[*2]Upon the foregoing papers, it is ordered that this Article 78 is decided as indicated below.

PetitionerCandace Oliver (Oliver), a disabled, single mother and primary caretaker of her two disabled minor daughters, seeks an order pursuant to Article 78 of the CPLR: (1) annulling respondent Department of Housing Preservation and Development's (HPD) determination, issued February 10, 2012, terminating petitioner Oliver's Section 8 subsidy; (2) ordering respondents to reinstate petitioner Oliver's Section 8 subsidy; and (3) remanding the matter for imposition of a lesser penalty. Petitioner Oliver asserts that the decision was arbitrary and capricious and an abuse of discretion, as to the measure of the penalty imposed, contrary to HPD's own policies and in violation of lawful procedure.

Respondents, Rafael Cestero, as Commissioner of HPD, and HPD, jointly answer the petition raising three affirmative defenses: (1) that this proceeding should be transferred to the Appellate Division, First Department, as the petition raises a question of substantial evidence; (2) that HPD's determination to terminate petitioner Oliver's Section 8 subsidy was reasonable, rational, supported by substantial evidence, and consistent with the applicable laws; and (3) that HPD's determination was not disproportionate as a matter of law.

Petitioner Oliver is diagnosed with major depressive disorder and anxiety disorder. She has been a participant of the HPD Section 8 Housing Choice Voucher Program since 1999. As a result of the termination of petitioner Oliver's Section 8 subsidy, she is currently living in a homeless shelter with her two minor daughters, Starnecia and Katera. Starnecia has asthma and must regularly rely on a nebulizer to breathe. Katera has been diagnosed with bipolar disorder and oppositional defiance disorder. Both daughters receive Supplemental Security Income (SSI) based on their respective disabilities.

Petitioner Oliver received Section 8 subsidy pursuant to the United States Housing Act of 1937 (Act). Section 8 of the Act authorizes the Secretary of Housing and Urban Development (HUD) "to enter into annual contributions contracts with public housing agencies pursuant to which such agencies may enter into contracts to make assistance payments to owners of existing dwelling units in accordance with this Section." 42 U.S.C. § 1437f(b)(1).

Respondent HPD is one of the public housing agencies charged with the duty and responsibility of administering the Section 8 subsidy pursuant to the Act. Respondent HPD administered petitioner Oliver's Section 8 subsidy. Respondent HPD issued an administrative agency decision to terminate petitioner Oliver's Section 8 subsidy, which is the subject of this Article 78 proceeding.

In March 2011, respondent HPD noticed a discrepancy between the income reported by petitioner Oliver in 2009 and 2010, and the income reported for her by the HUD Enterprise Income Verification. A pre-termination notice was sent to petitioner Oliver who, thereafter, participated in a mandatory conference. Subsequent to the mandatory conference, respondent HPD determined to terminate petitioner Oliver's Section 8 subsidy. In a prior Article 78 proceeding (Prior Proceeding), petitioner Oliver challenged respondents' termination of her Section 8 subsidy and respondent HPD's denial of her untimely hearing request. The Prior Proceeding was settled by stipulation between the parties. Petitioner Oliver discontinued the Prior Proceeding and respondent HPD held an informal hearing to determine whether to uphold its initial decision to terminate petitioner Oliver's Section 8 subsidy. [*3]

Petitioner Oliver appeared at the informal hearing on December 6, 2011, and respondents issued a hearing decision on February 10, 2012 (Hearing Decision). Petitioner Oliver now seeks to annul the Hearing Decision. Respondents answer the petition alleging that: (1) this proceeding should be transferred to the Appellate Division, First Department as petitioner Oliver raises a question of substantial evidence; (2) the Hearing Decision was reasonable, rational, supported by substantial evidence, and consistent with the applicable laws; and (3) the determination to terminate petitioner Oliver's Section 8 subsidy was not disproportionate as a matter of law.

Judicial review of an administrative determination is limited to whether the "determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion, including abuse of discretion as to the measure or mode of penalty or discipline imposed". CPLR 7803 (3). The court has the power to remit a matter to the agency where "further agency action is necessary to cure deficiencies in the record". Matter of Police Benevolent Assoc. of the New York State Troopers v Vacco, 253 AD2d 920, 921 (3d Dep't 1998), lv denied 92 NY2d 818 (1998). See also, Matter of Montauk Improvement, Inc. v Proccacino, 41 NY2d 913, 914 (1977). Additionally, a court may determine that an agency determination is shocking to one's sense of fairness and disproportionate to the offense such that a lesser penalty is warranted. Matter of Palmer v Rhea, 78 AD3d 526, 526 (1st Dep't 2010). See also, Matter of James v New York City Housing Authority, 186 AD2d 498, 500 (1st Dep't 1992).

The Appellate Division, First Department has consistently held that "[t]ermination of petitioner's tenancy, under the circumstances was so disproportionate to the offense, underpayment of rent, in the light of all the circumstances, as to be shocking to one's sense of fairness". Matter of Wise v Morales, 85 AD3d 571, 572 (1st Dep't 2011) (internal quotations omitted). See also, Matter of Vazquez v New York City Housing Authority, 57 AD3d 360, 361 (1st Dep't 2008). While in a recent decision, the Court of Appeals held that, under specific circumstances not found here, the termination of a "tenancy is not so disproportionate to [the misconduct of intentionally defrauding a government agency by failing to report income] as to [*4]shock the judicial conscience." Matter of Perez v Rhea, 2013 NY Slip Op 00953 (2013)^[FN1]. Reversing the Appellate Division, First Department, the Court of Appeals in Perez reasoned that "[a]bsent from the Appellate Division's analysis...is any estimate of how probable it is that petitioner's eviction would result in homelessness. Unlike some residents of public housing, petitioner...has an income." Id. The Court of Appeals was clear to hold that "reviewing courts must consider each petition on its own merits." Id.

Here, respondents argue that pursuant to 24 C.F.R. § 982.552, respondent HPD has the authority to deny or terminate Section 8 subsidies. Specifically, respondents cite Chapter 17.2.2 of its Administrative Plan, adopted pursuant to 24 C.F.R. § 982.54 to govern its local policies, which states, in pertinent part, that "[i]f the family share of rent is set too low due to error or omission of the family, HPD may exercise its discretion to terminate assistance to the family, or to enter into a repayment agreement with the family."

While petitioner Oliver admits that her income was not accurately reported, she argues that her unintentional failure was due, in part, to her genuine confusion as to which months she was receiving unemployment benefits and which months she was working part-time, and in part, to her mental disabilities, as well as her daughters' disabilities. Additionally, Petitioner Oliver alleges that the hearing officer failed to take into account the mitigating circumstances, as HPD is specifically authorized to "consider all relevant circumstances such as the seriousness of the case, the extent of participation or culpability of individual family members, mitigating circumstances related to the disability of a family member, and the effects of denial or termination of assistance on other family members who were not involved in the action or failure." 24 CFR § 982.552[c][2][i].

As stated above, the Court of Appeals has held specifically that "reviewing courts must consider each petition on its own merits." Matter of Perez v Rhea, 2013 NY Slip Op 00953 (2013). While the facts in the Perez case did not necessarily shock the conscience of the court, the facts presented herein differ greatly. Here, unlike in Perez, petitioner Oliver was never charged criminally. Further, unlike Perez, it is undisputed that the termination of petitioner Oliver's Section 8 has resulted in homelessness given that petitioner Oliver and her 2 disabled minor daughters are currently residing in a homeless shelter. Moreover, petitioner Oliver testified at the hearing that she is unemployed and currently receiving unemployment. See Transcript, p. 34, l. 2-9.

Significantly, the Court of Appeals in Perez noted the hearing officer's finding that the Perez petitioner failed to give any "explanation for her misrepresentations that might tend to show that she did not intend to defraud NYCHA' ", and thus, the Court of Appeals held that the Perez petitioner "knowingly and intentionally concealed her income...for seven years". Matter of [*5]Perez, 2013 NY Slip Op 00953. Here, however, unlike Perez,many mitigating reasons were given to show that petitioner Oliver "did not intent to defraud NYCHA" Perez supra at 00953. The record is replete with instances in which petitioner Oliver maintained that her failure to accurately report her income, for a two year period, was due, in part, to the confusion with her unemployment and part-time employment:

[Petitioner] Ms. Oliver: ...I did apply for unemployment, but there was an investigation going on, so I never received it until September. That's why they only have down here in September. I can't say I have unemployment in 2009 when I wasn't receiving anything. The investigation lasted that long. ... Dr. Watsonberger's office was a temp position from an agency that I was at. ...I was there for a couple of months part time working...[a]nd then would say...I don't need you right now because business is slow. And it went on like that for the past year.

[Transcript, p. 26, l. 15-p. 27, l. 9].

[Hearing Officer]: Exhibit 4E. So it does, it gives, it gives an effective date [for unemployment benefits] of January 19th, 2009. But then at the bottom of the payment history, it looks like the first payment history is October. ... 2009. ... So when you filled out the recertification in July, you didn't indicate the unemployment, cause you weren't actually receiving it yet?

[Petitioner] Ms. Oliver: Yes, yes.

[Hearing Officer]: And you didn't know when you were going to receive it? Okay.

[Transcript, p. 43, l. 17-p. 44, l. 14].

[Petitioner] Ms. Oliver: I wasn't receiving unemployment when I recertified at that time.

[Hearing Officer]: This is 2010. You said you were - -

[Petitioner] Ms. Oliver: ...My unemployment ended January 24th of 2010. That's what it says in that paperwork that you have. It ended January 24.

[Transcript, p. 46, l. 4-11].

[Hearing Officer]: So you started receiving the unemployment in September of 2009. When did it end?

[Petitioner] Ms. Oliver: January 24th, 2010.

[Hearing Officer]: Did you receive any unemployment after that?

[Petitioner] Ms. Oliver: No.

[Transcript, p. 47, l. 4-10].

[Petitioner] Ms. Oliver: With the temp agency I worked there for a week and then the next thing you know it I'm out of work for the rest of the month. It just goes if they like me, cause, cause of the budget cuts and then the stock market. They let me off for about two months, which was, oh, towards the holidays. And, and then of 09 and then they called me back right before the holidays kicked in. And I was working on and off.

[Transcript, p. 50, l. 17-25].

Moreover, the record reveals that petitioner Oliver has a mental disability, and both her daughters have severe disabilities (including one daughter who was "mentally disturbed"), and that this affected her and became overwhelming:

[Petitioner] Ms. Oliver: ...I was also doing, dealing with a mentally disturbed child, which became overwhelming. Because I can't even hold down a job, because I'm getting, you know, [*6]phone calls at work because of her. And this was one of the reasons why I'm not employed.

[Transcript, p. 27, l. 11-16].

[Petitioner] Ms. Oliver: Then with the situation I was dealing with both of my daughters, it became overwhelming. For the past two years, I've really been struggling with a lot of different natures to where it overwhelms and my daughters disorder keeps me from working."

[Transcript, p. 32, l. 13-18].

[Petitioner] Ms. Oliver: ...[the temporary employer] was constantly telling me, oh, because of my daughter's - - he's not going to keep me.

[Transcript, p. 51, l. 19-21].

[Petitioner] Ms. Oliver: ... I'm even in therapy to get better and try and get more help when it comes to my disabled child, so I don't have to go through this again.

[Transcript, p. 52, l. 2-5].

Significantly, both of petitioner Oliver's daughters have severe enough disabilities as to qualify for Supplemental Security Income based on their disabilities.

Further, it is undisputed that petitioner Oliver had not previously lied about her unemployment or income:

[Petitioner] Ms. Oliver: ...if you look at my history of being on unemployment, I have never once lied about my income. I've always reported it. And I have been a good tenant since I've been...on Section 8. ...I just got so overwhelmed with - - my daughter and other issues that came...and even with myself.

[Transcript, p. 57, l. 17-24].

Moreover, at the hearing, the hearing officer asked the representative of respondent HPD, Mr. Gabriel Mombrun, for a recommendation, and even the HPD representative conceded that there were "many mitigating" factors:

[Hearing Officer]: ...I want you to say HPD's recommendation on this case after hearing the testimony and evidence presented.

Mr. Mombrun: ...I believe the facts here are that, um, [petitioner] Ms. Oliver failed to report income, but, um, based on her testimony it seems...that she had many mitigating circumstances which led her to...make difficult choices.

[Transcript, p. 56, l. 7-16].

Despite petitioner Oliver's testimony and evidence, and notwithstanding respondent HPD's clear concession at the hearing that "many mitigating circumstances" existed, the hearing officer found that "[t]he fact the family may be displaced from their unit does not outweigh the harm to the agency through subsidy overpayment". Hearing Decision, p. 12.

It is uncontested that petitioner suffers from a disability and is the sole caretaker of two minor daughters, both of whom have severe disabilities (including a child diagnosed with bipolar and obsessive compulsive disorder), sufficient to qualify for Supplemental Security Income, and reside with her. Petitioner Oliver offered uncontroverted testimony at her hearing that dealing with such disabilities was overwhelming, and that there was confusion as to her unemployment benefits, as well as her part-time employment. In fact, the "many mitigating" factors were plainly conceded by HPD's representative at the hearing. Transcript, p. 56, l. 7-16. The procedures relied on by respondents permit, but do not require, termination of petitioner's Section [*7]8 subsidy. Moreover, the income in question spans two years, rather than seven years in Perez, and the sums involved appear to differ significantly. Considering the extremely sympathetic circumstances herein, petitioner, a long-time tenant with a disability, with two severely disabled children, should be provided with a penalty more proportionate to the offense. Similarly, the Appellate Division, First Department, has held that in similar circumstances, "the penalty of termination of petitioner's housing subsidy...[is] shockingly disproportionate to the offense [of failure to report income]. ...Petitioner has...no record of any prior offenses, and the record suggests that termination of the subsidy will likely lead to homelessness for petitioner and her [minor] son." Matter of Gray v Donovan, 58 AD3d 488, 488 (1st Dep't 2009) (internal citations omitted). See also, Matter of Davis v NYC Dep't. of Housing Preservation and Development, 58 AD3d 418, 419 (1st Dep't 2009), Matter of Williams v Donovan, 60 AD3d 594, 595 (1st Dep't 2009). Reviewing the within undisputed facts, given petitioner Oliver's unblemished record in the Section 8 program, her disabilities, and the severe disabilities of her minor children, both of whom she is supporting, the hearing officer's determination to terminate her Section 8 subsidy, which has indisputably led to the homelessness of petitioner Oliver and her two disabled children, shocks the judicial conscience, and must therefore be vacated ^[FN2].

As the decision to terminate petitioner's Section 8 subsidy, in light of the circumstances, was disproportionate to the offense and shocking to one's sense of fairness, the petition is granted to the extent that the Hearing Decision is vacated and remanded to the agency for imposition of a lesser penalty.

Accordingly, it is

ORDERED that the petition is granted to the extent that the Hearing Decision, issued February 10, 2012, terminating petitioner Oliver's Section 8 subsidy, is vacated; and it is further

ORDERED that this application is remanded to respondent Department of Housing Preservation and Development for imposition of a lesser penalty in accordance with this decision; and it is further

ORDERED that within 30 days of entry of this order petitioner Oliver shall serve a copy upon respondents with notice of entry.

Dated:

DORIS LING-COHAN, J.S.C.