Cedar-Riverside Associates, Inc. v. US

• Decision Date: 18 October 1978
• Docket Number: No. 4-77 Civ. 428.,4-77 Civ. 428.
• Citation: 459 F. Supp. 1290
• Parties: CEDAR-RIVERSIDE ASSOCIATES, INC., a Minnesota Corporation, Cedar-Riverside Properties, a Minnesota Limited Partnership, Cedar-Riverside Land Corporation, a Minnesota Corporation, Cedar-Riverside Land Co., a Minnesota Partnership, Stage I Land Co., a Minnesota Limited Partnership, Stage II Land Co., a Minnesota Limited Partnership, Stage III Land Co., a Minnesota Limited Partnership, F Building Land Co., a Minnesota Partnership, Keith Heller, Mary Doe and John Roe, Plaintiffs, v. The UNITED STATES of America, Patricia R. Harris, Secretary of the Department of Housing and Urban Development, William J. White, General Manager of the New Community Development Corporation, United States Department of Housing and Urban Development, New Community Development Corporation, New Communities Administration, Federal Housing Administration (herein collectively referred to as the Federal Defendants), First Trust Company of St. Paul, Inc., a Minnesota Corporation, the City of Minneapolis, and the Minneapolis Housing and Redevelopment Authority, Defendants.
• Court: U.S. District Court — District of Minnesota

459 F. Supp. 1290

CEDAR-RIVERSIDE ASSOCIATES, INC., a Minnesota Corporation, Cedar-Riverside Properties, a Minnesota Limited Partnership, Cedar-Riverside Land Corporation, a Minnesota Corporation, Cedar-Riverside Land Co., a Minnesota Partnership, Stage I Land Co., a Minnesota Limited Partnership, Stage II Land Co., a Minnesota Limited Partnership, Stage III Land Co., a Minnesota Limited Partnership, F Building Land Co., a Minnesota Partnership, Keith Heller, Mary Doe and John Roe, Plaintiffs, v. The UNITED STATES of America, Patricia R. Harris, Secretary of the Department of Housing and Urban Development, William J. White, General Manager of the New Community Development Corporation, United States Department of Housing and Urban Development, New Community Development Corporation, New Communities Administration, Federal Housing Administration (herein collectively referred to as the Federal Defendants), First Trust Company of St. Paul, Inc., a Minnesota Corporation, the City of Minneapolis, and the Minneapolis Housing and Redevelopment Authority, Defendants.

No. 4-77 Civ. 428.

United States District Court, D. Minnesota, Fourth Division.

October 18, 1978.

COPYRIGHT MATERIAL OMITTED

James P. Larkin, Peter K. Beck, James E. Strother, Larkin, Hoffman, Daly & Lindgren, Ltd., and James D. Lano, Oppenheimer, Wolff, Foster, Shepard & Donnelly, Minneapolis, Minn., for plaintiffs.

Andrew W. Danielson, U. S. Atty. by Stephen G. Palmer, Asst. U. S. Atty., Minneapolis, Minn., for Federal defendants.

Ronald A. Zamansky, and Stephen T. Refsell, Doherty, Rumble & Butler, Minneapolis, Minn., for defendant First Trust Co. of St. Paul, Inc.

Walter J. Duffy, Jr., City Atty. by Jerome F. Fitzgerald, Asst. City Atty., Minneapolis, Minn., for defendant the City of Minneapolis.

John M. LeFevre, Jr., and John M. Utley, Holmes, Kircher & Graven, Minneapolis, Minn., for defendant Minneapolis Housing and Redevelopment Authority.

MEMORANDUM ORDER

ALSOP, District Judge.

This matter comes before the court upon the motions of the defendants, the City of Minneapolis and the Minneapolis Housing and Redevelopment Authority, to dismiss the complaint herein pursuant to Rule 12 of the Federal Rules of Civil Procedure. Both of these defendants seek to dismiss the complaint, as against them, for lack of subject matter jurisdiction (Rule 12(b)(1)) and for failure to state a claim upon which relief can be granted (Rule 12(b)(6)). Memoranda have been submitted by these two defendants and by the plaintiffs, and oral argument was heard on April 14, 1978 and on July 14, 1978.

FACTUAL BACKGROUND

The facts surrounding this action are complicated and lengthy. The underlying dispute between the parties arose in connection with the "Cedar-Riverside New Town in Town" housing project in Minneapolis. In 1968, the Cedar-Riverside Urban Renewal Plan was approved by the Minneapolis City Council and by the Minneapolis Housing and Redevelopment Authority (MHRA). In 1970, the plaintiff Cedar-Riverside Associates, Inc., was selected by the MHRA as the private developer for 100 acres of land within the Urban Renewal Area. At that time, the Development Plan contemplated a ten-stage residential and commercial development between 1972 and 1991 which would provide approximately 12,500 dwelling units. In 1971, the United States Department of Housing and Urban Development (HUD) guaranteed $24 million of the developer's obligations pursuant to Title VII of the Housing and Urban Development Act of 1970, 42 U.S.C.A. § 4501 et seq.

The New Community Development Corporation within HUD adopted a resolution on December 10, 1976 concerning the acquisition and disposition of the Cedar-Riverside New Town in Town. The resolution proposed a continuation of the development with the construction of a minimum of 5,000 new units. The resolution directed HUD to determine whether this alternative was acceptable to the local parties and the City of Minneapolis.

On February 16, 1977, a unanimous resolution of the Minneapolis City Council was approved by the Mayor of Minneapolis establishing the Cedar-Riverside Task Force. The Task Force was responsible for developing and recommending a plan for the redevelopment and rehabilitation of the Cedar-Riverside area. After studying the area, the Task Force proposed a residential development in Cedar-Riverside of 1,900 new apartment units and 450 rehabilitated apartment units. Certain design and site changes were recommended by the Task Force, particularly with respect to Stage II. In addition, the Task Force recommended that the Cedar-Riverside area not be developed as a regional retail commercial center serving a wide geographic area.

The Task Force proposal is a substantial departure from the Cedar-Riverside New Town contemplated in the 1968 Urban Renewal Plan. If the Task Force report is implemented, the projected densities in the Cedar-Riverside area at project maturity will be reduced from 12,500 dwelling units, the number permitted under the 1968 Urban Renewal Plan, to 1,900 new dwelling units, 450 rehabilitated units, and 2,113 existing units. With respect to Stage II, the densities will be reduced from 1,800 units to 706 units. In addition, the Task Force proposes substantial changes in building design, building location and commercial development.

On May 19, 1977, the MHRA unanimously adopted the land use recommendations contained in the Task Force report. At the Minneapolis City Council meeting on May 27, 1977, the council formally adopted the Task Force report by a vote of eight to five. However, neither the MHRA nor the Minneapolis City Council has taken any formal action which would alter the maximum residential densities permitted by the Cedar-Riverside Urban Renewal Plan or which would amend the Minneapolis Zoning Ordinance.

PROCEDURAL HISTORY

In the twelfth and thirteenth causes of action in the original complaint, plaintiffs seek relief from the MHRA and the City of Minneapolis for intentional interference with an existing contractual relationship between the plaintiffs and the federal defendants.

In the fifteenth and sixteenth causes of action in the amended complaint, plaintiffs claim that the MHRA and the City of Minneapolis breached their statutory obligation to comply with the National Housing policy established by Congress in the National Housing Act of 1949, 42 U.S.C. § 1441 et seq.

The seventeenth and eighteenth causes of action in the amended complaint contain plaintiffs' claims of relief from the City of Minneapolis and the MHRA for their actions in adopting the Task Force report, which reduces the permitted densities in the Cedar-Riverside area. Plaintiff developers claim these actions deprived them of their property without due process of law in violation of the Fourteenth Amendment of the United States Constitution.

Finally, in the nineteenth cause of action in the amended complaint, plaintiffs allege that the MHRA and the City of Minneapolis conspired between themselves and with other groups to restrain competition in violation of the Sherman Antitrust Act.

NATIONAL HOUSING ACT CLAIM

The plaintiffs' fifteenth and sixteenth causes of action in their amended complaint allege that the MHRA and the City of Minneapolis violated the National Housing Act of 1949, 42 U.S.C. § 1441 et seq. (Housing Act), by diverting federal funds earmarked for the Cedar-Riverside Urban Renewal Area to other projects and by failing to effectively utilize federal funds provided for the administration of all MHRA projects, including the Cedar-Riverside Urban Renewal Area. The plaintiffs also assert that the adoption of the Task Force report by the MHRA and the City of Minneapolis violated the Housing Act. Plaintiffs' final claim is a right to damages as a third-party beneficiary of the contract between the MHRA, the City of Minneapolis and the federal defendants.

The first question presented is whether the MHRA and the City of Minneapolis are bound by the provisions of the Housing Act. Since the Housing Act is a federal law which purports to apply only to a federal administrative body, the obligations of the Housing Act can be asserted against the MHRA and the City of Minneapolis only on the basis that these two defendants voluntarily assumed the obligations of the Housing Act by exercising their power to act as agents of the federal government. See Minn. Stat. § 462.445, subd. 4(2) (1976). In their amended complaint, plaintiffs allege that these two defendants were acting as agents of the federal government in exercising powers granted by the Housing Act. For the purposes of a motion to dismiss for failure to state a claim, well pleaded material allegations of the complaint are taken as admitted. See 3B Moore's Federal Practice, § 12.08. Therefore, the plaintiffs' allegations that these defendants acted as agents for the federal government in implementing the Housing Act must be taken as admitted.

Nevertheless, the plaintiffs' claims must be dismissed since the National Housing Act does not create a private cause of action. Under Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), four factors must be considered when determining whether a private cause of action has been created by federal statute:

1) Is the plaintiff one of the class for whose especial benefit the statute was enacted? 2) Is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? 3) Is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? 4) 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?

In a case similar to the present case, M. B. Guran Co., Inc. v. City of Akron, 546 F.2d 201 (6th Cir. 1976), the Sixth Circuit Court of Appeals examined the four factors established by Cort v....