Northgate Housing Limited v. White, No. S1046-03 CnC (Norton, J., Nov. 19, 2004)

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STATE OF VERMONT                                                       SUPERIOR COURT
Chittenden County, ss.:                                            Docket No. S1046-03 CnC



NORTHGATE HOUSING LIMITED

v.

CHRISTA WHITE AND PETER WHITE

v.

NORTHGATE RESIDENTS ASSOCIATION, INC.



                                            ENTRY
        This case concerns an eviction proceeding against Christa and Peter White, tenants
in Northgate Apartments in Burlington. The Whites’ landlord, Northgate Housing
Limited Partnership, initiated this proceeding allegedly because Christa White refused to
sign an amendment to her lease agreement. The Whites have counterclaimed that the
eviction was retaliatory, in violation of 9 V.S.A. § 4465, and that Northgate Housing has
violated their federal rights. The Whites have also filed a third-party complaint against
Northgate Residents Association, Inc., the tenant organization for the Northgate
apartment complex. The Whites allege that Northgate Residents violated several federal
rights and acted ultra vires. In their counterclaim and third-party complaint, the Whites
seek declaratory and injunctive relief, as well as a dismissal of Northgate Housing’s
complaint.
       Northgate Residents brings a motion for judgment on the pleadings pursuant to
V.R.C.P. 12(c), arguing that the Whites have no right of action by which they can assert
that Northgate Residents violated their federal rights and that the Whites’ ultra vires
claim is moot. Northgate Housing brings a motion for summary judgment, also arguing
that the Whites lack a right of action by which to assert that Northgate Housing violated
their federal rights. Northgate Housing also argues that the Whites cannot prove that the
eviction action was retaliatory, given that Christa White ultimately signed the lease
amendment.
       The Whites agree that they no longer have a claim for ultra vires. Therefore, the
court dismisses this claim by stipulation of the parties. The court also dismisses the
Whites’ third-party complaint against Northgate Residents because the Whites have no
right of action, as discussed below. For the same reason, the court grants Northgate
Housing’s summary judgment motion with regard to the counterclaims regarding
violations of the Whites’ federal rights. Finally, the court denies Northgate Housing’s
summary judgment motion with regard to the retaliatory eviction counterclaim, because
the Whites have provided adequate evidence to demonstrate a dispute as to material facts.
      The facts are largely undisputed. Where there are disputes, the court gives the
Whites, as the nonmoving party, all benefits of reasonable doubt.
       Northgate Apartments is subject to U.S. Department of Housing and Urban
Development regulations. This dispute began when Christa White refused to sign a lease
amendment that gave Northgate Housing the right to terminate a lease should a resident
engage in certain criminal activity in or around the apartment complex. Ms. White
believed that the amendment was not properly adopted by Northgate Residents. In the
winter and spring of 2003, Northgate Housing sent several notices to Ms. White that she
was in violation of her lease by not signing the amendment.
       Ms. White had been active in organizing tenants to bring complaints before
Northgate Housing. She was active with the Concerned Residents of Northgate, Inc.,
which had complained to the U.S. Department of Housing and Urban Development that
Northgate Residents was not properly independent from the property managers. Shortly
before Northgate Housing began eviction proceedings, she was elected to the Northgate
Residents Board of Directors.
       Northgate Residents’s Board membership policy provides that each member must
be a tenant in good standing and in compliance with all the terms of the Northgate
Housing lease. After Northgate Housing began its eviction proceeding against Ms. White,
the Northgate Residents Board determined that she was not a tenant in good standing and
voted to remove her from the Board.
       The Whites’ counterclaim argues that Northgate Housing brought the eviction
claim to retaliate against her for joining the Board in the first place. In support of this
argument, the Whites point to surrounding circumstances of the eviction and to specific
statements in a deposition of a former Northgate Residents employee. In essence, this
employee testified that Northgate Housing was furious that Ms. White had been elected
to the Board and used the eviction action as a means to get her off the Board.
      The Whites also argue that Northgate Residents has violated several of Ms.
White’s federal rights, including her rights under HUD tenant organization regulations
and her First Amendment right to free speech.
       The court first addresses the Whites’ arguments with regard to federal rights
before turning to the retaliatory eviction counterclaim.
       Northgate Housing and Northgate Residents both argue that the Whites do not
have a cause of action under HUD statutes and regulations. Because HUD statutes do not
expressly confer a right of action, the Whites can bring their HUD-related claims only
through an implied right of action. In addressing implied rights of action, the Supreme
Court of the United States has drifted away from its mechanical, four-factor approach in
Cort v. Ash, 422 U.S. 66 (1975), to an approach whereby the primary goal is to determine
whether Congress intended to create a private right of action. As the Court stated in
Alexander v. Sandoval, 532 U.S. 275 (2001):
              The judicial task is to interpret the statute Congress has
              passed to determine whether it displays an intent to create not
              just a private right but also a private remedy. Statutory intent
              on this latter point is determinative. Without it, a cause of
              action does not exist and courts may not create one, no matter
              how desirable that might be as a policy matter, or how
              compatible with the statute.
Id. at 286–87 (citations omitted).



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       In determining whether a statute confers an implied right of action, the Sandoval
Court ascertained the individuals whom the statute addressed directly. According to this
approach, if the statutory text focuses on a class of beneficiaries, then the statute contains
rights-creating language that indicates a congressional intent to create a private right of
action for members of that class. If, however, the text focuses on individuals being
regulated or an agency enacting the regulation, an implied right of action is unlikely for
those who benefit from the regulations. See Sandoval, 532 U.S. at 288–89.
        Also, the Court in Sandoval held that regulations alone cannot confer implied
rights of action. Rather, the right of action must be implied by an agency’s governing
statute. Therefore, no matter how many protections a regulatory scheme appears to
confer, these protections do not provide an implied right of action without statutory
provisions to specifically support them. See id. at 291.
        Here, the tenant organization regulations that the Whites cite are authorized by
two statutory provisions: 12 U.S.C. § 1715z–1b and 42 U.S.C. § 3535(d). See Tenant
Participation in Multifamily Housing Projects, 61 Fed. Reg. 57,960, 57,961 (1996) (final
rule) (citing rulemaking authority). Section 3535(d) merely provides broad rulemaking
authority for the HUD Secretary and does not confer any actual rights or remedies.
Section 1715z–1b contains a statement of purpose, § 1715z–1b(a); general rights of
tenants, § 1715z–1b(b); and rulemaking authority, § 1715z–1b(c). In its entirety, §
1715z–1b(b), the most likely source of an implied right of action, states:
              (b) Rights of tenants
              The Secretary shall assure that--
                     (1) where the Secretary's written approval is required
              with respect to an owner's request for rent increase,
              conversion of residential rental units to any other use
              (including commercial use or use as a unit in any
              condominium or cooperative project), partial release of
              security, or major physical alterations or where the Secretary
              proposes to sell a mortgage secured by a multifamily housing
              project, tenants have adequate notice of, reasonable access to
              relevant information about, and an opportunity to comment
              on such actions (and in the case of a project owned by the



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             Secretary, any proposed disposition of the project) and that
             such comments are taken into consideration by the Secretary;
                    (2) project owners not interfere with the efforts of
             tenants to obtain rent subsidies or other public assistance;
                    (3) leases approved by the Secretary provide that
             tenants may not be evicted without good cause or without
             adequate notice of the reasons therefor and do not contain
             unreasonable terms and conditions; and
                     (4) project owners do not impede the reasonable
             efforts of resident tenant organizations to represent their
             members or the reasonable efforts of tenants to organize.
        Although the “Rights of Tenants” heading may be rights-creating language, the
entire subsection directs the HUD Secretary to regulate project owners (i.e., landlords
receiving HUD assistance), not tenants. Thus, the statute focuses on those regulated and
on the regulating agency, rather than the class of beneficiaries. Under the Sandoval
Court’s analysis, this section does not confer an implied right of action. See Banks v.
Dallas Hous. Auth., 271 F.3d 605, 611 (5th Cir. 2001) (applying Sandoval to similar
HUD statute). And because the statute does not confer an implied right of action,
regulations enacted under the statute’s authority cannot confer implied rights of action
either.
        The statement of purpose, 12 U.S.C. § 1715z–1b(a), also fails to demonstrate an
implied right of action.1 The broad purpose it conveys does not expressly identify tenants
as the sole beneficiaries. Rather, the section merely notes the “importance and benefits”
of tenant organizations. Tenant organizations may be just as important and beneficial to
landlords as they are to tenants. Furthermore, the Supreme Court has not generally relied


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                       The purpose of this section is to recognize the importance and benefits of
               cooperation and participation of tenants in creating a suitable living environment
               in multifamily housing projects and in contributing to the successful operation of
                    such projects, including their good physical condition, proper maintenance,
                                      security, energy efficiency, and control of operating costs.

                                                                       12 U.S.C. § 1715z–1b(a).

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on broad statements of policy and practice to determine that a statute confers a right. See,
e.g., Gonzaga Univ. v. Doe, 536 U.S. 273, 288 (2002).
       In sum, without a right of action, the Whites’ attempt to privately enforce HUD
regulations in this case is unavailing.
       This court also rejects the Whites’ claim that Northgate Housing and Northgate
Residents have violated their First Amendment right to free speech. The First
Amendment prevents only governments from abridging free speech rights; it does not
prevent private individuals or private entities from doing so. See 16A Am. Jur. 2d
Constitutional Law § 408 (1998). Neither Northgate Housing or Northgate Residents is
an arm of the state. Hence, the Whites’ First Amendment claim has no merit.
        Finally, the Whites claim they have a right of action to enforce the Supremacy
Clause, arguing that actions of Northgate Housing or Northgate Residents contravene
federal law, which is the “supreme Law of the Land.” U.S. Const. art. VI. Although
federal courts have recognized a Supremacy Clause right of action, it applies only in
cases where state or municipal laws, regulations, or ordinances contravene federal law.
See Qwest Corp. v. City of Santa Fe, 380 F.3d 1258, 1263–64 (10th Cir. 2004). Again, at
issue in the instant case are actions and policies of private entities, not arms of the state.
Thus, the Supremacy Clause does not provide the Whites with a right of action, either.
        With respect to the retaliatory eviction counterclaim, Northgate Housing argues
that the Whites have not met their burden and that the counterclaim should be dismissed
by summary judgment. Section 4465 of Title 9 of the Vermont Statutes Annotated
prohibits a landlord from retaliating “by establishing or changing terms of a rental
agreement or by bringing or threatening to bring an action against a tenant who . . . has
organized or become a member of a tenant’s union or similar organization.” Because this
is a counterclaim, the Whites have the burden of proof, but they need only provide
objective evidence that Northgate Housing’s actions were retaliatory. Houle v.
Quenneville, 173 Vt. 80, 90–91 (2001). “[T]enants can rely on the surrounding facts and
circumstances to fulfill their burden of proving retaliatory eviction.” Id.
      Here, the Whites have met their burden of proof to defeat a summary judgment
motion. The Whites were longtime resident organizers at Northgate, having helped form
“Concerned Residents of Northgate.” The Whites point to several excerpts from

                                              6
deposition testimony which indicate that Northgate Housing was concerned about the
Whites being elected to the Northgate Residents Board. As a former Northgate Residents
employee testified, Northgate Housing “wanted them to be taken off the board” and
directed Northgate Residents employees to “find a way to either have them in violation of
their lease or find some other clause that prohibited them from being allowed to be on the
[Northgate Residents] board.” This same former employee testified that Northgate
Housing later discovered that an eviction action would force the Whites off the Northgate
Residents Board, and that such an action was Northgate Housing’s “out” or excuse
through which it could accomplish this goal.
        There is contrary evidence that the property manager had decided to begin eviction
proceedings before the Whites were elected to the Northgate Residents Board. This
evidence would indicate that the eviction had nothing to do with the White’s membership
to the board. But in a summary judgment motion, the court must give the nonmoving
party the benefit of all reasonable doubts. Carr v. Peerless Ins. Co., 168 Vt. 465, 476
(1998). Hence, the testimony of the former Northgate Residents employee weighs in
favor of denying Northgate Housing’s motion.
       Although the Whites’ third-party complaint does not expressly raise a retaliatory
claim against Northgate Residents, the parties suggest that Northgate Residents may be
subject to injunctive or declaratory relief to ensure that Northgate Housing does not use
Northgate Residents to retaliate against the Whites. Thus, as the parties suggest, there
may be a derivative retaliatory claim against Northgate Residents. Such a claim lacks
merit here. The Whites’ retaliatory claim against Northgate Housing essentially posits
that Northgate Housing brought its eviction claim because the Whites engaged in
organizing residents, especially by being elected to the Northgate Residents board. Thus,
the eviction was retaliatory. Northgate Residents was not in a position to evict the Whites
because it was not the landlord in this case and the parties have not represented that
Northgate Residents had the power to evict any residents. Therefore, the retaliatory claim
against Northgate Residents has no merit and is dismissed.
       In summation, the Whites have no right of action to bring any of their claims
regarding a violation of rights imbedded in HUD regulations. Hence, Northgate Residents
motion to dismiss and Northgate Housing’s motion for summary judgment are granted
with respect to these claims. The Whites also have no meritorious claim that Northgate

                                             7
Residents was retaliating through the eviction proceeding because Northgate Residents
was not in a position to evict the Whites. And because the court has dismissed the ultra
vires claim, all claims against Northgate Residents have been dismissed. The court
therefore dismisses the Whites’ third-party complaint. With regard to the Whites’
counterclaim for retaliatory eviction against Northgate Housing, the court denies
Northgate Housing’s summary judgment motion.
                                         ORDER
       Northgate Resident’s motion to dismiss is GRANTED. Northgate Housing’s
motion for summary judgment is GRANTED in part and DENIED in part, consistent
with the above entry.


       Dated at Burlington, Vermont, November 19, 2004.



                                                          _____________/s/___________
                                                                                Judge




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