Park Properties Associates, L.P. v. United States

82 Fed. Cl. 162, 2008 U.S. Claims LEXIS 139, 2008 WL 2221827
CourtUnited States Court of Federal Claims
DecidedMay 23, 2008
DocketNo. 04-1757C
StatusPublished
Cited by17 cases

This text of 82 Fed. Cl. 162 (Park Properties Associates, L.P. 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
Park Properties Associates, L.P. v. United States, 82 Fed. Cl. 162, 2008 U.S. Claims LEXIS 139, 2008 WL 2221827 (uscfc 2008).

Opinion

OPINION

ALLEGRA, Judge.

“[N]o man may take advantage of his own wrong.”1

This contract case is before the court on the parties’ cross-motions for partial summary judgment. Plaintiffs entered into rent subsidy agreements with the United States Department of Housing and Urban Development (HUD), known as “Housing Assistance Payment” (HAP) contracts. Relying on Cuyahoga Metro. Hous. Auth. v. United States, 57 Fed.Cl. 751 (2003) (Cuyahoga I), this court previously determined that defendant repudiated those contracts in 1994, when Congress amended the controlling statute to alter the way in which rent increases were to be determined. Park Properties Assocs., L.P. v. United States, 74 Fed.Cl. [164]*164264, 265-66 (2006) (Park Properties I). At issue now is whether, if at all, a limitations provision in the HAP contracts affects the amount of damages recoverable in this case. See No. 04-1757C, Order of December 19, 2006.

I. BACKGROUND

A detailed recitation of this case may be found in this court’s prior opinion. Park Properties I, 74 Fed.Cl. at 266-70.2 The court will rehearse here only those details necessary to provide context, filling in a few additional facts as necessary.

In 1974, Congress amended the Housing Act of 1937 (Housing Act) to create what is known as the Section 8 housing program. See 42 U.S.C. § 1437f. Under the program, tenants make rental payments based upon their income and ability to pay; HUD makes “assistance payments” to the private landlords to make up the difference between the tenant’s contribution and a “contract rent” agreed upon by the landlord and HUD. 42 U.S.C. §§ 1437a(a), 1437f(c)(3); see also Nat’l Leased Hous. Ass’n v. United States, 105 F.3d 1423, 1425 (Fed.Cir.1997) (describing the program); Cuyahoga I, 57 Fed.Cl. at 753-55 (same). In 1978 and 1980, three transactions occurred between plaintiffs (or their predecessors in interest) and HUD:

• On September 27, 1978, Jerome Z. Ginsburg d/b/a “Park Property Associates” and HUD entered into a HAP Contract for Lamartine Terrace (the Lamartine HAP Contract). The effective date of the Lamartine HAP Contract is June 1, 1979. On July 1, 1996, Park Property Associates’ interest in this contract was transferred to Park Properties Associates, L.P., a plaintiff in this case.

• On September 27, 1978, Jerome Z. Ginsburg d/b/a “Valentine Property Associates” and HUD entered into a HAP contract for Valentine’s Lane Hill Apartments (the Lane Hill HAP Contract). The Lane Hill HAP contract was executed in two stages: (i) stage 1 became effective on January 2, 1980; and (ii) stage 2 became effective on February 19, 1980. On July 1, 1996, Valentine Property Associates’ interest in this contract was transferred to Valentine Associates, L.P., a plaintiff in this case.

• On September 29, 1980, St. John’s I Associates, L.P. (St. John’s), also a plaintiff herein, and HUD entered into a HAP contract for St. John’s Phase I (the St. John’s HAP Contract). The St. John’s HAP Contract was executed in three stages: (i) stage 1 became effective on July 1,1982; (ii) stage 2 became effective on September 22, 1982; and (iii) stage 3 became effective on December 15, 1982.

The framework for these contracts is governed, in part, by 42 U.S.C. § 1437f(c)(1), under which an initial, maximum monthly contract rent was established for each dwelling unit.3 As originally enacted, 42 U.S.C. § 1437f(e)(2) provided for adjustments in this maximum monthly rent thusly—

(A) The assistance contract shall provide for adjustment annually or more frequently in the maximum monthly rents for units covered by the contract to reflect changes in the fair market rentals established in the housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula.
(C) Adjustments in the maximum rents under subparagraphs (A) and (B) shall not result in material differences between the rents charged for assisted units and comparable unassisted units, ... as determined by the Secretary.

42 U.S.C. § 1437f(c)(2)(A) and (C) (1982). The HAP contracts in question implemented these provisions by providing that adjustment of rents would be made annually on the [165]*165basis of a reasonable formula, subject to an “overall limitation” designed to prevent adjustments from producing material differences between the rents for comparable assisted and unassisted units.

The annual adjustment was implemented through Section 1.8b (“Automatic Annual Adjustments”) of the HAP contracts, which, with minor irrelevant variations in the subject contracts, provided, in pertinent part—

(1) Automatic Annual Adjustment Factors will be determined by the Government at least annually; interim revisions may be made as market conditions warrant. Such Factors and the basis for their determination will be published in the Federal Regis-ter____

(2) On each anniversary date of the Contract, the Contract Rents shall be adjusted by applying the applicable Automatic Annual Adjustment Factor most recently published by the Government. Contract Rents may be adjusted upward or downward, as may be appropriate; however, in no case shall the adjusted Contract Rents be less than the Contract Rents on the effective date of the Contract.

Consistent with 42 U.S.C. § 1437f(c)(2)(C), the HAP contracts also contained, in Section 1.8d, an “Overall Limitation,” that stated:

Notwithstanding any other provisions of this Contract, adjustments as provided in this Section shall not result in material differences between the rents charged for assisted and comparable unassisted units, as determined by the Government; provided, that this limitation shall not be construed to prohibit differences in rents between assisted and comparable unassisted units to the extent that such differences may have existed with respect to the initial Contract Rents.

HUD regulations in effect at the time the contracts in question were executed mirrored these requirements. See 24 C.F.R. § 881.110(d) (1979).

In the early 1980s, HUD began using “comparability studies”—surveys of rents at comparable unassisted buildings—to enforce the “overall limitation” in its various HAP contracts. This practice was challenged in court as violating the contracts. Attempting to resolve this controversy, Congress, in 1987, added the following sentence to section 1437f(c)(2)(C): “If the Secretary ...

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Cite This Page — Counsel Stack

Bluebook (online)
82 Fed. Cl. 162, 2008 U.S. Claims LEXIS 139, 2008 WL 2221827, Counsel Stack Legal Research, https://law.counselstack.com/opinion/park-properties-associates-lp-v-united-states-uscfc-2008.