Silver Sage Partners v. City of Desert Hot Springs

• Citation: 251 F.3d 814
• Decision Date: 01 June 2001
• Docket Number: 99-56919,PLAINTIFFS-APPELLANTS,99-56920,DEFENDANTS-APPELLEES,Nos. 99-56917,s. 99-56917
• Parties: (9th Cir. 2001) SILVER SAGE PARTNERS, LTD., ROBERT E. FILLET, PAUL SABEN, RICHARD L. EARLIX, MICHAEL S. LINSK,, v. CITY OF DESERT HOT SPRINGS, DESERT HOT SPRINGS CITY COUNCIL, JOHN ISAACS, MAYOR, DANIEL BEEN, MIKE SEGRIST, SUE WOOD,
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 814

251 F.3d 814 (9th Cir. 2001)

SILVER SAGE PARTNERS, LTD., ROBERT E. FILLET, PAUL SABEN, RICHARD L. EARLIX, MICHAEL S. LINSK, PLAINTIFFS-APPELLANTS, v. CITY OF DESERT HOT SPRINGS, DESERT HOT SPRINGS CITY COUNCIL, JOHN ISAACS, MAYOR, DANIEL BEEN, MIKE SEGRIST, SUE WOOD, DEFENDANTS-APPELLEES.

Nos. 99-56917, 99-56919, 99-56920

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted March 5, 2001

Opinion Filed May 21, 2001

Opinion Withdrawn June 1, 2001

Opinion Filed June 1, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

William J. Davis, Min Chang, and Won Chang, Davis & Company, P.C., Los Angeles, California, for the plaintiffs-appellants.

Kevin Patrick McVerry, Graves, Roberson & Bourassa, Thousand Oaks, California, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California Consuelo B. Marshall, District Judge, Presiding D.C. No. CV-91-06804-CBM

Before: Procter Hug, Jr. and Betty B. Fletcher, Circuit Judges, and Susan Y. Illston,^* District Judge.

ORDER AND OPINION

B. Fletcher, Circuit Judge.

ORDER

The opinion filed on May 21, 2001 is withdrawn.

OPINION

We must decide whether a jury's award of damages in the amount of $3,040,439 was against the clear weight of the evidence. Because we conclude that it was not, we reverse and remand with instructions that the jury's verdict be reinstated. We must also decide whether plaintiffs who have established a defendant's liability under the Fair Housing Act must demonstrate a reasonable likelihood of future violations of the Act in order to be entitled to injunctive relief under the Act. We conclude that they need not and so reverse and remand for reconsideration.

BACKGROUND

Silver Sage Partnership, Ltd. (the partnership or Silver Sage) is a partnership organized to purchase and develop lowincome housing at a mobile home park in the City of Desert Hot Springs, California (the city). Paul Saben and Richard Earlix were the partnership's principals. In 1990, the partnership entered into an agreement with Huntington Savings and Loan to purchase the Silver Sage Mobile Home Park, which was located in the city.¹ The partnership initially sought to finance the project with bonds to be issued by Riverside County. Although the county approved a bond resolution for that purpose, it required the consent of the city, which the city would not give.

The partnership next tried to obtain financing from the state of California, believing that state financing would not require city approval. Because it planned to develop low-income housing, the California Tax Credit Allocation Committee agreed to provide the partnership tax credits in the amount of $8,248,370. For the same reason, the partnership was able to obtain a commitment for a favorable fifty-five year mortgage in the amount of $4,233,265 from the California Housing Department (CHD) under its Rental Housing Construction Program (RHCP). The involvement of CHD triggered the application of Article XXXIV of California's Constitution. That provision requires local voter approval of any low-rent housing projects that are "developed, constructed, or acquired" by a "state public body." CAL . CONST. art. XXXIV, § 1. On December 18, 1990, the city council voted to deny Article XXXIV approval to the partnership's development.²

After further attempts to persuade the city to change its mind failed, plaintiffs brought suit under 42 U.S.C.§ 3613(a), alleging a violation of section 3604 of the Fair Housing Act.³ After trial, the jury found for plaintiffs by general verdict and awarded them damages in the amount of $3,040,439. The city filed a motion for judgment as a matter of law or, in the alternative, a new trial. The district court denied the motion for a judgment as a matter of law and denied the motion for a new trial as to liability. However, because it found the jury's verdict "grossly excessive," the district court denied the city's motion for a new trial on the issue of damages conditional on plaintiffs' acceptance of a remittitur to $388,146.20.

Plaintiffs rejected the remittitur and a second trial on damages was held. After trial, the second jury awarded nominal damages for plaintiffs. After entry of judgment, plaintiffs filed a motion seeking to have the district court "amend" the second jury's damage award or, in the alternative, for a new trial as to damages. Plaintiffs also sought an injunction ordering the city to cease violating the Fair Housing Act. The district court denied both motions. However, the district court did grant plaintiffs' motion to reconsider its previous denial of attorney's fees. The district court decided that since plaintiffs had established the city's liability but had only obtained nominal damages from the jury, it would award plaintiffs $57,000 in attorney's fees.

Plaintiffs now appeal (1) the district court's order granting a new trial on damages because of plaintiffs' refusal to accept the remittitur, (2) the district court's denial of their motion to amend the second jury verdict or order a new trial on damages, (3) the district court's denial of injunctive relief, and (4) the amount of the district court's award of attorney's fees.⁴ We have jurisdiction under 28 U.S.C. § 1291.

DISCUSSION

A. Remittitur/New Trial

i. Standard of Review

We review a district court's grant of a new trial for an abuse of discretion. United States v. 4.0 Acres of Land, 175 F.3d 1133, 1139 (9th Cir. 1999). We conclude that the same standard of review is appropriate here, where a plaintiff rejects the remittitur and a second trial is held, for the outcome is the same in both cases--the district court overrides the jury's verdict. Cf. Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 279 (1989) (holding that court of appeals should review for an abuse of discretion district court's denial of new trial for punitive damages conditional on plaintiff's acceptance of remittitur).

Under the abuse of discretion standard, even if substantial evidence supports the jury's verdict, a trial court may grant a new trial if "the verdict is contrary to the clear weight of the evidence, or is based upon evidence which is false, or to prevent, in the sound discretion of the trial court, a miscarriage of justice." 4.0 Acres of Land, 175 F.3d at 1139 (internal quotation marks and citation omitted). We will uphold a district court's grant of a new trial if any of its grounds for granting the new trial are reasonable. Id. However, a district court may not grant a new trial simply because it would have arrived at a different verdict. Id. Thus if the jury's verdict is not against the clear weight of the evidence, we may find that a district court abused its discretion in granting a new trial. Id.

The proper interpretation of a federal statute is a question of law that we review de novo. U.S. v. Stephens , 237 F.3d 1031, 1033 (9th Cir. 2001).

ii. Analysis

The jury granted plaintiffs an award of $3,040,439 in damages. The jury's award was not against the clear weight of the evidence. The district court therefore abused its discretion in requiring plaintiffs to choose between a new trial and a remittitur.

Plaintiffs' damages expert (the expert) testified that the city's failure to approve the project cost plaintiffs $4,587,679 in damages. The district court found that some of the losses considered by the expert in calculating plaintiffs' damages (a) included lost profits which were too speculative, (b) failed to account for anticipated costs and an anticipated return, (c) included losses to individuals who were only marginally affected by the city's discriminatory practices, (d) included losses due to a purely speculative tax increase and (e) double counted the partnership's losses. Deducting these losses from the expert's total, the court concluded that the most that plaintiffs could claim was $1,847,067.20. However, the district court found that even an award in this amount would be "grossly excessive," because Silver Sage failed to mitigate its damages. Relying on a feasibility study Saben conducted in September 1989 for Huntington Savings and Loan, then the owner of the Silver Sage Mobile Home Park, the district court concluded that the partnership could have developed the project "as a market rate mobile home park and sold[it] for $1,458,918 after rent up." Deducting this from the amount it determined was the maximum losses Silver Sage suffered, the district court concluded that the city was liable for no more than $388,146.20. The district court denied the city's motion for a new trial on damages, conditional on plaintiffs' acceptance of a remittitur to $388,146.20. Plaintiffs argue that the district court's order was an abuse of its discretion. Plaintiffs' argument has merit.

a. "Speculative" Lost Profits

The district court objected to various alleged losses because it found them "too speculative." The court stated that the expert testified that project income "must be used first for operating expenses, then to pay the management fee, then to pay interest on the loan from the State of California, then to pay principal on that loan and only then would Silver Sage partners receive any remaining profit." The court also claimed that the expert testified that his calculation of damages assumed that Silver Sage would pay its loan obligation in full each year for fifty-five years. In addition, according to the court, Saben, one of the project's developers, testified both in court and before the city council that "he did not consider the loan from the State of California an obligation that had to be repaid [and that] the Silver Sage partnership's projected income stream would never be sufficient to pay much if any of the principal or interest on that loan." The court characterized Saben's testimony as uncontroverted by any other evidence presented at trial. Because it found that the evidence showed that...