United States General, Inc. v. City of Joliet

• Decision Date: 05 April 1977
• Docket Number: No. 75 C 4002.,75 C 4002.
• Citation: 432 F. Supp. 346
• Parties: UNITED STATES GENERAL, INC., a Wisconsin Corporation, Plaintiff, v. CITY OF JOLIET et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

432 F. Supp. 346

UNITED STATES GENERAL, INC., a Wisconsin Corporation, Plaintiff, v. CITY OF JOLIET et al., Defendants.

No. 75 C 4002.

United States District Court, N. D. Illinois, E. D.

April 5, 1977.

COPYRIGHT MATERIAL OMITTED

Jerome E. Wexler, John P. C. Duncan, Holleb, Gerstein & Glass, Chicago, Ill., for plaintiff.

Samuel J. Horwitz, Frank J. Scarpelli, Chicago, Ill., for defendants.

Raymon A. Feeley, Joliet, Ill., designated counsel for D'Amico.

James M. P. D'Amico, pro se.

MEMORANDUM DECISION

MARSHALL, District Judge.

Plaintiff, a Wisconsin corporation engaged in the development and construction of housing for low income families, brought this civil rights action seeking damages against the City of Joliet and various city officials who refused to issue building permits for two housing projects in Joliet. Defendants have filed motions to dismiss, challenging many aspects of the complaint. Their objections can be classified into four categories. First, defendants claim that plaintiff lacks standing. Second, they assert immunity under theories of sovereign, official, and tort immunity. Third, they contend that some counts are barred by the statute of limitations. Finally, they raise a group of objections relating to the capacity of the plaintiff and to the scope of their own police power.

For present purposes, we accept the following pleaded facts as true. The City of Joliet is a racially segregated community. In 1970, it had a minority population of black and Mexican Americans numbering 18,111, approximately 12% of the total population. By 1973, the Housing Authority of Joliet (HAJ) constructed and operated about 450 units of public housing for low-income families and about 850 units of public housing for the elderly. Virtually all occupants of the family units were black or Mexican, but only 10% of the units for the elderly were rented by members of either of these two minority groups. It is claimed that the sites of these public housing buildings were selected to perpetuate the pattern of racially segregated housing in Joliet.

By 1970, HAJ and the City Council of Joliet determined that a need existed in the community for additional public housing. The City passed Resolution # 1695 approving HAJ's application to the United States Department of Housing and Urban Development (HUD) for a preliminary loan of $140,000 for planning and surveys leading to construction of 700 additional units of public housing. After a period of negotiations between HUD and HAJ, two projects crystallized. The first, Project Illinois 24-7, consisted of 75 new single-family houses to be located at sites scattered throughout Joliet. These houses were intended for sale to low-income families. Project Illinois 24-8 consisted of rental units for low-income families and elderly people. Twenty-five units of family housing in townhouses were to be located on three separate sites, and 120 units of high-rise apartments for the elderly were to be located on a single site.

In 1972, HAJ, with the approval of HUD, selected plaintiff as the developer of both projects. Plaintiff then bought or purchased options on each of the sites approved by HUD for the housing projects. Plaintiff also prepared development programs for both housing projects. In September, 1973, plaintiff entered into a contract with HAJ. Plaintiff agreed to construct all the proposed rental units, located on a total of four sites, and to sell them to HAJ. Plaintiff began performance under this contract immediately. The scattered-site single-family dwellings project never reached the contract stage.

Next, plaintiff needed to secure a zoning change for one of the low-rent family town-houses. Plaintiff submitted a rezoning proposal to the Plan Commission of Joliet and the Plan Commission recommended that the Joliet City Council adopt an ordinance making the change. Defendant council members, however, refused to do so. Instead, at a meeting held on December 3, 1973, the Council passed the following motion:

that the City Council instruct the Building Department of Joliet to withhold all building permits for Federal housing projects until the entire plan of the Housing Authority can be reviewed and that letters be sent to U. S. General and the Housing Authority notifying them of what is being done.

According to the proceedings of that meeting, the Assistant Corporation Counsel and the City Manager told the council members that a class moratorium on public housing would be "an act of discrimination" and "definitely unconstitutional." Defendant's Memorandum, Exhibit A. After this meeting, plaintiff applied for building permits, but its application was denied.

In August, 1974, the city repealed its 1970 resolution supporting additional public housing in Joliet, because the city wanted more input regarding site selection. It was concerned about the impact of public housing on the surrounding community. Defendant D'Amico, the city attorney, wrote plaintiff a letter explaining that the city council wanted the high-rise project for the elderly to proceed, but was withholding the permit because it wanted the opportunity to review the sites of all proposed projects. In other words, the city council members were concerned about the location of the scattered-site housing projects, which were likely to be filled with minority group occupants.

Plaintiff filed a seven-count complaint seeking compensation for its expenditures, lost profits, and punitive damages. Counts I through IV allege that defendants are guilty of intentional and malicious discrimination in violation of various civil rights statutes and constitutional safeguards. Count I rests on the Fifth Amendment, the Fourteenth Amendment, and 42 U.S.C. §§ 1981 and 1982. Count II alleges violations of 42 U.S.C. § 2000d, which prohibits discriminatory exclusion from programs receiving federal funds. Count III is based on the Fair Housing Act of 1968, 42 U.S.C. §§ 3604 and 3617. Count IV alleges that defendants conspired to deprive plaintiff of the equal protection of the laws in violation of 42 U.S.C. § 1985(3). The last three counts of the complaint are based on diversity of citizenship between the parties and claim damages in excess of $10,000. Count V alleges that defendants committed tortious interference with plaintiff's contract rights. Count VI claims damages sustained when plaintiff detrimentally relied on the promises of defendant City of Joliet. Plaintiff contends that the ordinances of Joliet provide that building permits shall be issued to applicants if the applications are in proper form, if they conform to building regulations, and if the fee is paid. This ordinance, plaintiff contends, constitutes a promise.¹ Count VII requests damages for deprivation of rights secured by Article I, § 17 of the Illinois Constitution, which prohibits racial discrimination in the sale of property. Section 17 provides that the rights it creates are enforceable without action by the General Assembly.

I. Standing

Defendants first claim that the case must be dismissed because plaintiff lacks standing to bring it. The Supreme Court addressed standing in Warth v. Seldin, 422 U.S. 490, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), and sketched out a method for analyzing standing issues which we must follow. The Court's two part test consists of the threshold constitutional requirement of justiciability and of additional "prudential" limitations on the exercise of judicial power. To satisfy the constitutional requirement, the plaintiff must allege a personal stake in the outcome of the litigation. He must assert that he has suffered actual or imminent injury from the allegedly illegal action. To satisfy the prudential test, the plaintiff must assert his own legal rights and not the rights of third persons. Since the prudential limitations are matters of judicial self-governance rather than constitutional limitations, there are a number of exceptions to the rule barring third-party standing. Two of these exceptions must be mentioned. First, a plaintiff may assert constitutional rights of another, when defendant's action adversely affects an existing relationship between plaintiff and the third party, or when the third party is somehow inhibited from asserting its own rights. Second, a plaintiff may assert rights of another if Congress expressly or impliedly granted standing to persons in the plaintiff's position.

Under the two-part analysis, plaintiff has satisfied the minimal constitutional requirement of injury in fact. Plaintiff has suffered actual, concrete injury as a result of defendants' decision to withhold building permits. When defendants refused to issue permits, plaintiff was already the named developer for the two housing projects and was already under contract to build the buildings for one of them. Plaintiff had expended time and money in planning, and had acquired outright or bought options on specific parcels of property for both the rental units and the scattered site units. Finally, plaintiff completed applications for building permits and was turned down. It is hard to imagine a better example of injury in fact in this type of action. Arlington Heights v. Metropolitan Housing Development Corporation, 429 U.S. 252, 262, 97 S.Ct. 555, 562, 50 L.Ed.2d 450 (1977); cf. Planning for People Coalition v. County of DuPage, Illinois, 70 F.R.D. 38, 44 n. 5 (N.D. Ill.1976).

In Counts V and VI, plaintiff is asserting its own legal rights and not the rights of another. Count V alleges that defendants' conduct was a tortious interference with plaintiff's own contract rights. Count VI alleges that plaintiff itself detrimentally relied on the ordinances of Joliet. See Citizens Committee for Faraday Wood v. Lindsay, 507 F.2d 1065, 1079 (2d Cir. 1974), cert. denied, 421 U.S. 948, 95 S.Ct. 1679, 44 L.Ed.2d 102 (1975) (Oakes, J., dissenting). Consequently, both tests of Warth are satisfied and plaintiff has standing to bring Counts V...