Khan v. Bland
2010 U.S. App. LEXIS 26093
| 7th Cir. | 2010Background
- Khan, a Champaign County Section 8 landlord, participated since 1993 under HACC; in 2005 he evicted a Section 8 tenant and allegedly ran a side lease for a basement storage area.
- Bland, HACC executive director, concluded the side lease violated HAP rules and HUD regulations, and announced termination of all Khan's HAP contracts with debarment from future participation.
- HACC terminated two of Khan's four HAP contracts; two others continued; Khan alleges he was told by Presley he was an 'undesired person' and not suitable to rent from.
- Khan sued under 42 U.S.C. § 1983 for procedural and substantive due process violations; district court granted judgment as a matter of law, finding no property right to future HAP contracts and at most a state-law breach claim.
- On appeal, court held Khan had no entitlement to future Section 8 participation; existing contract rights may be enforced via breach-of-contract action; no pre-deprivation hearing was required.
- Court also rejected Khan's liberty interest and stigma-plus arguments; Bland lacked authority to debar from HUD programs; statements by Presley did not establish a protected liberty interest or a cognizable stigma-plus claim; substantive due process claim failed as no fundamental right or inadequate state remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Khan's future HAP contracts create a property interest? | Khan contends he had a protected entitlement to participate in Section 8. | Owners have no statutory or regulatory right to participate; HAP contracts may be terminated for breach. | No property interest in future HAP contracts; no pre-deprivation hearing required. |
| Does Khan have a property interest in his existing HAP contracts requiring due process? | Existence of contractual rights to ongoing HAP contracts. | Existing contracts can be terminated for HQS breaches or contract breaches with post-deprivation remedies. | Possible contract rights exist but remedy is via state-law breach action; no federal due process violation. |
| Did Bland’s debarment actions implicate a protected liberty interest? | Debarment and defamatory statements affect Khan's liberty to participate in government programs. | Khan was not officially debarred by HUD; no recognized liberty interest from debarment under these facts. | No liberty interest; statements alone do not create a protected liberty interest. |
| Does the alleged stigma from statements entitlement create a due process violation? | Defamatory statements by HACC staff stigmatize Khan and impact future housing opportunities. | Defamation alone does not invoke procedural due process without a protected interest or stigma-plus defeat. | Stigma-plus not shown; no procedural due process violation. |
| Does Khan's termination/debarment via HAP contract action support a substantive due process claim? | Maesensitive claim that government misconduct in terminating contracts without process violates substantive due process. | There is no fundamental right to participate; mere breach of government contract is not a substantive due process violation. | Substantive due process claim fails; remedy via contract law. |
Key Cases Cited
- Hudson v. City of Chicago, 374 F.3d 554 (7th Cir. 2004) (due process property interest requirements)
- Simmons v. Drew, 716 F.2d 1160 (7th Cir. 1983) (property interest in Section 8 rental assistance)
- Fincher v. South Bend Heritage Found., 606 F.3d 334 (7th Cir. 2010) (entitlements depend on substantive predicate in regulations)
- Paul v. Davis, 424 U.S. 693 (1976) (stigma-plus test for liberty interests)
- Medley v. City of Milwaukee, 969 F.2d 312 (7th Cir. 1992) (no liberty interest in debarment from program absent broader rights)
- Lujan v. G. & G. Fire Sprinklers, Inc., 532 U.S. 189 (1991) (need for present entitlement to trigger due process protections)
- Talley v. Lane, 13 F.3d 1031 (7th Cir. 1994) (no protected property right to participate when discretion exists)
- Kay v. Bd. of Educ. of City of Chicago, 547 F.3d 736 (7th Cir. 2008) (due process in education context; no direct bearing here but relevant)
- Mid-America Waste Sys., Inc. v. City of Gary, Ind., 49 F.3d 286 (7th Cir. 1995) (adequacy of post-deprivation procedures for contract claims)
- Goros v. County of Cook, 489 F.3d 857 (7th Cir. 2007) (contract interpretation falls outside due process concerns)
- Goros v. County of Cook, 489 F.3d 857 (7th Cir. 2007) (contract interpretation falls outside due process concerns)