NBC-USA HOUSING, INC., TWENTY-SIX v. Donovan

774 F. Supp. 2d 277, 2011 U.S. Dist. LEXIS 35255, 2011 WL 1204759
CourtDistrict Court, District of Columbia
DecidedMarch 31, 2011
DocketCivil Action 09-2245 (CKK)
StatusPublished
Cited by13 cases

This text of 774 F. Supp. 2d 277 (NBC-USA HOUSING, INC., TWENTY-SIX 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
NBC-USA HOUSING, INC., TWENTY-SIX v. Donovan, 774 F. Supp. 2d 277, 2011 U.S. Dist. LEXIS 35255, 2011 WL 1204759 (D.D.C. 2011).

Opinion

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 in-junctive 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 with *280 draw 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 Lil-ley 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 *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 sexwice 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 *282

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Bluebook (online)
774 F. Supp. 2d 277, 2011 U.S. Dist. LEXIS 35255, 2011 WL 1204759, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nbc-usa-housing-inc-twenty-six-v-donovan-dcd-2011.