United States District Court, D. Maryland, Southern Division
VIRNA M. DANIELS, Plaintiff,
HOUSING AUTHORITY OF PRINCE GEORGE'S COUNTY, et al., Defendants
[Copyrighted Material Omitted]
For Virna M. Daniels, Plaintiff: Lori Leibowitz, LEAD ATTORNEY, Legal Aid Bureau Inc, Riverdale, MD.
For Eric C. Brown, in his official capacity as Executive Director of the Housing Authority of Prince George's County, Housing Authority of Prince George's County, Defendants: John C Fredrickson, LEAD ATTORNEY, McMillan Metro PC, Rockville, MD; Barbara Wachter Needle, Reno and Cavanaugh PLLC, Washington, DC; Susan Zuhowski, O Malley Miles Nylen and Gilmore PA, Calverton, MD.
Alexander Williams, Jr., United States District Judge.
On October 14, 2011, Plaintiff brought suit against Defendants pursuant to 42 U.S.C. § 1983 for alleged deprivations of her rights under the Fourteenth Amendment Due Process Clause and the Housing Choice Voucher Program, 42 U.S.C. § 1437f. A bench trial was held on March 4 and March 7, 2013. The Court has carefully considered the parties' exhibits, the testimony of the witnesses, the pretrial submissions and post-trial briefs, and the oral arguments of counsel. The following constitutes this Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. For the reasons articulated below, the Court will enter judgment in favor of Defendants on Counts IV and V and in favor of Plaintiff on Count VI. The Court will award Plaintiff $24.00 in damages on Count VI and $1.00 in nominal damages for Defendants' liability on Count I.
The Housing Choice Voucher Program (" HCVP" ), also known as Section 8, is a federal program created to help low-income families obtain affordable housing. See 42 U.S.C. § 1437f. Defendants Housing Authority of Prince George's County (" HAPGC" ) and Eric C. Brown, in his official capacity as Executive Director of HAPGC, administer the program for Prince George's County. Plaintiff Virna Daniels, a participant in the HCVP homeownership program, alleged six counts against Defendants in her Amended Complaint, all of which were brought pursuant to 42 U.S.C. § 1983. See Doc. No. 24. In Count I, Plaintiff alleged that Defendants deprived her of her constitutional rights under the Due Process Clause of the Fourteenth Amendment by failing to provide her with an informal hearing to challenge the alleged underpayment of her housing subsidy in 2010. Similarly, in Count II, Plaintiff alleged that Defendants deprived her of her federal right under Section 8 and regulations implemented by the Department
of Housing and Urban Development (HUD) by failing to provide her with an informal hearing to challenge the alleged 2010 underpayment.
In Counts III, IV, V, and VI, Plaintiff alleged that Defendants deprived her of her federal right to a properly calculated housing subsidy under Section 8 and implementing HUD regulations. Specifically, Plaintiff alleged that Defendants failed to timely process her monthly payment for August 2010, which resulted in a prorated subsidy that month (Count III); erroneously used her son's 2009 income as a basis for her anticipated household income for 2010, thereby reducing her monthly subsidy payments from August 2010 through December 2010 (Count IV); failed to timely remove her son from the household in December 2010, thereby reducing her subsidy payment in December 2010 (Count V); and failed to properly credit her for all her medical expenses, thereby reducing her monthly subsidy payments from May 2011 through the present (Count VI).
On August 24, 2012, Plaintiff filed a Motion for Partial Summary Judgment as to liability on Counts I, IV, V, and VI. Doc. No. 28. The Court held a hearing on Plaintiff's Motion on November 16, 2012. Doc. No. 33. With respect to Count I, it was not disputed that Plaintiff requested an informal hearing to challenge Defendants' calculation of her subsidy on August 16, 2010, and that her attorney reiterated that request on multiple occasions in the months that followed. In their opposition brief, Defendants attempted to characterize August 12, 2010 and December 21, 2010 meetings between Defendants and Plaintiff and her counsel as " informal hearings." However, during the November 16 hearing, counsel for Defendants presented nothing convincing to challenge Plaintiff's argument that informal hearings in accordance with the HAPGC Administrative Plan were never held. Accordingly, the Court held that Defendants were liable on Count I:
In denying Daniels an informal hearing, Defendants failed to comply with the due process requirements of Goldberg v. Kelly, 397 U.S. 254, 266-71, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), applicable HUD regulations, e.g., 24 C.F.R. § 982.555, and corresponding provisions of the governing Administrative Plan, see Doc. No. 30-1 at 16-14-16-22. Accordingly, the Court finds that Defendants are liable under 42 U.S.C. § 1983 for violating Plaintiff's procedural due process rights.
Doc. No. 34 at 2. The Court also dismissed Count II without prejudice when counsel for Plaintiff acknowledged that it was duplicative of Count I, and denied Plaintiff's Motion with respect to Counts IV, V, and VI. Id. at 1-2. A bench trial was scheduled to determine damages on Count I and liability and damages on Counts III, IV, V, and VI. Id. at 3.
The bench trial was held on March 4 and March 7, 2013. At the close of Plaintiff's case, Defendants moved for judgment on all Counts. The Court entered judgment in favor of Defendants on Count III pursuant to Rule 52(c) of the Federal Rules of Civil Procedure, but denied Defendants' Motion with respect to the remaining Counts. The Court made the following findings of fact with respect to Count III: (1) Plaintiff's realtor, Joan Singh, sent communications to Defendants in June 2010 informing them that the closing on Plaintiff's home was scheduled for June 25, 2010; (2) The Housing Quality Standards (HQS) inspection of Plaintiff's home was not scheduled until after the closing; (3) The first HQS inspection, which Plaintiff's home failed, occurred on July 21, 2010; (4) A second HQS inspection was scheduled for August 4, 2010, at which time Plaintiff's
home passed inspection; and (5) Plaintiff's subsidy payment was prorated for the month of August 2010 on the grounds that her home did not pass inspection until August 4, 2010.
Under HUD regulations, a prerequisite for receiving a subsidy under the Section 8 program is that the participant's home pass HQS inspection. 24 C.F.R. § 982.628(a)(4). Accordingly, Defendants were not authorized by federal law to pay Daniels a subsidy until August 4, 2010. Neither § 1437f nor the HUD regulations cited by Plaintiff provided her with a right to have an inspection prior to her closing date or a right to an immediate inspection. Furthermore, the Court could not conclude that the passage of two weeks between inspections was due to Defendants' misconduct or was otherwise unreasonable. Accordingly, Plaintiff failed to show that she was deprived of a federal right, and Count III was dismissed.
The following findings of fact and conclusions of law are made with respect to the remaining claims in this case: liability and damages on Counts IV, V, and VI, and damages on Count I.
II. FINDINGS OF FACT
By letter dated April 13, 2010, the Maryland Department of Housing and Community Development informed Plaintiff Virna Daniels that she had pre-qualified to purchase a home under the Homeownership for Individuals with Disabilities Program. The April 13 correspondence indicated that the prequalification was based on Daniels's receipt of a Housing Choice Voucher subsidy from Defendant HAPGC in an estimated amount of $1,433.92. On May 7, 2010, Daniels signed a contract to purchase the property located at 13100 Glasgow Way, Fort Washington, Prince George's County. The contract was ratified on May 10, 2010, and the projected settlement date for the property was June 25, 2010. Prior to the settlement date, Carolyn Floyd, homeownership specialist for HAPGC, contacted Daniels to set up an appointment to certify her participation in the Section 8 Program, administered by Defendants in Prince George's County. The parties stipulated that since certification, Floyd acted according to HAPGC practice and policy in verifying Daniels's income and expenses and calculating her housing subsidy.
At all relevant times, Defendants were required to calculate Section 8 participants' assistance payments in accordance with the terms of the governing Administrative Plan adopted by HAPGC. Chapter 6 of the Plan provided the policies and methods that HAPGC was required to use to ensure that only eligible families received housing assistance and that no family paid more or less than its obligation under HUD regulations. That chapter specified the sources of income to include and exclude in computing a family's annual income, how to subtract deductions such as medical expenses to arrive at adjusted income, and the methodology for calculating the family's monthly assistance payment. Chapter 7 of the Plan governed Defendants' methodology for verification of the participating family's information, including income, household composition, and medical expenses. Several provisions of the Plan quoted, cited, or otherwise expressly relied upon the terms of administrative regulations and guidance documents promulgated by HUD. These and other relevant provisions of the Administrative Plan will be discussed in substantial detail in the Court's Conclusions of Law.
Daniels met with Floyd at HAPGC on June 23, 2010 for her certification appointment. Daniels provided several documents relating to the income earned by her son, Dahvae Akers, who was self-employed as a newspaper carrier. Akers's
income was relevant to calculating Daniels's subsidy because he resided with his mother, and Section 8 participants' subsidy calculations are based on the income earned by all members of the household. At the June 23 meeting, Daniels submitted Akers's 2009 income tax return, which indicated that his gross income for 2009 was $37,986 and his adjusted gross income for 2009 was $20,365. Daniels also provided an undated document from Akers's accountant, Liberty Tax Service (" LTS" ), which projected Akers's gross income for 2010 to be $35,592 and his net income for 2010 to be $9,492. Floyd received other materials from Daniels at the June 23 meeting, including receipts and other documents purportedly reflecting Akers's business expenses.
At the June 23 meeting, Floyd briefly reviewed the documents provided by Daniels, including the LTS projection, and estimated that Daniels's monthly subsidy would be $1,306.50. Floyd explained to Daniels that she needed additional time to review the documents in greater detail and that the figure was only an estimate. Daniels signed her initials next to the " ESTIMATE" heading of the HAP Calculations document and next to the projected HAP payment amount. Daniels and Akers both signed consents to the release of information to HAPGC on June 23.
At some point in July 2010, Floyd closely examined the documents submitted by Daniels and determined that her monthly subsidy would be $1,045. Floyd relied on Akers's 2009 tax return to make this calculation. Floyd declined to use the LTS projection because she believed the 2009 tax return was more reliable and that its use was in accordance with the Administrative Plan. Floyd also declined to use the other documents evidencing business expenses because many were illegible and could not be verified. Floyd did not request additional information from Daniels to determine the subsidy, did not contact the newspaper company that contracted with Akers, and did not provide forms to Akers for the reporting of his business expenses. Furthermore, Floyd did not rely on current circumstances in projecting Daniels's household income, and she did not document in Daniels's participant file her reasons for departing from current circumstances.
Daniels's home passed HQS inspection on August 4, 2010, and she began receiving her monthly assistance payment as of that date. On August 12, 2010, HAPGC sent a letter to Daniels informing her that her monthly assistance payment would be $1,045. Her initial payment for August 2010 was prorated at $975 because her home did not pass HQS inspection until August 4. Around this time, Daniels went to HAPGC to retrieve her first subsidy check. Daniels was shocked and became extremely upset upon discovering the amount of her monthly assistance payment. Daniels met with Floyd and Floyd's supervisor, Program Manager Mavis Headley, to review the calculations. Floyd and Headley explained the basis for the $1,045 amount, and Floyd reminded Daniels that the figure provided by HAPGC in June was merely an estimate. Daniels remained visibly upset throughout the meeting.
In early September 2010, Daniels retained an attorney, Hong Park, to assist her with her housing subsidy. Park reviewed Daniels's documentation and initially contacted HAPGC in September to try to set up a meeting. Park's first meeting with Floyd occurred on October 12, 2010, when they discussed the calculation of Daniels's subsidy and why it was prorated in August. He asked Floyd for a copy of the Administrative Plan, which she said she would provide. Park also informed
Floyd that he would be providing documents detailing Akers's business income and expenses.
At some point in September 2010, Akers left Daniels's home in Prince George's County and moved in with his uncle in Washington, D.C. On or about October 1, 2010, Akers filled out an " Official Mail Forwarding Change of Address Order" with the United States Postal Service (USPS). Daniels subsequently informed Park that her son had moved out of the home.
On November 17, 2010, Park went to HAPGC and had a brief meeting with Floyd. Floyd informed Park that she did not have the copy of the Administrative Plan that he had requested. Park, in turn, told Floyd that Akers had left Daniels's household. Floyd explained to Park that Daniels would have to inform HAPGC in writing as to the change in household composition. On November 18, 2010, Park e-mailed Floyd to inform her in writing that Akers no longer resided with Daniels and that he was living with his uncle in Washington, D.C. on a permanent basis. He requested that Akers's income be removed from Daniels's household effective December 2010. Park also told Floyd, " I can provide affidavits stating that [Akers] resides with his uncle when I meet with you on November 30th." Floyd did not respond to Park's e-mail or otherwise inform him in November that affidavits would not be sufficient.
As part of his November 18 e-mail to Floyd, Park also asserted that Defendants had miscalculated Daniels's subsidy by failing to properly account for her son's business expenses. Park attached a spreadsheet to explain the methodology behind his own calculations. The spreadsheet included a mileage ledger for Akers's vehicle use, including a determination that 72.55% of the mileage was for business purposes. The spreadsheet also included business expenses for vehicle parts and service, gas, AAA membership, note payments, insurance, payment for hired help, cell phone usage, and supplies. Park estimated that Akers's 2010 gross business income would be $39,833.87, that his 2010 net business income would be $16,418.74 based on business expenses, and that his 2010 net income after turning 18 would be $10,945.83. Park also attached to his November 18 e-mail a large number of receipts which reflected expenses for car payments, car service and parts, cell phone bills, gas, food, and purchases at various retail stores. Park noted in his spreadsheet that some of the receipts for food, supplies, and gas were not used in his analysis. Park's purpose in providing the spreadsheet was to help Floyd and Defendants understand the supporting documentation being submitted, to provide a clear summary, to aid negotiations with Defendants, and to convince them to increase her monthly subsidy payment. It is not disputed, however, that Park's methodology in singling out Akers's income after turning 18 was incorrect under the regulations and Administrative Plan.
Floyd subsequently reviewed the documents submitted by Park. She concluded that several of the documents could not be verified as business expenses under the Administrative Plan and that there were errors in Park's calculations. Some of the receipts submitted were also illegible and several were in Daniels's name, not Akers's. Defendants therefore continued to rely on the 2009 tax return in calculating Daniels's subsidy.
Park had a meeting set up with Floyd on November 30, 2010 to discuss the documents he submitted on November 18 as well as the change in Daniels's household composition. Floyd cancelled the meeting that morning, however, because her supervisors
were unavailable. The same day, Park e-mailed Floyd and attached affidavits from Daniels, Akers, and Akers's uncle stating that Akers had left Daniels's household and was residing with his uncle in Washington. On December 3, 2010, Floyd sent a letter to Daniels stating that HAPGC was unable to process her request for a change in household composition because it required the following additional information: " Legal proof of [Akers's] new residence (ex: new picture id, lease, utility bill, bank statement, and/or change of address card)." In response to this letter, Park e-mailed Floyd on December 15, 2010 and attached a copy of Akers's Washington, D.C. identification card and a change-of-address confirmation letter from USPS. Park eventually met with Floyd and Headley at HAPGC on December 21, 2010 to discuss the spreadsheets submitted by Park. Floyd and Headley told him that they would take his proposed calculations under advisement.
On January 6, 2011, HAPGC informed Daniels that Akers had been removed from her household composition. The removal of Akers from Daniels's household composition was effective January 1, 2011, and resulted in an increase in Daniels's monthly subsidy payment to $1,554. Headley also informed Park by letter dated January 10, 2011 that HAPGC fully assessed the concerns he expressed at the December 21, 2010 meeting but remained confident that Daniels was receiving all the benefits to which she was entitled. Headley's January 10 letter stated, " [t]he calculations performed reflect the accurate payment standard in effect at the time [Daniels's] subsidy began and also reflect the best projection of Akers' annual income based on the information presented at the time the calculations were performed."
In the months that followed, Daniels and Defendants also disagreed as to the amount of Daniels's medical expenses, which are deductible expenses for the purpose of calculating Section 8 participants' adjusted income and monthly assistance payments. Daniels suffers from a severe crossbite and malalignment of her jaw and temporomandibular joint. In April 2011, Defendants sent Daniels a letter for the annual recertification of her subsidy. On April 27, 2011, Daniels submitted documents to Floyd concerning medical treatment and related expenses. These documents included: (1) an April 19, 2011 Statement of Account for dental work from Dr. Cohen, which reflected $270 in payments by Daniels on March 3 and April 19, 2011, with a balance of $100 due to Dr. Cohen; (2) an April 19, 2011 Estimated Treatment Plan from Dr. Cohen; and (3) Financial Options documents from Drs. Burk and Flinn, also dated April 19, 2011. Defendants also acknowledged receiving during this time period a letter from Dr. Nicholas Mehta dated May 4, 2011, which described Daniels's condition and stated that she was currently undergoing dental treatment.
The Estimated Treatment Plan from Dr. Cohen estimated $366 in fees for proposed dental work, but contained no indication that Daniels had agreed to the proposed treatment or had undertaken a financial obligation with respect to such treatment. The Financial Options documents detailed two dental and orthodontic treatment plans totaling $5,382 and $6,327, respectively, for an estimated 20-22 months of treatment. Each Financial Option provided an interest-free office plan, as well as a flexible payment plan through Care Credit for as low as $125/month. As with the Estimated Treatment Plan, the Financial Options documents gave no indication that Daniels had agreed to treatment from Drs. Burk and Flinn or had undertaken any
financial obligations with respect to such treatment.
In computing Daniels's medical expenses at her annual recertification, which was effective August 2011, Floyd gave Daniels credit for $370 based on the statement from Dr. Cohen ($270 in payments plus the $100 remaining balance). Floyd did not give credit to Daniels based on the Estimated Treatment Plan from Dr. Cohen or the Financial Options documents from Drs. Burk and Flinn because the documents gave no explicit indication that Daniels would be responsible for ongoing expenses in the future. Although Floyd had authorization from Daniels to contact medical providers to verify information, Floyd did not contact any of her medical providers to discuss potential future treatment and future expenses. Accordingly, effective August 2011, Defendants were crediting Daniels with $370 in total medical expenses for the purpose of calculating her housing subsidy.
Several weeks later, on October 10, 2011, Park e-mailed Floyd to request a recalculation of Daniels's subsidy based on her medical expenses. Park reported that Daniels was spending approximately $230/month for dental work. The next day, Floyd responded to Park's e-mail and requested supporting documentation of her paid medical costs. On October 19, 2011, Park submitted invoices from Dr. Cohen establishing that Daniels had made payments totaling $445 between March 3 and September 7, 2011 (amounting to $55.63/month) and had a remaining balance of $91 balance with Dr. Cohen. Floyd had already credited Daniels with $370 of the $445 in paid expenses (a difference of $75) effective August 2011. Park also informed Floyd that Daniels would be receiving ongoing treatment from Dr. Cohen.
Park explained in his October 19 e-mail that Daniels paid for separate orthodontic services through her Care Credit card. Park further noted that Care Credit cards are used exclusively for healthcare services, and attached a Care Credit User Guide in support. The User Guide also stated that Care Credit cards could be used for family members and pets. Park provided an invoice from Care Credit showing that Daniels had a balance of $6,523.43 which required a minimum monthly payment of $179, and a printout of Daniels's Care Credit payment history showing that she had met the minimum monthly payment since July 2011. The payment history also showed that Daniels had made Care Credit payments totaling $845 since May 2, 2011. Park's e-mail informed Floyd that Daniels planned to make the minimum monthly payment going forward. Park's October 19 e-mails also attached the same documents that Daniels had submitted on April 27, 2011. Park requested that Defendants provide Daniels with retroactive benefits to April 2011, when she first submitted the medical documentation in support of her recertification.
Floyd reviewed the documents submitted by Park and adjusted Daniels's income effective November 2011 based on Care Credit payments of $845. Defendants did not give any credit to Daniels for the additional $75 in past payments to Dr. Cohen, the $91 balance with Dr. Cohen, or claimed ongoing payments to Care Credit for treatment from Drs. Burk and Flinn. Floyd also determined that retroactive payments dating back to April 2011 were not warranted. Effective November 2011, Defendants were crediting Daniels with $1,215 in total medical expenses. This was the result of adding $845 in Care Credit payments to the $370 in credit Daniels had been receiving since August 2011 for expenses paid to Dr. Cohen. Daniels continued
to receive credit for $1,215 in medical expenses through April 2012.
In January and February 2012, Park communicated to Floyd that he disagreed with Defendants' calculations of Daniels's medical expenses. Floyd informed him that Defendants had properly accounted for her medical expenses, and no additional modifications would be made. On February 29, 2012, Daniels requested an informal hearing with HAPGC to contest ...