Appeal from the United States District Court for the District of Columbia (No. 94cv00883)
BEFORE: Williams, Rogers and Tatel, Circuit Judges.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Opinion for the Court filed by Circuit Judge Williams.
The Department of Housing and Urban Development became the owner of a house as a result of a default by its owner on a HUD-insured mortgage. HUD allowed the defaulting mortgagor to remain in the house under a month-to-month lease. When HUD sold the property to the highest bidder, the defaulting mortgagor sought to invoke a District of Columbia law entitling a tenant to a right of first refusal when the premises are sold. HUD instead applied its own regulations. As it read them, a defaulting mortgagor-even one who after default occupies the premises under a lease-has no such rights. Because HUD's interpretation of its regulations is plainly valid and preempts conflicting local law, we need not reach the issue whether the District provision would otherwise be applicable to HUD. The defaulting mortgagor, who has for more than three years thwarted the winning bidder's right to the house, must now yield.
Janice L. Booker owned a house in Northeast Washington, D.C., subject to a HUD-insured mortgage. She defaulted. The mortgagee foreclosed and then, when HUD paid the insurance claim on the resulting loss, transferred the property to HUD. The Department allowed Booker to remain in occupancy of the house under a month-to-month lease. HUD put the house on the market in a sealed bid auction and Booker bid for it-but Cynthia Edwards's bid topped hers by more than $10,000. When Booker refused to vacate, claiming a right of first refusal under D.C. Code Section(s) 45-1637, Edwards sued Booker in D.C. Superior Court, seeking possession. Besides resisting the suit, Booker filed a complaint in Superior Court against both Edwards and HUD. The cases were consolidated, and HUD removed them to the United States district court pursuant to 28 U.S.C. Section(s) 1442's provision for removal of actions against a federal officer or agency, as well as the general provisions for removal of actions over which the district courts would otherwise have original jurisdiction, 28 U.S.C. Section(s) 1441(a), 1446. Federal jurisdiction over the dispute between Booker and Edwards appears to fit comfortably with the district court's supplemental jurisdiction under 28 U.S.C. 1367(a). The district court found that HUD lawfully deeded the property to Edwards, to the exclusion of Booker, and granted summary judgment in favor of Edwards and HUD. We affirm.
We assume in Booker's favor that she is right in her claim that under District law she would be entitled as a tenant to exercise a right of first refusal, even though HUD is the owner of the property. Such a reading of District law could be effected in full accord with HUD regulations if Booker were a tenant who had not been the defaulting mortgagor. The regulations provide:
(4) Tenants in occupancy will be offered the right of first refusal to purchase the property where:
(i) The tenant has a recognized ability to acquire financing and a good rent-paying history, and has made a request to HUD to be offered the right of first refusal; or
(ii) State or local law requires that tenants be offered the right of first refusal.
24 CFR Section(s) 291.100(a)(4) (1996). In the very same regulation, however, HUD also makes it clear that a defaulting mortgagor is not entitled to such a privilege:
(2) Former mortgagors in occupancy who have defaulted on the mortgage will not be offered the right of first refusal to repurchase the same property. They may submit an offer, or bid, to purchase the property when it is publicly listed, which will be treated in the same manner as other ...