Crooks v. Housing Authority of the City of L.A. ( 2019 )

Filed 10/3/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
ADRIANE CROOKS, B291068
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BS166478)
v.
HOUSING AUTHORITY OF THE
CITY OF LOS ANGELES,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Amy D. Hogue, Judge. Affirmed as modified
and remanded with directions.
Neighborhood Legal Services of Los Angeles County, David
Pallack, Lena Silver and Andres Rapoport for Plaintiff and
Appellant.
Joseph L. Stark & Associates, Joseph L. Stark and John M.
Bergerson for Defendant and Respondent.
_________________________________
Adriane Crooks appeals from a judgment granting in part
and denying in part her motion for a writ of administrative
mandamus. Crooks sought a writ from the superior court
directing respondent Housing Authority of the City of Los
Angeles (Housing Authority) to reinstate her to the federally
funded “Section 8” program for rental assistance for low-income
families (the Program). (See 42 U.S.C. § 1437f.) Crooks falsely
stated that she was single rather than married on two annual
eligibility questionnaires. Following a hearing, a Housing
Authority hearing officer found that Crooks engaged in fraud,
terminated her participation in the Program, banned her from
participating in any federal housing program for a period of
10 years, and ordered her to repay assistance payments she had
received in the amount of $21,378.
The trial court reversed the hearing officer’s ruling in part.
The court found that Crooks’s false statements were not
fraudulent, but that they were nevertheless sufficient grounds to
justify her termination from the Program under regulations that
require participants to provide truthful information to the
Housing Authority. Because Crooks’s conduct was not
fraudulent, the court reversed the hearing officer’s 10-year ban
and his order requiring Crooks to repay all the benefits she
received during the violation period.
Crooks argues that the trial court did not correctly apply
the law to the facts. She argues that the Housing Authority
abused its discretion in terminating Crooks’s participation in the
Program in the absence of any fraud. She also argues that the
Housing Authority did not have the discretion to terminate
Crooks’s participation in the Program based on a misreport that
2
did not actually have any effect on her benefits. She argues that
she should therefore be reinstated to the Program.
We agree with Crooks that the Housing Authority may not
terminate a participant from the Program for an immaterial
misreport. However, a false answer to a question about marital
status does not fall within that category. A Program participant’s
marital status has a direct and logical relationship to questions of
income and occupancy, which are key issues in assessing
eligibility for a subsidy.
We also affirm the trial court’s finding that Crooks’s false
statements support her termination from the Program even in
the absence of fraudulent intent. The facts show that Crooks
made a knowingly false statement about her marital status.
That was a conscious breach of her obligation to provide true and
complete information requested by the Housing Authority. The
Housing Authority had the discretion to terminate her from the
Program based upon such conduct.
We therefore affirm the trial court’s judgment finding that
adequate grounds existed to terminate Crooks from the Program.
However, there is another procedural step to consider before
Crooks’s benefits under the Program are actually terminated.
The governing regulations provide that, in determining
whether to terminate assistance, public housing agencies such as
the Housing Authority “may” consider all relevant circumstances,
including the seriousness of the case and the effect of termination
on other family members. (24 C.F.R. § 982.552(c)(2)(i) (2019).)
The hearing officer’s written ruling does not contain any
indication that he made a decision whether to exercise this
discretion. Moreover, by reversing the hearing officer’s fraud
finding, the trial court’s decision significantly affected the
3
seriousness of Crooks’s violations. We therefore will direct the
trial court to remand the case to the Housing Authority to
consider whether to exercise its discretion to take into account
other circumstances in determining the appropriate remedy for
Crooks’s violations.
BACKGROUND
1. Crooks’s Violations
Crooks received rental assistance benefits under the
Program from 1999 until her termination from the Program in
2016. She lived in a subsidized unit with her minor son.
For the first 15 years she was in the Program she was
unmarried. In 2014 she married Nathaniel Wills. Wills died on
December 15, 2015, following a motorcycle accident.
On December 10, 2014, and December 9, 2015, Crooks filled
out annual eligibility questionnaires that the Housing Authority
provided. The questionnaires included a question about marital
status. The question asked Crooks to check the applicable box for
“Married,” “Single,” “Widow(er),” or “Divorced.” On both
occasions Crooks checked the box for “Single.”
Based on a referral about a possible violation, the Housing
Authority investigated Crooks’s marital status. The resulting
investigative report concluded that: (1) Crooks married Wills in
June 2014; (2) Crooks failed to provide true and correct
information about her marital status on the 2014 and 2015
questionnaires; (3) Wills’s death certificate listed Crooks’s
address; (4) an “Accurint” report associated Wills with Crooks’s
address; and (5) a “Utility Locator” report indicated that Wills
had made 10 utility payments at Crooks’s address.
The Housing Authority notified Crooks that it was
terminating her from the Program on the grounds of: (1) fraud
4
and (2) failure to report her marriage to Wills, who “was residing
at the Section 8 unit.” Crooks requested a hearing.
2. The Administrative Hearing
The hearing took place on August 16, 2016. Following the
hearing, the hearing officer found “insufficient evidence to
support a finding that [Wills] resided at the assisted residence as
an unauthorized tenant.” However, he also found that Crooks
breached her family obligations under the Program by failing to
disclose her true marital status on the eligibility questionnaires.
The hearing officer found that this was a willful failure that
“constitutes fraud.” He ordered Crooks’s termination from the
Program as of September 30, 2016.
Applying the sanctions for fraudulent conduct set out in the
Housing Authority’s administrative plan, the hearing officer
ordered Crooks to repay the Housing Authority $21,378,
representing the benefits she received from December 10, 2014,
through the “end of participation.” He also banned Crooks from
participating in any federally funded housing program for
10 years.
3. Crooks’s Petition
Crooks filed her petition for a writ of administrative
mandate (Petition) on November 23, 2016, and the matter was
heard on March 21, 2018. In a written ruling on March 23, 2018,
the trial court granted the Petition in part and denied it in part.
The trial court concluded that the weight of the evidence
did not support the hearing officer’s fraud finding. The court
found that the evidence did not show that Crooks “had an intent
to deceive” the Housing Authority.
However, the court also concluded that Crooks’s “failure to
disclose her marital status” provided a separate ground for her
5
termination from the Program because it constituted a violation
of a reporting obligation imposed by the governing regulations.
The court therefore upheld her termination.
Because the evidence did not support a finding of fraud, the
trial court set aside the hearing officer’s 10-year participation
ban and his order that Crooks repay the benefits she had
received. The court remanded the case to the Housing Authority
“to determine what amounts, if any, [the Housing Authority]
overpaid as a result of [Crooks’s] failure to disclose her change in
marital status.” The trial court entered judgment accordingly on
April 16, 2018.
DISCUSSION
1. Standard of Review
In ruling on a petition for a writ of administrative mandate,
a trial court reviews the administrative record to determine:
(1) whether the administrative agency exceeded its jurisdiction;
(2) whether there was a fair trial; and (3) whether there was any
prejudicial abuse of discretion. (Code Civ. Proc., § 1094.5, subd.
(b).) An abuse of discretion “is established if the respondent has
not proceeded in the manner required by law, the order or
decision is not supported by the findings, or the findings are not
supported by the evidence.” (Ibid.)
In reviewing an agency’s factual findings in cases (such as
this) involving a fundamental right, a trial court “ ‘exercises its
independent judgment upon the evidence.’ ” (Fukuda v. City of
Angels (1999) 20 Cal. 4th 805, 816, fn. 8; Johnson v. Housing
Authority of City of Oakland (2019) 38 Cal.App.5th 603, 612 (City
of Oakland) [a decision terminating public assistance benefits
affects fundamental vested rights].) This means that a trial court
determines whether the agency’s findings are supported by the
6
“weight of the evidence.” (Code Civ. Proc., § 1094.5, subd. (c);
Strumsky v. San Diego County Employees Retirement Assn.
(1974) 11 Cal. 3d 28, 32.) On appeal, the appellate court reviews
the trial court’s findings for substantial evidence. (Bixby v.
Pierno (1971) 4 Cal. 3d 130, 143–144, fn. 10; Alberda v. Board of
Retirement of Fresno County Employees’ Retirement Assn. (2013)
214 Cal. App. 4th 426, 433–434.)
Here, neither party disputes the trial court’s factual
findings (although, as discussed below, the parties have different
interpretations of those findings). Rather, the parties dispute
whether the trial court applied the correct legal standard in
deciding whether the Housing Authority abused its discretion.
Because this raises a legal issue, we review it de novo. (MHC
Operating Limited Partnership v. City of San Jose (2003) 106
Cal. App. 4th 204, 219.)
2. Evidence of Crooks’s Intent
Crooks asserts that “[t]here is no dispute regarding the
facts as established by the trial court.” The Housing Authority
similarly asserts that “[t]here is no fact in dispute in this matter.”
Yet the parties characterize the trial court’s findings in
very different ways. Crooks argues that the trial court erred in
upholding Crooks’s termination from the Program in light of the
court’s determination that “Crooks’s misreport was only an
unintentional and immaterial ‘error.’ ” The Housing Authority
argues that Crooks “intentionally and deliberately” reported
incorrect information concerning her marital status. Before
considering the legal significance of the trial court’s findings, it is
therefore important to articulate a clear interpretation of what
the trial court actually found about Crooks’s state of mind.
7
The trial court’s description of its findings shows that it
concluded Crooks did not misreport her marital status as a result
of a desire to mislead the Housing Authority. Rather, Crooks
planned to disclose her marital status eventually but was unable
to do so in the manner that she thought was necessary. The trial
court cited Crooks’s testimony that she thought that she and
Wills had to “ ‘come in . . . together’ ” to the Housing Authority to
report her change in marital status. Crooks testified that they
were unable to do so before Wills passed away because Wills’s
mother became very ill right after he and Crooks were married.
The court characterized Crooks’s state of mind as a “ ‘lack of
understanding’ ” rather than fraud or abuse.
The trial court also found that Crooks did not misreport her
marital status with the purpose of obtaining a greater benefit
than that to which she was entitled. The court said so directly in
explaining that “there is no evidence [Crooks] intentionally
concealed her change in marital status in order to obtain a larger
subsidy.”
On the other hand, the trial court did not find that Crooks
mistakenly checked the wrong box on the two forms asking for
her marital status or that she was somehow confused by the
question. Rather, the trial court concluded that Crooks
understood she was providing incorrect information about her
marital status to the Housing Authority. That is shown by the
court’s inference that Crooks decided not to disclose her married
status on the questionnaire out of concern that merely “ticking a
box” would cause unwarranted action against her.
The trial court’s conclusion that Crooks knowingly provided
false information about her marital status is also confirmed by
colloquy during oral argument on Crooks’s Petition. During the
8
argument, the trial court asked a question about Crooks’s intent:
“And she’s looking at the form, and she has to make a decision:
Do I tick the box or do I not tick the box. [¶] And if her
testimony is I didn’t tick the box to say married because I might
get in trouble, don’t I have an intent—evidence of intent to
deceive?” Crooks’s counsel responded first by acknowledging, “I
think there’s no dispute that she intentionally misreported the
information.” He then offered an interpretation of Crooks’s
intent that the trial court ultimately accepted in its written
decision. He argued that Crooks “plausibly . . . might have
thought” that the Housing Authority would erroneously attempt
to terminate her from the Program based on her questionnaire
responses, as shown by the Housing Authority’s actual
unsuccessful attempt to terminate her participation in the
Program on the unproven ground that Crooks’s husband lived
with her. In a later discussion about the meaning of this
explanation, the trial court described its understanding: “I knew
what you meant”; “You’re not arguing she accidentally—” “—her
hand slipped and she hit the wrong box”; “No, that was a choice
she made.”
In sum, the trial court found that Crooks knowingly
checked the wrong box on the questionnaire in response to a
question about her marital status but did not do so with the goal
of deceiving the Housing Authority to obtain a greater benefit.
Stated in terms of legal conclusions, Crooks made a knowing false
statement, but she did not intend to defraud. The question is
whether this conduct justifies her dismissal from the Program
under the governing regulations.
9
3. The Housing Authority Had the Discretion to
Dismiss Crooks from the Program for Her False
Statement About Her Martial Status
A. The regulatory scheme
Title 42 United States Code section 1437f authorizes
housing assistance payments “[f]or the purpose of aiding low-
income families in obtaining a decent place to live and of
promoting economically mixed housing.” (42 U.S.C. § 1437f(a).)
The rental voucher program that this section establishes (the
Program) is funded by the federal government but administered
by local public housing agencies (PHA’s). (See 42 U.S.C.
§ 1437f(b)(1) & (o). The Housing Authority is the local PHA
responsible for administering the Program in the City of Los
Angeles.
The United States Department of Housing and Urban
Development (HUD) is the federal agency responsible for the
Program. HUD has issued various regulations governing the
PHA’s administration of the Program, found in part 982 of
title 24 of the Code of Federal Regulations (2019).1
Part 982.552 addresses reasons for denying assistance or
terminating participation in the Program. Part 982.552(c)(1)
identifies grounds on which a PHA “may” terminate
participation. The grounds include “fraud, bribery, or any other
corrupt or criminal act in connection with any Federal housing
program.” (§ 982.552(c)(1)(iv) (2019).) The grounds also include
violation of “any family obligations under the program.”
(§ 982.552(c)(1)(i) (2019).) These family obligations are
1 Unless otherwise stated, subsequent references to “part”
refer to the governing regulations.
10
separately identified in part 982.551 and include the obligation to
supply truthful information to the PHA. (§ 982.551(b)(4) (2019).)
B. The Housing Authority may terminate a
participant from the Program for an
intentional and material false statement
Crooks argues that the regulatory scheme does not permit
the Housing Authority to terminate a family from the Program
for a mere “immaterial and technical misreport.” She claims that
termination may be based only on a misreport that: (1) is made
with fraudulent intent and (2) involves information that is
material to a participant’s benefits.
We agree that the governing law, including the regulations,
Congress’s authorizing legislation, and the law concerning agency
discretion, requires some material violation of a family’s
reporting obligations to justify the severe sanction of termination
from the Program.2 However, providing false information about
marital status is such a material violation. And we reject
Crooks’s argument that a PHA has no discretion to terminate a
participant from the Program for an intentional statement that
does not amount to fraud.3
2 The Housing Authority’s brief does not directly address
the question of whether a reporting violation must be material to
justify termination. The Housing Authority argues that Crooks’s
marital status was in fact “material to the evaluation of her
eligibility and benefits.” However, it also argues that “any
violation of family obligations set forth in Title 24 of the CFR
may serve as grounds for termination of participation.”
3 Because Crooks made a knowingly false statement, we
need not consider whether an unintentional misreport can ever
justify termination.
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i. Materiality
(1) The governing regulations
include a materiality element
A number of considerations support the conclusion that a
participant may be terminated from the Program only for a
material false statement. First, the reporting regulations
themselves suggest that a family’s reporting obligations apply to
information that is material to a PHA’s function. Subsection
(b)(1) of part 982.551 requires a family to provide information
that “the PHA or HUD determines is necessary in the
administration of the program.” (§ 982.551(b)(1) (2019), italics
added.) And subsection (b)(2) imposes an obligation to provide
information that the PHA requests for use in regularly scheduled
and interim examinations of “family income and composition in
accordance with HUD requirements.” (§ 982.551(b)(2) (2019).)
Thus, these provisions link a participant’s reporting obligation to
specific information that is important for an agency’s function.
Subsection (b)(4) of part 982.551 does require that “[a]ny
information” a family supplies must be “true and complete.”
However, that subsection is grouped under the general topic of
“[s]upplying required information” and follows other subsections
describing such “required information.” (§ 982.551(b) (2019),
italics added.) The subsection as a whole therefore supports the
conclusion that the regulation is most concerned about
information that is significant for the administration of the
Program.
Second, the Program’s authorizing legislation also focuses
on a participant’s obligation to provide information that is
important for the Program’s purpose. Title 42 United States
Code section 1437f(o)(5)(B) mandates annual reviews of the
12
“family income of each family receiving assistance under this
subsection.” It requires that a PHA “establish procedures that
are appropriate and necessary to ensure that income data
provided to the agency and owners by families applying for or
receiving assistance from the agency is complete and accurate.”
(Ibid., italics added.) The focus on information that is
“appropriate and necessary” for determining income reflects a
concern for the truthfulness of information that is material to
determining a participant’s eligibility for a particular subsidy.
Third, the directive in part 982.551 that a PHA “may”
terminate program assistance based upon the violation of a
family obligation to provide truthful information provides PHA’s
with discretion in making that decision. Under both California
and federal law, administrative agencies tasked with
discretionary decisions are generally expected to exercise that
discretion within legal limits. (See Skelly v. State Personnel Bd.
(1975) 15 Cal. 3d 194, 217–218 (Skelly) [State Personnel Board
abused its discretion in upholding the petitioner’s dismissal from
employment where the sanction of dismissal was “excessive and
disproportionate to his alleged wrong”]; Clow v. U.S. Dept. of
Housing & Urban Dev. (9th Cir. 1991) 948 F.2d 614, 617 [court
reviewed HUD decision to deny entry into a mortgage assistance
program to determine if it was “ ‘ “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law” ’ ”],
quoting Citizens to Protect Overton Park, Inc. v. Volpe (1971) 401
U.S. 402, 416; 5 U.S.C. § 706(2)(A).) Imposing the severe
sanction of dismissal from the Program for an inconsequential
misreport could easily be challenged as an abuse of discretion. It
is therefore unlikely that part 982.552(c)(1) was intended to
13
provide PHA’s with unlimited discretion to terminate assistance
based even on immaterial violations.
Finally, and related to the prior point, the consequences of
failing to infer a materiality element in part 982.552(c)(1) support
the conclusion that such an element exists. If the governing
regulations are construed to permit termination from the
Program for a false statement about any information a PHA
requests, no matter how trivial, those regulations could be
applied so broadly as to threaten the due process principle of fair
notice. (See Sessions v. Dimaya (2018) __ U.S. __, 138 S. Ct. 1204,
1225 (conc. & dis. opn. of Gorsuch, J. [“Perhaps the most basic of
due process’s customary protections is the demand of fair
notice”].)4 For example, the form on which Crooks misreported
her marital status asks for a variety of background information.
If any false statement on that form could support termination
from the Program, a participant could be denied benefits for
failing to report truthful information about, for example, his or
her correct telephone number or his or her highest level of
education. Questions that a PHA official might ask during an
eligibility interview might be even more wide-ranging.
Interpreting the regulations to include a materiality element
avoids the potential constitutional issue of permitting a PHA to
terminate a participant from the Program for a false answer to
4 As the Supreme Court has explained, “[T]he void for
vagueness doctrine addresses at least two connected but discrete
due process concerns: first, that regulated parties should know
what is required of them so they may act accordingly; second,
precision and guidance are necessary so that those enforcing the
law do not act in an arbitrary or discriminatory way.” (FCC v.
Fox Television Stations, Inc. (2012) 567 U.S. 239, 253.)
14
any question the PHA might choose to ask. (Cf. People v. Morera-
Munoz (2016) 5 Cal.App.5th 838, 855–856 (Morera-Munoz)
[inferring a materiality requirement in a Vehicle Code provision
to avoid a constitutional issue].)
(2) Definition of materiality
While we agree that the Housing Authority could terminate
Crooks’s participation in the Program only for a material false
statement, we disagree with Crooks on the definition of
materiality. Crooks argues that, to be material, a false statement
must actually affect a participant’s benefits. Crooks relies on the
principle that a contract may be terminated only for a material
breach that actually causes harm to the other contracting party.
(See Boston LLC v. Juarez (2016) 245 Cal. App. 4th 75, 87.)
Crooks claims that because Crooks’s false statement about her
marital status did not actually affect her benefits, it was not
material.5
However, the issue of materiality arises here, not in the
context of a contract between private parties for their mutual
benefit, but in the context of eligibility for a type of public
assistance. The prohibition against false statements does not
5 The trial court did not foreclose the possibility that
Crooks’s false statements had an effect on her benefit. That is
clear from the fact that the court remanded the case to the
Housing Authority to “determine what amounts, if any, [the
Housing Authority] overpaid as a result of [Crooks’s] failure to
disclose her change in marital status.” The trial court simply
decided that the Housing Authority had not “attempted to
calculate the amount of housing assistance overpaid by [the
Housing Authority]” and had failed to introduce competent
evidence supporting its claim that Crooks’s husband had “an
income stream from which he paid utilities at [Crooks’s] unit.”
15
simply protect the reasonable expectation of the parties to a
contract; it protects the integrity of the Program. Moreover, the
regulations in question are federal provisions intended to govern
the operation of a federally funded Program. The most relevant
definition of materiality is therefore the definition that generally
applies to federal statutes addressing false statements made to
government agencies.
Under that definition, a “concealment or misrepresentation
is material if it ‘has a natural tendency to influence, or was
capable of influencing, the decision of’ the decisionmaking body to
which it was addressed.” (Kungys v. United States (1988) 485
U.S. 759, 770, citing Weinstock v. United States (D.C. Cir. 1956)
231 F.2d 699, 701–702.) To be material, a statement need not
have had actual influence. Rather, “ ‘[t]he false statement must
simply have the capacity to impair or pervert the functioning of a
government agency.’ ” (Morera-Munoz, supra, 5 Cal.App.5th at
pp. 858–859, quoting U.S. v. Boffil-Rivera (11th Cir. 2010) 607
F.3d 736, 741–742.)
As the court noted in Morera-Munoz, that standard of
materiality is similar to the standard applied under California
law in other contexts, including fraud in the inducement of a
contract and perjury. (Morera-Munoz, supra, 5 Cal.App.5th at
pp. 858–859). In Morera-Munoz, the court relied upon the federal
standard of materiality in defining the materiality element
applicable to a Vehicle Code provision that prohibited making
false statements to a police officer. Similarly, here, we conclude
that the generally applied federal standard is appropriate. The
standard is an objective one that focuses on whether the
statement in question had the potential to affect the decision of a
16
government agency, not whether it actually did so. (See Morera-
Munoz, at p. 859.)
(3) A false statement about marital
status is material
A false statement about marital status relates directly to a
core function of a PHA to determine and verify a Program
participant’s eligibility and benefit amount. A PHA’s mandated
annual examination focuses on “family income and composition.”
(§ 982.516(a)(1) (2019).) A participant’s marital status does not
necessarily affect his or her income or the number and identity of
persons living in his or her residence. But it might. A spouse is
another potential source of family income and another person
who might be living in the residence. Marital status is therefore
within the scope of topics that could influence a PHA’s benefits
decision.
Moreover, as the Housing Authority points out, if it had
known Crooks’s true marital status, the knowledge might have
prompted earlier investigation. Whether such an investigation
would ultimately have led to a change in Crooks’s benefits does
not matter in determining whether Crooks’s false statement was
material. A false statement about marital status is within the
category of violations that have the “ ‘capacity to impair or
pervert the functioning of a government agency.’ ” (Morera-
Munoz, supra, 5 Cal.App.5th at pp. 858–859, quoting U.S. v.
Boffil-Rivera, supra, 607 F.3d at pp. 741–742.) It is therefore
material.
ii. Intent
Crooks argues that the regulatory scheme supports her
claim that only fraudulent statements can support termination
from the Program. We disagree. The regulations provide a PHA
17
with the discretion to terminate a participant from the Program
for knowingly false statements, even if the participant did not
make the statements with the fraudulent intent to obtain
unauthorized benefits.
Crooks argues that part 982.552 distinguishes between
circumstances in which a PHA “must” terminate participation in
the Program and circumstances in which it “may” do so. (See
§ 982.552(b) & (c) (2019).) That difference is of no consequence
here because both the violation of a family obligation and fraud
are included within the provision that permits, but does not
require, termination. (§ 982.552(c)(1)(i) & (iv) (2019).)
Crooks also argues that the Housing Choice Voucher
Program Guidebook prepared by HUD distinguishes between
“errors or omissions” and “fraud and abuse.” (HUD, Off. of Public
and Indian Housing, Voucher Program Guidebook, Housing
Choice (Apr. 2001) Program Integrity, ch. 22, pp. 22-1 – 22.2
(Guidebook).) Crooks claims that because the trial court found
that Crooks’s false statements amounted to conduct that the
Guidebook categorizes as an “error/omission” rather than
“fraud/abuse,” the trial court should have concluded that there
were no grounds for termination.
Preliminarily, Crooks does not provide any support for her
claim that the Housing Authority was obligated to follow the
directions in the Guidebook rather than independently interpret
the governing regulations. Title 24 Code of Federal Regulations
part 982.52(a) (2019) provides that a PHA “must comply with
HUD regulations and other HUD requirements for the program.
HUD requirements are issued by HUD headquarters, as
regulations, Federal Register notices or other binding program
18
directives.” The Guidebook is not a regulation, and Crooks does
not address whether it is a “binding program directive.”6
In any event, even if the Guidebook establishes policy, it
does not support Crooks’s position. Crooks cites a portion of the
Guidebook that discusses “corrective action” when an error or
omission results in a family payment that is incorrectly set too
low (resulting in an overpayment by the PHA). The Guidebook
explains that, when the family is at fault, the family must repay
the PHA and, if it fails to do so, “the PHA may terminate the
family’s assistance.” (Guidebook, supra, at p. 22-12.) But the
Guidebook does not state that an error or omission can justify
termination from the Program only if a participant is first given
the opportunity to repay any overpayment. Such a requirement
would be inconsistent with the governing regulation, which states
that a PHA “may at any time deny program assistance for an
applicant, or terminate program assistance for a participant, for
any of the following grounds,” which include violation of a family
obligation. (§ 982.552(c)(1) (2019), italics added.)
Such a requirement would also be inconsistent with the
fact that the breach of a repayment agreement is a separate
ground for termination from the Program under part 982.552.
(See § 982.552(c)(1)(vii) (2019).) If the breach of a reporting
obligation could cause termination from the Program only if it
also met some other ground for termination (such as fraud or
6 We note that HUD apparently is preparing a new version
of a guidebook that specifically uses the term “must” to designate
“when a policy must be adopted as required by HUD.” (See
[as of Sept. 20, 2019], archived at
.)
19
breach of a repayment agreement), there would be no need for the
separate provision permitting termination for violation of a
reporting obligation.
The Guidebook ultimately does not mandate any particular
sanctions for errors and omissions or fraud but simply points out
that the distinction is important and directs that PHA’s
“carefully analyze the unique circumstances of the case to
determine how to best handle the situation.” (Guidebook, supra,
at p. 22-1.) The Guidebook also emphasizes the importance of
distinguishing between “unintentional and intentional
misreporting.” (Ibid.) However, it notes that an error or
omission “may be intentional or unintentional” and leaves to the
PHA’s the task of establishing “policies and procedures for fair
and consistent treatment of cases of intentional misreporting,
abuse, and fraud.” (Ibid.)
The Housing Authority has established such policies and
procedures in its “Section 8 Administrative Plan.” While that
plan distinguishes between cases of fraud and violation of family
obligations, it does not state that a participant may be
terminated from the Program only for fraud. Rather, it provides
that the Housing Authority “may deny or terminate housing
assistance” for the failure to meet family obligations, but that it
“terminates assistance” if any family member commits “fraud,
bribery, or any other corrupt or criminal act in connection with
any federal housing program.” (Housing Authority, City of Los
Angeles, Section 8 Administrative Plan (Oct. 2016) Terminations
and Denials, ch. 13, p. 13-12, italics added.)
The Housing Authority’s policy is consistent with the fact
that, as discussed above, part 982.552 establishes separate
provisions for termination from the Program for fraud and for
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violation of a family obligation (including the family reporting
requirements). There would be no need for the latter if
termination could result only from proof of the former.
Crooks draws the opposite conclusion from these separate
provisions. Citing McClarty v. Greene Metropolitan Housing
Authority (2011) 196 Ohio App. 3d 256 [963 N.E.2d 182], Crooks
argues that permitting termination from the Program for
misrepresentations not amounting to fraud would make the fraud
provision superfluous. The conclusion does not follow. Rather, it
seems likely that the separate provisions in part 982.552 for
fraud and for violation of family obligations were intended to
recognize the difference in seriousness between the two types of
offenses, but that a participant may be terminated from the
Program in appropriate circumstances for either violation.
Indeed, that is what the Housing Authority’s policy has done by
stating that it “terminates” Program participation for fraud but
that it “may” terminate participation for breach of a family
obligation. That interpretation is also most consistent with the
introductory language of part 982.552(c)(1), which states that a
PHA may terminate program assistance for “any of the following
grounds,” which include both violation of a family obligation and
fraud. (Italics added.)
4. The Housing Authority Did Not Abuse Its
Discretion in Upholding Crooks’s Termination
from the Program for Her Material False
Statements
As mentioned, a court may grant a petition for a writ of
mandate to set aside a disciplinary decision by a public agency
that is “excessive and disproportionate to [the] alleged wrong.”
(Skelly, supra, 15 Cal.3d at p. 217.) Crooks argues that the
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Housing Authority’s decision to terminate her from the Program
falls within that category.
For the reasons discussed above, we reject the argument.
Crook’s false statements were material, and she made them while
knowing that they were false. Her conduct therefore falls within
the range of the Housing Authority’s discretion to order
termination from the Program.
5. The Housing Authority Must Decide Whether to
Exercise Its Discretion to Consider the
Circumstances Identified in Part
982.552(c)(2)(i)
Part 982.552(c)(2)(i) provides that, in determining whether
to terminate assistance because of a family member’s action or
failure to act, a PHA “may consider all relevant circumstances
such as the seriousness of the case, the extent of participation or
culpability of individual family members, mitigating
circumstances related to the disability of a family member, and
the effects of denial or termination of assistance on other family
members who were not involved in the action or failure.” There
is no indication in the administrative hearing officer’s decision
here that he considered these circumstances before ordering that
Crooks be terminated from the Program.
Relying on several cases from Illinois, Crooks argues that,
despite the discretionary language of part 982.552(c)(2)(i), its
direction that a PHA “may” consider all the relevant
circumstances is actually mandatory. Crooks argues that, if
there is no such requirement, then “[part] 982.552’s distinction
between mandatory and discretionary terminations becomes
meaningless.”
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We do not agree. The provision at issue appears in
subsection (c) of part 982.552, which addresses circumstances in
which a PHA “may” terminate program assistance. There is no
inconsistency in directing that, along with the exercise of a PHA’s
discretion in determining whether to terminate a participant
from the Program on one of the grounds listed in subsection (c),
the PHA “may” consider the factors identified in subsection
(c)(2)(i). We find the reasoning of the Iowa Supreme Court
persuasive in rejecting an identical argument to the one Crooks
makes here: “If the PHA ‘may’ consider mitigating factors, then
it may consider all of them, some of them, or none of them. This
does not render the distinction between mandatory and
discretionary terminations ‘meaningless’ because the PHA
retains the discretion not to terminate.” (Bowman v. City of
Des Moines Municipal Housing Agency (Iowa S.Ct. 2011) 805
N.W.2d 790, 799, fn. 7.)
However, as Crooks points out, the failure to recognize the
authority to exercise discretion can itself be grounds for reversal.
(Fletcher v. Superior Court (2002) 100 Cal. App. 4th 386, 392; cf.
City of Oakland, supra, 38 Cal.App.5th at p. 615 [“a ‘hearing
officer’s failure to make any findings, coupled with his failure to
indicate any awareness that he was explicitly authorized by HUD
to exercise his discretion to take into account relevant
circumstances’ is contrary to established law”], citing Carter v.
Lynn Housing Authority (2008) 450 Mass. 626 [880 N.E.2d 778,
786–787].) There is nothing in the hearing officer’s decision
indicating that he either exercised his discretion to consider the
factors identified in part 982.552(c)(2)(i) or that he was aware of
his discretion to consider those factors and chose not to do so. As
important, the hearing officer decided that Crooks’s conduct was
23
fraudulent. The trial court’s ruling, which the Housing Authority
has not appealed, overturned that finding. Thus, the legal
significance of the facts that the hearing officer considered has
changed significantly since he ruled.
We will therefore direct the trial court to remand the case
to the Housing Authority for it to decide whether to exercise its
discretion to consider the factors identified in part
982.552(c)(2)(i). Consistent with the discussion above, the
Housing Authority is not required to consider those factors, but it
should make the decision whether to do so based on the current
record.
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DISPOSITION
The trial court’s judgment is modified to direct that, on
remand of the case to the Housing Authority, the Housing
Authority must decide whether to exercise its discretion to
consider the factors identified in title 24 Code of Federal
Regulations part 982.552(c)(2)(i) (2019) before determining if
Crooks’s participation in the Section 8 rental assistance program
should be terminated. In all other respects, the judgment is
affirmed, including the trial court’s finding that “failing to
disclose the change in Petitioner’s marital status was proper
grounds for termination under Section 13.8.5 of [the Housing
Authority’s] Administrative Plan.” In the interests of justice, the
parties shall bear their own costs on appeal.
CERTIFIED FOR PUBLICATION.
LUI, P. J.
We concur:
CHAVEZ, J.
HOFFSTADT, J.
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