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St.Marks Place Housing Company, Inc. v. United States Department of Housing & Urban Development

June 25, 2010


Appeal from the United States District Court for the District of Columbia (No. 1:08-cv-00193-RBW).

The opinion of the court was delivered by: Tatel, Circuit Judge

Argued April 16, 2010

Before: HENDERSON, TATEL, and GRIFFITH, Circuit Judges.

Circuit Judge HENDERSON concurs in the judgment.

Appellants, the current owners and prospective buyers of an affordable housing complex, seek to prepay the project's federally insured mortgage. The Department of Housing and Urban Development interpreted the mortgage to require its approval for prepayment and then conditioned that approval on the parties agreeing to maintain the property as affordable housing. Appellants challenge this decision, contending that HUD regulations prohibit the Department from requiring prepayment approval. Deferring to HUD's interpretation of its own regulations, we affirm the district court's dismissal of appellants' complaint. Along the way, we resolve a tricky jurisdictional issue arising from the fact that the district court issued an order purporting to dismiss the case but stating, "[T]his Order shall not be deemed a final Order subject to appeal until the Court has issued its Memorandum Opinion."


The National Housing Act (NHA), 12 U.S.C. §§ 1701 et seq., authorizes the Department of Housing and Urban Development (HUD) to insure and subsidize mortgages in order to encourage development of affordable housing. See, e.g., id. § 1713(b). The housing project at issue in this case, Castleton Park Apartments, is a 454-unit complex located on Staten Island. Developed as part of New York State's Mitchell-Lama affordable housing program, the complex was originally financed in 1974 with an approximately $20 million mortgage from the state's Housing Finance Agency. Three years later, appellant St. Marks Place Housing Company and the Housing Finance Agency negotiated a refinancing, dividing the original mortgage into a senior loan of approximately $18 million and a subordinate loan for the balance of the debt. Under NHA sections 207 and 223(b), the Housing Finance Agency obtained insurance from HUD for the senior mortgage-the subject of this case. Section 207 "facilitate[s] particularly the production of rental accommodations, at reasonable rents, of design and size suitable for family living." Id. § 1713(b)(2). Section 223(f) provides for "[i]nsurance of mortgages executed in connection with . . . refinancing of existing multifamily housing project[s]." Id. § 1715n(f).

Although the Castleton Park mortgage has a forty-year term, reaching maturity in 2017, it gives the borrower a right to prepay. The mortgage's prepayment clause states: "Privilege is reserved to pay the debt in whole or in an amount equal to one or more monthly payments on principal next due, on the first day of any month prior to maturity upon at least thirty (30) days' prior written notice to the holder." A footnote to this sentence provides, "Subject to the prior approval of the Secretary of Housing and Urban Development."

In 2006, St. Marks and an affiliated limited partnership known as St. Marks Place Associates contracted to sell their interests in the Castleton Park Apartments to Stellar CP LP and Castleton GP LLC. As part of this transaction, the sellers and the prospective buyers notified HUD that the two St. Marks companies intended to prepay the senior HUD-insured mortgage. Citing the mortgage's requirement that HUD approve prepayment, however, the Department notified the parties that their prepayment was subject to NHA section 250.

That section provides, "During any period in which an owner of a multifamily rental housing project is required to obtain the approval of the Secretary for prepayment of the mortgage, the Secretary shall not accept an offer to prepay the mortgage on such project" unless he finds that certain conditions designed to preserve the supply of affordable housing and protect the project's tenants have been satisfied. 12 U.S.C. § 1715z-15(a). HUD advised the parties that pursuant to these requirements it would approve prepayment only if the companies invest substantial sums to repair and rehabilitate the complex, promise to maintain it as a viable multifamily affordable housing property, and notify residents of the prepayment.

In response, the St. Marks companies and the prospective Castleton Park purchasers filed suit in the United States District Court for the District of Columbia. The companies principally argued that at the time the Castleton Park senior mortgage was executed, HUD regulations governing section 207 mortgages barred prepayment conditions and that the mortgage's requirement that the owners obtain HUD approval for prepayment is therefore unenforceable. In support, they cited 24 C.F.R. § 207.14(a) (1977), which provides that section 207-insured mortgages "shall contain a provision permitting the mortgagor to prepay the mortgage . . . after giving to the mortgagee 30 days' notice in writing." Moving to dismiss for failure to state a claim, see Fed. R. Civ. P. 12(b)(6), HUD countered that section 207.14(a) limits only a lender's right to refuse prepayment. According to HUD, nothing in section 207.14(a) prohibits prepayment from being conditioned on HUD approval.

The district court, deferring to HUD's interpretation of its own regulation, dismissed the complaint. St. Marks Place Housing Co. v. HUD, No. 08-193, 2009 WL 1543688, at *6-7 (D.D.C. June 3, 2009). The companies appeal, and we review the district court's decision de novo. Nat'l Wildlife Fed'n v. Browner, 127 F.3d 1126, 1128 (D.C. Cir. 1997) (reviewing de novo district court's Rule 12(b)(6) dismissal of a complaint against EPA based on the agency's regulations).


Before considering the companies' arguments on the merits, we must address a threshold question regarding our jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998) (courts must consider jurisdictional issues sua sponte). Under 28 U.S.C. § 1291, appeals may be taken (with certain exceptions not relevant here) only from "final decisions." "A 'final decision' generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Budinich v. Becton Dickinson & Co., 486 U.S. 196, 199 (1988) (internal quotation marks omitted). Under Federal Rule of Appellate Procedure 4(a)(1)(B), the notice of appeal must be filed "within 60 days after the judgment or order appealed from is entered" in civil cases where a U.S. agency is a party. See also 28 U.S.C. § 2107(b) (statutory basis for Rule 4(a)(1)(B)); Bowles v. Russell, 551 U.S. 205, 210 (2007) (recognizing "statutory time limits for taking an appeal as jurisdictional"). This deadline is strict: "Congress [has] specifically ...

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