Prevado Village Partnership v. United States

31 Cont. Cas. Fed. 71,398, 3 Cl. Ct. 219, 1983 U.S. Claims LEXIS 1647
CourtUnited States Court of Claims
DecidedAugust 22, 1983
DocketNo. 156-82C
StatusPublished
Cited by30 cases

This text of 31 Cont. Cas. Fed. 71,398 (Prevado Village Partnership v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prevado Village Partnership v. United States, 31 Cont. Cas. Fed. 71,398, 3 Cl. Ct. 219, 1983 U.S. Claims LEXIS 1647 (cc 1983).

Opinion

OPINION

LYDON, Judge:

In its complaint, plaintiff, a partnership, seeks damages for breach by defendant, acting through the Department of Housing and Urban Development (HUD), of an alleged implied-in-fact agreement to award plaintiff a construction contract under the Section 8 New Construction Program, which began as part of the 1974 general revision of the Housing Act of 1937, 42 U.S.C. § 1437f (1976). Plaintiff further claims that HUD violated its own regulations, which not only constituted a breach of this implied-in-fact contract, but also resulted in a violation of plaintiff’s Fifth Amendment rights to due process of law. Defendant has moved for summary judgment on the matter. Plaintiff opposes said motion and has filed a cross-motion for summary judgment. Both parties maintain there is no genuine issue of material fact. After oral argument and consideration of the positions and submissions of the parties, it is concluded that defendant’s motion for summary judgment should be granted.

I.

The Section 8 New Construction Program (Section 8 program) was designed to aid lower-income families in obtaining a decent place to live and to promote economically mixed housing by providing financial subsidies to promote developers. 42 U.S.C. § 1437f(a) (1976).

The Section 8 program, as implemented by appropriate regulations, consists of an application-review-negotiation process which may or may not culminate in a construction contract between a developer and HUD. Following a notice that funds are available for construction, 24 C.F.R. § 880.-[221]*221203 (1979), one or more “Preliminary Proposals” are submitted to HUD by interested developers describing pertinent features of their proposed construction, such as proposed location, title to property, size, intended rent by unit, and type of financing. Id. at § 880.205. After evaluating Preliminary Proposals on the basis of various factors, id. at § 880.208(e)(3), a HUD field office may approve one or more of the Proposals. Id. at § 880.208(e)(6). The developer is notified of its selection and advised of the various requirements and special conditions which must be met, e.g., acceptable contract rental rates. Id. at § 880.208(h). A developer may seek reconsideration of any HUD modification. Id. at § 880.208(h). An approved developer is then requested to submit a “Pinal Proposal” meeting the requirements of § 880.209. The required contents of a “Final Proposal,” though similar to the required contents of a Preliminary Proposal,1 are nonetheless different in that the requirements for a Final Proposal may be more extensive and particular in certain respects. See e.g., id. at § 880.209(2), (7), (10), (11), and (14).

After evaluating a Final Proposal, HUD notifies the interested developer whether its Final Proposal was approved, conditionally approved, or not approved. Each Final Proposal is then reviewed by HUD for technical feasibility and soundness. 24 C.F.R. §§ 880.209, 880.210 (1979). Upon a developer’s acceptance of the notification of approval of the Final Proposal, the developer must submit to HUD an architect’s certification in the prescribed form “[bjefore an Agreement may be entered into * * * ” by the parties. Id. at § 880.211(b). Finally, following receipt of the developer’s accepted notification, the architect’s certification and the working drawings and specifications, the HUD field office prepares the project “Agreement”, for execution. Id. at § 880.214. It is at this stage that a binding express construction contract between the parties comes into being. Thereafter, actual construction begins.

In this case, the HUD Birmingham Area Office (Area Office) on or about July 28, 1978, issued a notice, in a newspaper of general circulation, that invited Preliminary Proposals for construction of 125 units of elderly housing to be built under HUD’s Section 8 program in Birmingham, Alabama. Plaintiff, one of 21 developers who responded to this notice, submitted its Preliminary Proposal on August 28, 1978. Upon review of plaintiff’s submission, the Area Office notified plaintiff on September 27, 1978 that its Preliminary Proposal had been approved. The Area Office advised plaintiff, inter alia, that:

Subject to the fulfillment of all administrative and statutory requirements, an Agreement to Enter Into Housing Assistant Payments contract will be prepared and executed for the number and size of units described below * * *.

The letter of September 27, 1978, also informed plaintiff that contract rental rates acceptable to HUD were lower than those proposed by plaintiff, and that the maximum HUD mortgage insurance was $2,805,-000, substantially less than the $3,616,000 of HUD insurance which plaintiff sought in its Preliminary Proposal. Furthermore, the letter listed additional special conditions or requirements to be met.

By letter dated October 6, 1978, plaintiff conditionally accepted HUD’s approval of its Preliminary Proposal. Plaintiff’s approval was conditional because of the difference between HUD’s maximum amount of mortgage insurance and plaintiff’s requested amount. The October 6th letter also indicated that the parties’ differences in mortgage projections were the result of differences in annual operating expense projections. The operating expense projections were generally stated as anticipated [222]*222costs per unit {e.g. 1 bedroom) per annum (PUPA).

Subsequent to notifying plaintiff of approval of its Preliminary Proposal, one of the 21 firms that had submitted a Preliminary Proposal appealed the Area Office’s approval of plaintiff’s proposal to HUD’s Central Office in Washington, D.C. On or about November 23, 1978, plaintiff was informed by letter of the pending appeal and advised not to incur additional costs on the project until further notice since no further action would be taken on its proposal until the appeal was resolved. Nevertheless, on December 7, 1978, plaintiff submitted a “Firm Application” to the Area Office. On March 18, 1979, the Area Office informed plaintiff by letter that it would begin processing and screening the Final Proposal and Firm Application and would advise plaintiff if any additional information would be needed. On April 20, 1979, HUD ruled that the Area Manager’s approval of plaintiff’s Preliminary Proposal was proper and would not be rescinded.

Between May 1, 1979 and September 11, 1979, plaintiff and HUD officials from the Area Office engaged in negotiations in an effort to reach agreement on an acceptable Final Proposal. On May 1, 1979, plaintiff submitted its Application for Project Mortgage Insurance (Form 2013), which was to be reviewed as the financing portion of the Final Proposal, again requesting a HUD insured mortgage of $3,616,800. Plaintiff submitted a revised mortgage application form on May 10, 1979, requesting a mortgage amount of $3,851,000. On May 14, 1979, the HUD Area Office informed plaintiff by letter that its Final Proposal was not acceptable for processing for numerous reasons. The letter specifically listed over 20 deficiencies in the proposal that required completion.

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Bluebook (online)
31 Cont. Cas. Fed. 71,398, 3 Cl. Ct. 219, 1983 U.S. Claims LEXIS 1647, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prevado-village-partnership-v-united-states-cc-1983.