Opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

LEHIGH VALLEY 1 LLC :

: CIVIL ACTION

:

v. : NO. 24-2627

:

WHITEHALL FIDUCIARY LLC :

:

LEHIGH VALLEY 1 LLC :

: CIVIL ACTION

:

v. : NO. 24-2709

:

SAUCON TRUST :

______________________________________________________________________________

WHITEHALL FIDUCIARY LLC and :

SAUCON TRUST :

:

v. :

:

UNITED STATES DEPARTMENT OF :

HOUSING AND URBAN DEVELOPMENT, :

et al. :

MEMORANDUM OPINION

Henry, J. October 14, 2025

The instant matter involves two mortgage foreclosure actions brought by Lehigh Valley 1

LLC (“Lehigh”), against Whitehall Fiduciary LLC (“Whitehall”), and Saucon Trust (“Saucon”).

These two cases were consolidated, and Whitehall and Saucon filed a Third-Party Complaint

against the United States Department of Housing and Urban Development. In this Third-Party

Complaint, Whitehall and Saucon take issue with the process by which HUD sold their

mortgages to another party after Whitehall and Saucon had defaulted. HUD filed a Motion to

Dismiss the Third-Party Complaint. For reasons that will be discussed more fully below, HUD’s

motion to dismiss will be granted and the Third-Party Complaint will be dismissed.

I. BACKGROUND

M&T Realty Capital Corporation provided loans to Whitehall and Saucon secured by

mortgages on each defendant’s real property in Whitehall and Hellertown. Both the Whitehall

property and the Hellertown property house senior living facilities and both loans are secured by

a mortgage and a note. Amended Third-Party Complaint, Docket No. 61, ¶¶ 11, 16, 40, 45

(“Compl.”). Whitehall and Saucon each also entered into a Regulatory Agreement with HUD

that required the entities to undertake certain obligations, including making timely payments on

their mortgages. Compl. ¶¶ 14, 43; Ex. A (“Reg. Agmt.”)

In August of 2021, both Whitehall and Saucon defaulted on their mortgages when they

stopped making the required payments. Compl. ¶¶ 26, 55. Due to the defaults, the total debts

under the mortgages became due. Both mortgages were assigned by M&T to HUD. Compl. ¶¶

34, 63. In June of 2023, after Whitehall and Saucon had been in default for nearly two years,

HUD notified them of its intent to sell their mortgages. Compl. ¶¶ 68, 69; Ex. E. On July 28,

2023, HUD published notice in the Federal Register of its intent to sell the mortgages as part of a

Multifamily and Healthcare Loan Sale. Compl. ¶¶ 74, 75; Ex. F (“Notice”). The sale was held by

competitive sealed bids and was conducted pursuant to 12 U.S.C. § 1715z-11a(a). Notice, pp. 2-

3. The Notice states that all mortgagors whose mortgages were being sold were ineligible to bid.

Notice, p. 2.

Windstream Capital won the bid and purchased the mortgages, and on October 5, 2023,

Windstream informed Whitehall and Saucon that it was the new mortgagee and that they had

until October 16, 2023, to pay the mortgages in full. Compl. ¶ 80, Ex. G. Windstream later

assigned both mortgages to Lehigh, which filed the instant actions against Whitehall and Saucon.

On January 30, 2025, Whitehall and Saucon filed a Third-Party Complaint against HUD,

and an Amended Third-Party Complaint on April 3, 2025. In response to the Amended Third-

Party Complaint, HUD filed a motion to dismiss. The Amended Third-Party Complaint contains

the following claims against HUD: 1) HUD violated the notice-and-comment requirements of the

Administrative Procedures Act (“APA”) by not providing adequate notice of the sale of the

mortgages and prohibiting them from commenting in the rule-making process (Count I); 2) HUD

violated the National Housing Act (“NHA”) by excluding Whitehall and Saucon from the

bidding process on the sale of their mortgages (Count II); 3) HUD violated 24 C.F.R. § 290,

Disposition of Multifamily Projects and Sale of HUD-held Multifamily Mortgages, by selling the

mortgages (Count III); 4) HUD violated Whitehall and Saucon’s Fifth Amendment procedural

and substantive due process rights by not allowing them to participate in the bidding process

(Counts IV and V); and 5) HUD violated Whitehall and Saucon’s Fifth Amendment right to

equal protection by treating them differently from similarly situated entities (Count VI). The

Complaint also includes a request for declaratory judgment, vacating the sale of the mortgages

and declaring that HUD may not sell the mortgages without Whitehall and Saucon’s

participation in the bidding process (Count VII), monetary contribution from HUD for any

liability due from Whitehall and Saucon to the current mortgage holder (Count VIII) and

indemnification (Count IX). As I will discuss more fully below, HUD’s motion will be granted,

and the Third-Party Complaint will be dismissed in its entirety.

II. LEGAL STANDARD

Under Fed.R.Civ.P. 12(b)(1), a court must grant a motion to dismiss if it lacks subject-

matter jurisdiction to hear a claim. In evaluating a Rule 12(b)(1) motion, a court must first

determine whether the movant presents a facial or factual attack. Mortensen v. First Fed. Sav. &

Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). In reviewing a facial challenge, which contests the

sufficiency of the pleadings, “the court must only consider the allegations of the complaint and

documents referenced therein and attached thereto, in the light most favorable to the plaintiff.”

Gould Elec. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). In the instant matter, HUD’s

Rule 12(b)(1) motion sets forth a facial attack because it contends that the Amended Third-Party

Complaint lacks sufficient factual allegations to establish an express waiver of sovereign

immunity for any of Whitehall and Saucon’s claims, and therefore, this Court lacks subject

matter jurisdiction. If I find that this Court does not have subject matter jurisdiction over the

case, I must dismiss the entire action. See Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006)

(“[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the court must

dismiss the complaint in its entirety.”)

III. ANALYSIS

First, it is well settled that “the United States, as sovereign, is immune from suit save as it

consents to be sued, and the terms of its consent to be sued in any court define that court’s

jurisdiction to entertain the suit.” United States v. Mitchell, 445 U.S. 535, 538 (1980) (internal

quotations and citations omitted). “A waiver of sovereign immunity cannot be implied but must

be unequivocally expressed.” Id. Any ambiguity as to consent to be sued must be construed

strictly in favor of the sovereign, United States v. Nordic Village, Inc., 503 U.S. 30, 34 (1992).

In the instant matter, HUD argues that the Amended Third-Party Complaint fails to

identify an express waiver of sovereign immunity for any of its claims. HUD Memo in Support

of Motion to Dismiss, Docket No. 83, p. 7 (“HUD Memo”). HUD further argues that despite

citing to 28 U.S.C. §§ 1331, 1343 and 2201 and the Administrative Procedures Act in the

Amended Third-Party Complaint, Whitehall and Saucon do not “cite to an unequivocal waiver of

sovereign immunity for the specific claims they assert against HUD.” HUD Memo, p. 7. In

response, Whitehall and Saucon argue that they did in fact plead a waiver of sovereign immunity

for each specific claim asserted in their Amended Third-Party Complaint.

A. National Housing Act

In their opposition to HUD’s Motion to Dismiss, Whitehall and Saucon first argue that

their Amended Third-Party Complaint identifies an express waiver of sovereign immunity under

the National Housing Act (“NHA”), 12 U.S.C. § 1701 et seq. In response, HUD argues that the

waiver of sovereign immunity found in the NHA does not apply because it disposed of the

properties at issue in this matter pursuant to 12 U.S.C. § 1715z-11a(a), which is outside the scope

of NHA’s waiver.

It is true that the NHA contains a provision that expressly waives HUD’s sovereign

immunity in certain circumstances. 12 U.S.C. § 1702. However, Congress has granted HUD

“flexible authority” in addressing multifamily projects under Section 1715z-11a(a) as follows:

During fiscal year 1997 and fiscal years thereafter, the Secretary may manage and

dispose of multifamily properties owned by the Secretary . . . and multifamily

mortgages held by the Secretary on such terms and conditions as the Secretary

may determine, notwithstanding any other provision of law.

12 U.S.C. § 1715z-11a(a) (emphasis added). HUD argues that section 1715z-11a(a), quoted

above, is not part of the NHA and therefore, the waiver of immunity contained in Section 1702

of the NHA does not apply. In response, Whitehall and Saucon argue that the flexibility statute,

Section 1715z-11a(a), is “textually and structurally part of the NHA and should be treated

accordingly.” Whitehall and Saucon Memo of Law in Opposition to Motion (“Memo in Opp”),

Docket No. 93, p. 7.

Whitehall and Saucon are incorrect, as section 1715z-11a(a), the flexibility statute, is not

part of the NHA. First, it was not enacted as an amendment to the NHA, but rather as part of the

Department of Veterans Affairs and Housing and Urban Development, and Independent

Agencies Appropriations Act of 1997. See Codification to §1715z-11a(a) (“Section was enacted

as part of the Department of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act, 1997, and not as part of the National Housing Act

which comprises this chapter.”) Courts in other jurisdictions have examined this same issue and

found that section 1715z-11a(a) is not part of the NHA and therefore, the NHA’s waiver of

sovereign immunity does not extend to section 1715z-11a(a). See Ku v. United States, 2012 WL

2864509 at *4 (S.D.N.Y. May 4, 2012); Jewish Ctr. for Aged v. HUD, 2007 WL 2121691, at *5

(E.D. Mo July 24, 2007), aff’d on other grounds, 508 F. App’x 14 (2d Cir. 2013).

In their opposition, Whitehall and Saucon state that “most courts find that the flexibility

statute is part of the NHA,” Memo in Opp., p. 7, but do not cite to a single case that supports this

proposition. That is this proposition is incorrect and there are no cases that support it, as the

flexibility statute plainly states that it is not part of the NHA. Therefore, section 1715z-11a(a) is

excluded from the waiver of sovereign immunity found in section 1702 of the NHA and the

Court cannot review HUD’s actions in this matter pursuant to the NHA.

B. Administrative Procedures Act

Next, Whitehall and Saucon argue that their Amended Third-Party Complaint identifies

an express waiver of sovereign immunity under section 702 of the Administrative Procedures

Act, which provides that any “person ... aggrieved by agency action within the meaning of a

relevant statute is entitled to judicial review thereof.” 5 U.S.C. § 702. In response, HUD argues

that there is no waiver under the APA because section 1715z-11a(a), the flexibility statute under

which the mortgages in question were sold, provides HUD with broad discretion and therefore,

judicial review is precluded.

Under the APA, the action of an agency such as HUD is not subject to judicial review

when such action “is committed to agency discretion by law.” 5 U.S.C. § 701(a)(2); Specter v.

Garrett, 971 F.2d 936, 943 (3d Cir. 1992). This means that a court has no jurisdiction if the

statute or regulation governing the challenged agency action “is drawn so that a court would

have no meaningful standard against which to judge the agency's exercise of discretion.”

Heckler v. Chaney, 470 U.S. 821, 830 (1985) (emphasis in original). Therefore, section 701(a)(2)

requires dismissal when there is “no law to apply.” Citizens to Preserve Overton Park v. Volpe,

401 U.S. 402, 410 (1971).

Before the court may determine that an agency decision is unreviewable under section

701(a)(2), it must examine whether: 1) the action involves broad discretion, not just the limited

discretion inherent in every agency action; 2) the action is the product of political, military,

economic, or managerial choices that are not readily subject to judicial review; and 3) the action

does not involve charges that the agency lacked jurisdiction, that the decision was motivated by

impermissible influences such as bribery or fraud, or that the decision violates a constitutional,

statutory, or regulatory command. Davis Enterprises. v. U.S. E.P.A., 877 F.2d 1181, 1185 (3d

Cir. 1989).

As for whether the decision of HUD to sell Whitehall and Saucon’s mortgages involves

“broad discretion,” I must look to the statute under which the sale of the mortgages was

authorized. A review of the record shows that HUD sold the mortgages in question pursuant to

12 U.S.C. § 1715z-11a(a), titled “Disposition of HUD-owned Properties.” This is evident from

the notice published by HUD in the Federal Register of its intent to sell the mortgages, which

states: “This is a sale of unsubsidized mortgage loans, pursuant to Section 204(a) of the

Department of Veterans Affairs and Housing and Urban Development, and Independent

Agencies Appropriations Act of 1997 (12 U.S.C. § 1715z-11a(a)).” Compl., Ex. F (emphasis

added). Further, section 1715z-11a(a) states that HUD “may manage and dispose of multifamily

properties owned by the Secretary . . . and multifamily mortgages held by the Secretary on such

terms and conditions as the Secretary may determine, notwithstanding any other provision of

law.” 12 U.S.C. § 1715z-11a(a) (emphasis added). Numerous courts have found that the

language contained in this provision, “notwithstanding any other provision of law,” indicates that

Congress granted HUD broad discretion to dispose of these types of mortgages, and that section

1715z-11a(a) overrides any specified, contrary provision of law, including the right to agency

review contained in the APA. Ku, 2012 WL 2864509, at *4 (finding that the “notwithstanding

clause” indicates that section 1715z-11a(a) supersedes any other law that could hinder its

objectives); Massie v. U.S. Dep’t of Hous. & Urb. Dev., 2007 WL 184827, at *3-5 (W.D. Pa.

Jan. 19, 2007), order vacated in part on other grounds on reconsideration, 2007 WL 674597

(W.D. Pa. Mar. 1, 2007) (finding that the “notwithstanding clause” contained in 1715z-11a(a) is

“clear intent by Congress to preempt all other statutes and regulations.”); Jewish Ctr. for Aged,

2007 WL 2121691, at *6 (stating that section 1715z-11a(a) results in HUD being immune from

APA review, as “APA’s waiver would run afoul of the ‘notwithstanding’ clause found in [the

flexibility statute] that supersedes any other statute that hinders or impedes its objectives.”);

EGAE, LLC v. Fudge, 2023 WL 5957144, at * 4, 5 (D. Ala. Sept. 13, 2023) (stating that in

enacting section 1715z-11a(a), Congress chose to include “strong, unambiguous language

making clear that the discretion it accords HUD is not subject to ‘any other provision of law.’”)

As Congress granted HUD broad discretion in 1715z-11a(a), there is no law to apply in

order to determine if HUD’s decision to sell the mortgages in question, as well as the method by

which they were sold, was proper. Whitehall and Saucon cite to 12 U.S.C. § 1701z-11 and 24

C.F.R. §290.35 as potentially providing meaningful standards by which to evaluate HUD’s

actions under section 1715z-11a(a). However, this argument must fail, as section 1715z-11a(a)’s

broad discretion to dispose of these types of mortgages supersedes both section 1701z-11 and 24

C.F.R. 290.35. See Ku, 2021 WL 2864509, at *4 (Section 1715-z11a(a) supersedes 1701z-11);

Massie, 2007 WL 184827, at *3-4; Acorn v. U.S. Dep’t of Hous. & Urb. Dev., 2005 WL

8179274, at *5 (N.D. Ill. Oct. 5, 2005) (stating that 1715z-11a(a) “wipes out ‘any law’ that

would interfere with HUD's discretion to manage and dispose of multifamily properties.”).

Based on all the above, the first factor to consider in determining whether an agency

action is reviewable under the APA shows that HUD has broad discretion to dispose of

mortgages like those involved in the instant matter. This broad discretion is in line with a finding

that HUD’s actions in this matter are not reviewable under the APA. As to the second factor,

HUD argues that whether and on what terms to sell mortgages is an “economic choice that is

‘not readily subject to judicial review.’” HUD Memo, pp. 11-12. I agree with HUD on this

factor, as it is in the best position to determine how mortgages like these should be sold. Lastly,

as to the third factor, Whitehall and Saucon do not allege that HUD lacked jurisdiction over their

mortgages, that the decision to sell them was motivated by impermissible influences such as

bribery or fraud, or that the decision to sell them violates a constitutional, statutory, or regulatory

command. Accordingly, the three factors that I must examine before determining whether

HUD’s action are unreviewable under the APA all come down on the side of unreviewability.

Further, Whitehall and Saucon cited to no authority holding that a statute containing a

“notwithstanding” clause is reviewable under the APA. As a final point, Whitehall and Saucon

present extensive argument claiming that HUD promised them they would be able to bid on the

mortgages during the auction process then excluded them from the sale. However, Whitehall and

Saucon cannot cite to any document that supports this allegation. In fact, a review of the letter

that HUD sent to Whitehall and Saucon informing them that their mortgages were to be sold

stated “[n]either you, nor any of your principals, affiliates, or assigns can purchase the loan or

qualify to bid in the loan sale.” Compl., Ex. E. Further, the Notice published by HUD in the

Federal Register stated that a “mortgagor or healthcare operator, including its principals,

affiliates, family members, and assigns, with respect to one or more of the Mortgage Loans being

offered in the Loan Sale” are “among those INELIGIBLE to bid on the Mortgage Loans being

sold.” Compl., Ex. F, p.2 (capitalization in original). This evidence contradicts Whitehall and

Saucon’s unsubstantiated allegations that they were promised to be able to bid on their own

defaulted mortgages when they were sold.1 Therefore, I find this argument to be unpersuasive.

Lastly, Whitehall and Saucon have failed to allege that any other claim contained in their

Third-Party Amended Complaint contains an express waiver of sovereign immunity that would

allow their claims against HUD to proceed. I find that section 1715z- 11a(a) gave HUD broad

discretion to determine how and when to sell the mortgages in question and under what terms.

1 I must point out the absurdity of this argument. Whitehall and Saucon are basically arguing that they

should be permitted to default on their mortgages for lack of payment, and when HUD sells the

mortgages, they should then be permitted to bid on them in amounts significantly less than their original

debt. Allowing this course of action would result in a windfall for Whitehall and Saucon and should not

be permitted.

Therefore, Whitehall and Saucon cannot prove that there was a waiver of sovereign immunity in

this matter sufficient to establish that I have jurisdiction over the case, and the sale of the

mortgages is not reviewable by this Court.

III. CONCLUSION

For all the reasons set forth above, I will grant HUD’s Motion to Dismiss Whitehall and

Saucon’s Amended Third-Party Complaint. The Amended Third-Party Complaint will be

stricken, and HUD will be dismissed from the instant action. An appropriate order follows.