Nbc–usa Hous. Inc. v. Donovan, Civil Action No. 09–2245 (CKK).

CourtUnited States District Courts. United States District Court (Columbia)
Writing for the CourtMEMORANDUM OPINION
Citation774 F.Supp.2d 277
PartiesNBC–USA HOUSING, INC., TWENTY–SIX, Plaintiff,v.Shaun DONOVAN, Secretary of the Department of Housing and Urban Development, et al., Defendants.
Decision Date31 March 2011
Docket NumberCivil Action No. 09–2245 (CKK).

774 F.Supp.2d 277

NBC–USA HOUSING, INC., TWENTY–SIX, Plaintiff,
v.
Shaun DONOVAN, Secretary of the Department of Housing and Urban Development, et al., Defendants.

Civil Action No. 09–2245 (CKK).

United States District Court, District of Columbia.

March 31, 2011.


[774 F.Supp.2d 279]

Kathryn R. Yingling Schellenger, Cozen O'Connor, Washington, DC, for Plaintiff.David Cotter Rybicki, U.S. Attorney's Office, Washington, DC, for Defendants.

MEMORANDUM OPINION
COLLEEN KOLLAR–KOTELLY, District Judge.

Plaintiff NBC–USA Housing, Inc., Twenty–Six (“NBC”) filed the above-captioned action against Defendants Shaun Donovan, as Secretary (“Secretary”) of the Department of Housing and Urban Development (“HUD”),1 Jim Hotard Properties, LLC (“Hotard”), and Roy S. Lilley in his capacity as a HUD foreclosure commissioner (“Lilley”) for declaratory and injunctive relief relating to Defendants' actions in foreclosing on a property owned by NBC called “Fortner Manor.” In its four-count Complaint, NBC contends that Defendants failed to comply with HUD regulations in refusing to delay or withdraw

[774 F.Supp.2d 280]

foreclosure, denied NBC notice and an opportunity to be heard regarding the foreclosure, and otherwise acted arbitrarily and capriciously in deciding to foreclose. On September 27, 2010, the Court granted Defendant Hotard's motion to dismiss for lack of personal jurisdiction and dismissed Hotard from this action. See [35] Order, 741 F.Supp.2d 55 (D.D.C.2010). The Secretary and Lilley (collectively, “Federal Defendants”) have filed a [21] Motion to Dismiss the Complaint, or, Alternatively for Summary Judgment in which they seek to dismiss Lilley as a defendant for lack of personal jurisdiction and seek dismissal or summary judgment as to all of NBC's claims. NBC has filed an opposition, in which it requests jurisdictional discovery, and Federal Defendants have filed a reply. The motion is therefore ripe for adjudication.2 Although Federal Defendants move only in the alternative for summary judgment on the merits of NBC's claims, the Court finds that, except for two narrow claims discussed below, the parties have presented materials outside the pleadings for the Court's consideration.3 Therefore, the Court shall treat Federal Defendants' motion primarily as one for summary judgment.

For the reasons set forth below, the Court shall (1) deny NBC's construed motion for jurisdictional discovery; (2) grant Federal Defendants' motion to dismiss Lilley as a defendant for lack of personal jurisdiction; (3) grant the Secretary's motion to dismiss with respect to NBC's claims that HUD discriminated against it by foreclosing on Fortner Manor at the request of non-minority organizations and by singling NBC out for foreclosure; and (4) grant the Secretary's alternative motion for summary judgment with respect to NBC's remaining claims.

I. BACKGROUND
A. Statutory and Regulatory Background

Section 811 of the Cranston–Gonzalez National Affordable Housing Act (“Section 811”), 42 U.S.C. § 8013, authorizes the Secretary “to provide assistance to private, nonprofit organizations to expand the supply of supportive housing for persons with disabilities.” 4 Id. § 8013(b)(2). HUD

[774 F.Supp.2d 281]

provides this assistance in the form of capital advances and project rental assistance contracts. Id. § 8013(b)(2)(A)-(B). Capital advances are non-interest-bearing and do not need to be repaid “so long as the housing remains available for very-low-income persons[ 5] with disabilities” in accordance with Section 811. Id. § 8013(d)(1). Repayment of a capital advance does not extinguish a recipient's obligation to maintain the housing in accordance with Section 811. 24 C.F.R. § 891.170(a). Project rental assistance contracts, in comparison, “obligate the Secretary to make monthly payments to cover any part of the costs attributed to units occupied ... by very low-income persons with disabilities that is not met from project income....” 42 U.S.C. § 8013(d)(2). In exchange for the capital advances and project rental assistance contracts, nonprofit organizations must operate the housing in compliance with Section 811 for at least forty years. See id. § 8013(e)(1). HUD regulations require Section 811 housing to, inter alia, “be decent, safe, sanitary and in good repair,” including the housing site, building exterior, building systems, dwelling units, and common areas. 24 C.F.R. § 5.703. In addition, “[t]o ensure its interest in the capital advance, HUD shall require a note and mortgage, use agreement, capital advance agreement and regulatory agreement from the Owner....” Id. § 891.170(a).

“[U]pon the breach of a covenant or condition in the mortgage agreement” between HUD and a Section 811 recipient, the Secretary may foreclose on the Section 811 housing in accordance with the Multifamily Mortgage Foreclosure Act of 1981 (“MMFA”), 12 U.S.C. §§ 3701–17. See 12 U.S.C. § 3705. The MMFA “create[s] a uniform Federal foreclosure remedy for multifamily mortgages.” Id. § 3701. Pursuant to the MMFA, the Secretary is authorized to designate a “foreclosure commissioner,” who “shall be a person who is responsible, financially sound and competent to conduct the foreclosure” and, “if a natural person, shall be a resident of the State in which the security property is located.” Id. § 3704.

If a mortgage agreement is breached, “the Secretary may request the foreclosure commissioner to commence foreclosure of the mortgage.” Id. § 3707(a). However, either “before or after the designation of the foreclosure commissioner but before service of the notice of default and foreclosure,” the Secretary must provide the mortgagor “an opportunity informally to present reasons why the mortgage should not be foreclosed.” 24 C.F.R. § 27.5. After such an opportunity, the foreclosure commissioner may commence foreclosure through the service of notice of default and foreclosure sale. 12 U.S.C. § 3707; see also id. § 3706 (detailing information included in a notice of default and foreclosure sale). At least twenty-one days prior to the foreclosure sale, the notice of default and foreclosure sale must be sent by certified or registered mail to: (1) “the current security property owner of record;” and (2) “the original mortgagor and all subsequent mortgagors of record or other persons who appear of record or in the mortgage agreement to be liable for part or all of the mortgage debt.” Id. § 3708(1)(A)-(B). 6 These notices are

[774 F.Supp.2d 282]

“mailed to the owner or mortgagor at the address stated in the mortgage agreement, or, if none, to the address of the security property, or, at the discretion of the foreclosure commissioner, to any other address believed to be that of such owner or mortgagor.” Id. § 3708(1).

The foreclosure commissioner can withdraw a property from foreclosure and cancel the foreclosure sale in only three situations. See id. § 3709(a). First, if the Secretary directs the foreclosure commissioner to cancel the sale. Id. § 3709(a)(1). Second, if the foreclosure “commissioner finds, upon application of the mortgagor at least three days prior to the date of sale, that the default or defaults upon which the foreclosure is based did not exist at the time of service of the notice of default and foreclosure sale.” Id. § 3709(a)(2). Or finally, if, inter alia, the mortgagor tenders the entire amount due in the event of a monetary default or, in the case of a non-monetary default, the foreclosure commissioner finds, upon application of the mortgagor, that the default is cured. See id. § 3709(a)(3).

B. Factual Background
1. NBC's Purchase of Fortner Manor and Agreements with HUD

NBC is a non-profit religious organization that, inter alia, provides affordable housing to the disabled and elderly. Compl. ¶ 1. On September 1, 1999, NBC purchased the property currently located at 2217 Lapeyrouse Street, New Orleans, Louisiana, for approximately $100,000. Id. ¶ 6. At this site, NBC planned to build Fortner Manor Apartments (“Fortner Manor”) in order to provide affordable rental housing for the elderly and disabled. Id. ¶ 7. To finance the construction of Fortner Manor, NBC, through its president Reverend Zebadee Bridges and secretary Reverend Willie Gable, entered into three agreements with HUD on September 29, 1999. See id. ¶¶ 9–10; Def.'s Stmt. ¶ ¶ 16, 20, 24. 7 Those agreements include: (1) a mortgage agreement and note (“Mortgage Agreement”), Compl., Ex. A;

[774 F.Supp.2d 283]

Administrative Record (“AR”) at 7–12; (2) a use agreement (“Use Agreement”), Compl., Ex. B; AR at 20–23; and (3) a regulatory agreement (“Regulatory Agreement”), AR at 13–19. Subsequently, on September 10, 2001, NBC's new president, Reverend Charles W. Noble, executed NBC's project rental assistance contract (“PRAC”) with HUD. Defs.' Stmt. ¶¶ 31, 36. The relevant portions of the Mortgage Agreement, Regulatory Agreement, and PRAC—the agreements at issue in the pending motions—are set forth below.

a. The Mortgage Agreement

The Mortgage Agreement provides that in exchange for HUD's capital advance of $1,535,700.00, NBC grants the Secretary a security interest in Fortner Manor. Defs.' Stmt. ¶ 16; AR at 7–12. The Agreement also incorporates the Regulatory Agreement's provisions and provides that upon default of the Regulatory Agreement, the Secretary “may declare the whole indebtedness secured to be due and payable.” Defs.' Stmt. ¶ 17; AR at 7. In the Agreement, NBC promises to keep Fortner Manor “in good repair, and not to do, or permit to be done, upon said premises, anything that may impair the value thereof” Defs.' Stmt. ¶ 18; AR at 8. The Agreement further provides that “in case of a breach of any [ ] covenant,” the entire principal—$1,535,700.00—shall become due at the Secretary's election, and the Secretary “shall have the right immediately to foreclose this Mortgage.” Defs.' Stmt. ¶ 19; AR at 9.

b. The Regulatory Agreement

The Regulatory Agreement provides that “[t]he Note and Mortgage bear no...

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13 practice notes
  • Konah v. Dist. of Columbia, Civil Action No. 10–0904 (RMU).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • September 14, 2011
    ...to discovery without first putting forth a factual basis for her claim, something she has not done. NBC–USA Housing, Inc. v. Donovan, 774 F.Supp.2d 277, 297 n. 19 (D.D.C.2011) (“[T]here is no general right to discovery upon filing of the complaint. The very purpose of [Rule 12(b)(6) ] is to......
  • Smirnov v. Clinton, Civil Action No. 11–1126 (ABJ).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • July 14, 2011
    ...merits of their claims, they are not entitled to injunctive relief. [806 F.Supp.2d 24] NBC–USA Housing, Inc., Twenty–Six v. Donovan, 774 F.Supp.2d 277, 309–10 (D.D.C.2011). The plaintiffs have devoted a substantial portion of their pleadings to making the court aware of the hardships that t......
  • NBC–USA Hous. Inc. v. Donovan, No. 11–5116.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • April 6, 2012
    ...Inc., Twenty–Six v. Donovan, 741 F.Supp.2d 55, 61 (D.D.C.2010), and Roy S. Lilley, NBC–USA Housing, Inc., Twenty–Six v. Donovan, 774 F.Supp.2d 277, 294 (D.D.C.2011), for lack of personal jurisdiction. On March 31, 2011, the district court dismissed the case in its entirety, ruling that NBC'......
  • Uni-Top Asia Investment Ltd. v. Sinopec Int'l Petroleum Expl. & Prod. Corp., 20-cv-1770 (DLF)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • April 22, 2022
    ...of what discovery it wishe[d] to conduct' in support of its theory.” Id. at 8 (quoting NBC-USA Hous., Inc., Twenty-Six v. Donovan, 774 F.Supp.2d 277, 295 (D.D.C. 2011)). As a result of that holding, Uni-Top may establish personal jurisdiction over SIPC only if it shows that the company is a......
  • Request a trial to view additional results
13 cases
  • Konah v. Dist. of Columbia, Civil Action No. 10–0904 (RMU).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • September 14, 2011
    ...to discovery without first putting forth a factual basis for her claim, something she has not done. NBC–USA Housing, Inc. v. Donovan, 774 F.Supp.2d 277, 297 n. 19 (D.D.C.2011) (“[T]here is no general right to discovery upon filing of the complaint. The very purpose of [Rule 12(b)(6) ] is to......
  • Smirnov v. Clinton, Civil Action No. 11–1126 (ABJ).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • July 14, 2011
    ...merits of their claims, they are not entitled to injunctive relief. [806 F.Supp.2d 24] NBC–USA Housing, Inc., Twenty–Six v. Donovan, 774 F.Supp.2d 277, 309–10 (D.D.C.2011). The plaintiffs have devoted a substantial portion of their pleadings to making the court aware of the hardships that t......
  • NBC–USA Hous. Inc. v. Donovan, No. 11–5116.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • April 6, 2012
    ...Inc., Twenty–Six v. Donovan, 741 F.Supp.2d 55, 61 (D.D.C.2010), and Roy S. Lilley, NBC–USA Housing, Inc., Twenty–Six v. Donovan, 774 F.Supp.2d 277, 294 (D.D.C.2011), for lack of personal jurisdiction. On March 31, 2011, the district court dismissed the case in its entirety, ruling that NBC'......
  • Uni-Top Asia Investment Ltd. v. Sinopec Int'l Petroleum Expl. & Prod. Corp., 20-cv-1770 (DLF)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • April 22, 2022
    ...of what discovery it wishe[d] to conduct' in support of its theory.” Id. at 8 (quoting NBC-USA Hous., Inc., Twenty-Six v. Donovan, 774 F.Supp.2d 277, 295 (D.D.C. 2011)). As a result of that holding, Uni-Top may establish personal jurisdiction over SIPC only if it shows that the company is a......
  • Request a trial to view additional results

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