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May 21, 1993


The opinion of the court was delivered by: ROBERT P. PATTERSON, JR.


 Plaintiffs Marilyn Liddy and Steven August bring this action alleging that defendants, by refusing them a preference under the section a Housing Assistance Payments Program, denied them their rights as disabled persons in violation of (1) section 504 of the Rehabilitation Act of 1973 ("RHA"), 29 U.S.C. § 794 (Supp. 1992), (2) sections 3604(f)(3)(B) and 3068(e)(5) of the Fair Housing Amendments Act of 1988 ("FHAA"), 42 U.S.C. § 3601 et seq., and (3) section 553 of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553.

 The parties have made the following motions:

 Plaintiffs move to amend the complaint to add Yorkville Gardens Housing Development Fund Co., Inc. ("Yorkville") as a defendant.

 Plaintiff Liddy moves pursuant to Rule 65(a) of the Federal Rules of Civil Procedure for preliminary injunctive relief with regard to herself alone.

 Defendants Henry Cisneros (the "Secretary"), as Secretary of the United States Department of Housing and Urban Development ("HUD"), and A. M. Villane, the Regional Administrator of HUD's Region II (New York city) Office (referred to collectively as the "federal defendants"), move to dismiss the complaint pursuant to Rule 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure or in the alternative for summary judgment pursuant to Rule 56(b).

 Defendant 51st Capitol Associates ("51st Capitol") moves to dismiss the complaint pursuant to Rule 12(b)(6) and Rule 56.

 In opposing the motions for summary judgment, plaintiffs cross-move for a continuance pursuant to Rule 56(f).

 For the reasons set forth below, defendants' motions to dismiss pursuant to Rule 12 and Rule 56 are denied, and Plaintiff Liddy's motion for preliminary injunction is denied.



 A. Statutory and Regulatory Framework

 Plaintiffs are handicapped individuals who currently receive the benefit of subsidized housing under the section 8 Housing Assistance Payments Program of the United States Housing Act of 1937, as amended by the Housing and community Development Act of 1974, codified at 42 U.S.C. § 1437f (Supp. 1992) ("section 8"). The section 8 program is administered by HUD, and its purpose is to aid lover income families most in need of housing to obtain a decent place to live. See 42 U.S.C. § 1437f(a); 24 C.F.R. § 880.101(a)(1) (1991). Section 8 authorizes the Secretary to enter into contracts to make housing assistance payments to private owners with respect to programs involving existing housing in which some or all of the units are to be leased to lower income families (sometimes referred to as "assisted tenants"). 42 U.S.C. § 1437f(a), (b). Section 8 mandates that all such contracts between HUD and private owners "shall provide . . . [that] the selection of tenants for such units shall be the function of the owner . . . ." 42 U.S.C. § 1437f(d)(1)(A). However, HUD prescribes the eligibility requirements for section 8 programs and has issued regulations pertaining thereto. See, e.g., 24 C.F.R. §§ 812, 813, 880.603(b).

 B. Eligibility Requirements for Non-Handicapped Persons

 An applicant may claim qualification for a federal preference "by certifying to the owner that [he or she] qualifies for a preference under" the three categories noted above. "An owner must accept this certification: unless the owner verifies that the applicant is not qualified for a Federal preference." Id. § 880.613(c)(2). Accordingly, "before executing a lease or occupancy agreement with an applicant who has been offered assistance on the basis of a Federal preference, the owner must require the applicant to provide verification that he or she qualifies for a Federal preference." Id. § 880.613(c)(3).

 If an owner of a section 8 housing project determines that an applicant for section 8 housing does not qualify for a federal preference under 24 C.F.R. § 880.613(c), the owner must provide the applicant with prompt written notice of such determination. The notice must explain the reasons for the determination, and "state that the applicant has the right to meet with the owner or the owner's designee to review it." Id. § 880.613(k).

 C. Eligibility of Handicapped Persons

 Housing that meets the needs of handicapped persons administered separately under the section 8 program. However, the preferences enunciated in 42 U.S.C. § 1437f(d)(1)(A) and 24 C.F.R. § 880.613(c) are also applied to that class of tenants. The regulations also provide that "the applicant may exercise other rights if the applicant believes that he or she has been discriminated against on the basis of . . . handicap." 24 C.F.R § 880.613(k). HUD regulations require that the "owner must apply the Federal preferences in a manner that is consistent" with other applicable federal requirements. 24 C.F.R. § 880.613(b). Thus, with respect to the occupancy of those units specially designed for the handicapped -- the units which are the subject of this litigation -- a handicapped person without one of the federal preferences under 42 U.S.C. § 1437f(d)(1)(A), but meeting the other qualifications for residence in section 8 lower income housing, must be given priority over a non-handicapped individual with a federal preference. See 53 Fed. Reg. 1122, 1130 (1988). The regulations contained in C.F.R. pt. 8, entitled "Nondiscrimination Based on Handicap in Federally Assisted Programs and Activities of the Department of Housing and Urban Development," require owners of section 8 housing units which are handicap accessible to "maximize the utilization of such units by eligible individuals whose disability requires the accessibility features of the particular unit." 24 C.F.R. § 8.27(a). Thus, under the regulations the owner must first offer a handicap accessible unit to a handicapped person already living in the same project but in a non-accessible apartment. Thereafter, the owner can offer this unit "to an eligible qualified applicant on the waiting list having a handicap requiring the accessibility features of the vacant unit." 24 C.F.R. § 8.27(a)(1), (2).


 The HUD Bookletter-2, dated November 17, 1987, ("Bookletter") from the HUD Regional Office, Region II, states that HUD regulations "grant to the field office the authority to establish conditions governing rent-up and occupancy of Section 8 projects." Bookletter at 1, Mallow Aff., Exh. E. With regard to applicants, like plaintiffs, who already reside in federally subsidized housing, the Bookletter directs that

the owner will find that some applicants are residing in public or government assisted housing. Such applicants must be assigned a low-priority status and promptly notified to that effect. . . .
This status may be waived by HUD, however, on a case by case basis. Such waivers usually apply to situations that allow mobility impaired families to move into Section 8 apartments designed for the handicapped.

 Id. at 2-3.


 Other than federal defendants Cisneros and Villane, the parties are the following:

 Putative defendant Yorkville is a non-profit organization which owns Yorkville Gardens, an apartment building located at 225 East 93rd Street in Manhattan, New York which has been federally subsidized by HUD since May 1, 1985, pursuant to section 8.

 New York Foundation for Senior Citizens, Inc. (the "Foundation") is a non-profit agency located throughout New York City which serves New York city's elderly citizens and that sponsors Yorkville Gardens for the section 8 program.

 Defendant 51st Capitol is the owner of Capitol Apartments, a housing development located at 840 8th Avenue in Manhattan, New York which is subsidized through HUD's section 8 New Construction program.

 Marilyn Liddy

 Since 1974, Ms. Liddy has resided in a section 8 housing project, the Wardell Apartments ("Wardell"), located in Astoria, Queens, New York. Her only source of income is Supplemental Security Income ("SSI") payments of $ 524 per month, plus $ 90 per month in Food Stamps. She receives the SSI benefits because she is physically disabled and unable to work. Liddy Decl. P 4. "Ms. Liddy is an individual with severe physical and emotional disabilities." Compl. P 40. Her "hands and feet are severely, deformed," and "she suffers from a disease similar to Lupus which causes ulcerations on her legs." Compl. P 40. In addition, according to paragraphs 40 and 41 of the Complaint, which are supported by the affidavits submitted by plaintiffs:

40. . . . Years of arthritis and peripheral Vascular disease, which results in severe circulatory problems, have weakened the skin covering Ms. Liddy's feet and legs. Her skin in these areas is often swollen and broken and infections are common. Ms. Liddy suffers from Raynaud's disease, an extreme sensitivity to cold which also compromises her circulation and causes infections in her fingertips. Ms. Liddy is also asthmatic and experiences chronic depression in part as a result of her physical condition.
41. The combined result of these illnesses is that Ms. Liddy's mobility and ability to travel are seriously impaired. Although Ms. Liddy is sometimes able to walk, she must do so with the assistance or [sic] a cane or walker; often she must rely on a wheelchair. Her maximum walking distance is three to four blocks. Because of the delicate nature of her skin, prolonged exposure to cold weather causes Ms. Liddy to experience extreme pain.

 According to affidavits submitted for the summary judgment motion, Ms. Liddy's disability seriously impairs her mobility and ability to travel, and she now relies on a wheelchair at all times. Liddy Decl. P 8.

 Ms. Liddy's "medical problems often require specialized treatment." Compl. P 43. She is an out-patient at the Hospital for Special Surgery, New York Hospital and the East Side Center for Special Therapy, each of which is located in Manhattan. However, because "travel to Manhattan is so difficult for her," Ms. Liddy "frequently cannot be seen by specialists at these hospitals and treatment centers. Instead, she must rely on Astoria General ...

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