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WELLS v. UNITED STATES ADMR. OF VETERANS AFFAIRS

March 16, 1982

Francis and Elvira WELLS, on behalf of themselves and all other persons similarly situated, Plaintiffs,
v.
UNITED STATES ADMINISTRATOR OF VETERANS AFFAIRS, Defendant. Angela SLATER, Plaintiff, v. UNITED STATES ADMINISTRATOR OF VETERANS AFFAIRS, Defendant



The opinion of the court was delivered by: PRATT

Plaintiffs Francis and Elvira Wells filed this action seeking injunctive and declaratory relief to prevent the defendant Veterans' Administration (VA) from evicting them from their home. The Wells are the former owners of their home, which was financed by a VA-guaranteed mortgage. The mortgage was foreclosed and the property was conveyed to the VA by the mortgagee. Their suit was originally before Judge Dooling, who denied their motion for a temporary restraining order but granted the motion of plaintiffs Johnnie and Margaret Stewart, whose situation was similar to that of the Wells, to intervene. Shortly after the Wells' complaint was filed, plaintiff Angela Slater filed suit seeking the same relief. CV 80-1588. Plaintiffs allege jurisdiction under the veterans' benefits statute, 38 U.S.C. § 1820, the mandamus statute, 28 U.S.C. § 1361, the Administrative Procedure Act, 5 U.S.C. § 701, as well as general federal question jurisdiction pursuant to 28 U.S.C. § 1331.

PROCEDURAL ISSUES

 Consolidation.

 After these cases were transferred to the undersigned, defendant moved for summary judgment dismissing the complaints in both actions. Although the legal issues in both cases are substantially identical and the parties have filed their papers citing both docket numbers, it appears from the docket sheets that the cases were never formally consolidated. Since for a determination of the motions currently before it, the court need only consider issues of law, the plaintiffs will be treated as litigants in a single action, and the clerk is directed to consolidate the two cases under the earlier docket number, CV 80-1444.

 Intervention.

 Before turning to defendant's motion for summary judgment, the court will consider the motions of Rose Benson and Loretta Donahue to intervene as plaintiffs. Defendant opposes both motions, claiming that neither individual has standing to sue.

 With respect to intervenor Benson, defendant's argument is incorrect. As the widow of a former owner of a one-family house financed by a VA-guaranteed mortgage, (the court received a copy of her marriage certificate after defendant argued there was no proof of her marriage), she is part of the group intended to be benefited by the veterans' benefits statute. See 38 U.S.C. § 1801(b)(2). Since her claim and that of the plaintiffs herein possess common questions of law, intervenor Benson's motion to intervene as a plaintiff is granted. F.R.C.P. 24(b)(2).

 Ms. Donahue's motion to intervene must be denied. She is a tenant in a four-family house whose owner, a veteran, lost title when the mortgage was foreclosed. The property was conveyed to the VA by the mortgagee. Unlike intervenor Benson, she was a tenant of a veteran rather than a family member of a veteran, and, as such, was not the intended beneficiary of the veterans' benefits statute. As the court will discuss below, the statute was intended to provide credit to veterans for the purchase, construction, repair and improvement of homes to be occupied by veteran purchasers only. As a tenant, Ms. Donahue does not fall within this group, and her motion to intervene is therefore denied.

 SUBSTANTIVE ISSUES

 The situations of the named plaintiffs and intervenors are virtually identical, although the circumstances leading up to their current plights may differ in some respects. Plaintiffs are all former owners of homes for which they had obtained a VA loan guarantee. They defaulted on their mortgage obligations and failed to cure the default despite repeated notification that failure to cure would lead to foreclosure of their mortgages. Judicial foreclosure proceedings were instituted in state court by the respective mortgages, and after entry of judgment of foreclosure and sale, title to each home was transferred to the VA. All of the plaintiffs currently reside in the homes they formerly owned, and seek to remain as tenants of the VA. Plaintiffs' papers are not specific as to how long they wish to remain as tenants; however, it can be inferred that they are not arguing that the VA should become a permanent landlord, but rather that it should allow plaintiffs to remain until the houses have been sold to third parties. Defendant's mem. in support of motion for summary judgment at 2. Plaintiffs have offered to pay a "fair and reasonable rent". Wells' memorandum at 2.

 Plaintiffs predicate their claim for relief on the argument that they have a property interest in their position as tenants of their former homes, and that, therefore, the VA may not evict them without good cause and without due process. Since most of plaintiffs' constitutional and statutory claims must fail if this claimed property interest does not exist, the court will first consider whether, indeed, plaintiffs herein do have a property interest in their tenancy.

 The Existence of a Protectable Interest in Continued Occupancy.

 Plaintiffs argue that as former owners of homes now owned by the VA, they have a protectable interest in the continued occupancy of these homes, and, therefore, they must be allowed to have an input into the decision to evict them. They base this claim on a Second Circuit decision, Caramico v. Secretary of HUD, 509 F.2d 694 (CA2 1974), and a decision in the Eastern District of New York, Manners v. Secretary of HUD, 71 CV 550 (Dooling, J., 1973). In those cases, plaintiffs were non-owner occupants of family dwellings which were financed by mortgages guaranteed by the Federal Housing Administration (FHA). When the mortgages were foreclosed, and title was transferred to the FHA, plaintiffs brought suit seeking to enjoin their evictions by the Secretary of the Department of Housing and Urban Development (HUD). In both cases, the court found that the plaintiffs had a "protectable interest in continued occupancy" and held that although plaintiffs had no conventional property interest since their leases were no longer in effect, they had a right to have input into HUD's decision to require eviction. Caramico, supra, at 700.

 Plaintiffs argue that the decision in Caramico is controlling in this case. They urge that the veterans' benefit statute, 38 U.S.C. § 1801 et seq., and the United States Department of Housing and Urban Development Act, 42 U.S.C. § 3531 et seq., are similar, with similar methods of operation and similar goals. Therefore, they claim, they should be treated no differently than tenants who occupied housing with ...


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