Norris v. Housing Authority of City of Galveston

• Decision Date: 03 November 1997
• Docket Number: Civil Action No. G-96-459.
• Citation: 980 F.Supp. 885
• Parties: Walter NORRIS, Jr., v. HOUSING AUTHORITY OF THE CITY OF GALVESTON, et al.
• Court: U.S. District Court — Southern District of Texas

980 F.Supp. 885

Walter NORRIS, Jr., v. HOUSING AUTHORITY OF THE CITY OF GALVESTON, et al.

Civil Action No. G-96-459.

United States District Court, S.D. Texas, Galveston Division.

November 3, 1997.

COPYRIGHT MATERIAL OMITTED

Johnetta Strange Cooper, Gordon R. Cooper, II, Cooper & Cooper, Houston, TX, for plaintiff.

Sam G. Tramonte, Robert E. Bastien, Tramonte, Tramonte & Bastien, Galveston, TX, John Edward Eckel, Mills, Shirley, et al, Barbara Elliott Roberts, City of Galveston, Office of City Atty., Galveston, TX, for defendant.

ORDER GRANTING SUMMARY JUDGMENT

KENT, District Judge.

Plaintiff is the former Director of the Galveston Housing Authority ("GHA"). After he was terminated, Plaintiff filed suit against the GHA, Board of Commissioners of the GHA (the "Board"), Galveston Redevelopment and Community Enterprise Corporation ("GRACE"), and three individuals serving on the Board who voted to terminate Plaintiff. In his Second Amended Complaint, Plaintiff alleges breach of contract and various violations of 42 U.S.C. §§ 1981, 1983, 1985. Now before the Court is Defendants' Motion for Summary Judgment and Plaintiff's Motion for Summary Judgment. For the reasons set forth below, Plaintiff's Motion for Summary Judgment is DENIED, and Defendants' Motion for Summary Judgment is GRANTED. All of Plaintiff's claims are hereby DISMISSED WITH PREJUDICE.

I. FACTUAL SUMMARY

This is a hotly contested case arising from the unsightly quagmire of Galveston public-housing politics.¹ The GHA, which was established in 1940 pursuant to the Texas Housing Authorities Law, TEX.LOC. GOV'T CODE ANN. §§ 392.001-392.104 (Vernon 1997),² is a tax-exempt subunit of government organized to provide adequate housing for limited income residents of Galveston, Texas. Indeed, like other housing authorities in Texas, the GHA is mandated by the Texas Legislature to "manage and operate its housing projects in an efficient manner to enable it to set rentals at the lowest possible rates consistent with providing decent, safe, and sanitary housing...." Id. § 392.004. The GHA is governed by a five-member Board, appointed by the Mayor of Galveston; these commissioners serve two-year terms and cannot serve more than six years total. See id. §§ 392.031, 392.034, 392.051(b). Although the Federal Department of Housing and Urban Development ("HUD") promulgates regulations and provides funds for GHA projects, the power and authority of the GHA actually stems from the enabling legislation of the State of Texas and the Mayor of Galveston. See id. § 392.004. Thus, the only authority the federal government has over GHA activities stems from the Annual Contributions Contract entered into between the GHA and the federal government, and signed each year by the Chairman of the Board. In that contract, the GHA agrees that accepting federal funds obligates the GHA to administer federal housing programs according to those regulations promulgated by HUD.

Section 8 of the Housing Authorities Act declares that a Housing Authority is a public body corporate and politic, exercising public and essential governmental functions. The GHA is also a business institution; it is empowered to acquire control over dwellings, housing accommodations, and properties, and operate the same in order to carry out the purposes of the Act. See id. §§ 392.004, 392.052. In pursuit of its mission, the GHA has acquired extensive properties in and around Galveston, including 1,394 public housing units which range from traditional low-income, family developments to a $5.9 million, 81,000 square-foot community center. The GHA has also at different times owned various tracts of undeveloped land in Galveston County, a warehouse, a maintenance shop, and 23 vehicles. Pursuant to its rent subsidy program, approximately 317 landlords participate with the GHA to provide 851 units of low-cost housing.

Plaintiff, an African-American male, entered a two-year employment contract with the GHA on April 14, 1988, whereby Plaintiff became the executive director of that body. See id. § 392.051(c) ("An authority may delegate a power or duty to an agent or employee as it considers proper."). As executive director, Plaintiff was responsible for the overall administration of GHA activities; in that capacity, he also served as secretary to the Board.³ Specifically, Plaintiff's employment contract provided that he was to "keep all books and records as required" and "oversee and be responsible for the execution of all rules, regulations, and procedures."⁴ By consent of both parties, Plaintiffs original contract was amended on five occasions; the last amendment extended Plaintiff's contract, providing that Plaintiff would serve the GHA as executive director until June 30, 1999. Two of the three Board members who ultimately voted for Plaintiff's termination were on the Board at the time of the last contract extension.

Besides giving the GHA the right to terminate Plaintiff for conviction of a felony or a crime involving moral turpitude, section 6.03 of Plaintiff's employment contract with the GHA provided:

EMPLOYER may also terminate EMPLOYEE for misfeasance, non-feasance or for conduct that is detrimental to the best interest of the Authority, upon good cause. EMPLOYEE shall have the right to written charges, notice of hearing and a fair hearing before EMPLOYER'S Board, as required by due process. If EMPLOYEE chooses to be represented by legal counsel at any such hearing, he shall assume the cost of his legal expenses

(Plaintiff's Second Amended Complaint, at 3-4 (emphasis added)).

In late 1994, the then Mayor of Galveston began to express concerns regarding the scattered-site housing plan which Plaintiff alleges the GHA was using as an effort to decrease the density of, and to decentralize, public housing locations. At that time, the Mayor questioned the wisdom of the GHA's plan, stating that many neighborhoods were complaining about the poor planning and location of GHA properties. Thereafter, the Mayor called a "housing summit" and attempted to set an agenda for the GHA. In early 1995, local opposition to GHA policies and, in particular, to Plaintiff and his actions had devolved into a firestorm of controversy. This opposition was evidenced in several scathing articles appearing in Galveston's local newspaper which criticized the GHA and raised a number of valid concerns for public discourse regarding its activities.

Plaintiff alleges that in August of 1995 the Board reversed GHA's decentralization policy and began searching for ways to "buy out" his contract. Defendants argue that there was never such a policy at the GHA, and instead contend that because the GHA was rapidly becoming a hopeless mess, they began to question Plaintiff's competence and abilities. It is clear from the evidence that the Board then began discussions regarding the propriety of retaining a company to conduct an independent management review. In October, the Board approved such a measure. Thereafter, the services of Ventana Consulting Group were retained to conduct the management review. After determining that the procurement policies as provided by HUD had not been followed when hiring Ventana, the Board rescinded the contract with Ventana and recontracted, substituting GRACE⁵ in place of the GHA.⁶ The management review conducted by Ventana allegedly took six months, and involved 120 interviews and the collection of 6,500 individual documents. The result of the management review of the GHA was scathing, impugning the performance of GHA management and the Board.⁷ Some of the relevant findings reported in this 155 page document (exclusive of appendices) are reproduced here.⁸ Ventana's findings included:

— GHA was not being run in a businesslike manner in regards to its finances and management, and had failed to develop goals and long-range plans. This lack of planning had resulted in inordinate losses of GHA monies.

— GHA management openly defied the Board and worked against the Board on several issues.

— GHA's staff was not open with the public about operations and had a defensive mentality. Moreover, the community had a negative attitude regarding the GHA. Many residents felt verbally abused and threatened by GHA staff, and it was perceived that other residents had been given special privileges because of their support of the GHA.

— Financial information presented to the Board was inadequate, unclear, incomplete, and if provided, not done so in a timely manner.

— The GHA had failed to pay ad valorem taxes on GHA properties, resulting in $20,000 of penalties.

— The GHA had failed to make payments and submit required documentation in contravention of the terms of one of its loan agreements.

— Sizeable business transactions had been initiated by the executive director without adequate financial planning.

— The GHA did not have adequate internal accounting controls.

— The GHA had no cash management and investment policy for excess cash funds, resulting in a revenue loss of between $75,000 and $100,000 over a three-year period.

— GHA funds, equipment, supplies, personnel, and office space had been used to support an organization called the Minority Leadership Council. This organization had been involved in many local political matters, including the appointment of a superintendent of the Galveston school district, realignment of school attendance zones, selection of a new president for Galveston College, and appointment of GHA commissioners. Moreover, GHA funds, equipment, office space, and supplies had been used to prepare and distribute a petition to recall the Galveston Mayor and a member of the Galveston City Council, to prepare and distribute form letters and petitions asking residents to express support for the Mayor to reappoint former Board members, to plan meetings to prepare a response to the City Council's reported intent to conduct a management review of the City, and to plan retaliation efforts against the...