Hud Tenants Coalition; Samuel Rivers v. United States Department of Housing & Urban Development

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 07-1135
__________
HUD TENANTS COALITION;
SAMUEL RIVERS,
Appellants,
v.
UNITED STATES DEPARTMENT OF HOUSING
& URBAN DEVELOPMENT;
ALPHONSO JACKSON, Secretary,
United States Department of Housing
& Urban Development;
MARGE DELLA VECCHIA, Executive Director,
New Jersey Housing and Mortgage Finance Agency;
ANTHONY CUPANO, Director,
Housing Management Division,
New Jersey Housing and Mortgage Finance Agency.
& Urban Development.
__________
On Appeal from the United States District Court
for theDistrict of New Jersey
(D.C. Civil No. 05-cv-08283)
District Judge: Honorable William J. Martini
__________

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Argued on January 28, 2008
Before: SCIRICA, Chief Judge, and RENDELL, Circuit Judge,
and THOMPSON,* District Judge.
Filed: April 2, 2008
Michael Barbosa, Esq. [ARGUED]
Shavar D. Jeffries, Esq.
Seton Hall Law School
833 McCarter Highway
Newark, NJ 07102-0000
Counsel for Plaintiffs-Appellants
HUD Tenants Coalition;
Samuel Rivers.
Colette R. Buchanan, Esq.
Office of the United States Attorney
970 Broad Street, Room 700
Newark, NJ 07102-0000
Counsel for Defendants-Appellees
United States Department of Housing
& Urban Development;
Alphonso Jackson, Secretary,
United States Department of Housing
& Urban Development.
(continued)
__________________
* Honorable Anne E. Thompson, Judge of the United States District Court for the
District of New Jersey, sitting by designation.

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Robert J. Shaughnessy, Jr., Esq.
Office of Attorney General of New Jersey
Department of Law and Public Safety
P. O. Box 106
25 Market Street
Trenton, NJ 08625-0000
Counsel for Defendants-Appellees
MARGE DELLA VECCHIA, Executive Director,
New Jersey Housing and Mortgage Finance Agency;
ANTHONY CUPANO, Director,
Housing Management Division,
New Jersey Housing and Mortgage Finance Agency.
& Urban Development.
__________
OPINION OF THE COURT
__________
RENDELL, Circuit Judge.
Appellants HUD Tenants Coalition and Samuel Rivers (collectively, “HTC”)
appeal the final judgment of the United States District Court for District of New Jersey
(Martini, J.), dismissing HTC’s complaint against the United States Department of
Housing and Urban Development (“HUD”) and several executives from both HUD and
the New Jersey Housing and Mortgage Finance Agency (“HMFA”). The complaint
alleged violations of the Administrative Procedure Act (“APA”), the National Housing

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In its appellate briefing and before the District Court, HTC also challenged ZTI’s legal1
capacity to seek rent increases during the periods in which its corporate status was
revoked. As HTC conceded this aspect of its appeal at oral argument, we address it no
further here.
The implementing regulations applicable to HMFA are substantially similar to the2
federal regulations on which HTC focuses most of its arguments. Under N.J.A.C. 5:80-
9.4(a)(3) and (a)(4), a rent increase application for Section 236 developments “shall
consist of[, inter alia,] a status report on the housing project’s implementation of its
current energy conservation plan; [and a] narrative statement of the reasons for the rent
increase.”
4
Act (“NHA”), procedural due process, and New Jersey state law in relation to several
Section 236 rent-increase applications reviewed by HMFA and approved by HUD for the
Zion Towers Apartments between 1999 and 2004. On appeal, HTC challenges HUD and
HMFA’s approval of Zion Towers, Incorporated’s (“ZTI”) rent-increase requests despite
alleged inadequacies in its rent-increase applications. Specifically, HTC argues that1
ZTI’s “narrative statement[s] of reasons for the requested increase[s] in maximum
permissible rents” and “status report[s] on the project’s implementation of its current
Energy Conservation Plan,” required under 24 C.F.R. § 245.315(a), were insufficient to2
permit tenants to meaningfully comment on the proposed increases. Further, HTC argues
that it holds a property interest in the notice and comment opportunities outlined by
relevant federal and state statutes and regulations and was denied constitutional due
process when those opportunities were not meaningfully afforded. For the reasons stated
below, we will affirm.

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As we write for the benefit of the parties alone, we need not undergo a lengthy3
recitation of the facts, which, in any event, are not in dispute at this stage in the
proceedings. In reviewing a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6), all allegations in the complaint must be taken as true and viewed in
the light most favorable to the plaintiff. Warth v. Seldin, 422 U.S. 490, 501 (1975);
Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir.
1998). A more fulsome factual summary was set forth by the District Court in HUD
Tenants Coal. v. U.S. Dep’t of Hous. & Urban Dev., No. 05-cv-3283, 2006 WL 3733285,
at *1-3 (D.N.J. Dec. 15, 2006) (“Dist. Ct. Op.”).
5
DISCUSSION3
I. Jurisdiction
First, as an initial matter, we must examine whether the District Court properly
exercised jurisdiction over HTC’s complaint, an issue raised by HUD. HUD contends
that its decisions to approve ZTI’s rent-increase requests are not subject to judicial review
under the APA, as those decisions are strictly committed to agency discretion. HTC
responds that “it is well-settled that agencies do not possess the discretion to disregard
specific legal obligations and, even assuming HUD possesses substantive discretion to
make rent-increase determinations, it may not exercise that discretion in a matter that
violates federal law.” (Appellants’ Reply Br. 14.) We agree that HUD’s actions are not
immune from review.
HUD’s jurisdictional argument is based on a misreading of HTC’s claims. HTC
does not challenge the substantive determinations underlying HUD’s decisions to approve
ZTI’s rent-increase applications, but instead challenges “HUD’s compliance with the
specific procedural protections prescribed by the Due Process Clause, the NHA, and

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As recognized by HTC, even the cases cited by HUD in support of its jurisdictional4
argument actually support the District Court’s exercise of jurisdiction in this case. See,
e.g., Sutton v. U.S. Dep’t of Hous. and Urban Dev., 885 F.2d 471,475 (8th Cir. 1989)
(“[S]cope of review in a situation in which, as here, an agency has exercised discretion on
a matter that lies within its competence is to determine whether the agency has exceeded
statutory authority, has acted arbitrarily, or has failed to follow the necessary procedural
requirements.”); Grace Towers Tenants Ass’n v. Grace Hous. Dev. Fund Co., Inc., 538
F.2d 491, 496 (2d Cir. 1976) (“[O]ur finding of nonreviewability herein does not preclude
review of questions pertaining to the agency’s jurisdiction or compliance with
constitutional and statutory demands.”).
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federal regulations.” (Appellant’s Reply Br. 16 (emphasis in original).) There is no
question that the APA provides the District Court with the authority to review this type of
challenge; in fact, the APA explicitly requires a reviewing court to “hold unlawful and set
aside agency action, findings, and conclusions found to be[, inter alia,] without
observance of procedure required by law.” 5 U.S.C. § 706(2)(D). As we recognized in
Hondros v. United States Civil Service Commission, 720 F.2d 278, 293 (3d Cir. 1983),
“even those actions ‘committed to agency discretion by law’ are reviewable on grounds
that . . . the decision violates any constitutional, statutory, or regulatory command.”
Accordingly, HUD’s jurisdictional argument is simply without merit.4
II. Procedural Challenge
In its Letter Opinion dismissing HTC’s complaint, the District Court asked, inter
alia, “whether the tenants of Zion Towers were provided with statutorily sufficient
information before [ZTI]’s rent-increase proposals were granted.” Dist. Ct. Op. at *4.

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Section 1715z-1b(a) explains that its purpose is to ensure meaningful tenant5
participation in the administration of multifamily housing process:
The purpose of this section is to recognize the importance and benefits of
cooperation and participation of tenants in creating a suitable living
environment in multifamily housing projects and in contributing to the
successful operation of such projections, including their good physical
condition, proper maintenance, security, energy efficiency, and control of
operating costs.
Additionally, HUD regulations explain that, for Section 236 purposes, “HUD supports the
active involvement of tenants in creating and maintaining a suitable living environment
and in contributing to the successful operation of their multifamily housing projects.”
Tenant Participation in Multifamily Housing Projects, 64 Fed. Reg. 32,782-01 (June 17,
1999).
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After reviewing the relevant federal and state statutes, regulations, and case law, the
District Court answered this question in the affirmative. We agree.
The NHA explicitly requires that Section 236 tenants be provided with “adequate
notice of, reasonable access to relevant information about, and an opportunity to comment
on [rent-increase requests,] and that such comments are taken into consideration by the
Secretary.” 12 U.S.C. § 1715z-1b(b)(1). HTC contends that, due to insufficiencies in5
ZTI’s rent-increase applications, the tenants of Zion Towers were “not provided
information sufficient to constitute ‘adequate notice’ of the reasons supporting the rent
increase, and were not provided ‘reasonable access to relevant information about’ the
request, nor a meaningful opportunity to comment” (Appellant’s Br. 21) as prescribed by
12 U.S.C. § 1715z-1b(b)(1). HTC specifically challenges the sufficiency of ZTI’s
“narrative statement[s] of reasons for the requested increase[s] in maximum permissible

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In regard to ZTI’s 1999, 2001, 2002, 2003, and 2004 rent-increase applications, the6
record indicates that Mr. Rivers wrote to HMFA, complaining that ZTI’s narrative
statements and ECP status reports were inadequate. HMFA responded to these letters on
several occasions, stating that it considered ZTI’s narrative statements and status reports
to be sufficient. Dist. Ct. Op. at *5.
8
rents” and “status report[s] on the project’s implementation of its current Energy
Conservation Plan,” as required by 24 C.F.R. § 245.315(a)(3), (a)(5). See also N.J.A.C.
5:80-9.4(a)(3), (a)(4).
The District Court recognized that although federal regulations require a
Section 236 rent-increase application to include “[a] narrative statement of the reasons for
the requested increase in maximum permissible rents” and “[a] status report on the
project’s implementation of its current Energy Conservation Plan,” 24 C.F.R.
§ 245.315(a)(3), (a)(5), the regulations do not define “narrative statement” or “status
report.” In considering what these terms might require, the Court inferred from HMFA’s
letters to Mr. Rivers and from HUD’s approval of ZTI’s applications that the agencies6
found that ZTI’s materials satisfied the narrative statement and ECP status report
requirements. After laying out the basic principle that an agency’s reasonable
interpretation of its own regulations merits “substantial judicial deference,” Dist. Ct. Op.
at *6 (citing Morrison v. Madison Dearborn Capital Partners III L.P., 463 F.3d 312, 315
(3d Cir. 2006); Mutschler v. N.J. Dep’t of Envtl. Prot., 766 A.2d 285, 292 (N.J. Super.
App. Div. 2001)), the District Court concluded that “HMFA and HUD’s determination

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In 2001, ZTI revised its application in response to Rivers’ letter.7
Because we uphold the agencies’ reasonable interpretations of the applicable8
regulations, HTC’s due process claim—which relies on its assertion that HTC has a
protected property interest in the procedures created by the federal and state statutes and
regulations governing the rent-increase process—necessarily fails.
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that the narrative statement and ECP were sufficient falls within their controlling
interpretation of the relevant regulations,” id.
We find no error in the District Court’s reasoning. It is clear from the record that
the tenants of Zion Towers, including Mr. Rivers, were in fact provided with an
opportunity to review and comment on ZTI’s rent-increase requests, as required by
12 U.S.C. § 1715z-1b(b)(1). As the District Court recognized, HTC’s own complaint
references the dialogue between Mr. Rivers and HMFA regarding the content of ZTI’s
rent-increase applications. While Mr. Rivers may not have received the responses for
which he had hoped, he did receive the consideration to which he was entitled. In the7
end, it was not error for the District Court to defer to HUD and HMFA’s reasonable
interpretations of their own regulations absent plain error or clear inconsistency between
the agencies’ interpretations and the regulations themselves. See Thomas Jefferson Univ.
v. Shalala, 512 U.S. 504, 512 (1994); In re Freshwater Wetlands Prot. Act Rules, 852
A.2d 167, 184 (N.J. 2004). We find neither. Accordingly, we will AFFIRM.8

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