Englewood Terrace Ltd. Partnership v. United States

61 Fed. Cl. 583, 2004 U.S. Claims LEXIS 217, 2004 WL 1869647
CourtUnited States Court of Federal Claims
DecidedAugust 10, 2004
DocketNo. 03-2209C
StatusPublished
Cited by22 cases

This text of 61 Fed. Cl. 583 (Englewood Terrace Ltd. Partnership v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Englewood Terrace Ltd. Partnership v. United States, 61 Fed. Cl. 583, 2004 U.S. Claims LEXIS 217, 2004 WL 1869647 (uscfc 2004).

Opinion

OPINION AND ORDER

WOLSKI, Judge.

Defendant has moved for a dismissal of this ease under Rule 12(b)(1) of the Rules of the United States Court of Federal Claims, arguing that this Court lacks subject matter jurisdiction. At issue is whether provisions of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (“MAHRA”), which preclude judicial review of certain decisions by the United States Department of Housing and Urban Development (“HUD”), insulate defendant from claims for breach of a contract entered into under MAHRA. The Court concludes that they do not.

[584]*584BACKGROUND

When ruling on a motion to dismiss, the Court will normally accept as true all factual allegations made by the pleader and draw all reasonable inferences in a light most favorable to that party. Scheuer v. Rhodes, 416 U. S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d, 90 (1974). If a motion for dismissal due to lack of subject matter jurisdiction is based on disputed facts bearing on the issue of jurisdiction, however, evidence beyond the pleadings may be considered and the plaintiff must demonstrate jurisdiction by a preponderance of the evidence. Reynolds v. Army & Air Force Exchange Service, 846 F.2d 746, 747-48 (Fed.Cir.1988). Disputed jurisdictional facts are not at issue here, as defendant United States makes a purely legal argument against this Court’s jurisdiction, and thus the facts recited below are as pled in the complaint.1

Plaintiff Englewood Terrace, L.P. (“Englewood”), is the owner of South Pointe Towers, a 303-unit apartment budding located in Chicago, Illinois. In return for providing housing for low income families, Englewood had, since at least 1992, received subsidies from HUD under a series of Housing Assistance Payments (“HAP”) contracts. These HAP contracts were initially entered into pursuant to HUD’s authority under Section 8 of the United States Housing Act of 1937, 42 U.S.C. § 1437 et seq. After the enactment of MAHRA in 1997, HAP contracts and contract renewals were executed under that authority, as well. See MAHRA, Pub.L. 105-65, Title V, Subtitle A, 111 Stat. 1384-1409 (as amended at 42 U.S.C. § 1437f(note) (2000)); Exs. C, D to Complaint.

In October, 2000, HUD and Englewood signed a HAP renewal contract that was to “run for an initial 1 Year period,” beginning October 1, 2000. The contract expressly provided that, “[ajfter expiration of the initial term, this Contract shall renew automatically for 3 additional one-year terms, subject to the availability of appropriations in any year.” Ex D to Complaint, ¶ 2 (italics added). The contract stated that it was entered into pursuant to section 524(a) of MAHRA, and that rent adjustments “shall be determined in accordance with section 524(c) of MAHRA.” Id. and ¶ 5. An addendum provided that “[i]f HUD notifies the Owner that it has failed to maintain a dwelling unit in decent, safe, and sanitary conditions and the Owner fails to take corrective action within the time prescribed in the notice,” then HUD might reduce or suspend the housing assistance payments, and might use the abated payments “for the purpose of rehousing” families. Ex D to Complaint. A second page of the addendum included the following:

Owner agrees as a condition of renewing the Section 8 Contract that, in the event HUD’s Real Estate Assessment Center (REAC) issues a physical inspection report to the Owner that has a score which evidences Owner failure to comply with HUD’s Uniform Physical Condition Standards and Physical Inspection Requirement ... HUD may terminate the Contract after the renewal providing the Owner a reasonable period, as determined by HUD, to correct deficiencies or if the Owner fails to perform under an approved Correction Action Plan to Repair. Notwithstanding the foregoing, HUD may, at its option, continue the contract or renew said contract to facilitate the provision of vouchers for such reasonable time (not to exceed 180 days) as may be necessary to relocate eligible residents ...

Id.2

A REAC inspection of South Pointe Towers was conducted on March 2, 2001, and on March 8, 2001, a REAC physical inspection report was issued to Englewood. Ex F to Complaint. This report identified a number of deficiencies found in common areas and in 25 randomly-sampled units, including the lack of safety inspection certificates, a [585]*585blocked emergency exit, exposed wires, missing covers to electrical outlets, damaged kitchen stoves, plumbing problems, damaged walls, and the presence of cockroaches. Because of a low score on the inspection, Englewood was given “30 days in which to submit a Proposed Plan of Correction,” which required that Englewood “conduct a survey of [its] property to determine if any additional deficiencies exist.” Id. Englewood responded with two letters, dated April 5 and April 8, 2001, purporting to provide the requested information. See Exs. G, H to Complaint.3

On April 9, 2001, HUD sent “formal notice” by letter to Englewood declaring the HAP contract to be in default for “failure to keep and maintain the Project in a decent, safe, and sanitary condition,” and giving Englewood another thirty days to correct the problems. Ex I to Complaint. This letter did not mention Englewood’s letters dated April 5 and 8, but did mention a different letter dated March 16, as well as HUD’s April 3, 2001 rejection of an Englewood application for federal insurance for a proposed rehabilitation loan. Id.; see also Complaint ¶ 33; Ex. J to Complaint. This April 3, 2001 letter listed eighteen reasons for rejecting the application, including the concern that the loan Englewood sought was not large enough to pay for all of the repair work needed. Ex J to Complaint. In this regard, HUD noted that deficiencies were uncovered in an April 28, 1999, REAC inspection, and in an inspection conducted on March 22 and 23, 2001, by a HUD construction analyst. Id.

Representatives of Englewood and HUD met on April 13, 2001, to discuss their differences in opinion concerning the scope of the rehabilitation work to be done at South Pointe Towers. Englewood sought a loan for $3.4 million to make what it described to be “some large scale capital improvements related to the roof, the exterior, mechanical systems and other ‘capital’ upgrades,” none of which related to the deficiencies identified in the REAC report. Complaint ¶ 36-38. HUD wanted Englewood to borrow $6.2 million to be used for “the complete replacement of the floors, cabinets, appliances and fixtures in the kitchens and baths, air conditioning and electrical upgrades, the complete repainting of all interior spaces,” and new security and safety systems. Id. At this meeting, HUD allegedly “refused to let Englewood explain its analysis and reasoning.” Complaint ¶ 38.

In a letter dated May 15, 2001, HUD informed Englewood that the latter’s response to the March 8 REAC report “will not be accepted due to impending negotiations with HUD ... concerning [Englewood’s] proposed refinance and substantial rehabilitation of the property.” Ex.

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Bluebook (online)
61 Fed. Cl. 583, 2004 U.S. Claims LEXIS 217, 2004 WL 1869647, Counsel Stack Legal Research, https://law.counselstack.com/opinion/englewood-terrace-ltd-partnership-v-united-states-uscfc-2004.