Court Opinion

ID: 8949908
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:41:49.282264+00
Date Added: 2024-06-11T17:09:56.190878
License: Public Domain

JAMES HUNTER, III Circuit Judge,
dissenting:
I respectfully dissent.
In 1980, following the death of her husband, Jean Armstead acquired sole title to their home at 1531 Lincoln Avenue, Sharon Hill, Pennsylvania. The property is incumbered by a mortgage held by Fidelity Bond and Mortgage Co. (“Fidelity”) and insured by HUD. In December of 1984, Fidelity sent notice to Armstead that the mortgage was in serious default and subject to foreclosure. The notice also stated that Arm-*284stead may be eligible for an assignment of her mortgage to HUD under the Mortgage Assignment Program. See 12 U.S.C. § 1715u (1982) and 24 C.F.R. § 203.650 et seq. (1986). Accordingly, Fidelity requested Armstead to complete and submit some forms so that Fidelity could determine Armstead’s eligibility for the program. Armstead complied, but Fidelity determined that she failed to meet two conditions of eligibility — to wit, the default was not caused by circumstances beyond her control, and there was no reasonable prospect for resumption of regular payments. See 24 C.F.R. §§ 203.650(a)(5) and (6) (1986). Therefore, by letter dated January 17, 1986, Fidelity informed Armstead that it would not ask HUD to take an assignment but that she had the right to contact HUD directly to request acceptance of an assignment.
Armstead contacted HUD, and HUD asked her to supply some information. She did so. On the basis of this information HUD made the preliminary determination that she was not eligible for an assignment for the same reason previously enumerated by Fidelity. By certified letter dated March 29, 1985, HUD informed Armstead of its preliminary determination. The letter explained the bases of HUD’s findings and stated that she could challenge the determination at a face-to-face conference. The letter instructed Armstead to write to HUD or to call Mr. Albert Aladjem, a HUD Loan Specialist, in order to arrange a conference. The letter went on to say that if she failed to write or call by April 13, 1985, the preliminary determination would become final. Enclosed in the letter was a list of housing counselors and legal aid agencies from which Armstead could obtain assistance.
Armstead neither wrote to HUD nor spoke to Mr. Aladjem; therefore, on Mr. Aladjem’s recommendation, the preliminary determination became final on April 24, 1985. The following day HUD sent a letter to Fidelity informing Fidelity that it was free to proceed with foreclosure. A copy of this letter was apparently sent to Arm-stead.
Approximately four months later, Arm-stead received a mortgage foreclosure complaint. She then contacted an attorney. The attorney sent to HUD a letter alleging that Armstead had called HUD prior to April 13, and that “[s]he spoke with a woman who informed her that HUD would not be able to take the assignment because of her income level.” Administrative Record at 49. The attorney, therefore, requested HUD to reopen the case and grant Arm-stead a belated assignment conference. HUD refused.
Armstead then filed suit in federal district court averring, inter alia, that HUD wrongfully refused to reopen the case and grant a conference. After each side submitted affidavits, the district court granted HUD’s motion for summary judgment. This appeal followed.
Appellant Armstead first argues that the district court applied an incorrect standard of review. In its Memorandum In Support Of Motion For Summary Judgment, HUD asserted that its processing of an application for a mortgage assignment is an informal agency action and subject to judicial review under the arbitrary and capricious standard. See, Administrative Procedures Act, 5 U.S.C. § 706(2)(A) (1982); and see, Anderson v. United States Dept. of Hous. and Urban Dev., 701 F.2d 112 (10th Cir. 1983) (handling of mortgage assignment application is informal action subject only to arbitrary and capricious standard of review). Appellant apparently agreed that the arbitrary and capricious standard should be applied, see, Plaintiff’s Memorandum Against Summary Judgment at 32, and the district court reviewed the case under that standard. Now, appellant argues for the first time that HUD’s denial of the request for a belated conference should have been reviewed de novo in the district court. “We generally refuse to consider issues that are raised for the first time on appeal absent exceptional circumstances, ... and have held on numerous occasions that a trial court should never be reversed on grounds that were never urged or argued below.” Caisson Corp. v. Ingersoll-Rand Co., 622 F.2d 672 (3d Cir.1980); see Newark Morning Ledger Co. v. United *285States, 539 F.2d 929, 932-33 (3d Cir.1976); Walker v. Sinclair Refining Co., 320 F.2d 302, 305 (3d Cir.1963) (en banc). I detect no exceptional circumstances in this case, and I therefore agree with the majority that we should review this case under the arbitrary and capricious standard.
Our inquiry, therefore, is whether HUD’s denial of appellant’s request to reopen and to grant a conference was arbitrary, capricious, or an abuse of discretion. Appellant urges that she was prevented from making a timely request for a conference because the alleged telephone conversation that she had with the woman at HUD led her to believe that a conference would be fruitless. Thus, appellant contends, she had “good cause” not to properly request a conference, and under HUD regulations, Where the mortgagor’s failure to respond was due to ... good cause shown, the Field Office shall request the mortgagee to delay foreclosure; if the mortgagee agrees to the delay, the Field Office shall afford the mortgagor a full review. “Good cause” could include, but is not limited to, failure to receive the mortgagees’ notice because of being hospitalized or out-of-town or the notice being sent to the wrong address.
HUD Handbook 4330.2, chpt. 3-4(b). In this case, HUD did not find good cause to request the mortgagee to delay foreclosure and to grant a belated full review.
I cannot say that HUD’s failure to find “good cause” was arbitrary or capricious. HUD’s records do not indicate that the alleged telephone conversation ever transpired. In light of the fact that it is HUD’s normal practice to make records of all telephone contacts with mortgagors and in light of the fact that previous telephone contacts with Armstead are noted in the HUD record, it was not unreasonable for HUD to assume that the alleged conversation never occurred.1 Even assuming, however, that the conversation did take place, I believe that HUD would still have been justified in refusing to reopen the case. *286While the HUD regulations do not provide an exhaustive list of what constitutes “good cause,” it is fair to infer that “good cause” only exists when the mortgagor’s failure to request a conference is caused by no fault on the part of the mortgagor. Here, it cannot be said that appellant was without fault. First, appellant does not even allege that she ever wrote a timely letter to HUD or that she ever asked to speak to Mr. Aladjem as the letter of March 29 instructed her to do. Second, there is no indication in the administrative record or the district court record that any employee of HUD ever represented that appellant was not entitled to a conference upon timely request; at most, the record indicates that the unknown woman with whom appellant conversed stated that appellant’s income was too low for HUD to accept an assignment; thus, she merely iterated a reason for HUD’s preliminary determination not to accept an assignment. Finally, appellant did not seek counsel or request a belated conference until August of 1985 even though HUD’s letter of April 25, 1985 indicated that foreclosure was impending; thus, appellant acted dilatorily. Under these circumstances, I agree with the district court that HUD’s actions were neither arbitrary nor capricious.
I would affirm the judgment of the district court.

. I am frankly baffled by the majority’s conclusion that HUD is not entitled to rely on its own records. The majority reaches this conclusion by taking judicial notice of the fact "that the ‘usual practice’ is not always followed in of-fices____” While I am willing to admit that we live in a world where mistakes occur, I do not believe that this fact alone makes it arbitrary or capricious to believe that that which normally happens in fact did happen. My position is amply supported in the law of evidence. Federal Rule of Evidence 803(6) provides for the admissibility of any "memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the item by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness.” The rationale behind this exception to the rule against hearsay is that the inherent reliability of business records is "supplied by systematic checking, by regularity and continuity which produce habits of precision, by actual experience of business in relying upon them, or by a duty to make an accurate record as part of a continuing job or occupation.” Fed.R.Evid. 803(6) advisory committee’s note.
Just as a notation in a business record may provide evidence of the occurrence of an event, under Fed.R.Evid. 803(7), the absence of an entry in relevant business records may be used to prove the nonoccurrence or nonexistence of a matter. The logic of this rule was eloquently and forcefully explained by Professor Wigmore: When a book purports to contain all items
transacted within the scope of the book’s subject, the absence of an entry of transaction of a specific purport is in plain implication a statement by the maker of the book that no such transaction was had. The psychology of it is the same as that of testimony on the stand by a person who denies that a sound took place in his presence because he heard no such sound. The practical reliability of it is shown by every day’s practice in every business house. All industry and commerce is daily conducted on the negative as well as on the affirmative showings of the regular books of entry. The repetition in modern times of rulings so divorced from common experience is astonishing. They must make the businessman think that law is just a queer game.
5 J. Wigmore, Evidence § 1531 (Chadbourn ed. 1974).
There can be little doubt that the HUD record is a "business record" within the meaning of Fed.R.Evid. 803(6) and (7). I cannot see why HUD should be precluded from relying upon the same type of evidence that is used virtually daily in the federal courts to support civil judgments and criminal convictions.