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Lawrence v. Town of Brookhaven Department of Housing

December 26, 2007

DEIRDRE LAWRENCE, PLAINTIFF,
v.
TOWN OF BROOKHAVEN DEPARTMENT OF HOUSING, COMMUNITY DEVELOPMENT & INTERGOVERNMENTAL AFFAIRS, VALERI J. BISCARDI, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS COMMISSIONER OF THE TOWN OF BROOKHAVEN DEPARTMENT OF HOUSING, COMMUNITY DEVELOPMENT & INTERGOVERNMENTAL AFFAIRS, ROSEANN D. GALLAGHER, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS RENTAL SUBSIDY PROGRAM COORDINATOR FOR THE TOWN OF BROOKHAVEN DEPARTMENT OF HOUSING, COMMUNITY DEVELOPMENT & INTER-GOVERNMENTAL AFFAIRS, AND JAMES RYAN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS HEARING OFFICER FOR THE TOWN OF BROOKHAVEN DEPARTMENT OF HOUSING, COMMUNITY DEVELOPMENT & INTERGOVERNMENTAL AFFAIRS, DEFENDANTS.



The opinion of the court was delivered by: Seybert, District Judge

ORDER ADOPTING REPORT AND RECOMMENDATION

The Court is in receipt of Magistrate Judge William D. Wall's Report and Recommendation regarding Plaintiff Deirdre Lawrence's ("Plaintiff") order to show cause for a preliminary injunction seeking reinstatement of her rental subsidy benefits, dated August 3, 2007 ("Report and Recommendation"). Presently pending before the Court are (1) Plaintiff's objections to Magistrate Judge Wall's recommendation that the Court deny Plaintiff's motion for a preliminary injunction and (2) a cross-motion to dismiss by Defendants Town of Brookhaven Department of Housing, Community Development & Intergovernmental Affairs ("Housing Authority"), Valerie Biscardi ("Biscardi"), Roseann Gallagher ("Gallagher"), and James Ryan ("Ryan").

BACKGROUND

As noted, there are distinct motions pending and the standards under which the motions, and the facts related thereto, are analyzed differ. Unless otherwise noted, the following facts are taken from the Complaint, as well as documents referenced in or relied upon by Plaintiff in the Complaint,*fn1 and are presumed to be true for purposes of deciding the pending motion to dismiss. The Court may consider and rely on other facts in considering Plaintiff's request for a preliminary injunction, the Report and Recommendation, and Plaintiff's objections to the Report and Recommendation.

Since July 2004, Plaintiff has resided in the Town of Brookhaven ("Brookhaven") with her three minor children. (Compl. ¶ 29.) Prior to moving to Brookhaven, Plaintiff and her children lived in the Town of Babylon ("Babylon"). While living in Bablyon, Plaintiff received federal rental subsidies 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 ("Section 8"). (Id. ¶ 30; see also 42 U.S.C. §§ 1437 et seq. The Section 8 program is administered by the Department of Housing and Urban Development ("HUD"), which has promulgated regulations governing the Section 8 program ("HUD Regulations"). (Compl. ¶ 16; see also 24 C.F.R. Parts 5 and 982.) On the local level, the Section 8 program is administered by local public housing authorities ("PHAs"). See 42 U.S.C. § 1437(a)(1)(C).

Both Babylon and Brookhaven have PHAs that administer the Section 8 program in their respective towns. In Brookhaven, the PHA is Defendant Housing Authority. (Compl. ¶ 8.) Defendant Biscardi is the Commissioner of the Housing Authority, and Defendant Gallagher is the Rental Subsidy Program Coordinator for the Housing Authority. (Id. ¶¶ 9-10.)

When Plaintiff moved from Babylon to Brookhaven in July 2004, she continued to receive Section 8 benefits, pursuant to HUD Regulations, through March 31, 2007. (Id. ¶¶ 1, 29.) Specifically, Plaintiff's Section 8 benefits were transferred pursuant to Section 982.355 of the HUD Regulations (the "Portability Rules"). (Id. ¶ 30.)

Although not specifically alleged in the Complaint, on July 30, 2004, after Plaintiff moved to Brookhaven and her Section 8 benefits had transferred to Brookhaven, the Housing Authority, specifically, Gallagher, requested that the Suffolk County Police Department conduct a criminal background check on Plaintiff. (Preliminary Injunction Hr'g ("PI Hr'g") Defs.' Ex. D.) The criminal report reflected that, on July 29, 2004, Plaintiff had been arrested for drug-related criminal activity that occurred in 2003. (Compl. ¶ 31.) On November 17, 2004, Gallagher issued a termination notice ("2004 Notice") to Plaintiff stating that, "effective December 31, 2004, rental assistance is being terminated for your failure to fulfill your obligations under the Housing Choice Voucher Program." (Id. ¶ 32; PI Hr'g Defs.' Ex. B.) The 2004 Notice also indicated that the decision to terminate Plaintiff's Section 8 benefits was based on Plaintiff's failure to fulfill her program obligations under "24 CFR 982.551" as a result of a July 29, 2004 arrest for Criminal Sale of a Controlled Substance in the 3rd Degree. (Compl. ¶ 32; PI Hr'g Defs.' Ex. B.) Plaintiff was also informed that she had the right to request an informal hearing to contest the termination, which she did. (Compl. ¶ 33; PI Hr'g Defs.' Ex. B.)

The informal hearing was held on April 8, 2005 before Defendant Ryan, and Gallagher was the only witness called to testify on behalf of the Housing Authority. (Compl. ¶ 33.) Several months later, a written decision was issued finding that the Housing Authority did not establish by a preponderance of the evidence that Plaintiff violated her obligations under the Section 8 program ("September 2005 order"). (Id. ¶ 34.) More specifically, Ryan found that because Plaintiff was not given the opportunity to cross examine the arresting officer or the Assistant District Attorney, she was denied the right to a full and fair opportunity to be heard. (PI Hr'g Defs.' Ex. D at 3.) As a result, the Housing Authority continued to subsidize Plaintiff's rent under the Section 8 program. (Compl. ¶ 34.)

On or about September 29, 2005, shortly after receiving the September 2005 order, Gallagher again requested a criminal background check on Plaintiff from the Suffolk County Police Department. (Id. ¶ 35; PI Hr'g Defs.' Ex. G.) On or about October 12, 2005, Gallagher was informed that Plaintiff's July 29, 2004 arrest resulted in a guilty plea. (Compl. ¶¶ 36-37.) Approximately six months later, on April 6, 2006, Gallagher issued a second termination letter ("2006 Notice") to Plaintiff based on the July 29, 2004 arrest to which Plaintiff "pled guilty." (Id. ¶ 37.) Again, the 2006 Notice advised Plaintiff she had the right to request an informal hearing, which she did. (Id. ¶ 38.)

The second informal hearing was held on September 22, 2006 before Ryan and, again, Gallagher was the only witness to testify on behalf of the Housing Authority. (Id. ¶ 39.) In addition, Plaintiff submitted evidence at the informal hearing, including a letter from her landlord, stating that she was a tenant in good standing, and a letter indicating that she was enrolled in a rehabilitation treatment program. (Id. ¶ 40.) Approximately five months later, on February 15, 2007, Gallagher sent a letter informing Plaintiff that her Section 8 assistance would be terminated as of February 28, 2007. (Id. ¶ 44.) The letter was accompanied by an unsigned, undated informal hearing decision indicating that the Housing Authority's determination to termination Plaintiff's benefits had been sustained. (Id.)

Plaintiff complained that she had not promptly received a written decision from Ryan. (Id. ¶ 45.) Plaintiff alleges that, in response to this complaint, Gallagher simply re-dated the February 15, 2007 letter to March 15, 2007, and attached the same informal hearing decision, which was now dated March 5, 2007 and included an illegible signature ("March 2007 order"). (Id.) On or about March 12, 2007, Biscardi issued an order terminating Plaintiff's Section 8 benefits as of March 31, 2007. Pursuant to Biscardi's order, the Housing Authority did not subsidize Plaintiff's rent after March 31, 2007.

On June 4, 2007, Plaintiff commenced this action against Defendants. On June 11, 2007, this Court denied Plaintiff's request for a temporary restraining order and referred Plaintiff's request for a preliminary injunction to Magistrate Judge William D. Wall for a Report and Recommendation. On June 26, 2007, Judge Wall held a preliminary injunction hearing ("PI Hearing"), at which both parties offered evidence and called witnesses to testify. Subsequently, Defendants filed the pending motion to dismiss.

DISCUSSION

I. Standards of Review

A. Legal Standard Under Rule 12(b)(6)

In Bell Atl. Corp. v. Twombly, --- U.S. ---, 127 S.Ct. 1955, 167 L.Ed. 2d 929 (2007), the Supreme Court disavowed the half-century old standard set forth in Conley v. Gibson that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed. 2d 80 (1957), (overruled by Bell Atl. Corp., 127 S.Ct. 1955 (2007). Holding that "Conley's 'no set of facts' language has been questioned, criticized, and explained away long enough," the Supreme Court expressly rejected the standard in favor of a requirement that the plaintiff plead enough facts "to state a claim for relief that is plausible on its face." Bell Atl. Corp., 127 S.Ct. at 1969, 1974. The Court explained that the complaint "must be enough to raise a right to relief above the speculative level." Id. at 1965. To be clear, Bell Atlantic does not require "heightened fact pleading of specifics, but only enough facts to state a claim for relief that is plausible on its face." Id. at 1974.

The Second Circuit has interpreted Bell Atlantic to require "a flexible 'plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007). Moreover, in applying this new standard, the district court must still accept the factual allegations set forth in the Complaint as true and draw all reasonable inferences in favor of Plaintiff. See Cleveland v. Caplaw Enter., 448 F.3d 518, 521 (2d Cir. 2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005).

B. Legal Standard Upon Review Of A Report And Recommendation

"When evaluating the report and recommendation of a magistrate judge, the district court may adopt those portions of the report to which no objections have been made and which are not facially erroneous." Walker v. Vaughan, 216 F. Supp. 2d 290, 291 (S.D.N.Y. 2002) (citation omitted). A party may serve and file specific, written objections to a magistrate's report and recommendation within ten days of receiving the recommended disposition. See FED. R. CIV. P. 72(b). Upon receiving any timely objections to the magistrate's recommendation, the district "court may accept, reject, or modify, in whole or in part, the findings and recommendations made by the magistrate judge." 28 U.S.C. §636(b)(1)(C); see also Fed. R. Civ. P. 72(b). A party that objects to a report and recommendation must point out the specific portions of the report and recommendation to which they object. See Barratt v. Joie, No. 96-CV-324, 2002 U.S. Dist. LEXIS 3453, at *2 (S.D.N.Y. March 4, 2002) (citations omitted).

When a party raises an objection to a magistrate judge's report, the Court must conduct a de novo review of any contested sections of the report. See Pizarro v. Bartlett, 776 F. Supp. 815, 817 (S.D.N.Y. 1991). However, "[w]hen a party makes only conclusory or general objections, or simply reiterates his original arguments, the Court reviews the Report and Recommendation only for clear error." Barratt, 2002 U.S. Dist. LEXIS 3453, at *2 (citations omitted).

As discussed in more detail below, Plaintiff makes specific objections to certain findings set forth in the Report and Recommendation. Some of the objections are detailed and supported by new arguments; other objections, however, are either conclusory or simply rehash Plaintiff's original arguments. The Court, therefore, will engage in a de novo review of the findings to which Plaintiff specifically objects and supports her objections with new arguments and will review the remainder of the Report and Recommendation for clear error. Under the de novo standard, the Court will make an independent determination of the specific findings to which Plaintiff objects, giving no deference to any previous resolution. See Nomura Sec. Int'l, Inc. v. E*Trade Sec., Inc., 280 F. Supp. 2d 184, 198 (S.D.N.Y. 2003). The Court is not limited to consideration of evidence presented to the magistrate judge, but may review the entirety of the record. See Fed. R. Civ. P. 72(b). II. Plaintiff's Objections To The Report And Recommendation Plaintiff filed objections to the Report and Recommendation on August 17, 2007, in which she disputes the following findings and/or statements made by Magistrate Judge Wall:

(1) that Defendant Housing Authority "must immediately place the transferring tenant in suitable housing and undertake re-certification procedures, including criminal background checks" (R&R at 2.), (2) that Defendants first became aware of Plaintiff's guilty plea on or about October 10, 2005, (3) that Plaintiff is seeking a mandatory injunction rather than a prohibitory injunction, (4) that the first informal hearing conducted by Defendant Ryan was not a final decision on the merits and, therefore, not entitled to res judicata effect, (5) that the doctrine of new evidence allows the admission of evidence regarding Plaintiff's guilty plea, (6) that Plaintiff's argument seems to be rooted in requirements for due process of law, (7) that Plaintiff's reliance on 24 C.F.R. § 982.553(b)(1)(i) is misplaced, (8) that the Housing Authority relied on 24 C.F.R. § 982.553(b)(1)(iii) to terminate Plaintiff's benefits, (9) that the applicable HUD Regulations support Defendants' determination to terminate Plaintiff's Section 8 benefits based on her guilty plea, (10) that the Housing Authority's use of a three-year look-back period to determine whether to terminate Section 8 benefits is permissible, and (11) that Plaintiff's completion of a drug rehabilitation program does not appear to be relevant.

A. Conclusory, Unsupported, And Repetitive Objections

As noted above, certain of Plaintiff's objections are either wholly conclusory, unexplained, or simply reiterate arguments previously made to and considered by Judge Wall.

The first of this type of objection is set forth as Plaintiff's second objection -- an objection to Judge Wall's finding that Defendants apparently first became aware of Plaintiff's guilty plea on or about October 10, 2005. This factual statement is set forth in the Background section of the Report and Recommendation. Plaintiff concedes that on or about October 10, 2005, Defendants received Plaintiff's criminal record from the Suffolk County Police Department, but argues that Defendant Roseann Gallagher had been in communication with an assistant district attorney and no evidence was offered as to when Defendants first discovered that Plaintiff pled guilty. Plaintiff fails, however, to explain the significance of Judge Wall's factual finding. More importantly, this argument contradicts the allegations in the Complaint and a statement made by Plaintiff's attorney at the PI Hearing before Judge Wall; namely, that "[t]he housing authority, after the conviction, then subsequently -- they actually found out about the conviction in October of 2005, and then in April 2006, issued a second termination notice . . . ." (PI Hr'g Tr. 7, June 26, 2007; Compl. ¶ 36.) The Court is perplexed by Plaintiff's argument that no evidence was offered as to when Defendants first learned of Plaintiff's guilty plea.

Nevertheless, it does not appear that Judge Wall relied on this fact in making his recommendation that Plaintiff's request for a preliminary injunction be denied. The only issue to which this fact appears to be relevant is res judicata. Specifically, whether Defendants had a full and fair opportunity to terminate Plaintiff's Section 8 benefits at the first hearing and whether they had new evidence. As Judge Wall correctly notes, "[s]ince plaintiff had not yet entered her plea at the time of the first hearing, clearly that evidence was not available to the Town at that time." (R&R at 12.) Judge Wall does not rely, nor does he need to rely, on when Defendants learned that Plaintiff pled guilty.

Furthermore, "[t]o the extent that [Plaintiff] object[s] to the Magistrate's supposed factual findings, [Plaintiff] prematurely raise[s] this objection. None of the Magistrate's findings of fact nor this Order's recitation of facts are conclusive." RxUSA Wholesale, Inc. v. HHS, No. 06-CV-5086, 2006 U.S. Dist. LEXIS 89232, at *12-13 (E.D.N.Y. Dec. 11, 2006). "'[F]indings of fact . . . made by a court granting a preliminary injunction are not binding at trial on the merits [because] . . . a preliminary injunction is customarily granted on the basis of procedures that are less formal and evidence that is less complete than in a trial on the merits.'" Id. (citing Thornburgh v. Am. Coll. of Obstetricians & Gynecologists, 476 U.S. 747, 806, 106 S.Ct. 2169, 90 L.Ed. 2d 779 (1986)). "A party is not required to prove his case in full at a preliminary-injunction hearing." Id. (internal citations omitted). Consequently, the Court find this objection to be completely without merit.

The Court also rejects Plaintiff's sixth objection, which is stated in a conclusory manner and completely unsupported by argument or reason. Magistrate Judge Wall's finding that Plaintiff seems to be making arguments based on due process of law is not facially erroneous. In fact, Plaintiff's attorney specifically stated that one of the issues raised by this case is a due process issue. (Preliminary Injunction Hr'g Tr. 5 ("And there are by and large two issues that I am raising in this particular case: one is a procedure due process issue . . . .").) Accordingly, the Court finds this objection to be without merit.

The Court addresses the remaining objections in turn.

B. Legal Standard For A Preliminary Injunction - Mandatory Versus Prohibitory Injunction

The Court next addresses Plaintiff's third objection, which challenges Magistrate Judge Wall's finding that Plaintiff is seeking a mandatory injunction rather than a prohibitory injunction.

In most cases, a movant seeking a preliminary injunction must establish "(1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly" in the movant's favor. Fed. Express Corp. v. Fed. Espresso, Inc., 201 F.3d 168, 173 (2d Cir. 2000). For this Court to issue a preliminary injunction against "government action taken in the public interest pursuant to a statutory or regulatory scheme," however, the movant must show "(i) irreparable harm absent the injunction and (ii) a likelihood of success on the merits." Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 114 (2d Cir. 2005) (citations omitted). Moreover, "where the movant seeks a mandatory injunction (one that will alter the status quo) rather than a prohibitory injunction (one that maintains the status quo), the likelihood-of-success standard is elevated: the movant must show a clear or substantial likelihood of success." Hoblock v. Albany County Bd. of Elections, 422 F.3d 77, 97 (2d Cir. 2005).

Plaintiff requests this Court to order Defendants to "continue" Plaintiff's Section 8 benefits pending resolution of this action. As is the case with many preliminary injunctions, Plaintiff's request can be phrased as a mandate, requiring affirmative action, or prohibitively, maintaining the status quo. Essentially, however, Plaintiff asks this Court to order Defendants to reinstate benefits they previously ...


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