In the
United States Court of Appeals
For the Seventh Circuit
No. 09-1735
L ATIF K HAN,
Plaintiff-Appellant,
v.
E DWARD B LAND, H OUSING A UTHORITY OF
C HAMPAIGN C OUNTY, et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of Illinois.
No. 06 C 2234—Michael P. McCuskey, Chief Judge.
S UBMITTED S EPTEMBER 13, 2010 —D ECIDED D ECEMBER 23, 2010
Before E ASTERBROOK, Chief Judge, and P OSNER and
T INDER, Circuit Judges.
T INDER, Circuit Judge. Latif Khan is a landlord in Cham-
paign, Illinois, who began renting properties under
the Section 8 Housing Choice Voucher Program in 1993
The parties stipulated to waive oral argument.
2 No. 09-1735
through the Housing Authority of Champaign County
(HACC). Khan’s relationship with the HACC began
to deteriorate in 2005 when Khan evicted a Section 8
tenant from one of his units and Edward Bland, the
executive director of HACC, became aware that Khan
had entered into a side lease with the tenant for the
basement of the unit. Bland believed the side lease was
a violation of Khan’s Section 8 Housing Assistance Pay-
ment (HAP) contract and a violation of U.S. Depart-
ment of Housing and Urban Development (HUD) regula-
tions. At a meeting with Khan and his attorney, Bland
informed Khan that he was going to terminate all of
Khan’s existing HAP contracts and debar him from
doing business with HACC’s Section 8 program in the
future because of the violation. Bland refused to
consider Khan’s explanation of the side lease. A subse-
quent meeting between Bland and Khan’s attorney had
the same outcome. At the time, Khan had four HAP
contracts; HACC terminated two of those contracts, but
allowed two to continue. Khan was later informed by a
prospective Section 8 tenant that Pam Presley, HACC
Section 8 Coordinator, told her that Khan was an “unde-
sired person,” that he was not good to rent from, and that
she could not rent from him.
Kahn brought suit against Bland, HACC Section 8
Manager Tosha LeShure, HACC, and Secretary of HUD
Alphonso Jackson (who is not a party this appeal) for
violation of his substantive and procedural due process
rights under the Fourteenth Amendment pursuant to 42
U.S.C. § 1983. He contends that Defendants-Appellees
Bland and HACC wrongfully terminated his existing
No. 09-1735 3
HAP contracts and debarred him from the Sec-
tion 8 program without due process. Although LeShure
is a named party on appeal, Khan has not appealed the
district court’s ruling dismissing her from the lawsuit.
Khan presented evidence of his claims (some of which
are not at issue here) to a jury, and at the close of his case,
the appellees moved for judgment as a matter of law
pursuant to Rule 50(a) of the Federal Rules of Civil Proce-
dure. The district court granted the appellees’ motion,
finding that Khan had no property right in the renewal of
his HAP contracts or future contracts and at most, had
a state law breach of contract claim for the termination
of his existing contracts. Khan declined the court’s in-
vitation to amend his complaint to assert a breach of
contract action. Khan appeals, contending that the dis-
trict court erred in granting judgment as a matter of law.
We affirm. Khan does not have a property right in
his expectancy to enter into new contracts under the
Section 8 program. He has not pointed to any provision
of the HAP contract, federal law, or state law that would
entitle him to continued participation in the program,
and the relevant regulations state that owners/landlords
are not entitled to continued participation. While he
may have property rights in his existing HAP contracts
and extensions of those contracts, he was afforded all
the process that was due by his available post-depriva-
tion remedy of a state law breach of contract action.
Because Khan was not denied a present entitlement, the
due process clause does not require a pre-depriva-
tion hearing to interpret the terms of the HAP contracts
and incorporated federal regulations.
4 No. 09-1735
Further, although Khan argues that he has a liberty
interest at stake, he has forfeited this argument by
failing to raise it below. Even if we assume that Khan
preserved this line of argument and accept his conten-
tion that Presley’s allegedly defamatory statements
were directed by Bland, Khan cannot meet the stigma-
plus test set forth in Paul v. Davis, 424 U.S. 693 (1976),
because he has not shown an alteration of his legal
status—the “plus” prong of the test. In accordance with
this court’s holding in Medley v. City of Milwaukee, 969
F.2d 312 (7th Cir. 1992), Khan has no liberty interest in
participating in the Section 8 program—a government
assistance program designed to provide benefits to
third party participants.
Finally, Khan cannot make out a substantive due
process claim for his property interest in existing con-
tracts. A mere breach of contract does not support a
substantive due process claim. Khan cannot show that a
fundamental right was implicated by the alleged breach,
nor can he show that appellees violated some other
substantive constitutional right or that state law rem-
edies were inadequate to redress the alleged violation.
I.
Khan asserted seven counts in his complaint; the
only counts at issue in this appeal are Counts I
(procedural due process claim against Bland), III (sub-
stantive due process claim against Bland), and VI (due
process claim against the HACC). More specifically, in
Count I, Khan alleged that Bland, as executive director
No. 09-1735 5
of the HACC, deprived him of valuable property rights,
i.e., his contracts with the HACC and his expectancy to
continue to contract in the future, without due process
of law. In Count III, Khan alleged that Bland debarred
him from doing business with the HACC and that
Bland’s actions were done arbitrarily and capriciously,
with malice in retaliation against Khan for evicting a
tenant who had violated his lease. In Count VI, Khan
alleged that Bland was in a position to make and enforce
policies on behalf of the HACC and that his actions
in terminating Khan’s contracts with the HACC without
due process were the actions of HACC.
This court reviews de novo the district court’s grant of
a motion for judgment as a matter of law. Greene v.
Potter, 557 F.3d 765, 767 (7th Cir. 2009). Rule 50
authorizes the entry of judgment as a matter of law if
“a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on that issue.”
Fed. R. Civ. P. 50(a)(1). “In other words, the question is
simply whether the evidence as a whole, when com-
bined with all reasonable inferences permissibly drawn
from that evidence, is sufficient to allow a reasonable
jury to find in favor of the plaintiff.” Hall v. Forest River,
Inc., 536 F.3d 615, 619 (7th Cir. 2008).
A. The Section 8 Housing Choice Voucher Program
Before exploring the details of this case, we begin by
discussing some general aspects of the federal housing
subsidy program. The Section 8 Housing Choice Voucher
Program provides rental assistance to low-income families
6 No. 09-1735
to enable them to participate in the private rental market.
This program is administered by HUD. 42 U.S.C.
§ 1437f(o); 24 C.F.R. pt. 982. Although funded by
the federal government, it is generally administered by
state or local government entities known as public
housing agencies (PHAs). 24 C.F.R. § 982.1(a). A PHA
must comply with HUD regulations and other HUD
requirements for the program. 24 C.F.R. § 982.52(a).
Federal regulations require PHAs to adopt written ad-
ministrative plans that establish local policies for admin-
istration of the program in accordance with HUD re-
quirements. 24 C.F.R. § 982.54.
The HACC is the local PHA that administers the
Section 8 program for Champaign County, Illinois. The
HACC Board of Commissioners establishes the policies
under which the HACC conducts business. The principal
staff member of the HACC is Executive Director Edward
Bland. Bland reports to the Board and is responsible
for carrying out HACC policies and managing its day-to-
day operations. Bland can draft written policies for
HACC, but he must take them before the Board for ap-
proval. The HACC’s administrative plan and local
policies are not part of the record in this case.
Eligibility for the Section 8 housing voucher is deter-
mined by income. 24 C.F.R. § 982.201. Qualified partici-
pants pay a percentage of their income toward rent and
utilities and receive subsidies for the balance of the
rental payment. 42 U.S.C. § 1437f. The participant’s por-
tion of the rent cannot exceed forty percent of his or her
monthly adjusted income. 24 C.F.R. § 982.305(a). The
No. 09-1735 7
subsidized portion of the rent is paid by the PHA to the
rental property owner (the “person . . . with the legal
right to lease . . . . a unit to a participant” under the pro-
gram, 24 C.F.R. § 982.4) pursuant to an HAP contract.
Once a PHA determines that a participant is eligible
and that there is available space in the program, the
PHA issues the participant a voucher and the par-
ticipant can search for housing. 24 C.F.R. §§ 982.202,
982.302.
If a property owner agrees to lease a unit to a tenant
under the program, he must enter into an HAP contract
with the PHA. The HAP contract is prescribed by
HUD and specifies the maximum monthly rent an owner
may charge. 42 U.S.C. § 1437f(c)(1). Before the PHA enters
into an HAP contract, the PHA must determine that
the cost of the unit is reasonable and meets HUD’s pre-
scribed housing quality standards (HQS). 42 U.S.C.
§ 1437f(o)(8); 24 C.F.R. § 982.305(a); 24 C.F.R. § 982.401.
The HAP contract provides that it “shall be interpreted
and implemented in accordance with HUD requirements,
including the HUD program regulations at 24 Code
of Federal Regulations Part 982.” HUD-52641, Part B
(3/2000), ¶ 16(b).
The Section 8 participant enters into a separate lease
with the owner that must meet certain requirements
pursuant to 42 U.S.C. § 1437f(o)(7). For example, the lease
must include the required tenancy addendum. 24 C.F.R.
§ 982.305(a). The housing must also be inspected annually
to ensure that it continues to meet the HQS. 42 U.S.C.
§ 1437f(o)(8)(B)-(D). Tenants must also re-certify family
8 No. 09-1735
income and composition annually to continue in the
program. 24 C.F.R. § 982.516.
B. Factual Background
And now for the details specifically pertinent to this
appeal. Khan began participating in the Section 8
program in 1993 through the HACC. Up until 2005
when Khan evicted Andrew Washington, a tenant partici-
pating in the Section 8 program, Khan had a seemingly
good relationship with the HACC. Khan first began
renting to Washington in 2003. The house Khan rented
to Washington had a basement that was not part of the
subsidized rental unit and could not be rented as
living space. Washington asked to rent the basement
for storage. Khan testified that he called Nancy Stone-
Johnson, an HACC inspector who did the pre-inspection
for the unit rented to Washington, and asked if he
could rent the basement as a storage unit to Washington
under a separate unsubsidized lease. According to
Khan, Stone-Johnson said that since the basement was
a separate unit and was not part of the subsidized unit,
he could rent it as storage. Stone-Johnson testified that
she worked for HACC until 2001, but Khan did not rent
to Washington until 2003, so she would not have been
an employee of HACC at the time. The testimony at
trial, however, indicates that she was employed at
HACC when Khan contacted her; neither party
addressed this inconsistency. In any event, after speaking
with Stone-Johnson, we presume as an employee of
HACC, Khan entered into a separate unsubsidized lease
with Washington for the basement as storage.
No. 09-1735 9
Khan then began having problems with Washington as
a tenant. He suspected that there were illegal activities
going on at the premises and observed that there were
inoperable cars and dangerous dogs on the property,
smoke detectors and screens that were missing, some
windows that were broken, and pests due to uncleanliness.
Washington also fell behind on his payment for the
storage and apartment leases. Khan sued to evict Wash-
ington for late payment of rent and prevailed in
December 2005. Around that time, Washington brought
the side lease to Bland’s attention. Bland called Khan’s
attorney who brought the eviction action to inform
him that Khan was in violation of HUD’s rules for
entering into a side lease with Washington and that
Khan could lose all his Section 8 payments.
A meeting was held between Bland, Khan, and Khan’s
attorney (a different attorney from the one handling the
eviction proceeding) later that month. Bland informed
Khan’s attorney that he believed Khan was attempting
to get more rent than was allowed under the HAP
contract and that he did not think the basement was
being rented as storage, but instead was used as a way
to get around the rent regulations. Bland said that Khan
was not the type of person they wanted in the program.
Bland informed Khan that he was terminating all of
his HAP contracts and that Khan was being debarred
from the program. Khan was not given the opportunity
to explain his position.
Khan’s attorney asked about an appeal process and
Bland said, “Well, if he wants to follow that process,
10 No. 09-1735
I’ll have the Inspector General come in and investigate
for fraud.” Khan similarly testified that Bland never
told him he had a right to a hearing or to an appeal and
instead said that “[i]f you do not listen to what I have
said, if you ever contest it, I will have you prosecuted
criminally.” Bland told Khan he had the authority to
debar Khan, that he had debarred people before, and
that Khan would not be the last person he debarred.
Bland testified at trial that an owner can appeal
Bland’s decisions to the Board and stated that the
HACC has a grievance process in place. Nothing in the
record describes the process; Bland only testified that a
landlord “could write a letter . . . requesting to speak to
the Board.” As noted, neither Khan nor his attorney
were informed of such a process.
On February 10, 2006, Irma Harris, HACC Section 8
Coordinator, sent a letter notifying Khan’s Section 8
tenants that Khan’s HAP contracts would be terminated
effective March 31, 2006, and that they could move to
new units effective April 1. On March 28, Khan received
a letter from Tosha LeSure (spelled “LeShure” in the
pleadings), HACC Section 8 Manager, explaining that the
HACC recently sent letters to his tenants informing
them that it would be terminating his HAP contracts
and that “tenants were also informed that they would
need to move from their current units by April 1, 2006.”
LeSure further explained that the HACC was made
aware that moving would cause a hardship for some
tenants, so “[f]or those tenants who would face a
hardship by moving, the [HACC] will allow them to
remain in their current units,” but that Khan “MUST
No. 09-1735 11
comply with all Housing Quality Standards (HQS) and
maintain the units in habitable condition.” (emphasis
in original). LeSure testified that Bland made the
decision to terminate Khan’s contracts.
Khan retained yet another attorney who scheduled a
second meeting with Bland around the end of March.
Khan did not attend this second meeting. Bland
informed Khan’s attorney that he was not going to
allow Khan to continue in the program and if Khan
“continued to fight this contract termination that he
was simply going to go to HUD . . . and report some
violations that he alleged existed for Mr. Khan.” Khan’s
attorney tried to find out what violations Bland was
referring to, but Bland would not give any specifics.
Instead he said that if Khan continued to push the issue,
he would seek criminal charges against him, either
“through HUD or the federal level” (presumably
through other federal authorities).
At this time, Khan had four Section 8 tenants: Eddie
Jackson, Caroline Hill, Carol Dorsey, and Melody
Decker. Testimony at trial revealed that Dorsey and Hill
were allowed to stay in Khan’s units, his HAP contracts
for those tenants were not terminated, and he continued
to receive Section 8 payments for them. Khan’s HAP
contract for the Jackson rental was terminated pursuant
to the February 2006 letter; Jackson moved out on April 1.
Khan’s HAP contract for the Decker rental was ter-
minated, according to the appellees, but disputed by
Khan, for failing to pass the annual HQS inspection.
Khan and Decker received a letter from HACC on
January 27, 2006, informing them that the annual HQS
12 No. 09-1735
inspection was scheduled for February 13. The Decker
unit failed the first inspection and a second inspection
was scheduled for March 13. After the unit purportedly
failed the second inspection, the HACC sent Khan a
letter dated March 15 informing him that as of April 1,
the contract would be terminated for failure to
correct noted deficiencies and Decker would be allowed
to move immediately. Decker moved from the property
but testified that she wanted to stay.
Khan testified that the inspection of the Decker
rental was done differently than the ones previously
done by the HACC. He stated that his contractor fixed
everything on the list from the February inspection and
that during the March inspection, the HACC only
noted minor repairs that were needed, such as a loose
toilet base and two inoperable electrical outlets. Until
this point, Khan never had a property that was
terminated for failing an inspection. The year
before, rent for the same property was going to be
abated (meaning no HAP payments until repairs are
made), but Khan fixed the problem before abatement.
There was one other instance where Khan received a
letter from HACC stating that he had to do emergency
repairs on one of his units or his HAP payments would
be abated. Although not clear from the testimony, it
appears that this issue was resolved without abatement.
Monique Hassan, a prospective Section 8 tenant,
testified that she had a voucher for Section 8 housing
and wanted to rent from Khan around the end of
2006. She spoke with Pam Presley, HACC Section 8 Co-
No. 09-1735 13
ordinator, about renting the property. Presley told her
that Khan was an “undesired person,” that he wasn’t
good to rent from, and she could not rent from him.
Hassan informed Khan of her conversation with
Presley and found another unit to rent.
II.
Khan alleges that Bland and the HACC violated his
procedural and substantive due process rights under
the Fourteenth Amendment. He asserts that he had
property rights in his existing HAP contracts and his
expectancy to contract in the future and that Bland
and HACC terminated his contracts and debarred
him from the program without due process. Khan also
alleges that the termination of his contracts, debarment
from the program, and Presley’s statement to Hassan
that he was undesirable and unfit for the program con-
stituted a deprivation of his liberty interest. He further
alleges that his substantive due process rights were
violated when Bland debarred him from the Section 8
program arbitrarily and capriciously with malice in
retaliation for evicting a tenant. These theories are dis-
cussed below.
A. Procedural Due Process
The Due Process Clause of the Fourteenth Amendment
forbids a state from depriving any person of “life, liberty,
or property, without due process of law.” U.S. Const.
amend. XIV, § 1. “An essential component of a pro-
14 No. 09-1735
cedural due process claim is a protected property or
liberty interest.” Minch v. City of Chi., 486 F.3d 294, 302
(7th Cir. 2007). “If the plaintiffs can establish such a
loss, we then must determine what process was due
regarding that loss.” Belcher v. Norton, 497 F.3d 742, 750
(7th Cir. 2007).
1. Property Interest
To demonstrate a procedural due process violation of
a property right, the plaintiff must establish that there
is “(1) a cognizable property interest; (2) a deprivation
of that property interest; and (3) a denial of due process.”
Hudson v. City of Chi., 374 F.3d 554, 559 (7th Cir. 2004)
(citation omitted). Accordingly, a plaintiff asserting a
procedural due process claim must have a protected
property interest in that which he claims to have been
denied without due process. Barrows v. Wiley, 478 F.3d
776, 780 (7th Cir. 2007). Khan has no protected property
interest in future HAP contracts with HACC, so his
procedural due process claim on that basis fails.
Assuming Khan has a protected property interest in his
existing HAP contracts, his due process rights were
satisfied by his ability to bring a state law breach of
contract action to remedy any alleged violations.
To claim a property interest protected by the Fourteenth
Amendment, “a person . . . must have more than a unilat-
eral expectation of [the claimed interest]. He must,
instead, have a legitimate claim of entitlement to it.” Bd. of
Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972). “A
legitimate claim of entitlement to warrant a due process
No. 09-1735 15
hearing occurs only when the statutes [or] regulations
in question establish a framework of factual conditions
delimiting entitlements which are capable of being ex-
plored at a due process hearing.” Fincher v. South Bend
Heritage Found., 606 F.3d 331, 334 (7th Cir. 2010) (internal
quotations and citations omitted). “A property interest
of constitutional magnitude exists only when the
state’s discretion is ‘clearly limited’ such that the plain-
tiff cannot be denied the interest ‘unless specific
conditions are met.’ ” Brown v. City of Michigan City, Ind.,
462 F.3d 720, 729 (7th Cir. 2006) (internal quotations and
citation omitted).
Using these guideposts, we have held that participants
who have been issued a certification for rent assistance
have a property interest in the assistance and must be
heard before being expelled from the program, Simmons
v. Drew, 716 F.2d 1160, 1162 (7th Cir. 1983), but Section 8
housing applicants who have been deemed eligible
do not have a protected right that entitles them to due
process when they are denied a specific Section 8
housing unit because landlords have considerable dis-
cretion in making final tenancy decisions, Fincher, 606
F.3d at 333-34. The issue here is whether under relevant
statutes, regulations, rules, policies or contracts, Khan—
a Section 8 landlord, rather than a tenant—has a legiti-
mate claim of entitlement to continue his existing HAP
contracts and enter into future contracts.
We begin our analysis with Khan’s claim of debarment.
Khan argues that Bland debarred him from the Section 8
program so he could not enter into future HAP contracts
16 No. 09-1735
or participate in any government programs, including
research grants. The record contains no evidence
that Khan was actually debarred from other federal
programs or was denied any research grants. Debarment
is a sanction that excludes an individual from con-
ducting business with any federal agency government-
wide. See 2 C.F.R. pt. 180 (explaining debarment process
as conducted by federal agency); see also 2 C.F.R. pt. 2424
(formerly 24 C.F.R. pt. 24) (HUD debarment proce-
dure). Arthur Orton, Director of Compliance for the
Departmental Enforcement Center for HUD, attested
(through an affidavit admitted at trial) that Khan was
never debarred by HUD.
Further, Bland, despite his threatening statements, did
not have authority to officially debar Khan from partic-
ipation in federal programs. In fact, Khan continued to
participate in the Section 8 program through the
HACC with respect to two of his properties. If Khan
was officially debarred, suspended, or denied participa-
tion in a HUD program, the regulations set forth pro-
cedures for contesting the imposed sanction. See, e.g., 2
C.F.R. § 2424.1130 (formerly 24 C.F.R. § 24.1130) (proce-
dures for contesting a limited denial of participation
from HUD program). Khan did not contact HUD to
determine whether he was officially debarred, nor does
he argue on appeal that the procedures set forth in the
applicable regulations should have been followed. This
is probably because the regulations apply to debarment
by HUD and as noted, Khan was not debarred by HUD
and so, was not denied participation in other govern-
ment programs.
No. 09-1735 17
Bland, however, effectively debarred Khan from the
Section 8 program administered in Champaign County
by declining to enter into new contracts with him. So we
consider whether Khan had a property interest in his
expectancy to enter into new HAP contracts. To establish
such a property interest, Khan must show that he has
an entitlement to participate through regulations, rules
or understandings, such that if certain substantive predi-
cates are met, a particular outcome necessarily follows.
See Kim Const. Co., Inc. v. Bd. of Trs. of Vill. of Mundelein,
14 F.3d 1243, 1246-48 (7th Cir. 1994) (finding that a disap-
pointed bidder had no property interest in a contract for
a municipal sewer project even though he was the low
bidder where the relevant statute and regulations gave
the municipality the right to reject any and all bids); see
also Perry v. Sindermann, 408 U.S. 593, 601 (1972) (stating
that a person’s interest in a benefit is “property” under
the Fourteenth Amendment “if there are such rules or
mutually explicit understandings that support [a] claim
of entitlement” that may be invoked at a hearing).
Khan has not shown that the relevant regulations
established eligibility criteria that, if satisfied, entitled him
to participation in the Section 8 program. The regula-
tions prescribe seven reasons why a PHA may, in its
administrative discretion, disapprove an owner and
deny the owner a lease under the program, including
an owner’s violation of his obligations under an HAP
contract. 24 C.F.R. § 982.306(c)(1)-(7). That section also
plainly states that “[n]othing in this rule is intended to
give any owner any right to participate in the program.”
24 C.F.R. § 982.306(e) (emphasis added). When issuing
18 No. 09-1735
final implementing regulations in 1999, HUD responded
to a public comment suggesting an appeal process for
owners prohibited from participating in Section 8. HUD
stated: “Owners have no statutory or regulatory right
to participate in the housing choice voucher program,
and consequently have no due process right to a hearing
on a PHA’s decision to disapprove owner participation.
There is no federal mandate for PHAs or HUD to grant
owners a process for appeal of a PHA decision to disap-
prove owner participation.” Section 8 Tenant-Based
Assistance, 64 Fed. Reg. 56,894, 56,901 (Oct. 21, 1999). In
dicta, the Fifth Circuit has noted: “Congress plainly
expressed its intent to provide housing assistance for
the benefit of the low-income families participating in
the program; it would be absurd to treat the voucher
program as a landlords’ relief act!” Johnson v. Hous. Auth.
of Jefferson Parish, 442 F.3d 356, 363 (5th Cir. 2006).
Khan has not pointed to any provision of the contract,
federal law, or state law that would entitle him to con-
tinued participation in the Section 8 program beyond
performance of his existing contracts. The regulations
themselves state that owners are not entitled to participa-
tion. Compare Talley v. Lane, 13 F.3d 1031, 1035 (7th Cir.
1994) (finding that applicant for subsidized housing
program for the disabled had no constitutionally pro-
tected property interest in the program where housing
authority had discretion to establish tenant selection
criteria and to determine that applicant was undesirable
because of his extensive criminal record), with Cont’l
Training Servs., Inc. v. Cavazos, 893 F.2d 877, 893 (7th Cir.
1990) (finding that plaintiff had property interest as a
No. 09-1735 19
vocational school to participate in the federal student
financial aid program under the Higher Education
Act for the benefit of its students because the eligibility
standards in the Act provided “the sort of ‘substantive
predicate’ the courts have required before finding that
property interests exist.” (citations omitted)), and Easter
House v. Felder, 910 F.2d 1387, 1395 (7th Cir. 1990) (en banc)
(finding that statutory and regulatory limitations upon
the Illinois Department of Children and Family Services’
authority to deny license renewals to child welfare agen-
cies created a legitimate claim of entitlement and thus,
a property interest). Because Khan is not afforded a
substantive right to participate in the program, he is not
afforded procedural due process rights upon denial.
Khan may, however, have a property right in his
existing contracts with HACC. See Mid-Am. Waste Sys., Inc.
v. City of Gary, Ind., 49 F.3d 286, 290 (7th Cir. 1995) (“If
a contract creates rights specific enough to be enforced
in state court by awards of damages or specific perfor-
mance, then it creates a legitimate claim of entitlement;
and if it creates such a claim, it is ‘property.’ ”). This right
appears to include the continuation of these contracts
beyond a twelve-month term. The HAP contract states
that “[t]he term of the HAP contract begins on the first
day of the initial term of the lease, and terminates on
the last day of the term of the lease (including the initial
lease term and any extensions).” HUD-52641, Part B (3/2000),
¶ 4(a) (emphasis added); see also 24 C.F.R. § 982.451(a)(2)
(“The term of the HAP contract is the same as the term
of the lease.”). Jackson’s lease stated that “[t]his lease is
for one year and extends automatically for another year
20 No. 09-1735
after that unless terminated by either party at one
month notice before the end of the year.” Pl’s Ex. 21.
Decker’s lease provided that “[t]his lease agreement
extend[s] automatically for another year if not
terminated by either side before the expiration of the
current lease by . . . certified mail.” Pl’s Ex. 25.
Although the defendants presented evidence that the
initial lease terms typed on the front of the HAP contracts
were for twelve months, the term of the HAP contract
includes the initial lease term and any extensions. While
the applicant must undergo re-certification and the
rental unit must pass an HQS inspection annually to
continue the HAP contract, if those conditions are met,
the term of the HAP contract, by its express provisions,
includes any extensions of the lease. Further, LeSure
testified that a landlord could expect that as long as he
complied with HQS inspections and cooperated with the
annual re-certification process, the HAP contract would
renew. The HACC, however, can terminate HAP
contracts if it determines that the unit does not meet
all requirements of the HQS, or if the owner has other-
wise breached the contract. HUD-52641, Part B, ¶¶ 4(b)(8),
10(a) and (c).
Whether Khan’s existing HAP contracts were wrong-
fully terminated requires an evaluation of the terms of
the contract and incorporated federal regulations. The
HAP lists actions by the owner that constitute a breach,
including:
(1) If the owner has violated any obligation under the
HAP contract, including the owner’s obligation to
maintain the unit in accordance with the HQS.
No. 09-1735 21
(2) If the owner has violated any obligation under
any other housing assistance payments contract
under Section 8.
(3) If the owner has committed fraud, bribery or any
other corrupt or criminal act in connection with any
Federal housing assistance program. . . .
HUD-52641, Part B, ¶ 10(a); see also 24 C.F.R. § 982.453.
When the HACC determines that a breach has occurred,
it “shall notify the owner of such determination,
including a brief statement of the reasons for the deter-
mination.” HUD-52641, Part B, ¶ 10(b). Any notice must
be in writing. HUD-52641, Part B, ¶ 15.
Bland testified that he is authorized to terminate HAP
contracts when he believes the owner has violated the
terms of the agreement. He terminated the HAP contract
for the Decker rental because of alleged HQS failures.
He terminated the Jackson rental because of Khan’s
alleged violation of his HAP contract on the Washington
unit, but did not provide Khan with the required written
notice. Khan contends that the HAP contract on the
Decker rental should not have been terminated for such
minor HQS violations that Khan was ready, able, and
willing to fix. Khan testified that he repaired the items
noted from the February inspection and the March in-
spection only revealed minor items that he could have
fixed; yet, the HACC terminated his contract. The reg-
ulations, however, provide that the owner must main-
tain the unit in accordance with HQS and if he fails to
do so, the housing authority “must take prompt and
vigorous action to enforce the owner obligations,” such as
22 No. 09-1735
“termination of the HAP contract.” 24 C.F.R. § 982.404(a)(1)
and (2); see also 24 C.F.R. § 982.452(b)(2) (stating that
the owner is responsible for “[m]aintaining the unit in
accordance with HQS, including performance of ordi-
nary and extraordinary maintenance”).
Even assuming the HAP contract for Decker was prop-
erly terminated for HQS violations, Khan contends that
the HAP contract for Jackson should not have been termi-
nated. If, however, Khan violated the HAP contract on
the Washington rental by entering into a side lease for
storage space, then the HACC could terminate his
other HAP contracts pursuant to HUD-52641, Part B,
¶ 10(a)(2). At trial, the parties disputed whether the side
lease was a violation of the HAP contract.
Under the HAP contract, the owner certifies that
“[e]xcept for the rent to owner, the owner has not
received and will not receive any payments or other
consideration . . . for rental of the contract unit during the
HAP contract term.” HUD-52641, Part B, ¶ 8(d) (emphasis
added); see also 24 C.F.R. § 982.451(b)(4)(i) and (ii) (“The
part of the rent to owner which is paid by the tenant
may not be more than: (A) The rent to owner; minus
(B) The PHA housing assistance payment to the owner”
and “[t]he owner may not demand or accept any rent
payment from the tenant in excess of this maximum . . . .”);
see also HUD-52641, Part C, ¶ 5(e) (“The owner may not
charge or accept, from the family or from any other
source, any payment for rent of the unit in addition to
the rent to owner.”) (emphasis added). The rent
includes “all housing services, maintenance, utilities and
No. 09-1735 23
appliances to be provided and paid by the owner in
accordance with the lease” and the “owner may not
charge the tenant extra amounts for items customarily
included in rent to owner in the locality.” HUD-52641,
Part C, ¶ 5(e) and (6)(c); see also 24 C.F.R. § 982.510(c).
The tenancy addendum further states that “if the
tenant and the owner agree to any . . . changes in the
lease, such changes must be in writing, and the owner
must immediately give the [HACC] a copy of such
changes.” HUD-52641, Part C, ¶ 15(a). Any changes “must
be in accordance with the requirements of the tenancy
addendum.” HUD-52641, Part C, ¶ 15(a). “The owner
must notify the [HACC] of any changes in the amount
of the rent to owner at least sixty days before any
such changes go into effect, and the amount of the rent
to owner following any such agreed change may not
exceed the reasonable rent for the unit as most recently
determined or redetermined by the [HACC] . . . .” HUD-
52641, Part C, ¶ 15(d) (emphasis added).
Khan contends that he did not violate these provi-
sions because he was renting a different unit, not for
housing, but for storage. He points to the definition of
“[c]ontract unit” under the HAP: “The housing unit
rented by the tenant with assistance under the program.”
HUD-52641, Part C, ¶ 17. Because the storage space
was not part of the housing unit rented under the
program, Khan asserts that his side lease did not violate
the HAP. He further asserts that Stone-Johnson, HACC
inspector, confirmed that he could enter into the side lease.
However, we need not decide whether the side lease
was a breach of the HAP contract because Khan could
24 No. 09-1735
have asserted his rights under the contract through a
breach of contract action. Due process does not neces-
sarily require that Khan be given a predeprivation
hearing where there is no present entitlement and the
issue is an ordinary state law claim of breach of contract
by a public body. Where a “postdeprivation hearing
not only is feasible but will give the deprived individual
a completely adequate remedy” due process does not
necessarily require a predeprivation hearing. See, e.g., Chi.
United Indus., Ltd. v. City of Chi., 445 F.3d 940, 944 (7th
Cir. 2006) (quoting Ellis v. Sheahan, 412 F.3d 754, 758
(7th Cir. 2005)). “[T]he adequacy of litigation as a means
to determine the meaning of a contract is a premise of
our legal system.” Id. (quoting Mid-Am. Waste Sys., 49
F.3d at 291); see also Indiana Land Co. v. City of
Greenwood, 378 F.3d 705, 710 (7th Cir. 2004) (“All states
provide judicial remedies for breach of contract and
these remedies will almost always provide all the
process that is constitutionally due.”).
In Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189, 191
(2001), the California Labor Code authorized the state of
California to withhold payments due a contractor on a
public works project if a subcontractor failed to
comply with certain Code requirements and in turn,
permitted the contractor to withhold those sums from
the subcontractor. An unpaid subcontractor brought
suit under the Due Process Clause of the Fourteenth
Amendment because the statutory scheme did not
afford it a hearing before or after the sums were with-
held. Id. The Supreme Court assumed without de-
ciding that the subcontractor had a property interest
No. 09-1735 25
in payment, but held that California law afforded the
subcontractor sufficient opportunity to pursue that
claim in state court. Id. at 195. The Court distinguished
this case from others where a reasonably prompt
hearing was required because in such cases, “the
claimant was denied a right by virtue of which he was
presently entitled either to exercise ownership domin-
ion over real or personal property, or to pursue a
gainful occupation.” Id. at 196. The Court reasoned that
“[u]nlike those claimants, [the subcontractor] ha[d] not
been denied any present entitlement.” Id. Rather, the
subcontractor had been denied payment under a con-
tract based on the state’s determination that it failed
to comply with the contract’s terms. Id. Accordingly,
the subcontractor’s interest could be protected by an
ordinary contract suit. Id.
Similarly, Khan has not been deprived a present entitle-
ment, but rather, monies owed under his HAP contracts
and lease agreements. His rights under the HAP contracts
can be fully protected by bringing a breach of contract
action. A postdeprivation process is appropriate in
this case because Khan is not being deprived of his
ability to rent housing to other tenants, only his ability
to rent under the program. He can still pursue his occupa-
tion as a landlord; his need to remedy the deprivation
is not particularly time sensitive. See, e.g., DeBoer v. Pen-
nington, 287 F.3d 748, 750 (9th Cir. 2002) (applying
Lujan’s holding to the property interest of former
managers of a city-owned cemetery whose management
contract was terminated by the city and reasoning that
because the “contract here has not given rise to a greater
interest than the contract itself,” the deprivation was
26 No. 09-1735
a mere contractual injury that could be adequately pro-
tected by a state breach of contract suit); cf. Baird v. Bd. of
Educ. for Warren Cmty. Unit, 389 F.3d 685, 691-92 (7th Cir.
2004) (distinguishing Lujan because a state law breach
of contract action is not an adequate remedy for
a terminated employee who possesses a present entitle-
ment and who has been afforded only a limited
pretermination hearing; it does not satisfy the require-
ment of promptness, which is essential for employees
to pursue remedies such as reinstatement).
The dispute here involves the interpretation and ap-
plication of the parties’ contractual relationship. The due
process clause does not “require hearings to resolve
disputes about the meaning and effect of laws, regula-
tions, and contracts.” Goros v. Cnty. of Cook, 489 F.3d
857, 859-60 (7th Cir. 2007). “[U]nless the plaintiff
maintains that the state actor had to offer a hearing to
resolve some contested issue of fact, the dispute belongs
in state court under state law.” Id. at 860. Khan is con-
tending that his contracts should not have been
terminated for his failure to remedy minor HQS viola-
tions or for entering into a side lease agreement with
Washington for storage when he was given approval by
Stone-Johnson. These issues will ultimately be resolved
by reviewing the contract terms, the incorporated reg-
ulations, and the parties’ understanding under the con-
tract. Khan is seeking to enforce the HAP contract sub-
stantively against the HACC and such action cannot
be maintained in federal court under the due process
clause. See, e.g., Kay v. Bd. of Educ. of City of Chi., 547
F.3d 736, 739 (7th Cir. 2008).
No. 09-1735 27
Khan contends that because Bland’s conduct was not
random and unauthorized, a predeprivation hearing is
required, but “[i]n a variety of cases not limited to ones
in which the seizure is random and unauthorized,
predeprivation process has not been required.” Ellis,
412 F.3d at 758 (citations omitted); see also Mid-Am. Waste
Sys., 49 F.3d at 291 (ruling not to invoke principle in
Parratt v. Taylor, 451 U.S. 527 (1981) that deals with sit-
uations where state actors ought to provide some kind
of hearing before acting, but mistake or other happen-
stance intervenes; in contrast, “when the issue is the
meaning of a commercial contract, a prior hearing is
unnecessary, and the opportunity to litigate in state court
is all the process ‘due’ to determine whether the state
has kept its promise.”). Khan could have asserted a
claim for breach of contract, but he declined the
district court’s invitation to amend his complaint to do
so. Khan’s claim that he was denied due process upon
deprivation of his property rights must therefore fail.
2. Liberty Interest
On appeal, Khan also argues that the termination of his
HAP contracts, debarment from the program, and
Presley’s statement that he was undesirable and unfit
for the program constitute a deprivation of his liberty
interests without due process of law. Khan, however,
did not allege a claim for deprivation of liberty interest
in the complaint or in response to the motion for judg-
ment as a matter of law. Khan did address stigma as it
related to substantive due process, but not procedural
28 No. 09-1735
due process. He has therefore forfeited this claim.
Kinslow v. Pullara, 538 F.3d 687, 692 (7th Cir. 2008) (a
claim not raised below is forfeited).
In any event, even if not forfeited, his claim fails. This
court addressed a similar argument in Medley v. City of
Milwaukee, 969 F.2d 312 (7th Cir. 1992). In that case, the
Medleys contracted with the Housing Authority of the
City of Milwaukee to rent units to persons participating
in the federally-funded rent assistance program. Id. at
313. The Medleys requested that a tenant pay extra for
parking space (even though the tenant did not have a
car) without seeking the housing authority’s approval.
The Medleys eventually initiated eviction proceedings
against the tenant for nonpayment of rent. During the
proceedings, the state judge found that the Medleys
had violated the terms of their HAP contract because
the housing authority had not approved the extra rent
payments. Id. at 314-15. As a result of the violation,
the housing authority barred the Medleys from future
participation in the rental program. Id. at 315. One of the
issues on appeal was whether the Medleys had a liberty
interest in participating in the program. Id. at 316.
We found they did not.
The Medleys argued that their debarment from partic-
ipation in the program deprived them of a liberty
interest because they were accused of illegally col-
lecting rental monies above and beyond the amounts
set forth in the approved leases. Id. at 317. They argued
that they were deprived of this liberty interest without
due process of law when they were debarred without
No. 09-1735 29
prior notice or a hearing. Id. We initially noted that
“there is a liberty interest in not being barred from
bidding on government contracts or seeking govern-
mental employment when the basis for the bar is a
charge of misconduct which in turn affects the reputa-
tion of the person or entity involved, and the bar may
substantially affect future employment or contracting
opportunities.” Id. (citations omitted).
We, however, addressed several problems with the
Medley’s argument as it applied to the Section 8 pro-
gram. First, the Medleys were not bidding on a govern-
ment contract or seeking government employment
and they could cite no case where a court has found a
liberty interest in a private party’s participation in a
government assistance program designed to provide
benefits for a third party. Id. at 317. Further, their debar-
ment did not foreclose the opportunity to contract with
any local or state housing assistance programs or to
lease their units to persons who were not in the pro-
gram. Id. at 317-18. At the time the housing authority
decided not to renew the Medleys’ contracts, only four
of their units were leased to program participants. Id.
The Medleys’ debarment, therefore, “did not ‘effectively
put [them] out of business.’ ” Id. (quoting Old Dominion
Dairy Products, Inc. v. Sec’y of Def., 631 F.2d 953, 963 (D.C.
Cir. 1980)). The Medleys also provided no explana-
tion how the actions of the defendants damaged their
reputations. Id. “In order to possess a liberty interest in
a debarment case, the plaintiff must demonstrate that
his ‘good name, reputation, honor or integrity is at
stake because of what the government is doing to
30 No. 09-1735
him.’ ” Id. (quoting in part Bd. of Regents, 408 U.S. at 573).
There was no allegation that the defendants published
the reason for the debarment to any one other than the
Medleys. Accordingly, the court found that the
Medleys had no liberty interest in continued participa-
tion in the program. Id.
Similar to Medley, Khan was not barred from renting
his units and could continue his occupation as landlord;
thus, he was not put out of business by Bland’s actions.
He similarly failed to show that he has a liberty interest
to participate in a government assistance program de-
signed to provide benefits for third parties. Unlike
Medley though, there is evidence that Presley, an HACC
employee, told Hassan, a prospective Section 8 tenant,
that Khan was an “undesired person” and “wasn’t a
good person to rent [from].” However, even if these
allegedly defamatory statements were made at the di-
rection of Bland, “mere defamation by the government
does not deprive a person of liberty protected by the
Fourteenth Amendment, even when it causes serious
impairment of one’s future employment,” Hojnacki v.
Klein-Acosta, 285 F.3d 544, 548 (7th Cir. 2002) (internal
quotation marks, brackets and citation omitted); see also
Paul v. Davis, 424 U.S. 693, 697, 708-09 (1976). Rather, it is
the “alteration of legal status,” such as the govern-
mental deprivation of a right securely held, “which,
combined w ith the injury resulting from the
defamation, [that] justifie[s] the invocation of procedural
safeguards.” Paul, 424 U.S. at 708-09; see also Brown v.
City of Mich. City, Ind., 462 F.3d 720, 730 (7th Cir. 2006).
This is known as the “stigma plus” test, and Khan
cannot fulfill the “plus” factor.
No. 09-1735 31
This court recognizes a valid liberty interest when “[an]
employee’s good name, reputation, honor or integrity
[is] called into question in a manner that ma[kes] it virtu-
ally impossible for the employee to find new employ-
ment in his chosen field.” Brown, 462 F.3d at 730
(quoting Townsend v. Vallas, 256 F.3d 661, 670 (7th Cir.
2001)); see also Abcarian v. McDonald, 617 F.3d 931, 941 (7th
Cir. 2010) (holding no liberty interest where even
though the plaintiff feared that he would not be
employed at additional health care institutions in the
future, “it is the liberty to pursue a calling or occupation,
and not the right to a specific job, that is secured by the
Fourteenth Amendment.” (emphasis added) (quotation
marks, brackets and citation omitted)). No lesser
showing would be sufficient under the circumstances
of this case.
There is a lack of evidence that Khan was precluded
from pursuing his chosen occupation because of the
appellees’ actions. He could still rent to non-Section 8
housing tenants and participate in other state or govern-
ment assistance programs. Although Khan contends he
was debarred from other government programs, the
undisputed evidence shows that he was not officially
debarred. Accordingly, Khan cannot establish a liberty
interest in continued participation in the Section 8
program through the HACC.
B. Substantive Due Process
Khan contends that the appellees’ debarment of him
from further participation in the Section 8 program was
32 No. 09-1735
arbitrary and capricious and done with malice in retalia-
tion for his eviction of Washington. As such, he contends
the debarment was a violation of his substantive due
process rights and no adequate state law remedy exists.
“Intrusion upon a cognizable property interest is a
threshold prerequisite to a substantive due process
claim.” Gen. Auto Serv. Station v. City of Chi., 526 F.3d
991, 1002 (7th Cir. 2008) (citing Am. Mfrs. Mut. Ins. Co. v.
Sullivan, 526 U.S. 40, 59 (1999)) (“The first inquiry in
every due process challenge is whether the plaintiff has
been deprived of a protected interest in ‘property’ or
‘liberty.’ ”). “[T]he lack of a protected property interest
is fatal to a substantive due process claim.” Id. As set
forth above, Khan has not established a property or
liberty interest in his expectancy to enter into new HAP
contracts and therefore, his debarment from the program
cannot be a basis for his substantive due process claim.
Khan’s potential breach of contract action also cannot
support his substantive due process claim. No fundamen-
tal rights are implicated by the alleged breach. “There
are only a handful of fundamental rights for which the
due process clause has a substantive component,” Taake
v. Cnty. of Monroe, 530 F.3d 538, 542 (7th Cir. 2008)
(internal quotations and brackets omitted) (quoting Goros
v. Cnty. of Cook, 489 F.3d 857, 860 (7th Cir. 2007)), and
courts must be reluctant to expand substantive due
process rights “because guideposts for responsible
decisionmaking in this unchartered area are scarce and
open-ended.” Collins v. Harker Heights, Tex., 503 U.S. 115,
125 (1992). Fundamental rights are rights “deeply rooted
No. 09-1735 33
in this Nation’s history and tradition, and implicit in
the concept of ordered liberty, such that neither liberty
nor justice would exist if they were sacrificed.” Washington
v. Glucksberg, 521 U.S. 702, 720-21 (1997) (citations and
quotations omitted).
“[M]ere breaches of contract by the government do not
support substantive due process claims under the Consti-
tution.” Taake, 530 F.3d at 542. “[A] unit of state or
local government does not violate the federal Constitu-
tion just because it violates . . . the law of contracts.” Garcia
v. Kankakee Cnty. Hous. Auth., 279 F.3d 532, 535 (7th
Cir. 2002) (citations omitted). “If a state’s violation of its
own laws and regulations does not violate the due
process clause, it is hard to see how failure to keep a
promise contained in a contract can violate the due
process clause.” Mid-Am. Waste Sys. Inc., 49 F.3d at 290.
Khan is seeking the right to a government subsidy; this
is not a fundamental right protected by substantive due
process. See, e.g., Glucksberg, 521 U.S. at 722 (stating that
the development of the Court’s substantive-due-
process jurisprudence has “been carefully refined by
concrete examples involving fundamental rights found
to be deeply rooted in our legal tradition.”); see also Idris
v. City of Chi., 552 F.3d 564 (7th Cir. 2009) (“Glucksberg
and the [Supreme] Court’s other opinions are adamant:
only state action that impinges fundamental rights is
subject to evaluation under substantive due process.”).
Khan’s remedy lies in a breach of contract action, not
a federal substantive due process claim. See Khan v.
Gallitano, 180 F.3d 829, 835 (7th Cir. 1999) (finding no
34 No. 09-1735
due process claim where the plaintiff failed to show why
the right to be free from tortious interference by state
actors is a fundamental right deeply rooted in our
history and tradition or implicit in the concept of ordered
liberty or why a state law remedy is inadequate under
the federal constitution).
Khan also has not shown that there was a violation
of some other substantive constitutional right or that
available state law remedies are inadequate. See Palka v.
Shelton, 623 F.3d 447, 453 (7th Cir. 2010) (stating that
substantive due process claim is limited to fundamental
rights and wrongful termination of public employment
is not actionable as a violation of substantive due
process unless the employee also alleges the defendant
violated some other constitutional right or state rem-
edies were inadequate). Nor has Khan shown that
the Bland’s actions rose to the level of shocking the con-
science. “Official misconduct will rise to the level of a
constitutional violation only if it shocks the conscience.”
Palka, 623 F.3d at 454; see also Khan v. Gallitano, 180 F.3d
829 (7th Cir. 1999) (discussing applicability of “shocks
the conscience” standard). Khan’s substantive due pro-
cess claim, therefore, fails.
Accordingly, for the reasons stated, the judgment of
the district court is A FFIRMED.
12-23-10