Reilly v. Marin Hous. Auth.

• Decision Date: 31 August 2020
• Docket Number: S249593
• Citation: 472 P.3d 472,268 Cal.Rptr.3d 163,10 Cal.5th 583
• Court: California Supreme Court
• Parties: Kerrie REILLY, Plaintiff and Appellant, v. MARIN HOUSING AUTHORITY, Defendant and Respondent.

10 Cal.5th 583

472 P.3d 472

268 Cal.Rptr.3d 163

Kerrie REILLY, Plaintiff and Appellant,

v.MARIN HOUSING AUTHORITY, Defendant and Respondent.

S249593

Supreme Court of California.

August 31, 2020

Law Offices of Frank S. Moore, Frank S. Moore ; Autumn M. Elliott, Ben Conway and Deborah Gettleman for Plaintiff and Appellant.

Morgan, Lewis & Bockius, Thomas M. Peterson San Francisco, and Jordan Mundell for Association of Regional Center Agencies, Autism Society of Los Angeles, CASHPCR, Disability Voices United, Fairview Families and Friends, Inc., Housing Choices, Jewish Los Angeles Special Needs Trust (JLA Trust), National Disability Rights Network, Professor Alison Morantz and Public Counsel as Amici Curiae on behalf of Plaintiff and Appellant.

Munger, Tolles & Olson and Michael E. Soloff, Los Angeles, for National Housing Law Project and Western Center on Law and Poverty as Amici Curiae on behalf of Plaintiff and Appellant.

Ilya Filmus ; WFBM, Randall J. Lee, Anne C. Gritzer, San Francisco; Wilson Elser Moskowitz Edelman & Dicker and Robert Cooper, Los Angeles, for Defendant and Respondent.

Paul Compton, Miniard Culpepper, David M. Reizes, Alexandra N. Iorio, Joseph H. Hunt, Alisa B. Klein, Melissa N. Patterson and Brad Hinshelwood for United States as Amicus Curiae on behalf of Defendant and Respondent.

Opinion of the Court by Chin, J.

The federal Housing Choice Voucher program is a key program in section 8 of the United States Housing Act of 1937. ( 42 U.S.C. § 1437 et seq., as amended by § 201(a) of the Housing and Community Development Act of 1974.) Commonly referred to as "Section 8," the program provides low-income families a monthly subsidy to pay for a portion of their rent. The amount of the subsidy depends, in part, on the income Section 8 families receive. The program, which is funded and regulated by the United States Department of Housing and Urban Development (HUD), is administered locally by public housing authorities (PHAs). In this case, we address whether a Section 8 beneficiary's compensation for providing in-home care for a severely disabled adult daughter should be excluded from income in calculating the rental subsidy. For reasons that follow, we conclude that it should be excluded and reverse the Court of Appeal's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In 1998, plaintiff Kerrie Reilly and her two daughters moved into a three-bedroom apartment in Novato and began receiving Section 8 housing assistance payments to subsidize their monthly rent. Reilly has an adult daughter, K.R., who is severely disabled and requires constant supervision. Reilly receives compensation to provide in-home supportive care for K.R. through the state and federally funded In-Home Supportive Services (IHSS) program.

In 2004, Reilly's other daughter, R.R., moved out of their subsidized apartment, but Reilly did not inform the Marin Housing Authority (MHA), which is responsible for administering Reilly's Section 8 voucher. Five years later, when Reilly told MHA that R.R. no longer lived with her, MHA advised her that her failure to report her daughter's leaving constituted a violation of the program rules. Reilly could only stay in the government-subsidized apartment if she paid approximately $16,000 in damages to MHA.

Reilly agreed to pay MHA in monthly installments, initially starting at $486 and eventually lowered to $150 per month at Reilly's request. In 2010, after Reilly missed an installment payment, MHA warned her that future missed payments would result in termination of her housing assistance. Reilly missed multiple payments in 2012, 2014, and 2015.

In 2015, Reilly requested that MHA recalculate her rent and exclude her IHSS compensation from "income" under the relevant federal regulation. (See 24 C.F.R. § 5.609(c)(16) (2020).) MHA did not respond to this request, but instead served Reilly a notice of termination of her Section 8 voucher. After a hearing on MHA's decision to terminate Reilly's housing voucher, the hearing officer upheld the agency's decision, noting that Reilly's failure to pay amounts under the settlement agreement constituted grounds for terminating her housing assistance. The hearing officer did not address whether the IHSS compensation counted as income, however.

On October 26, 2015, Reilly filed a petition for writ of mandate seeking an order requiring MHA to terminate her repayment plan and reinstitute her Section 8 voucher; she also sought an administrative writ ordering MHA to terminate the repayment plan and exclude Reilly's IHSS payments in calculating her income going forward. The trial court rejected Reilly's assertion that IHSS payments were excepted from the meaning of "annual income" ( 24 C.F.R. § 5.609(c)(16) (2020) ). It sustained MHA's demurrer without leave to amend, and the CA affirmed the judgment. ( Reilly v. Marin Housing Authority (2018) 23 Cal.App.5th 425, 232 Cal.Rptr.3d 789.) Both lower courts ordered "a stay in the enforcement of the administrative order terminating Reilly's Section 8 benefits." MHA later agreed to an extension of this stay pending review in this court.

We granted review, limited to the issue whether IHSS payments should be excluded from "annual income" for purposes of calculating a Section 8 beneficiary's home assistance payment.

DISCUSSION

A. Overview of Section 8 voucher program

In 1974, Congress added the Section 8 housing program to the United States Housing Act of 1937 "[f]or the purpose of aiding low-income families in obtaining a decent place to live." ( 42 U.S.C. § 1437f(a) ; see generally Friedman et al., Cal. Practice Guide: Landlord-Tenant (The Rutter Group 2019) ¶ 12.) The program gives eligible families either "tenant-based" or "project-based" rent subsidies administered locally through PHAs. (See Park Village Apartment Tenants Ass'n v. Mortimer Howard Trust (9th Cir. 2011) 636 F.3d 1150, 1152–1153 [overview of Section 8 housing assistance].) " ‘[T]enant-based assistance’ " is a rent subsidy that is tied to a specific family even if the family moves to other suitable housing. ( 42 U.S.C. § 1437f(f)(7).) " ‘[P]roject-based assistance,’ " on the other hand, is tied to a specific housing development or unit. ( 42 U.S.C. § 1437f(f)(6).) We focus on tenant-based assistance, which is at issue in this case.

Under the tenant-based assistance program, at least 75% of all admitted families must be "[e]xtremely low[ ] income," i.e., their income may not exceed 30% of the median income calculated by HUD for the relevant area ( 24 C.F.R. § 5.603(b) (2020) ); and all remaining admitted families must be "[l]ow income," i.e., their income may not exceed 50% of the median income. (Ibid .; id ., § 982.201(b)(1), (2)(i) (2020) [eligibility and targeting].)

After a Section 8 family selects an eligible rental unit approved by the applicable PHA, the PHA enters into a contract with the rental property owner. That owner "functions as a landlord in the private rental market. The owner signs a lease with the Section 8 tenant (which includes a HUD Lease/Tenancy Addendum) and also signs a Housing Assistance Payments (HAP) contract with the Housing Authority." ( Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles (2006) 136 Cal.App.4th 119, 123, 38 Cal.Rptr.3d 575.) The PHA gives the subsidy payments directly to the property owner. ( 24 C.F.R. § 982.311(a) (2020).)

As we explain below (see post , 268 Cal.Rptr.3d at p. 169, 472 P.3d at p. 477), the amount of the housing subsidy depends in large part on the "annual income" the Section 8 family receives or expects to receive. (See 24 C.F.R. § 5.609(a) (2020) ; id . § 982.201(a), (b) (2020).) The issue is whether the IHSS payments Reilly receives to provide services to keep her developmentally disabled daughter at home are excluded from income under 24 Code of Federal Regulations part 5.609(c)(16) (2020).

B. IHSS

IHSS is a state social welfare program implemented under The Burton-Moscone-Bagley Citizens’ Income Security Act for Aged, Blind and Disabled Californians, enacted in 1973. ( Welf. & Inst. Code,¹ § 12000 et seq., added by Stats. 1973, ch. 1216, § 37, p. 2904; see County of Sacramento v. State of California (1982) 134 Cal.App.3d 428, 430–431, 184 Cal.Rptr. 648.) The purpose of the legislation is to give the aged, blind and disabled the "assistance and services which will encourage them to make greater efforts to achieve self-care and self-maintenance, whenever feasible, and to enlarge their opportunities for independence." (§ 12002.) IHSS is specifically "designed to avoid institutionalization of incapacitated persons." ( Basden v. Wagner (2010) 181 Cal.App.4th 929, 931, 104 Cal.Rptr.3d 394.) Providers perform nonmedical supportive services for IHSS recipients, such as domestic services, personal care services, protective supervision, and accompaniment to health-related appointments. (§ 12300; see Miller v. Woods (1983) 148 Cal.App.3d 862, 867, 196 Cal.Rptr. 69, disapproved on other grounds by Noel v. Thrifty Payless, Inc . (2019) 7 Cal.5th 955, 986, fn. 15, 250 Cal.Rptr.3d 234, 445 P.3d 626.)

"IHSS is actually provided under three programs: the original IHSS program (the residual program) (§ 12300 et seq.); the Medi-Cal personal care services program (PCSP) (§ 14132.95); and the IHSS Plus waiver program (§ 14132.951).^{[2 ]} The latter two programs tap into federal funds, and IHSS recipients will receive services under the residual program only if they do not qualify under the other two programs. (§§ 12300, subd. (g); 14132.95, subd. (b); 14132.951, subd. (d).)" ( Basden v. Wagner , supra , 181 Cal.App.4th at p. 933, fn. 4, 104 Cal.Rptr.3d 394 ; see 2 Dayton et al., Advising the Elderly Client (2019) § 22:40 (Advising the Elderly Client); Calderon v. Anderson (1996) 45 Cal.App.4th 607, 609–610, 52 Cal.Rptr.2d 846.)

The State Department of Social Services (Department) administers the IHSS program in compliance with state and federal law. The Department promulgates regulations to implement the relevant ...