## Facts

- A certified class of residents and applicants associated with the Henry Horner Homes sued the Chicago Housing Authority (CHA) and its chairman, along with federal housing officials.
- Plaintiffs alleged CHA failed for an extended period to maintain the development, causing severe deterioration, widespread vacancy, and persistent disrepair in remaining units.
- Plaintiffs alleged CHA’s neglect functionally eliminated housing units—amounting to a constructive (de facto) demolition—without complying with statutory demolition/disposition requirements in 42 U.S.C. § 1437p.
- Plaintiffs asserted three claims against CHA and its chairman relevant to the motion:
  - a 42 U.S.C. § 1983 claim based on violations of § 1437p;
  - a contract claim alleging tenants and applicants were intended third-party beneficiaries of the HUD–CHA Annual Contributions Contract (ACC);
  - lease-based claims alleging CHA breached tenant leases by permitting uninhabitable conditions and loss of units.
- CHA and its chairman moved to dismiss these counts under Rule 12(b)(6), requiring the court to accept well-pleaded allegations as true and draw reasonable inferences for plaintiffs.

## Issues

1. Whether 42 U.S.C. § 1437p creates enforceable rights for tenants and applicants that may be vindicated through 42 U.S.C. § 1983.
2. Whether § 1437p applies to constructive (de facto) demolition accomplished by neglect and abandonment rather than formal demolition procedures.
3. Whether tenants and applicants are intended third-party beneficiaries of the ACC between HUD and CHA with standing to sue CHA for breach.
4. Whether allegations of pervasive disrepair and loss of habitable units plausibly state claims for breach of tenant leases.

## Decision

- The court denied the Rule 12(b)(6) motion to dismiss as to the § 1983 claim predicated on § 1437p.
- The court held the complaint plausibly alleged that § 1437p, as amended, confers enforceable rights on tenants and applicants and can be enforced via § 1983.
- The court allowed plaintiffs to proceed on the theory that § 1437p reaches de facto demolition where a housing authority effectively eliminates units by prolonged neglect.
- The court denied the motion to dismiss the ACC claim, concluding the allegations supported intended-beneficiary status for tenants and applicants at the pleading stage.
- The court denied the motion to dismiss the lease claims, finding the pleaded facts sufficient to allege breach of lease obligations tied to habitability and maintenance.

## Legal Principles

- A Rule 12(b)(6) motion is denied where well-pleaded allegations, taken as true with reasonable inferences for the plaintiff, plausibly state a claim for relief.
- Statutory provisions in the federal public housing scheme may create enforceable rights for intended beneficiaries; where Congress makes a tenant-enforceability directive clear, § 1983 may supply a cause of action.
- Demolition/disposition requirements under § 1437p may apply to constructive conduct that effectively removes public housing from service, not only to formal demolition decisions.
- Public housing tenants and applicants may qualify as intended third-party beneficiaries of the HUD–PHA ACC where the contract’s purpose and performance obligations are directed to providing and maintaining housing for them.
- Allegations that a housing authority allowed conditions rendering units uninhabitable can state claims for breach of lease under ordinary contract principles.

## Conclusion

The court permitted tenants and applicants to proceed on claims that CHA’s alleged neglect amounted to a de facto demolition subject to § 1437p, that § 1437p rights are enforceable through § 1983, and that plaintiffs could sue for breach of the ACC as intended beneficiaries and for breach of tenant leases based on uninhabitable conditions and loss of units.


Henry Horner Mothers Guild v. Chi. Hous. Auth., 780 F. Supp. 511 (N.D. Ill. 1991)