National State Bank of Elizabeth v. Gonzalez

• Decision Date: 30 July 1993
• Citation: 630 A.2d 376,266 N.J.Super. 614
• Parties: The NATIONAL STATE BANK OF ELIZABETH, Plaintiff, v. Gladys GONZALEZ, Defendant and Third-Party Plaintiff/Respondent, v. Henry CISNEROS, Secretary of the United States Department of Housing and Urban Development, Third-Party Defendant/Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 614

266 N.J.Super. 614

630 A.2d 376

The NATIONAL STATE BANK OF ELIZABETH, Plaintiff, v. Gladys GONZALEZ, Defendant and Third-Party Plaintiff/Respondent, v. Henry CISNEROS, Secretary of the United States Department of

Housing and Urban Development, Third-Party

Defendant/Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued June 2, 1993.

Decided July 30, 1993.

Andrew O. Schiff, Asst. U.S. Atty., for appellant (Michael Chertoff, U.S. Atty., attorney; Mr. Schiff, of counsel, and on the brief).

Gregory G. Diebold, Jersey City, for respondent (Hudson County Legal Services Corp., attorney; Timothy K. Madden, Director, Mr. Diebold, of counsel, and on the brief).

Before Judges MICHELS, BAIME and WALLACE.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Third-Party defendant Henry Cisneros, Secretary of the United States Department of Housing and Urban Development (Secretary) appeals pursuant to leave granted by this court from an order of the Chancery Division that denied his motion to dismiss a third-party complaint filed by defendant and third-party plaintiff Gladys Gonzalez (Gonzalez) for lack of jurisdiction in this mortgage foreclosure action.

Plaintiff The National State Bank of Elizabeth (NSB) instituted this action against Gonzalez to foreclose her mortgage. Gonzalez filed a third-party complaint against the Secretary, alleging that the Secretary erred in refusing to grant her temporary mortgage assistance payments pursuant to the National Housing Act (NHA), 12 U.S.C. § 1715u(a). This provision of the NHA authorizes the Secretary to assist individuals in meeting their monthly mortgage payments during periods of temporary delinquency. 12 U.S.C. § 1715u(a)(1). Relief is warranted only where the default "was caused by circumstances which are beyond the mortgagor's control and render the mortgagor temporarily unable to correct a mortgage delinquency and to resume full mortgage payments" and "such payments are necessary to avoid foreclosure." 12 U.S.C. § 1715u(a)(1) and (2). The amount of the payments is within the discretion of the Secretary, 12 U.S.C. § 1715u(a)(3), but they may not exceed a period of eighteen months unless the Secretary determines an extension is necessary, 12 U.S.C. § 1715u(a)(4). The payments are secured by the property and are repayable. 12 U.S.C. § 1715u(a)(5). The statute further provides that temporary mortgage assistance payments are to be made only "to the extent approved in appropriation Acts." 12 U.S.C. § 1715u(c).

After the Secretary denied Gonzalez temporary mortgage assistance, Gonzalez sought judicial review of its decision. Because Gonzalez was already in the Superior Court as a defendant in the foreclosure action initiated by NSB, she filed a third party complaint in the Chancery Division requesting (1) declaratory relief entitling her to temporary mortgage assistance and (2) dispensation of payments in an appropriate amount. The Secretary's motion to dismiss the third-party complaint for lack of subject matter jurisdiction was denied and we granted the Secretary leave to appeal.

The Secretary contends that the Superior Court does not have jurisdiction over Gonzalez's third party claim because Congress has not specifically waived sovereign immunity for suits against the Secretary in state court and, thus, it may only be sued in Federal Court. We agree and reverse.

It is fundamental that the federal government, as sovereign, is immune from suit absent the consent of Congress. Block v. North Dakota, 461 U.S. 273, 287, 103 S.Ct. 1811, 1819, 75 L.Ed.2d 840, 853 (1983); United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607, 613, reh'g denied, 446 U.S. 992, 100 S.Ct. 2979, 64 L.Ed.2d 849 (1980); United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 769, 85 L.Ed. 1058, 1061 (1941). A waiver of sovereign immunity cannot be implied, but must be unequivocally expressed by Congress. United States Dep't of Energy v. Ohio, 503 U.S. 607, ----, 112 S.Ct. 1627, 1633, 118 L.Ed.2d 255, 266 (1992); United States v. Nordic Village, 503 U.S. 30, ----, 112 S.Ct. 1011, 1014, 117 L.Ed.2d 181, 187 (1992); United States v. Mitchell, supra, 445 U.S. at 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d at 613; United States v. King, 395 U.S. 1, 4, 89 S.Ct. 1501, 1502, 23 L.Ed.2d 52, 56 (1969). "[T]he terms of [Congress'] consent to be sued in any court define that court's jurisdiction to entertain the suit." United States v. Mitchell, supra, 445 U.S. at 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d at 613 (quoting United States v. Sherwood, supra, 312 U.S. at 586, 769, 61 S.Ct. 767, 85 L.Ed. at 1061). When interpreting the terms of a waiver, courts generally employ strict construction in favor of the sovereign so as not to enlarge the scope of the waiver beyond what the language requires. See United States Dep't of Energy v. Ohio, supra, 503 U.S. at ----, 112 S.Ct. 1627, 1633, 118 L.Ed.2d at 266; United States v. Nordic Village, supra, 503 U.S. at ----, 112 S.Ct. 1011, 1014-15, 117 L.Ed.2d at 187-88; see also Ruckelshaus v. Sierra Club, 463 U.S. 680, 685, 103 S.Ct. 3274, 3277-78, 77 L.Ed.2d 938, 944 (1983); McMahon v. United States, 342 U.S. 25, 27, 72 S.Ct. 17, 19, 96 L.Ed. 26, 30, reh'g denied, 342 U.S. 899, 72 S.Ct. 228, 96 L.Ed. 673 (1951). Thus, the Secretary is immune from suit unless Congress has expressed a waiver of immunity. Furthermore, the waiver must clearly extend to the state courts for Gonzalez to maintain her suit in the Superior Court.

The only two relevant statutes involving immunity and jurisdiction for suits against the Secretary are the NHA and the Administrative Procedure Act (APA). First, Section 1702 of the NHA, in relevant part, provides:

The Secretary shall, in carrying out the provisions of this subchapter and subchapters II, III, V, VI, VII, VIII, IX-B, and X of this chapter, be authorized, in his official capacity, to sue and be sued in any court of competent jurisdiction, State or Federal.

[12 U.S.C. § 1702].

This "sue and be sued" provision was added to the NHA by amendment dated August 23, 1935 and has been interpreted as a valid waiver of immunity. See Federal Hous. Admin. v. Burr, 309 U.S. 242, 244, 60 S.Ct. 488, 490, 84 L.Ed. 724, 728 (1940); Federal Nat'l Mortgage Ass'n v. LeCrone, 868 F.2d 190, 193 (6th Cir.), cert. denied, 493 U.S. 938, 110 S.Ct. 335, 107 L.Ed.2d 324 (1989); Selden Apartments v. United States Dep't of Hous. and Urban Dev., 785 F.2d 152, 156 (6th Cir.1986); Armor Elevator Co., Inc. v. Phoenix Urban Corp., 493 F.Supp. 876, 883 (D.Mass.1980), aff'd, 655 F.2d 19 (1st Cir.1981); United States v. American Nat'l Bank and Trust Co. of Chicago, 443 F.Supp. 167, 170 (N.D.Ill.1977).

Although the NHA waives immunity for suits against the Secretary, there is no provision in the statute setting forth the procedures to be followed for judicial review of decisions of the Secretary. Consequently, applicants who wish to appeal the Secretary's denial of temporary mortgage assistance payments must bring suit under the APA. The APA is a general statute designed to provide judicial review of agency decisions in a broad spectrum of administrative actions. See Califano v. Sanders, 430 U.S. 99, 104, 97 S.Ct. 980, 983, 51 L.Ed.2d 192, 199 (1977). Section 702 of the APA sets forth the standards for judicial review:

Right of review

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party. The United States may be named as a defendant in any such action, and a judgment or decree may be entered against the United States: Provided, That any mandatory or injunctive decree shall specify the Federal officer or officers (by name or by title), and their successors in office, personally responsible for compliance. Nothing herein (1) affects other limitations on judicial review or the power or duty of the court to dismiss any action or deny relief on any other appropriate legal or equitable ground; or (2) confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought. [5 U.S.C. § 702 (first emphasis added) ].

The second sentence of this provision, which was added to the statute by amendment dated October 21, 1976, has been interpreted as a valid limited waiver of immunity in federal courts. See Ensign Financial Corp. v. Federal Deposit Ins. Corp., 785 F.Supp. 391, 398-99 (S.D.N.Y.1992), reh'g granted, 1993 WL 56775 (1993); The Presbyterian Church (U.S.A.) v. United States, 870 F.2d 518, 524 (9th Cir.1989); Hill v. United States, 571 F.2d 1098, 1102 (9th Cir.1978). Section 702 is clearly not, however, a waiver of immunity in state court. See Kozera v. Spirito, 723 F.2d 1003, 1011 n. 7 (1st Cir.1983); Aminoil U.S.A., Inc. v. California State Water Resources Control Bd., 674 F.2d 1227, 1233 (9th Cir.1982); First Jersey Sec., Inc. v. S.E.C., 194 N.J.Super. 284, 295, 476 A.2d 861 (App.Div.1984), appeal dismissed, 101 N.J. 208, 501 A.2d 893 (1985). The legislative history of Section 702 confirms the validity of this interpretation:

The first of the additional sentences provides that claims challenging official action or nonaction, and seeking relief other than money damages, should not be barred by sovereign immunity. The explicit exclusion of monetary relief makes it clear that sovereign immunity is abolished only in actions for specific relief (injunction, declaratory judgment, mandatory relief, etc.). Thus, limitations on the recovery...