The opinion of the court was delivered by: GASCH
The question before the Court is whether a three-judge court must be convened. Plaintiffs in this case seek a declaratory judgment that the procedure for extrajudicial foreclosure "authorized" by Title 45, Sections 301, 603 and 615 of the District of Columbia Code is unconstitutional because it deprives homeowners of property without due process of law. In addition, they have moved for a preliminary injunction to restrain the defendants from proceeding with completion of a foreclosure sale under a deed executed by plaintiffs pending full hearing on their complaint, and have made application for convening of a three-judge court pursuant to 28 U.S.C. § 2282.
Section 2282, Title 28, U.S.C., provides that an injunction restraining the enforcement of any Act of Congress "shall not be granted * * * unless the application therefor is heard and determined by a district court of three judges * * *."
However, Section 2282 does not apply if the question of constitutionality raised is not "substantial." A claim may lack substantiality "either because it is obviously without merit or because its unsoundness so clearly results from the previous decisions of [the Supreme Court] as to foreclose the subject." California Water Service Co. v. City of Redding, 304 U.S. 252, 255, 58 S. Ct. 865, 867, 82 L. Ed. 1323 (1938). For the reasons stated below, I have concluded that plaintiffs' constitutional claim is not substantial.
(1) at least 30 days in advance of the date of the sale gives written notice of the sale by certified mail, return receipt requested, and in such form as the District of Columbia Council by regulation prescribes, to the owner of the property at his last known address; and
(2) sends a copy of the notice to the Commissioner of the District of Columbia, or his designated agent.
Moreover, extrajudicial foreclosure is permissible only when the instrument contains a power of sale clause which expressly grants to the mortgagee or trustees the power to sell the property at a public auction if the owner should default in his payments. The power of sale may prescribe the terms of the sale and provide for notice to the grantor. However, any provision for notice is in addition to the 30-day notice required by Section 615(b).
Prior to 1968, foreclosure procedures in the District of Columbia had been characterized as the least cumbersome of any jurisdiction.
There was no statutory requirement that the owner be notified of an extrajudicial foreclosure sale and, therefore, there was no guarantee that a homeowner would have sufficient time before the sale to take legal action to protect himself. Homeowners - particularly low-income homeowners - who had been fraudulently tricked into giving second and third mortgages on their homes by a small number of unscrupulous merchants found that their homes were literally being sold from beneath them in foreclosure proceedings because the instruments they had signed contained power of sale clauses.
The Senate District of Columbia Committee considered but decided against enactment of a more stringent provision which would have in every case required the party seeking foreclosure to secure a court order before foreclosure could be made. The Committee felt that the delay which would inevitably result from a hearing and other procedural steps would unduly restrict legitimate financial institutions in transacting their business, and that a court foreclosure proceeding might restrict the flow of mortgage money into the District of Columbia. The notification requirement ultimately enacted, Congress concluded, would adequately protect the property owner.
The Constitutional Question
Essentially, plaintiffs assert that the challenged sections of the D.C. Code violate the Fifth Amendment because they permit foreclosure without first providing an opportunity for a hearing. They place principal reliance on the Supreme Court's decision last term in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S. Ct. 1820, 23 L. Ed. 2d 349 (1969), holding violative of the due process clause of the Fourteenth Amendment a Wisconsin statute which permitted ...