Cedar-Riverside Associates, Inc. v. City of Minneapolis

• Decision Date: 13 November 1979
• Docket Number: No. 78-1878,CEDAR-RIVERSIDE,78-1878
• Citation: 606 F.2d 254
• Parties: ASSOCIATES, INC., etc., et al., Appellants, v. The CITY OF MINNEAPOLIS and the Minneapolis Housing and Redevelopment Authority, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 254

606 F.2d 254

CEDAR-RIVERSIDE ASSOCIATES, INC., etc., et al., Appellants, v. The CITY OF MINNEAPOLIS and the Minneapolis Housing and Redevelopment Authority, Appellees.

No. 78-1878.

United States Court of Appeals Eighth Circuit.

Submitted May 16, 1979.

Decided Oct. 3, 1979.

Rehearing and Rehearing En Banc Denied Nov. 13, 1979.

James P. Larkin, Larkin, Hoffman, Daly & Lindgren, Minneapolis, Minn., for appellants; Peter K. Beck, James D. Lano, Oppenheimer, Wolff, Foster, Shepard & Donnelly, Minneapolis, Minn., on brief.

Jerome F. Fitzgerald, Asst. City Atty., Minneapolis, Minn., for appellee, City of Minneapolis; Robert J. Alfton, City Atty., on brief.

John M. LeFevre, Holmes & Graven, Minneapolis, Minn., for appellee Housing & Redevelopment Authority; John M. Utley, Minneapolis, Minn., on brief.

Before BRIGHT, HENLEY, and McMILLIAN, Circuit Judges.

BRIGHT, Circuit Judge.

Cedar-Riverside Associates, Inc., and several associated developers of the beleaguered "Cedar-Riverside New Town in Town" housing project in Minneapolis, Minnesota (collectively, appellants), ¹ appeal from a judgment dismissing four of their claims against the City of Minneapolis (the City) and the Minneapolis Housing and Redevelopment Authority (the MHRA). ² The claims at issue arose from the appellees' approval of a plan to reduce the housing density permitted in the Cedar-Riverside area and their alleged diversion to other housing projects of federal funds designated for the Cedar-Riverside project.

Appellants now concede that two of the four dismissed claims, both brought directly under the fourteenth amendment, are barred by this court's decision in Owen v. City of Independence, Mo., 589 F.2d 335 (8th Cir. 1978). ³ In their two remaining claims appellants allege violations of national housing policy, as expressed in the Housing Act of 1949, 42 U.S.C. § 1441 Et seq. (1976) (the Housing Act). The Housing Act does not expressly provide a private remedy for such violations. Hence, the threshold issue presented in this appeal is whether a private remedy should be inferred on behalf of appellants. The district court concluded that it should not, I. e., that appellants have no implied right of action under the Housing Act. We agree and therefore affirm.

I. Background. ⁴

In 1968, the Minneapolis City Council approved an Urban Renewal Plan for the Cedar-Riverside area (1968 plan) that had been prepared by the MHRA. In 1970, the MHRA selected appellant Cedar-Riverside Associates, Inc. (the developer) to develop 100 acres of private, noninstitutional land within the Cedar-Riverside Urban Renewal Area. The development plan for that land contemplated high density residential and commercial development; between 1972 and 1991, approximately 12,500 dwelling units were to be constructed or renovated. In 1971, the United States Department of Housing and Urban Development guaranteed $24,000,000 of the developer's obligations pursuant to Title VII of the Urban Growth and New Community Development Act of 1970, 42 U.S.C. § 4514 (1976).

Appellants completed the first of ten planned stages of redevelopment. In December 1973, however, environmental litigation halted further construction in the Cedar-Riverside area, and appellants have been unable to resume work on the project since that time. Nonetheless, the developer in late 1976-early 1977 indicated that it intended to proceed with the project upon conclusion of the environmental litigation. See Cedar-Riverside Environmental Defense Fund v. Hills, supra, 560 F.2d at 380.

In February 1977, the Minneapolis City Council established the Cedar-Riverside Task Force and assigned to it the responsibility of devising a plan for redevelopment and rehabilitation of the Cedar-Riverside area. In May 1977, the Task Force issued its report proposing, among other things, that residential development in the Cedar-Riverside area be limited to 1,900 new apartment units, 450 rehabilitated units, and 2,113 existing units. On May 19, 1977, the MHRA adopted the land use recommendations contained in the Task Force report, and the Minneapolis City Council followed suit on May 27, 1977. ⁵

The Task Force report, as adopted by the appellees, represents a substantial departure from the original 1968 plan pursuant to which the appellants undertook to develop the Cedar-Riverside area. If implemented, the Task Force proposal would reduce the 12,500 housing units permitted in the project area under the 1968 plan to approximately 4,500 units in that same area. In addition, the report proposes substantial changes in building design, building location, and commercial development.

The delay caused by the environmental litigation already had placed the appellants in serious financial difficulties. ⁶ On October 19, 1977, the New Communities Development Corporation, representing the federal guarantors of the developer's debentures, resolved to initiate foreclosure proceedings on the Cedar-Riverside project. ⁷

Thereafter, appellants brought this action. In the two claims remaining at issue here, appellants alleged that the City and the MHRA, in adopting the Task Force report and in administering and diverting to other projects federal funds designated for use in the Cedar-Riverside project, violated their statutory obligation under the Housing Act to exercise their powers consistently with national housing policy. Appellants further alleged that these violations contributed to appellants' financial difficulties and interfered with their contractual relations.

Holding that the Housing Act does not create a private right of action in favor of the developers of an urban renewal project, the district court granted the appellees' motions to dismiss these claims for failure to state a claim upon which relief could be granted. Cedar-Riverside Associates, Inc. v. United States, 459 F.Supp. 1290, 1294 (D.Minn.1978). The district court further indicated that appellants lack standing to sue for any breach of duties imposed by the Housing Act. The court reasoned that because appellants had never been the direct beneficiaries of appellees' distribution of funds in the Cedar-Riverside area, and because they could not show that any alternative distribution would have benefited them, they could not establish an injury in fact as a matter of law. Id. at 1295, Citing Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976).

II. Analysis.

Appellants characterize their fifteenth and sixteenth causes of action against, respectively, the MHRA and the City as arising

under the New Communities Act of 1968 (42 U.S.C. § 3901 Et seq.) and the Urban Growth and New Community Development Act of 1970 (42 U.S.C. § 4501 Et seq.), which, in turn, incorporate portions of the original National Housing Act (Housing Act of 1949, 42 U.S.C. § 1441 Et seq.), the specific provisions of which Plaintiffs have alleged Defendant City of Minneapolis and MHRA with violating.

Although the appellants' argument on this point is somewhat vague, the "specific provision" of the Housing Act which the appellees allegedly violated apparently is the directive in 42 U.S.C. § 1441 which reads, in pertinent part, as follows:

The Department of Housing and Urban Development, and any other departments or agencies of the Federal Government having powers, functions, or duties with respect to housing, shall exercise their powers, functions, and duties under this or any other law, consistently with the national housing policy declared by this Act and in such manner as will facilitate sustained progress in attaining the national housing objective hereby established * * *.

We assume, for the purpose of reviewing the district court's dismissal of appellants' claims for legal insufficiency, that 42 U.S.C. § 1441 applies to the City and the MHRA and that the appellees' approval of the Task Force plan and their diversion to other projects of federal funds earmarked for the Cedar-Riverside area violated this statutory directive. ⁸ We hold, however, that the Housing Act confers on the appellants no right of action to redress such violations.

The Supreme Court in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), listed four factors that are relevant in "determining whether a private remedy is implicit in a statute not expressly providing one(:)"

First, is the plaintiff "one of the class for whose Especial benefit the statute was enacted," * * * (emphasis supplied) that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? * * * Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? * * * And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? (422 U.S. at 78, 95 S.Ct. at 2088.)

Applying these criteria in this case, we determine first that appellants do not belong to a class for whose especial benefit Congress enacted the Housing Act. If Congress intended the Housing Act to benefit any particular class of persons, that class must be the inhabitants of inadequate housing, not private developers of housing projects. M.B. Guran Co., Inc. v. City of Akron, 546 F.2d 201, 204 (6th Cir. 1976). See 42 U.S.C. § 1441 (1976). ⁹

Appellants contend that the New Communities Act of 1968 (1968 Act) and the Urban Growth and New Community Development Act of 1970 (1970 Act) brought private housing developers within the class intended to be benefited by the Housing Act's housing policy directive. Although the legislative history of the 1968 and 1970 Acts indicates a congressional purpose to encourage private entrepreneurs in local home building industries, that history also discloses that...