United States District Court, Northern District of Illinois, E.D
September 17, 1980
JURELLENE JORMAN, BENJAMIN GOVAN, EDDY L. HODGE, CARRIE HODGE, EDWARD KEATE, JANNIS MOORE, MARGARET E. RHODES, ESSIE ROBINSON, BARBARA A. SPEARS, JOHN H. SPEARS, KAREN FLYNN HAFFNER, WILLIAM HAFFNER, LEONARD JUDICKAS, PHYLLIS KINNERK, JOHN KINNERK, MARY CEIL MCMANUS, EVA M. SWIONTKOWSKI, EMILY D. THOMAS, LAURETTA L. WINTERHELT, SOUTHWEST COMMUNITY CONGRESS, AND 6500 BLOCK CLUB, PLAINTIFFS,
VETERANS ADMINISTRATION OF THE UNITED STATES, AND JOSEPH MAXWELL CLELAND, DEFENDANTS.
The opinion of the court was delivered by: Crowley, District Judge.
MEMORANDUM OPINION AND ORDER
This action involves allegations of actual and threatened
systematic racial transition of specific residential
neighborhoods in Marquette Park, Chicago, allegedly caused by the
heavy use of government funding. Count I claims that the
defendant, Veterans Administration (VA), violated its duties
under § 808(d) of the Fair Housing Act, 42 U.S.C. § 3608(c), in
the manner in which it administered its VA home mortgage program
in Marquette Park. Count II, brought under §§ 810(d) and 812 of
the Fair Housing Act, 42 U.S.C. § 3610(d), 3612, alleges
violations of the Act in that the defendant knowingly
participated in, facilitated, and condoned unlawful steering,
solicitation, and appraisals in Marquette Park, 42 U.S.C. § 804,
805, 806, 817. Jurisdiction is founded upon 42 U.S.C. § 3608(c),
3610(d), and 3612.
Defendant has moved to dismiss both Counts for lack of
standing, Fed.R.Civ.P. 12(b)(1), and for failure to state a claim
upon which relief may be granted, Fed.R.Civ.P. 12(b)(6). Although
defendant contends that Counts I and II present identical claims,
the Counts clearly state separate and independent causes of
action and, accordingly, will be considered separately.
Plaintiffs assert that the recent Supreme Court case of
Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60
L.Ed.2d 66 (1979) is dispositive of the standing issues with
respect to Count II. In Bellwood, the Court extended its holding
in Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 93
S.Ct. 364, 34 L.Ed.2d 415 (1972) to provide standing under § 812
of the Fair Housing Act, 42 U.S.C. § 3612, to residents of a
particular neighborhood who had been deprived of the "social and
professional benefits of living in an integrated society" and who
complained of economic injuries because of the diminution in
property value of their homes. Gladstone, Realtors v. Bellwood,
441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979).
Were this the extent of the Bellwood holding, plaintiffs'
standing to assert Count II would be undeniable. The Court in
Bellwood emphasized, however, that in no event may a plaintiff
proceed in federal court without first satisfying the Article III
requirements of a "`distinct and palpable injury to himself' that
is likely to be redressed if the requested relief is granted."
Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601,
1608, 60 L.Ed.2d 66 (1979), quoting, Simon v. Eastern Kentucky
Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917,
1924, 48 L.Ed.2d 450 (1976).
There is no significant difference between the allegations in
Count II and those which were held to satisfy the Article III
requirements in Bellwood. Like the complaint in Bellwood, Count
II was brought under § 812 of the Fair Housing Act, 42 U.S.C. § 3612.
Count II avers that the plaintiffs are both direct and
indirect victims of specific discriminatory acts of illegal
solicitation and racial steering. The complaint in Bellwood
similarly alleged indirect injury due to unlawful racial
steering. Count II's allegation of the deprivation of the social
and economic benefits of living in a racially and economically
integrated, residential community is tantamount to the allegation
in Bellwood that the plaintiffs had been "deprived of the social
and professional benefits of living in an integrated society,"
Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601,
1603-1604, 60 L.Ed.2d 66 (1979). Finally, the complaint in
Bellwood and Count II both allege economic injury due to the
diminution in property value of the plaintiffs' homes.
Defendant contends, however, that Count II should fail because
the Veterans Administration is under the statutory duty to
guarantee loans to qualifying veterans and is without the
flexibility necessary to remedy the plaintiffs' grievances. A
cursory reading of 38 U.S.C. ch. 37, which establishes the VA
home loan and guarantee program, would support defendant's
argument. Section 1802 of that chapter limits the factors which
can be considered by the Veterans Administration to three
whether the veteran is eligible; 2) whether the purpose of the
loan is within the scope of chapter 37; and 3) whether the loan
is made within the provisions of that chapter. 38 U.S.C. § 1802.
Sections of statutes should not be read in isolation and must
be considered in their relation to the statute as a whole. In
particular, the Court must consider § 1804(d) which provides
[S]ubject to notice and opportunity for a hearing,
whenever the Administrator finds with respect to
guaranteed or insured loans that any lender has
failed to exercise proper credit judgment or has
willingly or negligently engaged in practices
otherwise detrimental to the interest of veterans or
of the government, the Administrator may refuse
either temporarily or permanently to guarantee or
insure loans made by such lender and may bar such
lender or holder from acquiring loans guaranteed or
insured under this chapter. . . . The Administrator
may also refuse either temporarily or permanently to
guarantee or insure any loans made by a lender or
holder refused the benefits of participation under
the National Housing Act pursuant to a determination
of the Secretary of the Department of Housing and
Urban Development. 38 U.S.C. § 1804(d).
Section 1804(d) belies the rigidity which defendant would read
into the statutory duty of the Veterans Administration. Because
the VA may consider whether a prospective applicant or lender has
"engaged in practices . . . detrimental to the interests of
veterans or of the government," it is responsible as an
"executive agency" to the requirements of § 808(d) of the Fair
Housing Act, 42 U.S.C. § 3608(c). Finally, the requests for
declaratory relief and for such further relief as the court may
deem appropriate are permissible remedies, 42 U.S.C. § 2201-02.
Consequently, plaintiffs have standing under Count II.
Plaintiffs concede that Count I, brought under 42 U.S.C. § 3608(c),
is not subject to the liberal standing provisions of
42 U.S.C. § 3610(d) and 3612, and, therefore, Bellwood does not
strictly apply. Bellwood did reaffirm other Supreme Court cases
which have held that the issue of standing involves "both
constitutional limitations on federal court jurisdiction and
prudential limitations on its exercise." Gladstone, Realtors v.
Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 1607-1608, 60 L.Ed.2d 66
(1979); Warth v. Seldin, 422 U.S. 490, 498 (1975); Trafficante v.
Metropolitan Life Ins. Co., 409 U.S. 205, 93 S.Ct. 364, 34
L.Ed.2d 415 (1972). The Court explained that the constitutional
limitations evolved from Article III's "case and controversy"
clause, while the prudential limitations are "principals by which
the judiciary seeks to avoid deciding questions of broad social
import where no individual rights would be vindicated and to
limit access to the federal courts to those litigants best suited
to assert a particular claim." Gladstone, Realtors v. Bellwood,
441 U.S. 91, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979).
The Bellwood Court recognized three basic prudential
limitations to the exercise of federal court jurisdiction.
Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 1608
& n. 6, 60 L.Ed.2d 66 (1979). First, the litigant must assert an
injury which is peculiar to himself or to a distinct group to
which he is a party, Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct.
2197, 2205, 45 L.Ed.2d 343 (1975). Second, the litigant must
assert his own interests rather than those of a third party,
Arlington Heights v. Metropolitan Housing Development Corp.,
429 U.S. 252, 263, 97 S.Ct. 555, 562, 50 L.Ed.2d 450 (1977). Third,
the interests of the plaintiff must be arguably within the zone
of interests sought to be protected under the statute. Simon v.
Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 39 n.
19, 96 S.Ct. 1917, 1925, 48 L.Ed.2d 450 (1976); Association of
Data Processing Services v. Camp, 397 U.S. 150, 153, 90 S.Ct.
827, 829, 25 L.Ed.2d 184 (1969).
Plaintiffs have satisfied the first criterion by asserting
their own particular interests in living in a balanced,
interracial community, and in not having the property values of
their homes diminished. Their
common concern stems from their residence within a particular
neighborhood. As such, the plaintiffs cannot be compared to the
two Bellwood plaintiffs who were found not to have standing
because they resided outside of the targeted neighborhood,
Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 1614
n. 25, 1616, 60 L.Ed.2d 66 (1979).
Having asserted their own legal interests, the plaintiffs have
satisfied the second requirement and have not alleged simply an
"abstract concern about a problem of general interest." Arlington
Heights v. Metropolitan Housing Development Corp., 429 U.S. 254,
263, 97 S.Ct. 555, 562, 50 L.Ed.2d 450 (1977). The plaintiffs'
standing is not affected because other area residents who have
not been joined in the lawsuit suffer similar injuries. Courts
have long recognized that "standing is not to be denied simply
because many people suffer the same injury." United States v.
SCRAP, 412 U.S. 669, 687, 93 S.Ct. 2405, 2415, 37 L.Ed.2d 254
Lastly, by alleging that they have suffered or are going to
suffer from the massive racial resegregation of their community,
plaintiffs have asserted an interest within the zone to be
protected by 42 U.S.C. § 3608(c). The purpose of the Fair Housing
Act is to provide "fair housing throughout the United States,"
42 U.S.C. § 3601, by bringing about "truly integrated and balanced
living patterns." Trafficante v. Metropolitan Life Ins. Co.,
405 U.S. 205, 211, 93 S.Ct. 364, 367, 34 L.Ed.2d 415 (1972).
Standing under Article III requires that the plaintiffs claim
a distinct and palpable injury to themselves as a result of the
defendant's conduct that is likely to be redressed if the
requested relief is granted. Gladstone, Realtors v. Bellwood,
441 U.S. 91, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979); Simon v.
Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct.
1917, 1924, 48 L.Ed.2d 450 (1976). As previously noted, the
plaintiffs have alleged sufficient injuries to satisfy the
constitutional requirement of "actual or threatened harm,"
Gladstone, Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601,
1614, 60 L.Ed.2d 66 (1979). Defendant's argument that the
plaintiffs stand to benefit from the influx of blacks into their
neighborhood misconstrues the nature of plaintiffs' complaint.
They do not complain about the normal movement of different races
within their community. Rather, plaintiffs assert that the
massive racial resegregation caused, in part, by the manner in
which the VA administers its home loan program, will disrupt the
"stable, racially integrated housing" in their community. Linmark
Assoc., Inc. v. Willingboro Twp., 431 U.S. 85, 94, 97 S.Ct. 1614,
1619, 52 L.Ed.2d 155 (1977).
As for the causation element, the plaintiffs specifically have
alleged that the manner in which the VA administered its home
loan program "has injured, continues to injure, and will
irrevocably injure" them. Whether the extent to which the VA
financed homes in the community actually contributed to the
plaintiffs' injuries is a question of fact which must await
resolution at trial. Likewise, whether the VA had, in fact,
administered its programs in a method contrary to the provisions
of the Fair Housing Act is a factual consideration. Gladstone,
Realtors v. Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 1615 n. 29, 60
L.Ed.2d 66 (1979).
The final element of standing under Article III,
redressibility, has been considered with respect to Count II, and
the same reasoning applies to this Count. Finding no prudential
or constitutional limitations, the plaintiffs have standing to
assert Count I of their complaint.
Defendant's motion to dismiss the complaint for failure to
state a claim relies on the assumption that the VA's mandatory
duties under the veterans home loan guarantee program relieves
the defendant of its affirmative duty under the Fair Housing Act.
The Court finds nothing in the statutory authorization for the
veterans home loan program which would abdicate the duty of the
VA to consider the impact of its activities on the racial
concentration of Marquette Park by taking into consideration
relevant racial and socio-economic data. Shannon v. HUD,
436 F.2d 809 (3rd Cir. 1970). Accord, South East Chicago Commission v.
HUD, 488 F.2d 1119 (7th Cir. 1973). Counts I and II state
separate, cognizable claims.
For the foregoing reasons, defendant's motions to dismiss for
lack of standing and for failure to state a claim upon which
relief may be granted are denied.
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