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FRANKLIN BLDG. CORP. v. CITY OF OCEAN CITY

November 18, 1996

FRANKLIN BUILDING CORPORATION, et al., Plaintiffs,
v.
CITY OF OCEAN CITY, et al., Defendants.



The opinion of the court was delivered by: ORLOFSKY

 ORLOFSKY, District Judge:

 Plaintiff, Franklin Building Corp. ("Franklin" or the "plaintiff"), has filed this action, on its own behalf and on behalf of several "John Doe" plaintiffs, against the City of Ocean City ("Ocean City"), its mayor, Henry Knight, the City Council of the City of Ocean City (the "Council"), the City Administrator, and several members of the Council both in their official and individual capacities. Franklin alleges that, by failing to pass a "resolution of need," the Council wrongfully blocked Franklin's proposed housing project. *fn1"

  Plaintiff principally alleges that the Council's failure to approve its request for a "resolution of need" constituted a violation of the Fair Housing Amendments Act of 1988 ("FHAA" or the "Act"). *fn2" Plaintiff also claims that defendants violated Section 504 of the Rehabilitation Act of 1973, *fn3" denied the plaintiffs equal protection and due process of law, violated 42 U.S.C. § 1983, violated the New Jersey Constitution, New Jersey's Municipal Land Use Law, *fn4" and New Jersey's Law Against Discrimination, *fn5" and tortiously interfered with Franklin's prospective economic advantage. The jurisdiction of this court is based upon 28 U.S.C. §§ 1331, 1343(a)(3) and 1367(a). Plaintiffs seek declaratory, and injunctive relief, as well as compensatory damages.

 Plaintiff, Franklin Building Corporation, has moved for partial summary judgment on the issue of defendants' liability under the FHAA pursuant to Fed. R. Civ. P. 56(a). Defendants oppose Franklin's motion and have filed a cross-motion for partial summary judgment seeking to dismiss plaintiffs' claims based upon the FHAA and all claims against the individual defendants. These partial summary judgment motions require this court to determine the proper scope of a municipality's duties under the FHAA when presented with an application for a "resolution of need" pursuant to N.J. Stat. Ann. § 55:14K-6(c), and whether the City Council of Ocean City breached those duties in its consideration of Franklin's proposed housing project for seniors. In addition, defendants' cross-motion for partial summary judgment presents the question whether the defendants who are named in their individual capacities are insulated from liability by absolute legislative immunity or qualified immunity.

 While a number of Circuit Courts of Appeals have addressed the FHAA in the context of denials of zoning variances or conditional use permits, *fn6" this appears to be a case of first impression insofar as it presents the question whether a municipality's failure to approve a "resolution of need," which precedes a zoning board decision, violates the FHAA.

 How our society provides for its elderly is among the most sensitive of contemporary issues. The so-called "graying of America" has led commentators to question seriously whether sufficient facilities exist to serve this rapidly growing sector of our population. *fn7" Health care concerns often dominate the debate. However, considerable effort has been expended researching the availability of appropriate housing for the elderly. See David R. Mark, N.J. lacking senior housing?, Asbury Park Press, June 11, 1995, § G, at 1 (reporting a study by the American Affordable Housing Institute at Rutgers University, New Brunswick, N.J.).

 Franklin contends that the actions of the City Council of Ocean City have reduced the housing options that would otherwise have been available for New Jersey's elderly. Ocean City contends that Franklin's proposal would not adequately have addressed the real housing needs of senior citizens, and that its opposition to the resolution of need was based upon a legitimate belief that Franklin's proposal would not have addressed the need for elderly housing. Because the summary judgment record is inadequate to resolve the issue of whether the Council's conduct violated the FHAA, partial summary judgment as to this issue must be denied. Although the applicability of the doctrine of legislative immunity to the facts of this case presents a close question, which I have resolved in plaintiff's favor, defendants' cross-motion to dismiss all claims against the Council members in their individual capacities will nevertheless be granted on the basis of the defendants' qualified immunity. Furthermore, all claims against Mayor Knight will be dismissed because the allegations in the complaint are insufficient as a matter of law to hold the Mayor liable. In addition, because plaintiff, Franklin Building Corp., does not allege either that it intends to continue to seek approval for the housing project in question, or that it will seek approval for a different project from the City of Ocean City, I conclude that Franklin lacks standing to sue for injunctive relief in this case.

 I. Facts

 Franklin Building Corporation contracted to purchase the Flanders Hotel in Ocean City, New Jersey, with a view to converting the hotel into an "age restricted" rental property. Certification of Paul DeBellis in Support of Plaintiff's Motion for Summary Judgment ("DeBellis Certif.") P 2. Franklin proposed to accept only tenants aged 55 and over and planned to set aside approximately twenty percent of the project's units for low and moderate income families. Id. PP 3, 18.

 Franklin applied to the City Council of Ocean City for a "resolution of need," without which it could not secure financing from the New Jersey Housing and Mortgage Finance Agency ("NJHMFA"). *fn8" Franklin alleges that this financing was critical to the success of its planned renovation of the Flanders. DeBellis Certif. P 8. Franklin further contends that the City Council was aware that "it could not . . . go forward with the proposed project" without NJHMFA financing. Id. P 19.

 When the approval of the "resolution of need" was moved before the Council, after several months and two public hearings, it failed to receive a second, thereby effectively defeating Franklin's application. DeBellis Certif., exhibit I, at 82. Faced with no possibility of obtaining NJHMFA-backed financing, Franklin abandoned the Flanders Hotel project.

 II. The Summary Judgment Standard

 On a motion for summary judgment this court is required to view the underlying facts and all reasonable inferences drawn from those facts in the light most favorable to the party opposing the motion. Pennsylvania Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995) (citation omitted); see also Helen L. v. DiDario, 46 F.3d 325, 329 (3d Cir.), cert. denied, 133 L. Ed. 2d 26, 116 S. Ct. 64, (1995); Valhal Corp. v. Sullivan Assocs., Inc., 44 F.3d 195, 200 (3d Cir. 1995); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977).

 Summary judgment should be granted only if the district court concludes that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the burden of proving that no genuine issue of material fact is in dispute. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 n.10, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Once the movant has carried its initial burden, the nonmoving party "must come forward with 'specific facts showing that there is a genuine issue for trial.'" Id. at 587 (quoting Fed. R. Civ. P. 56(e)) (emphasis added in Matsushita). The non-movant must present concrete evidence supporting each essential element of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 III. Discussion

 A. Standing

 Defendants contend that Franklin lacks standing to sue under the Fair Housing Act. The requirement of standing tests "whether the constitutional or statutory provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief." Warth v. Seldin, 422 U.S. 490, 500 (1975). Standing, or the lack of it, is a question of justiciability under Article III, and thus, goes to this court's jurisdiction, a threshold consideration in every case filed in federal court.

 Generally, one cannot assert the rights of third parties in a suit in federal court. See Sierra Club v. Morton, 405 U.S. 727, 31 L. Ed. 2d 636, 92 S. Ct. 1361 (1972). However, the Supreme Court has concluded that the Fair Housing Act extends standing to any party who can demonstrate injury in fact, the Article III minimum threshold for standing. See Havens Realty Corp. v. Coleman, 455 U.S. 363, 377-78, 71 L. Ed. 2d 214, 102 S. Ct. 1114 (1982). Indeed, under the FHAA, a plaintiff builder may assert the rights of third-party "John Does" who allegedly would have benefited from the proposed housing. Hovsons, Inc. v. Township of Brick, 89 F.3d 1096, 1100 n.2 (3d Cir. 1996).

 Notwithstanding this clear mandate to interpret the standing requirement broadly in cases brought under the Fair Housing Act, defendants contend that Franklin lacks standing because it is "not within the class of persons intended to be protected by Congress in enacting the Fair Housing Act," since it did not intend to lease units in its finished project to "handicapped" older adults. Defendant's Brief at 15. The standing requirement focuses upon the allegations of the complaint. "All decisions about standing are made on the basis of the pleadings, assuming all allegations within them to be true." Erwin Chemerinsky, Federal Jurisdiction 76 (2d ed. 1994). Franklin has alleged that defendants discriminated on the basis of handicap, namely, the misperception that the potential residents of the Flanders Hotel project would be incapable of independent living because of their age, and that Franklin has suffered economic injury as a result of this discrimination. To require more from Franklin to confer standing would transform the standing inquiry into a judgment on the merits. If the intended tenants of Franklin's proposed housing project do not fit within the definition of handicapped persons, plaintiffs cannot prevail on the merits. This, however, is beyond the scope of this court's inquiry into the question of plaintiffs' standing.

 Defendants further contend that Franklin lacks standing because it has no continuing economic interest in the Flanders Hotel project. Defendants rely upon Nasser v. City of Homewood, 671 F.2d 432, 437-38 (11th Cir. 1982), for the proposition that Congress did not intend "to entrust the enforcement of the Fair Housing Act" to developers who suffered only economic injury and whose project was no longer "viable" when suit was filed.

 Notably, although Nasser was decided approximately one month after the Supreme Court's decision in Havens Realty, the Eleventh Circuit makes no mention of that case. Thus, it is not immediately clear that Nasser's view of the proper extent of standing under the Fair Housing Act entirely comports with more recent cases. If there is, indeed, any conflict, this court must follow Hovsons.

 Moreover, Nasser is easily distinguished from Hovsons and the present case. The basis for denying plaintiffs standing in Nasser was the absence of any "allegation of interference with the plaintiffs' rights or that [the plaintiffs] have aided or encouraged any other person in the exercise or enjoyment of any right protected by the Act." Nasser, 671 F.2d at 438. Franklin in fact alleges that the City of Ocean City illegally discriminated against the "John Doe" plaintiffs on the basis of perceived handicap. Complaint PP 55, 100.

 Finally, defendants contend, in the alternative, that Franklin lacks standing to seek injunctive relief, because it has no continuing interest in the Flanders Hotel project. In addition to "injury in fact," Article III requires that the injury be of a kind that will be redressed by a favorable decision. Allen v. Wright, 468 U.S. 737, 751, 82 L. Ed. 2d 556, 104 S. Ct. 3315 (1984).

 In City of Los Angeles v. Lyons, 461 U.S. 95, 75 L. Ed. 2d 675, 103 S. Ct. 1660 (1983), the Supreme Court questioned the standing of a black motorist who alleged that the police had violated his civil rights when they restrained him in a chokehold. Lyons was allowed to seek damages, but was denied injunctive relief on the theory that he could not show a "sufficient likelihood" that he personally would run afoul of the Los Angeles Police Department in the future and, therefore, that he would again face the same alleged illegal conduct. Id. at 111; see also O'Shea v. Littleton, 414 U.S. 488, 38 L. Ed. 2d 674, 94 S. Ct. 669 (1974). Defendants ...


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