encompass a wide range of conduct on the part of a public housing authority. Indeed, nothing in the statute or legislative history suggests that Congress intended to limit the right conferred in subsection (d) by exempting certain types of conduct. Thus, neither the statute nor legislative history support a distinction between actual and de facto demolition. Concerned Tenants, 685 F. Supp. at 321. "The use of the words 'any action' and 'any step' can only be reasonably construed to encompass conduct, including an omission or a failure to act, by a public housing agency that would result in the destruction of all or part of a housing project. . ." Id.
Defendants' narrow construction of subsection (d) is at odds with Congress' intent in enacting § 1437p: to prohibit the destruction of public housing projects without HUD approval. Id.; Tinsley, 750 F. Supp. at 1007.
Because the result -- the unapproved destruction of a housing project -- is the same whether done by a wrecking ball and bulldozers or by neglect that renders the units uninhabitable, the requirements of § 1437p should apply to both actual and de facto demolitions. To conclude otherwise would allow public housing agencies to evade the law by simply allowing housing projects to fall into decay and disrepair.
Concerned Tenants, 685 F. Supp. at 31.
Moreover, the language of the statute is not limited to demolition. The Act prohibits "any action to demolish or dispose of a housing project or a portion of a housing project . . ." 42 U.S.C. § 1437p(d). The use of this language further supports a less narrow construction of the subsection than that urged by defendants. Congress not only prohibited demolition, but also steps taken to otherwise dispose of public housing units. For example, under subsection (d) a housing authority cannot eliminate public housing units by selling the buildigs or converting them to another use without first obtaining HUD approval and satisfying the conditions outlined in § 1437p(d).
In sum, the Court finds that § 1437p(d) creates an enforceable right against conduct that results in the de facto demolition of public housing. In so doing, the Court does not reach the far more difficult problem of what would have to be proved to show de facto demolition. Plaintiffs have stated a claim for which relief may be granted sufficient to overcome a motion to dismiss.
II. BREACH OF THE ANNUAL CONTRIBUTIONS CONTRACT (COUNT IV)
Defendants CHA and Lane also argue that Count IV of the complaint, alleging breach of the Annual Contributions Contract ("ACC"), also fails to state a claim. The ACC is a contract under which the CHA agrees to maintain public housing in a safe and sanitary condition in exchange for HUD funds. 42 U.S.C. §§ 1437c, 1437g. Defendants contend that plaintiffs are not intended beneficiaries under the ACC. Therefore, defendants reason, plaintiffs do not have standing to assert a breach of contract claim under the ACC.
The Seventh Circuit has held that public housing tenants can be considered third party beneficiaries for certain types of contracts between HUD and public housing authorities. Holbrook v. Pitt, 643 F.2d 1261 (7th Cir. 1981). Other courts have held that the ACC, in particular, confers third party beneficiary status on pubic housing tenants. See Ashton v. Pierce, 230 App. D.C. 252, 716 F.2d 56, 66 (D.C. Cir. 1983), modified on other grounds, 723 F.2d 70 (D.C. Cir. 1983); Knox Hill Tenant Council v. Washington, 145 App. D.C. 122, 448 F.2d 1045, 1057-58 (D.C. Cir. 1971); Tinsley, 750 F. Supp. at 1012; Concerned Tenants, 685 F. Supp. at 324. Moreover, the Holbrook court stated that a third party may have enforceable rights under a contract if the contract were made for the third party's direct benefit. Holbrook, 643 F.2d at 1270.
Under the standard enunciated in Holbrook, plaintiffs qualify as third party beneficiaries of the ACC. The ACC calls for the CHA to develop and administer each housing development "to achieve the well-being and advancement of the tenants thereof." (Complaint para. 17, citing ACC § 101.) It also requires the CHA "at all times [to] operate each Project . . . solely for the purpose of providing decent, safe and sanitary dwellings . . . within the financial reach of Families of Low Income." (Complaint para. 18, citing ACC § 201). The terms of the contract thus communicate that the purpose of the contract is to benefit public housing tenants, as well as low-income families generally, who are applicants and potential applicants of public housing.
Defendants' motion to dismiss Count IV is denied.
III. SUPPLEMENTAL JURISDICTION OF STATE LAW CONTRACT CLAIMS (COUNT V)
Finally, defendants assert that plaintiffs' state law contract claims should be dismissed because the federal claims should be dismissed. Alternatively, defendant request that the court sever the state law claims from this action. The claims in Count V, alleging breach of the leases between CHA and plaintiffs, are closely related to the claims in this case that are within the original jurisdiction of this Court. Hence the state law claims and the federal question claims "form part of the same case or controversy." 28 U.S.C. § 1367(a) (1991). Since defendant's 12(b)(6) motion fails, it is unnecessary to dismiss or sever the state law claims because they are within the supplemental jurisdiction of the Court.
James B. Zagel
United States District Judge
Date 19 Nov. 1991