Anaheim Gardens, L.P. v. United States
953 F.3d 1344
| Fed. Cir. | 2020Background
- Congress enacted ELIHPA (1987) and LIHPRHA (1990) (the "Preservation Statutes") to eliminate HUD mortgage prepayment rights and thereby preserve low‑income housing; the HOPE Act (1996) later restored some prepayment rights for some owners.
- Six First Wave Plaintiffs (FWPs) owned properties developed under HUD’s below‑market mortgage program; they fall into three groups: (a) four owners (Buckman, Chauncy, Cedar, Silverlake) who owned pre‑statute and sold under LIHPRHA procedures; (b) Rock Creek, which owned pre‑statute and entered a HUD use agreement to remain in the program; (c) Su Casa, which purchased its property after LIHPRHA but before HUD implementing regulations and later sold under LIHPRHA.
- Each FWP sued in the Court of Federal Claims alleging a regulatory taking under the Fifth Amendment; the Claims Court granted summary judgment for the government on all six claims, relying in part on the Penn Central three‑factor test.
- The Claims Court held Su Casa could not show reasonable investment‑backed expectations because it purchased after the Preservation Statutes were enacted, and it rejected the remaining FWPs’ economic‑impact proof (Dr. William Wade’s DCF/lost‑income analysis) as nonprobative, treating fair‑market‑value comparisons as the sole acceptable method.
- On appeal, the Federal Circuit affirmed the judgment as to Su Casa but vacated and remanded the judgments for the other five FWPs, finding (1) Su Casa’s lack of expectations was properly decided on summary judgment, but (2) the Claims Court erred in excluding DCF/lost‑income methodology and in foreclosing use of ex‑post data and certain expert analyses at summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a purchaser who bought after enactment of the Preservation Statutes can have reasonable investment‑backed expectations to prepay the mortgage (Su Casa) | Su Casa: timing alone does not categorically bar a Penn Central claim; uncertainty about how statutes/regulations would apply could support expectations | Govt: Su Casa was a sophisticated buyer who purchased with knowledge the statutes eliminated prepayment; no reasonable expectation existed | Court: Affirmed for Su Casa — purchaser lacked reasonable investment‑backed expectations; summary judgment appropriate |
| Proper method to measure economic impact of LIHPRHA/ELIHPA restrictions (FMV change vs. lost income/DCF) | FWPs: may measure loss by lost future market‑rate rental income (DCF), as an alternative endorsed in Cienega X | Govt/Claims Ct: economic injury must be shown by difference in fair market value at time of taking; FMV is the proper measure | Court: Vacated Claims Ct. rulings — rejected categorical FMV‑only rule; both FMV change and lost‑income/DCF approaches can be permissible depending on circumstances |
| Whether Dr. Wade’s DCF/NPV methodology (denominator choice/"parcel as a whole" and losses exceeding appraisal) is nonprobative | FWPs: Dr. Wade used present/NPV of future cash flows and challenged appraisals as undervaluing income; methodology is a factual/expert credibility matter | Govt/Claims Ct: methodology violates parcel‑as‑a‑whole teaching, improperly benchmarks to owner equity and inflates losses; losses larger than appraisals indicate flawed method | Court: Rejected treating these as dispositive on summary judgment; methodological and credibility issues are for admissibility and trial; Dr. Wade’s report not per se nonprobative |
| Whether expert may rely on ex‑post data (post‑taking real outcomes) rather than only ex‑ante forecasts | FWPs: ex‑post data are admissible and often more reliable; future streams may be discounted to the taking date | Govt: valuation must be fixed to the date of taking; expert should rely only on data available at that date | Court: Rejected categorical exclusion of ex‑post data; whether to use ex‑post evidence is a fact question for the Claims Court on remand |
Key Cases Cited
- Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978) (establishing the three‑factor takings balancing test)
- Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (timing of title transfer does not automatically extinguish takings claim; purchaser notice considered)
- Murr v. Wisconsin, 137 S. Ct. 1933 (2017) (prior law limiting reasonable expectations is an objective factor in takings analysis)
- Cienega Gardens v. United States, 503 F.3d 1266 (Fed. Cir. 2007) (discussing two permissible approaches to measuring LIHPRHA economic impact: change‑in‑value and lost‑income/DCF)
- CCA Assocs. v. United States, 667 F.3d 1239 (Fed. Cir. 2011) (Preservation Statutes and effect of temporary restoration under HOPE Act)
- Forest Props., Inc. v. United States, 177 F.3d 1360 (Fed. Cir. 1999) (using change in fair market value to measure economic impact in certain takings cases)
- Fla. Rock Indus., Inc. v. United States, 18 F.3d 1560 (Fed. Cir. 1994) (fair market value change as measure of takings in context of real property regulation)
- Ark. Game & Fish Comm’n v. United States, 568 U.S. 23 (2012) (takings inquiry is fact‑specific; no single formula for determining a taking)
- Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264 (1981) (takings inquiries require ad hoc, factual valuation work)
- Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) (absence of investment‑backed expectations may be dispositive on Penn Central analysis)