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ALSCHULER v. DEPT. OF HOUS. & URBAN DEVELOPMENT
June 4, 1981
FRANK ALSCHULER, DIANE SOKOLOFSKI, MORTON WEISMAN AND THE HUTCHINSON-HAZEL-JUNIOR TERRACE ASSOCIATION, PLAINTIFFS,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, ELMER C. BINFORD, LAWRENCE B. SIMONS, MONTEREY APARTMENTS, A CALIFORNIA LIMITED PARTNERSHIP, SABINA REALTY CORPORATION, G. BLIUDZIUS CONTRACTORS, INC., ADC MORTGAGE CORPORATION, RANBIR S. SAHNI, GEORGE GOTTFRIED AND UNKNOWN PARTNERS OF MONTEREY APARTMENTS, DEFENDANTS.
The opinion of the court was delivered by: Bua, District Judge.
Before the court is plaintiffs' motion for a preliminary
injunction pursuant to Rule 65(a), Fed.R.Civ.P. The plaintiffs
seek an order enjoining the Department of Housing and Urban
Development and two of its officials from providing housing
assistance payments to the owners of the Monterey Apartments
on behalf of future tenants, and from providing mortgage
insurance on the apartment project. The plaintiffs also seek
to enjoin the developers of the Monterey Apartments from
continuing rehabilitation work on the apartment buildings,
since they allege that such work is proceeding in violation of
a City of Chicago ordinance.
On August 27, 1980, plaintiffs filed a three count complaint
against defendants alleging violations of the United States
Housing Act of 1937 (as amended by the Housing and Community
Development Act of 1974, Pub.L.No. 93-383, 88 Stat. 633, and,
in particular by section 201 of the Housing and Community
Development Act of 1977, Pub.L.No. 95-128, 91 Stat. 1111,
codified in part at 42 U.S.C. § 1437f(c)(1)), section 221(d)(2)
of the National Housing Act of 1934, 12 U.S.C. § 1715l(d)(2),
Title VIII of the Civil Rights Act of 1968, also known as the
Fair Housing Act of 1968, 42 U.S.C. § 3601 et seq., the Housing
Development Act of 1974, 42 U.S.C. § 5301 et seq., and the Lake
Michigan and Chicago Lakefront Protection Ordinance, CHICAGO,
ILL., MUNICIPAL CODE ch 194B (1979).
In essence, plaintiffs' complaint was twofold: (1) the
defendant Department of Housing and Urban Development's (HUD)
approval of housing assistance payments to the owners of the
Monterey Apartments under the section 8 leased housing
assistance payments program, 42 U.S.C. § 1437f, see generally
Holbrook v. Pitt, 643 F.2d 1261 (7th Cir. 1981), and its
provision of mortgage insurance for the Monterey Apartments
pursuant to section 221(d)(4), 12 U.S.C. § 1715l(d)(4), was
"arbitrary, capricious, an abuse of discretion or otherwise not
in accordance with law," 5 U.S.C. § 706(2)(A); and (2) the
private defendants violated the Lakefront Protection Ordinance
by undertaking the rehabilitation of the Monterey Apartment
without first having secured the approval of the Chicago Plan
On September 8, 1980, plaintiffs moved for a preliminary
injunction to enjoin federal assistance to and construction of
the Monterey Apartments. They claim that unless a preliminary
injunction issues they will suffer irreparable injury in that
the concentration of "publicly assisted, low-income, and
minority persons in the Uptown area" will increase; racial and
minority residential segregation will increase; and
"additional strain will be placed on already burdened social
services and community resources located in the Uptown area."
They also contend that the provision of HUD assistance for the
Monterey project will adversely affect the "special
environmental, recreational, cultural, historical and
aesthetic qualities of the Lake Michigan and Chicago Lakefront
Protection District." See Motion for Preliminary Injunction.
On October 6, 1980, plaintiffs sought leave to amend their
complaint to add William Duggan, Commissioner of the
Department of Inspectional Services, as a defendant and to
require him to revoke the building permits and issue a stop
work order covering the Monterey Apartments. This issue has
been fully briefed by the parties.
On October 17, 1980, private defendants moved to strike and
dismiss Count III of the complaint. This issue has been fully
briefed by the parties.
On October 23, 1980, private defendants, complaining that
plaintiffs' lawsuit was "wholly frivolous and without merit,"
filed a three count counterclaim against plaintiffs alleging
interference with property rights, abuse of process, and
tortious, interference with contract, and seeking damages in
excess of one million dollars and injunctive relief.
On October 28, 1980, plaintiffs moved to dismiss private
On October 30, 1980, the federal defendants moved to dismiss
plaintiffs' complaint. Federal defendants have filed a
memorandum in support of their motion in which private
defendants have joined.
On November 21, 1980, plaintiffs were given leave to file an
amendment to their preliminary injunction motion to bring into
issue the Monterey Apartments' compliance with the court
orders in the Gautreaux litigation.
The preliminary injunction hearing began on November 5, 1980
and continued for eleven trial days. At the completion of the
plaintiffs' case on November 26, 1980, defendants moved for a
directed verdict. The court denied defendants' motion. The
taking of evidence was completed on December 2, 1980. The
court heard the testimony of twenty witnesses during the
evidentiary hearing. Also submitted in evidence were
designated portions of a number of depositions and many
The members of the Association are generally upper middle
and upper class families with incomes that are well above the
mean and median incomes of Chicago families. Almost all of the
members live in large single family homes. The individual
plaintiffs valued their homes between $150,000 and $250,000.
Out of over sixty families represented by the Association, all
of the membership is white with the exception of one black
member and one Oriental member. The only member of the
Association with a child attending a Chicago Public School is
plaintiff Frank Alschuler. His daughter attends Lane Technical
High School which is outside of the Uptown community.
The federal defendants are the Department of Housing and
Urban Development, an agency of the United States Government
responsible for the administration of the rental supplements
and mortgage insurance guarantees that have been promised to
the private defendants, Elmer Binford and Lawrence B. Simons.
Elmer Binford is sued in his capacity as Manager of the
Chicago Area Office of HUD. Lawrence B. Simons is sued in his
capacity as ...