Tyler House Apartments, Ltd. v. United States

38 Fed. Cl. 1, 1997 U.S. Claims LEXIS 94, 1997 WL 251968
CourtUnited States Court of Federal Claims
DecidedMay 12, 1997
DocketNo. 95-354C
StatusPublished
Cited by34 cases

This text of 38 Fed. Cl. 1 (Tyler House Apartments, Ltd. 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
Tyler House Apartments, Ltd. v. United States, 38 Fed. Cl. 1, 1997 U.S. Claims LEXIS 94, 1997 WL 251968 (uscfc 1997).

Opinion

OPINION

BRUGGINK, Judge.

This is an action for an alleged breach of contract, or, in the alternative, an uncompensated taking under the Fifth Amendment to the United States Constitution. The eight plaintiffs all have, or had, some connection with, or interest in, an apartment building known as Tyler House, in Washington, D.C. The matter is pending on the Government’s motion to dismiss or, in the alternative, for summary judgment. After considering the parties’ written and oral argument, the court agrees with defendant that, on the uncontested facts, as a matter of law there can be no liability.

Background1

Tyler House Apartments, located at 1200 North Capitol Street in Washington, D.C., is an eight story apartment building. Mt. Airy Baptist Church built it in 1971, in part using loan proceeds guaranteed by the Department of Housing and Urban Development (HUD), pursuant to section 236 of the National Housing Act, 12 U.S.C. § 1715z-l(c). The church [3]*3entered into a contract with HUD known as a Regulatory Agreement.

Over time, the building became what plaintiff characterizes as a “financially and physically troubled” property. HUD requested National Investment Development Corporation (NIDC) to put together an investment group to take over the building. NIDC agreed and formed a wholly-owned subsidiary, Partnership Investor Services, Inc. (PISI), one of the plaintiffs. PISI formed a limited partnership with another plaintiff, Housing Investment Fund II, Ltd. (HIF), a California limited partnership. Together they formed Tyler House Apartments, Ltd. (THAL), a District of Columbia limited partnership, also one of the plaintiffs. PISI was the general corporate partner, and HIF was the limited partner.

Transfer of ownership from the church to THAL was accomplished, in part, by HUD’s necessary approval of a document known as a “Transfer of Physical Assets,” or TPA. Final approval and sale were consummated in 1978. THAL re-executed the Regulatory Agreement with HUD and executed a Housing Assistance Payment Contract (HAP).

Life was apparently no better to Tyler House after the transfer than before. The complaint and other materials chronicle a depressing history of drugs, violence, inadequate maintenance and general physical deterioration. The plaintiffs attribute these problems in part to HUD. It is alleged that the agency “unconscionably and consistently delayed responding to and failed to approve requested and meritorious rent increases, or to permit justifiable additional Section 8 assistance to needy tenants at Tyler House.” Complaint 1136. Plaintiffs’ references are to potential financial assistance that HUD is statutorily able to give owners or renters of subsidized or federally-insured housing.

Faced with this situation, NIDC formed another limited partnership in the District of Columbia, Tyler House Apartments, Ltd. I (THAL-I), in hopes of attracting additional private capital through sale of the property by THAL to THAL-I. PISI also served as the corporate general partner of THAL-I. AFC Capital Fund I, a California limited partnership, was the limited partner in THAL-I. Both AFC Capital Fund I and THAL-I are named as plaintiffs in this action. THAL entered into an agreement to sell Tyler House to THAL-I in May, 1983. A TPA was submitted to HUD in August, 1983, although it was never approved.

By 1986, NIDC — the parent company of PISI and the general partner in THAL — was experiencing financial problems. In order to “avoid wholesale default on a large number of insured mortgages,” Compl. H 38, Associated Financial Corporation (AFC), which, although it appears to be connected to AFC Capital Fund, has not heretofore appeared in the narrative, and its principals, A. Bruce Rozet and Deane Ross, acted to acquire NIDC. This was done through Management Assistance Group, Inc. (MAGI), an affiliate of AFC, purchasing all the stock of NIDC. MAGI thus became the owner of PISI, which was the corporate general partner in both THAL and THAL-I. To summarize the effects of these proliferating acronyms, Rozet, Ross, and AFC owned MAGI, which in turn owned NIDC, which in turn owned PISI, which in turn was a general partner in THAL and THAL-I, one of which owned Tyler House apartments. All of these individuals or entities, except for AFC, are plaintiffs here, along with HIF, the limited partner in THAL.

Plaintiffs allege that, prior to MAGI’s purchase of NIDC stock, “Government officials involved in such purchase expressed an understanding and willingness to work with the purchasers regarding the physical and financial needs of the projects involved, including Tyler House____ At all times, HUD officials were aware of plaintiffs’ actions and encouraged plaintiffs to continue to study the properties’ problems and make proposals for corrective actions.” Compl. 1138. They also allege that “MAGI properly assumed ownership of NIDC and responsibilities with respect to Tyler House, in reliance on HUD’s good faith in administration of its programs and based on HUD’s responsibility to participate in rehabilitation of Tyler House.” Id. at 41.

In 1987, the tenants commenced a series of lawsuits against several of the plaintiffs [4]*4named here, seeking to have the court force them to provide safe and sanitary housing. In an effort to respond to the complaints, THAL-I invested approximately $600,000 between 1987 and 1989 to rehabilitate Tyler House.

Also in 1987, THAL-I submitted another in a series of requests for rent increases to HUD, which had to approve such increases. This request was only allowed in part. Plaintiffs contend that the agency’s refusal to grant the entire request was unlawful. Meanwhile, the agency was still withholding consent to the TP A, which would have made THAL-I the legal owner of the property.

One of the causes for holdup on approval was the existence of a lien on the property filed by the general contractor, Majestic. The 1977 lien secured a judgment Majestic had obtained against Mt. Airy. According to plaintiffs, the existence of the lien was a violation of a HUD-approved construction contract between Mt. Airy and Majestic. Plaintiffs also allege that the lender, the Federal National Mortgage Association (Fannie Mae) was aware of the lien at the time of the transfer to THAL. Plaintiffs contend that HUD’s refusal to approve the TPA, grounded in part on the existence of the lien, was “arbitrary and capricious.”

As part of negotiations with the tenants, plaintiffs conducted a survey of the physical problems with Tyler House. One of the more serious problems uncovered was the presence of asbestos. Removal would be very expensive. Plaintiffs estimated at that time that a complete rehabilitation would cost $18 million. As part of their negotiations with HUD for more federal financing, plaintiffs offered to obtain $2 million in private capital. HUD rejected the plaintiffs’ initial proposals in September, 1988, and suggested plaintiffs put together a less costly alternative.

Plaintiffs allege that HUD officials were well aware of the problem of asbestos at Tyler House and in federally-subsidized housing elsewhere, but that the officials deliberately “covered up the existence of any study of the implications” in the hopes that owners would absorb that potential liability. Compl. H 53. Plaintiffs contend that, despite this knowledge, HUD officials encouraged MAGI to purchase NIDC.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Ex parte CVS Pharmacy, L.L.C.
209 So. 3d 1111 (Supreme Court of Alabama, 2016)
Arrington v. Courtyard Citiflats, LLC
191 So. 3d 787 (Supreme Court of Alabama, 2015)
Collar v. University of South Alabama
149 So. 3d 582 (Supreme Court of Alabama, 2014)
Ground Improvement Techniques, Inc. v. United States
108 Fed. Cl. 162 (Federal Claims, 2012)
Newby v. Enron Corp.
279 F.R.D. 395 (S.D. Texas, 2011)
Atlantic Community Bank v. Iredale (In Re Iredale)
429 B.R. 853 (D. South Carolina, 2010)
Miller v. Riley
37 So. 3d 768 (Supreme Court of Alabama, 2009)
Cadle Co. v. Shabani
4 So. 3d 460 (Supreme Court of Alabama, 2008)
MidFirst Bank v. Brooks
Court of Appeals of South Carolina, 2008
EHL v. DiCHIARA
986 So. 2d 1166 (Supreme Court of Alabama, 2007)
Buco Bldg. Constr., Inc. v. Mayer Ele. Supply Co.
960 So. 2d 707 (Court of Civil Appeals of Alabama, 2006)
Padgett v. CONECUH COUNTY COM'N
974 So. 2d 993 (Court of Civil Appeals of Alabama, 2006)
Harris v. Mitchell
958 So. 2d 884 (Court of Civil Appeals of Alabama, 2006)
Waite v. Waite
959 So. 2d 610 (Supreme Court of Alabama, 2006)
Hopkins v. Foothill Mountain, Inc. (In Re Hopkins)
346 B.R. 294 (E.D. New York, 2006)
Canal Electric Co. v. United States
65 Fed. Cl. 650 (Federal Claims, 2005)
Snyder v. United States
63 Fed. Cl. 762 (Federal Claims, 2005)
Goodyear Tire & Rubber Co. v. Moore
900 So. 2d 1239 (Court of Civil Appeals of Alabama, 2004)
Alabama Alcohol. Bev. Bd. v. Henri-Duval Winery
890 So. 2d 70 (Supreme Court of Alabama, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
38 Fed. Cl. 1, 1997 U.S. Claims LEXIS 94, 1997 WL 251968, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tyler-house-apartments-ltd-v-united-states-uscfc-1997.