Michael Nozzi v. Hacla ( 2011 )

FILED
UNITED STATES COURT OF APPEALS MAR 25 2011
MOLLY C. DWYER, CLERK
FOR THE NINTH CIRCUIT U.S . CO U RT OF AP PE A LS
MICHAEL NOZZI, individually and as No. 09-55588
class representative; et al.,
D.C. No. 2:07-cv-00380-GW-FFM
Plaintiffs - Appellants, Central District of California,
Los Angeles
v.
HOUSING AUTHORITY OF THE CITY ORDER
OF LOS ANGELES and RUDOLPH
MONTIEL, in his official capacity,
Defendants - Appellees.
Before: TROTT and WARDLAW, Circuit Judges, and MOSMAN, District Judge.*
The memorandum disposition and concurrence filed on March 21, 2011, are
hereby withdrawn. The clerµ shall file the attached memorandum disposition and
concurrence in their place.
The parties shall have fourteen days from entry of the superseding
memorandum disposition to file petitions for rehearing or petitions for rehearing en
banc in the above-captioned matter.
IT IS SO ORDERED.
*
The Honorable Michael W. Mosman, District Judge for the U.S.
District Court for Oregon, Portland, sitting by designation.
FILED
NOT FOR PUBLICATION MAR 25 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. C O U R T O F AP PE ALS
FOR THE NINTH CIRCUIT
MICHAEL NOZZI, individually and as No. 09s55588
class representative; et al.,
D.C. No. 2:07scvs00380sGWsFFM
Plaintiffs s Appellants,
v. MEMORANDUM *
HOUSING AUTHORITY OF THE CITY
OF LOS ANGELES and RUDOLPH
MONTIEL, in his official capacity,
Defendants s Appellees.
Appeal from the United States District Court
for the Central District of California
George H. Wu, District Judge, Presiding
Argued and Submitted December 8, 2010
Pasadena, California
Before: TROTT and WARDLAW, Circuit Judges, and MOSMAN, District
Judge.**
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36s3.
**
The Honorable Michael W. Mosman, United States District Judge for
the District of Oregon, sitting by designation.
Plaintiffs Michael Nozzi and Nidia Pelaez, putative class representatives of
recipients of federal housing assistance payments under the Section 8 Housing
Voucher Program, 42 U.S.C. y 1437f(o), and the Los Angeles Coalition to End
Hunger and Homelessness (collectively “plaintiffs”) appeal the district court’s
dismissal of two claims and grant of summary judgment in favor of defendants
Housing Authority of the City of Los Angeles (“HACLA”), which administers the
Section 8 Program, and its Executive Director, Rudolph Montiel, on other claims
arising from defendants’ failure to provide adequate notice of its planned reduction
of the voucher payment standard (“VPS”), which is used to calculate plaintiffs’
monthly housing assistance payments. Because the district court incorrectly
applied wellsestablished law to conclude that plaintiffs asserted no property
interest to which due process attached, and because genuine issues of material fact
exist as to whether the notice HACLA provided satisfied the requirements of due
process, we affirm in part and reverse in part.
1. Perhaps misconstruing plaintiffs’ y 1983 due process claim, the district
court improperly concluded that plaintiffs’ property interest in Section 8 benefits
did not require adequate notice that their benefits were subject to the planned
reduction. Although the district court based this conclusion on its determination
that plaintiffs could not claim a property interest in the y 982.505 notice
2
requirement, plaintiffs’ claim does not depend on finding a “right to notice.”
Rather, plaintiffs claim that they are statutorily entitled to benefits under Section 8,
and that the statute in tandem with the regulatory requirements “restrict[ing] the
discretion” of HACLA, Griffeth v. Detrich, 603 F.2d 118, 121 (9th Cir. 1979),
creates a property interest in Section 8 benefits to which constitutional due process
attaches. See Perry v. Sindermann, 408 U.S. 593, 599–603 (1972) (citing Bd. of
Regents v. Roth, 408 U.S. 564 (1972)) (a legitimate claim of entitlement derived
from a statute, rule, regulation, or de facto protocol gives rise to a federally
protected property interest). Moreover, because it is beyond dispute that “property
interests . . . extend well beyond actual ownership,” Roth, 408 U.S. at 571–72, the
district court erred in concluding that plaintiffs “can only [have] a property interest
in property.” See, e.g., Ressler v. Pierce, 692 F.2d 1212, 1215 (9th Cir. 1982)
(finding that applicants have a federally protected property interest in receiving
benefits); Griffeth, 603 F.2d at 121 (same).
The controlling authority establishes that Section 8 participants have a
property interest in housing benefits by virtue of their “membership in a class of
individuals whom the Section 8 program was designed to benefit.” Ressler, 692
F.2d at 1215. Because the Section 8 regulations “closely circumscribe” HACLA’s
discretion – by prohibiting HACLA from immediately implementing a reduced
3
VPS, and requiring HACLA to inform participants that a reduced VPS will be
implemented – plaintiffs’ property interest is protected against an abrupt and
unexpected change in benefits. Id.; see also Geneva Towers Tenants Org. v.
Romney, 504 F.2d 483, 490 (9th Cir. 1974) (finding that plaintiffs’ protected
property interest in lowsincome housing included an expectation “that rents will be
kept as low as economically feasible” where an entity’s discretion to increase rent
was limited and plaintiffs clearly fell within the category of intended beneficiaries
of the federal assistance program).
What process is due to protect plaintiffs’ wellssettled property interest in
their Section 8 benefits is controlled by the factors set forth in Mathews v.
Eldridge, 424 U.S. 319, 335 (1976). Upon remand, the district court shall apply
the Mathews factors to the circumstances presented here. See, e.g., Ressler, 692
F.2d at 1216–22 (evaluating the sufficiency of procedural safeguards); Geneva
Towers, 504 F.2d at 491–93 (same). We note that the district court’s conclusion
that there is “no reason to look beyond the regulatory language” to determine if
HACLA’s notice was sufficient is at odds with Mathews. Technical compliance
with regulatory procedures does not automatically satisfy due process
requirements. See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 541 (1985)
(“‘Property’ cannot be defined by the procedures provided for its deprivation.”).
4
Moreover, given that the district court recognized that “the consequences of a
sudden reduction in benefits to a Section 8 participant could be potentially
devastating,” there exists a genuine issue of material fact as to whether HACLA’s
notice sufficiently protected plaintiffs’ property interest.1
2. For similar reasons, the district court improperly granted summary
judgment on plaintiffs’ state due process claim. California courts have held that
the due process provision of the California Constitution, Cal. Const. art I, y 7, is
“identical in scope and purpose” to the Due Process Clause of the federal
Constitution. Gray v. Whitmore, 17 Cal. App. 3d 1, 20 (1971) (citing Gray v. Hall,
203 Cal. 306, 318 (1928)).
3. The district court incorrectly concluded that the notice provided by
defendants satisfied the mandatory duty in y 982.505 to provide onesyear notice
before implementing the reduced VPS. California Government Code y 815.6
permits private individuals to sue public entities where: (1) an enactment imposes a
mandatory duty; (2) it is intended to protect the individual from the type of injury
suffered; and (3) the breach of the mandatory duty was the proximate cause of the
1
The district court’s reliance on Atkins v. Parker, 472 U.S. 115 (1985), is
misplaced. There, the plaintiffs had no property interest in advance notice of
congressional action under the Food Stamp Act, and thus minimal, aftersthesfact
notice of a legislative change satisfied due process. Id. at 125–26, 129–30.
5
injury suffered. Cal. Gov’t Code y 815.6. At a minimum, the notice must be
sufficiently effective to protect housing benefits recipients from an abrupt and
unexpected reduction of benefits. It is a question of fact whether the “literal
compliance” that occurred here was sufficient to meet y 815.6’s requirements.
4. The district court’s dismissal of plaintiffs’ state law negligence claim was
erroneous because, while public entities cannot be held liable for their own
negligence, they may be held vicariously liable for the negligent acts of their
individual employees. See Cal. Gov’t Code y 815.2; Eastburn v. Reg’l Fire Prot.
Agency, 31 Cal. 4th 1175, 1179 (2003).
5. The district court did not err in dismissing plaintiffs’ y 1983 claim to
enforce the notice requirement in the regulation. Under Save Our Valley v. Sound
Transit, 335 F.3d 932 (9th Cir. 2003), agency regulations cannot create a federal
right enforceable under y 1983.
AFFIRMED in part, REVERSED in part, and REMANDED for
proceedings consistent with this disposition. Each party shall bear its own costs.
6
FILED
09s55588 Nozzi v. Housing Authority of the City of Los Angeles MAR 25 2011
MOLLY C. DWYER, CLERK
Mosman, J., concurring U.S. C O U R T O F AP PE ALS
I agree with the panel that plaintiffs have a property interest in Section 8
benefits. And I also agree that this property interest is protected by the
constitutional guarantee of due process. I write separately only to clarify the
question left open for the district court to determine on remand: What process was
due?
“[O]nce a substantive right has been created, it is the Due Process Clause
which provides the procedural minimums, and not a statute or regulation.” Geneva
Towers Tenants Org. v. Federated Mortg. Investors, 504 F.2d 483, 489 n.13 (9th
Cir. 1974). Regulations like those referenced in the memorandum disposition can
be useful in deciding whether or not there is a protected property interest. But they
are not the source of the procedural protections. For this reason the district court
was correct to find that plaintiffs have no constitutional right to a year's worth of
benefits after being told of a change in the VPS. On remand, the district court
should determine what process is due by considering the factors in Mathews v.
Eldridge, 424 U.S. 319, 335 (1976), without regard to the procedural protections in
the regulations.
In situations analogous to termination of Section 8 benefits, the procedural
protection guaranteed by the Constitution is typically presdeprivation notice and a
hearing. See, e.g., Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 12–15
(1978) (requiring notice of opportunity to be heard before disconnecting municipal
utility service); Mathews, 424 U.S. at 339–40 (finding notice and administrative
procedures used before discontinuing social security disability benefits
constitutionally adequate); Perry v. Sindermann, 408 U.S. 593, 603 (1972)
(requiring notice and an opportunity to be heard before terminating employment);
Bell v. Burson, 402 U.S. 535 (1971) (requiring notice and an opportunity to be
heard before a driver’s license can be revoked); Goldberg v. Kelly, 397 U.S. 254,
264 (1970) (requiring notice and a hearing to discontinue welfare benefits). I am
unaware of any public benefit case requiring more than presdeprivation notice and
a hearing.
At oral argument plaintiff’s counsel conceded that plaintiffs who were
actually going to have Section 8 benefits reduced were granted notice and a
hearing before any reduction in those benefits. Because this was merely a
representation at oral argument, remand is the proper remedy to address this issue
of material fact. 1 If the district court finds that adequate notice and a hearing were
offered to every individual prior to any actual reduction in benefits, the district
court may find as a matter of law that due process was satisfied.
1
But see Hilao v. Marcos, 393 F.3d 987, 993 (9th Cir. 2004) (“A party . . . is bound by
concessions made in its brief or at oral argument.”).