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Massie v. HUD

620 F.3d 340 (3d Cir. Sept. 9, 2010), rev'g No. 06-1004, slip. op. (W.D. Pa. 2007).

The cooperative Third East Hills Park, Inc. owned a federally-assisted residential housing development in Pittsburgh. Shareholders in the cooperative sought to enjoin HUD from foreclosing the property without project-based Section 8, and without URA relocation benefits. After the District Court granted summary judgment to HUD, the Third Circuit reversed, ruling that HUD’s 2006 foreclosure and disposition of the property without a Section 8 contract violated the Schumer Amendment. The ruling requires HUD to reinstate the Section 8 HAP contract, and also remands for further fact-finding on whether the tenants were displaced for a federally financed project and therefore entitled to URA assistance.

Complaint (PDF)

* Counts include:

o Violation of Fair Housing Act, 42 U.S.C. §§ 3604, 3608 and 3617
o Violation of 109 P.L. 115, § 311
o Violation of the Uniform Relocation Act, 42 U.S.C. §§ 4621(b), 4622(a)(1), 4622(b), 4624, 4625(a), 4625(b), 4625(c), 4601 et seq.
o Violation of the Due Process Clause
o Breach of Contract

* Class Action Allegations

o Class meets numerosity, commonality, typicality and adequacy of representation standards
o Defendants’ actions make declaratory and injunctive relief appropriate with respect to the class as a whole

Tenants' Memorandum in Support of Preliminary Injunction (PDF)

* Because HUD had been exercising fiscal and property management control over the development, it was bound to maintain the property in a decent, safe and sanitary condition in accordance with 12 U.S.C. § 1701z-11(d)
* HUD has violated fair housing provisions of 42 U.S.C. § 3608(e)(5) by not affirmatively marketing new units to non-African American families

HUD's Memorandum in Support of Motion to Dismiss for Lack of Standing (PDF)

* As a result of the foreclosure sale, the case is now moot because the plaintiffs no longer face a threat of imminent injury

o after foreclosure, the plaintiffs no longer had an ownership interest in the property

* The court cannot enjoin the foreclosure because it has already occurred

HUD's Memorandum in Support of Motion to Dismiss (PDF)

* Plaintiff’s claims under the FHA and the URA should be dismissed because there is no applicable waiver of sovereign immunity
* Plaintiff’s claims under the APA should be dismissed because Congress expressly gave HUD the flexible authority to decide how to dispose of multifamily mortgages in 12 U.S.C. § 1715z-11a
* Plaintiff’s claim under Sec. 311 fails because HUD neither owns nor holds the property
* HUD has not discriminated against the plaintiffs under the FHA because HUD has a comprehensive neighborhood plan for revitalization and preservation of affordable housing

Tenants' Response in Opposition to Motion to Dismiss (PDF)

* Sec. 702 of the APA and Sec. 1702 of the U.S. Housing Act explicitly waive HUD’s sovereign immunity
* The flexible authority provision of 12 U.S.C. § 1715z-11a(a) does not apply because HUD elected to pursue foreclosure and negotiated sale of the property under the requirements of 12 U.S.C. § 1701z-11

o further, HUD is required to comply with its own regulations

* Sec. 1715z-11a(a) has been superseded by 109 P.L. 115, § 311 with respect to any discretion HUD may have had to refuse to require the continuation of project based rental assistance to the property

Court Opinion and Order Dismissing the Case (PDF)

* There is an injury in fact and a remedy available to plaintiffs
* Plaintiffs’ claims are precluded from review because Congress expressly gave HUD the flexible authority to decide how to dispense of multifamily mortgages such as those at issue here

o the flexible authority statute must be read to override any conflicting provision of law in existence at the time that the flexible authority statute was enacted

* Under the flexible authority statute, there is no meaningful way for this court to evaluate HUD’s decision so there is no jurisdiction to review plaintiffs’ claims
* §311 only applies to the disposition by HUD of multifamily property that is owned or held by HUD, not to the disposition of HUD held multifamily mortgages

Tenants' Brief in Support of Motion for Reconsideration (PDF)

* The plaintiffs have stated a claim under §311

o although HUD did not formally declare it was assuming Mortgagee in Possession status, HUD did exercise control over financial and management decisions and took physical possession of a portion of the development

* The court has jurisdiction to review the plaintiffs’ claim that the agency failed to follow its own regulations implementing/exercising the agency’s flexible authority

o HUD did promulgate regulations implementing/exercising the discretion it was given under the flexible authority statute

* The Plaintiffs’ due process claim is a matter of federal Constitutional deliberation and does not hinge on procedures otherwise provided by statute or regulation

HUD's Brief in Opposition to Motion for Reconsideration (PDF)

* Plaintiffs have failed to present any facts, legal theories or legal arguments that could not have been asserted in their opposition to HUD’s motion to dismiss
* Plaintiff does not advance any new legal theory or argument to support their due process claim
* When the foreclosure of the property occurred there were no rental assistance payments attached to dwelling units and, therefore, §311 is inapplicable

Tenants' Reply to Opposition to Motion for Reconsideration (PDF)

* HUD never terminated the project-based Section 8 contract at the property and §311 is applicable

o HUD merely suspended payments due under the contract

Order Reinstating the Case and Denying Motion to Dismiss (PDF)

* Dismissal was based on an incorrect statement made by defendant regarding whether HUD would comply with §311in its disposition of both multifamily properties and multifamily mortgages that the Secretary holds
* It can be inferred that rental assistance payments attached to the units were suspended, not completely abated, meaning dismissal is not warranted
* the Court does have jurisdiction to review plaintiffs’ claims

Appellants' Opening Brief (PDF)

Amicus brief of National Housing Law Project and Housing Preservation Project (PDF)

Brief for the Appellees (PDF)

Appellants' Reply Brief (PDF)


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