NOT RECOMMENDED F OR FUL L -TEXT PUB L I CATI ON File Na me: 12a0317n.06 No. 10-4501 UNI TED STATES COURT OF A PPEAL S FOR THE SI XTH CI RCUI T

J OHN S. MEACHAM; B ARBARA MEA CHAM; Plaintif fs-Appellants,

v. CI TY OF AKRON DEPARTMENT OF PL ANNI NG AND URB AN DEV EL OPMENT, et al., Defendants, UNI TED STATES DEPARTMENT OF HOUSI NG AND URB AN DEV EL OPMENT, Defendant-

Appellee

. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ON AP PEAL FR OM T HE UNI TED STATES DI STRI CT CO U RT FOR THE NOR T H E RN DI STRI CT OF OH I O

O P I N I O N

BEF ORE: GUY, COL E, and ROGERS, Circuit J udg es. COL E, Circuit J udg e. The City of Akron appropr iated J ohn and Ba rbar a Meac ham’s home in an eminent domain proce eding in order to r edeve lop a bli g hted area with fede ral funds. Akron identified what it considere d an adequate substitut e for th e M ea ch am s ’ home, and offe red near ly $80,000 in fede ral repla ceme nt h o u s i n g as sistance to cover the differ ence betwee n the eminent domain jury awa

rd and the substitut e home’s purcha s e price

. The Meac hams disag ree d that the identified home was an adequate substitut e, and, afte r having their administrative complaint denied, filed suit in the district court. T h e d i s t ri ct court there afte r g rante d the g overnme nt’s motion forNo. 10-4501

Meac ham v. City of Akron judgme nt on the rec ord, aff irming HUD’ s revised deter mination that the Meac hams w e r e not entitled to anyrepla ceme nt housing a ssistance. F or the following rea sons, we AF FI RM. I . BA CKGROUND The Meachams owned a home at 630 Diag onal Road in Akron, Ohio ( “630 Diag onal”) , in

a blighted ar ea k n own as the Crouse Redeve lopment District. I n 1998, there was a fire, and the Meac hams moved out of t he home. I n 2001, they transfe rre d owner ship of the home to Thomas Fa ulknier. Around the same time that the Meac hams transfe rre d their interest to Fa ulknier, the City of A k ron (“A kron”) was rede veloping proper ty in the are a as part of the Crouse Redeve lopment Pr o je c t, using funds from the Depa rtment of Housing and Urba n Deve lopment (HUD ). After an attempt in November 2003 to purcha se the p roper ty direc tly failed, Akron attempted to appropr iate 630 Diag onal in an eminent domain proce eding in Summi t County Probate Court. On Aug ust 31, 2005, Ba rba ra Meac ham rea cquire d an interest in 630 Diag onal via a land installment contra ct with Fa ulknier. The ne x t day , the eminent domain proce eding commence d. On November 7, 2005, a

1 jury awa rded the Meac hams $220,000 as just compensation for the appr opriation.

There is some question as to when the Meac hams executed the l an d i n s t all ment contra ct 1 with Fa ulknier. There is a land installment contra ct betwee n the Meac hams and Fa ulknier, enter ed into on October 19, 2003, that appea rs in the administrative rec ord. I n 2007, the Meac hams’ attorney wrote to a HUD reloc ation specia list, stating that the 2003 contra ct was “inadve rtently included in [t he appropriate land contra ct’s] place .” He t h en enclose d “a corre ct copy of t he refer ence d L and Contract” which was the 2005 contra ct. The 2003 contra ct does not a ppear in the Summi t County sales informa tion recor ds. - 2 -No. 10-4501

Meac ham v. City of Akron Be cause HUD funds wer e used, th e Un i form Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA) applied, which g rants re l o cation assistance to displaced homeowner s. 42 U.S.C. § 4621-38. The URA per mits t he hea d of the displacingag ency to make

a pay ment, in addition to the jury awa rd, to assist the homeowner i n acquiring a compar able repla ceme nt home. 42 U.S.C. § 4623(a) (1). Akron identified a home at 590 Diag onal Road that it deeme d “compa

rable ” to 630 Diag onal, and offe red the Meac hams an a dditional $79,000 to make up the diffe renc e betwe en the jury awa rd ($220,000) and the 590 Dia g onal price ($299,000). The Meac hams believed that the proper ty at 590 Diag onal was an inadequa te substitut e for their home, and reque st ed t h at t h e $79,000 in repla ceme nt housing assistance be incre ased to $295,000. Akron’s Depa rtment of Planning and Urba n Deve lop m en t d en ied the reque st. The Meac hams then contac ted a reloc ation specia list at HUD, who direc ted Ak r on to rec onsider and offe r

a more compar able home. A fter mor e than six m onths of neg otiations be tween Akron, HUD, and the Meac hams, HUD formally denied the Meac hams’ appea l for additional funds (“H UD’s 2006 deter mination”). The M ea chams soug ht judicial relief , appea ling HUD’ s decision to the district court. Meac ham v. W

oolford , No. 06-CV-2447, 2007 WL 10 8 7 6 0 9 (N.D. Ohio April 9, 2007). HUD

m o v ed to rema

nd for further ag ency action, contending “that it is now questionable wheth er [ t h e Meac hams] actua ll y h ad an o wn er ship interest in the proper ty at issue.” Id. at *3. At issue was whether the land contra ct betwee n the Meac hams and Fa ulknier occur

red long enoug h b ef

o re the i nitiation of neg otiations betwee n Akron and the Meac hams to qualify the Meac hams fo r

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Meac ham v. City of Akron

re p l ac ement housing assistance

. The district court g rante d the motion and rema nded the case for further inquiry by HUD. Id. at *4. On rema nd, HUD came into possession of documents show i n g ad d i t ional history of 630 Diag onal g oing back to HUD’ s initial purcha se offe r in November 2003. HUD deter mined that prior to this date, the Meac hams had not occupie d the home for sever al y ear s beca use of the fire in 1998. Multipl e appra isers, one in Aug ust 2003 and another two y ear s later, commented that the home was

vac ant. HUD also had evidenc e that J ohn Meac ham had admitted, in November 2003, to not occupy ing the home beca

use of the fire. I n light of HUD regulations that require the homeowner to have been an occupa

nt of the home prior to the formal initiation of neg otiations, HUD made a final deter minatio n ( “ H U D ’ s 2 0 0 8 d e te r mi n a tion”) that the Meac hams wer e not displaced persons elig ible for repla ceme nt housing assistance

. The Meac hams rema ined elig ible for rea sonable and actual moving e x penses. The Meac hams appea led HUD’ s 2008 deter mination to the district court, insisti ng that they

wer e elig ible for repla ceme nt housing assistance , and that the decision was arbitra ry , capr icious, and unsupported by substantial evidenc e. HUD moved fo r j u d gm ent on the record, which the di strict court g rante d. This appea l followed. I I . ANAL YSI S T h e Meac hams arg

ue that deter

minations of their occupa ncy and owner ship status were

err oneous, that the appea ls proce ss provided by HUD failed to comply with fede ral law and violated their constitutional due proce ss rig hts, and that HUD’ s initial 2006 denial of the Meac hams’ reque st

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Meac ham v. City of Akron for additional repla ceme nt housing assistance is not supported by substantial evidenc e. We addre ss

eac h in turn. A. Standard of Review We revie w de novo the di strict court’s e ntry of judg ment on the administrative re cord, but apply the same leg al standard as the district court did in the proce eding s below. W hitaker v. Hartford Life & Acc

. Ins. Co. , 404 F.3d 947, 949 (6t h C i r. 2005). “Ag ency actions involving reloc ation assistance under the URA are subject to judicial revie w under the Administrative Procedur e Act, 5 U.S.C.A. §§ 701 et seq .” Kroger Co. v. Regional Airport Auth. of Louisvill e , 286 F.3d 382, 386 ( 6th Cir. 2002). The Meac hams asser

t that HUD’s d eterminations must be viewed under a “substantial evidenc e” standard in light of Nagi v. United States , 751 F.2d 826 (6th Cir. 1985). We clar ified Nagi in Kroger , rea soning that the “substantial evidenc e” standard need only be adopted by a revie wing court if the deter

mination at issue followed a statutorily require d hear ing on the rec ord. Kroger , 286 F.3d at 387. Be cause the UR A does not provi d e fo r a h ea ri ng , we will set aside HUD’s findings, conclusions, or actions “only if they wer e arbitra ry , capr icious, an abuse of discretion, or otherwise not in accor dance with the law.” Id. (quoting 5 U.S.C. § 706(2)(A) ). Our revie w under this standard is narr ow, and is lim ited to the rec ord upon which HUD relied. Id. Nonethele ss, we must ensure that HUD “examine[d] the rele vant data and articula te[d]

a satisfac tory explanation for its action including a rational connec tion betwee n the fac ts found and the choice made.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto Ins. Co. , 463 U.S. 29, 43 (1983) (interna l quotation marks and citation omitted). Although our revie w must be “sea rching - 5 -No. 10-4501

Meac ham v. City of Akron and car eful,” we need not reve rse solely beca use HUD’ s decision is “of less than i d ea l clar ity .” Bowman Transp., Inc. v. Arkansas-Be st Freight Sys. , 419 U.S. 281, 2 8 5 -8 6 (1974) (citations omitted). B. HUD’ s 2008 Determination HUD ’s 2 0 0 8 deter

mination rea soned that the Meac hams did not qualify for repla ceme nt housing a ssistance be cause they failed to c omply with g overning HUD regulations. Eligibility for such assistance require s that the homeowner “[h] as actua lly owned and occupie d the displaceme nt dwelling for not less than 180 day s immediately prior to the initiation of neg otia t i ons . . . .” 49 C.F.R. § 24.401(a) (1). The initiation of neg otiations occur s upon “the delivery of th e initial

wr i t ten offe r of just compensa tion by the Ag ency to the owner or the owner ’s repr esenta ti v e t o purcha se the re al prope rty for the pr oject.” 49 C.F .R. § 24.2(a)( 15)(i). 1. Initiation of

negotiations T he date of t he ini tiation of negotiations i s the factual i ssue at the heart of t he Meachams ’ complaint. The Meac hams point to a letter from Akron, which rea ds that “[t] he eff ective date of this [not ice of elig ibilit y for HUD assistance ] is September 13, 2005 which is the I nitiation of Neg otiations for y our si te.” Given thi s letter, the Me acha ms arg ue, they

need only

to have owne d and to be living in 630 Diag onal since mid-Marc h of 2005. HUD’ s 2008 deter mination, meanwhile, ins i s t s that the initiation of neg otiations took place in November 2003, when Akron offe red to purcha se 630 Diag onal from Thoma s Fa ulknier, the owne r of r ecor d at that time. This contention is supported by a letter from Akron to the Mea chams’ attorney s that outlines the negotiations that

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Meac ham v. City of Akron took place on November 19, 2003, among Akron neg otiators, J ohn Meac ham, an d Geor g e Emersha w, an attorney

who re prese nted Fa

ulknier and the Meac hams. The Meac hams insist that the initiation of neg otiations could not ha ve taken place in 2003, beca use such a conclusion wo u l d v i o late HUD regulations. HUD require s that “[b] efor e the initiation of neg otiations[ ,] the rea l proper ty to be acquir ed shall be appra ised

. . . and the owner , or the owner ’s desig nated repr esenta tive, shall be g iven an o p p o rt u nity to acc ompany the appra iser during the appraiser’s inspection of the proper ty .” 49 C.F.R. § 24.102(c) (1). The Meac hams contend that (1) there was no appra isal, and (2) if there was, there was no opportunity to acc ompany the appr aiser; ther efor e, the initiation of neg otiations could not have take n place in 2003. A letter from Ak ro n t o E m er shaw, dated Marc h 10, 2004, states that Akron “has offe red $145,000 for this proper ty , which am o u n t repr esents the fair marke t value of the proper ty as deter mined by an MAI appra iser, and revie wed by another MAI appra iser.” Evidence in the rec ord also sug g ests that Akron attempted to c ontact F aulknier in June 2003, via cer tified mail, to inform him that he would have the opportunity to acc ompany the app raisers on the inspection of his proper ty

. 2 HUD’ s deter

mination that t h e initiation of neg otiations took place in November 2003 there fore finds ample support in the rec ord. Throug hout 2003, Akron con d u ct ed an appra isal, attempted to contac t the owner of rec ord to notify him of h i s ri gh t s i n the appra isal proce ss, and conducte d neg otiations for the purcha se of the land. 49 C.F.R. § 24.2(a) (15)( i) define s the initiation

Fa ulknier wa s, throug hout 2003, the owner of re cord of

630 Diag onal. 2 - 7 -No. 10-4501

Meac ham v. City of Akron of neg otiations as the date when the ag ency initially offe rs just compensa tion to the owner of the rea l proper ty

. Given that there is evidenc e in the rec ord sug g esting that an offe r of $145,000 was made in 2003, HUD’ s deter

mination that the initiation of neg otiations took pla ce in N ovember 2003 has

a rational basis and is neither a rbitrar y nor ca pricious. 2. Occ upation of 630 Diagonal pr ior to the init iation of negotiat ions I n order to be elig ible for repla ceme nt housing assistance , the Meac hams must be abl e to show that they both owned and occupie d 630 Diag onal prior to the initiation of neg otiations. HUD did not base its 2008 deter mination on the owner ship question, but instead focuse d on the occupation require ment. HUD noted that the Meac hams “had not occupie d the home for sever al y ear s prior to November

of 2003 bec ause of

a fire that occur

red in June of 1998 at t he property

. When [ Akron] sent the first appra iser out to the site in Aug ust 2003, the proper ty was vaca

nt, not occupie d by [t he Meac hams].” The Meac hams maintain instead that they “construc tive ly o ccupie d” the home as it was being repa ired for damag e cause d by the 1998 fire, and insist that our decision in Nagi require d HUD or 3 Akron “t o ap p l y a constructive occupa ncy ty pe exception in case s of unusual circ umstances and equity .” 751 F.2d at 830. HUD, meanwhile, points out that Nagi is only applicable when the displacee considere d the dwelling hi s home, and would have met the oc cupanc y require ment “but for e conomic or othe r circ umstances be y ond his control . . . .” Id.

The Meac hams do not argue that the constructive occupation took place during the rele vant 3 2003 period, but instead during the 2005 period, since they believe that the initiation of neg otiations took place in 2005. I n eff ect, they make no argument as to why they did not o cc u py the home immediately

prior to Novembe r 2003. - 8 -No. 10-4501

Meac ham v. City of Akron As the district court noted, the Meac hams “re ceive d the insuranc e proc eeds f rom the 1998 fire at the Residence in 2001. These proce eds wer e not used to restore the Residence .” Rather, the proce eds wer e used to resc ue the home from fore closure. The Meac hams thus arg ue that they wer e unable to occupy the hom e, such that the constructive occupa ncy exception oug ht to apply

. Alas, information submitted by the M eacham s themselve

s to the district court belies their argument. T h e M ea chams provided information to the di strict court to prove that their hom e an d t h e repla ceme nt home, 590 Diag onal, wer e not compar able. One such submissi on, a l et t er fr o m a

co n trac tor who worke d on 630 Diag onal afte r the fire, rea d “As of Marc h, 2003, all mecha n i ca l , structura l and major sy stems wer e restore d and functioning proper ly .” Another contra ctor wrote, “I had persona lly observe d both in 2002 and later in September 2005 that all mecha nical sy stems wer e functioning proper ly

. . . . The overa ll g ener al condition of the house including the 3rd floor was in my profe ssional opinion in good living c ondition.” These statements tend to show that the home could have been liv ed i n , i n contra st to the Meac hams’ contention that the home wa s u n fi t for their occupa ncy . Whil e we normally may consider only

evidenc e that wa s befor e the a g ency , this does not preclude our consider ation of the contra ctors’ statements for two rea sons. First, there is evidenc e that these materia ls wer e submitt ed to HUD prior to their 2008 deter mination. Second, it was the Meac hams themselves who prese nted this evidenc e to the district court. The Meac hams would have us consider their evidenc e when it is in their favor , but ignor e it when it is not. W e dec line to eng ag e in such c ompartmentalization. Finally , there is evidenc e in the rec ord that Fa ulknier occupie d 630 Diag onal at the same time that the Meac hams claim they wer e unable to do so. On September 17, 2003, Fa ulknier chec ked a - 9 -No. 10-4501

Meac ham v. City of Akron box on a mortg ag e loan application, indicating that he “pre sently occup[ied] [630 Diag onal] as [hi s] primary residenc e.” The Meac hams argue that this should be g iven limit ed weig ht, g iven that there is no signature on the document. But, a later d o cu m en t that ref ers to that lender ’s mortg ag e loan does bea r F aulknier’ s signa

ture. Under the rele vant standard of revie w, we must ensure that HUD examined the rele vant data, and that its 2008 deter

mination articula ted a satisfac tory explanat i o n for its actions. Given the evidenc e in the re cord that the Meac hams 1) did not live in 630 Diag onal immediately prior to the initiation of neg otiations in 2003, and 2) wer e able to live in the home if they decide d to do so, there is a rational c onnection betwe en the f acts HU D found a

nd the choice it made. C. HUD’s 2006 ac tions The Meac hams raise a number of arguments per t aini ng to the corr ectne ss of HUD’ s 2006 deter mination that denied them an incre ase in their repla ceme nt housing assistance

. They asser t that they should have been able to appea l direc tly to Akron, that their appea l within HUD was improper, that HUD eng ag ed in improper ex parte discussions during their appea l, and that the compilation of the admini strative record was unfair. They further argue that 590 Diag onal was not a compar able repla ceme nt dwelling

. The district court’s rema nd order was not a final, ap p ea l ab le order , so the Meac hams are not prec luded from raising these issues here

. See Schuck v. Frank, 27 F.3d 194, 196 (6th Cir. 1994). But, any proce dural irregularities are connec ted to HUD’ s 2006 deter mination. That decision is no longe r in eff ect, g iven HUD’ s 2008 determination.

I I I . CONCL USI ON For the fore g oing r easons, the judg ment of the district cour t is AFF I RMED. - 10 -