Jackson v. HUD ( 2022 )

Case: 21-20317 Document: 00516376074 Page: 1 Date Filed: 06/29/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
June 29, 2022
No. 21-20317 Lyle W. Cayce
Clerk
Daija Jackson; Sharobin White; Latoya Idlebird; Dinah
Clark; Janey Williams; Lawanda Douglas; Amanda
Williams; Shirley Andrews; Misty Joseph,
Plaintiffs—Appellants,
versus
United States Department of Housing and Urban
Development,
Defendant—Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:18-CV-2468
Before Southwick, Haynes, and Higginson, Circuit Judges.
Stephen A. Higginson, Circuit Judge:
Plaintiffs-Appellants (“Plaintiffs”) were tenants at Arbor Court, a
Houston apartment complex that received subsidies from the United States
Department of Housing and Urban Development (“HUD”). After flooding
that occurred during Hurricane Harvey, Arbor Court’s owner failed to
maintain the property in decent, safe, and sanitary condition. Accordingly,
HUD approved a transfer of the complex’s subsidy to a different property,
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offering Arbor Court tenants a choice between moving at no cost to the new
property or receiving housing vouchers that they could use at new housing of
their choice. After choosing the latter option, Plaintiffs sued HUD, seeking
relocation assistance under the Uniform Relocation Act (“URA”). The
district court dismissed the complaint. We AFFIRM.
I.
Plaintiffs were tenants at Arbor Court, an apartment complex in
Houston, Texas. Arbor Court participated in HUD’s Project-Based Rental
Assistance (“PBRA”) program, a form of housing assistance in which
“rental assistance is paid for families who live in specific housing
developments or units.” 24 C.F.R. § 982.1(b)(1); see also 42 U.S.C.
§ 1437f(f)(6). 1
In 2017, Arbor Court experienced severe flood damage during
Hurricane Harvey. Arbor Court’s owner, DM Arbor Court LTD (the
“Owner”), subsequently failed to maintain the property in decent, safe, and
sanitary condition. HUD eventually informed the Owner that it had
defaulted on its HUD Housing Assistance Payments (“HAP”) contract, and
in response the Owner requested a so-called “Section 8(bb) subsidy
transfer,” asking HUD to transfer Arbor Court’s PBRA funding to another
property, Cullen Park Apartments, under the terms of 42 U.S.C.
1
Section 8 of the United States Housing Act of 1937 (“Section 8”) authorizes
HUD to pay this assistance. See 42 U.S.C. § 1437f(a) (“For the purpose of aiding low-
income families in obtaining a decent place to live and of promoting economically mixed
housing, assistance payments may be made with respect to existing housing in accordance
with the provisions of this section.”). The present form of Section 8 originates in the
Housing and Community Development Act of 1974, which amended the Housing Act of
1937. See Pub. L. No. 93-383, sec. 201(a), § 8, 88 Stat. 633, 662-66. Section 8 programs can
take the form of “project-based assistance,” which is tied to particular housing units, or
“tenant-based assistance,” which is tied to particular households. See 42 U.S.C.
§ 1437f(f)(6)-(7); 24 C.F.R. § 982.1(b).
2
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§ 1437f(bb)(1). HUD approved the request. HUD then gave Arbor Court
tenants the option of either relocating to Cullen Park, with their moving
expenses paid by the Owner, or accepting Tenant Protection Vouchers
(“TPVs”) and relocating to other housing of their choice. 2
Plaintiffs sued HUD in July 2018. At the time Plaintiffs filed suit, the
Owner had not yet submitted the Section 8(bb) subsidy transfer request, and
Plaintiffs sought both “a final judgment that Plaintiffs’ leases with Arbor
Court are terminated without any default by Plaintiffs” and an injunction
“ordering HUD to continue to provide plaintiffs with a housing choice
voucher and the other assistance necessary to obtain affordable decent, safe,
and sanitary housing.” After HUD approved the transfer of Arbor Court’s
PBRA funding to Cullen Park, Plaintiffs did not relocate to Cullen Park, but
rather received TPVs. Plaintiffs then filed their second amended complaint,
seeking to compel HUD to provide them with relocation benefits, including
moving expenses, under the Uniform Relocation Act (“URA”). 3 The
district court dismissed the complaint under Federal Rule of Civil Procedure
12(b)(6) for failing to state a claim, explaining that “Plaintiffs cannot qualify
as displaced persons under the URA and are not entitled to relocation
2
TPVs “are provided to protect HUD-assisted families from hardship as the result
of a variety of actions that occur in HUD’s Public Housing (Low-Rent) and Multifamily
Housing portfolios.” Office of Public & Indian Housing, U.S. Department of Housing and
Urban Development, Notice PIH-2018-09, ¶ 6 (May 21, 2018),
https://www.hud.gov/sites/dfiles/PIH/documents/pih2018-09.pdf. TPVs are a part of
HUD’s Housing Choice Voucher program, see id., a form of tenant-based assistance in
which “[f]amilies select and rent units that meet program housing quality standards.” 24
C.F.R. § 982.1(a)(2); see also 42 U.S.C. § 1437f(o) (statutory authorization for program).
3
In their second amended complaint, Plaintiffs also challenged “HUD’s final
agency action for withholding the required site and neighborhood standard review under
HUD Notice 2015-03” and “HUD’s final agency action of approving the Section 8(bb)
transfer.” However, the district court dismissed these claims, and Plaintiffs do not renew
them on appeal.
3
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assistance from HUD beyond the housing vouchers they have already
received.” Plaintiffs then filed this appeal.
II.
“Appellate courts conduct a de novo review of a district court’s
dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6).”
Inclusive Communities Project, Inc. v. Lincoln Prop. Co., 920 F.3d 890, 899 (5th
Cir. 2019). “Rule 12(b)(6) authorizes the filing of motions to dismiss
asserting, as a defense, a plaintiff’s ‘failure to state a claim upon which relief
can be granted.’ Thus, claims may be dismissed under Rule 12(b)(6) ‘on the
basis of a dispositive issue of law.’” Id. (citations omitted). “Dismissal under
Rule 12(b)(6) also is warranted if the complaint does not contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In making
this evaluation, “the court ‘must accept all well-pleaded facts as true, and
view them in the light most favorable to the plaintiff.” Id. (cleaned up).
III.
A.
The Uniform Relocation Act provides that “[w]henever a program or
project to be undertaken by a displacing agency will result in the displacement
of any person, the head of the displacing agency shall provide for the payment
to the displaced person of,” inter alia, “actual reasonable expenses in moving
himself, his family, business, farm operation, or other personal property.” 42
U.S.C. § 4622(a). As relevant to residential tenancies, the URA defines the
term “displaced person” as “any person who moves from real property, or
moves his personal property from real property”:
(I) as a direct result of a written notice of intent to acquire or
the acquisition of such real property in whole or in part for a
4
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program or project undertaken by a Federal agency or with
Federal financial assistance; or
(II) on which such person is a residential tenant . . . , as a direct
result of rehabilitation, demolition, or such other displacing
activity as the lead agency [the Department of Transportation]
may prescribe, under a program or project undertaken by a
Federal agency or with Federal financial assistance in any case
in which the head of the displacing agency determines that such
displacement is permanent.
42 U.S.C. § 4601(6)(A)(i); see id. § 4601(12) (“The term ‘lead agency’
means the Department of Transportation.”). Thus, as the Supreme Court
has explained, the URA does not “provide assistance for all persons
somehow displaced by Government programs.” Alexander v. U.S. Dep’t of
Hous. & Urb. Dev., 441 U.S. 39, 60 (1979). Rather, URA assistance is only
available for those who meet the statutory definition of “displaced person.”
Plaintiffs have not pled that they moved from Arbor Court “as a direct
result of a written notice of intent to acquire or the acquisition of such real
property [i.e. Arbor Court] in whole or in part for a program or project
undertaken by a Federal agency or with Federal financial assistance.” 42
U.S.C. § 4601(6)(A)(i)(I). After all, Arbor Court was not acquired by a
federal agency or with federal financial assistance; rather, Cullen Park was.
Likewise, given that Plaintiffs have not pled that they moved because Arbor
Court was either rehabilitated or demolished, Plaintiffs have not moved as a
“direct result” of “rehabilitation” or “demolition” occurring “under a
program or project undertaken by a Federal agency or with Federal financial
assistance.” 42 U.S.C. § 4601(6)(A)(i)(II).
However, Plaintiffs argue that they are nonetheless eligible for URA
assistance because they moved from Arbor Court “as a direct result of . . .
such other displacing activity as the lead agency may prescribe.” Id.Specifically, they argue that under the applicable Department of
5
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Transportation (“DOT”) regulations, the Section 8(bb) subsidy transfer
from Arbor Court to Cullen Park qualifies as “such other displacing
activity.”
Plaintiffs rely primarily on the following DOT regulation: “The
phrase program or project means any activity or series of activities
undertaken by a Federal Agency or with Federal financial assistance received
or anticipated in any phase of an undertaking in accordance with the Federal
funding Agency guidelines.” 49 C.F.R. § 24.2(a)(22). Plaintiffs reason that
the Section 8(bb) subsidy transfer, which allegedly involved federal funds and
required HUD approval, was a “series of activities” undertaken both “by a
Federal agency” and “with Federal financial assistance.”
However, this regulation merely defines the phrase “program or
project.” It does not prescribe any “displacing activit[ies]” that cause one to
become a “displaced person” under the URA. Indeed, Plaintiffs do not
argue, and our research does not reveal, that the DOT has promulgated any
regulation prescribing that a Section 8(bb) subsidy transfer is a “displacing
activity” for purposes of the URA. Accordingly, even if we assume arguendo
that the subsidy transfer from Arbor Court to Cullen Park meets the
regulatory definition of “program or project,” Plaintiffs still do not qualify as
“displaced person[s]” under the URA. After all, the statute does not provide
that any person who moves because of a “program or project” is a “displaced
person.” Rather, as relevant to this argument, only those residential tenants
who move both “under a program or project” and “as a direct result of . . .
such . . . displacing activity as the [DOT] may prescribe” qualify as
“displaced person[s].” 42 U.S.C. § 4601(6)(A)(i)(II). Because Plaintiffs
have neither pled that they moved as a result of a “displacing activity,” as
prescribed by the DOT, nor otherwise pled facts indicating that they qualify
as “displaced person[s],” they are not entitled to URA assistance. See 42
6
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U.S.C. § 4622(a) (providing that only “displaced person[s] are eligible for
URA assistance). 4
B.
Plaintiffs further argue that, regardless of the actual text of the URA
and its implementing regulations, they qualify for URA assistance under
various regulations and guidance documents. These arguments fail for
multiple reasons.
As an initial matter, neither regulations nor guidance documents
could provide Plaintiffs with an entitlement to URA benefits not authorized
by statute. “An administrative agency’s authority is necessarily derived from
the statute it administers and may not be exercised in a manner that is
inconsistent with the administrative structure that Congress has enacted.”
United States v. Transocean Deepwater Drilling, Inc., 767 F.3d 485, 489 (5th
Cir. 2014). Though, as explained above, the URA allows the DOT to
prescribe “other displacing activity” that can cause a party to become a
“displaced person,” the statute does not authorize HUD to expand the
definition of this term. Accordingly, any HUD regulation that purported to
mandate the provision of URA benefits to parties that do not meet the
4
Cf. Alexander, 441 U.S. at 60 (“Congress did not expect to provide assistance for
all persons somehow displaced by Government programs.”); Devines v. Maier, 665 F.2d
138, 148 (7th Cir. 1981) (holding that because “defendants’ enforcement of housing codes
by evicting plaintiffs from structures determined by the building inspector to be unfit for
human habitation did not constitute an acquisition under 42 U.S.C. § 4601(6), . . . the
plaintiffs are not ‘displaced persons’ entitled to URA benefits”); Goodwin v. Miller, No.
2:17-CV-01537, 2019 WL 1416885, at *10 (W.D. Pa. Mar. 29, 2019) (rejecting URA claim
where “[t]he only Federal action taken . . . was HUD’s ending of a funding stream,”
explaining that the plaintiff “did not have to move because of the acquisition, rehabilitation,
or demolition of a property undertaken by a federal agency or with federal money, but rather
because Homewood [the property owner] allowed the Property to fall into disrepair, and
Esperanza (a private entity) wants to fix up the building”).
7
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definition of “displaced person” found in the statute or its implementing
regulations would be invalid. See Harris v. Lynn, 555 F.2d 1357, 1359 (8th Cir.
1977) (explaining, in the URA context, that “HUD cannot extend benefits by
regulation to a class of persons not included within the authorizing statute”);
Schism v. United States, 316 F.3d 1259, 1284-85 (Fed. Cir. 2002) (“[A]
regulation promulgated under the auspices of [a statute] cannot convey or
authorize an entitlement unless that statute clearly so provided. . . . [A]n
agency cannot do by regulation what the applicable statute itself does not
authorize.”).
Moreover, Plaintiffs are incorrect in their reading of the relevant
regulations and guidance. Plaintiffs principally rely on HUD Notice H-2015-
03 (the “Notice”), arguing that it “specifies that PBRA tenants subject to a
Section 8(bb) transfer are entitled to relocation assistance under the URA.”
However, the Notice does no such thing. The relevant portion of the Notice
provides as follows:
Any residents that move as a direct result of acquisition,
rehabilitation or demolition for an activity or series of activities
that includes transfer of budget authority under Section 8(bb)
may become eligible for relocation assistance under the
Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (URA).
Rather than purporting to expand the class of residents eligible for
URA benefits, the Notice merely recognizes that some Section 8(bb) subsidy
transfers “may” coincide with federal actions that implicate the URA.
Further, the Notice carefully tracks the statutory language, limiting its
application only to those residents who move “as a direct result of
acquisition, rehabilitation or demolition.” Cf. 42 U.S.C. § 4601(6)(A)(i)
(defining displaced person in terms of the “acquisition,” “rehabilitation,”
and “demolition” of property). The Notice thus confirms that URA
8
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assistance is available in a case involving a Section 8(bb) subsidy transfer from
a property only if the case also involves, among other statutory requirements,
an acquisition, rehabilitation, or demolition. As explained above, this case
does not involve such circumstances.
Plaintiffs also emphasize the following sentence from Section VII.B of
the Notice: “Under no circumstances shall the residents pay for any
relocation costs incurred as a result of this transaction.” However, the
“transaction” that Section VII.B refers to is “[r]elocation,” a situation in
which tenants move within the PBRA program, either “to a different unit in
Project A [i.e. Arbor Court] or to a unit in Project B [i.e. Cullen Park].” Here,
Plaintiffs chose to accept Tenant Protection Vouchers rather than relocate to
Cullen Park, and when “a tenant chooses not to relocate,” their rights are
described in Section VII.C of the Notice (titled “Tenant Protection”), rather
than Section VII.B of the Notice (titled “Relocation”). Section VII.C states
that Tenants who choose not to relocate will generally be offered TPVs, but
it does not refer at all to URA assistance.
Additionally, Plaintiffs repeatedly cite 24 C.F.R. § 886.338 (the
“Regulation”), a HUD regulation, arguing that “Plaintiffs are ‘displaced
persons’ under HUD’s URA regulation” and that the Regulation
“mandate[s] provision of relocation assistance to Arbor Court tenants.”
Once again, Plaintiffs are incorrect. The Regulation provides, in relevant
part:
For purposes of this section, the term displaced person means
a person (family, individual, business, nonprofit organization,
or farm) that moves from real property, or moves personal
property from real property, permanently, as a direct result of
acquisition, rehabilitation, or demolition for a project assisted
under this part. This includes any permanent, involuntary
move for an assisted project, including any permanent move from
the real property that is made . . . [a]fter notice by the owner to move
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permanently from the property, if the move occurs on or after the
date of the submission of the application to HUD.
24 C.F.R. § 886.338(g)(1) (emphases added). Plaintiffs focus on the second
sentence of the Regulation and reason that they qualify as “displaced
person[s]” because the Owner notified them of the Section 8(bb) subsidy
transfer. However, Plaintiffs overlook the Regulation’s first sentence, which,
just like the URA, requires a “displaced person” to have moved “as a direct
result of acquisition, rehabilitation, or demolition.” Cf. 42 U.S.C.
§ 4601(6)(A)(i). Thus, as with the Notice, the Regulation parallels the
URA’s definition of “displaced person” rather than purporting to expand it.
Accordingly, it offers no support to Plaintiffs’ claim. 5
Finally, Plaintiffs call the court’s attention to HUD Handbook 1378,
Tenant Assistance, Relocation and Real Property Acquisition Handbook (the
“Handbook”), and 49 C.F.R. § 24.301(a)(1). The Handbook states, “Any
displaced residential owner-occupant or tenant-occupant who qualifies as a
displaced person (defined at 49 CFR 24.2(a)(9)) . . . is entitled to a payment
5
Plaintiffs suggest in their reply brief that they qualify as “displaced person[s]”
under the Regulation because they were in fact “compelled to move as a direct result of an
acquisition”—not the acquisition of Arbor Court, but rather the Owner’s “HUD approved
acquisition of Cullen Park.” However, because Plaintiffs did not raise this argument until
their reply brief, they have waived it. See Peteet v. Dow Chem. Co., 868 F.2d 1428, 1437 (5th
Cir. 1989) (“We may not review arguments raised for the first time in the appellant's reply
brief.”). Moreover, even assuming arguendo not only that Plaintiffs have preserved the
argument but also that they would in fact qualify as “displaced person[s]” under the best
reading of the Regulation, this argument still would not advance Plaintiffs’ claim for URA
assistance. After all, the URA clearly states that a “displaced person” must have moved
from the property being acquired, not some other property, see 42 U.S.C.
§ 4601(6)(A)(i)(I) (defining “displaced person” as “any person who moves from real
property . . . as a direct result of . . . the acquisition of such real property”), and, as
explained above, a regulation cannot override a statute. Cf. 42 U.S.C. § 4601(6)(A)(i)(II)
(authorizing the DOT to expand the definition of “displaced person” but not authorizing
HUD to do so).
10
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for his or her moving and related expenses.” Handbook ¶ 3-2(A). Similarly,
49 C.F.R. § 24.301(a)(1) provides, “Any owner-occupant or tenant who
qualifies as a displaced person (defined at § 24.2(a)(9)) and who moves from
a dwelling . . . is entitled to payment of his or her actual moving and related
expenses.” However, 49 C.F.R. § 24.2(a)(9) (a DOT regulation
implementing the URA) requires a “displaced person” to have “move[d]
from the real property” either “[a]s a direct result of . . . the acquisition of[]
such real property” or “[a]s a direct result of rehabilitation or demolition for
a project.”49 C.F.R. § 24.2(a)(9)(i). Because, as previously explained,
Plaintiffs did not move for any of these reasons, neither the Handbook nor 49
C.F.R. § 24.301(a) applies to this case.
In addition to these regulations and guidance documents, Plaintiffs
claim that HUD has paid the moving expenses of Tenant Protection Voucher
recipients in other cases. Plaintiffs alleged in their complaint that HUD
provided “tenant protection vouchers and relocation assistance to PBRA
tenants at three PBRA projects in Hartford, Connecticut who are relocating
because HUD terminated the HAP contract for the PBRA project because
the housing conditions did not meet HUD’s housing quality standards.”
Similarly, Plaintiffs observe that in Goodwin v. Miller, a case in which a tenant
brought a variety of claims against HUD and several other defendants, the
court stated that HUD had “terminated” a “project-based Section 8
contract” with a property and then “provided every tenant with relocation
benefits and a voucher.” No. 2:17-CV-01537, 2019 WL 1416885, at *1-2
(W.D. Pa. Mar. 29, 2019). 6
6
The Goodwin plaintiff brought suit primarily “in an effort to remain in his unit
despite the unsanitary and unsafe conditions, and to force rehabilitation of the unit.” Id.
at *1.
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However, Goodwin and the Hartford projects are legally and factually
distinct from this case. Goodwin did not involve a Section 8(bb) subsidy
transfer, see id., meaning that the Goodwin tenants only had the option of
accepting TPVs, unlike Plaintiffs, who had the option of moving to Cullen
Park at the Owner’s expense. 7 And the Hartford tenants likely received
relocation assistance under 24 C.F.R. § 886.323(e), a non-URA HUD
regulation requiring HUD to “provide assistance in finding [another
dwelling] unit for the family” if certain requirements are met. 24 C.F.R.
§ 886.323(e). Plaintiffs do not argue on appeal that § 886.323(e) applies to
their situation, but rather seek relief solely under the URA. Thus, Goodwin
and the three Hartford projects do not affect our analysis of this case.
IV.
For the foregoing reasons, Plaintiffs are not entitled to relocation
assistance under the URA. Accordingly, we AFFIRM the judgment of the
district court.
7
Plaintiffs do allege that the “PBRA contracts for [the Hartford] projects are . . .
being transferred by HUD to other locations.”
12