Chhang v. West Coast USA Properties LLC

District Court, E.D. California·Decided July 9, 2024·No. 1:23-cv-01335·Unknown

Opinion

7 UNITED STATES DISTRICT COURT 8 9 EASTERN DISTRICT OF CALIFORNIA 10 PHARILYN CHHANG, Case No. 1:23-cv-01335-SAB 11 Plaintiff, ORDER DENYING PLAINTIFF’S MOTION 12 FOR RECONSIDERATION v. 13 (ECF Nos. 49, 52, 53) WEST COAST USA PROPERTIES LLC, et 14 al., 15 Defendants.

16 17 I. 18 INTRODUCTION 19 On May 3, 2024, the Court issued an order (“Order”) granting Defendant Housing 20 Authority of the City of Madera’s (“HACM”) motion to dismiss Plaintiff’s first amended complaint 21 without leave to amend. (ECF No. 47.) On May 17, 2024, Plaintiff filed an “application for 22 reconsideration of denial of leave to amend” under Rules 15, 16, and 60 of the Federal Rules of 23 Civil Procedure and Local Rule 230(j). The Court construes Plaintiff’s application as a motion 24 for reconsideration of its Order denying leave to amend. (ECF No. 49.) The Court finds this 25 matter suitable for decision without oral argument. See Local Rule 230(g). For the reasons set 26 forth herein, Plaintiff’s motion for reconsideration is denied. 27 / / / / / / 1 II. 2 RELEVANT BACKGROUND 3 On February 5, 2024, HACM filed a motion to dismiss pursuant to Rule 12(b)(6) of the 4 Federal Rules of Civil Procedure. The first amended complaint alleged Defendant Sergio 5 Madrigal, a private landlord, failed to make reasonable accommodations and engaged in 6 discriminatory conduct against Plaintiff. HACM argued it was an improper party because the 7 FAC failed to adequately allege HACM owed Plaintiff a duty to act or any statutory basis for 8 direct liability against HACM for Madrigal’s actions. (ECF No. 32-1 at 5.) Plaintiff argued that 9 HACM—which did not own, operate, or manage the property or itself commit a discriminatory 10 housing practice—was liable under the Fair Housing Act (“FHA”), Fair Employment and 11 Housing Act (“FEHA”), the Americans with Disabilities Act (“ADA”), and the Rehabilitation 12 Act for its “failure to intervene” to prevent Madrigal’s alleged discriminatory conduct. (FAC ¶¶ 13 20, 44; ECF No. 37 at 12; see also Transcript (“Tr.”), ECF No. 51 at 4:16-18.) Thus, the 14 question before the Court was whether a PHA that administers the Section 8 program but does not 15 otherwise own, operate, or manage the property or engage in the alleged discriminatory conduct, 16 owes a duty to the Section 8 tenant to affirmatively take corrective action against a private owner for 17 his alleged discriminatory acts. 18 The Court found the Housing Assistance Payments (“HAP”) contract, Annual 19 Contributions Contract (“ACC”), and various proffered statutes and interpreting regulations did 20 not impose a duty on HACM to intervene in Madrigal’s allegedly discriminatory conduct. 21 Plaintiff also failed to provide any caselaw confirming the existence of such a duty, and the 22 Court did not independently find such support. (See ECF No. 37 generally; Tr. 14:12-13.) 23 Accordingly, the Court found Plaintiff failed to assert a legal theory cognizable as a matter of 24 law against HACM and granted HACM’s motion to dismiss. 25 In her opposition to HACM’s motion to dismiss, Plaintiff requested leave to amend to 26 present additional factual allegations. (ECF No. 37 at 14.) However, Plaintiff did not offer what 27 additional facts not already alleged in the FAC would cure her claims against HACM. At the 1 a finding that granting leave to amend would not be futile.1 In response, counsel for Plaintiff 2 informed the Court that Plaintiff had stated facts sufficient to state a claim. (Tr. 26:22-23; 27:11- 3 14.) Finding the complaint failed as a matter of law, the Court granted HACM’s motion to 4 dismiss without leave to amend. 5 A. Plaintiff’s Motion for Reconsideration 6 On May 17, 2024, Plaintiff filed the instant motion for reconsideration of the Order 7 denying Plaintiff an opportunity to amend her complaint. (ECF No. 49-1.) Plaintiff’s motion 8 “aims to augment the allegations in her first amended complaint by adding 25 supplemental 9 allegations.” (Id. at 1-2.) Plaintiff contends that “[e]ach propose allegation is based on 10 information obtained by Chhang after the first amended complaint was filed, cures an ambiguity 11 in the first amended complaint, or responds to the Court’s interpretation of the first amended 12 complaint as stated in its dismissal order.” (Id. at 2.) Plaintiff’s twenty-five proposed allegations 13 that support Plaintiff’s FHA, FEHA, ADA, and Rehabilitation Act claims against HACM are as 14 follows: 15 1. HACM controlled material aspects of the rental relationship between Madrigal and Chhang pursuant to the terms and 16 conditions of the Housing Assistance Payments (HAP) Contract between HACM and Sergio Madrigal: 17 This is a HAP contract between the PHA and the owner. The HAP contract is entered to provide assistance for the 18 family under the Section 8 voucher program (see HUD program regulations at 24 Code of Federal Regulations 19 Part 982). The HAP contract only applies to the household and contract unit specified in Part A of the 20 HAP contract. (ECF 32-2 at 21.)

21 2. HACM mandated that the terms and conditions of the HAP contract between HACM and Madrigal superseded the terms and 22 conditions of the rental contract between Chhang and Madrigal: In case of any conflict between the provisions of the 23 tenancy addendum as required by HUD, and any other provisions of the lease or any other agreement between 24 the owner and the tenant, the requirements of the HUD- required tenancy addendum shall control. 25 3. HACM also forbade Madrigal from making any changes to his 26 1 “[I]f I am to grant this, what new facts would you assert that you need an amendment?” (Tr. 26:14-15); “You do 27 not proffer whatsoever what those facts are as to why I would give leave to amend….What are those?” (Tr. 26:18- 21); “But what facts?” (Tr. 27:3); “What facts would you proffer if I was to give you leave to amend?” (Tr. 27:9- 1 rental relationship with Chhang, even if those changes were not covered in the HAP contract, unless Madrigal [a] obtained 2 Chhang’s consent, [b] reduced the change to writing, and [c] provided HACM with a copy of the written change: 3 The tenant and the owner may not make any change in the tenancy addendum. However, if the tenant and the owner 4 agree to any other changes in the lease, such changes must be in writing, and the owner must immediately give 5 the PHA a copy of such changes. The lease, including any changes, must be in accordance with the requirements of 6 the tenancy addendum. (ECF 32-2 at 30.)

7 4. HACM also required – as an express condition of its rental payments on behalf of HUD for housing Chhang – that Madrigal 8 must treat Chhang in accordance with civil rights laws, regulations, and orders: 9 [Madrigal] must not discriminate against any person because of . . .disability in connection with the HAP 10 contract. . . . . 11 In accordance with applicable nondiscrimination and equal opportunity laws, statutes, Executive Orders, and 12 regulations, [Madrigal] must not discriminate against any person because of . . disability in connection with the 13 lease. (ECF 32-2 at 23, 30.)

14 5. HACM also required – as an express condition of its rental payments on behalf of HUD for housing Chhang – that Madrigal 15 must cooperate with HACM in response to a discrimination complaint by Chhang: 16 [Madrigal] must cooperate with [HACM] and HUD in conducting equal opportunity compliance reviews and complaint 17 investigations in connection with the HAP contract.

18 6. HACM also required – as an express condition of its rental payments on behalf of HUD for housing Chhang – that Madrigal 19 must take corrective action to resolve discrimination complaint by Chhang: 20 [Madrigal] is a breach of the HAP contract . . . [i]f [Madrigal] has violated any obligation under the HAP contract. 21 . . . .

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Chhang v. West Coast USA Properties LLC, (E.D. Cal. 2024).

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