United States District Court, D. Columbia.
Order Filed: December 4, 2013
For ROBERT BENNETT, LEILA JOSEPH, DELORES J. MOORE, Plaintiffs: Janell Maria Byrd, LEAD ATTORNEY, Craig L. Briskin, Steven A. Skalet, MEHRI & SKALET, PLLC, Washington, DC; Jean Marie Constantine-Davis, LEAD ATTORNEY, AARP FOUNDATION LITIGATION, Washington, DC.
For SHAUN DONOVAN, in his capacity as Secretary of the United States Department of Housing and Urban Development, Defendant: Thomas David Zimpleman, LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Washington, DC.
For NATIONAL REVERSE MORTGAGE LENDERS ASSOCIATION, Amicus: David M. Souders, LEAD ATTORNEY, WEINER BRODSKY KIDER PC, Washington, DC.
ELLEN SEGAL HUVELLE, United States District Judge.
On March 8, 2011, plaintiffs sued the Secretary of the Department of Housing and Urban Development (" HUD" ) in his official capacity, alleging that certain regulations implementing the Home Equity Conversion Mortgage (" HECM" ) program violate the Administrative Procedure Act (" APA" ), 5 U.S.C. § 551 et seq. Although plaintiffs originally brought four claims against HUD, the parties agree that three of the claims are now moot. Plaintiffs' sole surviving claim alleges that the Secretary acted contrary to law by failing to protect the spouses of HECM mortgagors from foreclosure. This Court previously dismissed plaintiffs' case for lack of standing. See Bennett v. Donovan, 797 F.Supp.2d 69 (D.D.C. 2011). The Court of Appeals reversed. See Bennett v. Donovan, 703 F.3d 582, 403 U.S.App. D.C. 262 (D.C. Cir. 2013). The parties have now filed cross motions for summary judgment. (Pls.' Mot. for Summ. J. (" Pls.' Mot." ); Def.'s Combined Mem. in Support of his Mot. for Summ. J. and in Opp. To Pls.' Mot. for Summ. J. (" Def.'s Mot." ).) For the reasons stated below, plaintiffs' motion will be granted, and defendant's motion will be denied.
The material facts and statutory framework relevant to this case were described in detail in the Court's prior opinion and by the Circuit Court. See Bennett, 703 F.3d at 584-86; Bennett, 797 F.Supp.2d at 72-73. Therefore an abbreviated version will suffice. HECMs, often referred to as " reverse mortgages," provide a mechanism for elderly homeowners to convert " a portion of accumulated home equity into liquid assets." 12 U.S.C. § 1715z-20(a). When an elderly homeowner enters into a reverse mortgage, he receives some combination of a lump sum payment, monthly payments, or a line of credit. This non-recourse loan is secured by a mortgage on the borrower's house. Because a collateral loss may result if the value of the home is less than the outstanding balance when the loan comes due, Congress created an insurance program administered by HUD.
Plaintiffs are widowed spouses of now deceased holders of reverse mortgages insured
by HUD.  Plaintiffs are not listed on the deeds of their homes, nor are they obligors on the reverse mortgages. See Bennett, 797 F.Supp.2d at 72-73. The reverse mortgages at issue contain language from the HECM form contract permitting the lender to demand immediate payment on the loan if the " [b]orrower dies and the [p]roperty is not the principal residence of a least one surviving borrower." Id. This language is consistent with 24 C.F.R. § 206.27, a regulation promulgated by HUD, which states that " [t]he mortgage shall state that the mortgage balance will be due and payable in full if a mortgagor dies and the property is not the principle residence of at least one surviving mortgagor . . . ."
Facing foreclosure, plaintiffs allege that this HUD regulation violates federal law because it does not protect them as non-mortgagor spouses. ( See Pls.' Mot. at 10-14.) In support of their position, plaintiffs rely on 12 U.S.C. § 1715z-20(j) (" subsection (j)" ) which states that
[t]he 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 the homeowner. (emphasis added).
Plaintiffs seek a declaratory judgment that HUD's regulation violates this subsection and demand that HUD be required to " take steps immediately to provide Plaintiffs the protection of Subsection (j)." (Pls.' Mot. at 15.)
I. LEGAL STANDARDS
A. Motion for Summary Judgment
Under Federal Rule of Civil Procedure 56, summary judgment is appropriate when the pleadings and the evidence demonstrate that " there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." However, in a case such as this one involving review of agency action under the APA, the standard set forth in Rule 56 does not apply. See Sierra Club v. Mainella, 459 F.Supp.2d 76, 89 (D.D.C. 2006). Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and is otherwise consistent with the APA standard of review. See Bloch v. Powell, 227 F.Supp.2d 25, 31 (D.D.C. 2002), aff'd, 348 F.3d 1060, 358 U.S.App. D.C. 322 (D.C. Cir. 2003).
B. Chevron Deference
The Supreme Court's opinion in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), outlines a two-step process courts must follow in determining whether to defer to an agency's interpretation of a statute. " Under Chevron [s]tep [o]ne, the court applies the traditional tools of statutory construction in order to discern whether Congress has spoken directly to the question at issue." Eagle Broad. Group, Ltd. v. FCC, 563 F.3d 543, 552, 385 U.S.App. D.C. 334 (D.C. Cir. 2009) (citing Chevron, 467 U.S. at 842-43). " If this 'search for the plain meaning of the statute . . . yields a clear result, then Congress has expressed its
intention as to the question, and deference is not appropriate.'" Id. at 552 (quoting Bell Atlantic Tel. Cos. v. FCC, 131 F.3d 1044, 1047, 327 U.S.App. D.C. 390 (D.C. Cir. 1997)). Under that circumstance, " the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." See Chevron, 467 U.S. at 842-43.
In order to decide a case on that basis of Chevron step one, a court must find that the intent of Congress evidenced in the statute is not just " plausible," but rather that it is the " only possible interpretation." See Regions Hosp. v. Shalala, 522 U.S. 448, 460, 118 S.Ct. 909, 139 L.Ed.2d 895 (1998); PDK Laboratories, Inc. v. U.S. D.E.A., 362 F.3d 786, 796, 360 U.S.App. D.C. 344 (D.C. Cir. 2004) (" That a statute is susceptible of one construction does not render its meaning plain if it is also susceptible of another, plausible construction . . . ." ). If the court finds that " the statute is silent or ambiguous with respect to the specific issue," the court will proceed to step two of the Chevron analysis and consider whether the agency's interpretation of the statute is arbitrary and capricious. See Chevron, 467 U.S. at 843. At this second step, the agency's interpretation is " given controlling weight unless" it is " manifestly contrary to the statute." Id. at 844. The question at this step " is not whether the [plaintiff's] proposed alternative is an acceptable policy option but whether the [agency action] reflects a reasonable interpretation of [the statute]." Coal. for Common Sense in Gov't Procurement v. United States, 707 F.3d 311, 317, 404 U.S.App. D.C. 13 (D.C. Cir. 2013).
II. CHEVRON STEP ONE REVIEW
A. Plain Meaning
When analyzing a statute under Chevron step one, a court must first determine whether the plain meaning of the statutory text is clear on its face or whether the statutory text is ambiguous. See PSEG Energy Resources & Trade LLC v. F.E.R.C., 665 F.3d 203, 208, 398 U.S.App. D.C. 423 (D.C. Cir. 2011). For purposes of Chevron analysis, " ambiguity is a creature not of definitional possibility but of statutory context." Brown v. Gardner, 513 U.S. 115, 118, 115 S.Ct. 552, 130 L.Ed.2d 462 (1994). Therefore, " the issue is not so much whether the [statutory language] . . . is, in some abstract sense, ambiguous, but rather whether, read in context and using the traditional tools of statutory construction, the term . . . encompasses [the government's interpretation]." Cal. Indep. Sys. Operator Corp. v. F.E.R.C., 372 F.3d 395, 400, 362 U.S.App. D.C. 28 (D.C. Cir. 2004).
In this analysis, " courts must presume that a legislature says in a statute whet it means and means in a statute what it says there." See Conn. Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992) (citation omitted). Moreover, at this step, " [courts] alone are tasked with determining Congress's unambiguous intent," and therefore the statutory interpretation proceeds " without showing the agency any special deference." Village of ...