Rosa v. Pathstone Corporation

Background

Felicia Rosa, proceeding without a lawyer, sued Pathstone Corporation; Megan Jackson, Pathstone’s Section 8 Director for Orange and Sullivan Counties; Damaris Gonzalez, Pathstone’s Deputy of Quality Control and the hearing officer at Rosa’s informal hearing; Zelma Dasilva, Pathstone’s Section 8 portability worker; YYA Estates LLC, Rosa’s landlord; and Vern S. Lazaroff, the landlord’s attorney.

Rosa participated in the Section 8 Housing Choice Voucher Program and lived in an apartment in Port Jervis, New York. She alleged that she missed a Pathstone inspection while she was away for about three and a half weeks because of family circumstances involving her children and mother. After she returned, Pathstone stated that it believed she had vacated the apartment. Rosa disputed that conclusion, provided utility-payment records and photographs of the furnished apartment, and explained that her children were temporarily attending school in New York City.

Pathstone later notified Rosa that it intended to terminate her subsidy because she was not using the apartment as her primary residence. After an informal hearing, Pathstone informed her that it would terminate the subsidy and later sent a repayment agreement stating that it had overpaid $27,690 in subsidies on her behalf. Rosa’s landlord notified her that her tenancy would be terminated and that she had to leave by March 31, 2023, to avoid eviction proceedings.

Rosa alleged that the defendants discriminated against her under the Fair Housing Act because of race and disability, although the opinion states that her complaint did not include facts connecting the defendants’ actions to either protected characteristic. She also appeared to assert due-process and equal-protection claims under 42 U.S.C. § 1983, a law allowing claims against state actors who violate federal rights. She requested damages and injunctive relief, including an order stopping collection of the alleged overpayment and preventing eviction proceedings.

Fair Housing Act claims

The court held that Rosa failed to state a Fair Housing Act claim because she did not allege facts plausibly showing that any defendant discriminated against her because of race, disability, or another prohibited factor. She also did not allege facts showing that she had exercised Fair Housing Act rights and was retaliated against for doing so. The court noted that her references to race in complaints filed with the Department of Housing and Urban Development and the New York State Division of Human Rights were not supported by factual allegations linking race to the defendants’ conduct.

The court therefore dismissed Rosa’s Fair Housing Act claims for failure to state a claim. Because Rosa might be able to provide additional facts, the court granted her 60 days to file a second amended complaint asserting Fair Housing Act claims against Pathstone and its employees. The court did not grant leave to amend those claims against YYA Estates LLC or Vern S. Lazaroff because Rosa alleged no facts indicating that they were involved in the discriminatory conduct.

Constitutional claims against Pathstone and its employees

The court explained that Section 8 recipients have a protected property interest in continuing to receive rental assistance. For a procedural due-process claim, the relevant question is whether the recipient received adequate procedures before the assistance was terminated. The court identified safeguards including timely notice of the reasons for termination, an opportunity to appear and present evidence at a hearing, representation by counsel, a decision based on the evidence and legal rules, and an impartial decisionmaker.

The documents attached to Rosa’s complaint showed that Pathstone gave her notices, scheduled an informal hearing, and issued a post-hearing decision. Rosa’s allegations nevertheless raised possible questions about whether the hearing officer was impartial, whether the evidence supported the termination, and whether problems involving her attorney affected her right to representation. Because she did not provide enough facts about the hearing or the attorney-related issues, the court could not determine whether she had adequately pleaded a due-process violation. The court granted her leave to amend those claims against Pathstone and its employees with additional facts.

The court also held that Rosa’s generalized allegations of discrimination did not state an equal-protection claim. She did not allege facts showing that a defendant intentionally treated her differently from similarly situated people based on race or another constitutionally impermissible reason. The order allowed her to provide additional facts about possible Fourteenth Amendment claims in a second amended complaint.

Claims against the landlord and attorney

The court dismissed Rosa’s Section 1983 claims against YYA Estates LLC and Vern S. Lazaroff for failure to state a claim. Section 1983 requires action under color of state law, meaning action by a state actor or someone acting with state authority. The court held that a private landlord and the landlord’s attorney generally are not state actors. It also stated that Rosa had not alleged that these defendants were personally and directly involved in Pathstone’s termination of her subsidy.

The court stated that it would decide later whether to exercise supplemental jurisdiction over any state-law claims Rosa might include in a second amended complaint, because it was not yet clear that she could state a federal claim.

Request for emergency relief

The court denied Rosa’s request for a preliminary injunction and temporary restraining order. Such relief requires a showing of likely irreparable harm and either a likelihood of success on the merits or sufficiently serious questions for litigation combined with a balance of hardships favoring the requesting party. The court found that Rosa had not made the required showing based on her current allegations. The denial of preliminary injunctive relief was without prejudice to renewal at a later date.

Disposition

The court granted Rosa 60 days to file a second amended complaint. The new complaint must replace, rather than supplement, the earlier complaint and must include the facts and claims she wants the court to consider. The court dismissed Rosa’s claims against YYA Estates LLC and Vern S. Lazaroff for failure to state a claim, denied her order to show cause for a preliminary injunction and temporary restraining order, and terminated all other pending matters. The court also certified that an appeal would not be taken in good faith and denied Rosa permission to proceed without prepaying appeal fees.