Banos v. Rhea

25 N.Y.3d 266

33 N.E.3d 471

11 N.Y.S.3d 515

2015 N.Y. Slip Op. 04029

In the Matter of Tayinha BANOS, Respondent

v.John RHEA, as Chairperson of the New York City Housing Authority, et al., Appellants, et al., Respondent.

In the Matter of Viola Dial, Respondent

v.John Rhea, as Chairman of the New York City Housing Authority, Appellantand690 Gates, LP, Respondent.

No. 60 No. 61

Court of Appeals of New York.

May 12, 2015.

David I. Farber, General Counsel, New York City Housing Authority, New York City (Melissa R. Renwick, Kelly D. MacNeal, Nancy M. Harnett, Corina L. Leske, Maria Termini and Andrew M. Lupin of counsel), for appellants in the first above-entitled proceeding.

Seymour W. James, Jr., The Legal Aid Society, Brooklyn (Kathleen Brennan, Ferdinand Ubozoh and Stephen Myers of counsel), for Tayinha Banos, respondent in the first above-entitled proceeding.

David I. Farber, General Counsel, New York City Housing Authority, New York City (Melissa R. Renwick, Kelly D. MacNeal, Nancy M. Harnett and Corina L. Leske of counsel), for appellant in the second above-entitled proceeding.

South Brooklyn Legal Services, Inc., Brooklyn (Michael Weisberg of counsel), for Viola Dial, respondent in the second above-entitled proceeding.

Robert H. Gordon, New York City, for 690 Gates, LP, respondent in the second above-entitled proceeding.

OPINION OF THE COURT

STEIN, J.

The principal issue raised in these cases is when the statute of limitations begins to run with respect to a tenant's legal challenge to a termination of Section 8 benefits by respondent New York City Housing Authority (NYCHA). We hold that, pursuant to a federal consent judgment, the statute begins to run upon the tenant's receipt of a “T–3 letter,” regardless of whether NYCHA has proved that it mailed other notices required by the consent judgment to be sent to the tenant before the T–3 letter. Because petitioners did not commence these proceedings within four months of their receipt of the respective T–3 letters, we reverse and dismiss the petitions in both cases.

I.

Pursuant to Section 8 of the U.S. Housing Act of 1937 (42 USC § 1437f [hereinafter Section 8] ), the federal government provides rent subsidies to low-income individuals and families to enable them to rent privately-owned housing. NYCHA has a contract with the federal government to administer the Section 8 program in New York City (see 42 USC § 1437f [b][1] ). To partially resolve a federal class action brought by a group of tenants alleging due process violations committed by NYCHA in the termination of their Section 8 benefits, the parties to that action entered into what is called the Williams first partial consent judgment (see Williams v. New York City Hous. Auth., U.S. Dist. Ct., S.D. N.Y., 81 Civ. 1801, Ward, J., 1984). It is undisputed that the consent judgment sets forth a specific procedure that NYCHA must follow when terminating benefits.

“First, after a preliminary determination that there exists a basis for termination, NYCHA must send the participant a warning letter specifically stating the basis for the termination and, if appropriate, seeking the participant's compliance. Thereafter, if the conditions which led to the preliminary determination have not been remedied within a reasonable time, NYCHA must send a second written notice, the Notice of Termination [called a T–1 letter], by certified and regular mail, stating the specific grounds for termination and informing the participant that he or she may request a hearing (and an optional pre-hearing conference). If the participant does not respond to the Notice of Termination or T–1 letter, NYCHA is required to mail a Notice of Default [called a T–3 letter] advising the participant that the rent subsidy will be terminated and the grounds therefor and affording the participant another opportunity to request a hearing. If the participant takes no action after the Notice of Default or T–3 letter, the rent subsidy will be terminated on the 45th calendar day following the date of mailing of the Notice of Default. If, however, a participant requests a hearing after the 45–day period, the participant's default may be reopened ‘upon a showing of good cause’ ” (Matter of Fair v. Finkel, 284 A.D.2d 126, 127–128, 727 N.Y.S.2d 401 [1st Dept.2001] [footnotes omitted] ).

Both of the cases before us involve the interpretation of the parameters of the Williams consent judgment.

Matter of Banos v. Rhea

NYCHA terminated the Section 8 benefits of petitioner Tayinha Banos effective June 30, 2010. Banos alleged that she never received a warning letter, T–1 letter or T–3 letter. However, she acknowledged receiving something from her landlord in June 2010 that caused her to send an inquiry to NYCHA, and further acknowledged that she received a responsive letter from NYCHA in early July 2010, informing her that her benefits had been terminated. In February 2012, Banos commenced this CPLR article 78 proceeding against NYCHA and its then-Chair, John Rhea¹ (hereinafter collectively referred to as NYCHA), seeking to annul NYCHA's determination as arbitrary, capricious, in violation of due process and contrary to law, and to reinstate her benefits.

NYCHA moved to dismiss the proceeding as time-barred. In its motion papers, NYCHA provided affidavits from two employees setting forth the agency's mailing procedures for the T–3 letter. The affidavits were supported by a copy of the T–3 letter sent to Banos, a mail log, and a United States Postal Service (USPS) Track and Confirm report. Although NYCHA's motion papers addressed the mailing of the T–3 letter to Banos, they did not mention anything about having sent her a warning letter or a T–1 letter.

Supreme Court denied NYCHA's motion, finding that, because NYCHA failed to show that it strictly complied with the consent judgment's requirement to send all three notices, the statute of limitations did not begin to run. The court then provided NYCHA time to submit an answer to the petition. The Appellate Division affirmed (111 A.D.3d 707, 975 N.Y.S.2d 87 [2d Dept.2013] ). Agreeing that the record failed to show that NYCHA mailed the warning letter and the T–1 letter, the majority concluded that “NYCHA's termination of the petitioner's Section 8 benefits was in violation of lawful procedure” and, therefore, the statute of limitations did not begin to run (id. at 708, 975 N.Y.S.2d 87 ). The dissent would have dismissed the petition on the basis that the Williams consent judgment specifically provided that the time to commence a proceeding to challenge a termination of benefits began to run from receipt of the T–3 letter (see id. at 708–714, 975 N.Y.S.2d 87

[Miller, J., dissenting] ). According to the dissent, Banos' bare assertion that she did not receive the T–3 letter was insufficient to rebut the presumption of delivery created by NYCHA's proof, and she failed to commence this proceeding within four months of receipt. The Appellate Division granted NYCHA leave to appeal, certifying the question as to whether its decision was correct (2014 N.Y. Slip Op. 67900[U] [2d Dept.2014] ).

Matter of Dial v. Rhea

NYCHA contends that it mailed a T–3 letter to petitioner Viola Dial in August 2007 by regular and certified mail. In contrast, Dial denies receiving any warning letter, T–1 letter or T–3 letter. However, Dial's landlord, respondent 690 Gates, LP, made her aware in December 2008 that NYCHA had terminated her Section 8 benefits. Dial sent letters to NYCHA in December 2008 and September 2010, seeking an explanation and reinstatement of her benefits. NYCHA promptly responded to each letter, declining Dial's requests for reinstatement and informing her that her benefits were terminated effective October 31, 2007.

In May 2011, Dial commenced this CPLR article 78 proceeding against Rhea, as Chair of NYCHA (who we generally refer to as NYCHA, which is the real party in interest), and 690 Gates. NYCHA moved to dismiss the petition as time-barred. To demonstrate that it mailed the T–3 letter to Dial, NYCHA submitted affidavits from two of its employees, as well as a reply affidavit, a copy of the T–3 letter mailed to Dial and mail logs. To explain the absence of records specifically pertaining to the mailing of the T–3 letter to Dial, NYCHA also proffered information indicating that the USPS Track and Confirm system maintains records for certified mailings for only two years.

Supreme Court denied NYCHA's motion to dismiss and granted the petition on the merits, annulling NYCHA's determination and ordering reinstatement of Dial's benefits retroactive to September 1, 2007. The court found that NYCHA did not comply with the notice requirements, as it failed to serve a warning letter and submitted insufficient proof that T–1 and T–3 letters were properly mailed to Dial. The Appellate Division affirmed, concluding that NYCHA bore the burden of showing that it served all three notices before its determination could be considered final and binding on a tenant (111 A.D.3d 720, 974 N.Y.S.2d 516 [2d Dept.2013] ). Finding that NYCHA failed to show that it mailed two of the three notices (the warning letter and T–1

letter), the Appellate Division determined that the statute of limitations did not begin to run. The Court implicitly found that NYCHA demonstrated that it mailed the T–3 letter to Dial (see id. at 722–723, 974 N.Y.S.2d 516 ). The Appellate Division granted NYCHA leave to appeal, certifying the question as to whether its decision was correct (2014 N.Y. Slip Op. 70575[U] [2d Dept.2014] ).

II.

All of the parties agree that a four-month statute of limitations applies to proceedings challenging NYCHA's termination of Section 8 benefits (see CPLR 217 [1 ] ). There is also no question that the time to commence such a proceeding begins to run when the agency determination “becomes final and binding upon the petitioner” (CPLR 217[1] ; see Matter of Best Payphones, Inc. v. Department of Info. Tech. & Telecom. of City of N.Y., 5 N.Y.3d 30, 34, 799...