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Annunziato v. Gan Inc.

June 26, 1984


Appeal from a decision of the United States District Court for the District of Connecticut (Burns, J.) determining that the defendant was liable for a portion of plaintiffs' legal fees under 42 U.S.C. § 1988; Oakes, J. Dissents in a separate opinion.

Lumbard, Oakes and Cardamone, Circuit Judges.

Author: Cardamone

CARDAMONE, Circuit Judge

This litigation arose out of the sale of The Roger Sherman School. This second oldest public school in New Haven, Connecticut is an elementary school for children from kindergarten to fifth grade and bears the distinguished name of one of Connecticut's representatives to the Constitutional Convention of 1787.

Plaintiffs are all New Haven residents. Some are members of a citizens group protesting New Haven's practice of disposing of its surplus property -- which the group claims amounts to a municipal give-away. A few of the plaintiffs are parents of children who formerly attended the Roger Sherman School. All joined together to object to the closing and sale of this school to The Gan. The Gan is a religious corporation that conducts an institution for Hebrew and general education. Pursuant to its charter, The Gan operates a day school for preschool and elementary school children of the Jewish faith who reside in Greater New Haven.

As a result of the City's sale of the Roger Sherman School to The Gan, plaintiffs instituted this action under 42 U.S.C. § 1983 claiming that the sale violated their constitutional rights. Plaintiffs sought an injunction to prevent the transfer or use of this property by The Gan, and named as defendants the City of New Haven, its Mayor, the Board of Aldermen and its members, the New Haven Board of Education, and The Gan. The complaint and the amended complaint alleged that the sale was an advancement of religion in violation of plaintiffs' rights under the Establishment Clause of the First Amendment. Plaintiffs made other constitutional claims and The Gan responded with equally serious assertions of constitutional privilege, i.e., that its free exercise of religion was threatened by the selective prosecution of this lawsuit against it.

Despite the amount of acrimony and heat generated by the parties, when sifting through the resulting shroud of smoke, there is but little fire remaining, since the substantive litigation between the parties has already been settled. Hence, we need not and do not address any of these constitutional allegations. What remains for us to pass upon is the propriety of an award of counsel fees under 42 U.S.C. § 1988. Following the settlement, The Gan was ordered by the United States District Court for the District of Connecticut (Burns, J.) to pay a portion of plaintiffs' attorney's fees for its role in defending the underlying lawsuit brought against it and the municipal defendants. Since the factual context in which this case arose is critical, we set it forth in some detail.

I Background

In recent years the City of New Haven has been forced for economic reasons to close a number of school buildings because of declining student enrollments. In 1981 the Board of Education commissioned two studies to identify additional school buildings for closing. The consulting firm of Coopers and Lybrand conducted the first study and recommended shutting three schools, including the subject Roger Sherman School. The second study, conducted by the Board itself, also concluded that the Roger Sherman School should be shut down, based upon the estimate that over $335,000*fn1 of capital expenditures were needed to keep the school open. As a result of these recommendations, the New Haven Board of Education voted on January 25, 1982 to close up the Roger Sherman School at the end of the 1981-82 school year.

Like other urban centers the City of New Haven encounters difficult dilemmas regarding the schools it takes out of service. At the time of the hearing in this case, the City had approximately 14 non-functional buildings in its surplus property inventory, some of which had not been used for over ten years. In order to prevent further deterioration of these idle structures, the City must heat and maintain them. The escalating costs of these services for these mostly older and energy inefficient buildings are exacerbated by acts of vandalism, graphically revealed by the photographs in this record. In short, the buildings are eyesores and burdensome to the public fisc. To meet this problem, New Haven adopted a program to encourage urban revitalization. To implement the plan and encourage would-be buyers of its surplus property, the City sold various parcels of its real estate for one dollar to a wide variety of organizations pursuant to rehabilitation agreements. In addition, the City sold other parcels at prices far below its own acquisition costs. These sales furthered the City's rehabilitation goals. Although the cash inflow from these sales had little positive impact upon the City's financial position, they nevertheless served to stem the City's plight of being required to throw good money after bad. At the onset of this litigation, these practices had been long in effect.

It was at this juncture that The Gan expressed its interest in acquiring the Roger Sherman School. As a nonprofit organization operating an Orthodox Jewish Day School, The Gan commenced holding classes for children in 1977. At that time it used rented quarters. In 1982 it sought new quarters because its lease was due to expire, and because the school's enrollment had grown. On January 26, 1982 The Gan learned from published stories that the City had decided to close the Roger Sherman School and promptly wrote the Mayor offering to buy it for $30,000. The Gan indicated the need for a ready response to its proposal because of the imminent expiration of its lease. Advantages that could inure to the City, were The Gan to purchase the Roger Sherman School, were also highlighted in the letter. For example, the City would be relieved of the costs associated with heating, maintaining and protecting an idle building, which amounted to approximately $50,000 per annum, and the sale would aid the City's revitalization program.

After receiving an affirmative review in his office, the Mayor sent The Gan's proposal to the Board of Aldermen, together with his recommendation that the Board act favorably upon it. After pointing out the difficulties and "years of trial" associated with the City's past efforts to market similar structures, the Mayor noted three distinct advantages of the proposal that would accomplish many of the City's primary goals: first, the immediate occupancy of the building would eliminate any possibility of vandalism to the structure; second, the building would remain in use as a school; and third, the sale to The Gan would insure the continued operation of a New Haven based private education center. In mid-February the City Planning Commission, to which the proposal had been referred, conducted a public hearing and unanimously approved The Gan proposal. The Commission noted particularly in its report the beneficial effect of the surrounding neighborhood that would result were The Gan to become the owner of the school. Thereafter, the Municipal Services Committee of the New Haven Board of Aldermen, after another public hearing, also voted unanimously in favor of the proposal.

The proposal was then put in the form of a resolution and submitted to the full Board of Aldermen. Alderman Zelinsky first spoke in support of selling the property to The Gan for $30,000. Alderwoman Azzaro next spoke and, of her own volition, moved to amend the resolution to reduce the purchase price to $1. The motion to amend passed by a vote of 15-12, and the amended resolution was approved by a vote of 24-2-1. By this vote the Board unilaterally reduced the purchase price to $1, without prior consultation with The Gan or any of its officers. The Mayor officially approved the action of the Board of Aldermen and the sale was closed on March 15, on the terms set by the Board.

Under the original terms of the contract, possession was slated for July 1, 1982, but by prior agreement of the parties, transfer of possession was advanced to June 18. On June 22 The Gan took full control of the property and began offering summer school classes to its students. After moving in, The Gan made extensive capital improvements to the school building. It constructed quarters for a resident janitor, installed a burglar alarm system and contracted for landscaping and other repairs. It intends to embark on a three phase renovation program with the bulk of the labor to be provided without charge by its members. The planned work includes upgrading the heating system, installing storm windows, improving the wiring, caulking, remodeling classrooms, replacing cracked skylights in the lavatories, upgrading the bathrooms, doing roof and gutter work, insulating, painting, pointing the brickwork, and fencing. The total cost of this rehabilitation is estimated by The Gan at $270,000.

II The Lawsuit

In June 1982 the plaintiffs filed the instant action. They sought an injunction from the district court to prevent the transfer of the Roger Sherman building to The Gan and a declaratory judgment that the sale of the school violated their constitutional rights. On June 25, when plaintiffs apparently first became aware that the building had already been transferred, the complaint was amended to seek an injunction preventing The Gan from using the building. Plaintiffs additionally asked that the ...

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