United States v. Starrett City Associates, Starrett City, Inc., Delmar Management Company

840 F.2d 1096, 1988 U.S. App. LEXIS 2776
CourtCourt of Appeals for the Second Circuit
DecidedMarch 1, 1988
DocketDocket 87-6132; 1483
StatusPublished
Cited by50 cases

This text of 840 F.2d 1096 (United States v. Starrett City Associates, Starrett City, Inc., Delmar Management Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Starrett City Associates, Starrett City, Inc., Delmar Management Company, 840 F.2d 1096, 1988 U.S. App. LEXIS 2776 (2d Cir. 1988).

Opinions

MINER, Circuit Judge:

The United States Attorney General, on behalf of the United States (“the government”), commenced this action under Title VIII of the Civil Rights Act of 1968 (“Fair Housing Act” or “the Act”) against defendants-appellants Starrett City Associates, Starrett City, Inc. and Delmar Management Company (collectively, “Starrett”) in the United States District Court for the Eastern District of New York (Neaher, J.). The government maintained that Starrett’s practices of renting apartments in its Brooklyn housing complex solely on the basis of applicants’ race or national origin, and of making apartments unavailable to black and hispanic applicants that are then made available to white applicants, violate section 804(a), (b), (c) and (d) of the Act, 42 U.S.C. § 3604(a) (d) (1982).

The parties made cross-motions for summary judgment based on extensive documentary submissions. The district court granted summary judgment in favor of the government and permanently enjoined appellants from discriminating on the basis of race in the rental of apartments. Starrett appeals from this judgment.

[1098]*1098BACKGROUND

Appellants constructed, own and operate “Starrett City,” the largest housing development in the nation, consisting of 46 highrise buildings containing 5,881 apartments in Brooklyn, New York. The complex’s rental office opened in December 1973. Starrett has made capital contributions of $19,091,000 to the project, the New York State Housing Finance Agency has made $362,720,000 in mortgage loans, and the U.S. Department of Housing and Urban Development subsidizes Starrett’s monthly mortgage interest payments. The United Housing Foundation abandoned a project to build a development of cooperative apartments at the Starrett City site in 1971. Starrett proposed to construct rental units on the site on the condition that the New York City Board of Estimate approve a transfer to Starrett of the city real estate tax abatement granted to the original project. The transfer created “substantial community opposition” because “the neighborhood surrounding the project and past experience with subsidized housing” created fear that “the conversion to rental apartments would result in Starrett City’s becoming an overwhelmingly minority development.” United States v. Starrett City Assocs., 660 F.Supp. 668, 670 (E.D.N.Y.1987). The transfer was approved, however, “upon the assurance of Starrett City’s developer that it was intended to create a racially integrated community.” Id.

Starrett has sought to maintain a racial distribution by apartment of 64% white, 22% black and 8% hispanic at Starrett City. Id. at 671. Starrett claims that these racial quotas are necessary to prevent the loss of white tenants, which would transform Star-rett City into a predominantly minority complex. Starrett points to the difficulty it has had in attracting an integrated applicant pool from the time Starrett City opened, despite extensive advertising and promotional efforts. Because of these purported difficulties, Starrett adopted a tenanting procedure to promote and maintain the desired racial balance. This procedure has resulted in relatively stable percentages of whites and minorities living at Star-rett City between 1975 and the present. See id. at 672.

The tenanting procedure requires completion of a preliminary information card stating, inter alia, the applicant’s race or national origin, family composition, income and employment. The rental office at Star-rett City receives and reviews these applications. Those that are found preliminarily eligible, based on family composition, income, employment and size of apartment sought, are placed in “the active file,” in which separate records by race are maintained for apartment sizes and income levels. Applicants are told in an acknowledgement letter that no apartments are presently available, but that their applications have been placed in the active file and that they will be notified when a unit becomes available for them. When an apartment becomes available, applicants are selected from the active file for final processing, creating a processed applicant pool. As vacancies arise, applicants of a race or national origin similar to that of the departing tenants are selected from the pool and offered apartments.

In December 1979, a group of black applicants brought an action against Starrett in the United States District Court for the Eastern District of New York. The district court certified the plaintiff class in June 1983. Arthur v. Starrett City Assocs., 98 F.R.D. 500 (E.D.N.Y.1983). Plaintiffs alleged that Starrett’s tenanting procedures violated federal and state law by discriminating against them on the basis of race. The parties stipulated to a settlement in May 1984, and a consent decree was entered subsequently, see Arthur v. Starrett City Assocs., No. 79-CV-3096, slip op. at 1 (E.D.N.Y. April 2, 1985). The decree provided that Starrett would, depending on apartment availability, make an additional 35 units available each year for a five-year period to black and minority applicants. Id. at 10.

The government commenced the present action against Starrett in June 1984, “to place before the [cjourt the issue joined but left expressly unresolved” in the Arthur [1099]*1099consent decree: the “legality of defendants’ policy and practice of limiting the number of apartments available to minorities in order to maintain a prescribed degree of racial balance.” United States v. Starrett City Assocs., 605 F.Supp. 262, 263 (E.D.N.Y.1985). The complaint alleged that Starrett, through its tenanting policies, discriminated in violation of the Fair Housing Act. Specifically, the government maintained that Starrett violated the Act by making apartments unavailable to blacks solely because of race, 42 U.S.C. § 3604(a); by forcing black applicants to wait significantly longer for apartments than whites solely because of race, id. § 3604(b); by enforcing a policy that prefers white applicants while limiting the numbers of minority applicants accepted, id. § 3604(c); and by representing in an acknowledgement letter that no apartments are available for rental when in fact units are available, id. § 3604(d). Because the government had refused to intervene in the Arthur suit, defendants moved to dismiss this suit as barred under the judicial estoppel doctrine. On April 2, 1985, that motion was denied. 605 F.Supp. at 265.

Following a period for taking discovery, the government moved for summary judgment on January 30, 1986. Defendants made a cross-motion for summary judgment on May 5, 1986. Extensive documentary submissions were made, and arguments on the motion were heard on August 26, 1986.

Starrett maintained that the tenanting procedures “were adopted at the behest of the [sjtate solely to achieve and maintain integration and were not motivated by racial animus.” 660 F.Supp. at 673. To support their position, appellants submitted the written testimony of three housing experts. They described the “white flight” and “tipping” phenomena, in which white residents migrate out of a community as the community becomes poor and the minority population increases, resulting in the transition to a predominantly minority community. See id. at 674.

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Bluebook (online)
840 F.2d 1096, 1988 U.S. App. LEXIS 2776, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-starrett-city-associates-starrett-city-inc-delmar-ca2-1988.