425 Mass. 79 | Mass. | 1997
The plaintiffs, tenants in a federally subsidized rental assistance program, commenced an action against the Metropolitan Housing Assistance Program (METHAP), the State agency administering the program, for breach of its obligations to inspect for and provide safe housing. The plaintiffs allege that this breach led to lead poisoning of the minor plaintiff because of lead-based paint ingestion at the leased premises. A judge in the Boston Division of the Housing Court Department denied METHAP’s motion for summary judgment. The parties filed a joint motion to request the judge to report his order and, in addition, to report certain underlying questions to the Appeals Court. The judge allowed the motion, and reported his ruling for a determination of its correctness. See Mass. R. Civ. P. 64, 365 Mass. 831 (1974). We transferred the case to this court on our own motion and vacate the denial of summary judgment.
I
The Federal government, through the United States Department of Housing and Urban Development (HUD), provides rental subsidies to low income tenants under the Section 8 Housing Assistance Program (HAP) of the United States Housing Act, 42 U.S.C. §§ 1437 et seq. (1994 & Supp. I 1995). The purpose of the act is to provide “decent, safe, and sanitary dwellings for families of lower income.” 42 U.S.C. § 1437 (1994). This program is administered through agreement with HUD by State and local agencies (public housing agencies or PHAs). METHAP is one such local agency. Administration of HAP is the subject of Federal statutory and regulatory provisions with which these agencies must comply. In Ayala v. Boston Hous. Auth., 404 Mass. 689, 696-697 (1989), we described the obligations of the PHA under Section 8 and its implementing regulations. For all relevant purposes they had not been changed at the time the contracts in this case were signed. These obligations include the obligation to inspect or to cause to be inspected the
Under the Section 8 program, the PHA enters into a HUD approved contract with the owner, a housing assistance payments contract (HAP contract), and an annual contributions contract (AC contract) that set out the terms by which the PHA will make rental subsidy payments to the owner, and, among other things, obligate the owner to maintain the premises in a decent, safe, and sanitary condition. The tenant, having been approved by the PHA for participation in the program, executes a HUD prescribed lease with the owner. The lease obliges the owner to provide decent, safe, and sanitary housing in accordance with applicable HUD regulations and the State sanitary code and to make necessary repairs accordingly. This lease is signed by the tenant and owner. Additional provisions relating to other good cause termination of the tenancy by the owner, security deposits, and certain prohibited lease provisions are contained in an addendum, which provides that the PHA initial the addendum.
Bames had applied to METHAP, and, after her eligibility was determined, housing search workers for the shelter where she was living with her children informed her of a vacancy. Prior to receiving housing, she attended a mandatory orientation program which informed her of the dangers of lead poisoning and advised her to have her children tested for lead poisoning every six months. At the completion of the program, she signed a HUD form entitled “Watch out for Lead Paint Poisoning.” Angela Barnes’s lease provided that the rent for the apartment in issue here would be $700 a month of which she would pay $39 and the balance would be
The plaintiffs brought this suit against METHAP, stating two distinct grounds. Count I states that METHAP “had a contractual relationship with the plaintiffs . . . obligating it] to provide plaintiffs with safe, habitable and fit housing,” and that the minor’s lead poisoning was the result of METHAP’s breach of its obligations. Count II states that METHAP “owe[d] a duty of reasonable care to the plaintiffs [to provide them with] leadffee housing and [to do] reasonable and appropriate lead inspections.” The judge in the Housing Court ruled that, following our decision in Ayala, supra, METHAP was obligated to the plaintiffs as third-party beneficiaries of its HAP contract and AC contract with the owners to provide them with lead-free housing or at least to inspect and protect them against lead hazards. Although the HAP contract and the AC contract had clauses explicitly excluding METHAP’s liability to third parties,
As to plaintiffs’ second count, “in looking at the document provided by the plaintiffs, the [judge ruled that he] cannot find that explicit and specific assurance, as defined in G. L. c. 258, § 10 (/) (1),” which would be necessary to impose liability on METHAP for breach of its duty to the plaintiffs apart from any contractual obligation.
The judge denied summary judgment, stating that he was “not finding that the statute as applied is unconstitutional. ’’
n
A
METHAP owed no contractual duty to the plaintiffs. The Housing Court judge and the plaintiffs rely on our decision in the Ayala case for the proposition that Section 8 tenants are the intended beneficiaries of the contracts that public agencies like METHAP make with landlords to provide “decent, safe, and sanitary dwellings” — that include dwellings free from lead-based paint hazards. In Ayala, the local agency administering the HAP was the Boston Housing Authority (BHA), which had failed to inspect for lead paint hazards the premises it approved for the plaintiffs’ use. The BHA was obligated by its contract with the owner to inspect the premises to make certain that it posed no lead paint hazard. We held that Section 8 tenants were intended third-party beneficiaries of this contractual obligation:
“Recognizing a right to enforce these promises against the BHA ‘is appropriate to effectuate the intention of the parties.’ Flattery v. Gregory, 397 Mass. 143, 148 (1986). . . . When faced with liability for breach of its contractual duty to inspect for, and oversee the remedying of, lead paint hazards, the BHA will have a strong incentive to achieve the goals of the Federal statutes and regulations. We conclude also that HUD, the promisee, intended the plaintiffs to benefit. Id. To rule that these plaintiffs were not intended beneficiaries would mock*85 the very goals which Congress and HUD set out to achieve through the Section 8 program, at least as to the lead paint provision: to afford children of families of meager means a decent, safe, and sanitary place to live.”
Ayala, supra at 700-701. But the contract in Ayala did not contain the exclusionary clause which was present here. The Housing Court, however, relied on Ayala to void that clause as against public policy. The judge held that the same considerations that led us to imply such an obligation in the contract in Ayala also rendered void as against public policy any attempt to exclude such an implication. The difficulty with this line of reasoning, which the plaintiffs repeat to us here, is that the Legislature, in enacting G. L. c. 258, § 10 (/), undertook to negate the doctrine of the Ayala case, and implicitly expressed its conclusion, which we are bound to follow, that no such public policy exists.
In order to reinstate the third-party contractual obligation to the plaintiffs, the Housing Court and the plaintiffs have recourse to the contract clause of the United States Constitution. The plaintiffs argue that the Legislature’s judgment of public policy expressed in § 10 (/), which was enacted after the contracts in this case were signed, may not be used to deprive the plaintiffs of relief because to do so would allow the State retroactively to alter its contractual obligations. It is not accurate to say, as the Housing Court did, that retroactive adjustments by the State of its contractual obligations must be subject to strict scrutiny.
B
There remains the claim, implicit in Count II of the plaintiffs’ complaint, that, quite apart from any contractual obligation to the plaintiffs as third-party beneficiaries to the
The order of the Housing Court denying summary judgment with respect to Count I is vacated. In respect to Count II, the case is remanded to that court for further proceedings in accordance with this opinion.
So ordered.
We refer to a tenant receiving subsidized rent under Section 8 of the HAP as a “Section 8 tenant.”
The HAP contract states:
“Nothing in this Contract shall be construed as creating any right of the Family or other third party (other than HUD) to enforce any provision of this Contract, or to assert any claim against HUD, the PHA or the Owner under this Contract.”
The AC contract states:
“Nothing in the [AC contract] shall be construed as creating any right of any third party to enforce any provision of this [AC*83 contract], or to assert any claim against HUD or the PHA under this [AC contract].”
General Laws c. 258, § 10, states:
“The provisions of sections one to eight, inclusive, shall not apply to: — . . .(f) any claim based upon the failure to inspect, or an inadequate or negligent inspection, of any property, real or personal, to determine whether the property complies with or violates any law, regulation, ordinance or code, or contains a hazard to health or safety, except as otherwise provided in clause (1) of subparagraph (/)•”
After a second briefing, the judge modified this language to state that “[t]he regulation of state contracts is subject to more strict scrutiny than the regulation of completely private contracts.” The judge did go on, however, to state that only a “compelling state interest” would justify a retroactive abandonment of the State’s own contractual obligations.
The judge apparently concluded that the statute would be unconstitutional as applied only if the plaintiffs were able to convince “a jury that they reasonably relied upon [the contracts] to their detriment because the Dwelling Lease Agreement incorporated by reference the HUD regula
It appears that another Housing Court judge in Parks v. Petraglia, Housing Ct. No. 93-CV-00155 (Jan. 20, 1995), opined that the Legislature undertook not to disapprove Ayala v. Boston Hous. Auth., 404 Mass. 689 (1989), but to confirm it. Because the case is unreported we do not comment on its reasoning, but disagree with that conclusion.
The leading United States Supreme Court case on this issue indicates that the Court subjects retroáctive altering of a State’s own obligation to
“The Contract Clause is not an absolute bar to subsequent modification of a State’s own financial obligations. As with laws impairing the obligations of private contracts, an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose. In applying this standard, however, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake. ... If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.” (Emphasis supplied and footnotes omitted.)
United States Trust Co. v. New Jersey, 431 U.S. 1, 25-26 (1977).
The judge conceded that “[i]t is clear that as to the future, the Legislature . . . has changed that public policy.”
The words are actually those of her attorney, as he posed questions to which she answered affirmatively.