Burroughs v. Hills

• Decision Date: 15 August 1984
• Docket Number: 83-2289,No. 83-1604,83-1604
• Citation: 741 F.2d 1525
• Parties: Leo BURROUGHS, Jr., et al., Plaintiffs-Appellants, Cross-Appellees, v. Carla HILLS, Secretary, Department of Housing and Urban Development, et al., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1525

741 F.2d 1525

Leo BURROUGHS, Jr., et al., Plaintiffs-Appellants, Cross-Appellees, v. Carla HILLS, Secretary, Department of Housing and Urban Development, et al., Defendants-Appellees, Cross-Appellants.

No. 83-1604, 83-2289.

United States Court of Appeals Seventh Circuit.

Argued April 11, 1984.

Decided Aug. 15, 1984.

Thomas J. McCarthy, Jenner & Block, Chicago, Ill., for plaintiffs-appellants, cross-appellees.

Margaret C. Gordon, Asst. U.S. Atty., Chicago, Ill., for defendants-appellees, cross-appellants.

Before POSNER and FLAUM, Circuit Judges, and NICHOLS, ^* Senior Circuit Judge.

PER CURIAM.

The court is unanimously of the opinion that the decision of District Judge Moran on summary judgment dismissing the petition, ought to be affirmed, and judgment is entered to that effect. The court is also unanimously of the opinion that the decision of the same district judge, denying costs to the prevailing parties, ought to be reversed, and judgment is entered to that effect. The judges of this panel differ somewhat in stating their reasons and, therefore, the views of each judge are separately appended. However, Judge Posner joins in Judge Nichols' opinion except Part IV B, and except for that part, it may therefore be taken as the opinion of the court. Affirmed in No. 83-1604 and reversed in No. 83-2289.

NICHOLS, Senior Circuit Judge.

This action was brought in the Northern District of Illinois by eight individuals and a voluntary community organization, against former Housing and Urban Development (HUD) Secretary Carla Hills, various regional and local HUD officials, and Seward Rist, Area Management Broker. Hills is no longer Secretary, but successors have not been formally substituted as parties. Plaintiffs originally sought injunctive relief but now seek money damages only, on account of injury they allege they suffered as nearby residents because defendants allowed certain Chicago residential property acquired by foreclosure to be vacant and a hazard to health and safety of community residents from acquisition, November 1974, through disposal, July 19, 1976, all contrary to Federal law, state law municipal ordinance, and in Mr. Rist's case, his contract. A motion to dismiss was early denied, but this holding is passed over here because not assigned as error in any party's appeal. The injunctive relief issue has been considered mooted since the disposal of the property shortly after the suit was filed.

On March 8 and 10, 1983, District Judge Moran, having before him cross-motions for summary judgment and a fact stipulation signed by all the parties, granted defendant's motion and dismissed the petition, but denied the defendants their costs. Burroughs v. Hills, 564 F.Supp. 1007 (N.D.Ill.1983). This appeal followed and there is a cross-appeal relating to costs only.

I Facts

The stipulated facts represent a somewhat unhappy situation from the Federal taxpayer's point of view. The case is said to be representative of others, and a test. The property in question is a three-story residential structure at 7228 S. Coles Avenue in Chicago. Becoming titleholder by foreclosure, HUD allowed the building to be unoccupied and unguarded, with no watchman on duty, and unfenced. Glass was broken throughout, rats, mice, other rodents and insects were present, foundations were cracked, exterior walls needed tuckpointing, floors were unstable, exterior doors were unsecured, the front steps and back porch were in disrepair, debris was scattered around the building, including rubble, refuse, and lumber material "knocked down by vandals" for whom the building was "a frequent target." Mr. Rist as contract "area management broker" (AMB) inspected seven times and reported the building was secured, the windows boarded, the grass cut, and the lot free of debris. (Evidently the parties mean to imply that Mr. Rist reported falsely.) Mr. Rist had the management of 150-200 government-owned buildings and so far as appears is the only defendant who actually saw this property, but the official defendants had independent means of knowing what was occurring so far as they were aware of plaintiffs' complaints.

HUD originally considered the property had a fair market value of $40,000, less needed repairs at $17,389, making it available at $22,600. Some $285 was spent on maintenance pursuant to Mr. Rist's invoices. HUD paid all the taxes. On July 19, 1976, HUD sold the property to the city for $1, which could, under the applicable program, be done only if the appraised value was under $5,000. Chicago conveyed it to the South Shore Senior Citizens Association, which was stipulated to be proceeding with repairs estimated to cost over $40,000, to be financed by HUD by "block grant." Thus the stipulated facts indicate a precipitate decline in market value during the period of HUD ownership, and we assume that this occurred, with an increase in the repairs needed.

Plaintiffs are eight individuals who resided as tenants within 500 feet of this derelict property, plus the Five Block Club, a voluntary organization formed for the purpose of combating neighborhood blight. The interest of the individual plaintiffs was their concern for the health and safety of themselves and their families. They feared increased crime and drug activity because the building was "a likely hideout for criminals and gangs." They routinely passed the immediate area and saw the building each day. None of them claim to own any real property in the neighborhood.

We note that dwelling within 500 feet of such an offending structure is a fact that confers special status under Illinois law, whether one is owner or tenant. If his property or person are "substantially affected" by an alleged violation, in addition to other remedies, he may sue for injunction, without having to "prove any special or unique damage to himself or his property from the alleged violation." Chapter 24, paragraph 11-13-15 of Illinois Revised Statutes, as amended and in effect when the complaint was filed.

Plaintiff Burroughs first complained to defendant Waner on March 19, 1975, and on April 2 the Five Block Club presented Waner with petitions signed by 107 members, one of whom oddly enough was defendant Rist. At that time they urged immediate sale to a buyer who would rehabilitate. They frequently communicated afterwards to Mr. Rist, but it is stipulated that the official defendants obtained no more information as to the bad condition of the building until the suit was filed. The stipulation describes their duties, from which we are perhaps expected to infer that it was their duty to know. Mr. Rist was a party to a contract with the government by which he was to perform, as to properties to which HUD acquired title, various services including inspection, and taking the necessary steps when repairs were found necessary.

The stipulation closes with a curious provision that if the official defendants are liable, they are liable jointly and severally in the amount of $1,000, and if Rist is liable, it is in the amount of $350. The stipulation is silent, and we are not informed what liability might be asserted in companion cases, if any, should what we here hold suggest such liabilities and what we say treated as stare decisis.

II Theory of the Action

Defendant Hills and the other official defendants are held by plaintiffs to be liable in their official capacities under Federal law. The official defendants, except Hills, are said to be liable in their individual capacities also under Federal law. Mr. Rist is liable under his contract with HUD, and under state and local law, they contend.

The district judge also dealt with what he considered to be pendent jurisdiction claims under the doctrine of United Mineworkers of America v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966). He pointed out that under the state law relied on, injunctive relief only is provided and he denied damages on that ground. Plaintiffs do not argue any reason why this is erroneous. This, however, does not preclude consideration of local law because in HUD operations, as we will point out, Federal law requires property management in conformity to local law, and thus if a breach of state law occurs, it may ipso facto be a breach of duties under Federal law, and it may not be necessary for the court to rely on pendent jurisdiction. HUD properties do not become like some Federal properties, enclaves exempt from local law. Merrill Tenant Council v. HUD, 638 F.2d 1086 (7th Cir.1981).

Plaintiffs admit that the National Housing Act, 12 U.S.C. Sec. 1701 and ff is the authority under which the United States insured and then foreclosed the mortgage on the involved property, becoming owner of record, and under which the Federal defendants acted. 12 U.S.C. Secs. 1713(k), 1710(g). They also admit that the act contains no language expressly authorizing suits against the Secretary of HUD, or any of her subordinates, to enforce official or personal liability for not executing the granted powers in a proper manner. The theory of the action, in its most basic form therefore, is that the litigation rights asserted herein are among those which can be held to have been implied by the legislative scheme, according to the standards stated in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) or in the progeny of that case.

Insofar as the suit is against the defendant officers in their official capacities, it is understood by the parties and held by the district judge, that the Secretary may sue and be sued in her official capacity by 12 U.S.C. Sec. 1702 which, as a practical matter, means that the "Mortgage Insurance Fund," or possibly other government funds, may be used to pay judgments and that issues of sovereign immunity and consent to be sued are eliminated. Merrill Tenant Council v. HUD, supra at 1091. But section 1702 does not of its own force create a private cause of action. Shivers v....