Nozzi v. Housing Authority, 2015 U.S. App. LEXIS 20727

Section 8 Voucher Program provides rental subsidies with regulated payment standards and annual reexaminations to ensure predictable subsidies.
In 2004, HACLA reduced the payment standard from 110% of the 50th percentile to 100% of the 40th percentile to meet HUD budget limits, signaling a potential subsidy decrease for many tenants.
HACLA attached a bilingual flyer to RE-38 notices stating the payment standards were lowered effective April 2, 2004, but said changes would not apply until the next regular reexamination.
Approximately one year later, a four-week notice informed beneficiaries of the upcoming year’s subsidies under the new standard, the first direct personal notice of the impact.
Plaintiffs Nozzi and Palaez, both Section 8 beneficiaries affected by the 2004 change, sued in 2007 on federal due process grounds and state law claims, alleging inadequate notice and planning protections.
The district court granted summary judgment for HACLA; on appeal, the Ninth Circuit held the notice inadequate and remanded for consideration of the merits, with the court ultimately reversing and remanding for entry of summary judgment in favor of plaintiffs and reassignment of the case.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs have a protectable property interest in Section 8 benefits.	Nozzi/tenants have a property right in benefits due to statute/regulations.	Agency discretionary power to change payment standards; no protected property right.	Yes, plaintiffs have a property interest subject to due process.
Was the notice adequate to satisfy due process requirements?	Flyer was incomprehensible and insufficient to inform one-year protections.	Flyer plus trainings/outreach sufficient under Mathews; no due process violation.	No; notice was constitutionally inadequate under Mathews and Mullane.
Did HACLA breach California § 815.6 mandatory-duty liability?	Regulation requires intelligible notice a year in advance; failure caused injury.	Discretion to change standards; notice not mandatory duty.	Yes; the notice breached a mandatory duty and proximately caused injury.
Is HACLA vicariously liable under § 815.2 for employees’ negligence?	Negligent acts tied to inadequate notice.	Equally analyzed with § 815.6; no separate liability.	Yes; vicarious liability is established and supports summary judgment for plaintiffs.

Mathews v. Eldridge, 424 U.S. 319 (U.S. 1976) (three-part test for due process notice sufficiency)
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (notice must be reasonably calculated to inform affected parties)
Roth v. United States, 408 U.S. 564 (U.S. 1972) (property rights in government benefits defined by regulation)
Rosas v. McMahon, 945 F.2d 1469 (9th Cir. 1991) (distinguishes pre-existing notice requirements from due process safeguards)
Geneva Towers, Ltd. v. City of New York Housing Auth., 504 F.2d 491 (2d Cir. 1974) (property interest in welfare housing benefits and notice rights)
Willis v. United States, 787 F.2d 1089 (7th Cir. 1986) ( Mullane-like analysis when notice is at issue)
Today’s Fresh Start, Inc. v. Los Angeles Cnty. Office of Education, 303 P.3d 1140 (Cal. 2013) (dignitary interest in informing individuals of action consequences)
Atkins v. Parker, 472 U.S. 115 (U.S. 1985) (regulatory changes to eligibility do not alter due process inquiry)
Haggis v. City of Los Angeles, 993 P.2d 983 (Cal. 2000) (California § 815.6 private right of action context)