Parkwood Associates Ltd. Partnership v. United States

97 Fed. Cl. 809, 2011 U.S. Claims LEXIS 540, 2011 WL 1338189
CourtUnited States Court of Federal Claims
DecidedApril 8, 2011
DocketNo. 07-742C
StatusPublished
Cited by19 cases

This text of 97 Fed. Cl. 809 (Parkwood Associates 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
Parkwood Associates Ltd. Partnership v. United States, 97 Fed. Cl. 809, 2011 U.S. Claims LEXIS 540, 2011 WL 1338189 (uscfc 2011).

Opinion

OPINION

ALLEGRA, Judge:

This action, which is before the court on defendant’s motion for summary judgment and plaintiffs cross-motion for partial summary judgment, has its genesis in a loan agreement between Parkwood Associates Limited Partnership (plaintiff) and the Farmers Home Administration (FmHA) to establish low income rural housing projects pursuant to section 515 of the Federal Housing Act. This agreement permitted prepayment of the mortgage balance at any time. In 1987, Congress enacted a statute that repudiated this prepayment provision. Notwithstanding, in 1992, plaintiff twice requested that it be allowed to prepay its loan. The FmHA essentially did not respond to these requests and plaintiff allowed the matter to drop. In 2003, plaintiff again sought to prepay its loan. This time the FmHA eventually permitted it to do so, but only after plaintiff agreed to limit its future rent charges under a new extended agreement. In 2007, plaintiff sued, claiming that the conditions imposed upon its prepayment breached its original loan agreement or, alternatively, effectuated a taking.

Defendant argues that this complaint is untimely, asserting that, under the statute of limitations provisions of 28 U.S.C. § 2501, plaintifPs claims accrued in 1992, the year plaintiff first made its prepayment requests. Not so, plaintiff responds in its cross-motion, asserting that not only is its complaint time-N, but that it is entitled to a finding, as a matter of law, that defendant is liable. As will be seen, binding precedent dictates a ruling in defendant’s favor.

I. BACKGROUND

While this case has a long history, only a few facts are needed to provide the necessary context for this motion.

On March 22, 1978, plaintiff entered into a loan contract with the FmHA, pursuant to sections 515 and 521 of the National Housing Act of 1949, as amended, 42 U.S.C. § 1485 (the 515 Program), to build the Parkwood Apartments (Parkwood) in Burlington, Washington. Under the 515 Program, the FmHA made loans to private entities to develop or construct rural housing for elderly and low-income tenants.1 To receive a loan under the 515 Program, a borrower was required, inter alia, to execute a loan agreement, a promissory note, and a mortgage or deed of trust. FmHA loaned plaintiff $567,900 at an interest rate of 8.25 percent, to be paid over a period of fifty years. The promissory note executed by plaintiff contained the following provision: “Prepayments of scheduled installments, or any portion thereof, may be made at any time at the option of Borrower.” Under the relevant FmHA regulations, to exercise this prepayment option, the borrower was obliged to submit a comprehensive set of documents at least 180 days in advance of the anticipated prepayment date. See 7 C.F.R. § 1965.90(a)(2)© (1988).

Over time, the number of 515 Program borrowers prepaying their mortgages outpaced the number of new entrants into the program, causing the supply of low-income rural housing to dwindle. In 1988, Congress enacted the Emergency Low Income Housing Preservation Act (ELIHPA), Pub.L. No. 100-242,101 Stat. 1877 (codified at 42 U.S.C. § 1472), which restricted the prepayment of section 515 mortgages that were entered before December 21, 1979. “Before accepting [812]*812any offer to prepay” such mortgages, FmHA was required to “make reasonable efforts to enter into an agreement with the borrower under which the borrower will make a binding commitment to extend the low income use of the assisted housing.” 42 U.S.C. § 1472(c)(4)(A). FmHA was authorized to offer various incentives such as additional rental assistance, an increase in returns to the owner, and equity loans. 42 U.S.C. § 1472(c)(4)(B); see also Franconia, 61 Fed.Cl. at 723.

On August 3, 1992, plaintiff sent defendant a group of documents together with a letter entitled “PREPAYMENT PACKAGE.” The letter stated that the submission “represents [plaintiffs] formal request to prepay Park-wood Associates, RRH #515 Plan II RA loan on February 3, 1993,” and contained “a completed prepayment request ... for [FmHA’s] review and approval.” This prepayment package appears to have included all the documentation required by the relevant regulations. In an August 27, 1992, letter, defendant explained that the processing of plaintiffs package had been delayed due to the potential unavailability of the project files and reassured plaintiff that defendant “will respond to your ... loan prepayment applications.” On September 2, 1992, plaintiff resubmitted “the pre-payment package for Parkwood Associates.” Defendant did not respond to these submissions. Yet, Parkwood continued to operate under the 515 Program.

On May 29, 2003, plaintiff again applied to prepay its 515 Program loan, and on July 29, 2003, defendant notified plaintiff that it had processed the application. Pursuant to EL-IHPA, on July 31,2003, defendant sent plaintiff a letter asking whether it was amenable to receiving incentives in lieu of prepayment. After plaintiff responded positively to this letter, defendant, on November 25, 2003, offered plaintiff an equity loan and additional rental assistance if plaintiff would agree to a “restrictive use agreement” that would “obligate [plaintiff] ... to restrict ] the use of the project to very-low, low, and moderate income tenants for a period of 20 years from the date the incentives are closed.” On December 18, 2003, plaintiff agreed to “continue the pre-pay and accept [FmHA’s] incentives.”

A year and a half passed. Defendant then notified plaintiff that it lacked the appropriated funds to provide the promised loan and additional rental assistance. On August 4, 2005, plaintiff withdrew its acceptance of these incentives and renewed its demand to prepay its loan. In an October 18, 2005, letter, defendant advised that because plaintiff had rejected the incentive agreement, if “prepayment will not have an adverse effect on housing opportunities ... but there is not an adequate supply ... of rental housing ..., the loan may be prepaid only if the borrower agrees to sign restrictive-use provisions, as determined by the Agency, to protect tenants at the time of prepayment.” Defendant subsequently determined that “the availability of units is severely limited” and that “[Mousing to minorities would be materially affected” by prepayment. On August 10, 2006, plaintiff signed “The Last Existing Tenant Restrictive-Use Provision and Agreement” (restrictive use agreement) as a condition to prepayment. The restrictive use agreement required plaintiff to permit tenants to continue paying rent at the existing rate and offer lease renewals at a basic rent amount approved by defendant.

On December 11, 2006, plaintiff paid the $277,164.64 balance on its 515 Program promissory note in full. On January 25, 2007, defendant executed a “Conditional Deed of Reconveyance” “subject to the restrictive use agreement,” and, on February 2, 2007, defendant terminated its rent subsidy contract with plaintiff.

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Cite This Page — Counsel Stack

Bluebook (online)
97 Fed. Cl. 809, 2011 U.S. Claims LEXIS 540, 2011 WL 1338189, Counsel Stack Legal Research, https://law.counselstack.com/opinion/parkwood-associates-ltd-partnership-v-united-states-uscfc-2011.