Source: http://dc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19890727_0000197.DDC.htm/qx
Timestamp: 2017-02-20 13:20:40
Document Index: 207157110

Matched Legal Cases: ['§ 1709', '§ 1708', '§ 1715', '§ 1715', '§ 1710', '§ 203', '§ 702', '§ 1441', '§ 36', '§ 36', '§ 36', '§ 1441']

| LEE v. KEMP
LEE v. KEMP
DEBORAH LEE, et al., Plaintiffs
JACK KEMP, Defendant
MEMORANDUM OLIVER GASCH, UNITED STATES DISTRICT JUDGE This is an action to enjoin the Department of Housing and Urban Development ("HUD") from selling or disposing of houses in its single-family inventory other than for the benefit of the homeless. Plaintiffs argue that HUD's policies governing the sale of houses from its single-family inventory violate the National Housing Act, the Fair Housing Act, the Administrative Procedure Act, and the Stewart B. McKinney Homeless Assistance Act.
Procedural History On August 26, 1988, Judge Thomas F. Hogan entered a temporary restraining order ("TRO") prohibiting HUD from selling single-family properties from its inventory in the state of Michigan. Plaintiffs amended their complaint and filed a motion for a nationwide TRO on August 29. On August 30, Judge Harold H. Greene entered a TRO enjoining HUD from selling any homes in the single-family inventory other than for the benefit of homeless and low income persons. On September 21, 1988, this Court denied plaintiffs' motion for preliminary injunction. Lee v. Pierce, 698 F. Supp. 332 (D.D.C. 1988). Before the Court are the parties' cross-motions for summary judgment. I. FACTUAL BACKGROUND Plaintiffs The four individual plaintiffs are women who have children and reside in homeless shelters. Three of the four are members of minority groups. There are two types of organizational plaintiffs. Two organizations, Philadelphia Union of the Homeless and Community for Creative Non-Violence, are made up primarily of homeless persons. They represent their members' legal interests and endeavor to provide shelter and medical care. Five organizational plaintiffs are nonprofit charitable organizations that aid homeless and low-income persons in ways that include acquiring and, if necessary, renovating, housing. Plaintiffs represent a class made up of all homeless and underhoused families and individuals in the United States and all organizations in the United States that provide assistance to homeless or underhoused families or individuals. Defendant The defendant, Jack Kemp, is the Secretary of HUD.
Under Section 203 of the National Housing Act, HUD is authorized to insure mortgages for family residences. 12 U.S.C. § 1709. Section 202 of the Act created the Mutual Mortgage Insurance Fund ("MMIF") program, a revolving fund used by the Secretary to carry out the Section 203 mortgage insurance program. See 12 U.S.C. § 1708. Approximately 90 percent of the homes insured in the Federal Housing Administration ("FHA") single family mortgage insurance program are insured through the MMIF. The balance of the homes are from the other mortgage fund programs that make up the Section 203 insurance program: the Special Risk Insurance Fund, id. § 1715z-3, and the General Insurance Fund, id. § 1715z. The MMIF is a revolving fund which uses the proceeds from insurance premiums, investment income, and foreclosure sales to provide funds for future mortgage insurance.
Third Martin Declaration at para. 3. HUD does not receive congressional appropriations for operation of the MMIF. In 1986, according to HUD documents, the MMIF spent 1.975 billion dollars and took in 3.756 billion dollars, for a "surplus" of 1.781 billion dollars. Exhibit 1 to Plaintiffs' Opposition to Defendant's Motion for Summary Judgment. In 1987, the MMIF had 4.682 billion dollars in outlays and received 5.737 billion dollars, for a "surplus" of 1.055 billion dollars. In August, 1988, the MMIF had a positive net worth of 3.5 billion dollars. Letter from M. Dorsey, HUD General Counsel, Exhibit E to Complaint for Temporary Restraining Order. Budget documents for fiscal year 1988 were not made part of the record, but a HUD official declared that the MMIF would have a large deficit for that year and fiscal year 1989. Third Martin Declaration at para. 3. Under the Section 204 mortgage insurance program, when a mortgagee forecloses on federally insured property, it can file a claim for insurance benefits. 12 U.S.C. § 1710(a); 24 C.F.R. § 203.355-57. In most cases, the mortgagee must deed title to HUD and deliver the property in vacant condition to receive its benefits. Within 14 days of acquisition HUD advertises the property for sale in a bidding process. The time for submitting bids closes 10 days after the advertisement appears. To bid, a prospective owner must submit a signed HUD sales contract and an earnest money deposit to a real estate broker. HUD accepts bids only through brokers. The amount of the earnest money deposit is set by the field office conducting the sale at an amount between $ 500 and $ 2,000. Third Martin Declaration at para. 29. Offers are accepted "based on the highest net return to HUD, with priority to owner-occupants only in the case of a tie net offer." HUD Property Disposition Handbook, One to Four Families, 6-5 (No. 4310.5 Rev. 1) (April, 1987) (Plaintiff's Exhibit 8). The sale is ordinarily closed within 60 days of HUD's acceptance of the bid. HUD's sales program is not administered on a nationwide basis; its 73 field offices conduct the programs. As of January, 1989, HUD had 47,319 homes in its single family inventory as a result of foreclosures. Third Martin Declaration at para. 4. In fiscal year 1987, HUD acquired 64,269 homes and sold 59,194. Id. In fiscal year 1988, HUD acquired 83,979 homes. During this same period, HUD sold 81,517 properties. Approximately 71,000 were MMIF properties and the other 12,000 were insured by either the General Insurance Fund or the Special Risk Insurance Fund. The average selling price of homes from the single-family inventory was $ 38,000 in 1988. Id. at P 20. A HUD survey estimates that 30 percent of the single-family houses are sold to investors who rent the properties or resell them for profit.
Id. at P 26. Affidavits from leaders of various non-profit organizations ("housing providers") that have attempted to acquire these single-family houses estimate the figure to be much higher, especially in urban areas, such as the District of Columbia, where affordable housing is scarce. See Lee v. Pierce, 698 F. Supp. at 336. HUD has three programs intended to assist the homeless. In its Reduced Sales Program, HUD offers a ten percent discount to qualified homeless organizations on certain properties before advertising the homes for sale. First Martin Declaration at para. 32(a). HUD has sold 183 single-family properties to homeless providers through this program since 1985. Third Martin Declaration at para. 13. HUD has a Lease-Option Program whereby it enters into six-month lease-purchase option agreements with homeless providers. HUD also has a Lease Program by which it leases certain houses to homeless organizations at a cost of one dollar per year on a case-by-case basis. Originally, only those homes insured by either the Special Risk Fund or the General Insurance Fund were eligible for the lease programs. But recently HUD also began making MMIF properties available on a limited basis, although it expects that few MMIF properties will be made available through the program. Currently, 293 houses are leased under these programs, 217 from General Insurance Fund properties and 76 from MMIF properties. First Martin Declaration at para. 25; Third Martin Declaration at para. 13. Plaintiffs allege that they have been "frustrated and rebuffed" when seeking to obtain housing under these programs, and that the HUD local field offices are either not aware of or not supporting the programs. See Declaration of Rodman McCoy, Director of Program Services of Neighborhood Housing Services; Declaration of Rev. Thomas Knoll. A phone survey conducted by plaintiffs of housing providers in 32 cities revealed that none was aware of these HUD programs. Declaration of Mary Ellen Hombs, Analyst for National Coalition for the Homeless. In their declarations in this case, several organizations specifically averred that when they sought to purchase single-family houses at some type of discount, HUD field offices told them HUD was forbidden from selling the houses under any circumstances other than sale to the highest bidder. See Declaration of Rev. Jim Dickerson, Director of MANNA; Declaration of Rodman McCoy. In one instance, the Washington field office allegedly told area housing providers that it would accept bids for a block of properties on a preferential basis, the organizations submitted bids, and the field office rescinded the sale on orders from the national office. Declaration of Rev. Jim Dickerson. II. STANDING A. The National Housing Act The Court previously held that plaintiffs had standing to maintain their National Housing Act claim. Lee v. Pierce, 698 F. Supp. at 336-37. Defendant does not contest the Court's holding that plaintiffs meet the case and controversy requirement. Instead, he argues that the prudential "zone-of-interest" test is not satisfied. In defendant's view, plaintiffs do not have standing to maintain this action because the interest they seek to protect does not fall within the zone of interests protected by the National Housing Act. The Administrative Procedure Act ("APA") grants standing to those "aggrieved by agency action within the meaning of a relevant statute." 5 U.S.C. § 702. Even if the plaintiffs are injured by agency action, the Supreme Court considers "whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute." Association of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 153, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970). In Clarke v. Securities Industry Association, 479 U.S. 388, 93 L. Ed. 2d 757, 107 S. Ct. 750 (1987), the Supreme Court revisited the elements of the zone of interest test. The Court noted that the phrase "a relevant statute" should be interpreted "broadly." Id. at 399. The Court also recognized that agency action is presumptively reviewable, and thus only "those would-be plaintiffs not even 'arguably within the zone of interests to be protected or regulated by the statute. . . .'" should be excluded on prudential grounds. Id. at 397 (quoting Data Processing, 397 U.S. at 153). Plaintiffs contend that they are the intended beneficiaries of the National Housing Act. See 42 U.S.C. § 1441.
Defendant concedes that plaintiffs are the intended beneficiaries of Section 1441. But he contends that because plaintiffs challenge the single-family property disposition program -- a part of the National Housing Act -- only that portion of the statute should be examined when defining the relevant zone of interests.
In his view, Section 1441 is irrelevant to the inquiry. In support of this theory, he relies on Tax Analysts and Advocates v. Blumenthal, 184 U.S. App. D.C. 238, 566 F.2d 130 (D.C.Cir. 1977), cert. denied, 434 U.S. 1086, 55 L. Ed. 2d 791, 98 S. Ct. 1280 (1978), where the D.C. Circuit refused to examine provisions of the tax code other than the provision at issue when considering whether plaintiff fell within the zone of interests: The question then becomes: does the court look to this section of the statute (the Code) to determine which interests are arguably to be regulated or protected for purposes of the zone test, or should the court look to other sections of the statute for evidence of arguable regulatory or protective intent? The Supreme Court decisions dealing with the zone test do not provide a conclusive answer to this inquiry. . . . We shall look only to Section 901 of the Code. 566 F.2d at 140. The Supreme Court's recent decision in Clarke v. Securities Association illustrates the error of this approach. The Comptroller of the Currency argued in that case that the limitation on branch banking contained in 12 U.S.C. § 36 was not intended to benefit the respondents. The Comptroller did not address the interests to be protected by the statute as a whole. The Supreme Court examined the statute in its entirety to ascertain the protected zone of interests: The Comptroller's argument focuses too narrowly on 12 U.S.C. § 36, and does not adequately place § 36 in the overall context of the National Bank Act. As Data Processing demonstrates, we are not limited to considering the statute under which respondents sued, but may consider any provision that helps us to understand Congress' overall purposes in the National Bank Act. 479 U.S. at 401. Clarke explicitly noted that the D.C. Circuit's practice of viewing the statutory section in isolation was "inconsistent with our understanding of the 'zone of interest test' as now formulated." Clarke, 479 U.S. at 400 n. 15 (disapproving of Control Data Corp. v. Baldridge, 210 U.S. App. D.C. 170, 655 F.2d 283, 293-94, cert. denied, 454 U.S. 881, 70 L. Ed. 2d 190, 102 S. Ct. 363 (1981)). A post-Clarke decision in the D.C. Circuit makes clear that this Court should "look for the requisite protective intent on the part of Congress not only in the specific statutory provision at issue but also in other provisions of a statute." Investment Co. Inst. v. FDIC, 259 U.S. App. D.C. 339, 815 F.2d 1540, 1545 (D.C.Cir.), cert. denied, 484 U.S. 847, 108 S. Ct. 143, 98 L. Ed. 2d 99 (1987). The Court, therefore, turns to the National Housing Act. &nbsp;By the plain language of the statute, the National Housing Act goals enunciated in 42 U.S.C. § 1441 apply to all National Housing Act programs.
Courts in this and other circuits have consistently applied the goals of Section 1441 to HUD's multi-family disposition programs. E.g., Russell v. Landrieu, 621 F.2d 1037, 1041 (9th Cir. 1980); Commonwealth of Pennsylvania v. Lynn, 163 U.S. App. D.C. 288, 501 F.2d 848, 855 (D.C.Cir. 1974). Indeed, as noted above, defendant does not contend that plaintiffs are outside the zone of interests to be protected by Section 1441 of the National Housing Act. Consequently, ...