Divetro v. The Housing Authority of Myrtle Beach et al

Filing 50

IT IS THEREFORE ORDERED that Defendants' 32 motion to dismiss is DENIED, that Defendants' 31 motion for summary judgment is DENIED, and that Plaintiff's 25 motion for a preliminary injunction shall be further held in abeyance and consolidated with a trial on the merits. Signed by the Honorable R Bryan Harwell on 7/10/2014. (hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Denise DiVetro,
Plaintiff,
v.
The Housing Authority of Myrtle
Beach, and GEM Management,
Defendants.

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Civil Action No.: 4:13-cv-01878-RBH

ORDER

Plaintiff Denise DiVetro filed this action for declaratory and injunctive relief against
Defendants the Housing Authority of Myrtle Beach (“MBHA”) and GEM Management pursuant 42
U.S.C. § 1983 on July 9, 2013. Compl., ECF No. 1. Plaintiff’s claim specifically alleges a violation
of her Fourteenth Amendment procedural due process rights arising from the termination—
allegedly without notice and an opportunity to be heard—of a rental assistance subsidy that the
Plaintiff received as part of her residing in a public housing project.1

She claims that the

termination of the subsidy ultimately contributed to her eviction from her apartment. Plaintiff now
moves for a preliminary injunction from the Court pursuant to Rule 65 of the Federal Rules of Civil
Procedure, seeking an order reinstating Plaintiff’s tenancy and to restore her rental subsidy during
1

As a preliminary matter, the Court has some concern with Plaintiff’s framing of this action as, in
part, an action to restore her rental assistance subsidy because Plaintiff has alleged that the subsidy
is a federal subsidy. She has named no federal agency or federal official as a party to this case.
This order should, therefore, be read for what it means: that Defendants have failed to meet their
burdens under Rules 12(b)(6) and 56 of the Federal Rules of Civil Procedure. Despite the Court’s
denial of Defendants’ motions, questions remain about the injury Plaintiff alleges was caused by
Defendants. These questions are critical because their answers determine the propriety and scope of
the injunctive relief Plaintiff seeks in this matter. Indeed, the evidence suggests that the termination
of the rental assistance subsidy is not the immediate injury to Plaintiff, but was rather the natural
consequence of the non-renewal of Plaintiff’s lease, in which she had an established property
interest. The Court admonishes the parties to thoroughly consider and narrow these issues prior to
the trial on the merits.

the pendency of this action. Mot. for Prelim. Inj., ECF No. 25. Defendants responded to Plaintiff’s
motion and filed both a motion to dismiss and a motion for summary judgment pursuant to Rules
12(b)(6) and 56 of the Federal Rules of Civil Procedure, respectfully. ECF Nos. 30, 31, 32. Plaintiff
responded to Defendants’ motions. ECF Nos. 36, 37. A hearing was held on each of the motions on
June 3, 2014, and the motions are before the Court.2 After considering the arguments and evidence
presented by the parties, the Court finds Defendants’ motion to dismiss and motion for summary
judgment must be denied. Furthermore, as the Court will explain in more detail below, Plaintiff’s
motion for a preliminary injunction shall be held in abeyance and consolidated with a trial on the
merits.
FACTUAL BACKGROUND
On June 23, 2011, Plaintiff signed a one-year lease to rent an apartment at Halyard Bend
Apartments, a complex owned by MBHA and managed by GEM Management in Horry County,
South Carolina.

The Halyard Bend Apartments complex is a multi-family housing project

purchased with financing provided by the United States Department of Agriculture (“USDA”). The
USDA’s Rural Development program provides funding to borrowers (here, Defendants), who, in
turn, lease housing to qualified tenants. Those tenants, moreover, may qualify for assistance
subsidies from the USDA for rent and utilities. The amounts of those subsidies are determined after
an annual certification, where factors such as income and family size are assessed. The lease that
Plaintiff signed indicated that her note rent3 was $658 per month; however, Plaintiff was initially

2

In addition to the motions of the parties, the Court sua sponte raised jurisdictional concerns,
requesting that the parties be prepared at the hearing to argue the applicability of the RookerFeldman doctrine.
3

“Note rent” is the amount of rent determined by the borrower (and approved by the USDA) to
cover the costs associated with financing and managing the multi-family complex.
2

approved for rental assistance that reduced her rent to $199 per month. She paid that amount until
her next certification in January 2012, when Plaintiff’s subsidy was increased to an amount that
effectively lowered her monthly rent to $0 per month.4 Also as a result of this recertification,
Plaintiff’s lease was renewed for another one-year term, set to expire at the end of January 2013.5
Not long after she moved into the unit did Plaintiff begin to receive written warnings from
apartment management. The first was a warning in August 2011 that two dogs were observed at her
apartment, a violation of occupancy rules. Next was a warning citing her children’s disruptive
behavior in February 2012, also a violation of the rules. Other violation warnings cited a rabbit in
her closet and an unregistered, non-operable vehicle on the property. On August 30, 2012, Plaintiff
was informed that an associate of hers had been barred from visiting her on the property. As a
result of these violations, GEM Management informed Plaintiff, by way of a November 9, 2012
letter, that her lease would not be renewed for another one-year term. She was told to vacate the
premises by the end of January 2013 and notified of her rights to defend an eviction in court.
Despite the demands that she vacate the premises, however, Plaintiff did not leave, and in a March
3, 2013 form letter, Plaintiff was informed that she had failed to pay rent for the months of February
and March.6 The letter indicated that she was $1,316 in arrears and that a failure to pay the balance
by March 15 would lead to a termination of her lease the following day. Plaintiff was thus treated
as a month to month tenant (at $658 per month) without having an opportunity to contest the lease
violations alleged by Defendants. Still maintaining that her rental assistance subsidy covered the
note rent entirely, however, Plaintiff did not pay any rent.
4

Plaintiff also received a utility subsidy that provided a net $13 to her each month.

5

As the Court shall explain further below, a borrower may only terminate a lease at the end of a
lease period under certain conditions. See 7 C.F.R. § 3560.159(b).
6

Upon the termination of the lease, Plaintiff no longer qualified for rental assistance.
3

An application for ejectment was filed in Horry County magistrate’s court on March 25,
2013. The form application listed two grounds as reasons for the writ of ejectment: “The tenant
fails or refuses to pay the rent when due or when demanded” and “The term of tenancy or
occupancy has ended.”7 That same day, the magistrate issued a rule to vacate or show cause to
Plaintiff, notifying her of the same reasons. A trial was held on April 11, 2013, and the magistrate
found that Plaintiff had failed to pay rent and issued a writ of ejectment. 8 Plaintiff moved to stay
the eviction; however, the amount of the undertaking was contested when Plaintiff continued to
assert at an April 29 hearing that her rent was not $658 per month. Instead, Plaintiff contended that
her rent was -$13 because of the rental and utility subsidies. The magistrate again rejected her
arguments and again found that she owed $658 per month for the months of February, March, and
April. Unable to pay rent, Plaintiff was evicted from her apartment on May 15, 2013. This action
was subsequently filed on July 9, 2013.
In addition to filing this § 1983 action, however, Plaintiff appealed the judgment of the
magistrate to a South Carolina circuit judge on April 15, 2013, as provided by South Carolina law.
Before the circuit judge, Plaintiff moved to modify the undertaking9 and for a preliminary
injunction. In a brief to the circuit judge, Plaintiff argued that her procedural due process rights
were violated when her rental assistance subsidy was terminated without notice and an opportunity
7

On the form application was a third ground for ejectment that was unchecked: “The terms or
conditions of the lease have been violated as follows.” The third option included space on the form
for the applicant to list the lease violations. All three grounds together track the grounds for
ejectment provided by section 27-37-10 of the South Carolina Code.
8

According to Plaintiff, she moved to dismiss the application at the trial because Defendants “had
not proved that they had good cause to terminate [her] subsidy and charge [her] fair market rent.”
The magistrate denied the motion. Aff. of Denise DeVitro 2, ECF No. 25-2.
9

An “undertaking” equals the amount of rent owed and is a prerequisite for the magistrate’s stay of
the eviction.
4

to be heard. The circuit judge denied both motions on July 29, 2013. Subsequently, after an
October 2, 2013 hearing in which Plaintiff again alleged procedural due process violations, the
circuit judge dismissed the appeal on November 1. The basis for his dismissal of the appeal was an
absence of a final order on file with the court and the magistrate’s failure to issue a return in order
to establish a record of the proceedings below. When Plaintiff moved for a reconsideration of the
circuit judge’s dismissal, the circuit judge ordered the magistrate to issue a return, holding the
motion in abeyance. At the time of the June 3 hearing before this Court, the magistrate had still not
issued a return despite the circuit judge’s order.10
LEGAL ANALYSIS
I.

Jurisdiction Under the Rooker-Feldman Doctrine
Both Plaintiff and Defendants have raised several issues in their respective motions;

however, because the Court has sua sponte raised jurisdictional concerns, the Court must first
determine whether it has jurisdiction to hear this action. Specifically, the Court ordered the parties
to address whether the Court has jurisdiction in light of the Rooker-Feldman doctrine.

In

accordance with the Court’s notice, the parties did so at the June 3 hearing. Plaintiff argued that
this action is separate from the eviction proceedings before a South Carolina magistrate. She
characterizes this action as a separate violation of her procedural due process rights when
Defendants terminated the rental assistance subsidy at the end of January 2013 and increased her
rent without any notice or opportunity to be heard on the alleged violations. Defendants, on the
other hand, argue that this § 1983 action is inextricably intertwined with the eviction proceedings,
noting that the same procedural due process arguments were made in the state court proceedings.

10

The parties further informed the Court in a June 27, 2014 letter that the magistrate had not issued
the return. Joint Ltr. of June 27, 2014, ECF No. 49.
5

The Rooker-Feldman doctrine traces its genesis to Rooker v. Fidelity Trust Co., 263 U.S.
413 (1923). The Supreme Court found that, by federal statute, only it could exercise appellate
jurisdiction over final state court judgments. Id. at 416. The Court applied the doctrine again in
District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), and most recently clarified
it in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280, 284 (2005). In Feldman, the
Court held that the allegations of a complaint were “inextricably intertwined” with state court
decisions rendered after judicial proceedings—enough to bar the Plaintiffs from bringing claims in
federal court. 460 U.S. at 486–87. In Exxon Mobil, the Court, after some confusion in the lower
courts, clarified that the doctrine “is confined to cases . . . brought by state-court losers complaining
of injuries caused by state-court judgments rendered before the district court proceedings
commenced and inviting district court review and rejection of those judgments.” 544 U.S. at 284.
After Exxon Mobil, the Fourth Circuit explained that the Rooker-Feldman doctrine is applicable
only when a Plaintiff challenges a state court decision. Davini v. Va. Dep’t of Transp., 434 F.3d
712, 718–19 (4th Cir. 2006). Despite the fact that the Davini plaintiff had brought similar claims in
federal court after losing in state court, the Fourth Circuit found his claims were “independent”
because they sought redress for an injury caused by the defendants, not the state court. Id. at 719.
The focus of a Rooker-Feldman analysis, therefore, is on the injury that Plaintiff asks this Court to
redress. “[I]f the state-court loser seeks redress in the federal district court for the injury caused by
the state-court decision, his federal claim is, by definition, ‘inextricably intertwined’ with the statecourt decision, and is therefore outside of the jurisdiction of the federal district court.” Id.
Here, Plaintiff claims that her injury was caused by Defendants’ actions, not by the South
Carolina magistrate’s writ of ejectment. It follows that the Rooker-Feldman doctrine does not bar
this action entirely. Specifically, the injury alleged by Plaintiff was the termination of Plaintiff’s

6

rental assistance subsidy (deriving from Defendants’ non-renewal of the lease), which Plaintiff
alleges occurred as a result of Defendants’ failure to give her an opportunity to be heard on the
alleged lease violations. At the same time, however, Plaintiff’s request that the Court reinstate her
tenancy would amount to a complete reversal of the magistrate’s writ. Indeed, it was the writ that
directly led to Plaintiff’s eviction. See Smalley v. Shapiro & Burson, LLP, 526 F. App’x 231 (4th
Cir. 2013) (“ ‘The injur[ies] alleged by [Appellants] in all of these allegations [are] a direct result of
the judicial order and fail[ ] to assert an ‘independent claim’ that would bring the case outside the
ambit of Rooker-Feldman.’ ” (citing Reguli v. Guffee, 371 F. App’x 590, 596 (6th Cir. 2010))
(alterations in original)). Thus, to that end, the Court finds that the Rooker-Feldman doctrine is
partially applicable to Plaintiff’s claim; however, the doctrine is only applicable to the extent that
Plaintiff seeks reinstatement of her tenancy. Enjoining Defendants to do so, even in light of
Plaintiff’s claims alleging injury by the Defendants, is tantamount to a review for error and reversal
of the final judgment of the magistrate—after a judicial proceeding. Plaintiff must not be able to
couch an injury directly caused by a state court as one caused by the Defendants in order to
circumvent the bars to this Court’s jurisdiction. The Court’s finding that Plaintiff’s claim is not
fully barred, however, requires further consideration of the other issues raised by this Court and the
parties.
II.

Defendants’ Motion to Dismiss
Defendants filed a motion to dismiss the action under 12(b)(6) of the Federal Rules of Civil

Procedure. Their only argument is that the Defendants are not proper “persons” under 42 U.S.C. §
1983.11 Specifically, they contend that “Plaintiff makes no allegation that any person has violated

11

42 U.S.C. § 1983 provides as follows:
7

any federally recognized right,” citing caselaw for the proposition that “inanimate objects such as
buildings, facilities, and grounds are not ‘persons’ and do not act under color of state law.” Memo.
in Supp. of Mot. to Dismiss 2–3, ECF No. 32-1. Plaintiff, however, points out that MBHA is a
“quasi-municipal, quasi-corporate” organization and that GEM Management is acting on behalf of
MBHA. She argues that courts have long-recognized “a cause of action pursuant to 42 U.S.C. §
1983 when a housing authority has violated a federal housing program participant’s due process.”
Memo. in Opp. to Mot. to Dismiss 5–6, ECF No. 37.
Rule 12(b)(6) governs motions to dismiss for “failure to state a claim upon which relief can
be granted.” The purpose of such a motion is to test the sufficiency of a plaintiff’s complaint. See
Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012). Rule 8(a)(2) of the Federal Rules of Civil
Procedure provides that a pleading must contain “a short and plain statement of the claim showing
that the pleader is entitled to relief.” While this standard “does not require ‘detailed factual
allegations,’ . . . [a] pleading that offers ‘labels and conclusions,’ or ‘a formulaic recitation of the
elements of a cause of action will not do.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Likewise, “a complaint [will not] suffice if
it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Iqbal, 556 U.S. at 678
(quoting Twombly, 550 U.S. at 557). Rather, to survive a Rule 12(b)(6) motion to dismiss, the
“[f]actual allegations must be enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555; see also Walters, 684 F.3d at 439 (“[W]hile a plaintiff does not need to

Every person who, under color of any statute, ordinance, regulation,
custom, or usage, of any State or Territory or the District of
Columbia, subjects, or causes to be subjected, any citizen of the
United States or other person within the jurisdiction thereof to the
deprivation of any rights, privileges, or immunities secured by the
Constitution and laws, shall be liable to the party injured in an action
at law, suit in equity, or other proper proceeding for redress.
8

demonstrate in a complaint that the right to relief is ‘probable,’ the complaint must advance the
plaintiff’s claim ‘across the line from conceivable to plausible.’ ” (quoting Twombly, 550 U.S. at
570)). Finally, when ruling on a motion to dismiss, the Court “must accept as true all of the factual
allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007).
After a review of Plaintiff’s complaint, the Court finds that Plaintiff has adequately alleged
that Defendants are not inanimate objects under § 1983. The cases cited by Defendants regard
actual inanimate objects that are named by the plaintiffs, such as jailhouses or school buildings.
Plaintiff, however, has named entities in this action. MBHA is “a federally-funded state public
housing agency,” and GEM Management “is a management agent of Defendant MBHA.” Compl.
¶¶ 9–10. Defendants, therefore, cannot plausibly be deemed inanimate objects under the facts
alleged. Indeed, Defendants cite the Supreme Court’s opinion in Monell v. Department of Social
Services of the City of New York, 436 U.S. 658, 690 (1978), which held that the term “person” under
§ 1983 includes municipalities and other local government units. MBHA, as a public housing
authority, falls within that category of persons recognized by Monell.12

Furthermore, private

corporations performing services on behalf of a public entity, are amenable to suit under § 1983.
See Burton v. Wilmington Parking Auth., 365 U.S. 715, 723–26 (1961); cf. Powell v. Shopco Laurel
Co., 678 F.2d 504, 506 (4th Cir. 1982) (applying the holding from Monell to private corporations).
Accordingly, because the allegations of Plaintiff’s complaint support the fact that Defendants are
not inanimate objects, Defendants’ motion to dismiss must be denied.

12

Courts within the Fourth Circuit have routinely presumed public housing authorities to be
amenable to suit under § 1983. See, e.g., Caulder v. Durham Hous. Auth., 433 F.2d 998 (4th Cir.
1970); Daniels v. Hous. Auth. of Prince George’s Cnty., 940 F. Supp. 2d 248 (D. Md. 2013);
Farmer v. Wilson Hous. Auth., 393 F. Supp. 2d 384 (E.D.N.C. 2004).
9

III.

Defendants’ Motion for Summary Judgment
Defendants also move for summary judgment under Rule 56 of the Federal Rules of Civil

Procedure. In their motion, they raise several grounds for this Court’s entry of judgment in their
favor.

While many of their defenses are inapplicable to the facts alleged in this action,13

Defendants argue that the undisputed and material facts demonstrate that Plaintiff’s procedural due
process rights were not violated when Defendants did not renew her lease and subsequently evicted
her from her apartment. Specifically, they contend that they followed all procedures required by
due process and federal regulations. Memo. in Supp. of Mot. for Summ. J. 5–8, ECF No. 31-1. In
addition to their argument on the merits, Defendants maintain that Plaintiffs claim is barred by the
doctrine of res judicata.14 Id. at 11. Plaintiff responded to these arguments. Because the Court finds

13

In addition to repeating the argument they make in their motion to dismiss, Defendants argue,
albeit in a summary fashion, that they are entitled to qualified immunity, entitled to Eleventh
Amendment immunity, and not liable under state law or any theories of vicarious liability,
respondeat superior, or supervisory liability. First, for the same reasons discussed by the Court in
denying Defendants’ motion to dismiss, Defendants fail to demonstrate that they are inanimate
objects that are not considered “persons” under § 1983. Second, qualified immunity and Eleventh
Amendment immunity are inapplicable to Defendants. They have presented no evidence that they
are individuals or arms of the state of South Carolina entitling them to such immunity. See Pearson
v. Callahan, 555 U.S. 223, 231 (2009) (“The doctrine of qualified immunity protects government
officials ‘from liability for civil damages . . . .’ ” (emphasis added) (quoting Harlow v. Fitzgerald,
457 U.S. 800, 818 (1982))); Sallie v. Tax Sale Investors, Inc., 998 F. Supp. 612, 621 (D. Md. 1998)
(“[I]t cannot be expected that the Supreme Court will allow a private business corporation, as
distinct from its officers and employees, to claim the benefits of qualified immunity.”); Bland v.
Roberts, 730 F.3d 368, 389–90 (4th Cir. 2013) (“[Eleventh Amendment immunity “protects ‘state
agents and state instrumentalities,’ meaning that it protects ‘arms of the State’ and State officials.”
(emphasis added) (quoting Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429 (1997); Mt.
Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 280 (1977))). Third, Defendants’ argue
that they are not liable under state law; however, Plaintiff only avers a single, federal claim against
Defendants. Finally, Plaintiff never alleges that Defendants are liable as a result of any theories of
vicarious liability, respondeat superior, or supervisory liability. Plaintiff, instead, alleges they are
directly liable under Monell. Accordingly, the Court need not address these arguments any further.
14

The Court ordered the parties to submit supplemental memoranda further addressing the
applicability of the doctrine of res judicata, as well as whether the abstention of this Court is
appropriate given the ongoing state proceedings. See ECF Nos. 41, 43, 44. The Court will further
10

a genuine dispute of fact exists about whether Plaintiff’s procedural due process rights were
violated, the Court denies Defendants’ motion for summary judgment. Memo. in Opp. to Mot. for
Summ. J. 12, ECF No. 36.
The Court shall grant summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed. R.
Civ. P. 56(a). The movant bears the initial burden of demonstrating that summary judgment is
appropriate; if the movant carries its burden, then the burden shifts to the non-movant to set forth
specific facts showing that there is a genuine dispute for trial. See Celotex Corp. v. Catrett, 477 U.S.
317, 322–23 (1986). If a movant asserts that a fact cannot be disputed, it must support that assertion
either by “citing to particular parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations (including those made for
purposes of the motion only), admissions, interrogatory answers, or other materials;” or by
“showing . . . that an adverse party cannot produce admissible evidence to support the fact.” Fed. R.
Civ. P. 56(c)(1).
To prevail on a motion for summary judgment, the movant must demonstrate that (1) there
is no genuine dispute as to any material fact and (2) that he is entitled to judgment as a matter of
law. As to the first of these determinations, a fact is deemed “material” if proof of its existence or

address the application of the doctrine of res judicata below. As for abstention, the only abstention
doctrine asserted by Defendants is the doctrine recognized in Colorado River Water Conservation
District v. United States, 424 U.S. 800 (1976). After further consideration of the parties’ arguments
regarding the application of the Colorado River abstention doctrine, both in their memoranda and at
the hearing, the Court finds abstention inappropriate. Indeed, “[t]he threshold question in a
Colorado River inquiry is whether the pending state and federal suits are parallel.” Chase Brexton
Health Servs., Inc. v. Maryland, 411 F.3d 457, 463 (4th Cir. 2005). State and federal actions are
parallel “if substantially the same parties litigate substantially the same issues in different forums.”
Id. at 464. In light of this Court’s ruling below that the application of res judicata is inappropriate,
the Court declines to surrender jurisdiction of this action under Colorado River. See Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983).
11

nonexistence would affect disposition of the case under applicable law. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A dispute of material fact is “genuine” if the evidence offered is
such that a reasonable jury might return a verdict for the non-movant. Id. at 257. In determining
whether a genuine dispute has been raised, a court must construe all inferences and ambiguities
against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S.
654, 655 (1962). The existence of a mere scintilla of evidence in support of the non-movant’s
position is insufficient to withstand a summary judgment motion. Id. at 252. Likewise, conclusory
allegations or denials, without more, are insufficient to preclude the granting of the summary
judgment motion. Ross v. Commc’n Satellite Corp., 759 F.2d 355, 365 (4th Cir. 1985). “Only
disputes over facts that might affect the outcome of the suit under the governing law will properly
preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will
not be counted.” Anderson, 477 U.S. at 248.
The Court first turns to Defendants’ res judicata argument. Defendants argue that the
doctrine of res judicata should bar Plaintiff’s § 1983 claim because she had previously been heard
by both the magistrate and the circuit judge on the same procedural due process issues. Plaintiff, on
the other hand, contends that the magistrate did not have the jurisdiction to adjudicate a § 1983
cause of action arising from the alleged violation of her procedural due process rights.
In deciding whether the doctrine of res judicata precludes this particular action, this Court
must apply the law of South Carolina. O’Reilly v. Montgomery Cnty. Bd. of Appeals, 900 F.2d 789,
791 (4th Cir. 1990). In South Carolina, for res judicata to act as a bar, a party must generally prove:
“(1) identity of the parties; (2) identity of the subject matter; and (3) adjudication of the issue in the
former suit.” Judy v. Judy, 712 S.E.2d 408, 412 (S.C. 2011). The South Carolina Supreme Court
has declined to “define a single standard,” however, “[b]ecause a determination of whether res

12

judicata precludes a subsequent suit cannot be reduced to a formulaic process.” Id. at 414. Instead,
the court recognizes a “conceptual framework” for applying the doctrine. Id.

“Res judicata bars

subsequent actions by the same parties when the claims arise out of the same transaction or
occurrence that was the subject of a prior action between those parties.” Plum Creek Dev. Co. v.
City of Conway, 512 S.E.2d 106, 109 (S.C. 1999). In other words, “ ‘[a] litigant is barred from
raising any issues which were adjudicated in the former suit and any issues which might have been
raised in the former suit.’ ” Id. (quoting Hilton Head Center of S.C., Inc., v. Public Service Comm’n
of S.C., 352 S.E.2d 176, 177 (S.C. 1987)). The “fundamental purpose” of the doctrine “is to ensure
that ‘no one should be twice sued for the same cause of action.’ ” Judy, 712 S.E.2d at 414 (quoting
First Nat'l Bank of Greenville v. U.S. Fid. & Guar. Co., 35 S.E.2d 47, 56 (1945)). In this context, a
“cause of action” means the “ ‘underlying facts combined with the law giving the party a right to a
remedy of one form or another based thereon.’ ” Plum Creek, 514 S.E.2d at 110 (quoting 50 C.J.S.
Judgment § 749 (1997)).
Plaintiff arguably had the opportunity to raise the issues she now raises to the magistrate at
the April 11, 2013 trial. Indeed, it appears she did so by way of a motion to dismiss; however, the
mere fact that she had the opportunity to raise the issue defensively—in an effort to show cause for
remaining in her apartment after having not paid rent—does not bar her claim under § 1983 for
declaratory and injunctive relief to redress the alleged violations of her due process rights. To put it
simply, there is no undisputed evidence that Plaintiff is suing Defendants a second time for the same
cause of action—the “fundamental purpose” the res judicata doctrine in South Carolina.
Furthermore, there is no undisputed evidence showing that Plaintiff had the opportunity to bring her
§ 1983 cause of action before the magistrate, who had before him the eviction by way of an
application for ejectment filed by Defendants. Defendants have not argued specifically that actions

13

for declaratory and injunctive relief of the kind sought by Plaintiff fall within the limited
jurisdiction of the magistrate, and this Court is unaware of any provision or rule giving a magistrate
such jurisdiction. See Judy, 712 S.E.2d at 412 (recognizing that a party’s failure to raise a claim to a
court without jurisdiction does not bar a party from raising the claim in a subsequent action). The
Court finds, therefore, that Defendants have failed to meet their burden of showing that the doctrine
of res judicata precludes Plaintiff from asserting her § 1983 claim.
Defendants next argue that their actions never rose to the level of a constitutional violation
and that Plaintiff never suffered an infringement of her Fourteenth Amendment procedural due
process rights.

Specifically, they argue that Plaintiff was given adequate notice of her lease

violations as a basis for the non-renewal of her lease and that South Carolina’s eviction procedures
provided her adequate due process. Moreover, they contend that Plaintiff’s alleged procedural due
process rights are premised on Supreme Court and Fourth Circuit caselaw that predates the current
USDA regulatory scheme, which they maintain that they complied with—that those cases no longer
apply.15 They emphasize that the requirement that due process be given prior to the termination or
non-renewal of a lease “would paralyze affordable housing acquisition” because “[n]o tenants could
ever be evicted without great time and expense.” Memo. in Supp. of Mot. for Summ. J. 7. In her
response, Plaintiff argues that Defendants never gave her an opportunity to contest the underlying
15

Defendants specifically argue as follows:
Plaintiff’s reliance on Goldberg v. Kelly, 397 U.S. 254 (1970),
Caulder v. Durham Housing Authority, 433 F.2d 998 (4th Cir. 1970)
and Joy v. Daniels, 479 F.2d 1236 (4th Cir. 1973) is misplaced. The
regulations governing the Department of Agriculture’s rural housing
service became effective February 24, 2005 and remained in effect
throughout Plaintiff’s occupancy and eviction. Those Cases deal with
prior regulations.

Memo. in Supp. of Mot. for Summ. J. 7.
14

basis (the lease violations) for Defendants’ non-renewal of her lease; it was the non-renewal of the
lease which led to the termination of her rental assistance subsidy. She highlights evidence showing
that her eviction before the magistrate was for her failure to pay rent for the months of February and
March—not on the ground of the lease violations on which Defendants’ based the non-renewal of
the lease. She contends that she has “produced sufficient evidence to show that there is an issue as
to whether Defendant violated Plaintiff’s due process rights.” Memo. in Opp. of Mot. for Summ. J.
12.
The Court finds that a genuine issue of material fact remains regarding whether Plaintiff’s
procedural due process rights were violated as a result of Defendants’ actions. Indeed, it has long
been established by the Fourth Circuit that the beneficiaries of public housing are entitled to avail
themselves of the Fourteenth Amendment’s Due Process Clause’s procedural protections when
facing the termination of their leases. Joy v. Daniels, 479 F.2d 1236, 1242 (4th Cir. 1974) (applying
the holding of Goldberg v. Kelly, 397 U.S. 254, 266–71 (1970), to the termination of public housing
leases). This is due to the fact, undisputed by the parties, that public housing tenants hold property
interests in their leases and their continued occupancy. Plaintiff’s property interest in the renewal of
her lease and continuation of her rental assistance subsidy accordingly entitles her to the procedural
due process protections recognized by the Supreme Court in Goldberg16 and expressly applied to
the public housing context by the Fourth Circuit in in Caulder v. Durham Housing Authority, 433
F.2d 998 (4th Cir. 1970). The issue before the Court, then, is whether Defendants can show as a

16

In Goldberg, the Supreme Court held that the Fourteenth Amendment’s Due Process Clause
requires (1) timely notice stating the basis for the proposed termination of a benefit; (2) an
opportunity by the beneficiary to confront and cross-examine each witness relied upon for the
termination; (3) the right of the beneficiary to be represented by counsel; (4) a decision, based
solely on evidence adduced at the hearing, in which the reasons for the decision are set forth; and
(5) an impartial decisionmaker. 397 U.S. 254, 266–71.
15

matter of law that they complied with the Fourteenth Amendment’s Due Process Clause and the
relevant federal regulations in unilaterally non-renewing Plaintiff’s lease and, by derivation, her
housing assistance subsidy.
Defendants cite federal regulations to support their position that Plaintiff was not entitled to
an opportunity to challenge the violations that Defendants deemed material enough to justify a nonrenewal of Plaintiff’s lease. Memo. in Supp. of Mot. for Summ. J. 6. Indeed, while the regulations
governing the USDA’s housing program create a grievance process for tenants of multi-housing
projects, the grievance process “does not apply” in situations where the tenant seeks to contest lease
violations that “would result in the termination of tenancy and eviction.” 7 C.F.R. §
3560.160(b)(2)(v). Plaintiff cannot genuinely challenge this exemption from the grievance process,
and she does not challenge the regulations as being in conflict with basic due process protections.
Here, relevant regulations and lease provisions require a borrower to provide a tenant thirty-days’
notice to terminate a lease at the end of the lease period. Standard Lease Agreement § 12, ECF No.
31-4; 7 C.F.R. § 3560.159(b) (“A tenant’s occupancy in an [USDA]-financed housing project may
not be terminated by a borrower when the lease agreement expires unless the tenant’s actions meet
[specific]conditions . . . or the tenant is no longer eligible for occupancy in the housing.”). In doing
so, the borrower must show material non-compliance with controlling rules or good cause.17 A

17

7 C.F.R. § 3560.159(a) explains that “[b]orrowers, in accordance with lease agreements, may
terminate or refuse to renew a tenant’s lease only for material non-compliance with the lease
provisions, material non-compliance with the occupancy rules, or other good causes.” Those bases
are further defined as follows:
(1) Material non-compliance with lease provisions or occupancy
rules, for purposes of occupancy termination by a borrower, includes
actions such as:
(i) Violations of lease provisions or occupancy rules that are
substantial and/or repeated;
16

borrower, moreover, must seek an eviction remedy in state court, see S.C. Code Ann. § 27-37-20,
and South Carolina’s eviction procedures have long been upheld by the Fourth Circuit as providing
adequate due process for public housing tenants facing the termination of their housing benefits.
Johnson v. Tamsberg, 430 F.2d 1125, 1127 (4th Cir. 1970) (finding that, in South Carolina, due
process is satisfied because “public housing tenants are not actually ejected until basic due process
requisites are satisfied.”). The bottom line is that the regulations mandate that a borrower give
notice of this remedy in order to provide a tenant with due process in an eviction. Here, the
evidence, even in light most favorable to Plaintiff, shows that Defendants complied with federal
regulations and the lease as they were written: Defendants gave adequate notice of the non-renewal
to Plaintiff and ultimately obtained a writ of ejectment from the magistrate.18

(ii) Non-payment or repeated late payment of rent or other financial
obligations due under the lease or occupancy rules; or
...
(2) Good causes, for purposes of occupancy terminations by a
borrower, include actions such as:
(i) Actions by the tenant or a member of the tenant’s household which
disrupt the livability of the housing by threatening the health and
safety of other persons or the right of other persons to enjoyment of
the premises and related facilities;
(ii) Actions by the tenant or a member of the tenant’s household
which result in substantial physical damage causing an adverse
financial effect on the housing or the property of other persons; or
(iii) Actions prohibited by state and local laws.
Id. The lease further defines the bases consistent with the regulations. A full recitation of the bases
in the lease, however, is not necessary by the Court at this time.
18

Defendants were required by the regulations to give notice of the termination and include the
following information:
17

Complying with the lease and regulations is one thing; assuring that Plaintiff receives
adequate due process under Goldberg, however, is another. Contrary to Defendants’ position,
Goldberg and Caulder continue to govern the facts of this case. Here, this Court cannot find that
the material facts that support a legal conclusion that Defendants provided Plaintiff with an
opportunity be heard on the lease violations are undisputed. Plaintiff has provided sufficient
evidence to create the inference that Defendants never gave Plaintiff the opportunity to contest the
violations resulting in the non-renewal of her lease, violating the spirit of due process as it is
expressed by the Supreme Court in Goldberg. The evidence shows that Defendants gave her notice
of the violations and the non-renewal of her lease. It shows that Plaintiff was informed that she had
the opportunity and “right to defend any court action relating to this lease non-renewal if such
action is brought.” November 9, 2014 Termination Ltr., ECF No. 31-7 (emphasis added). But the
evidence also implies that Defendants never gave her that opportunity. A reasonable inference can
be made from the application for ejectment presented to the magistrate that, rather than seeking an
eviction because the tenancy had ended as a result of the alleged violations and non-renewal of the
lease, Defendants brought the eviction action solely because Plaintiff failed to pay rent for the
months of February and March 2013. By doing so, Defendants bypassed, among other basic,

(1) A specific date by which lease termination will occur;
(2) A statement of the basis for lease termination with specific
reference to the provisions of the lease or occupancy rules that, in the
borrower's judgment, have been violated by the tenant in a manner
constituting material non-compliance or good cause; and
(3) A statement explaining the conditions under which the borrower
may initiate judicial action to enforce the lease termination notice.
7 C.F.R. 3560.159(b). There is no evidence in the record that Defendants’ did not follow the
regulations when giving notice to Plaintiff on November 9, 2012.
18

constitutional requirements, a decision by an impartial decisionmaker (here, the magistrate) on the
evidence that may (or may not) have supported Defendants’ grounds for their non-renewal of the
lease. The issue regarding the non-renewal of Plaintiff’s lease based on the alleged lease violations
was not an issue that Defendants affirmatively brought before the magistrate, and Defendants’
counsel admitted as much at the hearing before this Court.19 It is, therefore, the evidence of this end
run around Plaintiff’s due process protections that requires the Court to deny Defendants’ motion
for summary judgment.
IV.

Plaintiff’s Motion for a Preliminary Injunction
The Court, finally, turns to its consideration of Plaintiff’s motion for a preliminary

injunction. In light of the Court’s assessment of Plaintiff’s § 1983 claim under the Rooker-Feldman
doctrine—that reinstatement of her tenancy would effectively be a reversal of the magistrate’s writ
of ejectment thus barred by the Rooker-Feldman doctrine—the Court finds that further arguments
by the parties are necessary on the motion for a preliminary injunction. Because the April 25, 2014
discovery deadline and the May 12, 2014 dispositive motions deadline have passed, the Court finds
consolidation of the motion hearing with a trial on the merits appropriate and shall hold the motion
in abeyance. Indeed, Rule 65(a)(2) of the Federal Rules of Civil Procedure provides that “after
beginning the hearing on a motion for a preliminary injunction, the court may advance the trial on
the merits and consolidate it with the hearing.” See Gellman v. Maryland, 538 F.2d 603, 604 (4th
Cir. 1976) (“[Rule 65(a)(2) wisely permits the district court in an appropriate case to hear a motion
for preliminary injunction and conduct a hearing on the merits at the same time.”).

19

Plaintiff, moreover, conceded at the hearing that she would not have filed this action if
Defendants had applied for a writ of ejectment on the ground that she had violated the lease—the
third option on the form application—and presented evidence to the magistrate to support the
alleged violations that resulted in the non-renewal of her lease and termination of her subsidy.
19

CONCLUSION
IT IS THEREFORE ORDERED that Defendants’ motion to dismiss is DENIED, that
Defendants’ motion for summary judgment is DENIED, and that Plaintiff’s motion for a
preliminary injunction shall be further held in abeyance and consolidated with a trial on the merits.
IT IS SO ORDERED.20

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge
July 10, 2014
Florence, South Carolina

20

If the parties have not mediated this case, they should do so in light of this ruling. The Court
anticipates the trial of this case during its September 2014 term.
20