Gautreaux v. Pierce, 66 C 1460.

• Decision Date: 25 January 1982
• Docket Number: No. 66 C 1460.,66 C 1460.
• Citation: 535 F. Supp. 423
• Parties: Dorothy GAUTREAUX, Odell Jones, Doreatha R. Crenchaw, Eva Rodgers, James Rodgers, and Robert W. Fairfax, Plaintiffs, v. Samuel PIERCE, Secretary of the Department of Housing and Urban Development of the United States, Defendant.
• Court: U.S. District Court — Northern District of Illinois

535 F. Supp. 423

Dorothy GAUTREAUX, Odell Jones, Doreatha R. Crenchaw, Eva Rodgers, James Rodgers, and Robert W. Fairfax, Plaintiffs, v. Samuel PIERCE, Secretary of the Department of Housing and Urban Development of the United States, Defendant.

No. 66 C 1460.

United States District Court, N. D. Illinois, E. D.

January 25, 1982.

Alexander Polikoff, Howard A. Learner, Chicago, Ill., for plaintiffs.

Dan K. Webb, U. S. Atty., Robert Grossman, Roan & Grossman, Patrick W. O'Brien, Mayer, Brown & Platt, Richard Flando, Acting Regional Counsel, Gershon M. Ratner, Carolyn B. Lieberman, John W. Herold, Edward G. Weil, Dept. of Housing & Urban Development, Stanley J. Garber, Corp. Counsel, Calvin H. Hall, Gen. Counsel, Chicago Housing Authority, Earl L. Neal, Sp. Asst. Corp. Counsel, Chicago, Ill., Jane McGrew, Gen. Counsel, Dept. of Housing and Urban Development, Washington, D. C., Gerald D. Skoning, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

This litigation began in 1966 when plaintiffs, approximately 43,000 black tenants of and applicants for public housing in the Chicago area, brought related actions against the Chicago Housing Authority ("CHA") and the United States Department of Housing and Urban Development ("HUD") alleging that defendants had violated their rights under the Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981 et seq., and the equal protection clause of the fourteenth amendment. HUD was charged along with CHA with instituting and promoting racially discriminatory policies and practices that resulted in low income housing being built in exclusively black neighborhoods in Chicago and in racial quotas that limited the number of black families in white housing projects. Both HUD and CHA were found liable to the plaintiffs for their respective roles in contributing to Chicago's discriminatory housing patterns,¹ but meaningful relief for the plaintiff class was consistently thwarted through the delay occasioned by innumerable appeals and by defendants' refusal to take appropriate remedial action.

Finally, after more than a decade of intense litigation at all levels of the federal court system, a consent decree was negotiated between the plaintiffs and HUD that purported to encompass a workable plan for delivering long overdue relief to the plaintiff class. As part of the consent decree, which was approved by the Court on June 16, 1981, HUD agreed to provide 7,100 units of assisted housing² for the plaintiff class in specified areas of the Chicago Standard Metropolitan Statistical Area through various housing programs administered by HUD designed to stimulate the development of low income housing. An important, if not vital, adjunct to one of these HUD programs (Section 8 New Construction and Substantial Rehabilitation) is the Government National Mortgage Association Tandem Financing program ("GNMA Tandem") through which GNMA, a wholly-owned government corporation, indirectly provides a source of financing for housing development to serve low income persons. GNMA purchases FHA-insured mortgages issued to eligible developers by private lending institutions at below market rates and resells them at current market prices, absorbing the loss as a subsidy. The Reagan Administration has proposed that the GNMA Tandem program be eliminated in fiscal year 1983, however, and this matter is presently before the Court on plaintiffs' motion to enforce or, alternatively, to modify the consent decree in light of the current uncertainty with respect to the future of the Tandem program.

Paragraph 8.1 of the consent decree provides that:

Jurisdiction is retained by the Court for the purpose of enabling the plaintiffs and HUD to apply to the Court at any time for such further orders as may be necessary or appropriate for the construction, implementation, modification or enforcement of this Consent Decree.

For obvious reasons, plaintiffs initially characterize their motion as seeking implementation or enforcement of the decree since their burden in such a context is not as great as it would be if the motion were viewed as seeking modification of the decree. Alternatively, plaintiffs argue that the decree should be modified to require that HUD set aside approximately $324 million of GNMA's fiscal 1982 Tandem appropriation for Section 8 New Construction and Substantial Rehabilitation projects in the Chicago area ("Gautreaux projects") that have already received FHA mortgage commitments and for which section 8 rental subsidies have already been reserved. Defendants maintain that plaintiffs' motion cannot be characterized as seeking enforcement or implementation of the decree and that plaintiffs have not met their burden of showing that the decree should be modified to provide the relief they desire. For the reasons set forth below, plaintiffs' motion will be denied.³

Plaintiffs' first argument, that the relief they seek may properly be viewed as implementation or enforcement rather than modification of the decree, is not persuasive. Plaintiffs correctly note that HUD undertook to "explore actively all possibilities of supplying assisted housing to eligible persons as rapidly as possible through the assisted housing programs referred to in this Consent Decree." Consent Decree at paragraph 5.9. They then turn to paragraph 8.7 of the consent decree which provides that where HUD has agreed to consider or explore taking any action not specifically required under the decree, HUD must do so in good faith but HUD's failure to actually take the action that it had considered or explored taking shall not be grounds for contempt. Finally, plaintiffs' reason that the limitation of paragraph 8.7 to contempt, taken together with the Court's inherent power to implement or enforce the decree, recognized in the decree itself at paragraph 8.1, must mean that the Court may grant relief other than contempt, such as implementation or enforcement of the decree, when HUD's exploration of avenues of relief under paragraph 5.9 leads it to "an indefensible result."

Even if we accept plaintiffs' interpretation of paragraph 8.7 of the decree, as contemplating relief other than contempt when HUD fails to take action necessary to afford relief under the decree, it does not necessarily follow that the "other" relief plaintiffs seek must be characterized as implementation or enforcement of the decree, particularly when they seek to impose an obligation upon HUD to which it did not expressly agree and, in fact, which it specifically rejected during negotiations leading up to the proposed decree. If plaintiffs had been successful in negotiating a set aside of GNMA Tandem funds into the consent decree as they had attempted to do, then the decree could be enforced to give effect to that obligation imposed upon HUD. Similarly, if HUD should renege on its commitment to set aside contract authority for 150 units of Section 8 Existing Housing each year, then plaintiffs could move to enforce the terms of the decree. But it would be ironic indeed to grant plaintiffs' motion under the guise of enforcing the terms of the decree when plaintiffs themselves were unsuccessful in their attempt to have those terms inserted into the document in the first place. The Court is not free to rewrite the terms of the decree and then enforce the decree as rewritten.⁴ In the Court's view, plaintiffs' motion is more appropriately characterized as seeking modification of the decree and we will turn to a discussion of the motion in that context.

A consent decree embodies elements of both a contract and a court order so that a party seeking to modify it faces a rather substantial burden. As the court noted in McGoff v. Rapone, 78 F.R.D. 8, 24 (E.D.Pa. 1978), the party opposing modification has a "justified expectation that a bargain freely entered into will be honored." Moreover, the integrity of the judicial system depends to a large extent upon the principle and the perception that final judgments⁵ are not granted lightly or whimsically and that they are entitled to a strong presumption of stability. Id., 78 F.R.D. at 25. See also United States v. ITT Continental Baking Company, 420 U.S. 223, 236-37, 95 S.Ct. 926, 934-35, 43 L.Ed.2d 149 (1975); Philadelphia Welfare Rights Organization v. Shapp, 602 F.2d 1114, 1119-20 (3d Cir. 1979), cert. denied, 444 U.S. 1026, 100 S.Ct. 689, 62 L.Ed.2d 660 (1980); Mayberry v. Maroney, 558 F.2d 1159, 1164 (3d Cir. 1977). Nevertheless, the Supreme Court has held that a consent decree may be modified in appropriate circumstances, United States v. United Shoe Machinery Corp., 391 U.S. 244, 88 S.Ct. 1496, 20 L.Ed.2d 562 (1968); United States v. Swift & Company, 286 U.S. 106, 52 S.Ct. 460, 76 L.Ed. 999 (1932), though lower courts often differ with respect to the phrasing of the standard to be applied in order to determine whether modification is warranted.

A review of the decisions in which courts have considered whether to modify a consent decree, including the most recent decision of the United States Court of Appeals for the Seventh Circuit in United States v. City of Chicago and Fraternal Order of Police, 663 F.2d 1354 (1981) (en banc), reveals that, for the most part, courts generally engage in a two-part analysis in determining whether modification of a consent decree is appropriate.⁶ As a threshold matter, exceptional circumstances, new, changed or unforeseen at the time the decree was entered, are required in order to justify modification of the decree. Courts then weigh the equities in determining the hardship upon the moving party if modification is not granted and the hardship on the party opposing modification if the Court grants the relief sought as well as the impact of modification upon innocent third parties. An important consideration in connection with this second inquiry into the equities is whether `the purposes of the litigation as...