Velez v. Cisneros, Civ. A. No. 90-6449.

• Decision Date: 29 April 1994
• Docket Number: Civ. A. No. 90-6449.
• Parties: Carmelia VELEZ, Hector Velez, Victoria Arnita Green, Cynthia Chappell, Catherine Nixon, and Clarence Pitts, on behalf of themselves, and on behalf of all other persons similarly situated, v. Henry CISNEROS, in his official capacity as Secretary of the United States Department of Housing and Urban Development, the United States Department of Housing and Urban Development, Jacquelyn M. Pryor, in her official capacity as Executive Director of the Chester Housing Authority, and Chester Housing Authority.
• Court: U.S. District Court — Eastern District of Pennsylvania

850 F. Supp. 1257

Carmelia VELEZ, Hector Velez, Victoria Arnita Green, Cynthia Chappell, Catherine Nixon, and Clarence Pitts, on behalf of themselves, and on behalf of all other persons similarly situated, v. Henry CISNEROS, in his official capacity as Secretary of the United States Department of Housing and Urban Development, the United States Department of Housing and Urban Development, Jacquelyn M. Pryor, in her official capacity as Executive Director of the Chester Housing Authority, and Chester Housing Authority.

Civ. A. No. 90-6449.

United States District Court, E.D. Pennsylvania.

April 29, 1994.

COPYRIGHT MATERIAL OMITTED

Lawrence J. Fox, David M. Doto, Drinker, Biddle & Reath, Philadelphia, PA, Denise M. Heberle, Jane Molt, Delaware County Legal Assistance Ass'n, Roger V. Ashodian, Chester, PA, Brian S. Mudge, Nadia Myrytiuk Jannetta, Drinker, Biddle & Reath, Philadelphia, PA, for plaintiffs.

Arthur R. Goldberg, Judry L. Subar, Raphael O. Gomez, Elaine Romberg, Felix Baxter, Dept. of Justice, Civ. Div., Washington, DC, Debra Leanne Wrobel Cohn, U.S. Attys. Office, Philadelphia, PA, Andrew C. Phelan, U.S. Dept. of Justice, Civ. Div., Washington, DC, Ronald David Ashby, Ronald David Ashby & Associates, P.C., Media, PA, Francis X. Crowley, Blank, Rome, Comisky & McCauley, Philadelphia, PA, Ronald H. Surkin, Media, PA, for defendants.

MEMORANDUM and ORDER

SHAPIRO, District Judge.

I. PROCEDURAL HISTORY

Plaintiffs filed this action on behalf of the class of past, present, and future tenants of Chester Housing Authority public housing against the United States Department of Housing and Urban Development, its secretary Jack L. Kemp, Chester Housing Authority, and its Executive Director Earline Mann. Defendants Henry Cisneros and Jacquelyn M. Pryor were substituted for defendants Kemp and Mann, respectively, pursuant to Fed.R.Civ.P. 25(d).¹ The Second Amended Complaint ("Complaint") requested declaratory and injunctive relief for alleged violations of federal housing law, the Administrative Procedures Act ("APA"), civil rights laws, and breach of the Annual Contributions Contract ("ACC") between HUD and CHA. With the consent of the parties, the court appointed the Honorable William M. Marutani as mediator to promote discussion between the parties, assist them to develop and exchange pertinent information concerning the issues, and arrive at a mutually acceptable resolution of the controversy. While mediation was underway, HUD declared CHA a "Troubled Housing Authority" in substantial breach of its obligations under the ACC and assumed control of the assets and management of CHA.

Mediation was unsuccessful. On October 25, 1991, plaintiffs filed a motion for a preliminary injunction alleging that dangerous conditions threatened the lives, health, and safety of the tenants. While this motion was pending, HUD took control of CHA and contracted with the Quadel Consulting Corporation ("Quadel"), a professional management firm, to manage CHA and remedy the problems causing the "Troubled Housing Authority" designation. The future operation of CHA was uncertain, so the parties agreed to continue the preliminary injunction hearing several times. At a hearing held on January 9, 1992, plaintiffs withdrew the motion for preliminary injunction to give new management a chance to improve the conditions of which plaintiffs complained. The court placed the case in administrative suspense to enable the parties to complete fact finding and discuss settlement further in light of the new developments.

The defendants conducted a Needs Assessment, prepared a Comprehensive Grant Plan according to the requirements of HUD's Comprehensive Grant Program regulations, 42 U.S.C. § 1437(a)-(o), 24 C.F.R. § 968, and initiated a plan of reconstruction and restoration. Plaintiffs remained dissatisfied and opposed defendants' plan to hire an executive director without "adequate input" from the tenants and the City of Chester. On July 31, 1992, plaintiffs filed a motion to restore the case to active status and preliminarily enjoin the appointment of an executive director.

The court held hearings on plaintiffs' motion for a preliminary injunction for nine days, beginning September 25, 1992. Many tenants testified on behalf of the plaintiffs and aired general grievances against CHA management and housing conditions. The selection of a new executive director — the ostensible reason for the hearing — was scarcely mentioned. The court granted the motion to return the case to active status but declined to enjoin the appointment of an executive director for lack of a showing of irreparable harm. The court set a February 17, 1993 trial date.

Plaintiffs, requesting several extensions of time for discovery, represented that personnel changes at Delaware County Legal Assistance and in the executive branch of the federal government made preparation for trial overly burdensome and possibly unnecessary. Plaintiffs also stated that additional time would enable newly retained counsel to assume significant responsibilities. The court, by order of January 7, 1993, modified the trial schedule to accommodate the plaintiffs. The trial, continued until May 3, 1993, was allowed to proceed on behalf of a plaintiff class consisting of "all current tenants of public housing owned and operated by CHA or HUD." Memorandum and Order of February 17, 1993. A non-jury trial was held on twelve days during the period from May 3, 1993 to July 9, 1993.

II. SUMMARY OF THE COMPLAINT

The plaintiff class claims that defendants have caused constructive demolition ("de facto demolition") of CHA housing by failure to fill vacant units, maintain occupied units in a habitable condition, train maintenance workers, perform routine inspections, and respond promptly to tenant complaints.

Count I of the complaint alleges that CHA took action to demolish a portion of the William Penn Homes without HUD approval and without meeting the statutory criteria required by 42 U.S.C. § 1437p. Although HUD initially approved CHA's demolition plan, CHA withdrew its proposed demolition plan shortly after obtaining funds for comprehensive modernization of the project in September, 1992. This Count will be dismissed as moot.

Counts II and III allege that CHA's gross neglect and mismanagement constitute constructive (de facto) demolition of public housing units in violation of 42 U.S.C. § 1437p. Count IV alleges that HUD violated 42 U.S.C. § 1437p by approving the plan to demolish a portion of William Penn Homes even though the plan failed to meet statutory and regulatory criteria. At trial, plaintiffs also argued that HUD had engaged in de facto demolition of CHA housing units by failing to prevent de facto demolition of housing units prior to November 6, 1991 and by permitting it as manager of the projects subsequent to November 6, 1991.

Count V alleges that HUD's approval of the now-withdrawn plan to demolish a portion of William Penn Homes violated the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-06. Plaintiffs also argued at trial that HUD violated the APA by failing to prevent de facto demolition of units prior to November 6, 1991 and making arbitrary and capricious decisions as manager of CHA housing units subsequent to November 6, 1991.

Count VI alleges that defendants have violated the ACC and that plaintiffs are entitled to enforce its provisions against CHA as third party beneficiaries.

Count VII alleges that the defendants' failure to preserve public housing units and defendants' actual and de facto demolition of units have had a racially discriminatory impact in violation of § 3604 of the Fair Housing Act, 42 U.S.C. §§ 3601-3631 ("Housing Act"). Count VIII alleges that HUD violated the Housing Act by failing to protect plaintiffs from racially discriminatory treatment. Count IX alleges that the actions and omissions by defendants are a part of a pattern of intentional discrimination against non-whites in public housing in violation of Title VI of the Civil Rights Act, 42 U.S.C. § 2000d. Plaintiffs presented no evidence regarding Counts VII, VIII, and IX; these counts were dismissed for failure of proof at close of plaintiffs' case.

Count X alleges that CHA violated the Housing Act by including a lease requirement requiring tenants to pay for repairs necessary to restore housing units to habitable conditions. Count X also alleges that CHA violated the Housing Act by requiring tenants to pay for repairs caused by normal wear and tear or acts of third parties.

III. FINDINGS OF FACT AND CONCLUSIONS OF LAW

The court makes the following findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52(a).

A. Findings of Fact

1. Conditions Prior to November 6, 1991

a. Vacancies and Turnaround Time

CHA operates five public housing developments in the City of Chester, Pennsylvania: Ruth Bennett Homes ("Bennett"), Lamokin Village, William Penn Homes ("Penn"), McCaffery Village, and Chester Towers. These developments contain approximately 1,700 public housing units.

According to HUD performance indicators, a vacancy rate of 3% or above is "deficient." 24 C.F.R. § 901.05(k); 24 C.F.R. § 901.10(b)(1)(vii); at that rate, more than 51 vacancies for CHA's 1,700 units would be "deficient" performance. However, HUD allows a Public Housing Authority ("PHA") to deduct units approved for demolition in calculating the vacancy rate, 24 C.F.R. § 901.05(e)(1), and permits adjustment for funded on-schedule modernization. 24 C.F.R. § 901.10(b)(1)(vii)(B).

On December 30, 1987, there were 97 vacant units at the five CHA developments; as of December 30, 1988, this number had increased to 138. Pls.' Ex. 1; Administrative Record ("A.R.") at 20413. By December 30, 1990, there were 262 vacant units; 79 of these units were vacant pursuant to a HUD-approved plan to demolish portions of Penn. Id. On December 30, 1991, the number of vacancies rose to 320; 100 vacancies were in...