Clark v. Alexander ( 1996 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
STACEY CLARK,
Plaintiff-Appellant,
v.
ARCHIBALD ALEXANDER, Acting
No. 95-1280
Executive Director, Alexandria
Redevelopment and Housing
Authority,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, District Judge.
(CA-94-1242)
Argued: March 4, 1996
Decided: May 30, 1996
Before LUTTIG, Circuit Judge, CHAPMAN, Senior Circuit Judge,
and CLARKE, Senior District Judge for the
Eastern District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Senior Judge Clarke wrote the opin-
ion, in which Judge Luttig and Senior Judge Chapman joined.
_________________________________________________________________
COUNSEL
ARGUED: Michael Gerhart Allen, LEGAL SERVICES OF
NORTHERN VIRGINIA, Alexandria, Virginia, for Appellant.
Michael Jay Weiser, Alexandria, Virginia, for Appellee. ON BRIEF:
Sylvia M. Brennan, LEGAL SERVICES OF NORTHERN VIR-
GINIA, Alexandria, Virginia, for Appellant.
_________________________________________________________________
OPINION
CLARKE, Senior District Judge:
This appeal concerns the standard of review applicable in federal
civil rights cases challenging the decisions of local housing authori-
ties implementing the federal low-income housing assistance pro-
gram. See 42 U.S.C. §§ 1401-40. In Ritter v. Cecil County Office of
Hous. & Community Dev., this Court held that interpretive rules
adopted by local housing authorities should be afforded deference by
federal courts "only to the extent the agency's rules are not contrary
to the statute or regulation." 33 F.3d 323, 328 (4th Cir. 1994). In this
case, the Court is asked to determine the standard of review applica-
ble to housing authority adjudicative factfinding and decisions. The
District Court, in keeping with the Ritter decision, gave substantial
deference to the Alexandria Redevelopment and Housing Authority
(ARHA) and the reviewing hearing officer in granting ARHA's
motion for summary judgment. Clark v. Alexander , 894 F.Supp. 261,
263 (E.D.Va. 1995). For the reasons set out below, this Court agrees
with the decision of the district court and, upon de novo review,
affirms.
I.
Stacey Clark was a participant in the federal government's rent
subsidy program as administered by ARHA. The rent subsidy pro-
gram is overseen by the Department of Housing and Urban Develop-
ment and implemented in accord with Section 8 of the United States
Housing Act as amended. 42 U.S.C. § 1437f. In administering the
rental voucher system, HUD is authorized to "prescribe other terms
and conditions which are necessary for the purpose of carrying out the
provisions of this paragraph and which are consistent with the pur-
poses of this paragraph." 42 U.S.C. § 1437f(o)(11)(F). Relevant to
this case, HUD has promulgated regulations concerning the drug-
related criminal activity by recipients of rent subsidies and their fami-
2
lies. Specifically, it is the obligation of the family receiving federal
rent subsidies to not "[e]ngage in drug-related criminal activity, . . .
including criminal activity by any Family member." 24 C.F.R.
§ 882.118(b)(4) (1994). "Drug-related criminal activity" means (1)
"the felonious manufacture, sale, or distribution, or the possession
with intent to manufacture, sell, or distribute, a controlled substance,"
or (2) "the felonious use or possession (other than with intent to man-
ufacture, sell, or distribute) of a controlled substance," where the use
or possession occurs within one year of a public housing authority's
decision to deny admission or terminate assistance under the program.
24 C.F.R. § 882.118(b)(4)(i)(A), (B) (1994)."Family" is defined in
the regulations to include but is not limited to:
(a) An Elderly Family or Single Person as defined in this
part,
(b) The remaining member of a tenant family, and
(c) A Displaced Person.
24 C.F.R. § 812.2 (1994); see also 42 U.S.C. § 1437a(b)(3) (same).
The public housing authority may terminate a participant's rent
subsidy "[i]f the participant has violated any Family obligation" as set
out in section 882.118. 24 C.F.R. § 882.210(d)(2) (1994). A termina-
tion based on participation in drug-related criminal activity must be
based on a "preponderance of the evidence indicat[ing] that a Family
member has engaged in such activity, regardless of whether the Fam-
ily member has been arrested or convicted." 24 C.F.R.
§ 882.216(c)(1) (1994). The procedure for termination consists of a
written notice from the housing authority stating the reasons for the
termination. 24 C.F.R. § 882.216(b)(3)(i) (1994). The participant in
the program must be given the opportunity for an"informal hearing."
24 C.F.R. § 882.216(b)(1)(ii) (1994); cf . 42 U.S.C. § 1437d(k) (man-
dating the creation of an "administrative grievance procedure" for ten-
ants at each public housing authority receiving funds under Section
8). The informal hearing is set before a neutral hearing officer, is
adversarial in nature, and is decided using a preponderance of the evi-
dence standard. 24 C.F.R. § 882.216(b)(6) (1994).
3
On March 19, 1994, Alexandria police executed a search warrant
for Ms. Clark's address and for a black male at that address. Probable
cause for the search was provided by a confidential informant's tip
that cocaine was being sold by a black male at that residence. Ms.
Clark was not home at the time the warrant was executed. However,
police detectives did find Ms. Clark's father and her estranged hus-
band, David Clark, at the residence. During the search, the detectives
seized quantities of heroin and associated drug paraphernalia from a
dresser in the master bedroom. Detectives also uncovered two address
books in the dresser and a two-foot long sword hidden between the
bed and box spring. In the basement of the house, detectives confis-
cated a quantity of cocaine. At the time of the search, David Clark
admitted to the detectives that the heroin and related drug parapherna-
lia found in the master bedroom were his. He also admitted ownership
of the sword and the address books. Mr. Clark gave his address as that
residence. Mr. Clark subsequently pled guilty to possession of heroin
and possession of drug paraphernalia related to the March 19, 1994
incident.
On May 9, 1994, ARHA, through its executive director Archibald
Alexander, informed Ms. Clark of its decision to terminate her hous-
ing assistance. The ARHA notice stated that the Alexandria police
had received information that illegal drugs had been sold from her
residence and that a resulting police search at her residence had led
to the confiscation of drugs and drug paraphernalia. From this evi-
dence, ARHA had concluded that family members had engaged in
drug-related activity in her residence and that termination of assis-
tance was authorized under federal regulations.
Ms. Clark exercised her right to an informal hearing, which took
place on July 27, 1994, before Steven Zimmerman, a local attorney.
At the hearing, Mr. Zimmerman heard testimony from Alexandria
police detective Hassan Aden, who had been present during the exe-
cution of the search warrant, David Clark, and Stacey Clark. Detec-
tive Aden testified that he believed Mr. Clark to be a resident at Ms.
Clark's apartment based on Mr. Clark's familiarity with the premises;
statements of ownership of the drugs, drug paraphernalia, and per-
sonal items (address books and the silver sword) found at the resi-
dence; and statement that he did in fact live at the residence. David
Clark admitted to ownership of the heroin and related paraphernalia
4
but denied any knowledge of the cocaine in the basement. He also
stated that he never admitted to Detective Aden that he lived at the
residence, nor had he admitted that he owned the silver sword. Ms.
Clark testified that David Clark did not live at her household and that
she had no knowledge of the use or possession of drugs in her house-
hold prior to the execution of the search warrant. Mr. Zimmerman
upheld ARHA's decision to terminate, relying heavily on the testi-
mony of Detective Aden and concluding that a "family member" at
Ms. Clark's residence had been involved in drug-related criminal
activity, warranting termination of benefits under 24 C.F.R.
§ 882.210.
Ms. Clark brought suit under 42 U.S.C. § 1983, alleging various
procedural errors in the informal hearing and alleging that ARHA
exceeded its authority in terminating her Section 8 benefits where no
"family member" was involved in drug-related criminal activity. On
plaintiff's motion for partial summary judgment and defendant's
motion for summary judgment, the district court found in favor of
defendant. The district court applied the standard articulated in Ritter.
Clark v. Alexander, 894 F.Supp. 261, 263 (E.D.Va. 1995). The court
found that the housing authority's basis for termination was not
inconsistent with the applicable HUD regulations. Id. at 264. Follow-
ing Ritter, the court afforded the decision to terminate "reasonable
deference," and granted the housing authority's motion for summary
judgment. Id. at 264-65. Plaintiff appeals on the sole issue of whether
the district court erred in deferring to ARHA and the hearing officer's
conclusion that David Clark was a "family member" for the purposes
of the Section 8 regulations.
II.
A.
We review the district court's granting of summary judgment de
novo. Ritter, 33 F.3d at 327; Haavistola v. Community Fire Co., 6
F.3d 211, 214 (4th Cir. 1993). Summary judgment under Rule 56 of
the Federal Rules of Civil Procedure is appropriate only when the
Court, viewing the record as a whole and in the light most favorable
to the nonmoving party, determines that there exists no genuine issue
of material fact and that the moving party is entitled to judgment as
5
a matter of law. See Celotex Corp. v. Catrett , 477 U.S. 317, 322-24
(1986).
The outcome on a motion for summary judgment is dependent not
only on the standard of review, but also on the scope of review. That
is, the focus of the court's inquiry is as important as the rigor of that
inquiry. This action is brought under section 1983, which provides a
cause of action for the deprivation of rights created by federal law. 42
U.S.C. § 1983. The Supreme Court has held that violations of federal
housing laws by state agencies implementing these laws are action-
able under section 1983 by Section 8 participants. Wright v. Roanoke
Redev. & Hous. Auth., 479 U.S. 418, 429 (1987); see Ritter, 33 F.3d
at 327 n. 3 ("we proceed on the assumption that[plaintiff] is entitled
to sue for improper termination of Section 8 assistance when the ter-
mination is in conflict with federal regulation"); Holly v. Housing
Auth. of New Orleans, 684 F.Supp. 1363, 1366 (E.D.La. 1988). The
civil rights cause of action against a state agency implementing a fed-
eral program compels federal courts to uphold the letter of federal law
while allowing agencies the discretion to perform their function of
reasonably administering the federal program.
B.
The Court first reviews the deference the District Court gave to the
factfinding of the hearing officer. Plaintiff contends that the factfind-
ing of the hearing officer is to be afforded no deference in a section
1983 action and that the District Court was obligated to make its own
findings of fact.
Plaintiff's argument misconstrues the nature of the informal hear-
ing which is intended to provide pretermination review of housing
authority decisions to terminate housing assistance benefits. See 55
Fed.Reg. 28541 (1990). This review is designed to comport with the
due process requirements for public-welfare program termination pre-
scribed in Goldberg v. Kelly, 397 U.S. 254, 266-71 (1970). See 55
Fed.Reg. 28541 (1990) ("PHAs must adopt written informal preter-
mination hearing procedures for participants, which fully meet the
requirements of Goldberg v. Kelly"). The administrative review, while
not in the form of a "trial," nevertheless serves "to produce an initial
determination of the validity of the [housing authority's] grounds for
6
discontinuance of payments in order to protect a recipient against an
erroneous termination of benefits." Goldberg , 397 U.S. at 266-67.
Goldberg places five requirements on the termination process
employed by a housing authority: (1) timely notice from the housing
authority stating the basis for the proposed termination, (2) an oppor-
tunity by the tenant to confront and cross-examine each witness relied
on by the housing authority, (3) the right of the tenant to be repre-
sented by counsel, (4) a decision, based solely on evidence adduced
at the hearing, in which the reasons for the decision are set forth, and
(5) an impartial decision maker. Goldberg, 397 U.S. at 266-71; see
also Caulder v. Durham Housing Authority, 433 F.2d 998, 1003-04
(4th Cir. 1970), cert. denied, 401 U.S. 1003 (1971) (Goldberg applies
to Section 8 terminations). Federal regulations set out the basic proce-
dural requirements of informal hearings in almost literal compliance
with Goldberg. 24 C.F.R. § 882.216(b)(6). Plaintiff has not chal-
lenged these regulations on due process grounds, and there is no alle-
gation in this appeal of violation of these regulations.
The sole issue before the Court regarding the factfinding is the
issue preclusive impact or degree of deference it may be afforded by
courts in subsequent litigation, including cases brought under section
1983. The Administrative Procedure Act's regulation of the scope of
court review, found at 5 U.S.C. § 706, is not applicable to housing
authorities. Ritter, 33 F.3d at 327. However, the Supreme Court has
held that in actions under section 1983, "federal courts must give [an]
agency's factfinding the same preclusive effects to which it would be
entitled in the State's courts." University of Tennessee v. Elliott, 478
U.S. 788, 799 (1986); see also United States v. Utah Construction &
Mining Co., 384 U.S. 394, 421-22 (1966) (deference given to fact-
findings of federal agency acting in judicial capacity where parties
had an adequate opportunity to litigate). In addition to having the
agency's decision recognized in state court, the agency must be "act-
ing in a judicial capacity" and the parties must have had "an adequate
opportunity to litigate." Id.; Layne v. Campbell County Dept. of Social
Services, 939 F.2d 217, 219 (4th Cir. 1991). ARHA's informal hear-
ing is clearly judicial in nature in that it entails the presentation of evi-
dence and a decision based thereon under specific legal standards. In
this case, the hearing also complied with the Goldberg requirements
including the opportunity to confront witnesses, the opportunity to be
represented by counsel, and a hearing in front of an impartial decision
7
maker. It is therefore appropriate to conclude that plaintiff had an "ad-
equate opportunity to litigate." The difficulty however lies with the
preclusive effect in state court. A review of Virginia state court deci-
sions and federal court decisions applying Virginia law finds no
review of housing authority factfindings. Virginia has its own Admin-
istrative Process Act, Va. Code § 9-6.14:1 et seq., that, like the federal
Administrative Procedures Act, governs the standard of review of
state agency decisions. However, the Virginia act specifically
excludes local or regional authorities, "including those with federal
authorities." Va. Code § 9-6.14:4.1. State case law confirms that local
housing authorities are not considered state agencies. See VEPCO v.
Hampton Redevelopment & Hous. Auth., 217 Va. 30, 225 S.E.2d 364(1976).
Nevertheless, this Court concludes that deference must be shown
to the factfinding of local housing authorities. Plaintiff has received
a termination hearing that comports with the requirements of due pro-
cess as set out in Goldberg. ARHA's original decision to terminate
was therefore validated by an administrative adjudicative process.
That established, it follows that due process does not require an
opportunity to relitigate the issues previously settled. See Detweiler
v. Commonwealth of Va. Dep't of Rehabilitative Servs., 705 F.2d 557,
561 (4th Cir. 1983) ("The Supreme Court has not ruled that judicial
review of the substantive decision of the hearing officials is required
by the due process clause. On the contrary, its decisions imply that
an administrative hearing is sufficient."). Deference to the findings of
an impartial hearing officer in Section 8 program termination hearings
results in no constitutional deprivation and advances the sound policy
articulated in University of Tennessee and Utah Construction. See
University of Tennessee, 478 U.S. at 798 ("the parties' interest in
avoiding the cost and vexation of repetitive litigation and the public's
interest in conserving judicial resources is equally implicated whether
the factfinding is done by a federal or state agency") (citing Utah
Construction, 384 U.S. at 422.).
The level of deference shown to the factfindings of a hearing offi-
cer is not absolute but it is significant. The regulations governing
hearings state that factual findings must be "based on a preponderance
of the evidence presented at the hearing." 24 C.F.R. § 882.216(6)(v);
see also 55 Fed.Reg. 28541 ("Factual determinations relating to the
8
individual circumstances of the participant must be based on the evi-
dence presented at the hearing."); accord Goldberg, 397 U.S. at 271("the decisionmaker's conclusions must rest solely on the legal rules
and evidence adduced at the hearing"). Accordingly, to insure compli-
ance with federal law, the reviewing court must be satisfied that the
hearing officer's conclusions are supported by substantial evidence.
Cf. 5 U.S.C. § 706(2)(E) (factfindings in agency hearings reviewed in
court under a "substantial evidence" standard).
In this case, the District Court did not explicitly review the hearing
officer's factfindings under a substantial evidence standard. Neverthe-
less, it is evident that the court set its level of deference to insure
compliance with the federal regulations. The court stated:
This Court finds that the AHRA [sic] and the hearing officer
had ample evidence before them to conclude that David
Clark was a member of Ms. Clark's family. Such informa-
tion was contained in the initial letter from the AHRA [sic]
and in the decision of the hearing officer. In fact, the hearing
officer specifically states that he considered the totality of
the evidence in coming to the conclusion that the AHRA
[sic] had shown by a preponderance of the evidence that
drug-related criminal activity occurred in the plaintiff's resi-
dence and that such residence was under her control.
Clark, 894 F.Supp. at 264. This Court concludes that the District
Court did, in fact, apply the correct standard of review to the hearing
officer's factfindings. The Court now reviews the District Court's
conclusions de novo. Haavistola v. Community Fire Co., 6 F.3d 211,
214 (4th Cir. 1993).
The hearing officer heard testimony from Detective Aden, who
executed the search warrant, and from David and Stacey Clark. The
testimony of the detective conflicted with that offered by David
Clark, in that Mr. Clark denied telling the detective that he lived at
the residence and denied having claimed ownership of personal prop-
erty at the residence. The hearing officer was also aware that the
Alexandria police department's search was instigated by information
that a black male was selling drugs from that residence. The hearing
officer chose to believe the testimony of Detective Aden and con-
9
cluded that David Clark: (1) was found at Stacey Clark's residence in
possession of heroin and related drug paraphernalia; (2) had ready
access to the residence; (3) was intimately familiar with the layout of
the residence; and (4) had personal belongings, including a sword hid-
den underneath a mattress, at Stacey Clark's residence. This Court
agrees with the District Court that the testimony of Detective Aden
accompanied by the details of the search warrant and the police report
constitute substantial evidence supporting the factfinding of the hear-
ing officer. That factfinding will not be disturbed.
C.
The Court next addresses the deference to be afforded ARHA's
interpretation of the federal regulations in terminating Stacey Clark's
Section 8 benefits. In Ritter v. Cecil County Office of Hous. & Com-
munity Dev., this Court recognized that "it is appropriate for us to
show some deference to a state agency interpreting regulations under
the authority of a federally created program." 33 F.3d at 327-28 (cit-
ing General Electric Co. v. Gilbert, 429 U.S. 125, 141 (1976)). Ritter
created a two-step analysis for reviewing state agency interpretations
of federal laws. First, the court should determine whether the state
agency action is inconsistent with the federal housing provisions. Id.
at 328. If there is no inconsistency, the court should afford the state
agency's action reasonable deference, meaning that the action should
be upheld unless it is found to be arbitrary or capricious. Id. at 328
(citing Chevron U.S.A., Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 844 (1984)).
While Ritter dealt with a promulgated, interpretive rule by a hous-
ing agency, there is no reason to limit the Ritter analysis to such a set-
ting. Whether an interpretation is promulgated or not may touch on
the reasonableness of the state agency's interpretation. However, for
the purposes of this case, the fact that an interpretation is not in the
form of a promulgated rule will not prevent that interpretation from
being afforded deference by courts if it is consistent with the federal
provisions and is reasonable.
This Court now applies the standard of review established in Ritter
to determine whether David Clark could be considered a member of
Stacey Clark's family under the federal housing regulations. As set
10
out above, there is no specific definition of "family" in the federal
housing statutes or regulations. See 42 U.S.C. § 1437a(b)(3) (defini-
tions); 24 C.F.R. § 812.2 (1994) (same). In HUD's preamble to the
regulations authorizing assistance termination for family involvement
in drug-related criminal activity, HUD explained that "``family' in
these programs includes only individuals who are occupying the same
unit." 55 Fed.Reg. 28543 (1990). The hearing officer concluded that
David Clark: (1) was found at Stacey Clark's residence in possession
of heroin and related drug paraphernalia; (2) had ready access to the
residence; (3) was intimately familiar with the layout of the residence;
and (4) had personal belongings, including a sword hidden underneath
a mattress, at Stacey Clark's residence. Based on these findings,
which were supported by substantial evidence, the hearing officer
concluded that David Clark was a "family member" for the purposes
of 24 C.F.R. § 882.118. The Court holds that the findings of the hear-
ing officer support the conclusion that David Clark"occupied the
same unit" as Stacey Clark. Therefore, the hearing officer's conclu-
sion, which was subsequently relied on by ARHA, is reasonable and
not inconsistent with the federal regulations. Accordingly, ARHA's
decision to terminate Stacey Clark's Section 8 benefits must be
afforded deference.
III.
Plaintiff's conception of the standard and scope of review in this
case would place federal courts and juries in the position of second-
guessing every decision made by local housing authorities. The actual
role of the federal courts is far more limited, even in actions brought
under section 1983. In this case, the local housing authority drew rea-
sonable conclusions from the evidence presented regarding David
Clark's status as a member of Stacey Clark's family. These conclu-
sions were not inconsistent with the federal regulations. As a matter
of law, Stacey Clark's rights as created by the federal housing regula-
tions were not infringed, and summary judgment for the defendant
was warranted.
The judgment of the district court is affirmed.
AFFIRMED
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