The opinion of the court was delivered by: Mordue, District Judge.
Plaintiff Norman E. Roth is in the business of property rental and
management. He owns and manages several rental propertie, in the
neighborhoods in and around the University area in the City of Syracuse.
The other named plaintiffs are all businesses owned and operated by
Defendant Syracuse Housing Authority ("SHA") is a public corporation
and a public housing agency responsible for administering state and
federal low-income housing programs within the City of Syracuse. SHA is a
separate legal entity from the City of Syracuse. SHA employees are not
employees of the City of Syracuse and vice versa. Defendant Frederick R.
Murphy is employed by SHA as its Executive Director. Defendant Terry
Kresser supervises SHA's administration of low-income housing programs in
the City of Syracuse.
The present complaint comprises 114 paragraphs and alleges that
defendants violated a number of plaintiffs' federal and constitutional
rights. Defendants move for dismissal pursuant to Fed.R.Civ.P. 12(b)(6)
or, in the alternative, for summary judgment on a variety of legal and
Plaintiffs rented properties to students at Syracuse University and
LeMoyne College for many years until 1992 when Syracuse University
amended its student housing policy to require sophomore, as well as
freshman students, to live on campus. This change left many
owner/landlords, such as plaintiffs, with vacant properties. Plaintiff
then became involved in the federally subsidized, low-income housing
program known as "Section 8," which is administered in the City of
Syracuse by SHA and funded by the United States Department of Housing and
Urban Development ("HUD").
Under the Section 8 program, a low income individual or family
requiring rent assistance applies to a public housing agency such as SHA
for approval to receive benefits based on family composition, income and
citizenship status. The approved individual or family then locates a
rental property and landlord who will accept Section 8 payments. Once
such a property and landlord are identified, the tenant signs a lease and
the public housing agency and landlord enter into a standard Housing
Assistance Payment ("HAP") contract. Under this arrangement, the public
housing agency pays the majority of the rent and the tenant and/or local
social services agency is responsible for the balance.
In September 1997, SHA notified Roth that he and his companies were
suspended from participation in the Section 8 housing program pending its
investigation of his property management practices." SHA indicated that
during its investigation, present contracts would be honored, but no new
HUD contract would be executed. Roth's attorney immediately requested a
meeting with SHA to discuss the suspension. The meeting was scheduled to
take place on November 6, 1997. On October 30, 1997, however, HUD advised
SHA in writing that Roth's suspension did not conform to federal
regulations and the HUD contract*fn2 and ordered SHA to reinstate Roth
to full and unrestricted participation in the Section 8 program. Based on
the order of reinstatement, Roth's attorney canceled the November 6,
1997, meeting with SHA.
On November 12, 1997, Roth filed a complaint with HUD alleging that SHA
had violated the Fair Housing Act (42 U.S.C. § 3601 et seq.) by
suspending him from participation in the section 8 program because he was
renting to African-American tenants in primarily all-white
neighborhoods. Roth alleged that SHA was thereby denying minority tenants
fair housing by interfering with their use of Section 8 federal
subsidies. In January 1999, after investigating these charges, PU!)
issued a "Determination of No Reasonable Cause" to believe that SHA
engaged gaged in any discriminatory housing practices.
Notwithstanding its compliance with HUD's October 1997 order of
reinstatement, SHA advised Roth's attorneys on November 17, 1997, that
its investigation of Roth was continuing. In January 1999, as part of it
investigation, SHA invited Roth to attend a meeting with Director Murphy
to discuss the issue of whether and how he screened his tenants. Roth,
through his attorney, chose not to meet with SHA on the grounds that
failure to screen was not a valid basis on which to disapprove of Roth as
a Section 8 landlord and that HUD ad exclusive jurisdiction over any
decisions regarding Roth's participation in the Section 8 program.
On February 5, 1998, SHA advised Roth in writing that, after concluding
its investigation into whether he screened prospective tenants as
required by existing HUD contracts, SHA would not approve any future
Section 8 leases submitted by Roth or any of his businesses, although it
would not termimate any existing HAP contracts, SHA explained that its
decision was based on evidence it gathered which established not only
that Roth had not screened tenants as required by his contracts, but that
he had falsely represented to SHA that he had done so, with the purpose
of influencing the outcome of SHA's investigation. SHA advised that it
was exercising its discretion under HUD regulations to deny approval to
tenants wishing to lease units from Roth or any of his companies.
In March 1999, HUD responded to a complaint made by Roth regarding
SHA's February 1998 determination to deny approval of any future HAP
contracts, stating that SHA complied fully with its October 1997
directive to restore Roth to the housing program. HUD noted that this
directive applied only to the October 1997 suspension and not to future
matters involving Roth and SHA. Nor was the directive intended to require
SHA to seek HUD approval before taking future action against Roth. HUD
noted that public housing agencies such as SHA had "clear authority to
disapprove an owner and refuse to do business with him/her." Moreover,
HUD stated that it ...