Englewood Terrace Ltd. Partnership v. United States

96 Fed. Cl. 614, 2011 U.S. Claims LEXIS 22, 2011 WL 292022
CourtUnited States Court of Federal Claims
DecidedJanuary 24, 2011
DocketNo. 03-2209C
StatusPublished
Cited by2 cases

This text of 96 Fed. Cl. 614 (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, 96 Fed. Cl. 614, 2011 U.S. Claims LEXIS 22, 2011 WL 292022 (uscfc 2011).

Opinion

ORDER

HORN, Judge.

FINDINGS OF FACT

Judgment was entered in the above captioned case on August 4, 2010 after extended pre-trial and trial proceedings, post-trial briefings by the parties, and many requests for extensions of time. Now, after judgment, plaintiff filed a post-judgment motion for “limited supplemental discovery.” Three days later, plaintiff filed a second motion to alter or amend the judgment of the court. Defendant objects to both motions. The parties have fully briefed both motions.

[616]*616The court has issued multiple previous opinions in this case. The first opinion in the ease was issued by Judge Victor J. Wolski, the original Judge assigned to the case. See Englewood Terrace Limited P’ship v. United States, 61 Fed.Cl. 583 (2004) (Englewood I). Subsequently, the case was re-assigned to the undersigned Judge. An earlier opinion issued by the court found that the United States had breached the plaintiffs 2000 Housing Assistance Payment (HAP) contract. See Englewood Terrace Ltd. P’ship v. United States, 79 Fed.Cl. 516 (2007) (Englewood II). This court also previously determined that plaintiff was not entitled to an energy reimbursement or a budget-based rent increase. See Englewood Terrace Ltd. P’ship v. United States, 84 Fed.Cl. 649 (2008) (Englewood III). The court further found that plaintiff could not offer a new theory of recovery to request an Operating Cost Adjustment Factor (OCAF) rent increase on a motion to reconsider, after trial, and after the court had issued an opinion denying plaintiffs budget-based rent increase claim. See Englewood Terrace Ltd. P’ship v. United States, 86 Fed.Cl. 720 (2009) (Englewood IV). In its most recent opinion on damages, the court denied plaintiffs claim for lost equity damages, but awarded plaintiff $3,272,217.00 for HAP contract damages. See Englewood Terrace Ltd. P’ship v. United States, 94 Fed.Cl. 116 (2010) (Englewood V). This Order becomes Englewood VI. The extensive findings of fact in the court’s earlier opinions will not be repeated here, but are incorporated into this Order. A brief recapitulation of relevant facts specifically related to the issues addressed in this Order is repeated below for ease of reference.

Englewood alleged, and the court agreed, that the United States Department of Housing and Urban Development (HUD) had breached a HAP contract between Engle-wood and HUD. The HAP contract provided for rent subsidies to be used by the tenants of South Pointe Towers (South Pointe), a high-rise apartment building in Chicago, Illinois. South Pointe was owned by Engle-wood 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. 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 Donald 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, replaced P.M. One as South Pointe’s managing agent.

The HAP contract at issue was executed in October 2000 and called for a one year term, followed by three, automatic, one year renewals, which would have continued the contract through September 2004. In December 2000, HUD unilaterally amended the contract into one consisting of a series of short term agreements with no automatic renewals. The short term agreements permanently ended in September 2002. The court held that HUD “should be held to the terms of the original HAP contract it made in October, 2000.” Englewood II, 79 Fed.Cl. at 535.

On October 1, 2001, Edward Hinsberger, Director of the Chicago Office of Multifamily Housing for HUD, sent an email to Mr. Hayes and Mi-. Samuelson stating that “[t]he [Chicago] Housing Authority has advised us that they will begin issuing vouchers for the residents at South Pointe today.... As a result, the See. 8 [HAP] contract will be terminated once all of the residents receive their vouchers.” Mr. Hinsberger testified at trial that he had told residents on October 1, 2001 that they would be receiving vouchers and “wasn’t about to ... turn around and say never mind, you’re not going to get them.” Mi-. Hinsberger also indicated at trial that vouchers did not begin to issue until June of 2002.

On November 30, 2001, HUD issued to Englewood a “Notice of Abatement and Termination” stating that HUD planned to phase out its HAP contract in stages, as it issued Chicago Housing Authority (CHAC) vouchers to tenants. Issuing the CHAC vouchers took longer than HUD originally intended, so HUD proceeded to extend the plaintiffs HAP contract for short term renewal periods, the last of which expired on September 30, 2002. HUD also informed [617]*617Englewood that the contract would officially end when CHAC vouchers were distributed to all the tenants, which was determined by the court to have happened by July 2002. Id. at 518, 522.

The occupancy rate at South Pointe began to decline in the spring of 2002. It dropped below 85% in April 2002 and below 70% by June 2002. It continued to decrease steadily through October 2002, the month following the expiration of the HAP contract, when the occupancy rate dwindled to 35%. HUD phased out the HAP contract in stages. HUD would permanently cease to pay a HAP subsidy for a specific unit whenever its tenant used the CHAC voucher, either to leave, or, if the unit was acceptable, to remain at South Pointe.2 HUD also permanently stopped HAP payments when a unit that had received the subsidy became vacant for any other reason. During this time, the costs to run South Pointe remained constant for Englewood, and Englewood continued to pay high interest payments on its loan from Community Investment Corporation (CIC).

The HAP contract at South Pointe ended on September 30, 2002, after the final short term agreement expired and all tenants had been given housing vouchers, permitting them to either remain at South Pointe or to relocate to other housing with their vouchers. HUD based its termination of the HAP contract on its finding that Englewood had not provided decent, safe and sanitary housing to tenants, as required by the terms of the HAP contract. The specific basis for the termination of the HAP contract cited by HUD was a March 2, 2001, Real Estate Assessment Center (REAC) inspection of South Pointe. After trial, this court found that HUD’s decision to terminate Englewood’s HAP contract was made even before HUD received Englewood’s plan to correct deficiencies, identified in the March 2, 2001 REAC inspection. The court concluded that Englewood was not afforded a full and meaningful opportunity to cure the deficiencies, identified in the March 2, 2001 REAC inspection. The record reflects that, although HUD had urged that South Pointe be placed under new ownership and management, under someone other than Mr. Hayes, once new ownership and management were in place, there appeared to be a reluctance on the part of HUD to provide a meaningful opportunity for the new ownership and management, under Mr. Samuelson, to take corrective action, or for HUD to acknowledge any improvements at South Pointe. HUD’s posture thereby undermined its contract termination action against Englewood.

In January 2002, Englewood defaulted on its CIC loan. CIC filed a foreclosure action, which was voluntarily withdrawn in March 2002, and then reinstated in May 2002.

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Bluebook (online)
96 Fed. Cl. 614, 2011 U.S. Claims LEXIS 22, 2011 WL 292022, Counsel Stack Legal Research, https://law.counselstack.com/opinion/englewood-terrace-ltd-partnership-v-united-states-uscfc-2011.