Conille v. Secretary of Housing and Urban Development

• Citation: 840 F.2d 105
• Decision Date: 15 September 1987
• Docket Number: No. 87-1120,87-1120
• Parties: Marie CONILLE, Plaintiff, Appellant, v. SECRETARY OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants, Appellees. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 105

840 F.2d 105

Marie CONILLE, Plaintiff, Appellant, v. SECRETARY OF HOUSING AND URBAN DEVELOPMENT, et al Defendants, Appellees.

No. 87-1120.

United States Court of Appeals, First Circuit.

Heard Sept. 15, 1987.

Decided Feb. 19, 1988.

Paul R. Collier, III, Boston, Mass., with whom Philip Buri, Harvard Legal Aid Bureau, was on brief for plaintiff, appellant.

Daniel S. Manning, Greater Boston Legal Services, Boston, Mass., on brief for Mrs. Charlie Dew, amicus curiae.

Robert K. Rasmussen, Appellate Staff, Civil Div., Dept. of Justice, with whom Michael Jay Singer, Appellate Staff, Civil Div., Dept. of Justice, Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Robert S. Mueller, III, U.S. Atty., Boston, Mass., Gershon M. Ratner, Associate General Counsel for Litigation, John W. Herold, Asst. General Counsel for Litigation, and Barry F. Smith, Office of General Counsel, Washington, D.C., were on brief for defendants, appellees.

Before COFFIN and ALDRICH, Circuit Judges, and LAGUEUX, ^* District Judge.

COFFIN, Circuit Judge.

The appellant, Marie Conille, is a former tenant of the Washington Apartments in Dorchester, Massachusetts, a housing project rehabilitated in the late 1960s with mortgage loans insured by the United States Department of Housing and Urban Development ("HUD"). During her tenancy, the owners of the Washington Apartments defaulted on their mortgage obligations. As a result, HUD took assignment of the mortgage and on May 10, 1982, became mortgagee in possession ("MIP") pursuant to section 1713(k) of the National Housing Act ("NHA"), 12 U.S.C. Secs. 1701-1750g. In its capacity as MIP, HUD was responsible for all aspects of property management, including rent collection and property maintenance. Conille v. Pierce, 649 F.Supp. 1133, 1136, 1144 (D.Mass.1986). It hired an independent company, Interim Management, Inc., to manage the Washington Apartments.

On January 31, 1983, while HUD was serving as MIP, Conille and her family allegedly were forced to vacate the apartment due to its deteriorated condition. ¹ She subsequently filed a complaint in the United States District Court for the District of Massachusetts against Samuel R. Pierce, in his capacity as Secretary of HUD, seeking to recover rent paid and compensatory damages for the period from May 10, 1982 to January 31, 1983. She claimed that the Secretary had breached an implied warranty of habitability and had infringed her right of quiet enjoyment under state and federal law. ² The Secretary asserted affirmative defenses of sovereign immunity and federal preemption.

The parties submitted stipulated facts for a trial on the Secretary's affirmative defenses. The district court concluded that the Secretary had waived sovereign immunity and was therefore subject to Conille's suit for damages or restitution of rent. Conille, 649 F.Supp. at 1138. ³ It dismissed Conille's state law claims, however, on the ground that they conflicted with federal law embodied in the NHA. Id. at 1145-46. The court found that the Secretary had a "duty to take reasonable steps to maintain all HUD-owned or MIP projects in a decent, safe, and sanitary condition, and that such steps must include safeguards for the life, health, and safety of the tenants." Id. at 1145. Nevertheless, the court concluded that even if the Secretary had breached that duty in this case, Conille would not be entitled to either monetary damages or restitution of her rent because, notwithstanding the conditions of her apartment, see supra note 1, either remedy would be too "extraordinary" in the circumstances of this case. Id. at 1154. It therefore dismissed her action and entered judgment for the Secretary.

I. The Law to be Applied

Conille argues that the district court erred in concluding that her state law claims were preempted by provisions of the NHA. In the alternative, she contends that even if the district court correctly dismissed her state law claims, the same or similar rights and remedies are available to her as a matter of federal common law. The Secretary presents essentially two arguments for upholding the district court's judgment. First, he asserts that because this action calls into question the rights and obligations of the United States under a lease entered into pursuant to the NHA, uniquely federal interests are at stake, and federal law must be applied. Second, he argues that Congress has comprehensively addressed the issues presented in this case through the enactment of sections 203(a) and (c) of the Housing and Community Development Amendments of 1978, 12 U.S.C. Sec. 1701z-11(a) and (c), and thereby left no room for federal courts to fashion federal common law in this area.

We approach the complicated issues raised in this appeal recognizing that the Supreme Court has found it necessary to develop federal common law only in "few and restricted" instances, Wheeldin v. Wheeler, 373 U.S. 647, 651, 83 S.Ct. 1441, 1444-45, 10 L.Ed.2d 605 (1963), "[w]hen Congress has not spoken to a particular issue ... and when there exists a 'significant conflict between some federal policy or interest and the use of state law.' " Milwaukee v. Illinois, 451 U.S. 304, 313, 101 S.Ct. 1784, 1790, 68 L.Ed.2d 114 (1981) (quoting Wallis v. Pan American Petroleum Corp., 384 U.S. 63, 68, 86 S.Ct. 1301, 1304, 16 L.Ed.2d 369 (1966)).

A.

We agree with the Secretary that federal law must be applied to a controversy concerning the rights or obligations of the United States under a lease entered into in furtherance of the national housing program.

Conille's action against the Secretary for breach of implied obligations underlying her lease is one that sounds in contract. See Forman v. United States, 767 F.2d 875, 879 n. 4 (Fed.Cir.1985); Keydata Corp. v. United States, 504 F.2d 1115, 1123 (Ct.Cl.1974); see also Javins v. First National Realty Corp., 428 F.2d 1071, 1075 (D.C.Cir.1970). It is well established that cases involving the rights and obligations of the United States or one of its agents under a contract, entered into pursuant to authority conferred by federal statute, are governed by federal law. See, e.g., Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 641, 101 S.Ct. 2061, 2067, 68 L.Ed.2d 500 (1981); Miree v. DeKalb County, 433 U.S. 25, 28-29, 97 S.Ct. 2490, 2493-94, 53 L.Ed.2d 557 (1977); United States v. Little Lake Misere Land Co., 412 U.S. 580, 93 S.Ct. 2389, 37 L.Ed.2d 187 (1973); Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 89 L.Ed. 838 (1943); Krupp v. Federal Housing Administration, 285 F.2d 833, 834 (1st Cir.1961). Conille's action against the Secretary, involving alleged violations of implied rights under a lease, entered into pursuant to the NHA, ⁴ is such a case and therefore is governed by federal law.

See Alexander v. United States Department of Housing and Urban Development, 555 F.2d 166, 170-71 (7th Cir.1977), aff'd on other grounds, 441 U.S. 39, 99 S.Ct. 1572, 60 L.Ed.2d 28 (1979); Girard Trust Co. v. United States, 149 F.2d 872, 874 (3d Cir.1945); Chase v. Theodore Mayer Bros., 592 F.Supp. 90, 97 (S.D.Ohio 1983). See generally Note, Implied Warranty of Habitability in Federal Housing Projects: Alexander v. United States Department of Housing and Urban Development, 19 B.C.L.Rev. 343, 348-49 (1978).

Stating that an issue is governed by federal law, however, does not open the door to the fashioning of federal common law by federal courts. ⁵ Federal common law, being "subject to the paramount authority of Congress," is resorted to only as a "necessary expedient" when federal courts are "compelled to consider federal questions which cannot be answered from federal statutes alone." Milwaukee v. Illinois, 451 U.S. at 313-14, 101 S.Ct. at 1791 (quotations and citations omitted). ⁶ Moreover, if there is no "significant conflict between some federal policy or interest and the use of state law," id. at 313, 101 S.Ct. at 1790, there is no need for a federal court to embark upon the unfamiliar road of common lawmaking, even in situations where the rights or obligations of the United States under a contract are at stake. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979); United States v. Yazell, 382 U.S. 341, 86 S.Ct. 500, 15 L.Ed.2d 404 (1966). ⁷ Thus, in cases involving contractual obligations of the United States that are not addressed by statute, but resolvable under state law without any conflict with federal policy, state law is said to be "incorporated as the federal rule of decision." United States v. Kimbell Foods, Inc., 440 U.S. at 728, 99 S.Ct. at 1458. ⁸

The parties have addressed these considerations. Conille argues that we should incorporate Massachusetts landlord-tenant law as the federal rule in this case. The Secretary argues, on the other hand, that Congress has addressed, in a comprehensive way, the rights and obligations at issue in this case, leaving no room for our fashioning of federal common law, with or without the incorporation of state law. We think that neither party is fully correct. We address their arguments in reverse order.

B.

The Secretary argues that 12 U.S.C. Sec. 1701z-11 comprehensively covers the issues involved in this case, and that by enacting that statute, Congress left no room for judicial recognition of Conille's federal law claims.

Section 1701z-11 provides, in pertinent part:

(a) It is the policy of the United States that the Secretary of Housing and Urban Development ... shall manage and dispose of multifamily housing projects which are owned by the Secretary in a manner consistent with this chapter and this section. The purpose of the property management and disposition program of the Department of Housing and Urban Development shall be to manage and dispose of projects in a manner which will protect the financial interests of the Federal Government and be less costly to the Federal Government than other reasonable...