Opinion
Civil Action No. 01-2392.
March 10, 2005
Daniel J. Tobin, Kirkpatrick Lockhart Nicholson Graham LLP, Washington, D.C., Counsel for Plaintiffs.
Lisa S. Goldfluss, Assistant United States Attorney, Washington, D.C., Counsel for Defendant.
MEMORANDUM OPINION
In this case plaintiffs Gary O. Travis, Joseph S. Herren, and Shelter Solutions, Inc. ("SSI"), seek judicial review and declaratory relief pursuant to 5 U.S.C. §§ 702 et. seq. for administrative sanctions imposed upon them by the Housing and Urban Development ("HUD") Atlanta Homeownership Center ("HOC"). Because the Court finds that plaintiffs lack standing, summary judgment is granted in favor of defendant.
Right of review of agency action.
Background
Herren is President of SSI, a nonprofit corporation that provides affordable housing to low- and moderate-income families by purchasing, fixing and selling homes. Travis, a member of the board of directors of SSI, also served as its Treasurer. Several years after he had started his voluntary service on SSI's board, Travis took a position as a loan officer at Accubank Mortgage Corporation ("AMC"). Herren approached Travis and asked him to originate loans for SSI through AMC, and Travis did so after informing AMC that he was still serving as an SSI board member. AMC acquiesced to this dual role and Travis never received compensation for his services from SSI; he received only his normal commissions from AMC. Plaintiffs made several inquiries to experts about Travis's dual roles and whether this created any conflict, but did not approach HUD regarding this matter. Upon advice from counsel, the SSI board passed a resolution requiring Travis to recuse himself from any board consideration of SSI's mortgage financing.
Starting in 1998, AMC accepted and approved FHA financing for approximately 106 SSI properties. Travis asserts that he did not participate in AMC's decision to approve or reject SSI loan applications and that he played no role in evaluating SSI's financial information or determining its sufficiency. Instead, Travis merely acted as loan officer and received regular commissions from AMC for these loans. In late 1999, HUD inquired into Travis' dual roles and required him to sign a certification stating that "[he has] not individually gained profit from transactions performed by Shelter Solutions, Inc., its subsidiaries or affiliates." Herren also signed a certification stating that "members of [SSI's] Board of Directors serve in a voluntary capacity and receive no compensation, other than reimbursement for expenses, for their services . . ."
Despite these certifications, the Director of the Atlanta HOC, Charles E. Gardner, issued Limited Denials of Participation ("LDPs") against plaintiffs prohibiting them from participating in all single family housing programs administered by the Assistant Secretary for Housing for 12 months in the states and territories in which plaintiffs operated. The LDP applicable to Travis was based on the Atlanta HOC's assertions that Travis' dual roles at AMC and SSI created a conflict of interest and violated HUD regulations, directives, and standards. The LDP against Herren and SSI asserted that Herren knew or should have known that Travis' dual roles created a conflict of interest and violated HUD regulations, directives, and standards.
Plaintiffs appealed these LDPs, and Gardner issued decisions on May 4 and 9, 2001, deleting some of the bases for the LDPs but affirming the term and effect of the LDPs. Shortly thereafter, a HUD Administrative Judge ("AJ") reviewed the LDPs. After a hearing in which Gardner served as HUD's chief witness, the AJ issued two opinions entitled "Findings of Fact and Recommended Decision" — one for Travis and the other for Herren and SSI. In her opinions, the AJ concluded that there was inadequate evidence to support the LDPs and that the legal bases cited for the sanction were either inapplicable or unproven. Nonetheless, Gardner issued Final Decisions accepting the AJ's findings of fact but rejecting her conclusions of law, maintaining that there was adequate evidence to support the issuance of the LDPs.
These decisions turned on reasons (e) and (f) of the LDPs. Reason (e) of the Travis LDP charged that Travis' receipt of compensation for originating SSI loans through AMC was a "personal benefit" to Travis, and violated HUD Mortgage Letters 96-52, which require that a nonprofit borrower have a "voluntary board whose members do not personally benefit." Reason (e) of the Herren and SSI LDP charges that Herren and SSI knew or should have known that Travis' activities were improper but nonetheless collaborated with him. Reason (f) of the Travis LDPs charged that Travis' multiple roles for SSI and AMC prevented SSI from acting independent of AMC, thereby providing FHA-insured financing without the normal arms-length negotiations between mortgagor and mortgagee, thus violating HUD Mortgagee Letter 96-52. Reason (f) of the Herren and SSI LDP charges that Herren and SSI knew or should have know that Travis' activities were improper but nonetheless collaborated with Travis to execute them.
In its final decision, HUD terminated its earlier limited denial of the plaintiffs' right to participate in certain HUD programs because it found the plaintiffs to be presently responsible. Thus, it is undisputed that all of the plaintiffs are currently eligible to participate in all HUD programs. HUD did not, however, void the LDPs ab initio.
Plaintiff SSI is not eligible to participate in all HUD programs for reasons extraneous to the issues presented in this action. But for these extraneous reasons, SSI would be able to participate in all HUD programs.
Jurisdiction
Before considering the merits of the claims asserted in this litigation, the Court must assess as a threshold matter Travis', Herren's and SSI's standing. See La. Envtl. Action Network v. Browner, 318 U.S. App. D.C. 370, 87 F.3d 1379, 1382 (D.C. Cir. 1996) ("Before we reach the merits of any claim, we must first assure ourselves that the dispute lies within the constitutional and prudential boundaries of our jurisdiction."). There are two principal forms of standing, "Article III (case or controversy)" standing and "prudential" standing, each of which must be considered. Mudd v. White, 353 U.S. App. D.C. 428, 309 F.3d 819, 823 (D.C. Cir. 2002).
A. Constitutional Standing
Article III standing entails three requirements:
First, the plaintiff must have suffered an "injury in fact" — an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or imminent, not `conjectural' or `hypothetical.'" Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be "fairly . . . traceable to the challenged action of the defendant, and not . . . the result [of] the independent action of some third party not before the court." Third, it must be "likely," as opposed to merely "speculative," that the injury will be "redressed by a favorable decision."
The party invoking federal jurisdiction bears the burden of establishing these elements. Since they are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 119 L.Ed. 2d 351, 112 S. Ct. 2130 (1992) (internal citations omitted). The critical question as to standing in this case is whether any of the plaintiffs have suffered or will suffer actual or imminent injury. Plaintiffs assert that their "injuries arise from the critical difference between leaving a sanction on the record and voiding it from its inception." By "merely" terminating the LDPs as of the date of the Final Decisions, plaintiffs argue, the Final Decisions left the sanctions against plaintiffs on the record. As a result, Travis and Herren argue that they continue to suffer injury to their reputation and also that their future employment has been placed in jeopardy as a result of having to disclose the LDP action on various personal and professional license applications and employment applications. SSI maintains that its ability to obtain grants will be significantly impaired. In support of these claims, plaintiffs assert that
Various federal, state and local licensing commissions require officers, directors and other individuals in managing positions to complete personal disclosure forms in connection with a corporate applicant's license application. One of the questions commonly contained in these forms is whether such individual has been sanctioned by a state or federal government agency. Given that Travis and Herren have been the subject of an LDP action, each is required to disclose this information on these disclosure forms and will continue to be required to disclose such sanction unless the LDPs are voided ab initio. Similar questions are also contained on individual license applications and employment application.Pl.'s Reply Memo. in Further Support of Cross-Mot. for Summ. J. at Note 3. Still missing in the plaintiffs' materials, however, is any specific factual support that a particular plaintiff has suffered, or imminently will suffer, concrete harm as a result of the Director's refusal to void the LDPs ab initio. Although individuals and non-profit organizations may be required to disclose past sanctions and such disclosures may factor negatively in hiring or grant decisions, it remains unclear whether such disclosure has been or portends to be the deciding factor — or even a significant factor — in a negative determination.
Moreover, plaintiffs' highly generalized description of the injuries suffered by them fails to identify any specific instances of such denials or that any pending applications even exist. Accordingly, given the late stage of the litigation, the plaintiffs' assertions fall short of meeting their burden to establish standing. See Sierra Club v. EPA, 352 U.S. App. D.C. 191, 292 F.3d 895, 899 (D.C. Cir. 2002) ("On a motion for summary judgment . . . `the plaintiff can no longer rest on such `mere allegations,' but must `set forth' by affidavit or other evidence `specific facts.''" (quoting Defenders of Wildlife, 504 U.S. at 561)).
Because this Court finds that plaintiffs Travis, Herren and SSI have not satisfied the requirements of Article III Constitutional standing, the Court need not inquire into the issue of prudential standing. Accordingly, it is hereby
ORDERED that summary judgment is GRANTED in favor of defendant, United States Department of Housing and Urban Development.
ORDERED that plaintiff's cross motion for summary judgment is DENIED.
A separate Order accompanies this Memorandum Opinion.