United States v. Livecchi
711 F.3d 345
2d Cir.2013Background
- Livecchi and CRL Management owned a HUD-insured multifamily project; HUD foreclosed in 1998 after default.
- Regulatory Agreement required RFR funding and restricted rental-income use; HUD could declare default and foreclose for violations.
- HUD later subpoenaed annual financial statements, which revealed equity skimming by Livecchi.
- Government sued under 12 U.S.C. § 1715z-4a to recover misappropriated income following foreclosure.
- District court granted summary judgment on standing and accrual, and later awarded double damages and prejudgment interest; Livecchi appealed.
- On appeal, the court held the government had standing and the six-year accrual period began upon discovery of the misappropriation in 2000.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing after foreclosure | Livecchi argues HUD foreclosed and no longer has standing. | Livecchi contends HUD’s post-foreclosure action cannot proceed under § 1715z-4a(a). | HUD has standing despite foreclosure. |
| Accrual timing under § 1715z-4a(d) | Livecchi asserts accrual began at mortgage default in 1997. | HUD contends accrual began upon discovery of equity skimming. | Accrual began on discovery date (Aug. 21, 2000); timely filed in 2003. |
| Purpose of equity-skimming remedy vs. foreclosure | Statutory interpretation would bar post-foreclosure recovery. | Statute’s deterrent purpose allows dual remedies of foreclosure and damages. | Statute permits both post-foreclosure assets recovery and double damages. |
Key Cases Cited
- United States v. Shyne, 617 F.3d 103 (2d Cir. 2010) (statutory interpretation and standard de novo review)
- United States v. Domino Sugar Corp., 349 F.3d 84 (2d Cir. 2003) (statutory limitations and government accrual principles)
- Badaracco v. Comm’r of Internal Revenue, 464 U.S. 386 (1984) (strict construction in favor of government with limitations)
- Tomka v. Seiler Corp., 66 F.3d 1295 (2d Cir. 1995) (statutory interpretation and avoidance of absurd results)
- New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir. 1985) (avoidance of interpretations that frustrate statute goals)
- United States v. Cofield, 215 F.3d 164 (1st Cir. 2000) (equity-skimming deterrent statute purpose)
- United States v. Envicon Dev. Corp., 153 F. Supp. 2d 114 (D. Conn. 2001) (definition of discovery date for accrual)
- United States v. Winthrop Towers, 628 F.2d 1028 (7th Cir. 1980) (HUD foreclosure priorities and asset preservation)
- United States v. Ret. Servs. Grp., 302 F.3d 425 (5th Cir. 2002) (precedent on accrual and equity-skimming actions)