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FAYER v. ROMNEY

October 11, 1973

Alfred FAYER, Plaintiff,
v.
George W. ROMNEY, as Secretary of the Department of Housing and Urban Development, et al., Defendants


Gurfein, District Judge.


The opinion of the court was delivered by: GURFEIN

GURFEIN, District Judge.

Both plaintiff and defendants move for summary judgment. The plaintiff, Alfred Fayer, is an attorney licensed by the State of New York. He seeks the annulment of a final determination made by the defendants, the effect of which was to suspend plaintiff from further participation as an attorney in Department of Housing and Urban Development (HUD) programs, pending the resolution of a criminal indictment against him in the United States District Court for the Eastern District of New York. The defendants agree that there are no material facts at issue and adopt Statements Numbered 1 to 12 inclusive in plaintiff's statement filed pursuant to Rule 9(g). This court has jurisdiction pursuant to 28 U.S.C. § 1361 (mandamus) and Section 10 of the Administrative Procedure Act, 5 U.S.C. §§ 701-704. Gonzalez v. Freeman, 118 U.S. App. D.C. 180, 334 F.2d 570 (D.C. Cir. 1964); Harms v. Federal Housing Administration, 256 F. Supp. 757 (D. Md. 1966).

 The conceded facts are as follows:

 The plaintiff is an attorney at law. On March 29, 1972, thirteen indictments were filed in the United States District Court for the Eastern District of New York charging many defendants with bribery and other crimes in connection with mortgages insured by the Federal Housing Administration ("FHA"). The plaintiff was named as a defendant in nine of these indictments. On May 21, 1972 all thirteen indictments were superseded. The plaintiff was named as a defendant in only one of the superseding indictments and was dropped as a defendant in all the other indictments. Only one indictment remains in which the plaintiff is named as a co-defendant with two others and a corporation. That indictment charges the defendants with violating 18 U.S.C. § 201(d) in that they offered an employee of FHA the services of an attorney to represent the employee, and also private employment, to influence his testimony under oath in a court proceeding. Fayer has pleaded not guilty.

 On April 13, 1972, the plaintiff was orally informed by the director of the Hempstead office of FHA that he would not be permitted to act as closing attorney in connection with any mortgage loan to be insured by FHA. Thereafter, the plaintiff, by letter, requested rescission of the oral notification. On June 14, 1972, Eugene A. Gulledge, Assistant Secretary of HUD, wrote to Fayer advising him of the intention to suspend plaintiff from participation in HUD programs until the indictment was resolved, and informing him of his right to be "heard and represented by counsel in accordance with 24 C.F.R. 24-1.010."

 Fayer requested and was granted a hearing which took place before a hearing officer on July 27, 1972. At the hearing the only items of evidence presented were the thirteen original indictments and the thirteen superseding indictments, in only one of which was the plaintiff named as a defendant.

 On September 12, 1972, the hearing officer rendered an initial determination suspending plaintiff from participation in HUD programs, and on September 28, 1972, Mr. Gulledge made a final determination confirming such suspension.

 It is conceded by the Government also that the plaintiff has diligently attempted to obtain a trial of the indictment against him, but has been unable to achieve this objective.

 Fayer asserts that his suspension, coupled with the delay in the trial of his indictment, will continue to cause him financial harm.

 At the hearing, plaintiff's counsel argued that Fayer, acting as a lawyer, was not a "contractor" within the meaning of HUD regulations, and that HUD had no right to suspend him from acting as a lawyer in closing mortgages. He has agreed that his client would not act as an attorney where the closing involved Secretary-held property, but urged that he could not be debarred from acting as an attorney in other mortgage closings where the mortgage was to be insured by FHA.*

 The Government contended at the hearing that the plaintiff was a "contractor" and that the superseding indictment, along with the other indictments, was "adequate evidence" to justify the suspension.

 The plaintiff contends that 1) the defendants did not have jurisdiction over him and 2) that the suspension order was invalid, in any event, because the evidence was insufficient and because no evidence was presented that the plaintiff's suspension was necessary for the protection of the public.

 The first question is whether a lawyer, acting solely in his professional capacity in closing mortgages to be insured by FHA, comes within the scope of the regulations relating to suspension or debarment.

 The Secretary of HUD has Congressional authority to "make such rules and regulations as may be necessary to carry out his functions, powers, and duties." (Section 7d of the HUD Act, 42 U.S.C. § 3535(d). Pursuant to that authority, the Secretary promulgated regulations regarding debarment and suspension from Government work. It is well settled that, once having formulated the regulation, the Secretary is bound to follow it. Service v. Dulles, 354 U.S. 363, ...


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