Zheng v. the City of N.Y.

• Decision Date: 02 May 2011
• Docket Number: Seq. No.: 001,Index No.: 400806/11
• Parties: Jasmine Zheng and A.T. on behalf of themselves and all others similarly situated, Plaintiffs, v. The City of New York, The New York City Department of Homeless Services, The New York City Human Resources Administration, Seth Diamond, as Commissioner of the New York City Department of Homeless Services and Robert Doar, as Commissioner of the New York City Human Resources Administration, Defendants.
• Court: New York Supreme Court

2011 NY Slip Op 31120

Jasmine Zheng and A.T. on behalf of themselves and all others similarly situated, Plaintiffs,

v.The City of New York, TheNew York City Department of Homeless Services, TheNew York City Human Resources Administration, Seth Diamond, as Commissioner of the New York City Department of Homeless Servicesand Robert Doar, as Commissioner of the New York City Human Resources Administration, Defendants.

Index No.: 400806/11

Seq. No.: 001

Supreme Court of the State of New York County of New York: Part 10

Dated: May 2, 2011

Decision/ Order

Present:

Hon. Judith J. Gische

J.S.C.

Recitation, as required by CPLR § 2219 [a] of the papers considered in the review of this (these) motion(s):

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                ¦Papers                                                              ¦Numbered¦
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                ¦OSC, SB affirm., Zheng affd., A.T. affd., JS affd., LD affd exhibits¦1       ¦
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                ¦SD 3/28/11 affd., exhibits                                          ¦2       ¦
                +--------------------------------------------------------------------+--------¦
                ¦Notice of Cross-Motion. ER affirm.. SD affd., exhibits              ¦3       ¦
                +-----------------------------------------------------------------------------+
                

Upon the foregoing papers, the decision and order of the court is as follows:

Named plaintiffs, Jasmine Zheng and A.T. (Collectively "plaintiffs"), are participants in the Advantage II program (sometimes "Advantage" or "program") administered by defendant, the City of New York, through its agencies that provideservices for homeless New Yorkers (defendants are collectively referred to as "NYC")¹.As more fully explained below, Advantage is a program that provides durational housing assistance payments to homeless individuals and families, in an effort to transition them to permanent housing.In response to notifications by NYC that it would be discontinuing Advantage, effective April 1, 2011, the named plaintiffs, on behalf of themselves and all others similarly situated, brought an action for: specific performance of contracts allegedly made by NYC to provide the payments required under the program (First Claim); a declaration that NYC is contractually bound to continue Advantage payments (Second Claim); an injunction prohibiting NYC from discontinuing Advantage payments to tenant-recipients that are currently participating in the program (Third Claim); and deprivation of property without due process of law (Fourth Claim).

Plaintiffs now move for a preliminary injunction preventing NYC from terminating the rent subsidy payments for existing program participants.The gravamen of their argument is that NYC is contractually bound to provide these payments, for either one or two years, to the current participants in the program.They also seek class certification of the 15,000 households, consisting of families and individuals, that are currently enrolled in Advantage.

At the outset, it needs to be made clear that the plaintiffs are not seeking to have NYC continue the program in the future.As of March 17, 2011, NYC stopped taking in new program participants.Plaintiffs do not contest in this action NYC's right to stoptaking in new participants.Nor are plaintiffs seeking to require NYC to pay rent subsidies for existing program participants for an indefinite duration of time.Plaintiffs recognize that the right of the current program participants to receive rent subsidy payments cannot exceed two years from the time any particular participant initially began receiving such subsidies.

NYC not only opposes the motion, but cross-moves to dismiss the complaint for failure to state a cause of action.While it recognizes that Advantage has been a remarkably successful program in averting chronic homelessness², it argues that the program is just that, a program that exists without any contractual obligation on the part of NYC to continue it.NYC explains that it finds itself in an unenviable position of having to discontinue Advantage because New York State, after having renewed its authorization for the program in May 2010, has failed to fund its one third share of the program's cost.As a consequence, the program is ineligible for the one third funding previously provided by the Federal government.The withdrawal of the State and Federal funding, effective April 1, 2011, is described by NYC as a "devastating blow."NYC states that it is not in a position to fund the entire program without State and Federal financial assistance, which it projects as $97,000,000.00 for one year and $171,000,000.00 for two years.It understands that, under existing law, prior consent court decrees and that as a matter of public policy, it has ongoing obligations to homeless families.NYC explains, however, that it can fulfill its obligations with other, albeit less effective, programs, which are more cost effective to NYC, because the State is obligated to contribute funds to the alternative programs.

The Advantage Program

In general³, the current Advantage program provides partial monthly rental subsidies for participants, that are paid directly to private landlords for an initial one year period, but for no more than two years.The goal of the program is to transition formerly homeless families into permanent housing, and to prevent them from returning to the shelter system.

Since 2004, there have been at least two prior programs that were designed in a similar manner to achieve similar goals.In 2004, the program was known as Housing Stability Plus ("HSP").In order to rectify what were perceived problems with HSP, in 2007 the first Advantage program was approved.In 2009-2010, the Advantage program underwent further changes and in May 2010, the current Advantage program was approved by the New York State Office of Temporary and Disability Assistance("State OTDA").

All of the iterations of the program, which were considered research and demonstration programs, were designed with and required the approval the State OTDA. 18 NYCRR §300.11.Since the programs involved additional shelter supplements to public assistance recipients to reside in private housing, prior approval of the State OTDA was required.The State OTDA could authorize the supplement onlyif it determined that there were sufficient funds available to provide such reimbursement.18 NYCRR § 352.3(a)(3).Since the programs were demonstration projects, NYC was required to and did evaluate the success of such programs.According to NYC, the success rate was overwhelming.Of the 25,000 households that participated in the Advantage program since 2007, 90% of such households did not return to the shelter system after exiting the program (Diamond affd. ¶3).

The current Advantage program is described as follows: It is only open to eligible households.Eligibility requires that a family or individual had to reside in a shelter for at least 60 days, have an open and active public assistance ("PA") case and have a total household income that did not exceed 200% of federal poverty level.In general, eligible families had to have at least one household member working at least 20 hours per week, at minimum wage or above, and engaged in HRA approved activities for a total of 35 hours weekly.Additional adult members of the household had to meet separate eligibility requirements.If members of a household could not meet the employment requirement due to disability, they could still qualify for the program if the they received Social Security Income, Social Security Disability Income or other federal disability benefits, or were certified as "needed at home" to care for a disabled family member receiving such benefits.

The amount of rental assistance provided depended upon total gross household income and household size.No subsidy would be paid if the rent exceeded a maximum amount set by NYC.

If eligible, the participant had to find an apartment, which was subject to an approval process by NYC.The subsidy was for an initial one year period.Participantswere required to contribute 30% of their gross monthly income to their rent.If certain eligibility criteria were met, a participant could receive an additional year of rent subsidies.A participant household was required to pay 40% of gross income toward the monthly rent during the second year.

Under the current Advantage program (as well as under its earlier iterations) documents were generated by NYC to facilitate the program.The content of the documents has changed somewhat as the programs evolved, but the documents utilized can be generally categorized as:

[1] a certification of eligibility

[2] a participant statement of understanding

[3] a landlord statement of understanding and

[4] a lease rider

(collectively "program documents").

It is these program documents that are central to the parties' positions in this action.Plaintiffs claim that the documents, taken together, or in various combinations, are binding contracts that require NYC to continue the Advantage program as to the existing participants.They claim that the documents are contracts between NYC and the participants to provide at least one, and if otherwise eligible, up to two years of rent subsidies.They further claim that these documents are contracts between NYC and private landlords to guarantee payment of rent subsidies for at least one and, if the participants are otherwise eligible, up to two years.They argue that the tenant participants, as third party beneficiaries of the guarantee agreements with the private landlords, can bring an action to enforce the contracts.

NYC claims that these documents are not contracts, whether taken collectively or in various combinations, but only intended to provide information to participants and landlords about the underlying...