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Schlessinger v. Chicago Housing Authority

United States District Court, Seventh Circuit

June 3, 2013

DAVID SCHLESSINGER, Plaintiff,
v.
THE CHICAGO HOUSING AUTHORITY, CVR ASSOCIATES, INC., CHARLES WOODYARD (in his individual capacity), ANA VARGAS (in her individual capacity), JESSICA PORTER (in her individual capacity), and KEN LOVE (in his individual capacity), Defendants.

MEMORANDUM OPINION & ORDER

JOAN B. GOTTSCHALL, District Judge.

Plaintiff David Schlessinger has brought a four-count Amended Complaint against Defendants the Chicago Housing Authority ("the CHA"), CVR Associates, Inc. ("CVR"), and individual employees and officers of the CHA and CVR Charles Woodyard, Ana Vargas, Ken Love, and Jessica Porter (collectively, "Defendants"). In Counts I and II, Schlessinger alleges, pursuant to 42 U.S.C. § 1983, that Defendants retaliated against him for opposing Defendants' improper conduct, in violation of his First Amendment rights. He also asserts supplemental state-law claims of conversion (Count III) and breach of contract (Count IV). Now before the court is Defendants' motion to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the court grants the motion in part and denies it in part. Count I is dismissed with prejudice as to CVR, Woodyard, and Ayala, and without prejudice as to the CHA. The motion to dismiss Count I is denied as to Porter and Love. Count II is dismissed with prejudice as to CVR and without prejudice as to the CHA. Count III is dismissed with prejudice as to all Defendants. Count IV is dismissed with prejudice as to CVR and the individual Defendants. The motion to dismiss Count IV is denied as to the CHA.

I. BACKGROUND

Schlessinger's original complaint, filed May 15, 2012, alleged a number of civil-rights and state-law claims. On November 13, 2012, the court dismissed the civil-rights claims and declined to exercise supplemental jurisdiction over the state-law claims. Schlessinger's First Amendment claims were dismissed without prejudice, and he filed an Amended Complaint on December 10, 2012, repleading those claims, along with two supplemental state-law claims. Defendants moved to dismiss the Amended Complaint on December 29, 2012.[1]

The court takes Schlessinger's allegations as true for purposes of the motion to dismiss. According to the Amended Complaint, Schlessinger is a landlord who has participated since 2005 in the Housing Choice Voucher ("HCV") program, the federal government's Section 8 program providing assistance to renters in the private market. Under the HCV program, once a program participant has located an approved rental unit, a local public housing agency, such as the CHA, pays the landlord a rent subsidy. The agency must inspect the rental unit in accordance with the agency's guidelines, federal regulations, and local law. Schlessinger owns and operates several rental units leased to HCV program participants. He entered into a housing assistance payment ("HAP") contract with the CHA for each of the units. Pursuant to the contracts, the CHA pays Schlessinger a portion of monthly rent on behalf of his tenants.

CVR is a company contracted by the CHA to inspect units as part of the HCV program. Defendant Ana Vargas is CEO of CVR. Defendant Charles Woodyard is CEO of the CHA. Defendant Jessica Porter is Senior Vice President of the HCV Program for the CHA. Defendant Ken Love is Deputy Director of Inspections for the CHA.

In his Amended Complaint, Schlessinger alleges that between March and June 2011, he attended a CHA Public Hearing to voice complaints against the CHA to the public and to the CHA Board of Commissioners ("the Board"). He criticized the CHA for breaching its agreements with United States Department of Housing and Urban Development ("HUD") by knowingly hiring CVR's unqualified and improperly trained inspectors, who lacked required licensing and education. On July 27, 2011, Schlessinger contacted the Assistant to the Director of Public Housing of HUD, Zill Khan, to file a complaint against the CHA. On August 10, 2011, Schlessinger had a teleconference with Porter and Love, during which he discussed his complaints to the Board and to HUD.

Schlessinger alleges that the CHA began to retaliate against him the same day he spoke to Porter and Love. On August 10, 2011, the CHA reclassified an inspection of one of his units to a "fail." This was the first time an inspection of one his units had been reclassified. Schlessinger contacted Love and Salvatore Aiello to inquire as to why the inspection had been reclassified.

On August 16, 2011, Schlessinger contacted Khan at HUD to follow up on his previous complaint. He also had a teleconference that day with Porter, Vargas, and Love. He complained of the same issues he had raised previously before the Board, to HUD, and to Porter and Love. He stated that he felt that the CHA was retaliating against him because of his complaints. Porter told Schlessinger that the CHA would reinspect the unit that had been reclassified to a "fail."

A new inspection of the unit was conducted on August 17, 2011. This time, the inspectors failed fifty items in the unit. This was the largest number of deficiencies for which Schlessinger had ever been cited in an inspection. Schlessinger contacted Love to inquire about the list of failed items, and he was told that the inspection was a "special inspection." According to Schlessinger, a "special inspection" of the unit was not allowed under the CHA's Administrative Plan because neither Schlessinger nor the tenant had requested such an inspection. The CHA did not provide Schlessinger with a timely report regarding the failed items so that he could correct any deficiencies. Schlessinger received a copy of the inspection report on August 29, 2011. The report indicated that the failed items were emergency repairs, but Schlessinger contends that they did not meet the CHA's criteria for emergency repairs.

On August 24, 2011, the CHA received a Notice to Vacate from one of Schlessinger's tenants. The CHA did not provide the notice to Schlessinger until October 28, 2011. The CHA admitted that the untimely notice was a violation of its own policies and procedures. The CHA issued the tenant a voucher permitting her to move from Schlessinger's unit, even though she was still under a lease and had damaged Schlessinger's property.

On August 31, 2011, Schlessinger received a letter from Porter stating that she had determined that there were concerns as to whether he was meeting his obligations under the HCV program and the HAP contracts. She threatened to abate his rent payments and terminate his HAP contracts.

On September 1, 2011, Schlessinger's HAP payment for August 2011 was deficient by $7, 800.00. The payment was accompanied by no explanation regarding the deficiency. Schlessinger contacted Love to inquire as to why his payment was deficient. He received an email from Love stating that one of his HAP contracts had been terminated by the CHA. Schlessinger alleges that the CHA failed to tender HAP payments due to him. On October 6, 2011, the CHA sent five of Schlessinger's tenants notices that the CHA intended to terminate them from the HCV program.

On January 27, 2012, Schlessinger again complained to the CHA that its inspectors were not properly licensed. On January 31, 2012, the CHA terminated one of Schlessinger's tenants from the HCV program, without providing her with an administrative hearing, and terminated rent subsidy payments to Schlessinger on her behalf. Another of Schlessinger's tenants was terminated from the HCV program without a hearing on February 29, 2012. On April 12, 2012, the CHA inspected one of Schlessinger's properties and cited him with a list of failed items that Schlessinger contends did not constitute failed conditions. Schlessinger alleges that he has incurred damages in the form of lost rental subsidies and continues to incur losses each month for units for which he is not receiving subsidy payments from the CHA.

In Counts I and II of the Amended Complaint, Schlessinger alleges, pursuant to 42 U.S.C. § 1983, that all of the Defendants violated his rights ...


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