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Divetro v. Housing Authority of Myrtle Beach

United States District Court, D. South Carolina, Florence Division

July 10, 2014

Denise DiVetro, Plaintiff,
The Housing Authority of Myrtle Beach, and GEM Management, Defendants.


R. BRYAN HARWELL, District Judge.

Plaintiff Denise DiVetro filed this action for declaratory and injunctive relief against Defendants the Housing Authority of Myrtle Beach ("MBHA") and GEM Management pursuant 42 U.S.C. § 1983 on July 9, 2013. Compl., ECF No. 1. Plaintiff's claim specifically alleges a violation of her Fourteenth Amendment procedural due process rights arising from the termination- allegedly without notice and an opportunity to be heard-of a rental assistance subsidy that the Plaintiff received as part of her residing in a public housing project.[1] She claims that the termination of the subsidy ultimately contributed to her eviction from her apartment. Plaintiff now moves for a preliminary injunction from the Court pursuant to Rule 65 of the Federal Rules of Civil Procedure, seeking an order reinstating Plaintiff's tenancy and to restore her rental subsidy during the pendency of this action. Mot. for Prelim. Inj., ECF No. 25. Defendants responded to Plaintiff's motion and filed both a motion to dismiss and a motion for summary judgment pursuant to Rules 12(b)(6) and 56 of the Federal Rules of Civil Procedure, respectfully. ECF Nos. 30, 31, 32. Plaintiff responded to Defendants' motions. ECF Nos. 36, 37. A hearing was held on each of the motions on June 3, 2014, and the motions are before the Court.[2] After considering the arguments and evidence presented by the parties, the Court finds Defendants' motion to dismiss and motion for summary judgment must be denied. Furthermore, as the Court will explain in more detail below, Plaintiff's motion for a preliminary injunction shall be held in abeyance and consolidated with a trial on the merits.


On June 23, 2011, Plaintiff signed a one-year lease to rent an apartment at Halyard Bend Apartments, a complex owned by MBHA and managed by GEM Management in Horry County, South Carolina. The Halyard Bend Apartments complex is a multi-family housing project purchased with financing provided by the United States Department of Agriculture ("USDA"). The USDA's Rural Development program provides funding to borrowers (here, Defendants), who, in turn, lease housing to qualified tenants. Those tenants, moreover, may qualify for assistance subsidies from the USDA for rent and utilities. The amounts of those subsidies are determined after an annual certification, where factors such as income and family size are assessed. The lease that Plaintiff signed indicated that her note rent[3] was $658 per month; however, Plaintiff was initially approved for rental assistance that reduced her rent to $199 per month. She paid that amount until her next certification in January 2012, when Plaintiff's subsidy was increased to an amount that effectively lowered her monthly rent to $0 per month.[4] Also as a result of this recertification, Plaintiff's lease was renewed for another one-year term, set to expire at the end of January 2013.[5]

Not long after she moved into the unit did Plaintiff begin to receive written warnings from apartment management. The first was a warning in August 2011 that two dogs were observed at her apartment, a violation of occupancy rules. Next was a warning citing her children's disruptive behavior in February 2012, also a violation of the rules. Other violation warnings cited a rabbit in her closet and an unregistered, non-operable vehicle on the property. On August 30, 2012, Plaintiff was informed that an associate of hers had been barred from visiting her on the property. As a result of these violations, GEM Management informed Plaintiff, by way of a November 9, 2012 letter, that her lease would not be renewed for another one-year term. She was told to vacate the premises by the end of January 2013 and notified of her rights to defend an eviction in court. Despite the demands that she vacate the premises, however, Plaintiff did not leave, and in a March 3, 2013 form letter, Plaintiff was informed that she had failed to pay rent for the months of February and March.[6] The letter indicated that she was $1, 316 in arrears and that a failure to pay the balance by March 15 would lead to a termination of her lease the following day. Plaintiff was thus treated as a month to month tenant (at $658 per month) without having an opportunity to contest the lease violations alleged by Defendants. Still maintaining that her rental assistance subsidy covered the note rent entirely, however, Plaintiff did not pay any rent.

An application for ejectment was filed in Horry County magistrate's court on March 25, 2013. The form application listed two grounds as reasons for the writ of ejectment: "The tenant fails or refuses to pay the rent when due or when demanded" and "The term of tenancy or occupancy has ended."[7] That same day, the magistrate issued a rule to vacate or show cause to Plaintiff, notifying her of the same reasons. A trial was held on April 11, 2013, and the magistrate found that Plaintiff had failed to pay rent and issued a writ of ejectment.[8] Plaintiff moved to stay the eviction; however, the amount of the undertaking was contested when Plaintiff continued to assert at an April 29 hearing that her rent was not $658 per month. Instead, Plaintiff contended that her rent was -$13 because of the rental and utility subsidies. The magistrate again rejected her arguments and again found that she owed $658 per month for the months of February, March, and April. Unable to pay rent, Plaintiff was evicted from her apartment on May 15, 2013. This action was subsequently filed on July 9, 2013.

In addition to filing this § 1983 action, however, Plaintiff appealed the judgment of the magistrate to a South Carolina circuit judge on April 15, 2013, as provided by South Carolina law. Before the circuit judge, Plaintiff moved to modify the undertaking[9] and for a preliminary injunction. In a brief to the circuit judge, Plaintiff argued that her procedural due process rights were violated when her rental assistance subsidy was terminated without notice and an opportunity to be heard. The circuit judge denied both motions on July 29, 2013. Subsequently, after an October 2, 2013 hearing in which Plaintiff again alleged procedural due process violations, the circuit judge dismissed the appeal on November 1. The basis for his dismissal of the appeal was an absence of a final order on file with the court and the magistrate's failure to issue a return in order to establish a record of the proceedings below. When Plaintiff moved for a reconsideration of the circuit judge's dismissal, the circuit judge ordered the magistrate to issue a return, holding the motion in abeyance. At the time of the June 3 hearing before this Court, the magistrate had still not issued a return despite the circuit judge's order.[10]


I. Jurisdiction Under the Rooker-Feldman Doctrine

Both Plaintiff and Defendants have raised several issues in their respective motions; however, because the Court has sua sponte raised jurisdictional concerns, the Court must first determine whether it has jurisdiction to hear this action. Specifically, the Court ordered the parties to address whether the Court has jurisdiction in light of the Rooker-Feldman doctrine. In accordance with the Court's notice, the parties did so at the June 3 hearing. Plaintiff argued that this action is separate from the eviction proceedings before a South Carolina magistrate. She characterizes this action as a separate violation of her procedural due process rights when Defendants terminated the rental assistance subsidy at the end of January 2013 and increased her rent without any notice or opportunity to be heard on the alleged violations. Defendants, on the other hand, argue that this § 1983 action is inextricably intertwined with the eviction proceedings, noting that the same procedural due process arguments were made in the state court proceedings.

The Rooker-Feldman doctrine traces its genesis to Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923). The Supreme Court found that, by federal statute, only it could exercise appellate jurisdiction over final state court judgments. Id. at 416. The Court applied the doctrine again in District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), and most recently clarified it in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 284 (2005). In Feldman, the Court held that the allegations of a complaint were "inextricably intertwined" with state court decisions rendered after judicial proceedings-enough to bar the Plaintiffs from bringing claims in federal court. 460 U.S. at 486-87. In Exxon Mobil, the Court, after some confusion in the lower courts, clarified that the doctrine "is confined to cases... brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments." 544 U.S. at 284. After Exxon Mobil, the Fourth Circuit explained that the Rooker-Feldman doctrine is applicable only when a Plaintiff challenges a state court decision. Davini v. Va. Dep't of Transp., 434 F.3d 712, 718-19 (4th Cir. 2006). Despite the fact that the Davini plaintiff had brought similar claims in federal court after losing in state court, the Fourth Circuit found his claims were "independent" because they sought redress for an injury caused by the defendants, not the state court. Id. at 719. The focus of a Rooker-Feldman analysis, therefore, is on the injury that Plaintiff asks this Court to redress. "[I]f the state-court loser seeks redress in the federal district court for the injury caused by the state-court decision, his federal claim is, by definition, inextricably intertwined' with the statecourt decision, and is therefore outside of the jurisdiction of the federal district court." Id.

Here, Plaintiff claims that her injury was caused by Defendants' actions, not by the South Carolina magistrate's writ of ejectment. It follows that the Rooker-Feldman doctrine does not bar this action entirely. Specifically, the injury alleged by Plaintiff was the termination of Plaintiff's rental assistance subsidy (deriving from Defendants' non-renewal of the lease), which Plaintiff alleges occurred as a result of Defendants' failure to give her an opportunity to be heard on the alleged lease violations. At the same time, however, Plaintiff's request that the Court reinstate her tenancy would amount to a complete reversal of the magistrate's writ. Indeed, it was the writ that directly led to Plaintiff's eviction. See Smalley v. Shapiro & Burson, LLP, 526 F.Appx. 231 (4th Cir. 2013) ("The injur[ies] alleged by [Appellants] in all of these allegations [are] a direct result of the judicial order and fail[] to assert an independent claim' that would bring the case outside the ambit of Rooker-Feldman. '" (citing Reguli v. Guffee, 371 F.Appx. 590, 596 (6th Cir. 2010)) (alterations in original)). Thus, to that end, the Court finds that the Rooker-Feldman doctrine is partially applicable to Plaintiff's claim; however, the doctrine is only applicable to the extent that Plaintiff seeks reinstatement of her tenancy. Enjoining Defendants to do so, even in light of Plaintiff's claims alleging injury by the Defendants, is tantamount to a review for error and reversal of the final judgment of the magistrate-after a judicial proceeding. Plaintiff must not be able to couch an injury directly caused by a state court as one caused by the Defendants in order to circumvent the bars to this Court's jurisdiction. The Court's finding that Plaintiff's claim is not fully barred, however, requires further consideration of the other issues raised by this Court and the parties.

II. Defendants' Motion to Dismiss

Defendants filed a motion to dismiss the action under 12(b)(6) of the Federal Rules of Civil Procedure. Their only argument is that the Defendants are not proper "persons" under 42 U.S.C. § 1983.[11] Specifically, they contend that "Plaintiff makes no allegation that any person has violated any federally recognized right, " citing caselaw for the proposition that "inanimate objects such as buildings, facilities, and grounds are not persons' and do not act under color of state law." Memo. in Supp. of Mot. to Dismiss 2-3, ECF No. 32-1. Plaintiff, however, points out that MBHA is a "quasi-municipal, quasi-corporate" organization and that GEM Management is acting on behalf of MBHA. She argues that courts have long-recognized "a ...

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