failure to supervise does not constitute an affirmative defense
to this action. See fn. 3, supra at p. 9. Anderson's third
affirmative defense, therefore, does not bar summary judgment.
D. Anderson's Counterclaim.
Finally, Anderson has raised the counterclaim that HUD violated
its "Rehabilitation Financing Handbook" when it failed to
monitor, supervise and inspect the rehabilitation project.
Defendant contends that as a result of HUD's violation of its
duty to monitor, supervise and inspect the project, she
suffered "great humiliation, embarrassment, the loss of
personal financial resources and incurrence of debt. . . ."
As noted by the Seventh Circuit in Burroughs v. Hills,
741 F.2d 1525 (7th Cir. 1984), "Uncertainty often exists whether a
handbook is meant to be, or is inadvertently made to be, an
independent source of legal rights or claims against the United
States Government and its officials." Id. at 1529. The
Seventh Circuit held that HUD's "Property Disposition Handbook"
had no binding force but was entitled to notice to the extent
that it was an official interpretation of statutes or
regulations with which it did not conflict. Id. In denying
plaintiffs any cause of action under the HUD handbook, the
Court noted that "[e]fforts to enforce implied causes of action
under the National Housing Legislation or the HUD Handbook,
have frequently come under consideration of appellate courts,
and have always failed." Id. at 1532.
The government concedes that the Handbook's procedures called
for HUD inspections of the construction work, instead of or in
addition to inspections by the Village (which were carried
out). The government contends, however, first that the HUD
handbook conferred no legal rights upon Anderson entitling her
to sue for a violation thereof; and second, even if it did
confer legal rights, Anderson has not established that she
suffered any injury by reason of HUD's failure to supervise and
inspect the rehabilitation project.
HUD's Rehabilitation Handbook, like the Property Distribution
Handbook at issue in Burroughs, appears to have been drafted
for the internal use of HUD and the local public agencies
assisting HUD in the administration of the Section 312 loan
program. In particular, HUD's duty to inspect under Chapter 20
of the Handbook was designed to protect HUD, not the borrower,
from payments for unsatisfactory work on a project. The Court
holds, therefore, that the Rehabilitation Handbook did not
confer any legal rights upon Anderson upon which she can base a
cause of action against HUD.
Since this holding disposes of the counterclaim against HUD,
the Court need not decide whether Anderson suffered injury by
reason of HUD's alleged failure to inspect and supervise. The
Court notes, however, that the record is bereft of any evidence
of emotional distress suffered by Anderson as a result of HUD's
alleged failure to inspect or supervise. No evidence has been
presented to show that an inspection by HUD would have
benefitted the project. In fact, an inspection eventually
carried out by HUD at Anderson's request failed to reveal a
single instance in which a contractor was paid improperly, or
work was performed unsatisfactorily, or an inspection by
Village officials was deficient.
In sum, Anderson's affirmative defenses and counterclaim must
be dismissed and summary judgment in favor of the United States
For the reasons set forth herein, Intervenors' and the United
States' motions for summary judgment are GRANTED.