Englewood Terrace Ltd. Partnership v. United States

86 Fed. Cl. 720, 2009 U.S. Claims LEXIS 90, 2009 WL 969909
CourtUnited States Court of Federal Claims
DecidedApril 7, 2009
DocketNo. 03-2209C
StatusPublished
Cited by6 cases

This text of 86 Fed. Cl. 720 (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, 86 Fed. Cl. 720, 2009 U.S. Claims LEXIS 90, 2009 WL 969909 (uscfc 2009).

Opinion

ORDER

HORN, Judge.

FINDINGS OF FACT

Plaintiff filed a motion to reconsider a decision issued by this court which denied plaintiff a rent increase and denied reimbursement for higher energy costs at a Housing and Urban Development (HUD)subsidized housing facility. See Englewood Terrace Ltd. P’ship v. United States, 84 Fed.Cl. 649 (2008) (Englewood III).1 Plaintiff moves to reconsider only the denial of a rent increase, not the denial of a one-time reimbursement of higher energy costs. The court also issued an earlier opinion which concluded the liability issue of a breach of contract claim in favor of the plaintiff. See Englewood Terrace Ltd. P’ship v. United States, 79 Fed.Cl. 516 (2007) (Englewood II). The extensive findings of fact in the last two decisions issued by the undersigned will not be repeated here, but are incorporated into this order. For convenient reference, the key facts relevant to this opinion are referenced briefly here. Plaintiff Engle-wood alleged that HUD breached a Housing Assistance Payment (HAP) contract between Englewood and HUD. The HAP contract provided for rent subsidies to be used by the tenants of South Pointe Towers (South Pointe), an apartment building in Chicago, Illinois. South Pointe was owned by the Englewood Terrace Limited Partnership. John J. Hayes was the President of P.M. Group, the Englewood Terrace Limited Partnership’s general partner, until December 13, 2002. An entity owned by Mr. Hayes, P.M. One, was the managing agent at South Pointe. On December 13, 2002, DSSA New Englewood Terrace LLC (DSSA), a sole proprietorship of Don S. Samuelson, replaced P.M. Group as Engle-wood’s general partner. Earlier, on December 1, 2001, Mr. Samuelson’s DSSA Management, Inc., which was affiliated with Mr. Samuelson’s DSSA New Englewood Terrace LLC, replaced P.M. One as South Pointe’s managing agent.

Englewood’s complaint stemmed from HUD’s termination of Englewood’s HAP contract with HUD. The HAP contract at South Pointe ended on September 30, 2002, after tenants had been given housing vouchers permitting them to either remain at South Pointe or relocate to other housing facilities. HUD based its termination of the HAP contract on its belief that the tenants were not being provided decent, safe and sanitary housing, as required by the HAP contract.

The specific basis for the termination of the HAP contract was a March 2, 2001 HUD inspection of South Pointe. After a trial in the matter, this court found that HUD’s decision to terminate Englewood appeared to have been made even before HUD received Englewood’s plan to correct deficiencies identified in the March 2, 2001, HUD inspection. The court concluded that Englewood was not afforded a full and meaningful opportunity to cure the deficiencies identified in the March 2, 2001, HUD inspection. The record reflects that, on the one hand, HUD had urged that South Pointe be placed under new management and new ownership, but that, once new management and ownership were in place, there appeared to be a reluctance on the part of HUD to provide a meaningful opportunity for the new management and ownership, in the person of Mr. Samuelson, to take corrective action, or for HUD to even acknowledge any improvement at South Pointe. HUD’s actions and posture thereby undermined its contract termination action against Englewood.

[723]*723After the trial on liability, the court afforded the parties an opportunity to settle any remaining issues, including damages. In addition to the contract termination issue, En-glewood also made a claim for a rent increase at South Pointe. On the rent increase claim, Mr. Samuelson had sent an August 21, 2001 letter to Edward J. Hinsberger, the Director of HUD’s Chicago Multifamily Hub, titled, “Contract Renewal and Budget Based Rent Increase for South Pointe Apartments,” on DSSA Management, Inc. letterhead, indicating that DSSA, Inc., intended to obtain a partnership interest in Englewood, and that DSSA Management, Inc. intended to become the managing agent for South Pointe. Mr. Samuelson’s letter also stated that South Pointe had not had a rent increase since 1998, and requested an increase, with “rent levels increased to market comparables.” Mr. Samuelson’s justification for the rent increase stated:

First, South Pointe is operating in 2001 on a 1998 income schedule. There have been three years without a rental increase. Second, Operations have resulted in deficits of approximately $200K a year in 1999 and 2000. Gas costs have risen dramatically over the past year. While vacancy and collection losses, and legal and security costs can be reduced in the future after the improvement program has been put in place, they will not be able to be reduced meaningfully during the remainder of 2001 and 2002. Third, rent comparables in the neighborhood support an average rental increase of $56 per unit per month. Such an increase would increase income potential by $200K per year, enough to offset the operating deficits that have been experienced in past years.

Mr. Samuelson included a Rent Comparability Study with his request for a rent increase. A September 5, 2001 internal HUD e-mail reflected that a desk review of this Rent Comparability Study for South Pointe was conducted, and that the Study was found to be acceptable. As a result, in a September 6, 2001 e-mail to Mr. Samuelson, titled “South Pointe Comparability Study,” Mr. Hinsberger wrote that the requested rent increase was supported by the rent comparability survey, but that the request needed to be signed by the owner, Mr. Hayes, and resubmitted. Mr. Hayes’ recollection was that he signed a request for the rent increase, however, Mr. Hinsberger stated that HUD never received a rental request signed by Mr. Hayes. Neither party produced a document signed by owner Hayes requesting a rent increase for the court’s review. The court concluded that plaintiff had not demonstrated by a preponderance of the evidence that a request for a rent increase was submitted by Mr. Hayes. See Englewood Terrace Ltd. P’ship v. United States, 84 Fed.Cl. at 653 (Englewood III). The court further concluded that the request for a rent increase signed by Mr. Samuelson was submitted to HUD at a time when Mr. Samuelson was neither the owner nor the manager of South Pointe Towers. Id. No copy of the rent increase request submitted to the court contained a certification signed by Mr. Samuelson, or Mr. Hayes, or anyone else, as to the accuracy of the supporting data. Id. at 653-54. The claim for a rent increase was denied in the court’s earlier opinion. Id. at 654.

Plaintiffs present motion for reconsideration does not address the denial of reimbursement of higher energy costs in Engle-wood III, or the request for a budget-based rent increase signed by Mr. Samuelson, which was dealt with at length in Englewood III. Instead, plaintiff, for the first time, argues an “alternative route,” that is, for a rent increase based on an “operating cost adjustment factor (OCAF).”

DISCUSSION

Rule 59(a)(1) of the Rules of the United States Court of Federal Claims (RCFC) provides that the court may, on motion of either party, reconsider any or all issues previously decided.

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86 Fed. Cl. 720, 2009 U.S. Claims LEXIS 90, 2009 WL 969909, Counsel Stack Legal Research, https://law.counselstack.com/opinion/englewood-terrace-ltd-partnership-v-united-states-uscfc-2009.