United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 16, 2010 Decided June 25, 2010
No. 09-5257
ST. MARKS PLACE HOUSING COMPANY, INC., ET AL.,
APPELLANTS
v.
UNITED STATES DEPARTMENT OF HOUSING & URBAN
DEVELOPMENT AND SHAUN L. S. DONOVAN, AS SECRETARY OF
THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-00193-RBW)
Stephen B. Meister argued the cause and filed the briefs
for appellants.
Henry C. Whitaker, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Ronald C. Machen Jr., U.S. Attorney, and Michael S. Raab,
Attorney. R. Craig Lawrence, Assistant U.S. Attorney,
entered an appearance.
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Before: HENDERSON, TATEL, and GRIFFITH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge TATEL.
Circuit Judge HENDERSON concurs in the judgment.
TATEL, Circuit Judge: 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.”
I.
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
3
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
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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
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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).
II.
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 limited the
amount of time by which district courts can extend the notice-
of-appeal period,” litigants “cannot rely on forfeiture or
waiver to excuse . . . lack of compliance,” and courts have “no
authority to create equitable exceptions.” Bowles, 551 U.S. at
213–14 (2007).
In this case, the district court entered an order purporting
to dismiss the companies’ complaint on March 27, 2009. The
order states:
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The plaintiffs bring this claim pursuant to the
Administrative Procedure Act (“APA”), 5 U.S.C.
§§ 701-06 (2006), seeking a declaratory judgment,
injunctive relief, and an order of mandamus.
Currently before the Court is the defendants’ motion
to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). Upon consideration of the
various filings submitted by the parties, the Court
will grant the defendants’ motion. Therefore, in
accordance with the Court’s reasoning to be set forth
in the Memorandum Opinion to be issued within
thirty days of this order, absent unforseen [sic]
circumstances, it is hereby
ORDERED that the defendants’ motion is
GRANTED. It is further
ORDERED that this case is closed. It is further
ORDERED that this Order shall not be deemed a
final Order subject to appeal until the Court has
issued its Memorandum Opinion.
St. Marks, No. 08-193 (D.D.C. Mar. 27, 2009) (footnote
omitted). Sixty-eight days later, on June 3, the court issued its
opinion. In a footnote, the court stated, “This Memorandum
Opinion renders the Order granting the Defendants’ Motion to
Dismiss entered on March 27, 2009, an appealable Order.”
St. Marks, 2009 WL 1543688, at *8 n.5. The companies filed
their notice of appeal on July 13, forty days after the June 3
opinion and 108 days after the March order. As measured
from the opinion, then, the companies’ notice of appeal was
timely, but as measured from the earlier order, it was not.
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The companies argue that their appeal is timely because,
as they see it, the district court’s March order was not a
section 1291 “final decision,” so Rule 4(a)’s sixty-day clock
could not start running until the district court issued its June
opinion. HUD agrees, even though, having prevailed in the
district court, it would obviously benefit from a dismissal for
lack of appellate jurisdiction. Whether the companies and
HUD are correct turns on how one resolves the apparently
contradictory language in the March order. On the one hand,
the order announced the court’s decision in seemingly
definitive terms: “ORDERED that the defendants’ motion is
GRANTED”; “ORDERED that this case is closed.” See Ctr.
for Nuclear Responsibility, Inc. v. U.S. Nuclear Reg. Comm’n,
781 F.2d 935, 938–39 (D.C. Cir. 1986) (a final order that
precedes the opinion explaining it nonetheless starts the time
for appeal). On the other hand, the order disclaimed its own
finality: “[T]his Order shall not be deemed a final Order.”
Several considerations convince us that the latter statement
controls, meaning that the district court did not issue a section
1291 “final decision” until it released its June opinion.
First, and most obviously, district courts can choose
when to decide their cases. This provides a strong reason to
take the district court at its word when it wrote, “[T]his Order
shall not be deemed . . . final.” See Bankers Trust Co. v.
Mallis, 435 U.S. 381, 385 n.6 (1978) (describing section 1291
finality as turning on “whether the district court intended the
judgment to represent the final decision in the case”).
Second, and somewhat counterintuitively, apparently
definitive dismissal language—like “ORDERED that this case
is closed”—does not always signal finality. For example, in
Castro County, Tex. v. Crespin, 101 F.3d 121 (D.C. Cir.
1996), we found an order to be nonfinal even though it stated,
“ORDERED that the above-entitled cause shall be, and
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hereby is, DISMISSED . . . .” Id. at 123. Although Castro
County differs from this case in that it dealt with a conditional
order—the order stated that the case would be reopened if
settlement negotiations failed—it makes clear that in
determining finality, we must read the district court’s order as
a whole and may not focus on dismissal language in isolation.
See also Se. Fed. Power Customers, Inc. v. Harvey, 400 F.3d
1, 5 (D.C. Cir. 2005) (order stating that settlement agreement
“is hereby declared valid and approved” was not final where it
was conditioned on another court lifting a related injunction).
Third, the district court issued its March order just four
days before the March 31 deadline on which judges must
report all motions that have been pending for more than six
months. See 28 U.S.C. § 476(a) (creating reporting
requirements); Administrative Office of the U.S. Courts, Civil
Justice Reform Act of 1990 (2009) (report on motions pending
March 31, 2009), available at http:// jnet.ao.dcn / Statistics /
Other_Statistical_Publications / Civil_Justice_Reform_Act_
March_2009.html. At that time, HUD’s motion to dismiss
had been pending for more than six months, and the district
court, having ordered the motion “GRANTED” and the case
“closed,” was able to file the March 31 report without listing
the motion. In the companion case that we resolve by
judgment today, Woodruff v. McPhie, No. 09-5086 (D.C. Cir.
June 25, 2010), the district court did the same thing: just a few
days before the March 31 deadline, it granted a motion to
dismiss that had been pending for over six months, instructing
in its dismissal order that it “not be deemed a final order.”
Woodruff v. McPhie, No. 06-688 (D.D.C. Mar. 28, 2008).
Given these circumstances, and given that the March order at
issue in this case warned that “this Order shall not be deemed
a final Order subject to appeal,” we think it quite clear that the
district court “closed” the case for reporting purposes only.
Although we are aware of no case quite like this one, other
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circuits have held that closure of a case for reporting
purposes—sometimes referred to as “administrative
closure”—does not qualify as a section 1291 “final decision.”
See Mire v. Full Spectrum Lending Inc., 389 F.3d 163, 167
(5th Cir. 2004) (“The effect of an administrative closure is no
different from a simple stay, except that it affects the count of
active cases pending on the court’s docket; i.e.,
administratively closed cases are not counted as active.”);
15A Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure § 3914.6, at 539 &
n.29 (2d ed. 1991 & Supp. 2010) (collecting cases).
Finally, in applying Federal Rule of Civil Procedure 58’s
requirement that judgments be set out in a separate document,
the Supreme Court has emphasized that “‘[t]he rule should be
interpreted to prevent loss of the right of appeal, not to
facilitate loss.’” Bankers Trust Co., 435 U.S. at 386 (quoting
9 J. Moore, Federal Practice ¶ 110.08[2], at 119–20 (1970)).
Because the separate document rule and section 1291 work
together to determine the timing of appeals, we think the same
principle should apply to questions of finality, thus providing
another reason why orders expressly denying their own
finality, like the district court’s March order, should be taken
at their word. Were we to treat the March order as final
notwithstanding such language, then the companies would
lose their right to appeal even though, as counsel made clear
at oral argument, they had relied on that language to postpone
filing their notice of appeal until the district court issued its
June opinion.
To sum up, although district courts are generally without
authority to extend the time for appeal, they may choose when
to decide their cases. Of course, district courts may not use
the latter authority as cover for doing the former, but that is
not what happened here. The court made its March order
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nonfinal because it entered the order for reporting purposes
only. The court’s “final decision” came in its June opinion,
and because the companies timely filed their notice of appeal
following that opinion, we have jurisdiction.
That said, we believe that orders whose finality awaits
the issuance of a later opinion should be avoided. Setting
aside the propriety of using such orders to report motions as
resolved when they still require judicial attention—a matter
we leave to the district courts and the Administrative Office—
these orders can confuse parties. In this case, for example,
counsel for the companies was quite candid: “I think [the
order] is contradictory and it did create confusion. And to be
perfectly blunt, we struggled with it.” Oral Arg. Tr. at 4.
Only after “consultation with local counsel,” he explained, did
they come “to the conclusion . . . that we had to wait for the
Memorandum Decision” before filing an appeal. Id. at 4–5.
In suggesting that orders like the one here be used rarely,
if at all, we fully understand, as Judge Rovner—herself a
former district judge—has cautioned, that district courts have
“scarce resources” and “are overextended”; that reports on
unresolved motions may produce “something of a stigma”;
and that “congressionally-imposed time constraints on the
civil docket compete with the Speedy Trial Act restrictions of
the criminal docket,” as well as other obligations. Otis v. City
of Chicago, 29 F.3d 1159, 1172 (7th Cir. 1994) (Rovner, J.,
concurring in the judgment). And we certainly share Judge
Rovner’s belief that it is “incumbent upon us, as a responsible
and responsive reviewing court, to provide our colleagues
with all reasonable means of efficiently and intelligently
managing their case loads.” Id. at 1173. The last thing we
want is to exacerbate the competing pressures on busy,
dedicated district court judges. Still, we think all judges, both
circuit and district, must take care to ensure that case
11
management innovations neither confuse litigants nor threaten
their procedural rights.
III.
On the merits, the companies’ principal argument rests on
24 C.F.R. § 207.14(a) (1977), which states in full:
“Prepayment privilege. The mortgage shall contain a
provision permitting the mortgagor to prepay the mortgage in
whole or in part upon any interest payment date after giving
to the mortgagee 30 days’ notice in writing in advance of its
intention to so prepay.” The companies contend that “[i]f the
mortgagor of a Section 207 mortgage loan must seek HUD’s
approval for prepayment of that loan, and HUD refuses to
grant such approval, then the result is that the mortgagor has
been denied the right to ‘prepay the mortgage in whole or in
part . . . after giving the mortgagee 30 days’ notice in writing
in advance of its intention to so prepay.’” Appellants’ Br. 45
(quoting 24 C.F.R. § 207.14(a)). Drawing an expressio unius
inference from the regulation, the companies insist that “[t]he
only permissible requirements for the prepayment of [a
section 207 mortgage are] that the borrower give the required
thirty days’ notice of its intent to make such prepayment and
that the prepayment occur on an interest payment date.” Id.
HUD counters that the prepayment term “provided for in
§ 207.14 is not . . . an ‘unfettered right to prepay.’”
Appellees’ Br. 24 (quoting Appellants’ Br. 37). Instead,
HUD argues, the “regulation addresse[s] the rights and
obligations as between the owner and the lender,” and the
Castleton Park mortgage complies with section 207.14(a)
because it denies the lender the right to refuse prepayment.
Id. at 24–25. HUD continues: “[i]t is reasonable to construe
[section 207.14] as silent on the parties’ privileges with
respect to nonparties to the mortgage, such as the Secretary,
and thus to permit the parties to condition prepayment on the
Secretary’s approval.” Id. at 25.
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In evaluating these competing arguments, “[w]e must
give substantial deference to an agency’s interpretation of its
own regulations.” Thomas Jefferson Univ. v. Shalala, 512
U.S. 504, 512 (1994). Indeed, “the agency’s interpretation
must be given controlling weight unless it is plainly erroneous
or inconsistent with the regulation.” Id. (internal quotation
marks omitted).
Were we interpreting HUD’s regulations in the first
instance, the companies’ expressio unius argument might
have some merit. But we have previously held that the
expressio unius canon “has little force” in the context of
challenges to an agency’s interpretation of a statute, “where
we defer to an agency’s interpretation unless Congress has
directly spoken to the precise question at issue.” Mobile
Commc’ns Corp. of Am. v. FCC, 77 F.3d 1399, 1404–05
(D.C. Cir. 1996) (internal quotation marks omitted). The
same principle applies all the more so where, as here, we are
reviewing an agency’s interpretation of its own regulations.
Nat’l Med. Enters. v. Shalala, 43 F.3d 691, 696–97 (D.C. Cir.
1995) (in reviewing an agency’s interpretation of its own
regulations, “we apply a still more deferential standard” than
in reviewing its interpretation of a statute).
In this case, nothing in section 207.14(a) unambiguously
forecloses HUD’s interpretation of the regulation as
governing only “the rights and obligations as between the
owner and the lender.” Appellees’ Br. 25. The regulation
describes what the “mortgage shall contain,” and the
mortgage is between the mortgagor and mortgagee. HUD is
not a party, nor is it mentioned anywhere in the text of the
provision. Given this, we have no basis for concluding that
HUD’s position—that the regulation does not relate to it—is
“plainly erroneous or inconsistent with the regulation.”
13
Thomas Jefferson Univ., 512 U.S. at 512 (internal quotation
marks omitted).
HUD’s interpretation gains support from section
207.14(a)’s subsequent subsections. Section 207.14(b)
governs prepayment charges, stating that section 207
mortgages “may contain a provision” for a prepayment charge
“as may be agreed upon between the mortgagor and
mortgagee,” so long as the mortgagor is “permitted to prepay
up to 15 percent of the original principal amount . . . in any
one calendar year” without charge. By its terms, then, this
provision focuses on the financial relationship between the
lender and borrower, meaning that the requirement that a
borrower be “permitted to prepay up to 15 percent” without
penalty clearly refers to prepayment permission from the
lender. Likewise, section 207.14(c) states that a mortgage
“may provide for the collection by the mortgagee of a late
charge,” again focusing on the financial terms of the deal
between the borrower and the lender. Reading section
207.14(a) in light of these neighboring provisions, we think it
perfectly reasonable for HUD to have interpreted the
regulation as prohibiting only mortgage terms that give
lenders the right to refuse prepayments, while remaining
silent on those giving HUD a right to object to such payments.
The companies insist that even if we might otherwise
defer to HUD’s interpretation, we should not do so here
because, according to an internal HUD memorandum, the
Department’s General Counsel advocated for a different
reading of the regulation. But so what? The HUD secretary,
like all agency heads, usually makes decisions after
consulting subordinates, and those subordinates often have
different views. In the end, it is the agency head whose
decision we review, and as the Supreme Court has made clear,
“the mere fact that the Secretary’s decision overruled the
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views of some of his subordinates is by itself of no moment in
any judicial review of his decision.” Wisconsin v. City of New
York, 517 U.S. 1, 23 (1996) (upholding the Secretary of
Commerce’s decision to overrule the Census Director
regarding statistical adjustments to the decennial census).
Finally, the companies argue that even if we reject their
reading of section 207.14(a), we should interpret the Castleton
Park mortgage to require HUD approval for only partial
prepayments and not the kind of full prepayment that the
companies seek to make. The footnote that makes
prepayments “[s]ubject to the prior approval of [HUD]” is
attached to the end of the following sentence: “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.” According to the
companies, the footnote modifies only the second clause, i.e.,
“or in an amount equal to one or more monthly payments on
principal next due.” The footnote signal, however, appears at
the end of the sentence, not after the phrase “or in an amount
. . . ,” and therefore obviously modifies the entire sentence.
The companies insist that an attachment to the mortgage
supports their interpretation because it discusses HUD
preapproval of one particular early payment contemplated by
the parties but is silent as to HUD preapproval of other
possible prepayments. But whatever the significance of this
attachment, it hardly gives us reason to embrace the
companies’ counterintuitive and countertextual interpretation
of the mortgage itself.
We affirm the district court’s dismissal of this case.
So ordered.