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Bfno Properties, LLC v. Housing Authority of New Orleans

United States District Court, E.D. Louisiana

April 16, 2015



SUSIE MORGAN, District Judge.

Before the Court is a Motion to Remand filed by Plaintiffs BFNO Properties, LLC and Tucker Property Holdings, LLC.[1] For the reasons set forth below, Plaintiffs' Motion to Remand is DENIED.


Plaintiffs BFNO Properties, LLC and Tucker Property Holdings, LLC are the owners and operators of Jackson's Landing North and Jackson's Landing South, apartments located in New Orleans, Louisiana in the area referred to as Algiers.[2] Defendant Housing Authority of New Orleans ("HANO") is a public housing authority that assists in providing affordable housing to low and moderate-income families in New Orleans.[3]

In 2002, the U.S. Department of Housing and Urban Development ("HUD") determined that HANO was in substantial default of its obligations under its contract with HUD, which authorized HUD to force HANO into federal receivership.[4] While HANO was under receivership, HUD appointed David Gilmore to be the Executive Administrator and Receiver ("Administrative Receiver") for HANO.[5]

In December 2010, HANO entered into Housing Assistance Payments Contracts with Plaintiffs for the Section 8 Project-Based Voucher Program at Jackson's Landing North and South ("the HAP Contracts").[6] David Gilmore signed the HAP Contracts on HANO's behalf.[7] The purpose of the HAP Contracts "is to provide housing assistance payments for eligible families who lease contract units that comply with the HUD [Housing Quality Standards] from the owner[s]."[8] Effective December 31, 2010 for a term of 15 years, the HAP Contracts require Plaintiffs to reserve certain units in Jackson's Landing North and South for low-income tenants in return for HANO making housing assistance payments to Plaintiffs for the difference between the low-income tenants' contributions and the rent specified in the HAP Contracts.[9]

David Gilmore also signed a Decision Memorandum dated March 26, 2014 regarding the use of certain rent comparables for the calculation of Plaintiffs' reasonable rent increases.[10] In Gilmore's affidavit attached to Plaintiffs' petition, he states that he signed the Decision Memorandum and authorized the movement of tenants from one apartment to another during reconstruction of the apartment complexes.[11] In July of 2014, HANO was returned to local control, and Gregg Fortner was appointed as Executive Director of HANO to lead the transition.[12]

On January 20, 2015, Plaintiffs filed a petition in the Civil District Court for the Parish of Orleans, State of Louisiana seeking damages for breach of contract and injunctive relief against HANO and Dwayne G. Bernal, Alice Reiner, Toni Hackett Antrum, Glen M. Pilie, and Vonda Rice, in their capacities as members of HANO's Board of Commissioners.[13] Plaintiffs' petition makes the following allegations:

(1) "HANO owes plaintiffs in an amount exceeding $250, 000 for funds wrongfully recaptured and/or withheld that HANO refuses to pay plaintiffs, and said amount continues to increase monthly as HANO wrongfully recaptures and/or withholds funds owed to plaintiffs based on the [HAP] contracts;"[14]
(2) "Plaintiffs have not received any new tenants for the Project-Based Housing Choice Voucher Program since June of 2014 and have a number of vacancies which should have been filled;"[15]
(3) "HANO has refused to abide by the agreement[s] made between plaintiffs and HANO" that were approved by David Gilmore while HANO was in receivership and under his absolute control as Executive Administrator (i) "regarding the moving of tenants during the reconstruction of the facilities, " and (ii) "approv[ing] a Rent Reasonableness (Rent Increase Request) authorizing plaintiffs to use rent comparables furnished by a state licensed appraiser for the calculation of reasonable rent increases;"[16] and
(4) "HANO has refused to recognize the rent increases that became automatic once Jackson's Landing Apartments North was recognized as a tax credit property in 2014."[17]

Plaintiffs seek remand of their action to state court for "funds due to [them under their contractual agreements with HANO] as well as damages, costs, attorney's fees, and equitable relief.[18] The petition also requests a temporary restraining order, a preliminary injunction, and a permanent injunction to stop HANO from monthly recapturing and/or withholding any funds due to Plaintiffs.[19] Before removal, the state court issued a temporary restraining order prohibiting HANO or anyone acting at its direction from wrongfully recapturing and/or withholding future or past rents and any other funds due to Plaintiffs.[20] The temporary restraining order expired on January 30, 2015 at 12:00 pm.[21]

On January 30, 2015, Defendants removed the case to this Court, asserting in the notice of removal that the Court has federal question subject-matter jurisdiction.[22] On February 11, 2015, Plaintiffs moved to remand the case to state court arguing that the petition asserts no federal claims and, therefore, the Court lacks subject-matter jurisdiction over this case.[23] Plaintiffs argue in their memorandum that their state court petition brings claims solely for breach of contract arising under Louisiana law.[24] On February 25, 2015, Defendants filed an amended notice of removal further specifying the federal statutes and regulations they claim support removal under 28 U.S.C. ยง 1331.[25] On February 25, 2015, ...

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