Meacham v. City of Akron Department of Planning & Urban Development

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a0317n.06
No. 10-4501
FILED
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
Mar 21, 2012
LEONARD GREEN, Clerk
JOHN S. MEACHAM; BARBARA MEACHAM; )
)
Plaintiffs-Appellants, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE NORTHERN
CITY OF AKRON DEPARTMENT OF PLANNING ) DISTRICT OF OHIO
AND URBAN DEVELOPMENT, et al., )
) OPINION
Defendants, )
)
UNITED STATES DEPARTMENT OF HOUSING )
AND URBAN DEVELOPMENT, )
)
Defendant-Appellee. )
BEFORE: GUY, COLE, and ROGERS, Circuit Judges.
COLE, Circuit Judge. The City of Akron appropriated John and Barbara Meacham’s home
in an eminent domain proceeding in order to redevelop a blighted area with federal funds. Akron
identified what it considered an adequate substitute for the Meachams’ home, and offered nearly
$80,000 in federal replacement housing assistance to cover the difference between the eminent
domain jury award and the substitute home’s purchase price. The Meachams disagreed that the
identified home was an adequate substitute, and, after having their administrative complaint denied,
filed suit in the district court. The district court thereafter granted the government’s motion for
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Meacham v. City of Akron
judgment on the record, affirming HUD’s revised determination that the Meachams were not entitled
to any replacement housing assistance. For the following reasons, we AFFIRM.
I. BACKGROUND
The Meachams owned a home at 630 Diagonal Road in Akron, Ohio (“630 Diagonal”), in
a blighted area known as the Crouse Redevelopment District. In 1998, there was a fire, and the
Meachams moved out of the home. In 2001, they transferred ownership of the home to Thomas
Faulknier.
Around the same time that the Meachams transferred their interest to Faulknier, the City of
Akron (“Akron”) was redeveloping property in the area as part of the Crouse Redevelopment Project,
using funds from the Department of Housing and Urban Development (HUD). After an attempt in
November 2003 to purchase the property directly failed, Akron attempted to appropriate 630
Diagonal in an eminent domain proceeding in Summit County Probate Court. On August 31, 2005,
Barbara Meacham reacquired an interest in 630 Diagonal via a land installment contract with
Faulknier.1 The next day, the eminent domain proceeding commenced. On November 7, 2005, a
jury awarded the Meachams $220,000 as just compensation for the appropriation.
1
There is some question as to when the Meachams executed the land installment contract
with Faulknier. There is a land installment contract between the Meachams and Faulknier, entered
into on October 19, 2003, that appears in the administrative record. In 2007, the Meachams’ attorney
wrote to a HUD relocation specialist, stating that the 2003 contract was “inadvertently included in
[the appropriate land contract’s] place.” He then enclosed “a correct copy of the referenced Land
Contract” which was the 2005 contract. The 2003 contract does not appear in the Summit County
sales information records.
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Because HUD funds were used, the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (URA) applied, which grants relocation assistance to displaced
homeowners. 42 U.S.C. § 4621-38. The URA permits the head of the displacing agency to make
a payment, in addition to the jury award, to assist the homeowner in acquiring a comparable
replacement home. 42 U.S.C. § 4623(a)(1). Akron identified a home at 590 Diagonal Road that it
deemed “comparable” to 630 Diagonal, and offered the Meachams an additional $79,000 to make
up the difference between the jury award ($220,000) and the 590 Diagonal price ($299,000).
The Meachams believed that the property at 590 Diagonal was an inadequate substitute for
their home, and requested that the $79,000 in replacement housing assistance be increased to
$295,000. Akron’s Department of Planning and Urban Development denied the request. The
Meachams then contacted a relocation specialist at HUD, who directed Akron to reconsider and offer
a more comparable home. After more than six months of negotiations between Akron, HUD, and
the Meachams, HUD formally denied the Meachams’ appeal for additional funds (“HUD’s 2006
determination”).
The Meachams sought judicial relief, appealing HUD’s decision to the district court.
Meacham v. Woolford, No. 06-CV-2447, 2007 WL 1087609 (N.D. Ohio April 9, 2007). HUD
moved to remand for further agency action, contending “that it is now questionable whether [the
Meachams] actually had an ownership interest in the property at issue.” Id. at *3. At issue was
whether the land contract between the Meachams and Faulknier occurred long enough before the
initiation of negotiations between Akron and the Meachams to qualify the Meachams for
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replacement housing assistance. The district court granted the motion and remanded the case for
further inquiry by HUD. Id. at *4.
On remand, HUD came into possession of documents showing additional history of 630
Diagonal going back to HUD’s initial purchase offer in November 2003. HUD determined that prior
to this date, the Meachams had not occupied the home for several years because of the fire in 1998.
Multiple appraisers, one in August 2003 and another two years later, commented that the home was
vacant. HUD also had evidence that John Meacham had admitted, in November 2003, to not
occupying the home because of the fire. In light of HUD regulations that require the homeowner to
have been an occupant of the home prior to the formal initiation of negotiations, HUD made a final
determination (“HUD’s 2008 determination”) that the Meachams were not displaced persons eligible
for replacement housing assistance. The Meachams remained eligible for reasonable and actual
moving expenses.
The Meachams appealed HUD’s 2008 determination to the district court, insisting that they
were eligible for replacement housing assistance, and that the decision was arbitrary, capricious, and
unsupported by substantial evidence. HUD moved for judgment on the record, which the district
court granted. This appeal followed.
II. ANALYSIS
The Meachams argue that determinations of their occupancy and ownership status were
erroneous, that the appeals process provided by HUD failed to comply with federal law and violated
their constitutional due process rights, and that HUD’s initial 2006 denial of the Meachams’ request
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for additional replacement housing assistance is not supported by substantial evidence. We address
each in turn.
A. Standard of Review
We review de novo the district court’s entry of judgment on the administrative record, but
apply the same legal standard as the district court did in the proceedings below. Whitaker v.
Hartford Life & Acc. Ins. Co., 404 F.3d 947, 949 (6th Cir. 2005). “Agency actions involving
relocation assistance under the URA are subject to judicial review under the Administrative
Procedure Act, 5 U.S.C.A. §§ 701 et seq.” Kroger Co. v. Regional Airport Auth. of Louisville, 286
F.3d 382, 386 (6th Cir. 2002).
The Meachams assert that HUD’s determinations must be viewed under a “substantial
evidence” standard in light of Nagi v. United States, 751 F.2d 826 (6th Cir. 1985). We clarified Nagi
in Kroger, reasoning that the “substantial evidence” standard need only be adopted by a reviewing
court if the determination at issue followed a statutorily required hearing on the record. Kroger, 286
F.3d at 387. Because the URA does not provide for a hearing, we will set aside HUD’s findings,
conclusions, or actions “only if they were arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with the law.” Id. (quoting 5 U.S.C. § 706(2)(A)).
Our review under this standard is narrow, and is limited to the record upon which HUD
relied. Id. Nonetheless, we must ensure that HUD “examine[d] the relevant data and articulate[d]
a satisfactory explanation for its action including a rational connection between the facts found and
the choice made.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29,
43 (1983) (internal quotation marks and citation omitted). Although our review must be “searching
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and careful,” we need not reverse solely because HUD’s decision is “of less than ideal clarity.”
Bowman Transp., Inc. v. Arkansas-Best Freight Sys., 419 U.S. 281, 285-86 (1974) (citations
omitted).
B. HUD’s 2008 Determination
HUD’s 2008 determination reasoned that the Meachams did not qualify for replacement
housing assistance because they failed to comply with governing HUD regulations. Eligibility for
such assistance requires that the homeowner “[h]as actually owned and occupied the displacement
dwelling for not less than 180 days immediately prior to the initiation of negotiations . . . .”
49 C.F.R. § 24.401(a)(1). The initiation of negotiations occurs upon “the delivery of the initial
written offer of just compensation by the Agency to the owner or the owner’s representative to
purchase the real property for the project.” 49 C.F.R. § 24.2(a)(15)(i).
1. Initiation of negotiations
The date of the initiation of negotiations is the factual issue at the heart of the Meachams’
complaint. The Meachams point to a letter from Akron, which reads that “[t]he effective date of this
[notice of eligibility for HUD assistance] is September 13, 2005 which is the Initiation of
Negotiations for your site.” Given this letter, the Meachams argue, they need only to have owned
and to be living in 630 Diagonal since mid-March of 2005. HUD’s 2008 determination, meanwhile,
insists that the initiation of negotiations took place in November 2003, when Akron offered to
purchase 630 Diagonal from Thomas Faulknier, the owner of record at that time. This contention
is supported by a letter from Akron to the Meachams’ attorneys that outlines the negotiations that
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took place on November 19, 2003, among Akron negotiators, John Meacham, and George
Emershaw, an attorney who represented Faulknier and the Meachams.
The Meachams insist that the initiation of negotiations could not have taken place in 2003,
because such a conclusion would violate HUD regulations. HUD requires that “[b]efore the
initiation of negotiations[,] the real property to be acquired shall be appraised . . . and the owner, or
the owner’s designated representative, shall be given an opportunity to accompany the appraiser
during the appraiser’s inspection of the property.” 49 C.F.R. § 24.102(c)(1). The Meachams
contend that (1) there was no appraisal, and (2) if there was, there was no opportunity to accompany
the appraiser; therefore, the initiation of negotiations could not have taken place in 2003.
A letter from Akron to Emershaw, dated March 10, 2004, states that Akron “has offered
$145,000 for this property, which amount represents the fair market value of the property as
determined by an MAI appraiser, and reviewed by another MAI appraiser.” Evidence in the record
also suggests that Akron attempted to contact Faulknier in June 2003, via certified mail, to inform
him that he would have the opportunity to accompany the appraisers on the inspection of his
property.2
HUD’s determination that the initiation of negotiations took place in November 2003
therefore finds ample support in the record. Throughout 2003, Akron conducted an appraisal,
attempted to contact the owner of record to notify him of his rights in the appraisal process, and
conducted negotiations for the purchase of the land. 49 C.F.R. § 24.2(a)(15)(i) defines the initiation
2
Faulknier was, throughout 2003, the owner of record of 630 Diagonal.
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of negotiations as the date when the agency initially offers just compensation to the owner of the real
property. Given that there is evidence in the record suggesting that an offer of $145,000 was made
in 2003, HUD’s determination that the initiation of negotiations took place in November 2003 has
a rational basis and is neither arbitrary nor capricious.
2. Occupation of 630 Diagonal prior to the initiation of negotiations
In order to be eligible for replacement housing assistance, the Meachams must be able to
show that they both owned and occupied 630 Diagonal prior to the initiation of negotiations. HUD
did not base its 2008 determination on the ownership question, but instead focused on the occupation
requirement. HUD noted that the Meachams “had not occupied the home for several years prior to
November of 2003 because of a fire that occurred in June of 1998 at the property. When [Akron]
sent the first appraiser out to the site in August 2003, the property was vacant, not occupied by [the
Meachams].”
The Meachams maintain instead that they “constructively occupied” the home as it was being
repaired for damage caused by the 1998 fire,3 and insist that our decision in Nagi required HUD or
Akron “to apply a constructive occupancy type exception in cases of unusual circumstances and
equity.” 751 F.2d at 830. HUD, meanwhile, points out that Nagi is only applicable when the
displacee considered the dwelling his home, and would have met the occupancy requirement “but
for economic or other circumstances beyond his control . . . .” Id.3
The Meachams do not argue that the constructive occupation took place during the relevant
2003 period, but instead during the 2005 period, since they believe that the initiation of negotiations
took place in 2005. In effect, they make no argument as to why they did not occupy the home
immediately prior to November 2003.
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As the district court noted, the Meachams “received the insurance proceeds from the 1998
fire at the Residence in 2001. These proceeds were not used to restore the Residence.” Rather, the
proceeds were used to rescue the home from foreclosure. The Meachams thus argue that they were
unable to occupy the home, such that the constructive occupancy exception ought to apply. Alas,
information submitted by the Meachams themselves to the district court belies their argument.
The Meachams provided information to the district court to prove that their home and the
replacement home, 590 Diagonal, were not comparable. One such submission, a letter from a
contractor who worked on 630 Diagonal after the fire, read “As of March, 2003, all mechanical,
structural and major systems were restored and functioning properly.” Another contractor wrote, “I
had personally observed both in 2002 and later in September 2005 that all mechanical systems were
functioning properly . . . . The overall general condition of the house including the 3rd floor was in
my professional opinion in good living condition.”
These statements tend to show that the home could have been lived in, in contrast to the
Meachams’ contention that the home was unfit for their occupancy. While we normally may
consider only evidence that was before the agency, this does not preclude our consideration of the
contractors’ statements for two reasons. First, there is evidence that these materials were submitted
to HUD prior to their 2008 determination. Second, it was the Meachams themselves who presented
this evidence to the district court. The Meachams would have us consider their evidence when it is
in their favor, but ignore it when it is not. We decline to engage in such compartmentalization.
Finally, there is evidence in the record that Faulknier occupied 630 Diagonal at the same time
that the Meachams claim they were unable to do so. On September 17, 2003, Faulknier checked a
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box on a mortgage loan application, indicating that he “presently occup[ied] [630 Diagonal] as [his]
primary residence.” The Meachams argue that this should be given limited weight, given that there
is no signature on the document. But, a later document that refers to that lender’s mortgage loan
does bear Faulknier’s signature.
Under the relevant standard of review, we must ensure that HUD examined the relevant data,
and that its 2008 determination articulated a satisfactory explanation for its actions. Given the
evidence in the record that the Meachams 1) did not live in 630 Diagonal immediately prior to the
initiation of negotiations in 2003, and 2) were able to live in the home if they decided to do so, there
is a rational connection between the facts HUD found and the choice it made.
C. HUD’s 2006 actions
The Meachams raise a number of arguments pertaining to the correctness of HUD’s 2006
determination that denied them an increase in their replacement housing assistance. They assert that
they should have been able to appeal directly to Akron, that their appeal within HUD was improper,
that HUD engaged in improper ex parte discussions during their appeal, and that the compilation of
the administrative record was unfair. They further argue that 590 Diagonal was not a comparable
replacement dwelling. The district court’s remand order was not a final, appealable order, so the
Meachams are not precluded from raising these issues here. See Schuck v. Frank, 27 F.3d 194, 196
(6th Cir. 1994). But, any procedural irregularities are connected to HUD’s 2006 determination. That
decision is no longer in effect, given HUD’s 2008 determination.
III. CONCLUSION
For the foregoing reasons, the judgment of the district court is AFFIRMED.
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