Source: http://nj.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20050913_0001148.C03.htm/qx
Timestamp: 2016-10-22 20:01:02
Document Index: 746836888

Matched Legal Cases: ['§ 965', '§ 965', '§ 965', '§ 1437', '§ 1437', '§ 1437', '§ 523', '§ 1437', '§ 1437']

JACKIE MCDOWELL, ET AL.v.PHILADELPHIA HOUSING AUTHORITY (PHA); JOHN WHITE; BARRY MILLERJACKIE MCDOWELL AND THE CERTIFIED CLASS WHOM SHE REPRESENTS, APPELLANT
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA District Court No. 97-cv-02302 District Judge: The Honorable John P. Fullam.
App. at 25. The terms of the settlement were incorporated into a consent decree, which provided that the District Court would retain continuing jurisdiction over the administration and enforcement of the parties' agreement. Id. at 29.
Since a consent decree issued upon the stipulation of the parties has the characteristics of a contract, contract principles govern its construction. See Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 437 (2004); United States v. New Jersey, 194 F.3d 426, 430 (3d Cir. 1999). One of these principles is that an unambiguous agreement should be enforced according to its terms. See United States v. New Jersey, 194 F.3d at 430 (citing Fox v. U.S. Dep't of Hous. & Urban Dev., 680 F.2d 315, 319-20 (3d Cir. 1982)). Whether the decree is unambiguous is a question of law that the Court decides by considering whether, "from an objective standpoint, [the decree] is reasonably susceptible to at least two different interpretations." Id. (citing Hullett v. Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 111 (3d Cir. 1994)).
If the decree is ambiguous, the Court may look to extrinsic evidence of its meaning, see Thermice Corp. v. Vistron Corp., 832 F.2d 248, 252 (3d Cir. 1987), but ambiguities that persist must be construed against the party seeking enforcement. See Harris, 47 F.3d at 1350; accord FTC v. Kuykendall, 371 F.3d 745, 760-61 (10th Cir. 2004). This rule avoids imposing obligations on the parties that they did not bargain for, and it ensures that a party has fair notice of what the decree requires before the serious sanction of contempt is invoked. See United States v. Armour & Co., 402 U.S. 673, 681-82 (1971); Harris, 47 F.3d at 1350.
There can be no doubt that the consent decree obligated the PHA to revise its gas allowances after the rate changes at issue here. This duty emerges unambiguously from the plain text of paragraph 8 of the decree, and the PHA does not deny that this duty was breached. The interpretive question we must answer is how the consent decree permitted the PHA to remedy this breach. The PHA argues that the decree permitted it to offset the shortfall in the allowances the tenants received by revising estimates of tenant gas consumption during the period when the violations were occurring. The tenants argue that the PHA may not offset its sanctions in this manner because the decree does not permit it to adjust the tenants' allowances retroactively based on revised consumption data.
We agree with the tenants. The only paragraph of the decree that discusses consumption is paragraph 7, which permits the PHA, in the course of an annual review, to consider "all changes in circumstances indicating probability of a significant change in reasonable consumption requirements." App. at 25. The word "probability" plainly indicates that the focus of the review is to be prospective. Although paragraph 9 arguably gives limited retroactive effect to some revisions based on consumption changes, it does not follow that the revisions may be retrospective. The unambiguous language of paragraph 7 indicates that revisions must correct for "probab[le]" changes in consumption, not for past consumption levels that, in retrospect, were overstated.
This view is buttressed by HUD regulations whose language the consent decree tracks. Under 24 C.F.R. § 965.502(c), the PHA must give at least 60 days' notice to all tenants before the "proposed effective date" of an adjustment to their allowances. Section 965.507(b) carves out an exception to the notice requirement for adjustments based on rate changes of 10% or more but does not mention adjustments based on consumption changes. Id. § 965.507(b). Adjustments based on consumption changes thus remain subject to § 965.502(c)'s notice requirement. Since such an adjustment may not take effect until 60 days after the tenants have received notice, retroactive adjustments are plainly forbidden under the regulations.
The PHA submits that it was required to retroactively revise the allowances because § 1437a(a)(1) does not allow tenants to pay less than 30% of their monthly adjusted income in rent. The PHA points to dicta in Wright v. Roanoke Redevelopment & Housing Authority, in which the Supreme Court explained that § 1437a permits a housing authority to charge "no more and no less than 30 percent" of a tenant's income as rent. 479 U.S. 418, 430 (1987). According to the PHA, many tenants will end up paying less than 30 percent of their income in rent if allowances based on inflated consumption estimates are left uncorrected.
Even if the language on which the PHA relies were binding, it could not support the PHA's argument. In 1998, over a decade after Wright was decided, Congress rewrote § 1437a(a)(2) and added the following language:
Quality Housing and Work Responsibility Act of 1998, Pub. L. No. 105-276, § 523, 112 Stat. 2518, 2566 (codified at 42 U.S.C. § 1437a(a)(2)(B)(i)(II)) (emphasis added). The amendment takes pains to ensure that the amounts set forth in § 1437a(a)(1) are not construed as minimum rents. Once this putative rent floor is removed, the PHA's argument has nothing left to stand on.
There is consequently no merit to the District Court's conclusion that the tenants failed to show "actual provable injury" resulting from the PHA's violations. The sanction imposed on a civil contemnor for his past conduct may not exceed the actual damages caused by his violation of the court's order. See Gregory v. Depte, 896 F.2d 31, 34 (3d Cir. 1990) (citing Quinter v. Volkswagen of Am., 676 F.2d 969 (3d Cir. 1982)). It does not follow, however, that the tenants' actual consumption of gas is the baseline from which their damages should be measured. As this Court explained years ago in National Drying Machinery Co. v. Ackoff, the offended party's rights under the decree set the baseline for calculating his loss:
Whether an award in civil contempt be measured in terms of a plaintiff's loss or a defendant's profit, such an award, by very definition, must be an attempt to compensate plaintiff for the amount he is out-of-pocket or for what defendant by his wrong may be said to have diverted from the plaintiff or gained at plaintiff's expense.
245 F.2d 192, 194 (3d Cir. 1957); see also Quinter, 676 F.2d at 975 ("[I]n civil contempt proceedings enforcement of the rights and remedies of a litigant is the ultimate object."); cf. Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 455-56 (1932) (permitting the recovery of profits from a patent infringement in violation of a court order even though the patentee could not show damages resulting from the infringement).