South East Chicago Com'n v. DEPARTMENT OF H. & U. DEV.

• Decision Date: 19 October 1973
• Docket Number: No. 72-1795.,72-1795.
• Parties: SOUTH EAST CHICAGO COMMISSION et al., Plaintiffs-Appellants, v. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

488 F.2d 1119 (1973)

SOUTH EAST CHICAGO COMMISSION et al., Plaintiffs-Appellants, v. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Defendants-Appellees.

No. 72-1795.

United States Court of Appeals, Seventh Circuit.

Argued June 4, 1973.

Decided October 19, 1973.

Charles Barnhill, Jr., Reuben L. Hedlund, Chicago, Ill., for plaintiffs-appellants.

James R. Thompson, U. S. Atty., William T. Huyck, Asst. U. S. Atty., Jerome H. Torshen, Richard L. Curry, Chicago, Ill., for defendants-appellees.

Before SWYGERT, Chief Judge, and KILEY and SPRECHER, Circuit Judges.

SWYGERT, Chief Judge.

Plaintiffs, mostly residents of the Kenwood and Hyde Park communities of Chicago, brought this action in the district court to set aside a commitment made by the federal defendants¹ and approved by the City of Chicago to provide Lake Village Associates with mortgage insurance and interest subsidization in connection with a low-income housing project which Lake Village planned to erect at the border of Kenwood. In three of four counts,² the plaintiffs claimed (1) that the commitment was in violation of the Constitution, various statutory provisions, and regulations issued by HUD, (2) that the commitment was finalized in violation of plaintiffs' rights to due process and fair procedure, and (3) that the commitment was sought by Lake Village and accepted by the City in violation of a contract between them which plaintiffs, as third party beneficiaries, had a right to enforce. Both sides moved for summary judgment on the three counts. The defendants prevailed. The district judge found, upon a narrow review of the agency action, that the commitment of FHA and HUD was within the law as a matter of both substance and procedure, and that Lake Village and the City were in compliance with the contract sued upon. This appeal followed.

I

The City of Chicago invited bids in 1966 for the acquisition and development of certain parcels of land to which it had acquired title a few years earlier pursuant to an urban renewal plan for the Hyde Park and Kenwood areas of Chicago. One of those parcels, designated HR-1 by the City, was bounded on the north by 47th Street, the southern terminus of a census tract adjacent to HR-1 which had a white population of approximately one percent. The census tract in which HR-1 was located had a forty-two percent black population. In 1966, HR-1 and adjoining parcels were the subject of two detailed offers for acquisition and development made by Lake Village and the United Dwelling Foundation of Metropolitan Chicago.

The bids were reviewed by the Department of Urban Renewal of the City of Chicago, which issued a recommendation that both bidders develop the parcels jointly. Lake Village and United Dwelling Foundation, on June 20, 1967, signed an agreement that Lake Village would withdraw its bid and that, upon a conveyance to United Dwelling Foundation of the property, United Dwelling Foundation would reconvey to Lake Village for development a portion of the land which included the northern three acres of HR-1, a parcel subsequently designated HR-1B. The entire tract of land was then conveyed to United Dwelling Foundation pursuant to this agreement by a resolution of the Department of Urban Renewal. At approximately the same time the United Dwelling Foundation entered into a redevelopment agreement with the City of Chicago, to the terms of which Lake Village became bound by a partial assignment from the United Dwelling Foundation.

Some two years later FHA committed itself to fund a project which Lake Village intended to erect on parcel HR-1B. Upon learning of this, certain of the plaintiffs voiced objections based on their fear that federal subsidization — which necessarily limited the prospective tenancy of the Lake Village project to persons of low income — would bring a number of poor blacks into the Kenwood area, upsetting the racial balance of that predominantly white area. Defendant Ernest C. Stevens, the local Insuring Office Director for FHA, arranged a conference between Lake Village, the objectors and himself. On July 15, 1971, all parties were allowed to present documentary matter and to argue in support of their respective positions. Stevens refused to transcribe the meeting, to allow cross-examination of witnesses, or to grant the objectors access to certain information known to FHA. At the completion of the conference, and after a meeting of FHA and HUD personnel, Stevens issued a written administrative determination not to rescind the commitment of FHA to Lake Village.

Plaintiffs thereupon filed suit on August 10, 1971, and recorded a lis pendens notice. In the first count of their complaint, they sought to enjoin the federal defendants from issuing to Lake Village Associates, and the City of Chicago from approving, mortgage insurance and interest reduction subsidies under 12 U.S.C. § 1715z-1 in connection with the Lake Village project. In support of their right to contest the use of federal subsidy programs, the plaintiffs cited the Fifth and Fourteenth Amendments, the National Housing Act, the 1964 and 1968 Civil Rights Acts, and regulations of HUD and FHA. In a second count, the plaintiffs set out a challenge to the procedural integrity of the decision by HUD and FHA to provide the Lake Village project with federal assistance. They sought relief by a trial de novo on the merits of their substantive claims and an injunction such as was sought in the first count, or, alternatively, by an order directing the federal defendants to afford them an adequate rehearing. A fourth and final count, founded on the doctrine of pendent jurisdiction, made reference to the redevelopment contract between the City and Lake Village, stated that the plaintiffs were the "intended beneficiaries" thereof, alleged that the contract had been violated by Lake Village and the City by their arrangement of extensive federal funding for the project, and asked for specific performance of the contract by Lake Village and the City.

On motion of defendants, the district judge entered a summary judgment against plaintiffs on all three counts. He found that the federal defendants had employed a proper legal standard and that their decision was based on a "consideration of the relevant factors . . . with no clear error of judgment." As to the procedural claim of plaintiffs' he denied it on the ground that "plaintiffs' rights are adequately protected by their opportunity to obtain judicial review," citing Shannon v. Dept. of Housing and Urban Development, 436 F.2d 809 (3d Cir. 1970). He found, lastly, that the contract claim of plaintiffs was contradicted by the very terms of the agreement sued upon.

II

According to the plaintiffs, the law which dictates national housing policy for the purposes of this case is contained in 24 C.F.R. § 200.700 et seq., 42 U.S.C. § 3608 (d) (5), Shannon v. Dept. of Housing and Urban Development, 436 F.2d 809, 820-821 (3d Cir. 1970), Gautreaux v. Romney, 448 F.2d 731 (7th Cir. 1971), and Gautreaux v. Chicago Housing Authority, 296 F.Supp. 907 (N.D.Ill. 1969). The defendants would concur in this list did it not contain a citation to 24 C.F.R. § 200.700 et seq., known to the parties as the Project Selection Criteria. Director Stevens, in particular, paid no heed to the Criteria in weighing the objections of plaintiffs to the FHA commitment. Our first task is to resolve this difference. Loosely speaking, the question is one of retroactivity, for the Criteria, though first published on June 24, 1971, did not become effective until February 7, 1972, long after HUD and FHA had solidified their commitment to Lake Village.

There are few principles of our law more ancient, and none more respected, than the canon which holds that laws are enacted for the future. A legislative pronouncement may not operate on acts which predate its passage. Neither may it serve to divest rights which have come into concrete existence before its date of effect. In our early days, the principle was seen by many judges to be a transcendental limitation upon the power of the legislature. See, e. g., Terrett v. Taylor, 13 U.S. (9 Cranch) 23, 27, 3 L.Ed. 650 (1815) (Story, J.); Calder v. Bull, 3 U.S. (3 Dall.) 305, 306-307, 1 L.Ed. 648 (1798) (Chase, J.). Modern times have refined this perception, and the principle today stands embodied in a number of constitutional principles: Laws acting ex post facto are void; so, too, are enactments which work to the impairment of contract or the deprivation of property without due process. Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 17 L.Ed. 1434 (1934); McCracken v. Hayward, 43 U.S. (2 How.) 587, 11 L.Ed. 397 (1844). See generally, Smead, The Rule Against Retroactive Legislation: A Basic Principle of Jurisprudence, 20 Minn.L.Rev. 775, 789-97 (1936). In construing legislation, then, courts have rigorously adhered to a rule of construction that a law will not be given retroactive effect without a clear mandate to that end from its enacting body, for judges have always been reluctant to decide constitutional questions unless they must. See Union Pacific Ry. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199-200, 34 S.Ct. 101, 58 L.Ed. 179 (1913). As put in Greene v. United States, 376 U.S. 149, 160, 84 S.Ct. 615, 621, 11 L.Ed.2d 576 (1964):

The first rule of construction is that legislation must be considered as addressed to the future, not to the past . . . and a retrospective operation will not be given to a statute which interferes with antecedent rights . . . unless such be `the unequivocal and inflexible import of the terms, and the manifest intention of the legislature.\' 376 U.S. at 160, 84 S.Ct. at 621.

This is a rule of long standing. See, e. g., Claridge Apartments Co. v. Commissioner of Internal Revenue, 323 U.S. 141, 164, 65 S.Ct. 172, 89 L.Ed. 139 (1944); United States v. Magnolia Co., 276 U.S. 160, 162-63, 48 S.Ct. 236, 72 L.Ed. 509 (1928); United States v. Heth...