DENISE COTE, District Judge.
The United States ("Government") has objected to the Opinion of March 16, 2012 ("Opinion") issued by the Honorable Gabriel Gorenstein insofar as it sustained the objection of Westchester County ("County") to one portion of the Report and Recommendation of the Monitor James E. Johnson ("Monitor") dated November 14, 2011 ("Report"). At its essence, this dispute concerns whether the veto of legislation breached the duty to promote the legislation. For the following reasons, the Government's objection to the Opinion is well-founded, and the Monitor's Report is upheld in its entirety.
This litigation began six years ago. In 2006, the Anti-Discrimination Center of Metro New York, Inc., acting as a
Following the completion of discovery, partial summary judgment was entered against the County.
On August 10, 2009, the Government intervened and elected to proceed with this action, filing its own complaint. The Government's complaint alleged violations of the FCA and of the Housing and Community Development Act. Simultaneously, the Government submitted an executed settlement of the litigation ("Settlement").
The Settlement provided for the County to pay the Government $30 million, with $21.6 million of that amount credited to the County's account with HUD for development of housing in accordance with the Stipulation. The County was also required to secure $30 million in additional funding for such housing development over six years.
The Settlement also provided for injunctive relief. Among other things, a Monitor was appointed and given authority,
In the Settlement, the Country agreed to affirmatively further fair housing in a variety of ways. These included the development of 750 units of new affordable housing ("Affordable AFFH Units") over the course of seven years in areas with low black and Hispanic populations. Of particular significance to this dispute, the Settlement required the County to "promote, through the County Executive, legislation currently before the [County's] Board of Legislators to ban `source-of-income' discrimination in housing," and to "incorporate" that undertaking in the Country's AI, which the County was required to submit to HUD. As the Monitor noted in his December 31, 2011 biennial report, legislation to ban source of income discrimination in housing (herein "source-of-income legislation") "if it were to become law, would prevent landlords from refusing to rent to tenants solely on the grounds that a person's income is derived from government programs such as Section 8, Social Security, or disability benefits." The County itself has noted that "Section 8 vouchers are a major source of assistance for low and very low income families and that reluctance by landlords to accept Section 8 continues to be a challenge."
In addition, the Settlement required the Country to identify specific zoning practices within the County that hinder the development of Affordable AFFH Units. The Country agreed to establish a process for notifying the implicated municipalities of changes that must be made to such zoning practices and the consequences for a failure to make those changes.
At the time of the Settlement, the Country's Board of Legislators ("Board") had legislation before it that prohibited housing discrimination by landlords based on source of income. While the Board approved the Settlement, it did not approve the legislation before the end of its session in December 2009. Nonetheless, County Executive Andrew J. Spano ("Spano") had written to the Board in October 2009 urging the passage of the legislation and in November had written letters to five housing advocacy organizations urging them to advocate for passage of the legislation.
On January 19, 2010, source-of-income legislation was reintroduced in the Board's new legislative session. The Board held at least eight meetings on the proposed legislation, as well as public hearings. Spano's successor, County Executive Robert Astorino ("Astorino"), who took office on January 1, did not participate in any of the meetings or hearings. The Board's Committee on Legislation ("the Committee") submitted an amended version of the legislation to the Board on May 10. In a May 10 memorandum accompanying the proposed legislation, the Committee stated that source-of-income legislation "would prevent the growing trend of discrimination based upon a person's source of income, which creates an extreme hardship for individuals with lower incomes, including the disabled and the elderly, and for families transitioning from welfare to work." The Committee further stated that the proposed legislation "complies with the County's obligations in its fair housing contract with [HUD]."
On June 14, the Board passed the source-of-income legislation. Astorino vetoed it on June 25. That veto is at the heart of the dispute before this Court.
Through a letter of July 13, 2011, HUD notified the County that the County's revised AI did not meet the requirements of the Settlement since it did not incorporate the corrective actions which HUD had specified in a May 13 letter regarding "promotion of source-of-income legislation or plans to overcome exclusionary zoning practices." HUD therefore rejected the County's certification that it would affirmatively further fair housing, as well as the County's FY 2011 Annual Action Plan ("FY 2011 Plan"). As a consequence of HUD's disapproval of the FY 2011 Plan, the County ceased being a grantee of federal Community Planning and Development programs covered by the County's AI, effective May 1, 2011.
In response to the federal funding cut-off, the County invoked the dispute-resolution procedures in the Settlement and sought the Monitor's assistance on July 20 in resolving its dispute with HUD. The Government also invoked the dispute-resolution procedures of the Settlement in an August 18 letter. It identified two relevant issues as the Country's failure to promote legislation prohibiting discrimination on the basis of source-of-income and its failure to establish a process for addressing exclusionary zoning practices.
With respect to the County's obligation to promote source-of-income legislation, the Government requested in its August 18 letter that the Monitor resolve the following dispute between the parties:
On November 14, the Monitor issued his Report responding to the parties' requests. Among other things, he found that the County was in breach of its obligation to promote source-of-income legislation, and that by February 29, 2012, it should analyze zoning ordinances in connection with the required Analysis of Impediments.
The Report explained in detail the legal and factual bases for its finding that the County was in breach of its obligation to promote source-of-income legislation. It identified the key questions for resolution as "(a) what does it mean to `promote' the Source of Income legislation through the County Executive; (b) over what period of time did that duty exist; and (c) did the County Executive discharge that duty." The Monitor concluded that while the "Settlement does not mandate the ultimate adoption of Source of Income legislation," the acts undertaken by the County Executive were insufficient to constitute promotion. The Report reviewed definitions of promotion that included "to help or encourage to exist or flourish," "to bring or help bring into being," and "to contribute to the growth, enlargement, or prosperity of." Using these and similar definitions of the term "promote", the Report found that "[n]either the single letter [sent by Spano] to the [Board], nor the five letters to advocacy organizations, taken separately or together, can be credibly considered as acts sufficient" to constitute promotion, and that the veto by Astorino "vitiated any prior act of promotion and placed the County in breach of the Settlement."
The County appealed these and other determinations to the Magistrate Judge. In a March 16, 2012 Opinion, the Magistrate Judge sustained the County's objection to the Monitor's finding that the Settlement required the County Executive to sign the source-of-income legislation.
The Government has filed an objection seeking review by this Court of the portion of the Opinion that concluded that the County Executive's veto of source-of-income legislation passed by the Board did not violate the Settlement. No party has filed objections to the remainder of the Opinion, which sustained other portions of the Monitor's Report. The briefing on the Government's objection was fully submitted on April 13.
A district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C). The court shall conduct a
As an initial matter, the parties dispute whether this Court has jurisdiction over the Government's objection to the Opinion. The County argues that the parties consented in ¶ 14 of the Settlement to the Magistrate Judge issuing a final order resolving any dispute between them, pursuant to 28 U.S.C. § 636(c).
Upon the consent of the parties, a [magistrate judge] may conduct any or all proceedings in a jury or nonjury civil matter and order the entry of judgment in the case[.]" 28 U.S.C. § 636(c). The consent of each party to the magistrate judge exercising plenary jurisdiction under § 636(c) must be "clear and express."
Paragraph 14(d) of the Settlement does not constitute the parties' consent to the magistrate judge's plenary jurisdiction. To the contrary, the Settlement provides in ¶ 14(d) that should a party to the Settlement seek review of the Monitor's report and recommendation from the magistrate judge, "the relevant provisions of the Federal Rules of Civil Procedure, the Local Rules and the Court's Individual Rules governing reports and recommendations from a magistrate judge shall apply." Under those provisions, a timely objection from a party to the magistrate judge's report and a recommendation must be resolved
Resolving the Government's objection requires interpretation of the Settlement, a consent decree between the Government and the County. Consent decrees "reflect a contract between the parties (as well as a judicial pronouncement), and ordinary rules of contract interpretation are generally applicable."
"[W]hen faced with unclear language in a consent decree, a court of equity may, in construing the provision, consider the purpose of the provision in the overall context of the judgment at the time the judgment was entered."
Paragraph 33(g) of the Settlement provides: "As part of its additional obligations to [affirmatively further fair housing], the County shall . . . promote, through the County Executive, legislation currently before the Board of Legislators to ban `source-of-income' discrimination in housing." As the Monitor noted, "the key questions" for resolving whether the County has breached the Settlement by failing to fulfill this obligation are:
The parties effectively agree that the County's obligation to "promote" source-of-income legislation must be understood in accordance with the plain meaning and normal, everyday usage of the term. As the Second Circuit has recently observed, "[t]he ordinary meaning of `promote' includes `to bring or help bring into being,' to `contribute to the growth, enlargement, or prosperity of,' or to `encourage' or `further'."
Thus, the answer to the first "key" question is straightforward. The County's obligation to "promote" source-of-income legislation required the County Executive to take active steps to foster and facilitate passage of the legislation. Those obligations are not limited to hortatory steps.
The answer to the second question is also easy to discern from the structure and terms of the Settlement itself. The County's obligation to promote source-of-income legislation is an ongoing obligation, and did not terminate upon the expiration of the 2009 legislative session. Paragraph 33, the paragraph that requires the County to promote source-of-income legislation, does not contain any time limitation. In contrast, the parties were careful to set forth specific time limitations and deadlines for other obligations imposed by the Settlement, and to provide mechanisms by which the County might seek an extension of those deadlines, for example, in connection with the implementation plan mandated by ¶ 18 of the Settlement.
Any other interpretation of the County's obligation to promote source-of-income legislation would also be inconsistent with the structure of the County's obligations under the Settlement as a whole, and thus is disfavored. The Settlement requires the County to "incorporate each undertaking set forth in [¶ 33] in the the County's AI." Settlement ¶ 33(i). The County was originally required to submit its AI to HUD 120 days after the Settlement was entered. The Settlement provided a mechanism by which the County could seek an extension of that deadline. At the earliest, therefore, the Settlement contemplated an AI submission deadline of December 9, 2009, only weeks before the end of the 2009 BOL session. The County took advantage of the opportunity for an extension, however, and did not submit its AI to HUD until July 23, 2010. As noted, the Settlement required the County to address at that time within its AI, its obligation to promote, through the County Executive, the legislation currently before the Board to ban source-of-income discrimination in housing. Thus, the settlement contemplated a continuing duty to advise HUD of the County's efforts to promote source-of-income legislation.
Finally, the County breached its obligation to promote source-of-income legislation. The County does not dispute that County Executive Spano's single letter to the Board and five letters to advocacy organizations during the fall or 2009 do not constitute efforts sufficient to discharge the County's obligation to promote, through the County Executive, source-of-income legislation. It is also undisputed that the sole action the County Executive has taken since December 2009 in relation to the legislation he is obligated to promote is to veto it. It is unnecessary to decide the precise contours of the duty to promote that the Settlement imposed on the County. Under no reasonable understanding of the term can the County Executive be said to have discharged the obligation to promote source-of-income legislation when he vetoed the legislation. The veto was an unambiguous breach of the duty to promote.
Paragraph 13(c) of the Settlement grants the Monitor authority to "[i]dentify, recommend, and monitor implementation of additional actions by the County needed to ensure compliance with [the Settlement]." The Monitor has recommended, pursuant to ¶ 13(c), that
"Until parties to [a consent decree] have fulfilled their express obligations, the court has continuing authority and discretion — pursuant to its independent, juridical interests — to ensure compliance."
The County raises disputes at each stage of the analysis above. First, the County argues that actions of promotion encompass acts of persuasion or advocacy only. While the County points to the
In
The County also argues that other obligations it assumed in ¶ 33 of the Settlement indicate its obligation under ¶ 33(g) to promote source-of-income legislation is limited to acts of persuasion. It argues that the other tasks and actions set forth in ¶ 33 require it only to undertake acts of persuasion.
Next, the County contends that ¶ 33(g) applies only to legislation before the BOL during its 2009 session. The County emphasizes that the phrase "currently before the [BOL]" is not set off by commas. When ¶ 33(g) is read not in isolation, but in the context of the County's Settlement obligations as a whole, it is clear that the obligation did not terminate with the end of the 2009 legislative session. Such a reading would frustrate the clear intention of the parties that the County's commitment to promote source-of-income legislation be incorporated as an ongoing obligation into its AI. The more reasonable reading of "currently before the [BOL]" is as a description of the type of legislation the County has an obligation to promote: the bill then pending before the BOL or legislation sufficiently similar to it. The County has not pointed to any material differences between the source-of-income legislation pending before the Board in August 2009 and the amended version passed by the Board in June 2010.
With respect to the question of whether the County breached the Settlement, the County argues that the Settlement did not obligate the County Executive to
The Monitor also correctly found that Astorino's veto constituted, by itself, a breach of the County's obligation under ¶ 33(g) of the Settlement. The County is correct that the term "promote" has a different meaning from the term "enact". While the Settlement did not require the County to guarantee passage of the legislation, it required the County Executive to promote that passage. As already discussed, the terms "promote" and "enact" are not mutually exclusive; failing to take an action which is necessary to enact legislation — particularly when it is the final act — may also constitute a failure to promote that legislation, i.e. to "bring [the legislation] into being."
The County claims that constitutional principles would be violated if the Monitor's interpretation and application of ¶ 33(g) is upheld. None of these arguments has merit.
The County cites to
The County raises two related arguments that proceed from the assumption that an interpretation of ¶ 33(g) of the Settlement obliging the County Executive to sign source-of-income legislation passed by the Board involves a surrender of "sovereign power." The County argues that such an interpretation would violate the "reserved powers doctrine." The County also argues that the "unmistakability doctrine" should be applied to construe the Settlement so as not to oblige the County Executive to sign source-of-income legislation passed by the Board. These arguments will be addressed in turn.
The reserved powers doctrine "describe[s] the uncontroversial proposition that a state may not enter a contract that `surrenders an essential attribute of its sovereignty' and that, as a consequence, the Contracts Clause may not be used to compel a state to adhere to a contract that purports to achieve such a result."
The County is incorrect that this dispute implicates the reserved powers doctrine. First, the County has failed to point to a case supporting the proposition that the reserved powers doctrine applies to an agreement entered into by a
The unmistakability doctrine is a rule of contract construction which provides that in "a contract with a sovereign government . . . an ambiguous term of a grant or contract [will not] be construed as a conveyance or surrender of sovereign power."
Finally, the County argues that the interpretation of ¶ 33(g) of the Settlement adopted here violates the Constitution's Guarantee Clause.
The Magistrate Judge's Opinion overruled the County's objections to several other portions of the Monitor's Report. The Opinion agreed with the Report that the County must specify its strategy for overcoming exclusionary zoning practices, and that the Monitor may require the County to identify the types of municipal zoning practices that would, if not remedied by the municipality, cause the County to pursue legal action. The Opinion also overruled the County's objections to the Monitor's refusal to rule on the propriety of HUD's rejection of the County's AI. Neither party has objected to these portions of the Opinion, and the Magistrate Judge's findings with respect to these three issues are not clearly erroneous. The Court therefore adopts these sections of the Opinion.
The Government's objection to the Magistrate Judge's March 16 Opinion is sustained. The Court adopts those sections of the Monitor's Report dealing with the County's obligation to promote source-of-income legislation. The remaining sections of the March 16 Opinion are adopted.
SO ORDERED: