Marshall v. Cuomo , 192 F.3d 473 ( 1999 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
GEORGE F. MARSHALL; ONE
MANAGEMENT, INCORPORATED;
FREDERICK INVESTMENT CORPORATION,
Plaintiffs-Appellants,
v.
ANDREW CUOMO, in his official
No. 98-1780
capacity as Secretary of Housing
and Urban Development; U.S.
DEPARTMENT OF HOUSING & URBAN
DEVELOPMENT; UNITED STATES OF
AMERICA,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
Malcolm J. Howard, District Judge.
(CA-97-924-5-H2)
Argued: May 6, 1999
Decided: September 23, 1999
Before WILKINSON, Chief Judge, and TRAXLER and KING,
Circuit Judges.
_________________________________________________________________
Affirmed by published opinion. Judge Traxler wrote the opinion, in
which Chief Judge Wilkinson and Judge King joined.
_________________________________________________________________
COUNSEL
ARGUED: Kevin Lamar Sink, HOWARD, STALLINGS, STORY,
WYCHE, FROM & HUTSON, P.A., Raleigh, North Carolina, for
Appellants. Eric David Goulian, Civil Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. ON
BRIEF: Ashley H. Story, HOWARD, STALLINGS, STORY,
WYCHE, FROM & HUTSON, P.A., Raleigh, North Carolina, for
Appellants. Frank W. Hunger, Assistant Attorney General, Janice
McKenzie Cole, United States Attorney, Barbara C. Biddle, Civil
Division, UNITED STATES DEPARTMENT OF JUSTICE, Wash-
ington, D.C., for Appellees.
_________________________________________________________________
OPINION
TRAXLER, Circuit Judge:
Appellants George F. Marshall, One Management, Inc., and Fred-
erick Investment Corporation (collectively "Marshall"), brought a
complaint against appellees, the Department of Housing and Urban
Development and its Secretary (collectively "HUD"), challenging
administrative proceedings which resulted in HUD's imposition of a
suspension and three-year debarment of Marshall from future partici-
pation in covered transactions with the federal government. See 24
C.F.R. §§ 24.100-.420 (1999). The district court granted HUD's
motion for summary judgment as to two counts of Marshall's ten-
count complaint and granted HUD's motion to dismiss the remaining
eight counts, thereby upholding HUD's decision pursuant to the
Administrative Procedures Act ("APA"). See 5 U.S.C.A. §§ 702-706
(West 1996). We affirm.
I.
Section 8 of the United States Housing Act (the"Act") provides for
financial assistance to "aid[ ] low-income families in obtaining a
decent place to live and [to] promot[e] economically mixed housing."
42 U.S.C.A. § 1437f(a) (West Supp. 1998). Pursuant to the Act, HUD
enters into Housing Assistance Payment Contracts ("Section 8 agree-
ments") with private landlords, under which the landlords agree to
maintain "decent, safe, and sanitary" housing for low-income tenants
in return for HUD's agreement to make rental assistance payments (or
subsidies) on behalf of the tenants.1 If a property owner fails to main-
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1 The "decent, safe, and sanitary" requirement is defined in HUD's
Housing Quality Standards, which are incorporated by reference into the
2
tain the subsidized units as required, HUD may abate further rental
assistance payments, see 24 C.F.R. § 886.323(e) (1999), and may pur-
sue suspension and debarment proceedings against the owner, 24
C.F.R. §§ 24.305, 24.405. The regulation enumerates the specific
grounds for suspension and debarment, including"[a] willful failure
to perform in accordance with the terms of one or more public agree-
ments or transactions," 24 C.F.R. § 24.305(b)(1), and the "material
violation of a statutory or regulatory provision or program require-
ment applicable to a public agreement or transaction," 24 C.F.R.
§ 24.305(f).
This case arises from Section 8 agreements which Marshall entered
into with HUD for the provision of subsidized, multifamily housing
at South Lawndale Apartments and Whitney Young Apartments in
Chicago, Illinois. As owner of the properties, Marshall was required
to certify, on a monthly basis, that the subsidized units were in a
decent, safe, and sanitary condition. Following HUD inspections of
South Lawndale and Whitney Young in March 1997, however, the
HUD Assistant Secretary for Housing, acting as the debarring official,
see 24 C.F.R. § 24.105, issued a notice of suspension and a proposed
five-year debarment, charging that Marshall had violated his Section
8 agreements with HUD by failing to maintain the properties in a
decent, safe and sanitary condition.2 Marshall also received a report
rating the physical condition of both properties as"below average,"
as well as estimates that Whitney Young needed $541,530 in repairs
and that South Lawndale needed $106,845 in repairs. In response,
Marshall's on-site property manager at Whitney Young submitted a
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Section 8 agreements. See 24 C.F.R. § 886.113 (1999); see also 24
C.F.R. §§ 5.701-5.705 (1999).
2 The notice also charged three additional grounds for the proposed
debarment, including the alleged failure to obtain required HUD
approval for management changes, the alleged submission of incomplete
previous participation certificates, and the alleged submission of mis-
leading previous participation certificates. Having concluded that the
failure to maintain the two apartment complexes in a decent, safe, and
sanitary condition in violation of the Section 8 agreements was alone suf-
ficient to justify a three-year debarment, the debarring official ultimately
made no findings as to these additional grounds.
3
plan to HUD proposing $535,715 in repairs. However, Marshall dis-
agreed with the amount of repairs proposed by both HUD and his
property manager, offering instead to use project income (after oper-
ating expenses) plus a personal contribution of $100,000 to fund cer-
tain repairs.
Although Marshall did effect some repairs to the Chicago proper-
ties, HUD ultimately determined that the repairs were insufficient to
bring the properties into compliance. Specifically, HUD referenced
sagging and uneven flooring; cracked and missing bricks and mortar
(evidencing widespread settling and structural damage); seriously
deteriorated porches and exterior stairwells creating safety hazards to
the residents and children; water damage throughout several of the
project buildings from leaking roofs; inoperable doors and door
frames creating a security hazard; numerous broken windows and
windows lacking adequate insulation from outside elements; and
unusable kitchen and bathroom fixtures and appliances (due to age,
deterioration from the sagging floors, or water damage). Convinced
that the condition of the properties violated both Section 8 agree-
ments, HUD abated subsidy payments in May 1997. Shortly thereaf-
ter, Marshall sold the Whitney Young and South Lawndale properties.
By this time, Marshall had responded to the charges set forth in the
notice of suspension and debarment. In May 1997, Marshall requested
and was granted an immediate hearing on the charges, and a hearing
official was appointed to preside. Following a hearing, the debarring
official issued the determination challenged in this action.3 The debar-
ring official concluded that "Marshall ha[d] willfully failed to main-
tain the [Chicago] projects in decent, safe, and sanitary condition, as
required by the [Section 8 agreements] and therefore may be debarred
under 24 C.F.R. § 24.305(b)(1),"4 and that "Marshall's conduct cons-
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3 The debarring official is to render the final decision within 45 days
after receipt of the respondent's argument and evidence, or within 15
days after receipt of the findings from the hearing official, unless such
period is extended for good cause. See 24 C.F.R. § 24.314(1).
4 The debarring official further noted in support of this determination
that:
[Marshall's] failure to comply with his contractual obligations
continued after HUD notified him of the projects' deficiencies
4
titute[d] a material violation of a program requirement applicable to
public agreements, i.e. the [Section 8 agreements]," which indepen-
dently justified debarment under 24 C.F.R. § 24.305(f). The debar-
ment was for a three-year period.5
In addition to challenging the debarring official's determination
that he failed to maintain the Chicago properties in a decent, safe, and
sanitary condition, Marshall alleges that HUD was motivated to initi-
ate the debarment proceedings not by this alleged failure, but by a
desire to retaliate against him for his "hav[ing] been openly critical
of HUD" in the context of an earlier dispute concerning subsidized
property that he owned in Washington, D.C. Specifically, in the fall
of 1995, HUD had declared Clifton Terrace Apartments, owned by an
affiliate of Marshall, in default under a deed of trust held by HUD for
the alleged failure to maintain the property in a decent, safe, and sani-
tary condition and sought to accelerate the entire indebtedness
secured by the deed of trust. HUD also abated subsidy payments cal-
led for by the Section 8 contract pertaining to Clifton Terrace Apart-
ments.
In response, Clifton Terrace Apartments filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code. Ultimately, the
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and lasted until he sold the projects. . . . Marshall's willful failure
to comply with the [Section 8 agreements] is evidenced in part
by his express oral and written refusal to perform all of the
repairs identified by HUD and his on-site manager. .. . Mar-
shall's disregard for his contractual obligations is further evi-
denced by the results of HUD's many inspections of the
properties from March 3 to May 14, 1997. Despite frequent cor-
respondence and discussions, Marshall did not make many of the
repairs that were needed to return the projects to decent, safe,
and sanitary condition, nor did he present a plan for making the
repairs.
5 The period of debarment runs from March 21, 1997, when the notice
of suspension and proposed debarment was issued, to March 20, 2000.
Although the debarring official had originally proposed a five-year
debarment, he noted in the determination that adherence to the general
rule of imposing not more than three years, see 24 C.F.R. § 24.320(a)(1),
was appropriate in the absence of egregious conduct or extraordinary cir-
cumstances.
5
bankruptcy court granted HUD relief from the automatic stay to pur-
sue a contractual right to assume possession of the property. HUD
then filed an action in federal district court seeking to take possession
of Clifton Terrace Apartments. The district court denied HUD's
motion for preliminary injunction and later stayed the action to allow
the parties to pursue mediation. The parties ultimately reached a set-
tlement agreement under which HUD was to receive title to Clifton
Terrace Apartments. Of asserted relevance to this action, the settle-
ment agreement also contained the following language:
After the Sale Date, HUD shall remove Clifton Terrace's
ownership and/or management through One Management,
as a basis for any administrative action, including specifi-
cally, for denial of Clifton Terrace, One Management,
and/or any of the principals of Clifton Terrace, One Man-
agement, or their affiliates, should they request 2530 previ-
ous participation clearance; they will be considered by HUD
in the same manner as 2530 previous participation certifica-
tions filed by any other entity pursuant to HUD's regula-
tions and standards.
In this action, Marshall contends that HUD's actions with respect to
the Chicago properties were motivated solely out of what he charac-
terizes as the public criticism and embarrassment he inflicted upon
HUD during the Clifton Terrace proceedings, and therefore that HUD
has violated the Clifton Terrace settlement agreement's prohibition
against any reliance upon Clifton Terrace as a basis for future admin-
istrative action.
Following receipt of the debarring official's decision to debar Mar-
shall for his willful failure to maintain the Chicago properties in a
decent, safe, and sanitary condition -- and, in the course thereof, to
reject Marshall's claim that HUD was instead motivated by retaliation
for the Clifton Terrace matter -- Marshall brought a ten-count com-
plaint in federal district court, seeking judicial review and reversal of
HUD's decision. Marshall alleged that his debarment violated the
APA and the Clifton Terrace settlement agreement, that the proce-
dures used by HUD to debar him did not comport with the APA and
his due process rights under the Fifth Amendment of the United
States Constitution, and that HUD had failed to adequately respond
6
to various Freedom of Information Act ("FOIA") requests which he
made under 5 U.S.C.A. § 552 (West 1996 & Supp. 1999). The district
court granted summary judgment in favor of HUD as to Counts I and
II of Marshall's complaint as well as HUD's motion to dismiss the
remaining counts. This appeal followed.
II.
We review the district court's decision granting HUD's motion for
summary judgment and its motion to dismiss de novo. See Flood v.
New Hanover County, 125 F.3d 249, 251 (4th Cir. 1997); Austin v.
Owens-Brockway Glass Container, Inc., 78 F.3d 875, 877 (4th Cir.
1996). However, this court, like the district court, reviews the debar-
ment decision by HUD pursuant to the APA, under which the agen-
cy's decision must be upheld unless "arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law." 5 U.S.C.A.
§ 706(2)(A). "Under this narrow standard, we are not empowered to
substitute [our] judgment for that of the agency." Wilson v.
CHAMPUS, 65 F.3d 361, 364 (4th Cir. 1995) (internal quotation
marks omitted) (alteration in original). Rather, our task is to deter-
mine "whether the agency conformed with controlling statutes, and
whether the agency has committed a clear error of judgment." Id.
(internal quotation marks omitted); see also Maryland Dep't of
Human Resources v. United States Dep't of Agric., 976 F.2d 1462,
1475 (4th Cir. 1992).
III.
We begin with Marshall's appeal of the district court's decision to
grant summary judgment for HUD on Counts I and II. Count I alleges
that Marshall submitted substantial evidence contradicting the evi-
dence submitted by HUD in support of the proposed suspension and
debarment, and that the debarring official "should have concluded
that HUD did not carry its burden of proof [under 24 C.F.R.
§ 24.314(c)] of establishing cause for debarment by the preponder-
ance of the evidence." Count II alleges that HUD's allegations, even
if true, do not constitute cause for suspension or debarment under 24
C.F.R. § 24.305.6
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6 Suspension may be imposed pending completion of an investigation
or debarment proceeding, see 24 C.F.R. § 24.400, based upon the same
7
Debarment may be imposed for "[v]iolation of the terms of a public
agreement or transaction so serious as to affect the integrity of an
agency program, such as . . . [a] willful failure to perform in accor-
dance with the terms of one or more public agreements or transac-
tions," 24 C.F.R. § 24.305(b)(1), or "for material violation of a
statutory or regulatory provision or program requirement applicable
to a public agreement or transaction," 24 C.F.R.§ 24.305(f). The
agency bears the burden to prove its case by a preponderance of the
evidence. See 24 C.F.R. § 24.314(c).
In this case, the debarring official found that Marshall had willfully
failed to maintain the property as required by the Section 8 agree-
ments in violation of § 24.305(b)(1) and that Marshall's conduct con-
stituted a material violation of a program requirement applicable to
the Section 8 agreement in violation of § 24.305(f).7 In rendering this
determination, the debarring official reviewed the evidence and con-
cluded that Marshall had not maintained Whitney Young and South
Lawndale in a "decent, safe, and sanitary" condition based upon the
various deficiencies documented during the HUD inspections. Addi-
tionally, the debarring official relied upon photographs of the subsi-
dized units showing, among other deficiencies, deteriorated porches
with missing or rotting boards, sagging floors, cracked bricks and
mortar, and unrepaired water damage in units and common areas.
Marshall primarily contends that the debarring official essentially
ignored the conflicting evidence he presented by choosing instead to
favor HUD's evidence as to the condition of the property. As noted
previously, however, our function is not to substitute our judgment for
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causes for debarment set forth in § 24.305, see 24 C.F.R. § 24.405. Most
of the procedures governing debarments also apply to suspensions. See
24 C.F.R. § 24.410-.420.
7 Under the regulation, "[a]ffiliates" of a debarred party may be debar-
red on the same grounds if given specific notice and the opportunity to
respond. See 24 C.F.R. § 24.325(a)(2). Persons or entities are "affiliates"
if one controls, or has the power to control, the other. See 24 C.F.R.
§ 24.105. One Management, Inc. and Frederick Investment Corporation
are "affiliates" of Marshall and were given notice and the opportunity to
respond.
8
that of the debarring official, see Wilson, 65 F.3d at 364, nor are we
"to re-weigh conflicting evidence [or] make credibility determina-
tions," see Craig v. Chater, 76 F.3d 585, 589 (4th Cir. 1996). Rather,
we review the agency decision to ensure that it is not arbitrary, capri-
cious, or an abuse of discretion. See 5 U.S.C.A. § 706(2)(A).
Marshall's particular reliance upon evidence he submitted to sup-
port his argument that many deficiencies were the result of tenant
abuse and vandalism also does not avail him. The debarring official
rejected Marshall's claim in this regard, noting that many of the defi-
ciencies could not be explained by tenant abuse. Furthermore, the
debarring official observed that:
[t]he fact that the projects are old and in a poor neighbor-
hood does not excuse the conditions at the projects.[Mar-
shall] ha[s] not shown how the project's age or location
adversely affect[ed] [his] ability to make needed repairs.
The district court concurred, noting that Marshall remained ultimately
responsible for repairing the housing to ensure a decent, safe, and san-
itary condition regardless of the cause of the needed repairs. We
agree.
We likewise reject Marshall's reliance upon evidence he submitted
which purported to show that other subsidized properties he owned
had been maintained in a decent, safe, and sanitary condition. The
debarment proceeding concerned the condition of the Chicago proper-
ties and the conditions pertaining to them. Obviously, Marshall can-
not pick and choose which Section 8 agreements he will comply with
or ward off appropriate administrative action by pointing to his com-
pliance with unrelated agreements for unrelated properties.
Having reviewed the administrative record, it is clear that the
debarring official's determination that the Chicago properties were
not kept in decent, safe and sanitary condition and that Marshall did
not cooperate in attempts to achieve this standard, is fully supported
by the record.8 Accordingly, we conclude that the debarring official
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8 Marshall also asserts that there was insufficient evidence that the sub-
standard conditions were the result of a "willful" violation justifying
9
did not act in an arbitrary, capricious, or unlawful manner in imposing
debarment under 24 C.F.R. § 24.305. Hence, we affirm the district
court's grant of summary judgment to HUD as to Counts I and II of
Marshall's complaint.
IV.
Counts III through X of Marshall's complaint focus not on the
issue of whether the condition of the Chicago properties warranted
HUD's decision to debar him from further participation, but on his
challenge to the manner in which the debarment proceeding was con-
ducted and HUD's alleged motivation in seeking debarment. Marshall
asserts that if any of these counts survive, the administrative process
is tainted, and therefore, we must also reverse the district court's
order granting HUD's motion for summary judgment as to Counts I
and II. For the reasons that follow, we affirm the district court's dis-
missal of these remaining counts.
A.
We begin with Counts V and VI, in which Marshall alleges that
HUD engaged in procedural irregularities in conducting the debar-
ment proceeding. In particular, Marshall asserts that HUD's failure to
conduct the debarment proceeding in accordance with its own regula-
tions renders the decision to debar Marshall "arbitrary, capricious and
not in accordance with law" in violation of 5 U.S.C.A. § 706(2)(A).
We disagree.9
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debarment under 24 C.F.R. § 24.305(b). While we conclude that the
debarring official's finding as to willfulness is equally supported by the
record, we note that the debarring official also concluded that, by virtue
of the substandard condition of the subsidized property, Marshall had
violated "material provisions" of the Section 8 agreements, which is an
independent cause for debarment under 24 C.F.R.§ 24.305(f).
9 Count VI alleges that these same procedural irregularities violated
Marshall's due process rights under the Fifth Amendment of the United
States Constitution. On appeal, however, Marshall has limited his argu-
ment to the alleged violation of the APA. In any event, because we con-
clude that HUD did not engage in any such procedural irregularities or
violate its own regulations in conducting the debarment proceeding, Mar-
shall's due process claim also fails.
10
Marshall's specific complaint centers on his belief that he was enti-
tled to have the proceeding conducted in accordance with the formal
procedures set forth in 24 C.F.R. §§ 26.1-26.26. These procedures,
applicable to debarment hearings held before hearing officers, allow
for such things as formal pleadings and motions, discovery, and cross-
examination more akin to those available in an ordinary civil action.
Marshall's claim fails, however, because the regulations did not
require HUD to conduct Marshall's debarment proceeding in accor-
dance with these more formal procedures.
Under 24 C.F.R. § 24.310, HUD is instructed to"process debar-
ment actions as informally as practicable, consistent with the princi-
ples of fundamental fairness, using the procedures in §§ 24.311
through 24.314." The proceeding is initiated by the referral of cases
to a debarring official for consideration, see 24 C.F.R. § 24.311, who
then issues a notice stating the reasons for the proposed debarment,
see 24 C.F.R. § 24.312. In response, the property owner may submit
materials in opposition to the proposed debarment and may request a
hearing. See 24 C.F.R. § 24.313(a). In some cases, the regulations
require nothing further. If no genuine dispute over material facts
exists, the debarring official may simply render"a decision on the
basis of all the information in the administrative record, including any
submission made by the respondent." 24 C.F.R.§ 24.314(a). How-
ever, the regulations also afford the debarring official broad discretion
in determining what, if any, additional proceedings should be con-
ducted. Although he need not make a finding as to whether the
respondent has demonstrated the existence of a genuine issue of mate-
rial fact, "[t]he debarring official may , in his or her discretion, refer
actions . . . in which there is no genuine dispute over material facts,
to a hearing officer or other official for review of the administrative
record and appropriate findings." 24 C.F.R. § 24.314(a)(1) (emphasis
added).
If the debarring official finds that the respondent's submission does
raise a genuine dispute of fact material to the proposed debarment, the
respondent is "afforded an opportunity to appear with a representa-
tive, submit documentary evidence, present witnesses, and confront
any witness the agency presents." 24 C.F.R. § 24.313(b). And, if addi-
tional proceedings are necessary to determine material facts, "[t]he
debarring official may refer disputed material facts to another official
11
for findings of fact," 24 C.F.R. § 24.314(b)(2) (emphasis added), or
"may refer disputed material facts and issues of law to a hearing
officer for findings of fact and conclusions of law," 24 C.F.R.
§ 24.314(b)(2)(i) (emphasis added). Unlike a hearing official, the reg-
ulations limit a hearing officer to an Administrative Law Judge or a
Board of Contract Appeals Judge. See 24 C.F.R. § 24.105. Only at
this point do the procedures set forth in Part 26 apply. The hearing
officer (i.e. the Administrative Law Judge or Board of Contract
Appeals Judge) is directed to conduct the proceedings in accordance
with the more formal procedures, whereas a hearing official's
involvement remains informal.
Although acknowledging that the individual conducting the debar-
ment hearing in this case was neither an Administrative Law Judge
nor a Board of Contract Appeals Judge, Marshall contends that the
hearing official was required to conduct the administrative proceeding
pursuant to the more formal requirements delineated in 24 C.F.R. Part
26. In essence, Marshall asserts that the proper procedures to be
applied were mandated not by the decision of the debarring official,
in his discretion, to refer the case to a hearing official rather than a
hearing officer, but by Marshall's belief that his response to the notice
of debarment raised disputed material facts. Marshall's argument,
however, fails to recognize the wide discretion afforded to the debar-
ment official in such matters.
Upon receipt of Marshall's response to the notice of debarment and
request for a hearing, the debarring official had the discretion to ren-
der a decision on the basis of the administrative record before him,
or to refer the matter to a hearing official or hearing officer. He chose
not to refer the matter to a hearing officer and, instead, chose to select
a hearing official to conduct the hearing requested by Marshall. This
decision was entirely appropriate pursuant to the discretion afforded
the debarring official by 24 C.F.R. § 24.314(a)(1), and accordingly,
the formal procedures of Part 26 simply did not apply to the debar-
ment proceeding.10
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10 The actual hearing was conducted in accordance with 24 C.F.R.
§ 24.313(a). The debarring official incorrectly stated in his written deter-
mination that a "hearing officer" conducted the hearing in accordance
12
Nor did the regulations require the debarring official to designate
a hearing officer (or otherwise require application of the formal pro-
cedures in Part 26) simply because Marshall believed that his
response had demonstrated a genuine issue of material fact. Initially
we note that although the debarring official may refer a matter to a
hearing officer, he is not required to do so even if he believes a dis-
pute of material fact exists. See 24 C.F.R.§ 24.314(b)(2). Rather, in
such cases 24 C.F.R. § 24.313(b)(1) requires only that Marshall "be
afforded an opportunity to appear with a representative, submit docu-
mentary evidence, present witnesses, and confront any witness the
agency presents."
In any event, having reviewed the administrative record in this
case, we conclude that the debarring official did not abuse his discre-
tion, nor act in an arbitrary, capricious, or unlawful manner, by not
finding that a genuine dispute of material fact existed or by not refer-
ring the matter to a hearing officer. Although Marshall sought to
escape debarment as a result of the violation of the Section 8 agree-
ments applicable to the Chicago properties and, in part, by asserting
that abuse by the tenants resulted in the substandard conditions, there
appears to be no genuine dispute that substandard conditions did
exist. The debarring official possessed the discretion to allow Mar-
shall to escape debarment notwithstanding these conditions, but the
regulations certainly allowed for its imposition.
Accordingly, we conclude that the debarring official did not abuse
his discretion in conducting the proceedings under the informal proce-
dures allowed by the regulation or by concluding that debarment was
appropriate. Once placed on notice of the proposed debarment, Mar-
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with 24 C.F.R. § 24.313(b). As noted previously, a "hearing officer,"
defined in the regulations as including only an Administrative Law Judge
or Board of Contract Appeals Judge, conducts hearings under
§ 24.313(b), whereas a "hearing official" conducts hearings under the
less formal procedures of the regulation. The hearing in this case was
conducted by neither an Administrative Law Judge nor a Board of Con-
tract Appeals Judge. Thus, we reject plaintiffs' attempt to transform the
nature of the hearing by referencing what were obvious misstatements by
the debarring official.
13
shall was allowed to "submit, in person, in writing, or through a repre-
sentative, information and argument in opposition to the proposed
debarment." 24 C.F.R. § 24.313(a). He was additionally granted a
hearing before a hearing official to further present his case in
response. Under these circumstances, nothing further was required by
the regulations.11
B.
Marshall also contends that the district court erred in dismissing
Counts III, IV, and X of the complaint, all of which rely upon the
Clifton Terrace matter as a basis for overturning the debarring offi-
cial's determination. We disagree.
As noted previously, HUD and Marshall were involved in a dispute
over whether Marshall had complied with his obligation to maintain
the Clifton Terrace apartments in a decent, safe, and sanitary condi-
tion. The dispute was ultimately resolved via a settlement agreement,
under which HUD received title to the property. Marshall contends
that his public criticism of HUD during the pendency of this dispute,
coupled with the alleged embarrassment inflicted upon HUD in the
proceedings, motivated the instant debarment proceeding and, conse-
quently, violated the settlement agreement's provision that "HUD
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11 Immediately prior to the debarment hearing, Marshall requested a
continuance, prompted by his receipt of evidence upon which HUD
intended to rely, which was denied by the hearing official. As part of his
challenge to the manner in which the debarment proceeding was con-
ducted, Marshall complains that he was afforded insufficient time to
respond to the evidence submitted by HUD. However, although the hear-
ing official denied Marshall's request for a continuance of the hearing,
he left the record open to allow both parties to submit supplemental
information. He also granted Marshall's subsequent request for yet more
additional time to submit evidence -- extending the original 15-day post-
hearing deadline to August 11, 1997. Marshall also complains because
HUD attempted to supplement the record after the August 11, 1997 dead-
line. The hearing official, however, ultimately ruled that no materials
submitted after the August 11, 1997 deadline would be considered part
of the record in the suspension and debarment proceedings. We find no
error or prejudice in the manner in which the hearing official addressed
these evidentiary submissions.
14
shall remove Clifton Terrace's ownership and/or management
through One Management, as a basis for any administrative action."
We, like the district court, are satisfied that Marshall has failed to
state a claim for violation of the Clifton Terrace settlement agree-
ment.
Initially we note that were we to accept Marshall's argument, all
administrative action initiated by HUD against Marshall or his affili-
ated companies in the future -- regardless of the location of the prop-
erty or the stated basis for the action -- would be subject to a claim
that HUD was motivated not by the stated basis, but solely by an
alleged "vendetta" arising from the Clifton Terrace matter. The refer-
enced paragraph in the Clifton Terrace settlement agreement simply
cannot be interpreted to allow such a result. Rather, the obvious intent
of the language was not to bar HUD from further administrative
action against Marshall for violations of Section 8 agreements appli-
cable to other properties, but to evidence an agreement that HUD
would not rely upon Clifton Terrace as a basis for the denial of "pre-
vious participation clearance" and, of course, that HUD would be pro-
hibited from pursuing further administrative action against Marshall
in the Clifton Terrace matter. It simply cannot, however, be fairly
read to prohibit HUD from pursuing future administrative action
against Marshall arising out of substandard conditions existing at
other subsidized properties owned by Marshall or his affiliated com-
panies.
Nor are we persuaded by Marshall's contention that HUD violated
this portion of the agreement because some of its employees involved
with the Chicago properties had participated in the Clifton Terrace
matter. The settlement agreement could have, but did not, preclude
HUD personnel involved in the Clifton Terrace matter from partici-
pating in future matters involving subsidized property owned by Mar-
shall or his affiliated companies. And, in any event, the debarring
official's decision to debar Marshall was fully supported by Mar-
shall's failure to maintain the Chicago properties in a decent, safe,
and sanitary condition. Accordingly, we hold that the district court
properly concluded that Marshall failed to state a claim that the debar-
ment proceeding violated the Clifton Terrace settlement agreement or
15
that the Clifton Terrace matter was relied upon to support the decision
to debar Marshall.12
C.
In Count VII, Marshall contends that HUD improperly combined
prosecutorial and adjudicative functions by permitting improper rela-
tionships to exist between the prosecutors and the hearing official in
violation of 5 U.S.C.A. § 554(d) (West 1996) of the APA. We dis-
agree.
Under § 554(d), "[a]n employee or agent engaged in the perfor-
mance of investigative or prosecuting functions for an agency in a
case may not, in that or a factually related case, participate or advise
in the decision . . . except as witness or counsel in public proceed-
ings." Marshall contends that this provision was violated because two
HUD employees involved in the prosecution of the Clifton Terrace
matter acted as advisors to the hearing official in the Chicago matter
(one of whom normally worked directly or indirectly under the super-
vision of a prosecuting attorney), and because a HUD employee pre-
viously involved in prosecuting the Clifton Terrace matter assisted in
the prosecution of the Chicago matter.
As an initial matter, we note HUD's contention that§ 554(d) is
inapplicable to the debarment proceeding because the proceeding is
not statutorily required. See 5 U.S.C.A.§ 554(a) (providing that its
provisions apply to "adjudication[s] required by statute"). Although
we have not decided the issue, see Leitman v. McAusland, 934 F.2d
46 (4th Cir. 1991), at least one circuit has held that § 554 is inapplica-
_________________________________________________________________
12 Although Marshall broadly asserts that the district court erred in dis-
missing all three counts based upon the Clifton Terrace property, he lim-
its his discussion on appeal to the dismissal of Count X, which directly
asserts that HUD violated the Clifton Terrace settlement agreement. The
related Counts III and IV allege that the debarment proceeding violated
the APA and Marshall's due process rights because the Clifton Terrace
proceeding, as opposed to the condition of the Chicago properties, was
the basis for the debarment proceeding. In any event, for reasons dis-
cussed infra, we conclude that Counts III and IV were also properly dis-
missed by the district court.
16
ble to debarment proceedings, see Girard v. Klopfenstein, 930 F.2d
738, 741 (9th Cir. 1991). Even assuming that § 554(d) applies to
HUD's debarment proceeding, however, we agree with the district
court's determination that HUD neither conducted the debarment pro-
ceeding improperly nor violated § 554(d).
As an initial premise, we note that there is no basis upon which to
conclude that the hearing official or the HUD advisor engaged in the
performance of investigative or prosecuting functions for HUD in the
debarment proceeding. Rather, at most, we are faced with a situation
in which the HUD advisor to the hearing official in the debarment
proceeding had previously participated in the investigation and prose-
cution of the Clifton Terrace matter.
The Clifton Terrace matter did involve the same parties and some
of the same HUD employees. However, it arose from facts and cir-
cumstances completely unrelated to the Chicago matters. The Chi-
cago matters, of course, concerned different subsidized housing
which, although owned by the same landlord, was required to be kept
in a decent, safe, and sanitary condition under separate Section 8
agreements entered into between HUD and Marshall. While related in
the sense that, in both cases, HUD took issue with Marshall's mainte-
nance of the subsidized housing as required by the applicable Section
8 agreements, we fail to see how they are factually related. In addi-
tion, as with Marshall's earlier attempts to insert the Clifton Terrace
proceeding into the debarment proceeding, we decline to endorse
Marshall's theory that he may forever use the Clifton Terrace matter
to both escape his contractual obligations with HUD and defend
against HUD's attempts to enforce those obligations on behalf of the
tenants whom the agreements are designed to protect.
We likewise affirm the district court's dismissal of Count VIII of
Marshall's complaint, which alleged that the same facts underlying
Count VII violated his due process rights under the Fifth Amendment
of the United States Constitution. It is well established that due pro-
cess rights are not violated simply by the combination of the investi-
gative, prosecutorial, and adjudicative functions in one agency.
Rather, actual bias or a high probability of bias must be present before
due process concerns are raised. See Withrow v. Larkin, 421 U.S. 35,
17
46-53 (1975).13 Although a HUD employee acted as an advisor to the
hearing official, there is no basis upon which to conclude that the
advisor exerted any improper influence upon the hearing official or
that the hearing official was otherwise biased as a result of any HUD
participant. Nor is there any indication that the Clifton Terrace matter
entered into the debarring official's determination in this case or that
his decision was tainted or otherwise rendered unsupportable by the
roles of any other HUD employees participating in the debarment pro-
ceeding. On the contrary, the administrative record reveals that the
debarment decision was fully supported by the evidence presented
regarding the condition of the Chicago properties.
D.
Finally, Marshall contends that the district court erred in granting
HUD's motion to dismiss Count IX, which asserts a claim under the
Freedom of Information Act. See 5 U.S.C.A.§ 552. Specifically,
Marshall alleges that he made in excess of seven requests for informa-
tion, to which HUD failed to fully respond. The district court dis-
missed the claim because Marshall failed to identify the specific
documents requested, when they were requested, to whom those
requests were directed, or the extent of HUD's responses. See 5
U.S.C.A. § 552(a)(3)(A) (West Supp. 1999). We find no error in the
district court's dismissal on this basis and, accordingly, affirm.
_________________________________________________________________
13 Marshall's reliance upon Utica Packing Co. v. Block, 781 F.2d 71
(6th Cir. 1986), does not avail him. Utica Packing involved an action
filed by the United States Department of Agriculture ("USDA") seeking
to withdraw meat inspection services from a meat packing company and,
thereby, effectively put the company out of the meat packing business.
When the appointed hearing officer issued a decision dismissing the
charges, USDA officials -- who "`violently disagreed'" with the hearing
officer's decision -- "unceremoniously removed him [from the case] and
presented a petition for reconsideration to their hand-picked replace-
ment." Id. at 78. Unlike the litigant in Utica Packing, Marshall has
alleged no facts or circumstances which would render"the risk of unfair-
ness [in the debarment proceeding] `intolerably high.'" Id.
18
V.
For the foregoing reasons, we conclude that HUD's decision to
debar Marshall was neither arbitrary or capricious, nor an abuse of
discretion. The district court properly granted HUD's motion for sum-
mary judgment as to Counts I and II and HUD's motion to dismiss
Counts III through X of Marshall's complaint, and accordingly, we
affirm the judgment below.
AFFIRMED
19