Nozzi v. Hacla

Section 8 beneficiaries of the Housing and Community Development Act of 1974 have a due process property interest in their benefits.

In 1974, Congress enacted the Section 8 housing program to help low-income families pay for housing. Michael Nozzi, who is disabled, and Nidia Palaez, who is a single mother, receive Section 8 housing benefits through Los Angeles’ Housing Authority. According to state law, Section 8 recipients must receive one year’s notice of any changes the Housing Authority makes to their benefits. In 2004, the Housing Authority decreased Section 8 benefits. That year, the Housing Authority sent out a flyer to each Section 8 beneficiary that vaguely summarized upcoming “notice of review determination” and alluded to “new payment standards.” Thirty days before new plan took effect, the Housing Authority sent out another notice, this time specifically referring to the anticipated increase in the beneficiary’s rent contribution. In 2007, Nozzi and Palaez, together with the Los Angeles Coalition to End Hunger and Homelessness, filed an amended class action complaint against the state alleging violations of due process, breach of mandatory governmental duties, and negligence. The district court dismissed the negligence claim and granted summary judgment in favor of the Housing Authority on the due process and the governmental duty claims. On appeal, the Ninth Circuit reversed and remanded to the district court with instructions of summary judgment for Nozzi. The panel held that the Section 8 beneficiaries had a property interest in their housing benefits. As such, they were denied due process of law when the Housing Authority decreased their benefits without adequate notice. The panel determined the first flyer was not adequate notice as its intended message of benefit decrease was indiscernible to an unsophisticated reader. Further, the flyer did not explain the effect of the change. REVERSED and REMANDED.