SYVLIA'S HAVEN, INC. v. MASSACHUSETTS DEVELOPMENT FIN. AGENCY (D.Mass. 2005)

NATHANIEL GORTON, District Judge

In the present dispute, Plaintiff Sylvia's Haven, Inc. ("SHI"), a non-profit homeless service provider, alleges that defendant Massachusetts Development Finance Agency ("MassDevelopment") violated various federal and state laws in its effort to evict SHI from property that was formerly part of Fort Devens. Defendant filed a motion to dismiss Plaintiff's case for lack of subject matter jurisdiction which was referred to Magistrate Judge Robert B. Collings for resolution. Magistrate Judge Collings issued a Report and Recommendation ("RR") in which he recommended that Defendant's Motion be allowed.

Plaintiff objects to the RR and asks this Court to decline to accept and adopt it and to deny Defendant's Motion to Dismiss for lack of subject matter jurisdiction. The defendant has filed a memorandum of law in support of the RR. Having considered the pleadings, pro and con, the Court now resolves the case as follows.

I. Background

A. Facts

The factual background of this case is lengthy and complex. In short summary, this case arises out of efforts by MassDevelopment to evict SHI from property that was formerly part of Fort Devens. SHI was awarded the property and entered into a lease with MassDevelopment, a qualified "local redevelopment authority", under the McKinney-Vento Homeless Assistance Act ("McKinney-Vento Act") and the Base Closure Community Redevelopment and Homeless Assistance Act of 1994 ("Base Closure Act"). Those are the two federal statutes that ensure that surplus federal property will be provided to homeless service providers for use to meet the needs of the homeless.

After the lease was signed, problems arose between the parties. SHI claims that MassDevelopment has taken a series of actions to deprive SHI of the meaningful use of the awarded property while asserting that SHI owes allegedly unlawful fees for use of the property. According to Plaintiff, these efforts have culminated in MassDevelopment's "illegal attempt" to evict SHI and its resident homeless families from the Fort Devens premises in denial of their federal rights under the Base Closure Act.

B. Procedural History

SHI instituted litigation against MassDevelopment in Massachusetts state court to defend against MassDevelopment's eviction efforts and seeking a declaration that it does not owe MassDevelopment the amount alleged, citing, inter alia, the McKinney-Vento Act education provisions and the 1994 Base Closure Act. MassDevelopment removed the case to this Court in late December, 2002 based on federal question jurisdiction. After MassDevelopment filed its answer and counterclaims, SHI filed a First Amended Verified Complaint asserting both state and federal claims.

The claims were for: 1) declaratory judgment pursuant to M.G.L. c. 213A § 1 et seq. (Count I), 2) violations of the McKinney-Vento Act and 42 U.S.C. § 1983 (Count II), 3) breach of the lease (Count III), 4) breach of the covenant of quiet enjoyment (Count IV), 5) breach of the implied warranty of habitability (Count V), 6) constructive eviction (Count VI), 7) preliminary and permanent injunction, based on violations of both the McKinney-Vento Act and the Base Closure Act (Count VII), 8) violation of the Massachusetts Civil Rights Act, M.G.L. c. 12, § 11I et seq. (Count VIII), and 9) a claim of right to title to real property or the use and occupation thereof under M.G.L. c. 184, § 15 (Count IX).

After an unsuccessful attempt at alternative dispute resolution, MassDevelopment filed a motion for judgment on the pleadings, followed by a motion to dismiss for lack of subject matter jurisdiction. The latter took precedence and after submission of memoranda in support of and opposition to that motion, a hearing was held on May 2, 2005 before Magistrate Judge Collings. He issued his RR on September 1, 2005, regarding the motion to dismiss for lack of subject matter jurisdiction in which he recommended that Counts I, II, VII, and IX of the Complaint be dismissed "to the extent they involve claims based on federal law", and that the remainder of the case be remanded to the trial court of the Commonwealth of Massachusetts.

Pursuant to Fed.R.Civ.P. 72(b), SHI filed its objections to the RR. They were submitted in the form of an over-long brief without leave of court but were considered by the Court nevertheless. The Court now makes a de novo determination upon the record, as supplemented by further submissions of counsel, pursuant to the same federal rule. See Phinney v. Wentworth Douglas Hosp., 199 F.3d 1, 5 (1st Cir. 1999).

II. Legal Analysis

Plaintiff's objections to Judge Collings's RR are based on three arguments: 1) the Report incorrectly concludes that SHI is not permitted to bring its § 1983 claim to enforce rights under the McKinney-Vento Act, 2) the Report incorrectly concludes that SHI cannot bring its § 1983 claim to enforce rights under the Base Closure Act and 3) the Court should permit SHI to amend and replead the Complaint to address the issues raised in the RR. This Court will address each of these arguments seriatim.

A. SHI's § 1983 Claim to Enforce Rights Under the McKinney-Vento Act

SHI's argument on this issue contains two elements. First, SHI argues the text and structure of the McKinney-Vento Act clearly provide homeless children and youths with a number of educational rights, including the right to "the same free, appropriate public education . . . as provided to other children and youths", 42 U.S.C. § 11431(1), to be enjoyed free from any burden imposed by the State. SHI further argues that it has third-party and associational standing to assert this right on behalf of its resident homeless children. Second, SHI argues that the McKinney-Vento Act also grants specific rights to homeless service providers like SHI and that those rights are properly enforceable under § 1983.

1. Enforceable Rights of Homeless Children Under the McKinney-Vento Act

The RR recites the relevant statutory provisions of the McKinney-Vento Act. On the basis of those provisions, SHI argues that the Act confers a number of educational rights on homeless children but does not indicate a Congressional intent to foreclose a remedy under § 1983. Magistrate Judge Collings did not reject those contentions.

The crucial question left unanswered by Plaintiff's objections to the RR is one of standing. The RR concludes that SHI has neither third-party nor associational standing to bring a § 1983 claim under the McKinney-Vento Act on behalf of its resident homeless children, while SHI strenuously objects to that recommendation.

a. Third-Party Standing

To establish third-party standing, SHI needs to show that: 1) it personally has suffered an injury in fact that gives rise to a sufficiently concrete interest in the adjudication of the absent party's right, 2) the litigant has a close relationship to the absent party and 3) some hindrance exists that prevents the absent party from protecting its own interests. Eulitt v. State of Maine, Dep't of Educ. 386 F.3d 344, 351 (1st Cir. 2004). The RR concludes that SHI cannot get past the first prong of the Eulitt test. Specifically, Magistrate Judge Collings found that SHI lacks third-party standing to assert the rights of its resident homeless children and families because there was no allegation or evidence that the homeless children living at Fort Devens are not receiving that to which they are entitled by the education provisions of the McKinney-Vento Act, namely a free public education.

SHI responds to that conclusion with three objections:

1) The Magistrate Judge fails to appreciate the fact that only notice pleading is required of it. See Fed.R.Civ.P. 8.

2) The RR would impose a requirement for third-party standing that has not been articulated in any Supreme Court or First Circuit decision addressing the issue, namely that non-litigants themselves suffer an injury in fact. According to SHI, the well-established rules of third-party standing require only that the litigant, as the party seeking access to federal court, suffer an injury in fact sufficient to confer Article III standing.

3) Even if third-party standing rules did require non-litigants to suffer an injury in fact, such an injury need not be a complete deprivation of the right being asserted by the litigating party. Instead, injury in fact requires only that the plaintiff have "a direct stake in the outcome — even though small". United States v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669, 689 n. 14 (1973).

SHI's arguments are unpersuasive. The RR has correctly interpreted the standard for third-party standing. Under the Eulitt test, although the litigant is required to demonstrate an injury in fact sufficient to confer Article III standing, the absent third party must also have suffered some sort of injury to or infringement of his rights. See Playboy Enters. v. Pub. Serv. Comm'n, 906 F.2d 25, 37 (1st Cir. 1990). At no time has SHI asserted that the resident homeless children at Fort Devens have suffered any kind of deprivation of their right to a free public education at the hands of MassDevelopment. Under SHI's interpretation of third-party standing, it could sue MassDevelopment on behalf of its resident homeless children even when those children would have no right to sue MassDevelopment on their own. That would be a perversion not only of the principle behind third-party standing but also of standing principles in general.

SHI cites two cases in support of its position that the absent third-party need not suffer an injury in fact in order for the litigating party to bring suit on his/her behalf: Powers v. Ohio, 499 U.S. 400 (1991), and Planned Parenthood of Northern New England v. Heed, 390 F.3d 53 (1st Cir. 2004). Neither case supports SHI's position. In Powers, the Supreme Court held that a criminal defendant had standing to raise the third-party equal protection claims of jurors excluded by the prosecution because of their race. Those jurors suffered an injury in fact that would have allowed them to bring suit on their own. In Heed, as to which the Supreme Court granted certiorari in May, 2005, the First Circuit granted doctors third-party standing to challenge a New Hampshire law that required parental notification before a minor child could obtain an abortion. The absent third-party minors in that case would suffer an injury in fact under the law, specifically the deprivation of their access to medical services and specific risks to their health. In both Powers and Heed, a third party was allowed to bring suit on behalf of an absent party only when that absent party suffered or would suffer an injury in fact. These cases are in direct contravention to the propositions for which SHI cited them.

SHI also contends that because its resident homeless children will, in fact, suffer other injuries, namely the loss of the services SHI provides, if it is evicted from the Fort Devens property, it has third-party standing to assert the rights of the children under the McKinney-Vento Act. Once again, SHI's argument does not withstand close scrutiny. First, SHI cannot allege that it is the only homeless service provider capable of meeting the needs of the homeless children at Fort Devens. Second, the McKinney-Vento Act does not provide homeless children with a statutory right to receive support services but rather a right to a free public education. Section 1983 permits a party to sue in federal court only to protect "rights" granted by statute, not for the more amorphous concept of "interests" or "benefits". See Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002). Even if SHI were an indispensable service provider, which it is not, its eviction from Fort Devens would not impact the right of the resident homeless children to a free public education. Where the resident homeless children at Fort Devens have suffered no deprivation of their right to a free public education nor are in danger of suffering such a deprivation after SHI's eviction, SHI has no third-party standing to assert claims under the McKinney-Vento Act.

b. Associational Standing

Plaintiff next objects to the RR's finding that SHI lacks associational standing to assert the rights of its members under the McKinney-Vento Act. The Magistrate Judge concludes that SHI has no associational standing because it is not an "association".

SHI contends that it exhibits organizational traits that confer status as an "association" for purposes of associational standing. Counsel point to the fact that it is a non-profit charitable corporation organized under M.G.L. c. 180 that specializes in providing transitional housing to homeless and abused mothers and their children. SHI also argues that its charitable organization activities allow it to function as a traditional association, as when it requires all residents to share in the expenses related to the residence and holds weekly meetings at which grievances may be raised. See Risinger v. Concannon, 117 F. Supp. 2d 61, 71 (D. Me. 2000) (noting that the existence of grievance procedures for current and prospective clients is indicia of membership for the purpose of associational standing).

SHI may not be a formal association with members but it has the indicia of an association as the Supreme Court envisioned in Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333 (1977). In that case the Supreme Court held that a state commission had standing to assert the claims of apple growers and dealers because: 1) it served a specialized segment of the community which was the primary beneficiary of its activities, including the prosecution of this kind of litigation, 2) its beneficiaries had all the traditional indicia of membership in an organization and 3) its fortunes were closely tied to those of its constituency. The same may be said of SHI in its relationship to its resident homeless children. On the basis of this analysis, the Court concludes that the RR was incorrect when it found that SHI is not an association.

Nevertheless, the fact that SHI is an association does not mean that it has associational standing to assert the claims of its resident homeless children. To establish associational standing, the plaintiff must satisfy three requirements: 1) the members of the association would otherwise have standing to sue in their own right, 2) the interests it seeks to protect are germane to the organization's purpose and 3) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. United Food Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 553 (1996).

SHI contends that it has associational standing, but once again it stumbles on the first step. As this Court noted in its analysis of third-party standing in the preceding section, SHI cannot demonstrate that its resident homeless children suffered an injury in fact that was fairly traceable to MassDevelopment's actions. As long as SHI is unable to show an injury to the right of the resident homeless children to a free public education, it cannot assert associational standing on their behalf. In that regard, the conclusion in the RR is correct and this Court will not disturb it.

2. Enforceable Rights of SHI Under the McKinney-Vento Act

On a separate issue, SHI objects to the RR's finding that it has no enforceable rights of its own under the McKinney-Vento Act. Although the plain text and structure of the Act do not indicate that homeless service providers have enforceable rights, SHI points to the Senate Report issued upon enactment which stated that the Act was intended to "be enforceable in any court of competent jurisdiction by homeless children or their representatives." S. Rep. No. 101-436, at § 5(c) (1990).

SHI's argument is unavailing. It has been the practice of the Supreme Court to find that plain meaning can be overcome by compelling evidence of a contrary legislative intent. See, e.g., Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982). In this case, however, the relevant legislative history is inconclusive at best. Where the plain text of the statute is clear and unambiguous, a court must give effect to that expressed intent of Congress. See K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988). Under this principle, SHI has no enforceable right of its own under the plain language of the McKinney-Vento Act.

B. SHI's § 1983 Claim to Enforce Rights Under the Base Closure Act

The RR recommends dismissing SHI's § 1983 claim relating to the Base Closure Act on the grounds that the Act does not confer an enforceable right to homeless service providers and that, in any event, SHI has not suffered any injury in fact. SHI disputes that reading of the Act and application of the facts of this case.

1. Enforceable Rights of Homeless Service Providers Under the Base Closure Act

Title V of the McKinney-Vento Act, which required federal landholding agencies to make their surplus property available to homeless service providers and to state and local agencies for use in serving the needs of homeless people, was repealed by enactment of the Base Closure Act of 1994. The latter statute was enacted in the midst of the process by which SHI acquired a lease of property at Fort Devens. Realizing that there would be homeless service providers such as SHI that would find themselves caught between two statutes, Congress included language in the Base Closure Act, 10 U.S.C. § 2687 note, to address their unique situation. Section 2687 note specifically provides:

(5) (A) In preparing a redevelopment plan for buildings and property at an installation covered by such paragraph (7) by reason of this subsection, the redevelopment authority concerned shall

* * * * *

(B) in the case of any application by representatives of the homeless that was approved by the Secretary of Health and Human Services before the date of enactment of this Act, ensure that the plan adequately addresses the needs of the homeless identified in the application by providing such representatives of the homeless with

(i) properties, on or off the installation, that are substantially equivalent to the properties covered by the application; (ii) sufficient funding to secure such substantially equivalent properties; (iii) services and activities that meet the needs identified in the application; or (iv) a combination of the properties, funding, and services and activities described in clause (i), (ii), and (iii).

10 U.S.C. § 2687 note (emphasis added). According to SHI, this statutory language confers upon "representatives of the homeless", like themselves, a sharply defined right to one of the four benefits identified therein.

For convenience, citations to the 1994 amendments to the Base Closure Act will be to the note following 10 U.S.C. § 2687.

SHI attempts to marshal various other legal sources in support of its argument. First, SHI points to the Department of Housing and Urban Development ("HUD") regulation interpreting § 2687 note. That HUD regulation no longer refers to "such representatives of the homeless" but instead uses the term "the Title V applicant". 24 C.F.R. § 586.10. Second, SHI notes that the statute and regulation employ mandatory ("shall"), rather than precatory ("may"), terms upon state redevelopment agencies.

Finally, SHI cites the legislative history of § 2687 note and argues that such history bolsters its own interpretation of the statutory language. For example, Senator Pryor, one of the co-sponsors of the bill, spoke repeatedly in terms of the "homeless assistance groups" that would be affected by the legislation. 140 Cong. Rec. S14457 (daily ed. Oct. 6, 1994). Senator Feinstein, the bill's other co-sponsor, included a letter from Maria Foscarinis, Executive Director of the National Law Center for Homelessness and Poverty (NLCHP), in the legislative record. In her letter, Ms. Foscarinis stressed the need to preserve the rights of homeless providers with approved applications. 140 Cong. Rec. S14459 (daily ed. Oct. 6, 1994). SHI argues that the legislative history demonstrates that Congress was aware of the potential unfairness to homeless service providers that the change in the law could exact and Congress specifically legislated to preserve the rights for which homeless providers had already applied and which had been approved.

SHI also contends there is no evidence that Congress intended to foreclose a remedy under § 1983 for violations by state redevelopment agencies under § 2687 note. SHI points out there is no other provision in § 2687 note, the regulations promulgated thereunder or in the entire Base Closure Act for any kind of administrative enforcement mechanism to enforce compliance with these obligations by state redevelopment agencies.

The statutory language of the Base Closure Act is ambiguous with respect to the issue of whether homeless providers have their own enforceable right. The Magistrate Judge concluded in the RR that the references in the Act to "representatives of the homeless" were made in the context of identifying the needs of the homeless and directing efforts toward those needs. Although that argument is persuasive, SHI's alternative interpretation is equally plausible. Faced with such an ambiguity, it is appropriate for this Court to utilize other tools of statutory interpretation.

The legislative history of the Base Closure Act appears to bolster SHI's interpretation that homeless providers were intended to have enforceable rights under § 2687 note. Moreover, given the ambiguity of the statutory language, this Court is permitted to give weight to HUD's interpretation. See Chevron U.S.A., Inc., v. Natural Res. Def. Council, 467 U.S. 837, 842-3 (1984) ("[I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute"). In this particular case, HUD's interpretation of § 2687 note suggests the conveyance of enforceable rights to homeless providers such as SHI and nothing about that interpretation appears unreasonable or impermissible. Although this is a close question, this Court affords Plaintiff the benefit of all reasonable inferences on a motion to dismiss based on Fed.R.Civ.P. 12(b) (1) and finds that it does have an enforceable right under the Base Closure Act.

2. Determination of Whether SHI Has Suffered an Injury in Fact

The RR concludes that, even if the Base Closure Act did give enforceable rights to a homeless service provider, SHI lacks standing to pursue its § 1983 claim based upon the Base Closure Act because it has suffered no injury in fact. The Magistrate Judge found that SHI's rights under the Base Closure Act were fully satisfied when it received a lease to the property for which it had applied to the Secretary of Health and Human Services. According to the RR, once MassDevelopment satisfied its obligations under the Base Closure Act by entering into a lease with SHI for property at Fort Devens, its legal relationship with SHI was henceforth grounded in the lease, not the statute.

SHI submits several objections to those RR findings. First, SHI contends that MassDevelopment never provided the property to it. That allegation is without merit given the fact that SHI occupied the Devens property for nine years and continues to occupy it today.

Second, SHI asserts that MassDevelopment violated the Base Closure Act by failing to provide "alternative benefits" to it, such as the avoidance of certain fees or forebearance on eviction. MassDevelopment's obligations to SHI under the Base Closure Act ended, however, when it provided the property at Fort Devens to SHI. The "alternative benefits" to which SHI contends it was entitled are spurious.

Finally, SHI objects to the RR's finding that "[a]t this juncture, whatever rights and remedies Sylvia's Haven may have involve or arise out of the lease." It contends that the Complaint plainly alleges that the lease it entered into with MassDevelopment is voidable because certain of its terms violate federal law. If that is true, the lease should not, SHI asserts, stand in the way of any of its rights conferred by the Base Closure Act. But SHI cites no specific provision of federal law that the lease violates. Moreover, SHI's argument that the lease violates the Base Closure Act is even less compelling given that HUD approved the lease as it is required to do under the Act. Surely if the lease were defective or voidable, such a flaw would have been detected by HUD during its mandated review process.

SHI's argument that the lease is the product of coercion and economic duress is similarly unavailing. SHI did not raise that argument before the Magistrate Judge and thus cannot do so before this Court. Borden v. Sec'y of Health and Human Servs., 836 F.2d 4, 6 (1st Cir. 1987) ("Appellant was entitled to de novo review by the district court of the recommendations to which he objected, however he was not entitled to a de novo review of an argument never raised.").

Although this Court disagrees with the conclusion in the RR that SHI had no enforceable rights under the Base Closure Act, it agrees with the ultimate recommendation to find that SHI suffered no injury in fact. Therefore, SHI may not bring a § 1983 claim to enforce its rights under the Base Closure Act.

C. SHI's Request to Amend the Complaint

SHI further objects to the Magistrate Judge's conclusion that its case should be remanded to state court. According to SHI, even if this Court were to find it lacks federal subject matter jurisdiction over SHI's Complaint, SHI should be afforded the opportunity to amend and replead the Complaint so as to address the issues raised in the RR.

SHI never sought leave to amend the Complaint when responding to MassDevelopment's Motion to Dismiss for Lack of Subject Matter Jurisdiction. Its failure to raise that issue before the Magistrate Judge forecloses this argument in objection to the RR. See Borden, 836 F.2d at 6.

ORDER

For the foregoing reasons, this Court ACCEPTS and ADOPTS the Report and Recommendation of the Magistrate Judge and hereby ALLOWS Defendant's Motion to Dismiss (Docket No. 47). Plaintiff's request for leave to amend the Complaint is DENIED. Defendant's Motion for Judgment on the Pleadings (Docket No. 29) is DENIED as moot.

So ordered.