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Berlin v. Renaissance Rental Partners, LLC, No. 12-2213 (2d Cir. 2014)Annotate this Case
This opinion or order relates to an opinion or order originally issued on May 6, 2013.
12-2213-cv Berlin v. Renaissance Rental Partners, LLC 1 2 3 4 5 UNITED STATES COURT OF APPEALS 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 3rd day of April, two thousand fourteen. FOR THE SECOND CIRCUIT PRESENT: ROBERT A. KATZMANN, Chief Judge, DENNIS JACOBS, JOSÃ A. CABRANES, ROSEMARY S. POOLER, REENA RAGGI, RICHARD C. WESLEY, PETER W. HALL, DEBRA ANN LIVINGSTON, GERARD E. LYNCH, DENNY CHIN, RAYMOND J. LOHIER, JR., SUSAN L. CARNEY, CHRISTOPHER F. DRONEY, Circuit Judges. - - - - - - - - - - - - - - - - - - - - - -x BRUCE BERLIN, NANCY BERLIN, Plaintiffs-Appellees, - v.- 12-2213 RENAISSANCE RENTAL PARTNERS, LLC, D/B/A RENAISSANCE CONDOMINIUM PARTNERS II, LOUIS R. CAPPELLI, Defendants-Appellants, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 DELBELLO DONNELLAN WEINGARTEN WISE & WIEDERKEHR, LLP, Defendant. - - - - - - - - - - - - - - - - - - - - -x For PlaintiffsAppellees: Lawrence C. Weiner, Wilentz, Goldman & Spitzer, P.A., Woodbridge, NJ. For DefendantsAppellants: Robert Hermann, DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, White Plains, NY. For Amicus Curiae Real Estate Board of New York, Inc.: Richard H. Dolan, Schlam Stone & Dolan LLP, New York, NY. For Amicus Curiae Consumer Financial Protection Bureau: Nandan M. Joshi, Meredith Fuchs, ToQuyen Truong, David Gossett, Consumer Financial Protection Bureau, Washington, DC. ORDER Following disposition of this appeal on May 6, 2013, an active judge of the Court requested a poll on whether to rehear the case en banc. A poll having been conducted and there being no majority favoring en banc review, rehearing en banc is hereby DENIED. Dennis Jacobs, Circuit Judge, joined by Richard C. Wesley, Circuit Judge, dissents by opinion from the denial of rehearing en banc. FOR THE COURT: CATHERINE O HAGAN WOLFE, CLERK 2 1 DENNIS JACOBS, Circuit Judge, joined by RICHARD C. WESLEY, Circuit Judge, 2 dissenting from the denial of in banc review: 3 The statutory word lot in the Interstate Land Sales Full Disclosure Act 4 ( Land Sales Act ) is defined by regulation to mean exclusive use of a specific 5 portion of the land. 12 C.F.R. § 1010.1(b). The Department of Housing and 6 Urban Development ( HUD ), which promulgated the regulation, and the 7 Consumer Financial Protection Bureau ( CFPB ), HUD s successor in this 8 respect, claim Auer deference in aid of their project to transmute the regulation s 9 wording to mean any interest in real estate, or realty. See Auer v. Robbins, 10 519 U.S. 452, 461 (1997). In that way, HUD has created its jurisdiction to regulate 11 the sale of individual high rise condominium apartments, which obviously share 12 the use of . . . land rather than exclusive[ly] use it. 12 C.F.R. § 1010.1(b). 13 I would sit in banc to consider whether the agency s interpretation of its 14 own regulation is reasonable and, since I think it is not, I would withhold Auer 15 deference. But whether or not the agency s reading of its own regulation is 16 reasonable, the majority opinion rests upon Auer deference in a way that 17 illustrates how the doctrine can conflate (i) an agency s explanation of its text in 18 light of its expertise with (ii) the agency s expansion of its power to suit its 19 ambition. 1 The majority opinion neatly sets out [t]he only merits dispute on issue in 2 this appeal : whether a single floor condominium in a multi story building 3 includes the right to the exclusive use of a specific portion of the land, 12 C.F.R. § 4 1010.1(b) (emphasis supplied), and thereby qualifies as a lot within the 5 meaning of the Land Sales Act. Berlin v. Renaissance Rental Partners, LLC, 723 6 F.3d 119, 124 (2d Cir. 2013). The word land is held to be ambiguous (which is 7 itself remarkable) and is subjected to a sequence of mutations from statute to 8 regulation to guidance letter and amicus submission, so that (as I demonstrate in 9 my dissent) it loses any fixed meaning whatsoever. See id. at 131. The agency s 10 claimed jurisdiction morphs from lots to land to seemingly any conceivable 11 real estate interest. 12 How this works can be demonstrated step by step through direct 13 quotations (with my emphasis added) from the majority opinion and the CFPB s 14 amicus filing on which the opinion relies: 15 ¢ The question presented in this appeal is whether a single floor 16 condominium unit in a multi story building is a lot, thus triggering 17 ILSA s protections. Id. at 121. 18 19 ¢ The [CFPB] and [HUD] . . . have defined the term lot to mean any portion, piece, division, unit, or undivided interest in land located in 2 1 any state or foreign country, if the interest includes the right to the 2 exclusive use of a specific portion of the land. 12 C.F.R. § 1010.1(b). 3 Id. 4 ¢ [T]he CFPB and HUD have interpreted the phrase exclusive use of 5 . . . land to mean exclusive use of realty, see, e.g., CFPB Letter Br. at 6 6, thus concluding that the statutory term lot applies to 7 condominiums. Id. 8 ¢ The CFPB . . . letter brief . . . explain[ed], in part: HUD explained when it promulgated the definition of lot in 1973 that 9 10 condominiums carry the indicia of and in fact are real estate. 1973 11 Rule, 38 Fed. Reg. at 23866. Accordingly, the proper focus 12 regarding the analysis of whether a unit has exclusive rights to the 13 use of land . . . is whether the purchase of the unit gave the 14 purchasers the exclusive right to a unit, or any type of realty. [Dist. 15 Ct. Op. at 10.] Id. at 123. 16 ¢ We hold that the CFPB and HUD have reasonably interpreted their 17 own definition of the term lot. Id. at 122. Inasmuch as land is 18 sometimes used as a term of art referring to real estate, the CFPB 19 and HUD have reasonably concluded that their own definition of 3 1 lot applies to a condominium unit in a multi floor building. Id. at 2 125. 3 ¢ We conclude that the interpretation by the CFPB and HUD of their 4 own regulation is reasonable and therefore warrants deference. Id. 5 In other words, a right to exclusive use of a condominium unit is a 6 right to exclusive use of real estate, and therefore a condominium unit . 7 . . in a multi story building . . . is a lot within the meaning of ILSA. 8 Id. at 126. 9 10 11 This heavy lifting allows the word land to mean anything on earth (literally) that HUD wants to regulate. One potential reason to forgo in banc review is that Congress is at work 12 reining in HUD s pretension to regulate high rise condominiums as lots of land 13 (although a statutory amendment would be of no help to the seller in this case). 14 A House bill, passed September 26, 2013, would amend the Land Sales Act to say 15 that the Act s registration and disclosure requirements shall not apply to . . . the 16 sale or lease of a condominium unit . . . . H.R. 2600, 113th Cong. (2013). (The 17 Senate has not yet voted on the bill.) But it seems to me that we need to better 18 understand the scope of Auer deference, even if it may transpire that this specific 19 act of overreaching is eventually checked by Congress. 4 1 Some measure of discipline is needed to keep an agency from commanding 2 any level of deference when the agency creates the very jurisdiction it claims to 3 occupy. An agency is not like the busy spider, which can stand upon its own 4 spun web. 5