Court Opinion

ID: 9555326
Source: CourtListenerOpinion
Date Created: 2023-08-11 17:01:26.969147+00
Date Added: 2024-06-11T15:42:20.925495
License: Public Domain

NOT FOR PUBLICATION                            FILED
                   UNITED STATES COURT OF APPEALS                        AUG 11 2023
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

HOTEL OAKLAND ASSOCIATES,                       No.   22-15713

                Plaintiff-Appellant,            D.C. No. 3:21-cv-05389-SK

  v.
                                                MEMORANDUM*
DOYLE REAL ESTATE ADVISORS, LLC;
JOHN E. DOYLE,

       Defendants-third-party-
       plaintiffs-Appellees,

  v.

MARCIA L. FUDGE, Secretary, United
States Department of Housing and Urban
Development; U.S. DEPARTMENT OF
HOUSING AND URBAN
DEVELOPMENT,

       Third-party-defendants-
       Appellees.

                   Appeal from the United States District Court
                      for the Northern District of California
                     Sallie Kim, Magistrate Judge, Presiding

                      Argued and Submitted July 18, 2023
                           San Francisco, California

       *     This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: WARDLAW and M. SMITH, Circuit Judges, and RAYES, ** District
Judge.

      Plaintiff-Appellant Hotel Oakland Associates (HOA) brought various tort

claims against Defendant-Appellees Doyle Real Estate Advisors, LLC and John E.

Doyle (collectively, Doyle) for alleged negligence in preparing a Rent

Comparability Study (RCS) for the United States Department of Housing and

Urban Development (HUD). Doyle then sued HUD for contribution and

indemnification. The district court dismissed both complaints, finding that HOA

lacked Article III standing to bring a claim against Doyle. We have jurisdiction

pursuant to 28 U.S.C. § 1291, and we affirm. Because the parties are familiar with

the facts, we do not recount them here, except as necessary to provide context t o

our ruling.

      The district court did not err in concluding that HOA lacked standing to sue

Doyle, because HOA did not plausibly allege that HUD’s denial of the Mark-Up-

To-Market (MUTM) application was fairly traceable to Doyle’s negligence in

preparing the RCS. See Lexmark Int’l, Inc. v. Static Control Components, Inc.,

572 U.S. 118, 134 n.6 (2014) (noting that Article III standing requires that “the

plaintiff’s injury be fairly traceable to the defendant’s conduct.”)

      **     The Honorable Douglas L. Rayes, United States District Judge for the
District of Arizona, sitting by designation.

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      First, as reflected in the contract between Doyle and HUD for Doyle’s

provision of a RCS for HOA, the agency has the discretion to reject any RCS it

disagrees with, including those it commissions. For example, the contract states

that a RCS is subject to “100% inspection” by HUD, which means it “shall be

reviewed by HUD and certified for its completeness, accuracy, and conformance to

HUD’s standard.” Moreover, the statutory scheme governing the MUTM program

provides HUD with discretion to determine comparable market rents. Multifamily

Assisted Housing Reform and Affordability Act of 1997, § 524(a)(5), Pub. L. No.

105-65, 111 Stat. 1344 (as amended by Pub. L. No. 106-74, 113 Stat. 1074, 1109–

16 (1999)) (codified at 42 U.S.C. § 1437f note) (“[HUD] shall prescribe the

method for determining comparable market rent by comparison with rents charged

for comparable properties.”). As such, HUD would have had the right to reject any

hypothetical, non-negligent RCS prepared by Doyle.

      Second, the record indicates that other factors beyond Doyle’s RCS

impacted HUD’s decision to deny HOA’s MUTM application. HUD stated in its

second letter to HOA that it disagreed with HOA’s methodology and interpretation

of the Guidebook that formed the foundation of its own RCS. HOA suggests that

HUD violated its own guidance by rejecting HOA’s study because the study had

already passed HUD’s “substantive review.” But that argument shows only that

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the injury HOA complains of originated with HUD, not Doyle—the former which

it chose not to sue.

      Finally, HOA’s own factual allegations suggest that HUD, not Doyle, caused

the denial of HOA’s MUTM application, because HUD “directed” and

“wrongfully pressured” Doyle to change the results in his initial RCS draft to lower

comparable market rents. In fact, HOA’s version of the facts suggests that Doyle’s

initial RCS may have been acceptable to HOA prior to HUD’s intervention.

      Ultimately, HOA’s injury “depends on the unfettered choices made by

independent actors not before the court[] and whose exercise of broad and

legitimate discretion the court[] cannot presume either to control or to predict.”

WildEarth Guardians v. U.S. Forest Serv., 70 F.4th 1212, 1218 (9th Cir. 2023)

(citation omitted). The district court therefore did not err in concluding that HOA

did not have Article III standing. 1 And because all of Doyle’s claims against HUD

are derivative of HOA’s, the district court also did not err in dismissing Doyle’s

complaint against HUD.

      AFFIRMED.

1 Because we find that Doyle lacks Article III standing, we need not address the

district court’s holdings on duty or causation.

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