S.S. Silberblatt Inc. v. East Harlem Pilot Block

The principal question raised by this appeal is whether the Secretary of Housing and Urban Development may be held liable to a general contractor for amounts due on a project financed under § 236 of the National Housing Act, as amended, 12 U.S.C. § 1715z-1 (the Act).1 Plaintiff-appellant, S.S. Silberblatt, Inc., agreed as general contractor with East Harlem Pilot Block Buildings 1-4 Housing Development Fund Co., Inc. (East Harlem) to construct a large apartment structure, Taino Towers, located in the East Harlem section of Manhattan. East Harlem is a non-profit, assetless community organization. The building was planned and supervised as a joint venture of East Harlem and HUD. Construction financing was provided by Chemical Bank, with the mortgage insured under § 236(j) of the Act. As a result of financial problems and construction delays encountered by the project in early 1976, Chemical Bank assigned the mortgage to HUD. Silberblatt suspended construction and some time later was dismissed by East Harlem prior to completion of the project. Silberblatt sued HUD, East Harlem and Chemical Bank in the New York State Supreme Court seeking to recover amounts allegedly owing it for work performed on the project. At the instance of the Secretary the action was removed to the District Court for the Southern District of New York under 28 U.S.C. § 1442(a)(1) and assigned to Judge Milton Pollack. After a lengthy period during which the litigation was held in abeyance while the parties engaged in unsuccessful settlement negotiations, Judge Pollack rendered a decision on November 8, 1978, granting summary judgment in favor of the Secretary and Chemical Bank, and partial summary judgment to East Harlem, with remaining state law claims against East Harlem remanded to the state court.