Case Name: Wilson Lee CLOW, Jr., Lynne Ann Clow, Plaintiffs-Appellants, v. U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; Jack Kemp, Secretary of HUD, William Y. Nishimura, Regional Administrator, HUD, Defendants-Appellees
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 1991-11-05
Citations: 948 F.2d 614
Docket Number: No. 90-35324
Parties: Wilson Lee CLOW, Jr., Lynne Ann Clow, Plaintiffs-Appellants, v. U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; Jack Kemp, Secretary of HUD, William Y. Nishimura, Regional Administrator, HUD, Defendants-Appellees.
Judges: Before TANG, O’SCANNLAIN and LEAVY, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 948
Pages: 614–628

Head Matter:
Wilson Lee CLOW, Jr., Lynne Ann Clow, Plaintiffs-Appellants, v. U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; Jack Kemp, Secretary of HUD, William Y. Nishimura, Regional Administrator, HUD, Defendants-Appellees.
No. 90-35324.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Nov. 8, 1990.
Decided Nov. 5, 1991.
Howard L. Graham, Tacoma, Wash., for plaintiffs-appellants.
Charles Pinnell, Asst. U.S. Atty., Seattle, Wash., for defendants-appellees.
Before TANG, O’SCANNLAIN and LEAVY, Circuit Judges.

Opinion:
PER CURIAM:
The Clows defaulted on a federally insured home loan and applied for acceptance into the Department of Housing and Urban Development's mortgage assistance program. The Department ("HUD") denied the Clows' application, and the Clows sought judicial review. The district court rendered judgment for the Department on the merits, and the Clows appeal. We affirm.
FACTS AND PROCEEDINGS
Wilson and Lynne Ann Clow refinanced their home with a federally insured loan in March 1986. The Clows had purchased their home four years earlier and apparently had never missed a payment. One year after the refinancing, however, they defaulted.
Seeking to avoid foreclosure, the Clows applied for acceptance into HUD's mortgage assistance program under the National Housing Act, 12 U.S.C. § 1701 et seq. Under the terms of the program, the federal government agrees to acquire an eligible mortgagor's loan for a limited time to allow the mortgagor to overcome an unexpected financial hardship without losing his or her home. HUD denied the Clows' application on January 12, 1988. A week later, HUD invited the Clows to contest its ruling at an informal administrative meeting. The Clows appeared at the meeting, and presented additional materials in support of their application.
The Clows alleged that their inability to pay was the result of Mr. Clow's recent loss of his position with the Puget Sound Naval Shipyard, where he had worked as a marine electrician for four years. During that period, Mr. Clow had allegedly injured and reinjured his neck and right shoulder six times on the job, and he had not been able to return to work since the most recent of these episodes in February 1986. After efforts to find alternative work for him failed, the shipyard finally decided to release Mr. Clow in May 1987, the month in which the Clows defaulted.
The Clows then filed for bankruptcy on July 26, 1988. In an adversary proceeding dated September 14, 1988, they prayed for (1) a declaratory judgment that HUD could not legally deny their application for assistance, and (2) injunctive relief to prevent their lender from foreclosing on their home in the meantime. The complaint did not seek injunctive relief against HUD. The court denied the request for a temporary restraining order on November 15, 1988. On December 9, 1988, the case was withdrawn from bankruptcy on HUD's motion. The district court then denied the Clows' motion for a preliminary injunction on December 16,1988. The Clows did not appeal from either denial of their motions for preliminary relief. Shortly thereafter, the Clows' lender, City Federal Mortgage Company ("Cityfed"), foreclosed.
On December 23, 1988, the Clows filed an amended complaint in the district court, repeating their requests for declaratory relief against HUD and injunctive relief against Cityfed. The Clows prayed in the alternative for a replacement home "of similar value . under the same terms and conditions [as] their present mortgage." On May 9, 1989, apparently in response to learning that Cityfed had foreclosed on the home, the parties stipulated to Cityfed's dismissal. However, the Clows did not amend their complaint and seek injunctive relief against HUD. A year of litigation followed. In the meantime, Cityfed conveyed the foreclosed property to HUD in return for payment on the loan's federal insurance. In August 1989, with no pending motion for injunctive relief pled against it, HUD sold the home through its normal property disposition process. On January 16, 1990, the parties agreed to submit their case on the record. One month later, the district court rendered judgment for HUD on the merits. The Clows timely appeal.
DISCUSSION
I
HUD initially contends that because the home now belongs to an innocent third party, the case is moot. We disagree. In their first amended complaint, the Clows prayed for "[a]n order requiring defendants HUD, Pierce and Nishimura to accept an assignment of plaintiff's home loan or provide a home of similar value to Plaintiffs under the same terms and conditions of their [previous] mortgage." ER 10 (emphasis added). Hence, even after their home had been sold to an innocent third party, the Clows' complaint asserts an avenue of relief which they claimed was available to them: HUD's providing them with a home of similar value to their own under the same terms and conditions of their previous mortgage. "Where one of the several issues presented becomes moot, the remaining live issues supply the constitutional requirement of a case or controversy." Powell v. McCormack, 395 U.S. 486, 497, 89 S.Ct. 1944, 1951, 23 L.Ed.2d 491 (1969). Accordingly, without deciding whether that relief is available to the Clows, we reject HUD's contention that this case is moot. To the extent that the relief sought by the Clows implicates jurisdictional considerations of sovereign immunity, we assume — without deciding — the existence of subject matter jurisdiction over the Clows' action. See Norton v. Mathews, 427 U.S. 524, 530-32, 96 S.Ct. 2771, 2774-76, 49 L.Ed.2d 672 (1976); Wolder v. United States, 807 F.2d 1506, 1507 (9th Cir.1987).
II
The Clows contend that the district court did not properly discharge its duty to conduct an inquiry into the merits of their claim. In Citizens to Protect Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), the Supreme Court stated that to be proper, judicial review of an administrative decision "must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Id. at 416, 91 S.Ct. at 823-24 (citations omitted). The reviewing court's obligation is threefold. First, it must determine whether the agency or department in question acted within the scope of its authority. Id. at 415-16, 91 S.Ct. at 823. Second, under the Administrative Procedure Act, it must decide whether the challenged action was " 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.' " Id. at 416, 91 S.Ct. at 823 (quoting 5 U.S.C. § 706(2)(A)). Finally, the court must ensure that the agency or department "followed the necessary procedural requirements." Id. at 417, 91 S.Ct. at 824.
We conclude that the district court satisfied these obligations. In ruling for the defendants, the district court explicitly stated:
A review of the record presented to HUD indicates that the record facts supporting the agency action were adequately adduced and rationally applied, and that the decision was based on a consideration of the relevant factors, that there was no clear error of judgment, [and] that the act of HUD was not an abuse of discretion, contrary to law, [or] arbitrary or capricious.
Clow v. Department of Housing & Urban Dev., No. C88-528TB, at 3 (W.D.Wash. Feb. 14, 1990). Our review of the several orders and rulings of the district court convinces us that it adequately considered the numerous memoranda, affidavits, and exhibits submitted by the parties in order to reach its conclusion.
Ill
The Clows also contend that HUD's denial of their application was arbitrary and capricious, an abuse of discretion, and constituted a clear error of judgment. The Clows maintain that HUD incorrectly applied the criteria established in 24 C.F.R. § 203.650.
Under the applicable regulations, HUD will accept assignment of mortgages only when an applicant satisfies six conditions. 24 C.F.R. § 203.650(a). In the instant case, HUD determined that the Clows had not satisfied two of the six requirements for relief under its mortgage assistance program. These two criteria are as follows:
(5) The mortgagor's default has been caused by circumstances beyond the mortgagor's control which render the mortgagor unable to correct the delinquency within a reasonable time or make full mortgage payments.
(6) There is a reasonable prospect that the mortgagor will be able to resume full mortgage payments after a period of reduced or suspended payments not exceeding 36 months and will be able to pay the mortgage in full by its maturity date extended, if necessary, by up to ten years.
Id. § 203.650(a)(5)-(6) (emphasis added).
Upon review of the administrative record, we conclude that HUD's determination that the Clows' default had not been caused by circumstances beyond their control was not an abuse of discretion, arbitrary or capricious, or a clear error of judgment. Although the record supports the Clows' assertion that Mr. Clow was disabled and unable to perform his previous duties as an electrician, the record does not reasonably support the inference that Mr. Clow was unable to perform any job at the shipyard. On the contrary, the record supports HUD's conclusion that Mr. Clow had been offered and refused offers of alternative employment. The Supervisor's Statement indicates that "[t]his employee was offered jobs within his limitations though it/they would have been at a lower rate of pay." Exh. XVI, ER 63. Mr. Clow's letter to the Office of Workers Compensation also indicated that he was "tired of being an assistant secretary and other such low minded jobs." Exh. XVIII, ER 66. Finally, the record supports HUD's conclusion that Mr. Clow had encouraged his termination so that he could pursue other options. The Notice of Proposed Termination indicates that Clow had made numerous requests to have himself removed from the rolls of the shipyard in order that he could pursue state-financed rehabilitation programs. Exh. XIV, ER 58.
The Clows assert, however, that the Notice of Proposed Termination contradicts the Supervisor's Statement that Mr. Clow had been offered and refused other jobs within his limitations. We disagree. The Notice of Proposed Termination states: "Your name and qualifications were referred to the Shipyard Selective Placement Coordinator who attempted to locate a vacant position within the Shipyard for which, given your physical disability, you were qualified for and able to perform. The Placement Coordinator was not able to place you in an appropriate position." Exh. XIV, ER 59 (emphasis added). This statement does not necessarily indicate that other jobs were not found and offered to Mr. Clow, it only indicates that he was not placed in any such position. In the absence of a more definitive explanation, the Placement Coordinator's inability to place Mr. Clow reasonably can be interpreted to have resulted just as well from Mr. Clow's refusal to accept an offered position as from an inability to find any such alternate position. Hence, because the Notice of Proposed Termination is ambiguous on this point, we reject the Clows' contention that it necessarily contradicts the Supervisor's Statement.
Accordingly, we hold that HUD's determination that the Clows' default had not been caused by circumstances beyond their control was not an abuse of discretion, arbitrary or capricious, or a clear error of judgment. Because all six criteria set forth in 24 C.F.R. § 203.650(a) must be met before mortgage assistance will be granted, we need not reach the question of whether HUD erred in determining that the Clows had not established a reasonable prospect to resume their mortgage payments within a required period of time or whether HUD's adoption of the prudent lender standard is contrary to the intent of Congress.
AFFIRMED.
. Apparently, Mrs. Clow was not employed at any time during the period in question. On the financial disclosure form that accompanied the Clows' request for mortgage assistance, Mrs. Clow attested to receiving $200 per month from welfare, food stamps, and Medicaid benefits. On that same form, Mr. Clow attested to receiving $69 per month in veteran's benefits and $50-200 per month from "self employment."
. The dissent's argument concerning the use of hypothetical jurisdiction is untenable. The dissent admits that our circuit has held on several occasions that where an appeal presents difficult jurisdictional questions, we may forego the resolution of these issues if the merits of the appeal are insubstantial. See, e.g., Federal Ins. Co. v. Scarsella Bros., 931 F.2d 599, 602 (9th Cir.1991); Forster v. County of Santa Barbara, 896 F.2d 1146, 1147 n. 2 (9th Cir.1990) (per curiam); Sundance Land Corp. v. Community First Fed. Sav. & Loan Ass'n, 840 F.2d 653, 666 n. 15 (9th Cir.1988); Wolder, 807 F.2d 1506, 1507 (9th Cir.1987); Lehner v. United States, 685 F.2d 1187, 1189-90 (9th Cir.1982), cert. denied, 460 U.S. 1039, 103 S.Ct. 1431, 75 L.Ed.2d 790 (1983). Nevertheless, the dissent contends that because it believes the case upon which our circuit law relies, Norton v. Mathews, 427 U.S. 524, 96 S.Ct. 2771, 49 L.Ed.2d 672 (1976), does not support the theory of hypothetical jurisdiction, it has the power to repudiate prior circuit law and decide the issue anew. Such a position is incompatible with our circuit's proscription that '"[w]e are bound by decisions of prior panels' unless an en banc decision, Supreme Court decision, or subsequent legislation undermines those decisions." United States v. Washington, 872 F.2d 874, 880 (9th Cir.1989) (quoting Montana v. Johnson, 738 F.2d 1074, 1077 (9th Cir.1984)).
The dissent does not argue that an intervening Supreme Court decision has cast doubt on our prior circuit law, rather it asserts that the very Supreme Court decision upon which these cases rely does not support their holdings. If we were all free to disregard our prior circuit law based on our own predilections as to whether these decisions properly construe the Supreme Court cases upon which they rely, the doctrine of stare decisis would have little meaning in our circuit. Accordingly, contrary to the dissent's suggestion, we have no authority to revisit our circuit's embrace of the doctrine of hypothetical jurisdiction.
In attempting to limit Norton v. Mathews to the particular facts of that case, the dissent ignores the Court's statement that:
It thus is evident that whichever disposition we undertake, the effect is the same. It fol lows that there is no need to decide the theoretical question of jurisdiction in this case. In the past, we similarly have reserved difficult questions of our jurisdiction when the case alternatively could be resolved on the merits in favor of the same party.
Norton v. Mathews, 427 U.S. at 532, 96 S.Ct. at 2775. And, as was noted by Judge Weinstein in his opinion for the Second Circuit in Browning-Ferris Indus. v. Muszynski, 899 F.2d 151, 154-55 (2d Cir.1990), the Supreme Court has on many other occasions decided the merits of cases in which questions of subject matter jurisdiction remain to be resolved. See, e.g., Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 72 n. 16, 98 S.Ct. 2620, 2629 n. 16, 57 L.Ed.2d 595 (1978) (with jurisdiction over claims against one defendant established, Court assumed jurisdiction as to same claims against other defendant, because outcome would not be affected); Philbrook v. Glodgett, 421 U.S. 707, 721-22, 95 S.Ct. 1893, 1902, 44 L.Ed.2d 525 (1975) ("complex question of federal jurisdiction" avoided where jurisdiction existed over claims as to one defendant); McLucas v. De Champlain, 421 U.S. 21, 32, 95 S.Ct. 1365, 1372, 43 L.Ed.2d 699 (1975) (despite doubt that district court had subject matter jurisdiction, Court ignored the question and decided case on the merits in court-martial review case); Secretary of the Navy v. Avrech, 418 U.S. 676, 677-78, 94 S.Ct. 3039, 3040, 41 L.Ed.2d 1033 (1974) (per curiam) (same); Chandler v. Judicial Council of the Tenth Circuit, 398 U.S. 74, 86-89, 90 S.Ct. 1648, 1654-56, 26 L.Ed.2d 100 (1970) (in case involving motion for leave to file writ of mandamus or prohibition, Court avoided "knotty jurisdictional problem" and denied motion on merits); United States v. Augenblick, 393 U.S. 348, 350-52, 89 S.Ct. 528, 530-32, 21 L.Ed.2d 537 (1969) (Court assumed jurisdiction arguendo and decided collateral review of court-martial on merits). Nor are we alone in interpreting these cases to allow that in appropriate circumstances, a federal court may decide a case on the merits and assume jurisdiction when the jurisdictional issue is troublesome and resolution on the merits would not affect the outcome. See, e.g., Cross-Sound Ferry Servs., Inc. v. ICC, 934 F.2d 327, 333 (D.C.Cir.1991); Edwards v. Carter, 580 F.2d 1055, 1056-57 (D.C.Cir.), cert. denied, 436 U.S. 907, 98 S.Ct. 2240, 56 L.Ed.2d 406 (1978); United States v. 5 Sylvan Road, 928 F.2d 1, 4 (1st Cir.1991); Kaiser v. Armstrong World Indus., 872 F.2d 512, 514 (1st Cir.1989); Browning-Ferris Indus. v. Muszynsky, 899 F.2d 151, 154-58 (2d Cir.1990); Switlik v. Hardwicke Co., 651 F.2d 852, 856 n. 3 (3d Cir.), cert. denied, 454 U.S. 1064, 102 S.Ct. 614, 70 L.Ed.2d 601 (1981); Southern Pac. Transp. Co. v. Usery, 539 F.2d 386, 389 n. 1 (5th Cir.1976), cert. denied (1977). In the face of this overwhelming weight of authority, the only support marshalled for the dissent's contrary conclusion is that of a dissenting expression. See Cross-Sound Ferry Servs., 934 F.2d at 335 (Thomas, J., dissenting in relevant part). We therefore are satisfied that our utilization of hypothetical jurisdiction under the circumstances of this case is consistent with both Supreme Court and Ninth Circuit precedent.
. We also reject the Clows' contention that the district court erred by considering certain affidavits submitted by HUD. In its final ruling, the district court explicitly stated that it did not consider the challenged affidavits. Clow, No. C88-528TB, at 1-2 (W.D.Wash. Feb. 14, 1990).