38 F.4th 463
5th Cir.2022Background:
- Plaintiffs were tenants at Arbor Court, a Houston PBRA (project-based rental assistance) property that suffered flood damage during Hurricane Harvey.
- The owner failed to maintain the property, defaulted on its HAP contract, and requested a Section 8(bb) subsidy transfer of Arbor Court’s PBRA funding to Cullen Park; HUD approved the transfer.
- HUD offered tenants the choice to relocate to Cullen Park with moving expenses paid by the owner or to receive Tenant Protection Vouchers (TPVs); plaintiffs accepted TPVs and did not move to Cullen Park.
- Plaintiffs sued HUD seeking relocation benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act (URA); the district court dismissed under Rule 12(b)(6) for failure to state a claim.
- On appeal, plaintiffs argued the Section 8(bb) transfer and HUD guidance/regulations (including HUD Notice H-2015-03 and 24 C.F.R. § 886.338) made them “displaced persons” entitled to URA moving expenses; the Fifth Circuit affirmed dismissal.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are “displaced persons” under the URA because of the Section 8(bb) transfer | The Section 8(bb) transfer caused plaintiffs to move and thus qualifies as a displacing activity under the URA | URA defines “displaced person” to require moving as a direct result of acquisition, rehabilitation, demolition, or a DOT-prescribed displacing activity; plaintiffs did not plead any of those | Plaintiffs are not displaced persons under URA; dismissal affirmed |
| Whether DOT regulations or the definition of “program or project” convert a Section 8(bb) transfer into a URA displacing activity | The DOT definition of “program or project” and related regs encompass the subsidy transfer as a series of federal activities triggering URA coverage | The DOT regulation cited only defines “program or project,” it does not prescribe displacing activities; no DOT rule classifies a Section 8(bb) transfer as a displacing activity | The court found no DOT-prescribed displacing activity covering the transfer; plaintiffs’ theory fails |
| Whether HUD regulations, notices, or handbook language create a URA entitlement beyond the statute | HUD Notice H-2015-03, 24 C.F.R. § 886.338, and HUD Handbook show PBRA tenants in Section 8(bb) transfers may be eligible for URA relocation benefits | Agency regulations/guidance cannot expand statutory eligibility; the cited HUD materials track the statute and require acquisition/rehabilitation/demolition | Court held HUD guidance/regulation cannot confer benefits beyond URA statutory definition; cited HUD materials do not expand the class |
| Whether HUD’s prior practice (other projects or cases) requires payment of moving costs here | HUD has in some instances paid relocation costs when projects differed, so similar relief should apply | Those matters were factually and legally distinct (no Section 8(bb) transfer or different regulatory bases); plaintiffs seek relief solely under URA | Prior HUD practice/cases (e.g., Goodwin, Hartford projects) are distinguishable and do not create URA entitlement here |
Key Cases Cited:
- Alexander v. U.S. Dep’t of Hous. & Urb. Dev., 441 U.S. 39 (1979) (URA does not cover all persons displaced by government programs; entitlement limited by statute)
- Inclusive Communities Project, Inc. v. Lincoln Prop. Co., 920 F.3d 890 (5th Cir. 2019) (de novo review and pleading standards for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard governing Rule 12(b)(6))
- United States v. Transocean Deepwater Drilling, Inc., 767 F.3d 485 (5th Cir. 2014) (agency action must be grounded in statutory authority)
- Harris v. Lynn, 555 F.2d 1357 (8th Cir. 1977) (HUD cannot extend URA benefits by regulation beyond the statute)
- Schism v. United States, 316 F.3d 1259 (Fed. Cir. 2002) (regulations cannot create entitlements the statute does not authorize)
- Peteet v. Dow Chem. Co., 868 F.2d 1428 (5th Cir. 1989) (appellate waiver for arguments raised first in reply brief)
- Devines v. Maier, 665 F.2d 138 (7th Cir. 1981) (enforcement actions that are not acquisitions do not create URA displacement entitlement)