2675.

United States Court of Appeals, First Circuit.

Heard June 2, 2003.

Decided July 31, 2003.

John Cann with whom Timothy L. Thompson and Ann M. Norton were on brief for appellant, People to End Homelessness, Inc.

Terri L. Roman, Attorney, with whom Carole W. Wilson, Associate General Counsel, Howard Schmeltzer, Assistant General Counsel, United States Department of Housing and Urban Development, Margaret E. Curran, United States Attorney, and Michael P. Iannotti, Assistant United States Attorney, were on brief for appellees Mel Martinez, Secretary of the United States Department of Housing and Urban Development and the United States Department of Housing and Urban Development.

Lynette Labinger and Roney & Labinger were on brief for Develco Singles Apartments Associates, Develco Modern Apartments Associates, Develco Apartments, Inc., Develco Family Apartments Associates, and Hedco, Ltd.

Before HOWARD, Circuit Judge, BOWNES and RICHARD S. ARNOLD,^* Senior Circuit Judges.

BOWNES, Senior Circuit Judge.

Plaintiff-appellant, People to End Homelessness, Inc. ("PEH"), is a non-profit organization operating in Woonsocket, Rhode Island, which seeks to expand and preserve the supply of affordable housing in Rhode Island. Defendants-appellees in this case are the Develcos (the "Owners"), a group of four separately-owned but commonly managed housing developments located in Woonsocket, Rhode Island. The other defendants-appellees in this case are the United States Department of Housing and Urban Development ("HUD") and its Secretary. PEH brought suit in federal district court challenging the expiration of low-income housing contracts between HUD and the Owners. The district court granted HUD's motion to dismiss and then granted summary judgment for the Owners. For the reasons set forth below, we affirm both rulings.

I. BACKGROUND

This litigation revolves around the "Section 8" program created by HUD in 1974. The program is governed largely by the United States Housing Act of 1937, § 8 as amended, 42 U.S.C. § 1437f (2003) ("the Housing Act"). We begin with a brief sketch of how this program works. The purpose of the program is to "aid low-income families in obtaining a decent place to live and [promote] economically mixed housing." Id. § 1437f(a). Under the Section 8 program, HUD enters into Housing Assistance Payment ("HAP") contracts with private property owners and determines the maximum monthly rate that the owner may charge for each dwelling. Under the terms of the HAP contract, the property owner receives rent directly from two sources, the low-income tenant and HUD. The low-income tenants pay the property owner a percentage of their adjusted income, typically about 30 percent. The difference that remains between the HAP contract rent and the portion provided by the tenant is paid to the owner by HUD in the form of an assistance payment or subsidy.

Owners are required to provide the Secretary of HUD and the low-income tenants "not less than one year" written notice of their intention to terminate any Section 8 HAP contract.¹ Id. § 1437f(c)(8)(A). If the owner does not provide the proper notice, the owner may not evict the tenants or increase the tenants' rent until such time as the owner has provided the notice and the full one year has expired. Id. § 1437f(c)(8)(B). In circumstances when the HAP contracts expire, the Secretary and the owner may agree to renew the contract.

Should the owner choose not to renew, the Housing Act dictates that HUD "will provide tenant-based rental assistance to all eligible residents, enabling them to choose the place they wish to rent, which is likely to include the dwelling unit in which they currently reside." Id. § 1437f(c)(8)(A). If tenants choose to stay in the unit in which they currently reside, HUD issues those tenants "enhanced vouchers." These vouchers cover the cost of any increase in rent that the owner of the dwelling may charge once the HAP contract expires, while keeping the tenants' portion of the rent stable at the pre-expiration rate.

Having described the basic mechanics of the Section 8 program, we now turn to the events that prompted this appeal. The Owners began providing affordable housing to low-income families pursuant to Section 8 HAP contracts in the mid-1970's. Since that time, the Owners and HUD entered into numerous renewal HAP contracts. The most recent HAP contracts were set to expire on May 31, 2001. Six weeks before the scheduled expiration date, the Owners sent the tenants a notice informing them that the HAP contracts would not be renewed. HUD, in coordination with the Woonsocket Housing Authority ("WHA"), subsequently issued enhanced vouchers to each eligible tenant.²

On May 30, 2001, the day before the HAP contracts were set to expire, PEH filed a complaint, a motion for a temporary restraining order and a motion for a preliminary injunction in the district court against the Owners, HUD and its Secretary, and the WHA. PEH raised two major issues in the complaint. First, PEH argued that the six weeks notice given to the tenants by the Owners failed to comply with the one year federal notice requirement. Second, PEH argued that HUD was acting in violation of federal law by approving the Owners' decision not to renew the expiring HAP contracts and by issuing enhanced vouchers to the tenants.

On June 22, 2001, PEH moved to add the Develco Tenant Association (DTA), a group of Develco tenants, as a co-plaintiff with PEH. There were no objections to the motion and the complaint was amended to add DTA as a co-plaintiff. Shortly thereafter, the Owners agreed to a voluntary restraining order. The order prohibited the Owners from evicting or raising the rent on any tenant for one year, provided that the tenant was a participant in the Section 8 program.

After the restraining order was issued, HUD moved to dismiss for failure to state a claim. The district court, in a memorandum opinion dated March 29, 2002, granted the motion. The district court ruled that federal law did not obligate or even authorize HUD to "unilaterally extend HAP contracts against the will of owners." Similarly, the district court stated that there was no statutory authorization which would require the Owners to continue participating in HAP contracts once they expired. The district court stated that the "sole remedy for failing to provide the requisite notice is that the owner is prohibited from evicting tenants or increasing their rent payments until such notice has been provided and the prescribed notice period has elapsed."

With HUD dismissed from the case, the Owners and WHA moved for summary judgment. In a second memorandum opinion, dated October 16, 2002, the district court held that PEH and DTA lacked standing to pursue their complaint and granted the motion. The district court rejected PEH's request to require the Owners to continue renting units under the Section 8 HAP contracts. The court found that HUD's decision not to renew the expiring HAP contracts was a permissible exercise of HUD's discretion, and that since the contracts had expired, it was not possible to grant the relief requested. PEH filed this timely appeal challenging the district court's decision to dismiss PEH's claims against HUD and grant the Owners' motion for summary judgment.³ The DTA no longer exists and therefore has not joined in this appeal. No other Develco tenant joined PEH in this case at any time.

II. DISCUSSION

We address first PEH's challenge to the district court's decision to dismiss HUD from this lawsuit for failure to state a claim. See Fed.R.Civ.P. 12(b)(6). We review a district court's allowance of a motion to dismiss de novo. See Martin v. Applied Cellular Tech., Inc., 284 F.3d 1, 5 (1st Cir.2002). In doing so, "[w]e accept as true the well-pleaded factual allegations of the complaint, draw all reasonable inferences therefrom in the plaintiff's favor and determine whether the complaint, so read, sets forth facts sufficient to justify recovery on any cognizable theory." Id. at 6.

PEH's complaint alleged that HUD violated a variety of federal laws, including the Housing Act, the Administrative Procedures Act, 5 U.S.C. § 701 et seq. (2003), the Fair Housing Act, 42 U.S.C. § 3608(e)(5) (1994), and the Fifth and Fourteenth Amendments to the Constitution. Fairly read, the essence of these claims is that HUD illegally permitted the HAP contracts to expire. PEH alleges that HUD should have required the Owners to remain in the Section 8 program under HAP contracts until the one year notice period ended pursuant to the voluntary restraining order agreed to by the Owners.

This argument, however, is forestalled by the clear language of the Housing Act. See 42 U.S.C. § 1437f. When "the language of a statute `is plain and admits of no more than one meaning ... the sole function of the courts is to enforce the statute according to its terms.'" Arnold v. United Parcel Serv., Inc., 136 F.3d 854, 858 (1st Cir.1998) (quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917)). Section (c)(8)(B) of the Housing Act states in relevant part:

In the event the owner does not provide the notice required, the owner may not evict the tenants or increase the tenants' rent payment until such time as the owner has provided the notice and 1 year has elapsed. The Secretary may allow the owner to renew the terminating contract for a period of time sufficient to give tenants 1...