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Hyland v. Office of Housing & Community Development

United States District Court, D. Hawaii

August 29, 2018

LANRIC HYLAND, ET AL., Plaintiffs,
v.
OFFICE OF HOUSING & COMMUNITY DEVELOPMENT, ET AL., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS AND JOINDERS

          Leslie E. Kobayashi, United States District Judge

         On May 11, 2018, Defendant Office of Housing & Community Development, County of Hawai"i ("OHCD") filed its Motion to Dismiss [Doc 170] Plaintiffs' Third Amended Complaint ("OHCD Motion"). [Dkt. no. 173.] On May 15, 2018, Defendants Ainakea Senior Residences LLLP ("Ainakea") and Hawaii Island Community Development Corporation ("HICDC," collectively "Ainakea Defendants") filed their Motion to Dismiss (1) 42 U.S.C. § l437f Claims Alleged by All Plaintiffs in Second Claim for Relief in the Third Amended Complaint for Declaratory and Injunctive Relief, Filed May 1, 2018 and (2) 42 U.S.C. § 1983 Claims Alleged by Plaintiff Eliza Roze ("Ainakea Motion"). [Dkt. no. 181.] Also before the Court are the following joinders of simple agreement: the Ainakea Defendants' joinder in the OHCD Motion, filed May 11, 2018; Defendant Hawaii Affordable Properties, Inc.'s ("HAPI") joinder in the OHCD Motion, also filed on May 11; and HAPI's joinder in the Ainakea Motion, filed on May 16, 2018 (collectively "Joinders"). [Dkt. nos. 176, 178, 183.]

         Plaintiffs Lanric Hyland, Karen Martinez, and Eliza Roze ("Plaintiffs") filed their memorandum in opposition to the OHCD Motion ("OHCD Opposition") on July 20, 2018, and their memorandum in opposition to the Ainakea Motion ("Ainakea Opposition") on July 22, 2018. [Dkt. nos. 205, 206.] OHCD filed its reply ("OHCD Reply") on July 26, 2018, and the Ainakea Defendants filed their reply on July 27, 2018 ("Ainakea Reply"). [Dkt. nos. 210, 215.] On August 3, 2018, this Court issued an entering order granting Plaintiffs leave to file a surreply regarding the OHCD Motion, and Plaintiffs did so on August 5, 2018 ("OHCD Surreply"). [Dkt. no. 222, 226.] These matters came on for hearing on August 13, 2018. The OHCD Motion, the Ainakea Motion, and the Joinders are hereby granted in part and denied in part for the reasons set forth below. Specifically, Plaintiffs' equal protection claims against OHCD and Roze's 42 U.S.C. § 1983 claims against the Ainakea Defendants are dismissed with prejudice. The OHCD Motion, the Ainakea Motion, and the Joinders are denied in all other respects.

         BACKGROUND

         The relevant procedural history and the core factual allegations in this case are set forth in this Court's: Order Granting in Part and Denying in Part Plaintiff's Appeal of the Magistrate Judge's June 9, 2016 Order and August 1, 2016 Order; and Withdrawing this Court's March 16, 2017 Order ("6/30/17 Order"); and March 28, 2018 Order Granting in Part and Denying in Part Defendant Office of Housing & Community Development, County of Hawaii's Motion to Dismiss; and Granting in Part and Denying in Part Defendant Hawaii Affordable Properties, Inc.'s and Defendant Ainakea Senior Residences LLLP's Joinders ("3/28/28 Order"). [Dkt. nos. 105, 153.[1] ]

         Hyland's Second Amended Complaint for Declaratory and Injunctive Relief ("Second Amended Complaint"), [filed 7/31/17 (dkt. no. 108), [2] alleged two claims for relief: one alleging overcharging in tenant security deposits ("Count I"); and one alleging the denial of due process in terminations of tenancy, threatened terminations of tenancy, and allegations of Ainakea Senior Residences ("ASR") rule infractions ("Count II"). Each count alleged multiple theories of liability.

         In the 3/28/18 Order, this Court:

-denied the motion to dismiss as to 1) Count I, 2) the portions of Count II alleging due process claims against OHCD based on threatened termination of tenancy, 3) the portions of Count II alleging OHCD's threats to terminate tenancy violated the National Housing Act of 1937 ("NHA") and the applicable Housing and Urban Development's ("HUD") regulations, and 4) the portions of Count II alleging the citations for ASR rule violations that OHCD issued violated the NHA and applicable HUD regulations when they are used as grounds for a threat to terminate tenancy (either eviction or refusal to renew the tenant's lease); [3/28/18 Order at 34-35;]
-dismissed, for lack of standing, all of Hyland's claims in Count II based on termination of tenancy; [id. at 35;] and
-dismissed Hyland's claims against OHCD in Count II alleging ASR residents are entitled to due process for all citations for ASR rule violations, [id. 1 .

         The dismissals were without prejudice, and Hyland was allowed to file a third amended complaint to cure the defects in the dismissed claims and to include the parties that the magistrate judge had previously granted Hyland leave to add. [Id. at 35-36.[3]

         After the 3/28/18 Order was issued, Hyland filed a motion seeking leave to add Roze as a plaintiff, and the magistrate judge granted that motion on April 25, 2018. [Dkt. nos. 162, 169.]

         On May 1, 2018, Plaintiffs filed their Third Amended Complaint for Declaratory and Injunctive Relief ("Third Amended Complaint"). [Dkt. no. 170.] Plaintiffs allege the same two claims for relief: one alleging overcharging in tenant security deposits ("Amended Count I"); and one alleging the denial of due process in terminations of tenancy, threatened terminations of tenancy, and allegations of ASR rule infractions ("Amended Count II"). Each count alleges multiple theories of liability.

         Amended Count I alleges the practice of overcharging for ASR tenants' security deposits: violates the Hawai"i Residential Landlord-Tenant Code ("Landlord-Tenant Code"); [Third Amended Complaint at ¶¶ 299-320;] violates the NHA and the applicable HUD regulations; [id. at ¶¶ 321-51;] constitutes a denial of Plaintiffs' right to equal protection under the United States Constitution; [id. at ¶¶ 351-75;] and constitutes a denial of Plaintiffs' right to equal protection under the Hawai"i State Constitution, [id. at ¶¶ 376-79].[4]

         Amended Count II alleges that the wrongful terminations of tenancy, the wrongful threats to terminate tenancy, and the citations for rule infractions without meaningful due process: violate the NHA and the applicable HUD regulations; [id. at ¶¶ 380-98;] constitute a denial of Plaintiffs' right to due process under the United States Constitution; [id. at ¶¶ 399-435;] and constitutes a denial of Plaintiffs' right to due process under the Hawai"i State Constitution, [id. at ¶¶ 436-42].

         The OHCD Motion asks this Court to dismiss Amended Count I. [OHCD Motion at 2.] OHCD does not seek the dismissal of Amended Count II, although OHCD generally denies the allegations of the Third Amended Complaint in support of Amended Count II. [Mem. in Supp. of OHCD Motion at 1 n.l.] The Ainakea Motion seek dismissal, with prejudice, of the following: 1) all claims against the Ainakea Defendants in Amended Count II that are based on § l437f because there is no private right of action to assert the type of claims Plaintiffs bring in this case; and 2) all of Roze's § 1983 claims against the Ainakea Defendants in Amended Count II because they are time-barred. [Ainakea Motion at 2-3.]

         DISCUSSION

         I. ...


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