Bennett v. Donovan

74 F. Supp. 3d 382
CourtDistrict Court, District of Columbia
DecidedNovember 24, 2014
DocketCivil Action No. 2011-0498
StatusPublished
Cited by11 cases

This text of 74 F. Supp. 3d 382 (Bennett v. Donovan) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bennett v. Donovan, 74 F. Supp. 3d 382 (D.D.C. 2014).

Opinion

MEMORANDUM OPINION AND ORDER

ELLEN SEGAL HUVELLE, United States District Judge

Plaintiffs Robert Bennett and Leila Joseph have moved for an award of attorney’s fees, costs, and expenses pursuant to the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412. Plaintiffs originally brought suit in 2011 against the Secretary of the Department of Housing and Urban Development (“HUD”) in his official capacity, alleging that the agency’s implementation of the Home Equity Conversion Mortgage (“HE CM”) program violated the Administrative Procedure Act, 5 U.S.C. § 551, et seq. This Court initially dismissed the case for lack of standing in Bennett v. Donovan (“Bennett I”), 797 F.Supp.2d 69 (D.D.C.2011). The Court of Appeals reversed. See Bennett v. Donovan, 703 F.3d 582 (D.C.Cir.2013).

This Court, on remand, granted summary judgment to plaintiffs. See Bennett v. Donovan (“Bennett II ”), 4 F.Supp.3d 5 (D.D.C.2013). It found that HUD’s regulations violated the unambiguous text of the implementing statute by authorizing the agency to insure HECMs that became due and payable upon the death of a mortgagor who was survived by a non-borrowing spouse. See id. at 14-15. Following the instructions of the Court of Appeals, this Court remanded to the agency to fashion appropriate relief. See id. at 15.

Plaintiffs now assert that, in light of this Court’s decision in Bennett II, they are *389 prevailing parties and that the government’s position was not substantially justified. (Pis.’ Mot. for Attorneys’ Fees, Costs, and Expenses [ECF No. 51] (“Pis.’ Mot.”).) Plaintiffs therefore request a total award of $293,932.40. (Id. at 2.) For the reasons stated below, plaintiffs’ motion will be granted in part and denied in part, and plaintiffs will be awarded $236,112.89.

BACKGROUND

The background of this case has been described by this Court and the Court of Appeals. See Bennett, 703 F.3d at 584-86; Plunkett v. Castro, No. 14-cv-326, 67 F.Supp.3d 1, 4-11, 2014 WL 4243384, at *1-6, 2014 U.S. Dist. LEXIS 119805, at *3-15 (D.D.C. Aug. 28, 2014); Bennett II, 4 F.Supp.3d at 7-8; Bennett I, 797 F.Supp.2d at 71-73. The Court will therefore confine its discussion to the facts and statutory framework relevant to the instant motion.

HECMs, which are colloquially referred to as “reverse mortgages,” allow homeowners to convert “a portion of accumulated home equity into liquid assets.” 12 U.S.C. § 1715z-20(a)(l). A borrower who takes out an HECM loan may receive some combination of a lump sum payment, monthly payments, or a line of credit. See id. § 1715z-20(d)(9). Unlike a traditional mortgage, an HECM loan is generally not repaid until a specific “trigger” event occurs; for example, the death of the borrower or the sale of the home. See id. § 1715z-20(j); 24 C.F.R. § 206.27(c)(1). This arrangement is particularly favorable for the borrower because HECM loans are generally nonrecourse — that is, they are secured only by the home. 12 U.S.C. § 1715z-20(d)(3). If the value of the home is less than the amount of the loan when the trigger event occurs and the loan comes due, the lender has no recourse to the borrower’s other assets. Since the loan balance increases over time as interest accumulates, lenders can face a major loss if the borrower lives longer than expected.

In order to mitigate this risk and encourage lenders to provide elderly homeowners with HECM loans, Congress authorized HUD to insure HECMs that meet certain eligibility requirements. See 12 U.S.C. § 1715z-20(a), (d), (j). The particular provision at issue in the underlying litigation states:

The Secretary may not insure a home equity conversion mortgage under this section unless such mortgage provides that the homeowner’s obligation to satisfy the loan obligation is deferred until the homeowner’s death, the sale of the home, or the occurrence of other events specified in regulations of the Secretary. For purposes of this subsection, the term “homeowner” includes the spouse of a homeowner. .

12 U.S.C. § 1715z-20(j). In implementing the statute, HUD issued the following regulation concerning when HECM loans become due and payable:

The mortgage shall state that the mortgage balance will be due and payable in full if a mortgagor dies and the property is not the principal residence of at least one surviving mortgagor, or a mortgagor conveys all or his or her title in the property and no other mortgagor retains title to the property. For purposes of the preceding sentence, a mortgagor retains title in the property if the mortgagor continues to hold title to any part of the property in fee simple, as a leasehold interest as set forth in § 206.45(a), or as a life estate.

24 C.F.R, § 206.27(c)(1).

Plaintiffs are widowed spouses of holders of HECMs insured by HUD. Bennett II, 4 F.Supp.3d at 7-8. Plaintiffs were neither listed on the deeds to their spouses’ homes nor on the HECMs that their spouses had signed. Bennett I, 797 *390 F.Supp.2d at 73. Consistent with 24 C.F.R. § 206.27(c), the HE CM loans became due and payable upon the death of the mortgagors, ie., plaintiffs’ spouses. Id. Facing foreclosure, plaintiffs brought suit, alleging that HUD’s regulations violated federal law by failing to protect non-mortgagor spouses as required by 12 U.S.C. § 1715z-20(j).

In their motion for summary judgment, plaintiffs contended' that 12 U.S.C. § 1715z-20(j) was “capable of a single meaning: namely, that HUD may only insure reverse mortgages that come due after the death of both the homeowner (the mortgagor) and the spouse of that homeowner regardless of whether that spouse is also a mortgagor.” Bennett II, 4 F.Supp.3d at 9. Defendant responded that subsection (j) was “ambiguous because the statute can also be read to protect only those spouses who are co-obligors on a reverse mortgage.” Id. at 9-10.

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Cite This Page — Counsel Stack

Bluebook (online)
74 F. Supp. 3d 382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bennett-v-donovan-dcd-2014.