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CURTIS v. HOUSING AUTH. OF OAKLAND

September 5, 1990

BEVERLY CURTIS, VIRGINIA THOMAS, CHRISTINE BLANCHARD and ARNITA HINES, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
HOUSING AUTHORITY OF THE CITY OF OAKLAND; HAROLD DAVIS, Executive Director; DONALD A. DUFFY, FREDERICK JAMES, WILLIAM BUFORD, TED DANG, ARABELLA MARTINEZ, and CLARA PROVOST, Members of the Board of Commissioners, Defendants



The opinion of the court was delivered by: LYNCH

 EUGENE F. LYNCH, UNITED STATES DISTRICT JUDGE

 Plaintiffs are tenants in federally assisted public housing projects for low income tenants, owned and operated by defendant Housing Authority of the City of Oakland (hereinafter "OHA"), *fn1" a public housing authority operating under the United States Housing Act of 1937 (hereinafter "the Act"). 42 U.S.C. §§ 1437, et seq. In 1981, OHA adopted a policy discontinuing the provision of stoves to new tenants under the age of 62, continuing maintenance of stoves for existing tenants only for the useful lives of existing stoves, and exempting tenants over the age of 62 from this policy. Plaintiffs allege that this policy violates OHA's obligations under the Act, breaches OHA's contract with the Department of Housing and Urban Development (hereinafter "HUD") for operation of the public housing projects under OHA's management, and constitutes a violation of their civil rights under 42 U.S.C. section 1983 and the fourteenth amendment.

 As the facts which give rise to this case are largely undisputed, plaintiffs and defendants have both filed summary judgment motions seeking a ruling on the legality of OHA's policy regarding provision and maintenance of stoves for its tenants. For the reasons set forth in this order, the Court finds that OHA's policy breaches its operating contract with HUD. The Court therefore grants plaintiffs' motion and denies defendants' motion on this issue.

 I. FACTS AND PROCEEDINGS

 The current system of federally assisted low income housing programs was established by the Act in 1937. The stated purpose of the Act is:

 
To remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income and, consistent with the objectives of this chapter, to vest in local public housing agencies the maximum amount of responsibility in the administration of their housing programs.

 42 U.S.C. § 1437. Stated simply, the Act authorizes HUD to provide financial assistance to local public housing authorities (hereinafter "PHA's") to develop and operate low income housing projects which follow HUD guidelines. Rental payments by the tenants of such projects are statutorily limited to a certain percentage of their income. 42 U.S.C. § 1437a (hereinafter "the Brooke Amendment"). In return for rental payments, the tenants are entitled to reside in "decent, safe, and sanitary dwellings." Id.2

 The terms and conditions of HUD's provision of financial assistance to OHA are governed by an "Annual Contributions Contract" (hereinafter "ACC") between HUD and OHA. The ACC dictates to OHA many of the aspects of the development and operation of its low income housing projects in some detail. In consideration of OHA adhering to these obligations in the development and operation of the projects, HUD agrees in the ACC to provide financial assistance to OHA, including federal guarantees for bond issues for development as well as subsidies to repay the bonds and to meet operating expenses.

 Several specific provisions of the ACC are material to the issue currently before the Court. Section 312 of the ACC defines a "project" as including "all personal property . . . which is acquired and held in connection with such Project." Section 313 of the ACC permits OHA to dispose of personal property after making a determination, in accordance with section 308, that such personal property is in "excess to the needs" of the project. Section 308 provides that a determination that personal property is in excess of the needs of the project can be made if the personal property is "no longer useful or necessary to the development or operation of such Project." *fn3" Finally, section 209 requires OHA to maintain its projects "in good repair, order, and condition."

 In 1975, HUD implemented the Performance Funding System (hereinafter "PFS") to calculate the level of operating subsidies which PHA's were to receive. Under PFS, HUD determines the annual operating subsidy to a particular project by subtracting that project's expected income from a predetermined expense level; the difference between these two figures constitutes HUD's operating subsidy to the PHA. The expense level of a PHA is determined by examining the project's operating budget, as well as other factors such as a project's size and age, during a base year and adjusting this expense level annually to account for inflation. *fn4"

 On August 10, 1981, OHA's Board of Commissioners adopted Resolution Number 2439, which set forth its new policy regarding provision and maintenance of stoves for its tenants. *fn5" It does not appear from the facts that OHA ever sought HUD approval for this action; section 308 of the ACC does not require that OHA seek such approval. Additionally, OHA never made any public statement regarding a determination that stoves were in excess to the needs of its projects, nor did it make any public finding that stoves were "no longer useful or necessary" to its projects. Its only contentions to the contrary seem to be based on determinations reached privately and/or after Resolution Number 2439 was adopted. *fn6"

 Subsequent to OHA's adoption of its new policy regarding stoves, HUD issued a document entitled Notice 83-35 on July 13, 1984. This document addressed concerns raised by HUD Field Offices which had received requests by PHA's to phase out provision of major appliances. HUD responded to these concerns by directing Field Offices to inform the requesting PHA's that their obligations under the ACC regarding the maintenance and disposition of personal property required continuation of provision and repair of major appliances if the project was developed including these appliances. HUD also directed the Field Offices to inform requesting PHA's that phasing out provision and maintenance of major appliances would be permitted only with HUD approval, following provision of an allowance to the affected tenant to replace the removed appliance. *fn7"

 On April 26, 1989, plaintiffs initiated this action by filing their complaint in California Superior Court seeking a writ of mandate to compel OHA to comply with its constitutional, statutory and contractual duties. Plaintiffs further sought damages, as well as declaratory and injunctive relief. OHA timely removed the case to this Court on May 26, 1989. On September 27, 1989, plaintiffs filed an amended complaint which included class action allegations.

 On April 20, 1990, plaintiffs and OHA filed their cross-motions for summary judgment currently before the Court; plaintiffs also filed a motion for class certification that same date. At oral argument on the motions on May 18, 1990, the Court granted plaintiffs' motion for class certification and took the cross-motions for summary judgment under submission pending filing of an amicus curiae brief by HUD. HUD filed a brief from another case to which it was a party *fn8" with somewhat similar facts and supplemented this submission with a further brief specific to the facts of this case upon request by the Court.

 II. STANDARD FOR SUMMARY JUDGMENT

 Federal Rule of Civil Procedure 56(c) provides that a motion for summary judgment shall be granted if the moving party establishes the absence of any genuine issue of material fact which would preclude a ruling by the Court on the motion as a matter of law. Where, as here, the operative facts are largely undisputed, the disputed issue is especially susceptible to disposition by a summary judgment motion. Braxton-Secret v. A.H. Robins Co., 769 F.2d 528, 531 (9th Cir. 1985). In addition, interpretation and construction of statutes and unambiguous contracts are traditionally matters of law, which are therefore appropriate matters for summary adjudication. Western Oil & Gas Ass'n v. United States Envtl. Protection Agency, 767 F.2d 603, 606 (9th Cir. 1985) (statutory construction); Edison v. Reliable Ins. Co., 664 F.2d 1130, 1131 (9th Cir. 1981) (unambiguous contracts). *fn9"

 III. DISCUSSION

 Plaintiffs make two arguments that they are entitled to a ruling that OHA's policy regarding provision and maintenance of stoves to tenants is somehow illegal. First, they contend that the Brooke Amendment requires OHA to provide stoves to tenants in return for the tenant's statutorily limited rental payments. They arrive at this conclusion, even though HUD disputes this point, by examining the language of the Brooke Amendment itself, and by interpreting HUD's regulations promulgated to implement the Brooke Amendment. Secondly, plaintiffs argue that OHA has breached its obligation to HUD and to them as third party beneficiaries under the ACC to ...


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