This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
Metropolitan Housing and Redevelopment Authority,
Filed December 31, 2007
Toussaint, Chief Judge
Metropolitan Housing and Redevelopment Authority
Lawrence A. Moloney, Southern Minnesota Regional Legal Services, Inc., 166 East Fourth Street, Suite 200, St. Paul, MN 55101 (for relator)
Mary G. Dobbins, Mary G. Dobbins & Associates, 7400 Metro Boulevard, Suite 100, Edina, MN 55439 (for respondent)
Considered and decided by Toussaint, Chief Judge; Worke, Judge; and Crippen, Judge.*
TOUSSAINT, Chief Judge
Relator Rose Gibbs seeks certiorari review of the decision of respondent Metropolitan Housing and Redevelopment Authority (MHRA) to terminate her Section 8 rental assistance, arguing that: (1) the evidence does not support termination of her benefits; (2) the decision was arbitrary and capricious because MHRA failed to consider mitigating circumstances; (3) she was denied procedural due process when given inadequate notice by MHRA of her alleged violations; and (4) MHRA failed to make adequate findings of fact. Because substantial evidence supported MHRA’s decision, the decision was not arbitrary and capricious, relator was not denied procedural due process, and the findings are sufficient to permit meaningful review, we affirm.
Each month, relator was responsible for paying $418 in rent, the amount not subsidized by her Section 8 rental assistance. She signed MHRA’s “Statement of Responsibilities,” acknowledging: “I understand that if I violate a provision of my lease and am evicted by a court ordered judgment on behalf of the owner the HA will terminate my Section 8 Rental Assistance. Examples of Lease Violations Include: . . . failure to pay rent . . . .” (Emphasis in original.)
Relator did not pay her February 2006 rent because she thought, incorrectly, that her $418 was also going to be subsidized that month and because she had no funds after paying her other bills. Relator’s landlord did not receive her March 2006 rent. Relator claims that her daughter stole the money order out of the envelope before it was mailed.
After relator failed to pay rent for February and March 2006, her landlord filed an eviction complaint in Anoka County Housing Court. The housing court’s judgment stated that relator would be evicted if she did not pay her past-due rent by April 19, 2006. Relator obtained a loan from her church to pay one month of her past-due rent, but because she was unable to pay both months by April 19, 2006, the housing court issued a writ of recovery, and relator was evicted. Relator was notified by MHRA that her rental-assistance benefits would be terminated because she was evicted, and an informal hearing was held. The hearing officer upheld MHRA’s termination of relator’s rental-assistance benefits.
By taking evidence and hearing testimony, an agency acts in a quasi-judicial capacity. Carter v. Olmsted County Hous. & Redev. Auth., 574 N.W.2d 725, 729 (Minn. App. 1998). “An agency’s quasi-judicial determinations will be upheld unless they are unconstitutional, outside the agency’s jurisdiction, procedurally defective, based on an erroneous legal theory, unsupported by substantial evidence, or arbitrary and capricious.” Id. The reviewing court examines the findings to determine if they support the decision, but does not retry facts or challenge the credibility determinations of the agency. Senior v. City of Edina, 547 N.W.2d 411, 416 (Minn. App. 1996).
Relator alleges that MHRA hearing officer’s decision to terminate her Section 8 benefits was not supported by substantial evidence because the housing court’s eviction judgment was not in the record, and the housing court did not make a finding that relator’s violation of the lease was “serious,” as required by 24 C.F.R. § 982.552(b)(2) (2006).
An agency’s decisions must be supported by substantial evidence, defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Carter, 574 N.W.2d at 730 (citations omitted). Substantial evidence means more than a scintilla of evidence, some evidence, or any evidence. Id. (quotation omitted). On appeal, relator must demonstrate that the agency’s findings are not supported by the record when considered in its entirety, and this court applies an abuse-of-discretion standard of review. Id. This court must take into account contradictory evidence or evidence from which conflicting inferences can be drawn. Id. at 730-31.
Regulations promulgated by the Department of Housing and Urban Development (HUD) apply to all participants in the Section 8 program. Manor v. Gales, 649 N.W.2d 892, 894 (Minn. App. 2002). HUD regulations are interpreted according to their plain language. See Dep’t of Hous. & Urban Dev. v. Rucker, 535 U.S. 125, 130, 122 S. Ct. 1230, 1233 (2002). HUD regulation 24 C.F.R. § 982.552(b)(2) provides that a housing-authority agency “must terminate program assistance for a family evicted from housing assisted under the program for serious violations of the lease.” (Emphasis added.) HUD regulation 24 C.F.R. § 985.552(c)(1) (2006) states that a housing-authority agency, “may at any time . . . terminate program assistance for a participant . . . [i]f the family violates any family obligations under the program (see § 982.551).” (Emphasis added.)
Relator claims that the discretionary provision of section 982.552(c)(1) should have been applied in this case because of the wording of the termination notice that she received. But section 982.552(b)(2) is the more applicable provision because it specifically mentions eviction, and relator was evicted by court order. The hearing officer did not err in terminating relator’s rental assistance under section 985.552(b)(2).
According to the plain language of the statute, MHRA was required to terminate relator’s assistance if she was evicted for a serious violation of the lease. Cole v. Metro. Council HRA, 686 N.W.2d 334, 335 (Minn. App. 2004) (affirming termination of evicted tenant’s Section 8 benefits because 24 C.F.R. § 982.552(b)(2) is mandatory). Section 982.552(b)(2) does not define what constitutes a “serious” violation of the lease, but this court has looked elsewhere for guidance. See Cole, 686 N.W.2d at 337. Under 24 C.F.R. § 982.310 (2006), a landlord may terminate a lease for a Section 8 tenant’s failure to pay rent, which is a “serious” lease violation.
Relator does not dispute that she was evicted because she failed to pay both months of past-due rent by the court-ordered deadline of April 19, 2006. Because failure to pay rent is a “serious” violation under HUD regulations, relator’s termination under section 982.552(b)(2) was supported by substantial evidence.
An agency ruling is arbitrary and capricious if the agency entirely failed to consider an important aspect of the problem. White v. Minn. Dep’t of Natural Res., 567 N.W.2d 724, 730 (Minn. App. 1997), review denied (Minn. Oct. 31, 1997).
In determining whether to terminate assistance because of action by the family, the housing agency
mayconsider all relevant circumstances such as the seriousness of the case, the extent of participation or culpability of individual family members, mitigating circumstances related to the disability of a family member, and the effects of denial or termination of assistance on other family members who were not involved . . . .
24 C.F.R. § 982.552(c)(2) (2006). This subsection is permissive, not mandatory.
A hearing officer is not permitted to consider a particular hardship that would result from the termination of Section 8 benefits if a tenant was evicted and benefits were terminated under the mandatory-termination provision of section 982.552(b)(2). Cole, 686 N.W.2d at 338 (affirming MHRA’s termination of benefits under section 982.552(b)(2) where hardship to relator was not considered). Nevertheless, the record indicates that relator was allowed to present evidence at the hearing regarding mitigating circumstances and her hardships in paying rent. The hearing officer’s findings summarize relator’s testimony regarding extenuating circumstances, but the hearing officer made credibility determinations and stated that the extenuating circumstances did not change her decision. We defer to the hearing officer’s credibility determinations. See Senior, 547 N.W.2d at 416. The hearing officer’s decision was not arbitrary and capricious.
Whether an administrative agency has provided sufficient notice in accordance with the requirements of procedural due-process is a legal issue, which this court reviews de novo. In re License of West Side Pawn, 587 N.W.2d 521, 522 (Minn. App. 1998), review denied (Minn. Mar. 30, 1999).
Constitutional procedural due-process protections are applicable to administrative hearings involving the termination of Section 8 rental assistance. See Carter, 574 N.W.2d at 731, citing Goldberg v. Kelly, 397 U.S. 254, 264, 90 S. Ct. 1011, 1018-19 (1970) (emphasizing importance of welfare benefits to recipients and detailing due process protections). Due process requires that a recipient have timely and adequate notice giving the reasons for a proposed termination and an effective opportunity to defend. Goldberg, 397 U.S. at 267-68, 90 S. Ct. at 1020.
Relator claims that MHRA violated her due-process rights by not adequately notifying her of the basis of the termination action. After MHRA was informed of relator’s failure to pay rent, relator received a termination of assistance notice dated May 16, 2006, stating:
This action is being taken because you were evicted through a court order . . . You were informed that lease violations provoking a court ordered eviction were also violations of your family obligations . . . You were informed that the Metro HRA would terminate your rental assistance if you were evicted . . . for serious or repeated violations of your lease.
HUD regulations govern the notice that MHRA is required to send to Section 8 recipients whose benefits are terminated. 24 C.F.R. § 982.555(c)(2) (2006) states that MHRA must give the participant “prompt written notice that the family may request a hearing. The notice must: (i) Contain a brief statement of reasons for the decision, (ii) State that if the family does not agree with the decision, the family may request an informal hearing on the decision, and (iii) State the deadline for the family to request an informal hearing.”
The notice sent by MHRA to relator met the requirements. The reasons for the termination were clearly stated in the notice. The notice plainly declared that realtor’s assistance was being terminated because she was evicted through a court order. Relator was also informed of her right to request a formal hearing and was given a deadline to do so.
Notice must communicate the interest at stake to be constitutionally sufficient. Seeman v. Little Crow Trucking, 412 N.W.2d 422, 425 (Minn. App. 1987). Notice is inadequate when the consequences of government action are not foreseeable. See In re Metro Siding Inc., 624 N.W.2d 303, 308-09 (Minn. App. 2001). If a party knows or has reason to know of the adverse consequences of government action, then the notice meets the requirements of procedural due process. See Comm’r of Natural Res. v. Nicollet County Pub. Water/Wetlands Hearing Unit, 633 N.W.2d 25, 31 (Minn. App. 2001), review denied (Minn. Nov. 13, 2001).
Relator claims that, because the notice did not cite any HUD regulations, she was not able to predict the regulatory grounds upon which her assistance was being terminated. But the record establishes that relator knew, or had reason to know, of the possible adverse consequence of termination if she was evicted. She signed MHRA’s “Statement of Responsibility,” acknowledging that her Section 8 assistance would be terminated if she was evicted.
Furthermore, section 982.552(b)(2) specifically mandates termination if a rental-assistance recipient is evicted, and HUD regulations do not require that the agency specify the HUD regulation section on which a termination is based. Because MHRA’s notice was adequate under section 982.555(c)(2), relator was not denied procedural due process.
Relator argues that she was also denied due process because MHRA changed its legal theory between the hearing, when it said that its decision to terminate relator’s assistance was based on the discretionary section 982.552(c), and this appeal, when it argues that relator’s termination of assistance was based on the mandatory section 982.552(b)(2). Relator claims that MHRA’s change in legal theory denied her due process because she had no opportunity to be heard and present a defense based on the mandatory provision; specifically, she could have challenged the eviction on the basis that her violation was not “serious” if she had known that her assistance was being terminated under the mandatory provision. But relator did challenge the seriousness of her lease violation at the hearing by presenting evidence of the circumstances surrounding her failure to pay rent. The hearing officer’s findings show that the extenuating circumstances were considered.
Although MHRA may have changed its legal theory, relator was not denied the opportunity to defend herself. Even though the hearing officer was not required to hear evidence regarding extenuating circumstances, relator was allowed to challenge the seriousness of her lease violation by presenting this evidence.
Relator claims that the hearing officer’s findings were insufficient because the decision contained no finding of a “serious” violation of the lease, as required for termination of assistance under the mandatory provision of section 982.552(b)(2). Agency discretion is not unlimited and must be explained. Carter, 574 N.W.2d at 729 (reversing decision to terminate rental assistance because hearing officer’s findings of fact in support of termination were legally insufficient). An agency decision not supported by proper findings is considered “prima facie arbitrary,” and the agency bears the burden of proof at the appellate level. Id. at 730. In order to facilitate appellate review, an agency must state the facts and conclusions essential to its decision with clarity and completeness. Id. at 729. The agency must explain the evidence on which it is relying and how that evidence connects rationally with its decision. Id.
To be legally sufficient, the hearing officer must make an express credibility determination, must set forth the inconsistencies in the record that led to the rejection of testimony, must demonstrate that all relevant evidence was considered and evaluated, and must detail the reasons for discrediting pertinent testimony. Id. These requirements are mandatory, and impose affirmative duties. Id. at 729-30. An appellate court cannot be “left in the dark” as to what the agency made of evidence presented at a hearing. Id. at 730. The hearing officer’s findings are adequate because they summarize the testimony and exhibits, set forth inconsistencies in the record that allowed her to make credibility determinations, and demonstrate that she considered all relevant evidence. The findings meet the requirements of Carter. See id. at 729.
The overarching concern of an appellate court is that a record be sufficient to facilitate meaningful review. See Carter, 574 N.W.2d at 729. The record here provides sufficient detail to conduct a meaningful review. The hearing officer stated that her decision was based on the mandatory provision of section 982.552(b)(2). Furthermore, HUD regulations mandate no more than a “written decision, stating briefly the reasons for the decision.” 24 C.F.R. § 982.555(e)(6) (2006).