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Cienega Gardens, Claremont Village Commons, Covina West Apartments, Del Amo Gardens, Del Vista Village, Desoto Gardens, Las Lomas Gardens, Oxford Park, Parthenia Townhomes, Pioneer Gardens, Puente Park Apartments, Rayen Park Apartments, Reseda Park Apartments, Roscoe Park Apartments, San Jose Gardens, Sunland Park Apartments, Kittridge Gardens I, Kittridge Gardens Ii, Argonaut Apartments, Beck Park Apartments, Blossom Hill Apartments, Casa San Pablo, Central Park Apartments, Drehmoor Apartments, Fairview Green Apartments, Genessee Park Apartments, Grace & Laughter Apartments, Green Hotel, Hollywood Knickerbocker Apartments, Hollywood Plaza, Kings Canyon Apartments, Lawrence Road Apartments, Livermore Gardens, Palo Alto Gardens, Placita Garden Apartments, Skyline View Gardens, Villa Fontana and Village Green, and Sherman Park Apartments, Independence Park Apartments, Pico Plaza Apartments and St. Andrews Gardens, Plaintiffs/cross-Appellants v. United States

Citations: 194 F.3d 1231; 1998 U.S. App. LEXIS 38768Docket: 97-5126

Court: Court of Appeals for the Federal Circuit; December 6, 1998; Federal Appellate Court

Narrative Opinion Summary

The case involves a dispute between multiple plaintiffs, who are low-income housing owners, and the United States government, specifically the Department of Housing and Urban Development (HUD), regarding the prepayment of HUD-insured mortgage loans. The plaintiffs claimed that the Emergency Low Income Housing Preservation Act of 1987 (ELIHPA) and the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) breached contractual rights by imposing restrictions on mortgage prepayments after twenty years. The Court of Federal Claims ruled in favor of the plaintiffs, awarding damages, but the United States Court of Appeals for the Federal Circuit vacated this decision due to a lack of privity of contract between the plaintiffs and HUD, which negated jurisdiction. The appellate court emphasized that the regulatory agreements did not include prepayment provisions and that HUD, not being a party to the deed of trust notes, was not contractually bound to prepayment rights. Consequently, the claims were dismissed for lack of jurisdiction, and the case was remanded for further proceedings consistent with this ruling.

Legal Issues Addressed

Impact of ELIHPA and LIHPRHA on Mortgage Prepayment Rights

Application: The Emergency Low Income Housing Preservation Act and the Low-Income Housing Preservation and Resident Homeownership Act altered prepayment rights, requiring HUD approval for prepayment after twenty years, which the plaintiffs claimed breached their contracts.

Reasoning: They claimed that ELIHPA and LIHPRHA's enactment breached contracts with HUD that allowed prepayment of their mortgage loans after twenty years without HUD approval.

Interpretation of Regulatory Agreements and Related Documents

Application: The court found that the regulatory agreements did not incorporate prepayment terms from the deed of trust notes and thus did not establish privity of contract with HUD.

Reasoning: The agreements in question do not contain any prepayment provisions. The deed of trust note and its Rider A addressed prepayment but were agreements solely between the Owner and the private lending institution, not HUD.

Jurisdiction under the Tucker Act

Application: The court emphasized that under the Tucker Act, jurisdiction requires privity of contract between the United States and the plaintiff, which was not established in this case.

Reasoning: Under the Tucker Act, the Court of Federal Claims has jurisdiction over claims based on contracts with the United States, necessitating privity of contract for the plaintiff to maintain a cause of action.

Privity of Contract between HUD and Housing Owners

Application: The court determined that there was no privity of contract between the housing owners and HUD, thus lacking jurisdiction for the breach of contract claims in the Court of Federal Claims.

Reasoning: The appellate court, however, determined that there was no privity of contract between the housing owners and HUD, thus lacking jurisdiction for the breach of contract claims in the Court of Federal Claims.