Perry v. Housing Auth. of City of Charleston

• Decision Date: 18 February 1980
• Docket Number: Civ. A. No. 78-1646.
• Citation: 486 F. Supp. 498
• Court: U.S. District Court — District of South Carolina
• Parties: Geraldine PERRY, Anna Gibbs, Sarah Mack, and Vera Deli Guest, Individually and on behalf of all others similarly situated, Plaintiffs, v. The HOUSING AUTHORITY OF the CITY OF CHARLESTON, a corporate body politic, W. F. Stack, Individually and in his official capacity as Executive Director of the Housing Authority of the City of Charleston; and Jack C. Muller, Wilmot J. Fraser, Viola M. Smalls, Max Kirshstein, Raymond P. McClain, James J. French and Larry James, Individually and in their official capacity as members of the Housing Authority of the City of Charleston, Defendants.

486 F. Supp. 498

Geraldine PERRY, Anna Gibbs, Sarah Mack, and Vera Deli Guest, Individually and on behalf of all others similarly situated, Plaintiffs, v. The HOUSING AUTHORITY OF the CITY OF CHARLESTON, a corporate body politic, W. F. Stack, Individually and in his official capacity as Executive Director of the Housing Authority of the City of Charleston; and Jack C. Muller, Wilmot J. Fraser, Viola M. Smalls, Max Kirshstein, Raymond P. McClain, James J. French and Larry James, Individually and in their official capacity as members of the Housing Authority of the City of Charleston, Defendants.

Civ. A. No. 78-1646.

United States District Court, D. South Carolina, Charleston Division.

February 18, 1980.

Josef Kirk Myers, Charleston, S. C., for plaintiffs.

Robert N. Rosen, J. C. Hare, Stephen T. Schachte, William B. Regan, Charleston, S. C., for defendants.

ORDER ON MOTION TO DISMISS

HEMPHILL, Chief Judge.

Before the court is defendants' Rule 12 motions to dismiss for lack of jurisdiction and failure to state a claim for which relief can be granted. Plaintiffs in the lawsuit are tenants of a Charleston public housing project, who seek injunctive and legal relief from indecent housing. The question at issue is whether they may sue in federal court.

Plaintiff, and her alleged class, are tenants of the George Legare Homes, a public housing project operated by the Housing Authority of the City of Charleston, South Carolina (HACC). The 600 unit project, located in North Charleston, was built in 1942 by the HACC.

Under the United States Housing Act of 1937, 42 U.S.C. § 1437, et seq., HACC has obtained funds from the Secretary of Housing and Urban Development through an Annual Contributions Contract ("Contract") which provides monetary assistance to local housing authorities for payment of the debt service and some operating expenses.¹

The complaint alleges,² that Section 201 of the "Contract" entered into by each authority reads:

The Local Authority shall at all times operate each Project (1) solely for the purpose of providing decent, safe and sanitary dwelling (including necessary appurtenances thereto) within the financial reach of Families of Low Income, (2) in such manner as to promote serviceability, efficiency, economy, and stability, and (3) in such manner as to achieve the economic and social well-being of the tenants thereof.

In Section 209, part 2, the "Contract" requires the local housing authority to maintain each project in good repair, order and condition.

Living conditions at the George Legare Homes are alleged to be so deplorable that a listing of the complaints is appropriate. Reportedly, families of present tenants have been treated for lead poisoning from the lead paint on the walls. Poor refuse service has caused serious health problems and is responsible for the large number of rats and other vermin that infest the project. Poor grading has resulted in severe erosion, and there is a lack of side-walks and paved roads. Planted areas have deteriorated because of poor grading. The roofing, now nearly 40 years old, has not had major repair since it was constructed. Water from leaking commodes has damaged the flooring. The crime rate is high, due in part to inadequate security patrols and lighting. A dangerous electrical distribution system threatens tenant safety, while the apartment's supply of hot water and heating are inadequate.

Plaintiffs seek declaratory relief and injunction requiring defendants to restore to, and maintain the George Legare Homes in a decent condition; damages, including 35% of the total rents paid; plus attorneys' fees and costs.

Defendants have moved to dismiss the action for lack of subject matter jurisdiction which is asserted to rest upon 28 U.S.C. §§ 1337, 2201, 2202, 1343(3) and 1331. Since the civil rights issue under 28 U.S.C. § 1343(3) and the question of declaratory judgment jurisdiction under 28 U.S.C. §§ 2201 and 2202, turn upon the findings as to commerce jurisdiction. 28 U.S.C. § 1337 and federal question jurisdiction, 28 U.S.C. § 1331, the latter allegation will be treated first.

I.

The federal district courts have jurisdiction pursuant to § 1337³ over claims arising from acts of Congress regulating commerce. In recent years the courts have held that an Act of Congress "regulates commerce" when its constitutional basis is the Commerce Clause of the United States Constitution. Winningham v. United States Dept. of Hous. & Urb. Dev., 512 F.2d 617, 621 (5th Cir. 1975); Murphy v. Colonial Federal Savings & Loan Ass'n, 388 F.2d 609, 614 (2d Cir. 1967); Imm v. Union R.R., 289 F.2d 858, 860 (3rd Cir.), cert. denied, 368 U.S. 833, 82 S.Ct. 55, 7 L.Ed.2d 35 (1961). Moreover, it suffices that the Commerce Clause is a "significant" source of the Federal power rather than the exclusive source. Winningham v. United States Dept. of Hous. & Urb. Dev., supra; Moreno v. United States Dept. of Agriculture, 345 F.Supp. 310, 313 (D.D.C.1972) (three-judge court), aff'd 413 U.S. 528, 93 S.Ct. 2821, 37 L.Ed.2d 782 (1973).

The structure of the 1937 Housing Act, and the legislative history consisting of the Senate and House reports, lead this court to conclude that the Commerce Clause was a substantial constitutional basis for the Act. While the social objectives of the legislation were recognized and persuasive, see S.Rep.No.2160, 74th Cong., 2d Sess., 5 (1936); H.R.Rep.No.1634 (Conference Report), 75th Cong., 1st Sess., 1 (1937); S.Rep. No.933, 75th Cong., 1st Sess., 6 (1937), Congress was primarily concerned with the unemployment problems of the Depression era. A Senate report considered the first objective of the bill to be to provide opportunities for re-employment in the construction industry. S.Rep.No.933, at 2. The same report stated, "But every sign indicates that there can be no sustained period of prosperity without a concomitant revival of the building industry. This vicious cycle can be broken only with governmental assistance." Id. at 4. See also H.R.Rep.No. 1545, at 2 (". . . present and recurring unemployment will be relieved."). The Declaration of Policy in the original act expressed an intent to "alleviate present and recurring unemployment."

Today, the Act is still solidly based upon the Commerce Clause. In 1974, the Housing Act of 1937 was revised and consolidated with other housing statutes to form the Housing and Community Development Act of 1974. Pub.L. 93-383. One of the substantive amendments to the Housing Act of 1937, which retained its identity in the 1974 Act, was a shift in emphasis toward private development and management of housing for low income families. HUD recommended, and the Congress enacted, a statute which gives private developers the incentive for profit and risk of loss in low income housing. Should the Secretary so desire, the move toward stimulation of private construction may swallow most of the funding for an Act which originally envisioned federal aid to public housing agencies. 42 U.S.C. § 1437c(c) and § 1437f(b)(2).

The only court to consider this precise issue has reached a contrary result. In Potrero Hill Community Action Comm. v. Housing Authority of City and County of San Francisco, 410 F.2d 974, 979 (9th Cir. 1969), the Ninth Circuit held that the Housing Act of 1937 was not based on the Commerce Clause power of Congress, but on the welfare authority. However, this decision was reached without any reported analysis, and has been criticized as unpersuasive. See Davis v. Romney, 490 F.2d 1360 (3rd Cir. 1974); Bloodworth v. Oxford Village Townhouses, Inc., 377 F.Supp. 709 (N.D.Ga. 1974).

More compelling is the result reached by the Fifth Circuit in Winningham v. United States Dept. of Hous. & Urb. Dev., supra. Plaintiffs were a class of residents of a federally subsidized housing project who challenged the constitutionality of a federal statute authorizing rent supplements for tenants moving to a subsidized housing project from substandard housing but not for tenants who had not previously lived in substandard housing. The court found jurisdiction lay under § 1337 as a primary purpose of the rent subsidy program and was to encourage new construction. That is a primary purpose of § 1437, and this court so holds.

Having cleared one hurdle, plaintiffs are faced with another: § 1337 does not of and in itself, create a cause of action. To create federal jurisdiction under this section, some federal right, be it constitutional, statutory, or "federal common law" must exist, independent of general rights emanating from the power of Congress to regulate commerce. Gen'l Comm. of Adj. of Broth. of Loc. Eng. for Mo.-Kan.-Tex. R. Co. v. Mo.-Kan.-Tex. R. Co., 320 U.S. 323, 64 S.Ct. 146, 88 L.Ed. 76 (1943). Defendants' 12(b)(6) motion to dismiss for failure to state a claim challenges the existence of a private right of action under 42 U.S.C. § 1437 to support § 1337 jurisdiction. No private cause of action is explicitly granted in the 1937 Housing Act, hence the question is whether one can be implied from the statute.

Whether a statute creates an implicit private cause of action requires a determination of the intent of Congress. Touche Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979); Cannon v. University of Chicago, 441 U.S. 677, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979). Although Congressional intent has always been the ultimate test, the Supreme Court has recently changed the scope and emphasis of the analysis. Since 1975, the lower courts have used the following factors cited in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) as a guide to determining whether a private remedy is implicit in an act. First, whether plaintiffs are of the class for whose especial benefit the statute was enacted. Second, is there any indication of a legislative intent to create or deny such a right. Third, is it consistent with the legislative scheme to imply a private cause of action. Finally, is the...