Opinion ID: 466307
Heading Depth: 2
Heading Rank: 1

Heading: Unequivocal Command

Text: 21 In order to hold a party in contempt, the court must be able to point to a decree from the court which set[s] forth in specific detail an unequivocal command which the party in contempt violated. See H.K. Porter Co. v. National Friction Products, 568 F.2d 24, 27 (7th Cir.1977). We must look to the amended decree to determine whether the decree unambiguously forbid HUD to use the two-month rule (or, conversely, unambiguously required HUD to use the advancement rule). 22 Before examining the decree, however, one point deserves mention because both the district court and the plaintiffs appear to have mistakenly relied upon it. Both the court below in its various opinions and the plaintiffs in their brief and at oral argument at times seemed to argue the proposition that because the district court had, in 1983, interpreted the 1979 amended decree to require the advancement rule, HUD could not now argue that the decree did not unambiguously command the advancement rule for purposes of this contempt proceeding. This proposition is erroneous, because the court in the contempt proceeding faced a different issue than the one it decided when it interpreted the amended decree in 1983. 2 In 1983, the court decided which of two conflicting rules was the correct rule, i.e., the most reasonable interpretation of the decree. In the contempt proceeding, the court had to decide whether the amended decree so unambiguously spelled out the advancement rule that HUD's use of the two-month rule amounted to contempt. 3 We therefore must examine the various provisions of the amended decree which the plaintiffs claim (and the district court held) required HUD, even before the district court's 1983-84 decisions, to use the advancement rule. 4 23 The plaintiffs claim that HUD violated the following provisions by using its two-month rule: (1) Note to HUD Handbook 4330.2 Sec. 2-1; (2) HUD regulations 24 C.F.R. Secs. 203.330 & 203.331; and (3) Etheridge v. Beasley, supra. For the time being, we will lay aside the question of whether HUD's two-month rule was a change in HUD policy, for that matter is discussed in the next subsection. For now, we look only to see whether HUD's use of the two-month rule, in and of itself, violated the 1979 amended decree.
24 The date of default is referred to in the note to HUD Handbook 4330.2 Sec. 2-1(d). 5 Section 2-1 is captioned ELIGIBILITY CRITERIA, and subsection (d) explains and gives examples illustrating when a mortgagor qualifies for assistance based upon a default caused by a circumstance or set of circumstances beyond the mortgagor's control which temporarily rendered the family financially unable to cure the delinquency within a reasonable time or make full mortgage payments. 25 Both HUD and the plaintiffs claim that the note to section 2-1(d) supports their method of calculating the date of default. The plaintiffs argue that the first sentence of the note, which provides that only the current default is relevant, supports the advancement rule. The plaintiffs contend that the last sentence, which appears to support the two-month rule, merely states the obvious: that if the account is current, all past defaults have been cured (i.e., paid). HUD argues the last sentence of the note incorporates the two-month rule that HUD applied prior to the district court's 1983-84 decisions. 26 The district court declined to follow the plaintiffs' argument, but ruled instead that the note addressed not the issue of fixing the date of default, but rather the issue of determining the cause of the default. Like the district court, we reject plaintiffs' argument that HUD's use of the two-month rule clearly violated the terms of the note. Indeed, even if we were to reinterpret the note, it is at best ambiguous. The terms plaintiffs rely upon to support their claim, such as current default in the first sentence, are susceptible to multiple interpretations and fall far short of spelling out an unequivocal command. 6 27 Next, plaintiffs argue that sections 203.330 and 203.331, 24 C.F.R. Secs. 203.330 & 203.331 (1985), control the date of default and are inconsistent with HUD's two-month rule. The district court followed this argument, particularly with respect to section 203.330, in its contempt order. Section 203.330 7 is titled Delinquency and default, and section 203.331 8 is titled Date of default. HUD argues that section 203.330 merely defines a default and section 203.331 only applies to HUD's relationship with the mortgagees. 28 Once again, we need not reassess whether the district court's interpretation of these sections to require the advancement rule is sound. It is enough for us to conclude, as we are forced to do, that these sections are at best too ambiguous to support a finding of contempt. The HUD two-month rule does not violate any unequivocal command, as demonstrated by HUD's arguments that these sections can reasonably be read as consistent with the two-month rule. 29 As HUD points out, section 203.330 fails to mention the consequences of late payments. The section thus does not state whether late payments operate to advance the date of default for purposes of mortgage assignment relief. HUD interpreted the regulation as merely defining what constitutes a default. Although the district court later rejected HUD's construction of the section, HUD's interpretation violates no unequivocal command. 30 Likewise, HUD points out that section 203.331, unlike section 203.330, specifically applies only to Subpart B of the regulations, the subpart which governs HUD's insurance contract with the mortgagee. Thus the late payment advancement rule in 203.330 is limited to the regulations dealing with the rights and obligations between HUD and the mortgagee. Under Subpart B, the late payment advancement rule is the only reasonable rule, because under the program, when HUD takes an assignment, it must pay the mortgagee all payments since the mortgagor's date of default. Clearly, different equities and considerations are involved when HUD must calculate the date of default to determine whether the defaulting mortgagor qualifies for the assistance program. Because section 203.331 is expressly limited to a quite different situation than determining whether a mortgagor qualifies for relief, 9 HUD did not violate any unequivocal command by not applying section 203.331 to determine the date of default for purposes of a mortgagor's eligibility for the assignment program. Therefore, HUD's use of the two-month rule did not violate any unequivocal command contained in the 1979 amended decree.
31 The district court also relied upon a decision by Judge O'Kelley in the Northern District of Georgia as enunciating an unequivocable command. 10 Etheridge v. Beasley, 532 F.Supp. 266 (N.D.Ga.1981). In that case, the court granted a summary judgment to mortgagors who sought a ruling that HUD could not use the two-month rule. Id. at 271. The court concluded that 32 without deciding whether the plaintiffs will ultimately be entitled to require HUD to accept assignment of their mortgage, ... the federal defendants used an improper legal standard in denying the plaintiffs' request for assignment. The court concludes that the regulations and guidelines do not mandate the application of a two month rule or a one month rule [i.e., the plaintiffs' advancement rule]; they rather require HUD officials to exercise their independent judgment in determining whether, in light of all the surrounding circumstances, the mortgagor's default was beyond his or her control. 33 Id. 34 The plaintiffs point to language in the opinion where the court said applying accepted rules of statutory construction would lead one to reach the conclusion espoused by the plaintiffs, i.e., that the relevant date of default is thirty days after a payment is due and unpaid. Id. at 270. Given the equivocal nature of that statement, however, and the Etheridge court's later references (in particular the one set out above in the court's conclusion) to the necessity of HUD applying its judgment to each case, id. at 270-71 & n. 9, we can only conclude that the Etheridge court rejected both HUD's two-month rule and the advancement rule favored by the plaintiffs in favor of a less rigid rule that required HUD to exercise greater judgment. At the very least, HUD's interpretation of Etheridge to prohibit only the rigid application of the two-month rule, as opposed to combining use of the rule with judgment, falls short of the violation of an unequivocal command necessary to support a contempt citation. 11 Indeed, the fact that the Etheridge court's construction of the decree is arguably at odds with the district court's construction in this case merely points out how ambiguous the provisions of the decree actually are. 35 Even if we were to conclude that Etheridge laid down an unequivocal command, we have some reservations as to whether that decision would support this finding of contempt. The Etheridge case was not brought by the plaintiffs in this case, and the Supreme Court decision in United States v. Mendoza, 464 U.S. 154, 104 S.Ct. 568, 78 L.Ed.2d 379 (1984), which dealt with the use of offensive collateral estoppel against the government, pointed out the problems involved in allowing a party not involved in a prior suit to use that decision in a subsequent suit against the government. The Etheridge opinion bound HUD only in the Northern District of Georgia and did not obligate HUD to seek an opinion from the district court below in this case. Even if HUD did engage in some sort of coverup to circumvent the Etheridge decision in the Northern District of Georgia, which plaintiffs allege and HUD vehemently denies, HUD would be in contempt of the Etheridge court, not the district court in the current case.