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Clark v. Universal Builders Inc.

decided: April 19, 1983.

SIDNEY AND JULIA CLARK, ET AL., PLAINTIFFS-APPELLANTS AND CROSS-APPELLEES,
v.
UNIVERSAL BUILDERS, INC., ET AL., DEFENDANTS-APPELLEES AND CROSS-APPELLANTS



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 69 C 115 -- Nicholas J. Bua, Judge.

Cudahy and Coffey, Circuit Judges, and Swygert, Senior Circuit Judge.

Author: Cudahy

CUDAHY, Circuit Judge.

This appeal arises from a class action suit, originally filed in January of 1969, which alleged that defendants had violated plaintiffs' rights under section 1982 of the Civil Rights Act of 1866, 42 U.S.C. § 1982 (1976). After a bench trial in the United States District Court for the Northern District of Illinois, District Judge Nicholas J. Bua concluded that the plaintiffs had failed to establish a violation of 42 U.S.C. § 1982 and entered judgment in favor of the defendants on May 4, 1982. We affirm the judgment of the district court.

I

The Plaintiffs in this case are a class of over 1,000 black home buyers who purchased newly constructed single family dwellings from defendants under land installment contracts during a period from 1957 to 1969. All of these dwellings are located on the south side of Chicago and each plaintiff has made at least one payment under his contract.

The defendants include the building contractor for the homes, Universal Builders, Inc. ("Universal"), the "land companies" through which the homes were sold, the realty company which was the exclusive sales agent for the homes and various individuals who were affiliated with these companies. After incorporating in 1956, Universal entered into a series of joint venture agreements with corporations that agreed to purchase the land on which Universal was to build the homes and to finance the construction of the homes by obtaining long-term mortgage loans. These "land companies" determined which lots would be purchased and the joint venturers decided what models would be offered for sale on each lot.

The district court found that between early 1957 and early 1969 approximately 1350 residences were constructed by Universal and sold by the land companies. The district court also found that eighteen of these homes were sold to buyers who obtained mortgages, while the remainder were sold through installment contracts. Defendants advertised the homes through black-oriented newspapers and radio stations. Approximately twenty-five sales were made to whites, although some of these sales involved racially-mixed couples, and the remainder were to black purchasers. The homes were all located in a middle-class neighborhood located approximately seventy-five blocks south of downtown Chicago.

Plaintiffs have had, through the course of this litigation, two alternative theories of liability. Under a "traditional" theory, plaintiffs claim that defendants violated their civil rights by selling homes to black buyers at higher prices and on less favorable terms than were available to similarly situated white buyers. Plaintiffs have also argued an "exploitation" theory of discrimination. Under this theory, plaintiffs have attempted to prove that as a result of racially-based residential segregation a "dual" housing market existed in Chicago which defendants exploited by demanding prices and terms of black buyers which were unreasonably in excess of the prices and terms available to white buyers of comparable housing.

In 1969, District Judge Hubert Will denied defendants' motion to dismiss plaintiffs' complaint, and sustained plaintiffs' exploitation theory as stating a claim for relief under 42 U.S.C. § 1982. Contract Buyers League v. F & F Investment, 300 F. Supp. 210 (N.D. Ill. 1969), aff'd on other grounds, 420 F.2d 1191 (7th Cir.), cert. denied sub nom., Universal Builders, Inc. v. Clark, 400 U.S. 821, 27 L. Ed. 2d 49, 91 S. Ct. 40 (1970). The case was then tried to a jury in 1972. At the close of the plaintiffs' case in chief, District Judge Joseph Sam Perry granted defendants' motion for a directed verdict, ruling that without evidence of discrimination under the traditional theory, plaintiffs could not prove liability under section 1982. Clark v. Universal Builders, Inc., 501 F.2d 324, 328 (7th Cir.), cert. denied, 419 U.S. 1070, 95 S. Ct. 657, 42 L. Ed. 2d 666 (1974). Plaintiffs appealed and this court reversed and remanded, holding that, when all the evidence was viewed in the light most favorable to the plaintiffs, "the admitted evidence was sufficient to establish a prima facie case under section 1982 pursuant to the exploitation theory of liability and . . . under the so-called traditional theory of discrimination . . .," and accordingly warranted submission of the issues to the jury. 501 F.2d at 334.

In June 1979, after numerous postponements in the trial on remand, plaintiffs moved for a preliminary injunction, charging that the defendants were systematically depleting the assets of the corporate defendants. In October 1979, District Judge Nicholas J. Bua denied the motion, finding that the plaintiffs had failed to demonstrate irreparable harm.

In November 1979, after the parties waived trial by a jury, a second trial, lasting sixteen days, was held before Judge Bua. In May 1982, the district court entered judgment for the defendants, finding that the plaintiffs had failed to meet their burden of proof under either theory of potential liability. This appeal followed.

II

As a preliminary matter, we note that our scope of review in this case is somewhat limited. The district court's findings of fact cannot be set aside on appeal unless they are "clearly erroneous." Fed. R. Civ. P. 52(a); Pullman-Standard v. Swint, 456 U.S. 273, 102 S. Ct. 1781, 72 L. Ed. 2d 66 (1982). "The question for the appellate court under Rule 52(a) is not whether it would have made the findings the trial court did, but whether 'on the entire evidence [it] is left with the definite and firm conviction that a mistake has been committed. '" Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 123, 23 L. Ed. 2d 129, 89 S. Ct. 1562 (1969) (citing United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 92 L. Ed. 746 (1948)). While our discretion within the "clearly erroneous" standard is slightly broader in this case because the district court partially relied on documentary evidence or found many facts by drawing inferences from undisputed facts, Oscar Gruss & Son v. First State Bank of Eldorado, 582 F.2d 424, 430-31 (7th Cir. 1978); Flowers v. Crouch-Walker Corp., 552 F.2d 1277, 1284 (7th Cir. 1977), we are still constrained to give substantial deference to the findings of the district court. This is especially true where the district court made determinations as to the credibility of witnesses. Apolskis v. Concord Life Insurance Co., 445 F.2d 31, 34 n.1 (7th Cir. 1971).

The law governing this case was set forth by this court's 1974 opinion which explained the elements of a prima facie case of liability under both the "traditional" and the "exploitation" tests of discrimination. Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir.), cert. denied, 419 U.S. 1070, 95 S. Ct. 657, 42 L. Ed. 2d ...


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