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In an opinion affirming a $250,000 negligence verdict against the Philadelphia Housing Authority, the Commonwealth Court yesterday clarified a section of lessor-lessee contract law for public-housing authorities across the state, finding that a cause of action for breach of implied warranty of habitability in public housing does not exist. Last year, a Philadelphia judge found that a 12-year-old’s brain damage was caused by his exposure to lead-based paint in the South Philadelphia townhouse where he lived for four years and that the housing authority had failed to carry out its duty to remove or make safe that lead paint, according to the Commonwealth Court opinion. The judge awarded the child $210,000 on a claim of negligence, $39,600 in delay damages, and $5,800, or the rent the child’s mother had paid the PHA, on a claim of breach of implied warranty of habitability. But a public-housing tenant cannot bring a successful cause of action for breach of implied warranty of habitability, the Commonwealth Court said, because — unlike private residential lessee-lessor agreements — relationships between housing authorities and their tenants are controlled by the federal government through U.S. Department of Housing and Urban Development regulations. “What is involved here is not a marketplace lease entered into by two bargaining parties . . . but a public government program in which the authority, under federal law, is required to provide safe and habitable housing,” Judge Dan Pellegrini wrote in Ford v. Philadelphia Housing Authority. The Pennsylvania Supreme Court adopted the concept of warranty of habitability to address the inequities of the marketplace. But “public housing is anything but marketplace housing,” Pellegrini explained, and “we hold that the contract action for warranty of habitability does not apply to public housing.” Susan J. French of Wolf Block Schorr & Solis-Cohen, who represented the PHA, said the court’s ruling was a significant clarification of the law for public housing author-ities in Pennsylvania. “It’s been an open question in Pennsyl-vania for a while,” said French, who worked on the case with Wolf Block colleagues Alan C. Kessler and Lynn Hogben. “The court found that there’s no need for a special privilege here. The HUD regulations already give public-housing tenants greater protection than private tenants enjoy.” The Supreme Court has explained that an implied warranty of habitability ensures that a landlord provides the vital facilities and services a tenant needs to live safely in the residence, but the Commonwealth Court said the Supreme Court limits the cause of action to breaches of leases between private landlords and tenants. On appeal, the PHA had argued that the implied warranty of habitability could not stand because its housing is federally subsidized and regulated by HUD and the U.S. Housing Act, and, thus, any legal analysis taking into consideration the housing marketplace would be misplaced and unnecessary, according to the opinion. The Commonwealth Court agreed, noting that a warranty of habitability exists in a private relationship in which a housing unit was bargained for and a lease was signed. In Ford, HUD provided the lease agreement between the PHA and the child’s mother, Louise Pringle, and PHA could not alter the lease language, Pellegrini said. Also, HUD determines the price of rent based on a federal formula, and neither Pringle nor PHA had bargaining power over the amount of her rent, he said. Pringle, as a public-housing tenant, was also entitled to an administrative hearing as to whether PHA was carrying out maintenance responsibilities. This is not a market-based lease, the Commonwealth Court concluded. Therefore, the trial judge erred in letting a cause of action for a breach of implied warranty of habitability stand against PHA. The court ordered the judgment reduced by $5,800 – the amount Pringle had paid the PHA in rent. David Alexander, who represented Pringle and her son, called the court’s reasoning for finding no cause of action for warranty of habitability in public housing “bizarre.” “What a warranty of habitability says to a tenant is, We’re telling you that you can have a safe home,” said Alexander of Monheit Silverman & Fodera. “But this holding says that because we’re giving public housing tenants a break on rent, you don’t have that right.” While the Commonwealth Court knocked the verdict amount down by $5,800, it did affirm the remainder of the trial judge’s decision. PHA had argued that Pringle should have filed her claim within six months of the incident, as required in claims brought against state agencies. But the Commonwealth Court said PHA is not a state agency but a “governmental unit.” Because PHA had investigated the claim that there was lead paint at the townhouse, it had actual and constructive notice of the incident, and so Pringle wasn’t barred from bringing the claim. The court reviewed the evidence presented at the bench trial in late January 2003 and concluded that it supported Common Pleas Judge Lisa M. Rau’s finding of negligence and negligence per se against the PHA. Pringle presented evidence that the PHA knew there was lead-based paint at her home at 2114 Taney Terrace, part of the Wilson Park Housing Project, but did nothing to remove it, Pellegrini said. Rau found credible the testimony presented by medical experts who said the lead exposure caused the high levels of lead in Pringle’s son’s blood, according to the opinion. French had argued in her appellate brief to the Commonwealth Court that Rau should have considered that the lead-based paint found in Pringle’s walls in 1994 was “encapsulated,” or made safe, by the fact that it was painted over by non-lead-based paint that was intact and not chipping or peeling. French also contended that the places where the paint was chipping were not the same places where the walls had tested positive for lead-based paint. “The factual assumptions the court has made were not supported by the record,” French said. “We’re carefully looking at the issues and whether the PHA should appeal or ask for re-argument.” Senior Judge James R. Kelley and Judge Robert Simpson also participated in the decision. (Copies of the 44-page opinion in Ford v. Philadelphia Housing Authority , PICS No. 04-0480, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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