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Schlessinger v. Chicago Housing Authority

United States District Court, Seventh Circuit

October 2, 2013

DAVID SCHLESSINGER, Plaintiff,
v.
THE CHICAGO HOUSING AUTHORITY, 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 three-count Second Amended Complaint against The Chicago Housing Authority ("the CHA") and individual CHA officers Ken Love and Jessica Porter. Schlessinger alleges, pursuant to 42 U.S.C. § 1983, that the defendants retaliated against him for opposing the defendants' improper conduct, in violation of his First and Fourteenth Amendment rights. For these alleged violations, he seeks declaratory and injunctive relief against all of the defendants in Count I and damages against the CHA in Count II. He also asserts a supplemental state-law breach of contract claim against all of the defendants (Count III). Now before the court is the defendants' motion to dismiss the complaint in part pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons explained below, the court dismisses Count III against Porter and Love and strikes Schlessinger's requests for injunctive relief. The motion to dismiss the claims against the CHA is denied.

I. BACKGROUND

Schlessinger's original complaint 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 retaliation claims were dismissed without prejudice, and he filed an Amended Complaint on December 10, 2012, repleading those claims, along with state-law conversion and breach of contract claims. the defendants moved to dismiss the Amended Complaint on December 29, 2012. The court granted that motion in part on June 3, 2013, dismissing the claims against defendant CVR Associates, Inc. ("CVR") and two individual defendants with prejudice, while denying the motion to dismiss as to individual defendants Porter and Love. The court dismissed Schlessinger's retaliation claim against the CHA without prejudice. The court concluded that Schlessinger had not alleged facts sufficient to show a custom or policy of retaliation on the part of the CHA, pursuant to Monell v. Dep't of Soc. Servs., 436 U.S. 658 (1978). But the court gave Schlessinger leave to "replead his allegations that the allegedly retaliatory actions taken against him were taken by someone with final policymaking authority for the CHA." (Mem. Op. & Order June 3, 2013 at 12, ECF No. 45.)

Schlessinger filed a Second Amended Complaint on June 24, 2013. The court takes Schlessinger's allegations as true for purposes of the motion to dismiss. According to the Second 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 approximately thirteen rental properties housing sixteen families. He entered into a housing assistance payment ("HAP") contract with the CHA for his units. Pursuant to the contracts, the CHA pays a portion of monthly rent on behalf of the tenants.

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. Schlessinger alleges that in May 2009, he attended a meeting of the CHA Board of Commissioners ("the Board") and voiced concerns about the misuse and waste of public funds entrusted to the CHA. Porter approached him after the meeting and told him that she would be his point of contact going forward to address the issues. In early 2011, Porter gave Schlessinger Love's telephone number and advised him that Love was responsible for overseeing the CHA's inspections department, and that Schlessinger should contact Love to resolve any issues with inspections of his units.

Between March and June 2011, Schlessinger attended a CHA public hearing to raise additional complaints against the CHA. He criticized the CHA for breaching its agreements with HUD by knowingly hiring unqualified and improperly trained inspectors from CVR. 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 telephone conference with Porter and Love, during which he discussed his complaints to the Board and to HUD. Porter indicated that she would investigate his complaints.

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 find out why the inspection had been reclassified.

On August 16, 2011, Schlessinger contacted Khan to follow up on his previous complaint. He then participated in a telephone conference that included Porter and Love. He reiterated his previous complaints and stated that he felt that the CHA was retaliating against him because of his complaints. Porter informed Schlessinger that the CHA would reinspect the failed unit.

A re-inspection of the failed 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 Love told him 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 the deficiencies. Schlessinger eventually received a copy of the 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 delay in providing the notice to Schlessinger violated its own policies and procedures. The CHA issued the tenant a voucher permitting her to move from Schlessinger's property, 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 deficient payment was accompanied by no explanation from the CHA. 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 and that the CHA was deducting funds paid to him on behalf of the tenant since April 2011. 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. He received no response to his complaint. 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 subsidy payments on her behalf to Schlessinger. Another of his 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 exist.

Schlessinger alleges that he has incurred damages in the form of lost rental subsidies and that he 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 the defendants violated his First and Fourteenth Amendment rights by:

adopting, permitting, encouraging, tolerating, ratifying or being deliberately indifferent to a pattern, practice, and policy pursuant to which Defendants unlawfully and improperly contract with private companies to inspect HCV units with personnel who are uncertified, unlicensed, and unqualified to perform inspection under State law and terminate HCV landlords from the HCV program who oppose and complain about the use of the unqualified and uncertified inspectors by citing the landlord for repair needs that do not exist as a pretext for termination from the program and/or the improper conversion of funds through subsidy abatements

(Second Am. Compl. ¶ 42.) Schlessinger further alleges that the defendants eliminated landlords from the HCV program who opposed the CHA's conduct by improperly inspecting units and "contriving breaches of program obligations... as a pretext to terminate the landlord['s] HAP contract in retaliation." ( Id. at ¶ 43.)

In Count II, Schlessinger alleges that the CHA is liable for the conduct of the individual defendants Porter and Love because

the policymakers were permitted to continue and condone a long-standing policy, practice and custom of unlawfully and improperly contracting with private companies to inspect HCV units with personnel who are unlicensed, uncertified and/or unqualified to perform such inspections under State law and terminate HCV landlords from the HCV program who oppose and complain about the use of the unlicensed, uncertified and/or unqualified inspectors; by citing the landlord for repair needs that do not exist as a pretext for termination from the program; by unlawfully and improperly citing HCV landlord for deficiencies that are the sole responsibility of the tenants; and/or the improper ...

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