Nancy Woods v. Linnie Willis , 515 F. App'x 471 ( 2013 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 13a0181n.06
Nos. 11-4419/12-3029
FILED
UNITED STATES COURT OF APPEALS Feb 19, 2013
FOR THE SIXTH CIRCUIT DEBORAH S. HUNT, Clerk
NANCY WOODS, CAULENE FULLER,
CARLA MCCULLOUGH, in their own right
and as representatives of all similarly situated
Lucas Metropolitan Housing Authority Section
8 Housing Choice Voucher Program
participants, ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
Plaintiffs-Appellants/Cross-Appellees, NORTHERN DISTRICT OF OHIO
v.
LINNIE WILLIS, personally and in her official
capacity as Executive Director, Lucas
Metropolitan Housing Authority; MARGARET
MIRACOLA, personally and in her official
capacity as Director, Lucas Metropolitan
Housing Choice Voucher Program; CANDACE
RENNER, personally and in her official
capacity as Hearing Officer, Lucas
Metropolitan Housing Authority,
Defendants-Appellees/Cross-Appellants.
/
BEFORE: CLAY and STRANCH, Circuit Judges; BELL, District Judge.*
CLAY, Circuit Judge. Plaintiffs-Appellants Nancy Woods, Caulene Fuller and Carla
McCullough filed the underlying action, under 42 U.S.C. § 1983, as present and former participants
of the Housing Choice Voucher Program of § 8 of the United States Housing Act of 1937 (“Housing
*
The Honorable Robert Holmes Bell, United States District Judge for the W estern District of Michigan, sitting
by designation.
Nos. 11-4419/12-3029
Act”), 42 U.S.C. § 1437f, asserting that the Lucas Metropolitan Housing Authority’s (“LMHA”) § 8
Housing Program’s termination policy operates to deprive participants of their property interests in
violation of the due process clause of the Fourteenth Amendment and various applicable statutes.
Plaintiffs bring this joint appeal from the district court’s order granting in part Defendant’s motion
to dismiss pursuant to Federal Rule Civil Procedure 12(b)(6), and the order granting in part
Defendant’s subsequent motion for summary judgment. Defendant cross-appeals from the order
granting in part Plaintiff Fuller’s cross-motion for summary judgment. For the following reasons,
we AFFIRM both orders.
BACKGROUND
1. LMHA § 8 Housing Program
Defendant Linnie Willis is the executive director of LMHA, the Public Housing Authority
in Lucas County, Ohio, that administers to low-income individuals and families the § 8 Housing
Choice Voucher Program (“Housing Program”). LMHA determines tenant eligibility under the
applicable regulations. The amount of assistance provided is dependent on the number of individuals
living in the household. Approved families must select and maintain housing that meets the
program’s quality standards and that are approved by LMHA, which in turn enters into housing
assistance payments (“HAP”) contracts with the landlords. 24 C.F.R. § 982.1(a)(2).
Participating families are assigned a housing specialist and have obligations under the
Housing Program, including disclosing household income, allowing inspection of the unit, providing
the housing authority with eviction notices, and notifying LMHA before the family moves from an
approved residence. See id. § 982.551. Violating an obligation may result in termination from the
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Housing Program. Id. §§ 982.552–.553. However, the participant must have an opportunity for an
informal hearing to challenge the basis for the termination decision and to consider whether the
decision comports with federal law. See id. § 982.555(a)(1)(v).
LMHA has in place written procedures for conducting informal hearings. A housing
specialist or inspector is required to advise the managers that a cause for termination has
materialized. LMHA then issues to the participant a notice that includes a brief statement of the
reason for termination and advises him or her of the right to an informal hearing. Upon a request
submitted by the deadline specified in the notice, LMHA schedules informal hearings with a hearing
officer. The housing specialist compiles all of the relevant documentation used to make the initial
termination decision into one file and submits it for the hearing officer’s review. At the informal
hearing, the hearing officer reviews the file submitted and affords participants an opportunity to
explain why their eligibility should not be terminated before making a final decision. The decision
is mailed to the participant some time after the hearing.
Plaintiffs contend that LMHA’s practices and procedures surrounding and including the
informal hearing are unconstitutional and violate applicable regulations. Although Plaintiffs filed
this action jointly in an apparent effort to obtain class certification, their claims and circumstances
are substantially distinct, requiring this Court to address each separately for the sake of clarity.
2. Plaintiffs’ Factual Background
A. Nancy Woods
Woods began participating in the Housing Program in 2007. On March 6, 2008, her housing
unit failed LMHA’s annual housing quality standards inspection, and the landlord was provided an
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opportunity to make repairs. Aware that she could be required to move, Woods took steps required
to move as a Housing Program participant. She first attended LMHA’s required Rehousing Update
Class. Then, upon notice that her unit failed another inspection and repairs were necessary to avoid
termination on July 1, 2008 of the HAP contract, Woods submitted two Request for Tenancy
Approval forms to LMHA, seeking the requisite approval to move into different homes. However,
both requests were denied because the units were overpriced.
Thus, on July 1, Woods moved into a hotel in the belief that she would no longer be
authorized to remain on the property. However, despite telling her landlord of her decision to move,
she did not submit a 30-Day Notice of her intent to move to LMHA or the landlord, in violation of
LMHA’s policy, of which Woods was aware.
Upon learning that Woods vacated her unit, LMHA issued to her a Notice of Cancellation
on July 11, stating that her Housing Program eligibility would be terminated on July 15 because she
“vacate[d] without notice.” (R. 47, Ex. 4, Woods Notice of Cancellation.) On or about the same
day, Woods submitted a third Request for Tenancy Approval Form after negotiating a lower rent
payment with the landlord of one of the units previously denied. She also submitted a timely hearing
request shortly thereafter, on July 17, which was not scheduled (for reasons still disputed) until
December 8, 2008. In the interim, Plaintiff was denied approval for her third tenancy request, and
alleges that it was because she was “not eligible to re-house at the present time. (Currently at hearing
stage).” (R. 12, at ¶ 46. ) Consequently, Woods was not provided any housing assistance in the five
months before her December hearing.
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At her hearing, Woods’ attorneys asserted only that Woods’ failure to follow the policy was
de minimis because she provided sufficient notice by submitting a transfer request and attending the
rehousing class. There were no witnesses presented by LMHA at the hearing; the only evidence
presented was Woods’ own testimony. Woods admitted that she did not submit the requisite 30-day
Notice form, which proved to be dispositive. On January 16, 2009, the hearing officer issued a
decision upholding the termination “due to the fact that [Woods] vacated [her] unit without notice
and without [LMHA’s] approval to rehouse.” (R. 47, Ex. 4, at PID #774.)
B. Caulene Fuller
Fuller became a member of the voucher program in August 2008, with her son, D.W., listed
as a household member. In 2009, in the midst of an apparent domestic dispute, D.W.’s father, Jason
Watts, sent a letter to LMHA asserting that Fuller had committed fraud by claiming custody of her
son when in fact he was the custodial parent. Attached to the letter was an order from the juvenile
court, stating that Watts had legal custody of D.W., but also that both parents shared physical
custody. LMHA issued Fuller a Notification of Cancellation, stating that her Housing Program
eligibility would be terminated because she committed “fraud, in stating that [she had] custody of
[D.W.]” (R. 39, Ex. 4, Fuller Notice of Cancellation.) Fuller timely requested a hearing, which was
held on September 10, 2009.
Assuming it was Watts who contacted LMHA, Fuller obtained a letter from her caseworker
that addressed why D.W. was living in Fuller’s home. At the hearing, Fuller submitted her
caseworker’s letter and testified on her own behalf, asserting that D.W. in fact lived with her and,
thus, her answers as to whether he was in the household were not fraudulent. However, Watts was
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not present at the hearing so as to provide Fuller an opportunity to question him before the hearing
officer. Instead, the hearing officer weighed Fuller’s file, which included Watts’s letter, against her
testimony and evidence at the hearing to come to a decision. On September 21, 2009, the hearing
officer issued a decision which stated:
“According to CFR 982.551, this letter is to notify you of the final results of your
informal hearing that was held on September 10, 2009 to discuss your continued
eligibility as a Section 8 program participant. The hearing resulted from the fact that
you were involved in fraud, stating custody of [D.W.]. As a result of your hearing,
you may remain on the program with the removal of [D.W.], until such time as you
are granted legal custody. It is recommended you seek legal counsel for this matter.”
(R. 39, Ex. 6, Decision Letter (emphasis added).)
C. Carla McCullough
McCullough, a Housing Program participant since 2002, accepted a job as a hair stylist in
2006 that brought in varying amounts of money each month. She informed her LMHA housing
specialist of the position and unstable pay, and the housing specialist instructed McCullough to bring
her pay stubs to their annual review to ensure that LMHA’s voucher payments were accurate.
McCullough complied.
Shortly after the review, in a Notification of Cancellation dated September 3, 2008, LMHA
informed McCullough that her voucher was being terminated because she was “over-income.” (R.
12, Amended Compl. ¶ 79.) The letter advised her that she could request a hearing by September
12, 2008. Unfortunately, McCullough never received this letter, as it was delivered to a neighbor.
Upon receipt of the letter from the neighbor on September 17, 2008, McCullough requested a
hearing from LMHA. The Housing Program’s supervisor advised McCullough to submit a written
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hearing request, explaining why she missed the original deadline. McCullough complied, and
awaited LMHA’s review of her request.
In January 2009, McCullough was advised that LMHA would review the file to determine
if a hearing was necessary. LMHA ultimately decided to uphold the termination decision without
conducting a hearing.
3. Procedural History
A. Cause of Action
Plaintiffs filed their complaint in October, and later amended it in November, against the
following Defendants, personally and in their official capacities: Linnie Willis (Executive Director
of LMHA), Margaret Miracola (Director of LMHA), and Candace Renner (Hearing Officer for
LMHA). Plaintiffs allege that LMHA failed: to give timely, pre-termination notice stating the basis
for termination and to provide the opportunity for a hearing before termination (claim one); to
provide program participants with an opportunity to confront and cross-examine each witness relied
on by the housing authority (claim two); to make decisions based solely on evidence at the hearing
and issue a written decision specifically setting forth the reasons for the decision (claim three); and
to conduct informal hearings with an impartial hearing officer (claim four), in violation of the Due
Process Clause of the Fourteenth Amendment. Plaintiffs also advance several statutory claims under
42 U.S.C. §§ 1437d and 1437f, and 24 C.F.R. § 982.555(c): statutory counterpart of claim one
(claim five); statutory counterpart of claim four (claim six); statutory counterpart of claim two (claim
seven); and LMHA failed to issue sufficiently specific decisions and to base factual determinations
on a preponderance of the evidence (claim eight).
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In December, Plaintiff Fuller and Defendants entered into a stipulated agreement, which
provided that she could remain in the Housing Program with her son as a household member, subject
to the next annual review, and Fuller agreed to withdraw her motion for a preliminary injunction.
B. Motion to Dismiss
In September 2010, the district court granted in part Defendants’ motion to dismiss, disposing
of claims one, five, and eight in their entirety, and part of claim three,1 but denied the motion as to
the remaining claims. The court disagreed with Defendants’ argument that Fuller lacked standing
after the stipulated agreement, holding that Defendants’ voluntary cessation did not moot the case
where it was unclear whether the alleged behavior would recur. The court also held that Defendant
Renner was entitled to quasi-judicial immunity and dismissed the official capacity claims against
Renner and Miracola as duplicative. The court dismissed all of Plaintiff McCullough’s claims for
lack of standing, and later denied her motion for certification of final judgment.
C. Motion for Summary Judgment
After discovery, the remaining parties filed cross-motions for summary judgment on the
remaining claims. The district court entered judgment in favor of Plaintiff Fuller on claim two and
its statutory counter part, claim seven. The court found that the adverse decision was in fact based
on a determination that Fuller committed fraud, which could be supported only by a letter written
by her son’s father; and thus, the failure to allow her to cross-examine him was unconstitutional and
violated federal statutory requirements as a matter of law. The court entered judgment in the one
1
The court did not address the validity of the first part of claim three, the alleged failure to
make decisions based solely on evidence at the hearing, because Defendants did not provide an
argument regarding it.
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remaining Defendant’s favor on the remaining part of claim three and claims four and six as to both
Fuller and Woods, and claims two and seven as to Woods. Woods was denied relief on all claims.
The court also disregarded Woods’ effort to revive part of claim one, asserting that she failed to
plead facts sufficient to alert the court to her claim, and failed to brief the issue in the motion to
dismiss.
Plaintiffs timely appealed. Woods appeals the order denying her summary judgment motion
on claims two, three, four, and six, and the order granting Defendant’s motion to dismiss claim one
for failure to state a claim. Fuller appeals the denial of summary judgment on claims four and six,
and the dismissal of claim one for failure to state a claim. McCullough appeals from the order
dismissing her claims for lack of standing. Defendant timely cross-appealed the grant of summary
judgment to Fuller on claims two and seven.
DISCUSSION
I. DISMISSAL OF MCCULLOUGH’S CLAIMS
A. Standard of Review & Applicable Law
This Court reviews a district court’s decision to dismiss a plaintiff’s suit for lack of
constitutional standing de novo. White v. United States, 601 F.3d 545, 551 (6th Cir. 2010). A
plaintiff has standing where: 1) she has suffered an “injury in fact,” 2) that is “fairly traceable to the
challenged action of the defendant,” and 3) will likely be “redressed by a favorable decision.” Id.(citation and internal quotation marks omitted). All material factual allegations of the complaint
must be accepted as true and construed in the plaintiff’s favor. Id.9
Nos. 11-4419/12-3029
B. Analysis
This matter is better resolved under Federal Rule of Civil Procedure 12(b)(6) than as a
standing issue. McCullough has suffered an “injury in fact,” termination from the Housing Program,
which is apparently traceable to Defendant’s decision to uphold the termination decision, and would
indeed be redressed by a decision in her favor. However, even when the facts alleged are viewed
in a light most favorable to her, see Dubay v. Wells, 506 F.3d 422, 426 (6th Cir. 2007), McCullough
fails to state a claim upon which relief can be granted. McCullough does not assert that her delayed
request was at all due to some failure on LMHA’s part. She acknowledges that she was provided
with notice and an opportunity to be heard. However, she admits that she did not avail herself of this
opportunity within the requisite time frame. She did not have an indefinite right to a hearing.
Consequently, she cannot now claim that Defendant denied her due process.
Accordingly, this Court affirms the dismissal of McCullough’s claims.
II. DISMISSAL OF CLAIM ONE2
A. Standard of Review
This Court reviews de novo the district court’s grant of a motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6). Wells, 506 F.3d at 427. The motion should be granted
where a plaintiff “can prove no set of facts which would entitle him to relief,” reading all the factual
allegations in the light most favorable to him. Id. (citation and internal quotation marks omitted).
2
Plaintiffs do not reference the statutory counterpart, claim five, in this appeal, and therefore,
this Court does not address it in this opinion. However, its worth noting that because the statutory
requirement of “a brief statement of [the] reasons for the decision,” 24 C.F.R. § 982.555(c)(2)(i), is
identical to the minimum due process requirement in Goldberg, claim five would be resolved in the
same manner as claim one.
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“Factual allegations must be enough to raise a right to relief above the speculative level . . . .” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007) (citations omitted).
B. Applicable Law
Participation in a public housing program is a property interest protected by due process.
Davis v. Mansfield Metro. Hous. Auth., 751 F.2d 180, 184 (6th Cir. 1984). Due process requires that
Housing Program participants receive adequate notice of the grounds for termination, and must be
afforded an informal hearing prior to termination. See Davis, 751 F.2d at 185 & n.4; Goldberg v.
Kelly, 397 U.S. 254, 266–71 (1970) (“[T]he stakes are simply too high . . . and the possibility for
honest error or irritable misjudgment too great, to allow termination of aid without giving the
recipient a chance, if he so desires, to be fully informed of the case against him so that he may
contest its basis and produce evidence in rebuttal.”)
C. Analysis
This Court finds that the district court properly dismissed Woods’ and Fuller’s allegation that
they were provided inadequate notice, and properly found that Woods waived the first part of claim
one, that she was terminated prior to receiving an informal hearing. We address the dismissal as to
each Plaintiff below.
1. Woods’ Notice Claims
Woods asserts on appeal that her notice claim is twofold: 1) that she was terminated before
the informal hearing, and 2) that notice of cancellation was unconstitutionally deficient. However,
Woods has waived the first part of this claim for failing to defend it against Defendant’s motion to
dismiss claim one in its entirety. Plaintiffs’ response to the motion briefed only this part of claim
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one with respect to McCullough. Despite arguing this matter on appeal, Woods’ failure to defend
against the motion to dismiss leads us to the same conclusion as the district court; she has waived
this claim and we do not reach the question of whether it was properly dismissed. See Berger v.
Medina Cty. Ohio Bd. of Cty. Comm’rs, 295 F. App’x 42, 45 (6th Cir. 2008).
We do, however, reach the sufficiency of the second part of claim one—that the notice of
cancellation was deficient—and find that the district court properly dismissed it. The most favorable
reading of the amended complaint fails to yield any facts to support this allegation. Woods admits
that the notice of cancellation stated that she was being terminated because “client vacate[d] without
notice.” (R. 12, at ¶ 40.) Woods does not assert any facts that suggest she was terminated for any
other reason, or that she actually provided the notice required (i.e., the 30-Day Notice form). This
Court finds that Woods’ claim one was properly dismissed.
2. Fuller’s Notice Claims
Fuller’s appeal from the dismissal of her notice claim is also unpersuasive. Her notice of
cancellation stated that she would be terminated for “fraud, in stating that you have custody of
[D.W.].” (R. 12 at ¶ 54.) Yet, Fuller asserts that the notice of cancellation sent to her was not
sufficiently specific in that it did not “identify the specific circumstances,” “who she allegedly told,”
or “when she allegedly made the statement.” (Pls.’ Br. 52.) The law does not require such detail.
The notice of cancellation is required to enable participants the opportunity to prepare a defense,
Escalera v. New York City Hous. Auth., 425 F.2d 853, 862 (2d Cir. 1970), and therefore, it must only
be “sufficiently specific for it to enable an applicant to prepare rebuttal evidence to introduce at his
hearing appearance,” Billington v. Underwood, 613 F.2d 91, 94 (5th Cir. 1980). Here, the notice of
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cancellation allowed Fuller to prepare a defense against the fraud allegation, which was the basis of
the discussion at the informal hearing and the basis for the decision letter.3 This Court finds that
Fuller’s claim one was properly dismissed for failure to state a claim.
Accordingly, the order granting in part the Defendant’s motion to dismiss is affirmed.
III. SUMMARY JUDGMENT TO DEFENDANT ON WOODS AND FULLER’S CLAIMS
FOUR AND SIX
A. Standard of Review
This Court reviews grants of summary judgment de novo. Mell v. Anthem, Inc., 688 F.3d
280, 285 (6th Cir. 2012). Summary judgment is appropriate where the movant demonstrates “that
there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a). All of the evidence and reasonable inferences are drawn in favor of
the nonmoving party. However, the nonmoving party must go “beyond the pleadings,” Celotex
Corp. v. Catrett, 477 U.S. 317, 325 (1986), and provide more than a mere “scintilla of evidence” to
overcome a summary judgment motion, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
Where a rational trier of fact could not find for the nonmoving party based on the record as a whole,
summary judgment should be granted. Scott v. Harris, 550 U.S. 372, 380 (2007).
B. Applicable Law
This Court has previously held that there are procedural due process requirements in § 8
Housing termination proceedings, noting that a decision by an impartial hearing panel is one
requirement, Davis, 751 F.2d at 185 & n.4, which is also compelled by the federal statute, 42 U.S.C.
3
This Court’s conclusion regarding the basis of the decision letter is discussed in further
detail in the discussion of claims two and seven in Section IV.
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§ 1437d(k)(2), and applicable regulations, 24 C.F.R. § 982.555(e)(4). The Supreme Court, in a
related context, has held that “an impartial decision maker is essential,” Goldberg, 397 U.S. at 271(termination of welfare benefits), and this Court finds that the termination of housing benefits is due
no less protection. See Clark v. Alexander, 85 F.3d 146, 150 (4th Cir. 1996) (applying the Goldberg
due process requirements to public housing hearings).
However, agencies are provided the benefit of the doubt with regard to impartiality. There
is a presumption of honesty and integrity in those serving as adjudicators. Cobb v. Yeutter, 889 F.2d
724, 730–31 (6th Cir. 1989) (citing Withrow v. Larkin, 421 U.S. 35, 47 (1975)). The Supreme Court
has acknowledged only two cases where something less than actual bias violated due process: 1) the
“adjudicator has a pecuniary interest in the outcome;” and 2) the adjudicator has been the “target of
personal abuse or criticism from the party before him.” See Withrow, 421 U.S. at 47. A plaintiff
claiming bias has a heavy burden to shoulder, one that is not met with a mere showing that the
agency served as both a “prosecutor” and “judge.” Cobb, 889 F.2d at 730; see also Richardson v.
Perales, 402 U.S. 389, 410 (1971) (“Neither are we persuaded by the advocate-judge-multiple-hate
suggestion. It assumes too much and would bring down too many procedures designed, and working
well . . . .”). A plaintiff must demonstrate that “conferring investigative and adjudicative powers on
the same individuals poses such a risk of actual bias or prejudgment that the practice must be
forbidden if the guarantee of due process is to be adequately implemented.” Withrow, 421 U.S. at
47.
Woods and Fuller moved for summary judgment, arguing that the hearing officer, Candace
Renner, was biased because she served in two positions at LMHA in that she also served as a mental
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health housing specialist. The district court, even assuming that the housing specialist job involved
investigative functions, found that Plaintiffs failed to show how Renner’s service in two positions
resulted in any actual bias toward them. As the district court asserted, Renner’s ability to perform
both investigative and adjudicative functions as an employee for LMHA could not alone support a
due process violation claim. See Withrow, 421 U.S. at 47. She is presumed to have conducted the
hearings with honesty and integrity, absent a showing of actual bias or a high probability thereof.
No such risk exists where the investigative function was not even exercised in Plaintiffs’ cases. See
Goldberg, 397 U.S. at 271 (stating that an official acting as a decision maker should not have
“participated in making the determination under review”).
On appeal, Plaintiffs have seemingly altered their argument, asserting that Renner actually
served dual roles as an advocate and adjudicator in Woods and Fuller’s hearings, thus, creating an
actual bias against Plaintiffs. Woods and Fuller argue that, unlike Cobb, the issue is not whether the
same agency can perform the role of “prosecutor” and “adjudicator;” but rather, whether the same
individual can perform both roles. Despite this apparent shift in argument, Plaintiffs assert no facts
to support the allegation. Plaintiffs claim that Renner read from documents in the file and asked
Plaintiffs questions during the hearing, but this does not support a finding that she acted as a
“prosecutor.” The record shows the Renner relied on and communicated to Woods and Fuller the
facts in their respective files, which were undisputedly prepared by the hearing specialist (not
Renner) who proposed the termination. Thus, the “prosecutor,” to use Plaintiffs’ term, was in
essence the hearing specialist whose presence was not needed at the proceeding. Plaintiffs assert no
facts to establish that Renner was acting as counsel. The record demonstrates only that she was “an
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examiner charged with developing facts.” Cf. Richardson, 402 U.S. at 410 (describing the similar
role of a social security hearing examiner).
Additionally, Plaintiffs unsuccessfully attempt to demonstrate actual bias in two ways: 1) that
Renner improperly shifted the burden of proof to Plaintiffs in their hearings, and 2) that Renner
changed the basis for the termination decisions issued to Woods and Fuller. This Court finds the
evidence lacking with respect to these claims as well. First, to support the burden-of-proof
argument, Plaintiffs take out of context Renner’s deposition statement that in general, the informal
hearings provide participants with an opportunity “to tell their side of the story and explain why they
should not be terminated.” (R. 37, Renner’s Depo., at PID #60:25–61:9) Renner goes on to assert
that “if there was not sufficient documentation, then the termination couldn’t stand.” (Id. PID #365.)
Taken as a whole, the record does not demonstrate any confusion about the burden of proof. Nor
do the Plaintiffs assert that Renner’s decision was unsupported by the documentation presented in
their respective files. Rather, as articulated by the district court, Renner demonstrates an
understanding of the “fundamental truth—that participants must necessarily respond to factual
allegations in a notice of termination.” (R. 61, Order, at 18.) Plaintiffs have not proffered sufficient
facts to support their allegation that Renner shifted the burden of proof in their cases.
Plaintiffs’ second actual-bias argument—that Renner decided Woods and Fuller’s cases on
grounds other than the ones asserted in the notices of cancellation—is also unpersuasive. This claim
appears to be an effort to revive the already settled issue of the sufficiency of the notice. As
discussed above, in Section II, the decision letters submitted to Woods and Fuller stated that the
outcomes were in fact based on the same allegations made in the notice of cancellation. For Woods,
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her failure to provide the 30-Day notice was the basis of that the decision as reflected in her notice
of cancellation. For Fuller, fraud was the basis of her decision as reflected in her notice of
cancellation. The record simply does not support Plaintiffs’ allegations.
Accordingly, we find that summary judgment on claims four and six, with respect to both
Woods and Fuller, was properly granted to Defendant.
IV. SUMMARY JUDGMENT TO FULLER ON CLAIMS TWO AND SEVEN4
Lastly, Defendant cross-appeals the order granting summary judgment to Fuller on claims
two and seven. This Court affirms based on the insufficiency of the evidence relied upon.
Judicial Estoppel
Defendant argues that the decision rendered was not based on a finding that Fuller committed
fraud, but instead on a finding that she improperly listed her son on LMHA’s paperwork. Therefore,
according to Defendant, the hearing officer did not rely on hearsay evidence, i.e., the letter from
Jason Watts. As an initial matter, the plain language of the decision letter refutes Defendant’s
position. The letter states in relevant part:
“[T]his letter is to notify you of the final results of your informal hearing . . . . The
hearing resulted from the fact that you were involved in fraud, stating custody of
[D.W.]. As a result of your hearing, you may remain on the program with the
removal of [D.W.], until such time as you are granted legal custody.”
4
Defendant contends that Fuller lacks standing after their December 2009 stipulated
agreement in which Defendant agreed not to remove Fuller from the program or her son as a
household member before the next annual review. However, Defendant’s voluntary cessation does
not moot the case, particularly where its alleged reliance solely on hearsay to render a decision is
liable to occur again. See League of Women Voters of Ohio v. Brunner, 548 F.3d 463, 473 (6th Cir.
2008).
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(R. 39, Ex. 6, Decision Letter.) There simply is no indication otherwise to support Defendant’s
assertion.
More importantly, the argument advanced by Defendant is barred by judicial estoppel.
“Judicial estoppel forbids a party from taking a position inconsistent with one successfully and
unequivocally asserted by that same party in an earlier proceeding.” Pennycuff v. Fentress Cnty. Bd.
of Educ., 404 F.3d 447, 452 (6th Cir. 2005) (citation omitted). In its earlier motion, Defendant
moved to dismiss claims three and eight on the ground that, as alleged in Plaintiffs’ Complaint, the
decision letter mailed to Fuller plainly stated the reason for the decision. The district court
apparently adopted this position, evinced by the dismissal of claims three and eight, which were
never appealed. Defendant would now have this Court believe that the plainly stated reason is not
the actual basis for the decision. Based on Defendant’s new argument, this Court would have to
believe that the decision letter lacks any basis for the hearing officer’s decision because the only
basis asserted therein is that Fuller committed fraud. We decline to take such a position, which
would suggest that Defendant misled the district court in dismissing claims three and eight. See New
Hampshire v. Maine, 532 U.S. 742, 750 (2001).
Reliance Solely on Hearsay Evidence
Thus, finding as the district court did that Defendant’s adverse decision (to remove D.W.
from the home) was based on a finding of fraud, and because only the letter from Watts supported
such a finding, we turn to whether it was improper to base the determination solely on hearsay
evidence without providing Fuller the opportunity to cross-examine Watts.
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This is an issue of first impression in this Circuit. Hearing officers are required to give
participants an opportunity to present evidence and question any witness, 24 C.F.R. § 982.555(e)(5),
and due process requires the right to confront and cross-examine witnesses, Goldberg, 397 U.S. at
270. However, informal hearings are not bound by the rules of evidence applicable to judicial
proceedings. 24 C.F.R. § 982.555(e)(5). Thus, as an initial matter, hearsay evidence is generally
admissible in administrative proceedings. See Myers v. Sec’y of Heath & Human Servs., 893 F.2d
840, 846 (6th Cir. 1990).
However, it is less clear whether reliance on hearsay evidence can be the sole basis for a
termination decision in the § 8 Housing context. Although Goldberg, in the welfare context, asserted
a right to cross-examination and confrontation, the Supreme Court, in Richardson v. Perales, spoke
specifically on hearsay evidence. 402 U.S. 389, 402–06 (1971). The Court, in a case concerning the
denial of social security benefits, determined that medical reports, despite their hearsay character and
an absence of cross-examination, were sufficient to support the decision once the reports’ reliability
and probative value were proven. Id. The plaintiff argued that Goldberg compelled a finding that
due process was violated by reliance solely on hearsay evidence, but the Court’s conclusion
considered the fact that the plaintiff refused to exercise his right to subpoena the reporting physicians
to provide himself the opportunity for cross-examination. Id. 404–05. The Perales Court
distinguished Goldberg, noting that Goldberg dealt with termination of benefits and a lack of notice.
Id. 406–07. To the extent it concerned hearsay testimony, Goldberg was concerned more narrowly
with situations “where credibility and veracity [were] at issue, as they must be in many termination
proceedings” concerning welfare benefits. Id. (quoting Goldberg, 397 U.S. at 269). The “specter
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of questionable credibility and veracity” were not at issue in Perales. Id. at 407. Thus, reliability
and probative value were the linchpin of the Court’s decisions.
Sister circuits have provided little guidance on this issue. Only the Eleventh Circuit has had
the opportunity to address this precise question, in Basco v. Machin, where the housing authority
relied solely on two police reports to terminate assistance. 514 F.3d 1177, 1182 (11th Cir. 2008).
The Basco court, in dicta, suggested that hearsay evidence can be sufficient to support an adverse
finding if “factors that assure the underlying reliability and probative value of the evidence are
present.” Id. (citation and internal quotation marks omitted). Relying on Perales, the Eleventh
Circuit considered several factors, including whether the declarant could be subpoenaed, and
suggested in dicta that reliance solely on hearsay, particularly when the plaintiffs could not subpoena
the declarants, was at the very least questionable. See id. at 1183. However, the court ultimately did
not resolve that issue and decided the case on other grounds, finding that the evidence was
nonetheless insufficient. Id.Lower federal courts and state courts come down on both sides of this issue. On one hand,
some courts argue that the right to question any witnesses under the regulations and Goldberg plainly
refer only to any witness present at the hearing. See Robinson v. D.C. Hous. Auth., 660 F. Supp. 2d
6, 16 (D.D.C. 2009); Tomlinson v. Machin, No. 8:05-cv-1880-T-30MSS, 2007 WL 141192, at *6
(M.D. Fla. Jan. 16, 2007). Thus, allowing objection to hearsay on right-to-cross-examine grounds
would vitiate the principle that hearsay evidence is admissible. See Beauchamp v. De Abadia, 779
F.2d 773, 775–76 (1st Cir. 1985). Moreover, the touchstone of due process is reliability rather than
cross-examination, and as such, the hearsay evidence must only contain substantial indicia of
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reliability. Costa v. Fall River Hous. Auth., 903 N.E.2d 1098, 1110 (Mass. 2009); Robinson, 660
F. Supp. 2d at 12. On the other hand, some courts argue that the right to question any witness would
equally become meaningless if the housing authority could rely solely on hearsay evidence. Loving
v. Brainerd Hous. & Redevelopment Auth., Civil No. 08–1349, 2009 WL 294289, at *6–7 (D. Minn.
Feb. 5, 2009); Edgecomb v. Hous. Auth. of Town of Vernon, 824 F. Supp. 312, 316 (D. Conn. 1993).
We need not decide whether Defendant may rely solely on reliable hearsay testimony, or if
such reliance violates due process or the regulation absent the right to question the declarant, because
the evidence here fails under either rule. It is clear that due process would be violated under the
Edgecomb reading because the Watts letter was the sole basis for the adverse decision rendered
against Fuller. But, assuming, arguendo, that hearsay evidence can constitute substantial evidence
to support a § 8 Housing termination decision, the evidence must be at the very least reliable and of
proven probative value. In the instant case, it was not. Defendant relied on an un-notorized,
handwritten letter received in the mail, alleged to be from Jason Watts, making claims unsupported
by any facts that Fuller committed fraud. The Watts letter’s reliability and probative value was
nonexistent. Cf. Basco, 514 F.3d at 1182–83; see also Calhoun v. Bailar, 626 F.2d 145, 149 (9th Cir.
1980) (listing several factors to consider for determining whether hearsay constitutes substantial
evidence).
Thus, we affirm the district court’s grant of summary judgment to Fuller on claims two and
seven because the Watts letter was insufficient to support the adverse decision rendered.
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CONCLUSION
For the foregoing reasons, we AFFIRM both of district court’s orders regarding the motion
to dismiss and the cross-motions for summary judgment.
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