The opinion of the court was delivered by: JONES
The named plaintiffs have brought this action on behalf of themselves and all other purchasers
of homes in Washington, D.C. whose mortgages are insured under the Federal Housing Administration's (FHA) Existing House Program of § 221(d)(2) of the National Housing Act, 12 U.S.C. § 1715l (d)(2) (1970).
The plaintiffs basically seek a declaratory judgment that § 221(d)(2) obligates the defendants, the Secretary of the Department of Housing and Urban Development (Secretary), the Commissioner and local director of FHA, and the United States, to require, in order for a home to qualify for a § 221(d)(2) mortgage guarantee, that the home meet the housing and other applicable regulations of the District of Columbia, and that the plaintiffs' mortgages were insured under regulations in contravention of § 221(d)(2). In addition, they seek damages to enable the plaintiffs to bring their homes into building code compliance, and to reimburse those plaintiffs who have already repaired their homes or who wish to rescind their contracts.
Jurisdiction is based on 28 U.S.C. §§ 1337, 1346(a)(2), 1361 and 2201-2202 (1970), and 5 U.S.C. §§ 702-704 (1970). The defendants have moved to dismiss for lack of jurisdiction and for failure to state a claim upon which relief may be granted; in the alternative, they have moved for summary judgment.
The claim for damages under the Tucker Act, 28 U.S.C. § 1346(a) (1970),
will be treated first. The United States may be sued only to the extent to which it has waived its sovereign immunity. United States v. King, 395 U.S. 1, 89 S. Ct. 1501, 23 L. Ed. 2d 52 (1965). The plaintiffs assert that their claim for damages under the Tucker Act is based on an Act of Congress, § 221(d)(2), and not upon either a contract or a tort claim.
An examination of § 221(d)(2) and other related sections of the National Housing Act, however, reveals that no claim for damages can be founded upon that section.
Section 221(d)(2) nowhere gives the Secretary the authority to reimburse a purchaser of a home whose mortgage is guaranteed under the section (hereafter purchaser) for damages caused by physical defects in the premises. The section merely sets forth the eligibility requirements for the insurance of a mortgage pursuant to the § 221(d)(2) program. No monetary payment from the Secretary to any purchaser is authorized. The entire mortgage insurance application can be processed to completion without the existence of a prospective purchaser. Furthermore, § 221(d) (2) does not authorize the Secretary to reimburse anyone for defects in any home with a mortgage guaranteed under that section.
For these reasons, the instant case varies considerably from those principally relied upon by the plaintiff. In Aycock-Lindsey Corp. v. United States, 171 F.2d 518 (5th Cir. 1948), the plaintiff brought an action under the Tucker Act to recover additional subsidies allegedly owed it under the Soil Conservation and Domestic Allotment Act, 16 U.S.C. § 590a, et seq. The Court held that although that Act did not expressly provide that suit could be maintained against the United States for claims arising under it, the general terms of the Tucker Act did provide a jurisdictional basis for the suit. The Act in Aycock-Lindsey, however, differed from § 221(d)(2) in one extremely material respect. Section 590a(3) of the Act in that case provided that the Secretary of Agriculture enter into agreements to furnish financial aid to parties, like Aycock-Lindsey Corp., which would further the purposes of the Act. Thus the United States had entered into an agreement with the plaintiff to pay it subsidies if it assisted in programs authorized by the government. The government claimed these subsidies were mere gratuities, and that no enforceable claim to them could be asserted. In finding jurisdiction under the Tucker Act, the Court found that at least an implied contract had been created, and that the lack of specific statutory language to compel payment of the subsidies was no bar to the suit.
The second care principally relied on by the plaintiffs, National State Bank of Newark v. United States, 357 F.2d 704, 174 Ct. Cl. 872 (1966), is also readily distinguished. In National State Bank, the plaintiffs were banks seeking to recover additional mortgage insurance benefits for mortgages they had purchased which had been insured by the FHA under § 207 of the National Housing Act, 12 U.S.C. § 1713 (1964). That section provides that the mortgagee can collect the benefits of the mortgage insurance upon the mortgagor's default by assigning the mortgage to the FHA. The Court then held that the United States was liable for these claims against the FHA under the Tucker Act, absent a specific contrary provision.
Thus, in both Aycock-Lindsey and National State Bank, the United States or one of its agencies had entered into an agreement with the plaintiff under a statute which authorized disbursement of funds to parties that participated in a program authorized by the statute. Section 221(d)(2), however, makes no mention whatsoever of any disbursements of funds to purchasers like the plaintiffs. The only requirements of the statute are conditions imposed on the Secretary before he may insure a mortgage.
That § 221(d)(2) does not authorize the payment of the damages sought here is confirmed by 12 U.S.C. § 1735b (1970), which does authorize the Secretary to make expenditures to correct defects or compensate home owners in limited circumstances. Home owners with mortgages insured under the § 221(d)(2) Existing House Program, which include the named plaintiffs in this case, are not eligible for compensation.
Moreover, it is apparent that Congress does not view existing legislation as conferring upon the plaintiffs the rights which they seek to assert here. On March 2, 1972, the Senate passed Senate Bill 3248.
Section 721 of that bill would have amended § 1735(b) to authorize the Secretary to correct conditions or compensate home owners for defective homes with mortgages insured under § 221(d)(2). The Senate bill was referred to the House Committee on Banking and Currency, but was never reported out. Thus, it is apparent that at least the Senate would regard § 221(d)(2) as not authorizing the payments sought by the plaintiffs here.
This last expression of Congressional intent, when coupled with the general principles governing suits brought with the Tucker Act as the asserted jurisdictional basis, requires that the plaintiffs' claims for damages be dismissed for lack of jurisdiction.
The plaintiffs also seek a declaratory judgment that the present regulations under which the Secretary insures mortgages are invalid because they do not meet the mandate of § 221(d)(2) by requiring compliance with local health or safety codes before the insurance issues. An injunction requiring such compliance is also sought.
Assuming for the moment that this Court has jurisdiction to decide these issues under 28 U.S.C. §§ 1337, 1361, and 2201-2202, and 5 U.S.C. § 702-704 (1970), the Court finds that the plaintiffs lack standing to assert those claims. The relief the plaintiffs seek is a declaratory judgment that the present regulations of HUD with respect to § 221(d)(2) mortgages are invalid. All of the named plaintiffs' homes have mortgages ...