Opinion
Case No. C-3-01-285
August 21, 2002
The Plaintiff brings this action seeking injunctive and declaratory relief, as well as monetary damages, against the United States Department of Housing and Urban Development ("HUD"); Mel Martinez ("Martinez"), Secretary of HUD; and Michaelson, Connor and Boul, Inc. ("MCB"), a contractor for HUD. Martinez is sued in both his official and individual capacities. See Plaintiff's Complaint (Doc. #1) at ¶ 7. This litigation stems from the Plaintiff's unsuccessful attempt to purchase a house from HUD at a 50% discount, pursuant to the "Teacher Next Door" ("TND") Initiative.
In her Complaint, the Plaintiff alleges that she submitted a bid to MCB to purchase the house located at 225 Oxford Avenue, Dayton, Ohio, in accordance with the TND Initiative. Doc. #1 at ¶¶ 10-11. According to the Plaintiff, that house was owned by HUD, and MCB was acting as its agent. Id. at ¶¶ 9-10. The Plaintiff's bid was accepted; however, MCB subsequently informed her that the property was not eligible for the TND Initiative because it was not located in a HUD designated revitalization area. Id. at ¶¶ 11-13. Plaintiff contends that to be eligible for the TND Initiative, a property must be located either in a revitalization area, or in another area which meets the exception criteria, "i.e., meets the standards for a revitalization [area] and is located in a neighborhood where seller concessions, such as take-back financing, are common and/or a predominance of other buyers in the area are investor owners." Id. at ¶ 17. The Plaintiff alleges that her bid to purchase the house located at 225 Oxford Avenue was rejected without considering whether she met the foregoing exception. Id. at ¶ 18. Indeed, HUD and MCB declined even to evaluate whether that property qualified under the exception. Id. at ¶ 19. Plaintiff contends further that since the inception of the TND Initiative, HUD has failed to designate a revitalization area in southern Ohio and that, therefore, the only manner in which a person can participate in the TND Initiative in southern Ohio is through the exception set forth above.Id. at ¶ 20. According to the Plaintiff, the Defendants' failure to recognize the exception violates her rights under the Equal Protection Clause of the Fourteenth Amendment, the Thirteenth Amendment and her rights under 42 U.S.C. § 1981, 1982, 1983 and 1985. Id.
The Plaintiff seeks injunctive relief, preventing HUD from selling the property located at 225 Oxford Avenue to anyone other than herself and a declaration that the Defendants' failure to determine whether that property qualified for participation in the TND Initiative, pursuant to the exception, violated her rights under the Fourteenth Amendment. The Defendant also seeks an award of $50,000 as compensatory damages and a like sum as punitive damages.
This case is now before the Court on the Motion to Dismiss (Doc. #6) filed by HUD and Martinez. With that motion, HUD and Martinez argue that this Court is without subject matter jurisdiction over Plaintiff's claims against them, because the United States has not waived its sovereign immunity for the claims asserted by the Plaintiff. Alternatively, HUD and Martinez argue that the Court must dismiss Plaintiff's Complaint, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for failure to state a claim upon which relief can be granted. It is settled that, where the United States has not waived its sovereign immunity to a lawsuit, the action must be dismissed for lack of subject matter jurisdiction. United States v. Mitchell, 445 U.S. 535, 538 (1980). Since a District Court must assure itself that it can exercise subject matter jurisdiction over an action before addressing the merits (Steel Co. v. Citizens for Better Environment, 523 U.S. 83 (1998)), the Court turns first to the argument of HUD and Martinez that the Plaintiff's claims against them must be dismissed for want of subject matter jurisdiction.
Also pending is Plaintiff's Motion to Substitute Signed Affidavit for Unsigned Affidavit (Doc. #11), which the Court sustains.
It is well established that the United States has sovereign immunity unless it consents to suit. United States v. Dalm, 494 U.S. 596, 608 (1990); Lehman v. Nakshian, 453 U.S. 156, 160 (1981). The waiver of sovereign immunity must be explicit, and any waiver is strictly construed in favor of the sovereign. United States v. Nordic Village, Inc., 503 U.S. 30, 34 (1992). See also, United States v. King, 395 U.S. 1, 4 (1969) (noting that a waiver of sovereign immunity must be "unequivocal"). "Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit." Federal Deposit Ins. Corp. v. Meyer, 510 U.S. 471, 475 (1994). Accord, Department of the Army v. Blue Fox, Inc., 525 U.S. 255, 258 (1999); Federal Express Corp. v. United States Postal Serv., 151 F.3d 536, 539 (6th Cir. 1998) ("The federal courts may exercise subject matter jurisdiction over a cause prosecuted against a federal agency only if the United States has consented to be sued by waiving sovereign immunity."). Thus, the failure of the United States to waive sovereign immunity deprives this Court of subject matter jurisdiction. Mitchell, 445 U.S. at 538. The party bringing a claim against the United States has the obligation of identifying a waiver of sovereign immunity in order to proceed against the United States. Reetz v. United States, 224 F.3d 794, 795 (6th Cir. 2000). "If he cannot identify a waiver, the claim must be dismissed on jurisdictional grounds." Id. See also, Williams v. United States, 50 F.3d 299, 304 (4th Cir. 1995); Holloman v. Watt, 708 F.2d 1399, 1401 (9th Cir. 1983),cert. denied, 466 U.S. 958 (1984); Cole v. United States, 657 F.2d 107, 109 (7th Cir. 1981).
In her Complaint, the Plaintiff alleges that the Court can exercise subject matter jurisdiction over her Complaint under 28 U.S.C. § 1331 and 1343(a), as well as under the Declaratory Judgment Act, 28 U.S.C. § 2201-02. See Doc. #1 at ¶¶ 2-5. As a means of analysis, the Court will address the Plaintiff's jurisdictional allegations in the above order.
In Whittle v. United States, 7 F.3d 1259 (6th Cir. 1993), the Sixth Circuit held that 28 U.S.C. § 1331, the federal question jurisdiction statute, does not constitute a waiver of sovereign immunity. Thus, that statute does not invest this Court with jurisdiction over the Plaintiff's claims against HUD and Martinez in his official capacity.
A claim against Martinez in his official capacity is no more than a claim against the United States. See Kentucky v. Graham, 473 U.S. 159 (1985).
Section 1343(a) provides:
(a) The district courts shall have original jurisdiction of any civil action authorized by law to be commenced by any person:
(1) To recover damages for injury to his person or property, or because of the deprivation of any right or privilege of a citizen of the United States, by any act done in furtherance of any conspiracy mentioned in section 1985 of Title 42;
(2) To recover damages from any person who fails to prevent or to aid in preventing any wrongs mentioned in section 1985 of Title 42 which he had knowledge were about to occur and power to prevent;
(3) To redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States;
(4) To recover damages or to secure equitable or other relief under any Act of Congress providing for the protection of civil rights, including the right to vote.
The Courts which have considered the issue have concluded that § 1343(a) does not constitute a waiver of the sovereign immunity of the United States. Salazar v. Heckler, 787 F.2d 527, 528 (10th Cir. 1986);Beale v. Blount, 461 F.2d 1133, 1138 (5th Cir. 1972); Brian v. Gugin, 853 F. Supp. 358, 363 (D.Idaho 1994), affirmed, 46 F.3d 1138 (9th Cir. 1995) (table); Royer v. I.N.S., 730 F. Supp. 588, 590 (S.D.N.Y. 1990). Given that the text of § 1343(a) does not remotely suggest that Congress was waiving the sovereign immunity of the United States by enacting it, this Court concludes that the foregoing decisions are persuasive. Accordingly, the Court holds that § 1343(a) does not constitute a waiver of the sovereign immunity of the United States.
It should also be noted that Congress did not waive the sovereign immunity of the United States by enacting §§ 1981, 1982, 1983 and 1985. In Selden v. United States Department of Housing and Urban Development, 785 F.2d 152 (6th Cir. 1986), the Sixth Circuit held that §§ 1981 and 1982 did not constitute a waiver of the sovereign immunity of the United States. In Omeli v. National Council of Senior Citizens, 2001 WL 700849 (6th Cir.), cert. denied, 122 S.Ct. 559 (2001), the Sixth Circuit held that Congress did not waive the sovereign immunity of the United States by enacting §§ 1981 and 1985. Since an action under § 1983 can be brought against only someone who has acted under color of state law, it is apparent that Congress did not waive the sovereign immunity of the United States by enacting it. See also, Affiliated Professional Home Health Care Agency v. Shalala, 164 F.3d 282, 286 (5th Cir. 1999) (holding that Congress did not waive the sovereign immunity of the United States by enacting §§ 1981, 1982, 1983 and 1985).
Finally, the Plaintiff has cited the Declaratory Judgment Act, 28 U.S.C. § 2201-02 as a source of subject matter jurisdiction for this litigation. In Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950), the Supreme Court held that the Declaratory Judgment Act was a remedial statute which was not an independent source of subject matter jurisdiction. Accordingly, the Court concludes that the Declaratory Judgment Act does not constitute a waiver of the sovereign immunity of the United States.
With the foregoing, the Plaintiff does not disagree. Rather, she argues that the United States has waived its sovereign immunity under the Administrative Procedure Act ("APA"), 5 U.S.C. § 701, et seq., and that the Court can exercise subject matter jurisdiction over a lawsuit under the APA pursuant to the general federal question jurisdiction statute, 28 U.S.C. § 1331. The Court agrees with the Plaintiff that the APA constitutes a waiver of the sovereign immunity of the United States. See 5 U.S.C. § 702. Section 702 provides, in pertinent part:
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party.See also, Darby v. Cisneros, 509 U.S. 137 (1993). However, the Plaintiff did not allege in her Complaint that she was bringing this litigation under the APA, nor has she filed an amended pleading to include such an allegation. It should be noted that the Plaintiff possesses the right to amend her Complaint, without the necessity of obtaining leave of Court, since no Defendant has filed an answer. See Fed R.Civ.P. 15(a) (providing that a party may amend its pleading once, as a matter of right, before the opposing party has filed a responsive pleading). Therefore, a claim under the APA is not part of this litigation.
For reasons set forth in the Court's discussion of Plaintiff's individual capacity claims against Martinez, it would have been futile for the Plaintiff to have filed an amended pleading, setting forth a claim under the APA.
Based upon the foregoing, the Court concludes that it cannot exercise subject matter jurisdiction over Plaintiff's claims against HUD and her claims against Martinez in his official capacity. However, as is indicated above, the Plaintiff has also asserted claims against Martinez in his individual capacity. The argument that the Court is without subject matter jurisdiction over this litigation, because the United States has not waived its sovereign immunity, does not apply to Plaintiff's claims against Martinez in his individual capacity. Accordingly, the Court turns to Martinez's alternative request that the Court dismiss the Plaintiff's Complaint for failure to state a claim upon which relief can be granted against him, beginning its analysis by setting forth the standards which are applicable to all motions under Rule 12(b)(6).
In In re DeLorean Motor Co., 991 F.2d 1236 (6th Cir. 1993), the Sixth Circuit restated the standards which govern motions to dismiss for failure to state a claim upon which relief can be granted, under Rule 12(b)(6):
We review dismissal of a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on a de novo basis. Sinay v. Lamson Sessions Co., 948 F.2d 1037, 1039-40 (6th Cir. 1991). This Court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief. Meador v. Cabinet for Human Resources, 902 F.2d 474, 475 (6th Cir.), cert. denied, 498 U.S. 867 (1990). A complaint need only give "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Lawler v. Marshall, 898 F.2d 1196, 1199 (6th Cir. 1990) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A judge may not grant a Fed.R.Civ.P. 12(b)(6) motion to dismiss based on a disbelief of a complaint's factual allegations. Id. While this standard is decidedly liberal, it requires more than the bare assertion of legal conclusions. Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988). "In practice, `a . . . complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.'" Id. (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984), cert. denied, 470 U.S. 1054 (1985) (quoting In re Plywood Antitrust Litigation, 655 F.2d 627, 641 (5th Cir. 1981)).Id. at 1239-40. See also, Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Mertik v. Blalock, 983 F.2d 1353, 1356 (6th Cir. 1993). Moreover, although a District Court is required to accept the truth of the plaintiff's factual allegations, it is not required to accept as true either legal conclusions or unwarranted factual inferences. Gregory v. Shelby County, Tennessee, 220 F.3d 433, 446 (6th Cir. 2000).
The Plaintiff's claims are all based upon the premise that she was wrongfully denied the right to participate in the TND Initiative and, thus, to purchase 225 Oxford Avenue from HUD at a price that had been reduced by 50%. She alleges that there are two methods by which a property is eligible to participate in the TND Initiative, to wit: 1) it can be located in a revitalization area; or 2) it meets certain exception criteria, "i.e., meets the standards for a revitalization [area] and is located in a neighborhood where seller concessions, such as take-back financing, are common and/or a predominance of other buyers in the area are investor owners" (Doc. #1 at ¶ 17). The Plaintiff has not alleged that 225 Oxford Avenue was located in a revitalization area. Indeed, she contends that no revitalization areas are located in southern Ohio. Thus, the Plaintiff's claims rise or fall on her premise that the Defendants violated her rights by declining even to consider whether 225 Oxford Avenue qualified for participation in the TND Initiative under the exception criteria. For reasons which follow, this Court concludes that the TND Initiative does not contain exception criteria and that only houses located within revitalization areas qualify for participation under that program. Consequently, the Plaintiff's claims fall.
The TND Initiative, which was modeled after the "Officer Next Door" ("OND") Initiative, was adopted by HUD in 1999. The Official Notice by which HUD announced that program identified the requirements of participation in the program, one of which is that "[h]omes purchased through the TND Initiative must be located in HUD-designated revitalization areas." 64 FR 68370, 68371 (December 7, 1999) (emphasis added). The TND Initiative is a temporary program; it was initially scheduled to operate for only one year. Id. It has, however, been extended, and the extensions have also contained the requirement that houses be located in revitalization areas. See e.g., 67 FR 4548, 4554 (January 30, 2002) (in extending TND Initiative through March 2, 2002, indicating that it permits the sale of houses in "revitalization areas"). Neither the initial adoption nor the extensions of the TND Initiative indicated that houses not located in revitalization areas but meeting exception criteria were eligible for participation in the TND Initiative.
Nevertheless, the Plaintiff argues that the TND Initiative contains exception criteria for houses which are not located in revitalization areas. The Plaintiff supports that assertion with pages from the Procedures Manual for the OND and TND Initiatives, which indicate that properties not located in revitalization areas could be considered under exception criteria. See Doc. #10 at Ex. 1. The fact that the Procedures Manual indicates that properties not located within a revitalization area could be considered under exception criteria does not alter this Court's conclusion that the TND Initiative contains no such exception.
The OND Initiative contains exception criteria. For instance, the Notice announcing the OND Initiative provided that it "applies to properties located in Revitalization Areas and to other properties that meet certain exception criteria." See 63 FR 1886 (January 12, 1998). The interim rule, under which the OND Initiative became permanent, included similar language. See 64 FR 36210 (July 2, 1999). Therefore, since the Program Manual addressed both the TND and the OND Initiatives, it is quite understandable that it would indicate that properties not located within a revitalization area could be considered under exception criteria. Nevertheless, the Official Notice published in the Federal Register, by which HUD announced the TND Initiative to the public, establishes its parameters, rather than the requirements of that program being set by a manual which was not published in the Federal Register and which ambiguously addressed another program as well as the TND Initiative. Cf. Long v. Trans World Airlines, Inc., 913 F.2d 1262 (7th Cir. 1990) (indicating that official policy of federal agency is that which is published in the Federal Register, rather than in an ambiguous brief filed by the agency in another lawsuit).
Accordingly, the Court sustains the Motion to Dismiss of HUD and Martinez, as it relates to Plaintiff's claims against Martinez in his individual capacity.
In sum, the Court sustains the Motion to Dismiss (Doc. #6) of HUD and Martinez in its entirety. That leaves only the Plaintiff's claims against MCB pending in this litigation. Although this litigation was initiated on July 12, 2001, that Defendant has not filed an answer or otherwise responded to the Plaintiff's Complaint. Moreover, there is no indication that it has been served. Accordingly, the Court directs Plaintiff to show cause, within 10 days from date, why her claim against MCB should not be dismissed, without prejudice, for failure to prosecute, in accordance with Rule 41(b) of the Federal Rules of Civil Procedure.