Lehner v. U.S., 80-4326

• Decision Date: 03 September 1982
• Docket Number: No. 80-4326,80-4326
• Citation: 685 F.2d 1187
• Parties: Luisa LEHNER, Plaintiff-Appellant, v. UNITED STATES of America, Samuel Riley Pierce, * Secretary of the Department of Housing and Urban Development, House of Affirmation, Inc., a corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1187

685 F.2d 1187

Luisa LEHNER, Plaintiff-Appellant, v. UNITED STATES of America, Samuel Riley Pierce, ^* Secretary of the Department of Housing and Urban Development, House of Affirmation, Inc. a corporation, Defendants-Appellees No. 80-4326.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 16, 1981.

Decided Sept. 3, 1982.

Alan J. Cilman, San Francisco, Cal., for plaintiff-appellant.

Kimberly A. Reiley, Asst. U. S. Atty., San Francisco, Cal., Edmund L. Regalia, Oakland, Cal., for defendants-appellees; John G. Sprankling, Miller, Starr & Regalia, Oakland, Cal., on brief.

Appeal from the United States District Court for the Northern District of California.

Before MERRILL, Senior Circuit Judge, and CHOY and WALLACE, Circuit Judges.

CHOY, Circuit Judge:

The district court dismissed Luisa Lehner's numerous claims against the United States and the Secretary of Housing and Urban Development, and her single claim against the House of Affirmation, Inc. We affirm the dismissal of some of her claims for lack of jurisdiction and the remainder for failure to state claims upon which relief can be granted.

I. Facts

Lehner asserts that governmental misconduct resulted in the foreclosure and resale of realty located in California and owned by Coastside Convalescent Hospital, a limited partnership in which she was the sole general partner and to which she is the successor-in-interest. She alleges the following facts.

In early 1971, the Federal Housing Administration (FHA) guaranteed a loan from Bankers Mortgage Company of California to Coastside to renovate the hospital. Coastside executed a deed of trust to Bankers Mortgage as security for the loan and authorized the FHA to periodically inspect construction.

In early 1972, the construction contractor ran out of money. Fred Soviero, the FHA employee assigned to the project, told Lehner that if she executed a notice stating that the project had been substantially completed, the contractor could procure the money needed from funds held in escrow pending completion. Relying on assurances from Soviero that the FHA would see to the project's completion, Lehner executed the notice. The contractor, claiming no further obligation to work, abandoned the unfinished project. As a result, Coastside did not realize the income expected from the reopening of the hospital.

When Coastside failed to make loan payments as they fell due, the FHA fulfilled its duty as guarantor and paid Bankers Mortgage the balance. In return, Bankers Mortgage conveyed its interest in the realty to the FHA. Throughout the next three years, Lehner made repeated attempts, by herself and through an attorney, to negotiate a settlement with the FHA and its parent organization, the Department of Housing and Urban Development (HUD). Several oral agreements were made but not reduced to writing. HUD failed to honor the informal settlements.

In September 1976, HUD held a foreclosure sale at which the House of Affirmation purchased the property for an amount well below its alleged market value of $500,000. ¹ Lehner had known that the sale was imminent. In fact, her attorney had requested that HUD delay it on two occasions; the second request coming just a few days prior to the sale. Also, on the very day that the House of Affirmation contracted to buy the property, Lehner brought suit in federal district court to secure a temporary restraining order against the sale.

II. Jurisdiction

The doctrine of sovereign immunity foreclosed the district court from entertaining all of Lehner's tort claims as well as the monetary prayer in her contract claims against the United States. As the Supreme Court has explained: "The United States, as sovereign, is immune from suit save as it consents to be sued, and the terms of consent to be sued in any court defines the court's jurisdiction to entertain the suit." United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 769, 85 L.Ed. 1058 (1941) (citations omitted). ² The claims fail to clear this jurisdictional hurdle because Lehner failed to satisfy the conditions imposed by the United States on its waiver of immunity.

The Federal Tort Claims Act, 28 U.S.C. §§ 2671-80, waives federal sovereign immunity from tort claims brought in federal district court. House v. Mine Safety Appliances Co., 573 F.2d 609, 613 (9th Cir.), cert. denied, 439 U.S. 862, 599 S.Ct. 182, 58 L.Ed.2d 171 (1978); Caidin v. United States, 564 F.2d 284, 286 (9th Cir. 1977). A condition limiting the waiver is that "the claimant shall have first presented the claim to the appropriate Federal agency." 28 U.S.C. § 2675(a). The claim must be in the form of some "written notification of an incident, accompanied by a claim for money damages in a sum certain." 28 C.F.R. § 14.2(a) (1980). See House v. Mine Safety Appliances Co., 573 F.2d at 615; Caton v. United States, 495 F.2d 635, 637-38 (9th Cir. 1974); Avril v. United States, 461 F.2d 1090, 1091 (9th Cir. 1972). When the claimant sues in district court, it cannot seek "any sum in excess of the amount of the claim presented to the federal agency, except where the increased amount is based upon newly discovered evidence not reasonably discoverable at the time of presenting the claim to the federal agency, or upon allegation and proof of intervening facts, relating to the amount of the claim." 28 U.S.C. § 2675(b). Lehner failed to follow the prescribed procedures. She never filed a written claim or requested a monetary settlement with the FHA or HUD. Her informal discussions with agency officials certainly do not supply an adequate basis for bringing tort claims for $500,000 in district court.

Similarly, while the United States has waived immunity from contract claims, a claim seeking an amount in excess of $10,000 must be presented to the Court of Claims. 28 U.S.C. §§ 1346(a)(2), 1491. See Rowe v. United States, 633 F.2d 799, 800-01 (9th Cir. 1980), cert. denied, 451 U.S. 970, 101 S.Ct. 2047, 68 L.Ed.2d 349 (1981). The district court therefore lacks jurisdiction to award Lehner the $500,000 sought to compensate her for the FHA's alleged breach of contract.

This leaves three types of claims that clear the jurisdictional hurdle. First, Lehner alleges that HUD violated her right to due process by taking the property without adequate notice. The court had jurisdiction at least over her prayer for equitable relief. See Glines v. Wade, 586 F.2d 675, 681 (9th Cir. 1978), rev'd on other grounds sub nom. Brown v. Glines, 440 U.S. 957, 99 S.Ct. 1496, 59 L.Ed.2d 769 (1980). It is uncertain whether jurisdiction also exists over the prayer for money damages. In Beller v. Middendorf, 632 F.2d 788, 797-98 & n.5 (9th Cir. 1980), we reflected upon whether sovereign immunity ever protects the Government from liability for the unconstitutional acts of its agents. As in Beller, we need not resolve the issue here. Lehner's non-monetary prayer requires us to reach the due process claim and, for the reasons given below, the claim fails. Since the outcome would be the same whether or not jurisdiction exists over the monetary prayer, we decline to decide how the doctrine of sovereign immunity might affect constitutional claims. Cf. Norton v. Matthews, 427 U.S. 524, 532, 96 S.Ct. 2771, 2775, 49 L.Ed.2d 672 (1976) (avoiding difficult jurisdictional question and reaching substantive question).

The district court also had jurisdiction over the prayer in her contract claims that the FHA return to her the property sold to the House of Affirmation. As we have explained: "The Administrative Procedures Act (APA) provides for judicial review of agency action and a waiver of sovereign immunity in an action for relief other than money damages that states a claim that a federal agency or officer failed to act as required in his official capacity. 5 U.S.C. § 702." Rowe v. United States, 633 F.2d at 801 (footnotes omitted). When coupled with the grant of jurisdiction in 28 U.S.C. § 1331, the APA paved the way for the district court to entertain her equitable prayer. Id.

Finally, the doctrine of sovereign immunity does not affect Lehner's claim against the House of Affirmation (a private corporation). We see no other barrier to jurisdiction over it.

III. Failure to State a Claim

Although these three claims clear the jurisdictional hurdle, we uphold their dismissal under Fed.R.Civ.P. 12(b)(6). In each instance, Lehner has failed to allege facts which, if proven, would entitle her to relief. See Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 101, 2 L.Ed.2d 80 (1957). While the district court dismissed all three for lack of jurisdiction, we may affirm its judgment on any ground squarely presented in the record.

A. Due Process Claim

The State of California has established a procedure whereby a mortgagee can hold a foreclosure sale without judicial intervention. See Cal.Civil Code § 2924 et seq. When the Government acts as mortgagee, ³ clearly the mortgagor has a right to notice and a hearing prior to the sale. See Harris v. City of Roseburg, 664 F.2d 1121, 1125 (9th Cir. 1981) (relying on Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), and Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972)). Because Lehner does not dispute that the procedure prescribed by California law provides minimal due process, we need not evaluate its constitutionality. ⁴

Her sole challenge is to HUD's alleged failure to notify her formally of the foreclosure sale. She alleges that HUD mailed the notice to the wrong address. ⁵ Although we cannot determine whether her allegation is true, the record reveals clearly that she knew the foreclosure sale was imminent. Her repeated efforts to delay the impending sale attest to her knowledge. It is apparent that government officials informed her about the sale during their repeated conversations with Lehner and her lawyer. She makes no suggestion that the written notice would...