Case: Velez v. Cisneros

On October 5, 1990, residents of public housing complexes in Chester, PA filed this lawsuit in the U.S. District Court for the Eastern District of Pennsylvania. The plaintiffs sued the U.S. Department of Housing and Urban Development (HUD) and the Chester Housing Authority (CHA) under the federal public housing law, 42 U.S.C. § 1437. The plaintiffs, represented by legal aid and private attorneys, sought declaratory and injunctive relief. They claimed that the defendants violated federal housing law, the Administrative Procedures Act, and civil rights laws, and that the defendants had breached HUD’s Annual Contributions Contract. Specifically, they claimed that CHA took action to demolish part of the Chester housing complex without meeting statutory criteria, that gross neglect and mismanagement resulted in "de facto demolition," and that failure to preserve the public housing units resulted in racially discriminatory treatment. The plaintiffs contended that the CHA developments were overcrowded and unsafe; the large number of uninhabitable vacant units had prevented overcrowded families from obtaining larger units and applicant families from obtaining units at all.

This summary includes less information than usual because many of the documents for this case were not available. The summary is based on opinions, the docket, and news articles.

On October 31, 1990, the plaintiffs filed an amended complaint and on December 3, 1990, CHA and their executive director moved to dismiss the action for lack of subject-matter jurisdiction and for failure to state a claim. The plaintiffs responded to the defendants’ motion on December 13, 1990. On January 4, 1991, HUD moved to dismiss the case as well.

On March 1, 1991, Judge Norma Shapiro ordered with the consent of all parties that defendants would not enter into any contracts for the demolition of the William Penn Project, a complex managed by CHA, and or relocation of utility services prior to March 13, 1991.

Then, on March 13, 1991, the court denied without prejudice plaintiff’s motion for class certification and dismissed the complaint against CHA’s executive director. On the same day, the court denied HUD’s motion to dismiss. Further, the court set a deadline for an amended complaint.

On March 29, 1991, plaintiffs filed a Second Amended Complaint seeking declaratory and injunctive relief for alleged violations of federal housing law, the Administrative Procedures Act, civil rights laws, and breach of HUD’s Annual Contributions Contract. The plaintiffs filed another motion for class certification, moving under Rule 23(b)(2) to certify a class of “all current and future tenants of and applicants for admission to public housing owned and operated by Defendant Chester Housing Authority.” In April 1991, the defendants filed answers to the Seconded Amended Complaint.

The court placed the case in administrative suspense and, on August 6, 1991, appointed a mediator to resolve the dispute. Yet negotiations between the parties failed and the court vacated the mediation order on December 11, 1991.

On October 25, 1991, the plaintiffs moved for a preliminary injunction on grounds that the dangerous conditions threatened the lives, health, and safety of the tenants. On November 12, HUD filed a brief opposing the injunction. The court held a hearing on the motion for a preliminary injunction on November 20, 1991. Discovery proceeded into December.

On January 9, 1992, the court ordered that the plaintiff’s preliminary injunction motion was withdrawn in accordance with statements regarding eviction and rent collection. HUD had recently assumed control of CHA, designated a Troubled Housing Authority. HUD contracted with a professional management firm to manage CHA to remedy the problems. Additionally, the court placed the case on administrative suspense until October 9, 1992 so parties could complete fact finding and reach a settlement and give new management a chance to improve conditions.

During this time, defendants conducted a Needs Assessment, prepared a plan according to the requirements of HUD’s Comprehensive Grant Program regulations and implemented a plan of reconstruction and restoration. The plaintiffs remained dissatisfied and opposed their hiring an executive director without adequate input from tenants and the City. On July 31, 1992, the plaintiffs moved to restore the case to active status and for a preliminary injunction to prevent the appointment of an executive director. On September 18, 1992, HUD filed its opposition this motion. Beginning that month, the court held hearings on the plaintiff’s motion. On November 19, 1992, the court granted plaintiffs motion to restore case to active status and denied the motion for a preliminary injunction to enjoin the appointment of an executive director.

On December 23, 1992, the defendants filed their opposition to plaintiff’s motion for class certification. The court granted the motion in part and denied it in part on February 17, 1993. 1993 WL 45989. The court found that counsel and class representatives were adequate to represent a class composed of the current tenants of public housing owned and operated by the CHA or HUD.

On April 12, 1993, HUD moved for a judgment on the pleadings which the court denied on April 15.

A bench trial began on May 3, 1993 and lasted until July 9, 1993. On April 29, 1994, Judge Shapiro issued findings of fact and conclusions of law. 850 F.Supp. 1257. The court found that the CHA and the executive director in her official capacity were liable for de facto demolition of the housing units at CHA; HUD was liable for de facto demolition at CHA as operators after November 6, 1991. The court concluded that the high number of vacancies at CHA before the HUD takeover on November 6, 1991, the policy not to rehabilitate vacant units for occupancy adopted after November 6, 1991, and vacancies during the planned modernization and phased reconstruction plans over the next four to five years constituted illegal de facto demolition by CHA.

The court dismissed as moot the allegation that CHA took action to demolish the housing units without meeting statutory criteria required by 24 U.S.C. §1437(p), because CHA withdrew proposed demolition after it received funds to invest in modernization of the project in September 1992. Further, the court dismissed the plaintiff’s claims under the Fair Housing Act and Title VI of the Civil Rights Act. The court dismissed the count that alleged a breach of the Annual Contributions Contract between CHA and HUD as the plaintiffs were not entitled to enforce its provisions against CHA as third party beneficiaries. Finally, the court denied HUD’s motion for judgment on the pleadings as moot.

The court ordered parties to submit proposed remedies on or before May 20, 1994. On May 20, 1994, the plaintiffs filed a memorandum in support of their proposed order for relief. In response, on May 27, HUD opposed their proposed order of relief and moved for reconsideration of their liability finding on June 9, 1994.

Then, on August 31, 1994, the court appointed a receiver, Robert Rosenberg, to the CHA, which the defendants had moved for with the plaintiff’s consent.

On October 7, 1994, the plaintiffs moved for approval of a settlement between HUD and the plaintiffs. On October 24, the court denied HUD’s motion for reconsideration of liability finding but granted their motion for partial reconsideration of the basis upon which the court premised its findings of liability against the federal government. The court found that the appointment of the receiver rendered this case moot. Accordingly, the court denied as moot the plaintiff’s motion for approval of settlement and the defendants’ motion to stay consideration of the plaintiff’s motion to approve settlement agreement.

On June 9, 1995, the court appointed a master for purpose of arbitrating disputes under CHA leases. On December 20, 1995, the court appointed magistrate judge Faith Angell as an alternative or substitute to the master for the purpose of arbitrating disputes.

In August 1996, the court granted contractors the right to proceed in contract claims against CHA. In May 1997, the court referred the case to the magistrate for a settlement conference regarding the contractors’ claims. On January 1, 1997, the court appointed a new special master regarding disputes under CHA leases.

In December 1997, individual tenants began applying for leave to file complaints against CHA.

On September 18, 2000, HUD moved to reduce compensation of court-appointed receiver. On June 12, 2002, the court granted the federal defendant’s motion to reduce compensation of court-appointed receiver in part and denied it in part. HUD had argued that the receiver’s success in the role reduced his responsibilities such that his pay was disproportionate to his duties. The court ordered the defendants to compensate the receiver at the same rate but eliminate extra expenses. 2002 WL 1292021.

The court ordered a continuance of the CHA receivership but changed the receiver’s status to Judicial Administrator for Development on March 31, 2005. In that order, the court appointed an Advisory Board of Commissioners and a CHA Executive Director.

On September 13, 2013, HUD filed a notice of appeal regarding a July 24, 2013 order granting CHA’s motion that it could include funding for the Chester Housing Police Force in its annual plan from funds pursuant to federal public housing law, §1437. USCA Case Number 13−3926. The parties reached a negotiated settlement regarding this matter. Accordingly, on October 15, 2013, the parties filed a joint motion to vacate the July 25 order. On October 17, 2013, the court ordered that the joint motion would be granted if the Court of Appeals remanded for that purpose. On November 13, 2013, the Third Circuit issued an order granting HUD’s unopposed October 18 motion to remand the matter so the trial court could grant the motion to vacate. On November 20, 2013, the court granted the parties’ joint motion to vacate that order pursuant to the terms of their negotiated settlement.

On October 11, 2013, the court appointed an alternate special master to preside over arbitration hearings and appointed Judge Phyllis Beck to preside over any appeals of dispositions filed by the special master.

The court released the CHA from federal receivership on December 31, 2014. The 2013 annual report informed this decision. The report demonstrated that the recent HUD inspections of CHA properties resulted in very high ratings, HUD had rated CHA’s Section 8 program highly, the CHA police department had significantly improved the safety and security of tenants, and the CHA Board of Commissioners received intensive training to add to their qualifications. The court also found that the Judicial Administrator performed in an excellent manner, the executive director had fulfilled his duties and requirements under all court orders, and that significant progress had been made to transform CHA into a functioning authority capable of providing decent, safe, and clean low-income housing to its tenants.

As part of that release, the court retained jurisdiction to enforce its terms and conditions related to an amended agreement ordered on June 14, 2014. There, the court had found that upon termination of the receivership, an amendatory agreement would be substituted in CHA’s dwelling lease. On August 11, 2014, the court provided for continued arbitration of claims relating to the interpretation, validity, or performance of that lease.

On January 26, 2018, the case was reassigned to Judge Cynthia Rufe. The case is ongoing.