Orrego v. 833 West Buena Joint Venture

• Decision Date: 13 September 1991
• Docket Number: No. 89-2271,89-2271
• Citation: 943 F.2d 730
• Parties: Rolando ORREGO, Nikolaos Iakovos, Nurul Chowdhury, Leonie Amaker and Marta Mendez, individually and on Behalf of all other persons similarly situated, Plaintiffs-Appellees, v. 833 WEST BUENA JOINT VENTURE, Town Management Corporation and American National Bank and Trust Company of Chicago, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 730

943 F.2d 730

Rolando ORREGO, Nikolaos Iakovos, Nurul Chowdhury, Leonie Amaker and Marta Mendez, individually and on Behalf of all other persons similarly situated, Plaintiffs-Appellees, v. 833 WEST BUENA JOINT VENTURE, Town Management Corporation and American National Bank and Trust Company of Chicago, Defendants-Appellants.

No. 89-2271.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 13, 1990.

Decided Sept. 13, 1991.

Leslie A. Jones, Johnson, Schaaf, Jones & Snelling, William P. Wilen (argued), Legal Assistance Foundation of Chicago, Edward W. Feldman, Miller, Shakman, Nathan & Hamilton, Chicago, Ill., for plaintiffs-appellees.

Linda A. Wawzenski, Asst. U.S. Atty., Shalom L. Kohn, William F. Lloyd, Sidley & Austin, Ronald Butler, Kevin J. O'Brien, James I. Rubin (argued), Ellen M. Babbitt, Butler, Rubin, Newcomer, Saltarelli, Boyd & Krasnow, Chicago, Ill., Michael J. Singer, John S. Koppel (argued), Dept. of Justice, Civil Div., Appellate Section, Washington, D.C., Alan R. Dolinko, Chuhak & Tecson, Chicago, Ill., for defendants-appellants.

Linda A. Wawzenski, Asst. U.S. Atty., Chicago, Ill., for Department of Housing and Urban Development and Samuel R. Pierce, Jr.

Before COFFEY, RIPPLE and KANNE, Circuit Judges.

RIPPLE, Circuit Judge.

Defendants (referred to collectively as Joint Venture) are the owner, managing agent, and trustee/mortgagor of a federally assisted apartment building in Chicago. Joint Venture appeals the district court's grant of summary judgment on behalf of a class of tenants (referred to collectively as the West Buena Tenants). The district court held that a federal statute retroactively prohibited Joint Venture from prepaying its mortgage and thus ending federal regulation of the building. For the following reasons, we reverse the judgment of the district court and remand the case for proceedings consistent with this opinion.

I BACKGROUND

A. Statutory and Regulatory Background

This case involves the rights of the owners of a federally assisted but privately owned "(d)(3)" apartment building. See 12 U.S.C. § 1715l (d)(3). The statute provides that a developer and federal housing officials may enter into a "regulatory agreement" regarding future rents and "methods of operation." Id. Following construction, a government agency would purchase the existing mortgage and note and would give the developer a below-market forty-year mortgage. During the life of the mortgage, the Department of Housing and Urban Development (HUD) regulates rents and limits the profits of owners of (d)(3) buildings. See 24 C.F.R. §§ 221.529, 221.532(a) (1987). However, until recently, regulations and contractual agreements permitted (d)(3) owners to prepay their Enactment of the Emergency Low Income Housing Preservation Act of 1987 (ELIHPA or the 1988 Act), Pub.L. No. 100-242, tit. II, 101 Stat. 1815, 1877 (1988), significantly restricted an owner's right to prepay. Congress found that a large number of federally assisted units could be lost due to prepayment over the next fifteen years. See id. § 202(a)(1), 101 Stat. at 1877. The statute notes that "interim measures are needed to avoid the irreplaceable loss of low income housing" while a review of housing programs continues. Id. § 202(a)(10), 101 Stat. at 1878. ELIHPA requires owners to file a notice of intent and to receive approval of the Secretary of HUD before prepaying. Id. §§ 221(a), 222, 101 Stat. at 1878-79. The Secretary may approve prepayment only upon a written finding that prepayment would not materially affect current residents or the local supply of low income housing. Id. § 225(a), 101 Stat. at 1880. The statute required the Secretary to issue implementing regulations, which were "to take effect not later than 45 days after the date on which the regulations are issued." Id. § 234, 101 Stat. at 1886. The "Effective Date" section of subtitle B provides that "[t]he requirements of this subtitle shall apply to any project that is eligible low income housing on or after November 1, 1987." ¹ Id. § 235, 101 Stat. at 1886.

                mortgages after twenty years and thus terminate HUD regulation.   See id. § 221.524(a)(ii)
                

The effective date provision first appeared in the bill when it emerged from conference on November 6, 1987. Both the House and Senate approved amended versions that left section 235 unchanged. The final version of ELIHPA was approved by both houses on December 21, 1987, but was not signed into law by the President until February 5, 1988.

Two months later, HUD issued interim regulations authorized by section 234 of ELIHPA. See 53 Fed.Reg. 11,224 (Apr. 5, 1988). HUD indicated its view that, despite the language of section 235, Congress had not authorized rescission of a prepayment made between November 1, 1987 and February 5, 1988: "There is no evidence in the 1987 Act's legislative history that Congress intended such a result, and the Department's position is that the statute should not be so construed." ² Id. at 11,225; see also 24 C.F.R. § 248.103 (1990).

B. Facts

The apartment building at 833 West Buena was constructed as a (d)(3) building. The forty-year note involved in this case expressly provided for optional prepayment after twenty years. On October 22, 1987, Joint Venture first notified federal officials that it intended to exercise its prepayment option. Joint Venture later tendered its

                prepayment, which was accepted by HUD officials on January 4, 1988--after Congress passed ELIHPA, but before the President signed it into law.   In late January, Joint Venture sent rent increase and eviction notices to the West Buena Tenants.   This suit followed
                

C. The District Court Proceedings

The West Buena Tenants claimed that section 235 of ELIHPA manifested congressional intent to make the prepayment restrictions retroactive to November 1, 1987, and they thus sought to void the prepayment. ³ The district court rejected HUD's contention "that retroactive application of the law would produce absurd results: it would require regulation of housing that was deregulated, force HUD to undo a complicated set of transactions ..., and discourage future investment by the private sector in the (d)(3) program." Orrego v. United States Dep't of Housing and Urban Dev., 701 F.Supp. 1384, 1394 (N.D.Ill.1988). Rather, the court reasoned, retroactive application of the prepayment restrictions would satisfy ELIHPA's "primary purpose to preserve the status quo of (d)(3) housing in the face of impending prepayments." Id. The court concluded that there was no reason to defer to HUD's interpretation because it "directly conflicts with the express intent of Congress." ⁴ Id. (citing INS v. Cardoza-Fonseca, 480 U.S. 421, 445-48, 107 S.Ct. 1207, 1220-22, 94 L.Ed.2d 434 (1987); Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984)).

The district court next rejected a series of constitutional challenges raised by Joint Venture. It held that ELIHPA did not fail to provide substantive due process and that it did not effect an unconstitutional taking of private property for public use without just compensation. Id. at 1395-97. The court also rejected Joint Venture's contention that retroactive application of the statute violated the due process clause. Id. at 1397-98. The court therefore granted the West Buena Tenants' motion for summary judgment, voided HUD's acceptance of the prepayment, and ordered HUD to resume (d)(3) regulation over 833 West Buena. Id. at 1399-1400.

Additional memorandum opinions followed in response to cross-motions for post-trial relief. Both Joint Venture and the West Buena Tenants filed Rule 59(e) motions to alter or amend the judgment, and Joint Venture filed a Rule 62(c) motion to stay the judgment pending appeal. In denying the Rule 59(e) motions and conditionally granting the Rule 62(c) motion, the district court expressly requested counsel for the West Buena Tenants "to submit a draft final order." Mem. op. of Apr. 5, 1989 at 10, 1989 WL 36207. The court later issued an order that specified the relief granted. Order of June 14, 1989. Joint Venture then filed a notice of appeal on June 16, 1989.

ELIHPA's limitations on prepayment rights originally were supposed to terminate two years after enactment. See ELIHPA, § 203(a), 101 Stat. at 1878. However, Congress extended the provisions several times and, subsequent to both the district court proceedings and oral argument in this case, amended ELIHPA and made the amended limitations permanent. See Low-Income Housing Preservation and Resident Homeownership Act of 1990, Pub.L. No. 101-625, tit. VI, subtit. A, 104 Stat. 4249. We examine infra the effects

of these subsequent legislative developments on the issues raised in this appeal.

II ANALYSIS

A. Jurisdiction

The West Buena Tenants contend that this appeal must be dismissed for want of jurisdiction because Joint Venture failed to file its notice of appeal within sixty days of the April 5, 1989 entry of the order denying the Rule 59(e) motions. ⁵ We cannot agree. As the Supreme Court has noted, "[f]ederal appellate jurisdiction generally depends on the existence of a decision by the District Court that 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.' " Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). This court has dismissed appeals for want of jurisdiction when the district court has failed to "set forth the relief to which the prevailing party is entitled or the fact that the plaintiff has been denied all relief." Reytblatt v. Denton, 812 F.2d 1042, 1044 (7th Cir.1987) (per curiam). ⁶

It is clear in this case that neither the district court nor the parties believed that the April 5, 1989 order was final. First, the court requested the...