UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CARRINGTON GARDENS ASSOCIATES, I,
A VIRGINIA LIMITED PARTNERSHIP,
Plaintiff-Appellant,
v. No. 97-2579
HENRY G. CISNEROS, SECRETARY OF
HOUSING AND URBAN DEVELOPMENT,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
J. Calvitt Clarke, Jr., Senior District Judge.
(CA-96-987-2)
Argued: January 28, 1999
Decided: January 17, 2001
Before WIDENER and MURNAGHAN,* Circuit Judges, and
HAMILTON, Senior Circuit Judge.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Gregory Lane Sandler, EPSTEIN & SANDLER, P.C.,
*Judge Murnaghan heard oral argument in this case but died prior to
the time the decision was filed. The decision is filed by a quorum of the
panel. 28 U.S.C. § 46(d).
2 CARRINGTON GARDENS ASSOCIATES v. CISNEROS
Norfolk, Virginia, for Appellant. George Maralan Kelley, III, Assis-
tant United States Attorney, Norfolk, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Plaintiff, Carrington Gardens Associates I (Carrington), appeals the
district court’s ruling that defendant, Secretary of the Department of
Housing and Urban Development (HUD), was entitled to permanently
retain subsidy monies otherwise due to Carrington during time peri-
ods when Carrington was in default on the terms of a Housing Assis-
tance Payment contract (housing contract). For the reasons stated
below, we affirm the district court’s decision.
Carrington is a Virginia limited partnership that owns a multi-
family apartment complex in Richmond, Virginia. Carrington and
HUD entered into a housing contract pursuant to the Housing Assis-
tance Payments Program, 24 C.F.R. § 886 (1997). According to the
housing contract, HUD agreed to pay Carrington a portion of the
monthly rental sum due from qualified low income tenants occupying
certain rental units in Carrington’s complex. In exchange for the fed-
eral subsidy, Carrington agreed to maintain and operate the apartment
complex in a decent, safe, and sanitary manner according to the hous-
ing quality standards "as defined by HUD."
In October 1996, HUD discontinued the monthly subsidy to Car-
rington stating Carrington’s violation of its duty under the housing
contract to maintain adequately the housing complex. Carrington then
filed this suit against HUD seeking relief to compel HUD to restart
the monthly payments and for monetary damages equaling the
amounts withheld by HUD while Carrington was in violation of its
obligations. Once Carrington made the necessary repairs to comply
CARRINGTON GARDENS ASSOCIATES v. CISNEROS 3
with the housing contract, HUD recommenced making the payments
in question but it nevertheless refused to return the payments that
HUD suspended while Carrington was in default. During the trial, the
parties entered into a stipulation that resolved all factual disputes nec-
essary for the district court to make its decision. The parties agreed:
(1) that the apartment units inspected by HUD had at least one hous-
ing quality standard violation; (2) that in October 1996, HUD ceased
making subsidy payments to Carrington for the deficient units; (3)
that as of July 31, 1997, Carrington had cured any deficiencies in the
units, and HUD resumed payments; and (4) that HUD failed to pay
a total of $75,000 in housing payments between October 1996 and
August 1997. HUD having recommenced the payments as the condi-
tions were corrected, with no claim by HUD for abatement, the par-
ties also agreed to present to the court three alternative dispositions
for the retained sum of $75,000. First, HUD could return the retained
payments to Carrington; second, HUD could keep the retained pay-
ments; and, finally, HUD could apply the $75,000 to an outstanding
mortgage obligation that Carrington owes to HUD.
The district court accepted the parties’ factual stipulations and
decided that HUD was entitled to retain the sum of $75,000 perma-
nently. The court held that the housing contract language authorized
HUD to retain the funds. As the parties’ stipulation eliminates factual
disputes upon appeal, we conduct a de novo review of the district
court’s legal conclusion that the housing contract authorized HUD to
keep the suspended housing payments. See Nehi Bottling Co., Inc. v.
All-American Bottling Corp., 8 F.3d 157, 162 (4th Cir. 1993). We
hold that HUD properly exercised its authority to permanently retain
the funds that HUD discontinued while Carrington was in violation
of the housing contract.
The applicable regulations that govern the housing contract and
payments state:
(a) Maintenance and operation: The owner shall maintain
and operate the project so as to provide Decent, Safe, and
Sanitary housing and he shall provide all the services, main-
tenance and utilities which he agrees to provide under the
[Housing] Contract, subject to abatement of housing assis-
4 CARRINGTON GARDENS ASSOCIATES v. CISNEROS
tance payments or other applicable remedies if he fails to
meet these obligations.
***
(d) Units not Decent, Safe, and Sanitary. If HUD notifies
the Owner that he has failed to maintain a dwelling unit in
Decent, Safe, and Sanitary condition and the Owner fails to
take corrective action within the time prescribed in the
notice, HUD may exercise any of its rights or remedies
under the Contract, including abatement of housing assis-
tance payments, even if the Family continues to occupy the
unit.
24 C.F.R. § 886.123. The regulations clearly establish HUD’s right to
abate payments and to exercise "other applicable remedies" or "reme-
dies under the [Housing] Contract" if an owner fails to satisfy its obli-
gations.
The housing contract, which specifically incorporates HUD’s regu-
lations in section 3, establishes other remedies that HUD may exer-
cise if an owner is in default on its obligations. Section 26 of the
housing contract states that if an owner is in default, then HUD may:
(a) Pay housing assistance directly to the mortgagee in the
event of default under mortgage.
(b) Reduce or suspend housing assistance payments until the
default under this Contract has been cured to the satisfaction
of HUD.
(c) Withhold housing assistance payments until the default
under this Contract has been cured to the satisfaction of
HUD.
Therefore, if HUD finds that an owner has violated its obligations
under the housing contract to maintain decent, safe, and sanitary
housing, HUD may abate payments pursuant to 24 C.F.R. § 886.123
or exercise a remedy listed in section 26 of the housing contract. In
CARRINGTON GARDENS ASSOCIATES v. CISNEROS 5
this connection, we note that the meaning of abate is "a: to bring
entirely down; demolish: put an end to: do away with." Webster’s
Third New Int’l Dictionary 2 (1971).
Under the regulation, 24 C.F.R. § 886.123, the payments to Car-
rington could have been stopped for good, the contract terms aside.
For construction of the contract terms, we adopt the wording of the
opinion of the district court for the next three paragraphs of this opin-
ion which follow:
The plain meaning of the word "withhold" is "[t]o retain
in one’s possession that which belongs to or is claimed or
sought by another. . . . To refrain from paying that which is
due." Black’s Law Dictionary 1602 (6th ed. 1990). Using
this common meaning of "withhold," HUD clearly has the
authority to retain housing assistance payments. But, the
HAP Contract’s withhold remedy also limits how long the
funds may be retained. The housing assistance payments
may be retained only "until the default under this Contract
has been cured." Tr. Ex. 8, § 26. Once the default is cured,
HUD may no longer keep the retained funds. This remedy,
therefore, creates a trust type relationship where HUD has
the authority to keep the withheld funds on the owner’s
account only while the owner is in default and thereafter
must pay out the withheld funds when the default is cured.
In contrast, the reduce-or-suspend remedy suggests a
more permanent forfeiture of funds. The word "suspend"
means "[t]o interrupt; to cause to cease for a time; to post-
pone; to stay, delay, or hinder; to discontinue temporarily,
but with an expectation or purpose of resumption." Black’s
Law Dictionary 1446 (6th ed. 1990). "Reduce" means "to
diminish in size, amount, extent, or number." Webster’s
Third New International Dictionary 1905 (1981).3 Based on
these definitions, "reduce" is merely a less radical form of
"suspend."
Under the common meanings of "reduce" and "suspend,"
HUD has the authority to discontinue housing assistance
payments entirely or diminish the size of the payments
6 CARRINGTON GARDENS ASSOCIATES v. CISNEROS
while Carrington Gardens is in default. Like the withhold
remedy, this remedy limits how long payments may be dis-
continued or diminished — only "until the default under this
Contract has been cured." Tr. Ex. 8, § 26. After the default
has been cured, therefore, HUD must resume full housing
assistance payments. Unlike the withhold remedy, however,
under the plain language of the reduce-or-suspend remedy,
HUD is under no obligation to pay out any discontinued or
diminished funds. The words "suspend" or "reduce" furnish
no inference or suggestion that HUD is obligated to retain
suspended or reduced funds on the owner’s account until a
default is cured. This language in the HAP Contract speaks
only to HUD’s obligation to begin full payments after the
default is cured. JA 546-548.
_________________________
3
"Reduce" is not found in Black’s Law Dictionary. Hence,
the Court defaults to Webster’s.
Thus, under the applicable regulations and the contract between the
parties, the Secretary could have imposed any remedy from abatement
of the payments to suspension of them for a time, with or without
making up the suspended payments.
We are of opinion the action of the Secretary in suspending the
payments, recommencing the payments at the time the deficiencies
were corrected, and not paying the missed payments was within the
applicable regulation, the meaning of the contract terms, and the dis-
cretion of the Secretary.
The judgment of the district court is accordingly
AFFIRMED.