UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

Transcription

1 LEGAL SERVICES OF NORTHERN CALIFORNIA MONA TAWATAO, State Bar No. STEPHEN E. GOLDBERG, State Bar No. JONATHAN GIVNER, State Bar No. 000 th Street Sacramento, California Telephone: () 1- Facsimile: () 1- Attorneys for Plaintiff, Wonda Hicks UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA WONDA HICKS, -vs- Plaintiff, HELMUT MARTIN, dba H.C.M INVESTMENTS, and DOES 1 through XX, Inclusive, Defendants. CASE NO. COMPLAINT I. INTRODUCTION 1. Plaintiff Wonda Hicks (Plaintiff or Ms. Hicks) is a resident at an apartment complex known as Country Village Apartments located in Carmichael, California. She resides in one of the ten units of total units at Country Village that receives a rental subsidy from HUD known as Aproject-based Section.@ Ms. Hicks, a low-income disabled woman, and her minor son, face imminent danger of losing their home through eviction. Defendant owner of Country Village, Helmut Martin, (Defendant or Mr. Martin) has indicated in writing that he plans to terminate Ms. Hicks= tenancy as part of his unlawful attempt to Aopt-out@ of the Section contract. Mr. Martin refuses to accept the enhanced Section voucher authorized by Congress to enable tenants residing in developments with project-based Section - 1 -

2 assistance who wish to remain in those developments when owners decide to leave or Aopt of the project-based Section program.. Defendant's actions violate the United States Housing Act, U.S.C. '' et seq. as amended, the National Housing Act, U.S.C. '' 01 et seq.; the Multifamily Assisted Housing Reform and Affordability Act of as amended (codified at U.S.C. ' f) and a federal contract. Defendant=s actions also violate California Government Code Sections. and California Business and Professions Code Sections 0 et seq. Plaintiff seeks declaratory and injunctive relief: a) requiring the Defendant/owner to honor her right to remain in her rental unit and accept Aenhanced voucher@ Section assistance at the subject apartment complex as required by law, b) prohibiting Ms. Hicks= eviction, and c) requiring compliance with applicable notice procedures. Plaintiff also seeks compensatory damages for Defendant=s unlawful conduct. II. JURISDICTION. This Court has jurisdiction over this action under U.S.C. '' 1,, and.. This Court may issue declaratory and injunctive relief under U.S.C. '' 01 and 0 (Declaratory Judgment Act) and Rule of the Federal Rules of Civil Procedure.. Plaintiff=s claims arise under the United States Housing Act, U.S.C. '' et seq as amended; the National Housing Act, U.S.C. '' 01 et seq.; and the Multifamily Assisted Housing Reform and Affordability Act of as amended. The Court has pendent or supplemental jurisdiction over Plaintiff=s state statutory claims under California Government Code Sec.. and. and California Business and Professions Code sections 0, et seq, as said claims are derived from a common nucleus of facts common to the federal claims, i.e., Defendant=s conduct in relation to his efforts to opt-out of the project-based Section contract at Country Village Apartments, and would be expected to be resolved in one judicial proceeding. - -

3 III. PARTIES. Plaintiff Wonda Hicks (Plaintiff or Ms. Hicks) is a low-income disabled woman. She and her minor son have resided at Country Village Apartments since June,.. Defendant Helmut Martin (Defendant or owner) is the owner of the real property known as Country Village Apartments located at 1 Fair Oaks Boulevard in Carmichael, California and, Plaintiff alleges on information and belief, does business under the name H.C.M. Investments. Defendant=s principal place of business is in Sacramento County, California.. Defendants Does I through XX, inclusive, are sued herein under fictitious names. Their true names and capacities are unknown to Plaintiff. When their true names and capacities are ascertained, Plaintiff will amend this by inserting their true names and capacities herein. Plaintiff is informed and believes, and thereon alleges, that each of the fictitiously named Defendants is responsible in some manner for the occurrences herein alleged, and that Plaintiff=s damages herein alleged were proximately caused by those Defendants.. Plaintiff is informed and believes, and thereon alleges that, at all times herein mentioned, each of the Defendants was the agent and employee of each of the remaining Defendants, and in doing the things hereinafter alleged, were acting within the course and scope of such agency and employment. IV. STATUTORY AND REGULATORY FRAMEWORK Federal Claims. In, Congress enacted the rental assistance program known as as the primary effort of the federal government to further the central goal of the federal Housing Acts -- Athe realization as soon as feasible of the goal of a decent home and suitable living environment for every American family.@ U.S.C. '' 1, 1(a); U.S.C. ' 01t.. Although Section of the United States Housing Act, U.S.C. 'f, has authorized over the years a number of different subprograms, this program of federal rental assistance to private landlords on behalf of low-income families has two basic forms: Aproject-based@ Section assistance in - -

4 which the subsidy is attached to the structure and or Section assistance in which the subsidy moves with the tenant. U.S.C. ' f. The tenant-based program is administered by a local entity known as a Apublic housing authority@ or APHA.@ C.F.R..1.. In a project-based Section program, the landlord of the project and the United States Department of Housing and Urban Development (HUD) enter into a renewable Housing Assistance Payments (HAP) contract wherein HUD agrees to provide assistance payments to the owner to cover the difference between the rent contributed by the tenant and the maximum approved contract rent for the unit. C.F.R. Part 0.. The Multifamily Assisted Housing Reform and Affordability Act of (MAHRAA), Title V of the HUD Fiscal Year Appropriations Act, Pub.L. - was enacted on October,. MAHRAA established new policies for the renewal and non-renewal of Section project-based contracts.. Recognizing that an owner may decline to renew a HAP contract at the expiration of its term and thereby affect the supply of low-income affordable rental housing, Congress required project owners deciding to leave or Aopt out@ of the Section program to give notice of not less than one year to tenants affected by the opt out. U.S.C. ' f(c)()(a) (amended ).. To afford further protection to tenants affected by a lawful termination of expiring Section contracts, Congress in amended MAHRAA to provide that Athe Secretary shall make enhanced voucher assistance under section (t) of the United States Housing Act of ( U.S.C. f(t)) available on behalf of each low-income family who, upon the date of such expiration, is residing in an assisted dwelling unit in the covered project.@ Pub. L. No. -, ' 1, 1 Stat, ().. On December,, HUD issued Notice H - in which it stated that Athe FY 00 Appropriations Act enables the Department to make enhanced vouchers available to limit the displacement of families living in an assisted unit when an Owner elects to opt out of the Section project-based program. Residents may elect to remain in their units when issued an enhanced voucher as a result of an opt-out.@ HUD Notice H

5 . Congress recently acted to clarify that the enhanced voucher statute, grants families residing in project-based Section units at the time of opt out the right to remain. U.S.C. f(t) as amended by Public Law No. -, Sec. 01 (//00) (HR, FY 01 Military Construction and FY 00 Emergency Supplemental Appropriations Act.). Assuming he or she is otherwise eligible, a tenant affected by an owner opting out of the Section project-based program may elect to remain in his or her unit using an enhanced Section rental assistance voucher (enhanced voucher), or to leave and look for a residence elsewhere using a regular Section rental assistance voucher (regular voucher). U.S.C. f(o) and (t). If the tenant leaves using a regular voucher, he or she loses protections requiring good cause for eviction the tenant, must pay for any moving expenses and security deposit, and, must pay 0% of his or her adjusted income plus the difference between the actual total rent and a certain payment standard as determined by the local housing authority within certain guidelines. Id. With the enhanced voucher, a tenant is able to remain in her home, retain good cause protections, avoid moving expenses and payment of a security deposit, and particularly in expensive rental markets, likely pay less for rent than with a regular voucher because under the enhanced voucher program, the payment standard can be as high as the actual rent for dwelling as long as the local housing authority determines it is reasonable. See ' f(o)()(a) (reasonableness rent limitation) and (t)(1)(a) (enhanced voucher rent limitation).. Under the National Housing Act, an owner of Section assisted housing may not interfere with tenants= efforts to obtain rent subsidies. U.S.C. Sec. z-1(b)(). Pendent or Supplemental State Claims. Under California Government Code '., notices of intent to opt-out of the Section program issued by owners of such property prior to January 1, 01 must meet the following requirements, among others: (a) be provided to each affected tenant at least nine months prior to the anticipated date of termination of the subsidy; (b) contain a statement of the rent at the time of the notice and the anticipated rent after opt out; (c) be provided to the California State Department of Housing and Community Development (HCD), the city and county or city or county where the property is located and to the appropriate local public housing authority, and contain a statement that the notice was so provided; - -

6 (d) contain the telephone numbers of legal services, HCD, the County Board of Supervisors, and the local public housing authority; and (e) in the notices provided to the aforementioned state and local governmental entities, provide, based on data that is reasonably available, information regarding the number of tenants affected, the number of units that are government assisted and the types of assistance, the number of the units that are not government assisted, the number of bedrooms in each unit that is government assisted, and the ages and income of the affected tenants. An Aaffected that is, a tenant household residing in a housing development receiving Section or assistance under various other federal housing programs who is aggrieved by a violation of Section. is entitled to injunctive relief. Cal. Gov=t Code Sec..(i).. An action under California Government Code section 0 A>borrows= violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under section 0 et seq. and subject to the distinct remedies provided thereunder.@ Farmers Inc. Exchange v. Superior Court, Cal.th, (). Any activity which violates any business practice forbidden by law constitutes a violation of Business & Professions Code sections 0 et seq. Cisneros v. U.D. Registry, Inc., Cal.App.th, (). The California Supreme Court has held that '' 0 et seq. applies in the context of unlawful rental practices by residential landlords. People v. McKale, Cal.d, (). V. STATEMENT OF FACTS. Country Village Apartments is a -unit rental housing development located at 1 Fair Oaks Boulevard in Carmichael, California. The development, originally called the Quail Court Apartments, was constructed in 1 by Quail Court Investors (former owner). The former owner=s mortgage was insured by HUD under a program known as A' (d)().@ See National Housing Act, U.S.C.' l(d)(). As a participant in this program, the former owner was contractually obligated to maintain rents at below-market level for the benefit of lower-income persons for a period of 0 years.. On or about April, 0, the former owner and HUD executed a Housing Assistance Payment (HAP) Contract for the provision of project-based Section assistance for of the rental - -

7 units at Country Village. A true and correct copy of the HAP contract is attached as Exhibit AA@ and incorporated herein by reference. The term of the HAP contract was years, renewable every five years. This assistance provided an additional subsidy for these units (Section units). Specifically, the tenants residing in those units (Section tenants) paid 0% of their adjusted gross income as their share of the rent and HUD paid the balance.. On or about March 1,, the former owner pre-paid the HUD-insured mortgage for an amount of $1,1, HUD approved the pre-payment and terminated its provision of mortgage insurance on about April,. On information and belief, Plaintiff alleges that this caused the rents at Country Village to increase to market rent. However, the Section units continued to receive a rental subsidy from HUD pursuant to the HAP contract and the rent for those units did not increase to the market rate.. Around early, Defendant purchased the property and renamed it the Country Village Apartments.. On about April 1,, the former owner assigned to Defendant and Defendant accepted assignment of the Section HAP contract.. Plaintiff and the other Section tenants at Country Village are the intended beneficiaries of the HAP contract between Defendant owner and HUD.. On about February, 00, Defendant provided Plaintiff and the other Section residents at Country Village with a letter purporting to give them a one-year notice of his decision to terminate the Section HAP contract effective March, 01. A template of the letter, which was provided to HUD, is attached hereto as Exhibit AB,@ and is incorporated herein by reference. Defendant provided the same letter to HUD. However, Defendant did not provide such letter to the California Department of Housing and Community Development (HCD) nor the County Board of Supervisors, among others, nor did the notice provide a contact number for legal services for the residents as required under California law. Further, the letter did not contain a statement of the rent at the time of the notice and the anticipated rent after opt-out. Since the letter was not provided to HCD, neither it nor the - -

8 County Board of Supervisors received certain data about the residents and the property required to be provided under California law.. On about September, 00, HUD convened an informational meeting for the Section residents, including Plaintiff, regarding the impending opt-out. The presenters, which included the Sacramento Housing and Redevelopment Agency (SHRA), the local housing authority responsible for administering the tenant-based Section programs, including the enhanced voucher and regular voucher programs, and the Human Rights and Fair Housing Commission of Sacramento, gave the residents information about the opt-out process and their opportunity to obtain, through SHRA, Section tenantbased vouchers which they could use either to remain (enhanced voucher) at Country Village or attempt to use elsewhere (regular vouchers). The residents were advised by the participating agencies that they should not move. Defendant and his agents were present at this meeting and gave no indication that Defendant would not accept Section enhanced vouchers for those residents wishing to remain. 0. On about November, 00, Defendant sent a letter to the Section residents and HUD confirming that he did not intend to renew the HAP contract and, revealing for the first time to Plaintiff=s knowledge, that he did not intend to enter into any contracts with SHRA, the local housing authority, including those for enhanced vouchers. Plaintiff, however, did not learn of Defendant=s refusal to accept enhanced vouchers until one month later. A copy of the letter is attached hereto as Exhibit AC,@ and is incorporated herein by reference. 1. On about December, 00, HUD sent a letter to Defendant advising him, among other things, that under the United States Housing Act of, subsection (t), permanent statutory authority for enhanced vouchers had been created. A copy of the letter is attached hereto as Exhibit AD,@ and is incorporated herein by reference.. On about December, 00, counsel for the Human Rights/Fair Housing Commission of the City and County of Sacramento sent a letter to Defendant advising him of the potential illegality of his refusal to accept the enhanced vouchers from the Section tenants of Country Village. A copy of the letter is attached hereto as Exhibit AE,@ and is incorporated herein by reference - -

9 . On information and belief, Plaintiff alleges that HUD and SHRA engaged in negotiations with Defendant regarding his refusal to participate in the Section enhanced voucher program.. Apparently, the aforementioned negotiations were unsuccessful as Defendant sent a letter, dated February, 01, to Plaintiff re-iterating his position of November, 00 and stating that Plaintiff had the option of signing a new rental agreement with him by March, 01 for $0 per month or leaving and attempting to find a place elsewhere. Plaintiff currently pays $ per month as her share of the rent. Defendant also warns in his letter that if she does not vacate or sign the new agreement by the deadline, he would initiate eviction proceedings. A true and correct copy of this letter is attached hereto as Exhibit AF@ and incorporated herein by reference.. About mid-february 01, SHRA issued Plaintiff a Section tenant-based voucher. Prior to such issuance, Plaintiff had to be screened for eligibility for the voucher.. Plaintiff does not want to move from her unit at Country Village and wishes to use her voucher as an enhanced voucher to remain there. She has numerous health problems including diabetes, which occasionally causes her kidneys to fail, high blood pressure, and severe allergies, all of which directly limit her mobility and also require her to take medications which also limit her mobility because of their side effects. Ms. Hicks is also being treated by a physician for depression. Most of her health care providers are conveniently located close to her home. Plaintiff is also concerned that her son=s school year will be disrupted if she has to move out of the school district. However, Plaintiff=s current household income is $ per month. If Defendant is permitted to force her to sign a new lease, she won=t be able to afford the new rent and will be evicted.. Despite the fact that Plaintiff does not wish to move, she fears that Defendant=s actions will leave her and her son homeless and believes that she has no choice but to look for another place. Consequently, she has attempted to find alternate housing and has looked at and/or applied to rent at over twenty-five rental units. So far she has not succeeded in finding anything suitable for her and her son. Many prospective owners have stated that they will not accept her Section voucher. Further, she has had to pay non-refundable credit check fees to several prospective owners and incurred other expenses in her search for other housing. - -

10 . The current vacancy rate in the Sacramento Metropolitan Area, the area where Plaintiff is being forced to search for a new rental unit, is less than %, and the average rent is $0.. At all relevant times herein, Plaintiff and the other Section residents were low-income families within the meaning of U.S.C. ' a and Plaintiff is eligible in all other respects for assistance under the Section rental assistance voucher programs. 0. On or about October,, Congress required HUD to provide enhanced Section voucher assistance to each tenant family residing in dwelling units assisted under the project-based Section program where the landlord elected to opt out of the project-based Section program. Congress recently clarified the tenants= right to remain in their units using enhanced vouchers under these circumstances. 1. Defendant continues to refuse to accept the vouchers issued to Plaintiff and other Section tenants and to allow them to remain in their units at Country Village with Section assistance.. Defendant has interfered with Plaintiff=s efforts to obtain Section rental subsidies at Country Village.. Defendant=s actions threaten Plaintiff with imminent injury, including eviction and displacement from her home, fear and anxiety about losing her home, and the severing of personal, family, and community ties. Plaintiff=s interests are adversely affected by Defendant=s actions as complained of herein. remedy at law.. Defendant=s actions threaten Plaintiff with irreparable harm for which she has no adequate FIRST CAUSE OF ACTION Violation of United States Housing Act ( U.S.C. Sec. f). Plaintiff incorporates each and every allegation in the preceding paragraphs numbered 1 through as if fully set forth herein.. By refusing to accept the Plaintiff=s enhanced voucher Defendant landlord has violated Plaintiffs' rights under the Multifamily Assisted Housing Reform and Affordability Act of as - -

11 amended, ' (d) (codified at U.S.C. ' f), the United States Housing Act, U.S.C. ' f(t). SECOND CAUSE OF ACTION Violation of National Housing Act ( U.S.C.' z). Plaintiff incorporates each and every allegation in the preceding paragraphs numbered 1 through as if fully set forth herein.. By refusing to accept vouchers at Country Village, including the Plaintiff=s enhanced voucher which would allow her to exercise her right to remain in her home, Defendant has interfered with Plaintiff=s and other tenants= efforts to obtain rent subsidies at Country Village Apartments in violation of the National Housing Act, U.S.C.' z-1b(b)(). THIRD CAUSE OF ACTION Breach of Federal Contract. Plaintiff incorporates each and every allegation in the preceding paragraphs numbered 1 through as if fully set forth herein. 0. The HAP contract between HUD and Defendant is and was at all relevant time herein in effect. Although not the only reason, the contract is or was in effect at all relevant times because Defendant=s failure to follow require opt-out notice procedures precludes or voids any purported opt-out of the HAP contract. 1. The HAP contract prohibits the denial of assistance of any family eligible to obtain assistance as a result of the contract because of membership in a class such as Arecipients of public assistance.@. The HAP contract does not permit the termination of an assisted tenancy except for good cause. C.F.R Implicit in the HAP contract is the requirement that the parties thereto abide by all laws affecting the terms of the contract. contract.. Plaintiff and the other Section tenants are the intended beneficiaries under the HAP. No good cause exists to terminate Plaintiff=s tenancy. - -

12 . By threatening to evict Plaintiff and refusing to accept Plaintiff=s enhanced voucher and those of the other residents, in violation of the United States Housing Act, Defendant has materially breached the HAP contract with HUD, proximately caused injury to Plaintiff, and violated her rights as an intended beneficiary under the contract. FOURTH CAUSE OF ACTION Violation of California Opt-out Notice Requirements (California Government Code '.). Plaintiff incorporates each and every allegation in the preceding paragraphs numbered 1 through as if fully set forth herein.. Through numerous acts and omissions, Defendant has violated the law of the State of California governing notice requirements for owners who wish to opt out of the Section program, including the following: (a) the February, 00 notice to tenants did not state the rent at the time of the notice or what the rent would be after the opt out process was completed, (b) the February, 00 notice was not given to the California State Department of Housing and Community Development, the Sacramento County Board of Supervisors or the Sacramento County Housing and Redevelopment Agency, and (c) the February, 00 notice did not state the telephone numbers of legal services, California State Department of Housing and Community Development, the Sacramento County Board of Supervisors or the Sacramento County Housing and Redevelopment Agency.. Plaintiff is an Aaffected tenant@ and Aaggrieved party@ within the meaning of. and is thus entitled to injunctive relief thereunder. FIFTH CAUSE OF ACTION Unlawful Business Practice (California Business and Professions Code Sec. 0 et seq.) 0. Plaintiff incorporates each and every allegation in the preceding paragraphs numbered 1 through as if fully set forth herein. - -

13 1. The acts and omissions of Defendant in violation of U.S.C. Section f(t) (refusing to accept Section enhanced vouchers) and California Government Code Section. (issuing inadequate notice of intent to terminate Section rental assistance) and other relevant laws have caused and will continue to cause harm to Plaintiff and the general public.. The harm caused by Defendant=s business practices described above outweighs the utility of Defendant=s business conduct, and, consequently, those actions constitute unfair business acts or practices withing the meaning of Business and Professions Code Section 0 et. seq.. Defendant=s business practices described above present a continuing threat to members of the public. Plaintiff is informed and believes and thereon alleges that Defendant will continue these unlawful practices by completing the opt out process, refusing to accept enhanced vouchers with respect to Plaintiff and other tenants who wish to remain and raising rent to market rate after the opt out process is completed. Such practices will cause great and irreparable injury to the general public in that they will suffer injury similar to that of Plaintiffs.. Injunctive relief if proper because Plaintiff and the general public have no adequate remedy at law. Damages alone cannot compel Defendant to cease to engage in the unfair business practices described in this action. Plaintiff alleges that the benefit to the public good, as well as to Plaintiff, far outweighs the inconvenience to the Defendant of ceasing to engage in the unfair and unlawful practices.. As a direct and proximate result of the practices described above, Plaintiff has suffered restitution and actual damages. SIXTH CAUSE OF ACTION Declaratory Judgment Act ( U.S.C. '' 01-0). Plaintiff incorporates each and every allegation contained in the preceding paragraphs numbered 1 through as if fully set forth herein.. An actual controversy exists between Plaintiff and Defendant. Plaintiff contends that Defendant is acting in violation of federal and state law by refusing to permit her to remain in her unit using an enhanced voucher, threatening her with eviction and proceeding to opt-out of the project-based - -

14 Section rental assistance program upon an improper notice. Defendant contends in all respects to the contrary.. Plaintiff has no adequate remedy at law for Defendants= unlawful acts and will suffer irreparable harm if injunctive and declaratory relief is not granted.. Plaintiff seeks injunctive and declaratory relief as set forth in the prayer below. PRAYER FOR RELIEF WHEREFORE, Plaintiff pray that this court: 1. Enter a declaratory judgment that: a. the actions and omissions of the Defendant as set forth in First through Fifth Causes of Action violate the United States Housing Act, U.S.C.'' et seq.; the National Housing Act, U.S.C.' 01 et seq.; the terms of the HAP contract with HUD; California Government Code Section.; and California Business and Professions Code '' 0, et seq.; b. that Defendant must accept Plaintiff=s enhanced voucher and allow Plaintiff to remain in her unit; and c. the termination of the Section HAP contract is void;. Enter a temporary restraining order and preliminary and permanent injunction: a. enjoining the Defendant from refusing to accept the enhanced vouchers of Plaintiff and any other Section tenants who elect to remain in their unit at Country Village, for as long as Congress appropriates funds for enhanced vouchers for tenants in expiring Section projects and to the extent each such tenant complies with the lease; b. enjoining Defendant from evicting Plaintiff from her unit at Country Village on any ground related to or arising from Defendant=s refusal to accept Plaintiff=s Section enhanced voucher or any other impermissible grounds; and c. enjoining the Defendant, until nine months after he has complied with the notice provisions under., from proceeding to opt out of the Section program; - -

15 . Award Plaintiff compensatory damages;. Award Plaintiff her costs incurred herein; and.. Grant Plaintiff such other and further relief as the court deems just and proper. Dated: March, 01 By LEGAL SERVICES OF NORTHERN CALIFORNIA Mona Tawatao Attorneys for Plaintiff - -