Project B.A.S.I.C. v. Kemp

947 F.2d 11, 1991 WL 207550
CourtCourt of Appeals for the First Circuit
DecidedOctober 17, 1991
DocketNo. 91-1612
StatusPublished
Cited by157 cases

This text of 947 F.2d 11 (Project B.A.S.I.C. v. Kemp) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Project B.A.S.I.C. v. Kemp, 947 F.2d 11, 1991 WL 207550 (1st Cir. 1991).

Opinion

SELYA, Circuit Judge.

This is an appeal from a' court order holding the Secretary of Housing and Urban Development (HUD) in civil contempt and imposing monetary sanctions.1 We granted a stay and expedited appellate proceedings. We now reverse.

I. BACKGROUND

We begin by tracing the contours of the two earlier proceedings which together gave rise to the present appeal.

A. The Original Litigation (PB-I and PB-II).

Simmering hostilities erupted into public view when Project B.A.S.I.C. (BASIC), a tenant-advocacy organization, asked the federal district court to enjoin the Providence Housing Authority (PHA) from tearing down certain portions of an antiquated public housing project known as Hartford Park, located in Providence, Rhode Island. The district court denied BASIC’s motion for a preliminary injunction prohibiting the scheduled demolition. Project B.A.S.I C. v. Kemp, 721 F.Supp. 1501, 1518 (D.R.I.1989) (PB-I). We affirmed that denial without a published opinion. PHA proceeded to pulverize the structures.

There was more to PB-I, however, than the request for prohibitory injunctive relief. Thus, in addition to denying the prohibitory restrainer, the district court also entered the following decree:

IT IS HEREBY ORDERED that the PHA proceed as soon as possible to begin construction of the 240 public housing units, funded by HUD, needed to replace the 240 units lost due to the past and planned demolition of the highrises at Hartford Park. The PHA is ordered to complete construction of all 240 units of replacement housing within 23 months [14]*14of the date of this Opinion [July 17, 1989].

PB-I, 721 F.Supp. at 1515. In a separate appeal, we ruled that the legal grounds adduced by the district court to justify this mandatory injunction (which we shall refer to as the 1989 Order) were inadequate to that end. Project B.A.S.I.C. v. O’Rourke, 907 F.2d 1242, 1243-47 (1st Cir.1990) (PS-77). We noted, nonetheless, that the 1989 Order might be supportable on other grounds. Id. at 1247-49. For this reason, and mindful of the prospect that “the parties may ... no longer disagree about the order,” id. at 1249, we did not vacate the 1989 Order but left it “in place provisionally,” with directions to the district court to “reconsider the legal basis for its order if [the parties] request it to do so.” Id.

On remand, no such request was made. Rather, the litigants’ energies appear to have been expended principally on an amicable resolution of the underlying problems which had, in the first instance, fomented the law suit. In April 1991, with the district court’s approval, the parties entered into a series of settlement stipulations and consent orders designed to resolve the main dispute over the construction of replacement public housing.

B. The Second Litigation (Phoenix-I).

Much of the replacement housing was being developed by Phoenix-Griffin Group II, Ltd. and built by its affiliate, LTG Construction Co., as the general contractor. Both Phoenix-Griffin and LTG are owned by Lloyd T. Griffin. All are plaintiffs in the second litigation and appellees here. We refer to them collectively as Phoenix and to the second litigation as Phoenix-I.

During the course of Phoenix’s work, a substantial question arose as to whether Phoenix had paid the wage rates required by federal law. The United States Department of Labor (DOL) requested HUD to withhold $500,000 in funds pending resolution of the question. When HUD announced its intention to withhold — or to direct PHA to withhold — $500,000 from the next payment due Phoenix, Phoenix sued both HUD and PHA. It sought injunctive relief, damages, and other remedies, asserting that husbanding the funds was arbitrary and capricious, violated specific laws and regulations, abridged Phoenix’s constitutional rights, and threatened Phoenix with irreparable harm. Among other things, Phoenix asserted that, without access to the $500,000, it would be prevented from paying down its revolving line of credit, thus causing its lead bank to close the spigot. Phoenix feared that it would be unable to complete construction in progress if further advances were denied.

A hearing on Phoenix’s request for a preliminary injunction was held on June 6, 1991. The stated purpose of the hearing was to determine if HUD and/or PHA should be enjoined from withholding payments due to Phoenix under existing contracts. At the hearing, the district judge suggested that HUD, which had directed the holdback, might be in contempt of the 1989 Order. He asked HUD to brief the topic.

Four days after HUD’s brief was served, the court filed a memorandum decision under a dual caption referring to both the new and old cases. Project B.A.S.I.C. v. Kemp, 768 F.Supp. 21 (D.R.I.1991).2 The court stated that its “clear intention at the time of the [1989 Order] was to bind HUD as well as the PHA.” The court remarked that HUD had been an active participant in the litigation leading up to, and following, entry of the 1989 Order, including the earlier appeal. Characterizing HUD’s decision to withhold $500,000 as the product of an interagency turf battle between HUD and DOL — a characterization which HUD emphatically contests — the court ruled that HUD could, and should, have avoided flouting the 1989 Order by issuing a change order to make funds available to Phoenix, notwithstanding DOL’s administrative directive. Hence, HUD could not assert that compliance with the 1989 Order was an impossibility.

[15]*15In the end, the court found that HUD was fully subject to the 1989 Order and had violated it. The court concluded that, “[u]ntil such time as HUD has done everything within its power to move the [replacement housing] project toward completion” as per the preexisting time schedule, the court would not find HUD to have complied with the outstanding order. 768 F.Supp. at 25 (emphasis in the original). The court gave HUD three days within which to resume making payments in the ordinary course. If HUD failed to do so within the three-day period, thus purging itself of the contempt, then:

In order to coerce compliance with my order, I will initially fine the agency $250,000. I will continue to fine it at a rate of $2,000 a day until HUD removes all barriers to completion within its control. The fine will be capped at $500,000 and any monies collected by this Court shall be applied toward completion of the housing.

Id. at 25-26. Cognizant of the tightness of the schedule it had imposed, the district court stayed execution of its order for an additional ten days (until June 27, 1991). During that interval, this appeal was docketed. We granted an appellate stay maintaining the status quo.3

II. ISSUES ON APPEAL

The government advances a host of reasons why the contempt finding cannot stand. It argues, inter alia, that the 1989 Order was rendered nugatory by the stipulations entered into among the parties in the spring of 1991, see supra p.

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947 F.2d 11, 1991 WL 207550, Counsel Stack Legal Research, https://law.counselstack.com/opinion/project-basic-v-kemp-ca1-1991.