107 Fed. Cl. 404
Fed. Cl.2012Background
- Plaintiffs are owners/developers of low-income housing who allege LIHPRHA/ELIHPA prepayment restrictions violate their rights by taking the ability to prepay and terminate affordability restrictions.
- LIHPRHA/ELIHPA require HUD prepayment approval via a plan of action (POA) and incentive schemes; prepayment is not automatic and is contingent on statutorily defined findings.
- Plaintiffs seek damages but must show ripeness; the government argues exhaustion of HUD procedures; futility is the alleged exception.
- The case traces ripeness doctrine, with Greenbrier and Ciénega VI establishing that futility may excuse exhaustion if HUD would have no discretion to approve prepayment due to statutory criteria.
- The court remanded to develop a factual record on futility, focusing on per-property potential to meet the statutory prepayment criteria.
- The court later grants summary judgment for the defendant as to Thetford IV properties not meeting two WPT-based tests, while denying summary judgment as to remaining properties and denying Plaintiffs’ motion for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ripeness and futility exception | Plaintiffs contend futility excuses exhaustion; HUD would have no discretion to approve prepayment. | Exhaustion not excused absent a final HUD denial or lack of discretion; many properties could pursue POA. | Partial: factual record needed; futility shown for some, not all, properties; remand for record development. |
| Issue preclusion applicability to Thetford IV | Thetford IV should be barred by prior Fourth Circuit ruling on futility. | Thetford IV preclusion applies; Thetford III not so barred due to nonparty representation. | Thetford IV barred; Thetford III not barred by issue preclusion. |
| Extent of HUD discretion under LIHPRHA | HUD had some discretion via LIHPRHA §4108 and Windfall Profits Test to approve prepayment. | LIHPRHA's numerical criteria preclude discretionary approval unless criteria are met. | HUD discretion is limited by statutory criteria; prepayment only if criteria are satisfied. |
| Validity of Smith/WPT-based futility analysis | Smith’s Windfall Profits Test replicates prepayment criteria and shows futility. | WPT is not exact proxy for prepayment; data and methods are flawed or misapplied. | Courts require case-by-case factual showing; summary judgment denied for most properties pending further facts. |
| Summary judgment posture and case outcome | Plaintiffs deserve judgment based on futility evidence. | Material facts remain; some properties meet tests showing ineligibility. | Partial grant of defendant’s motion; Thetford IV properties not meeting tests get judgment for defendant; remaining properties unresolved. |
Key Cases Cited
- Cienega Gardens v. United States, 265 F.3d 1237 (Fed.Cir.2001) (set forth two-prong test for HUD prepayment and futility framework)
- Anaheim Gardens v. United States, 444 F.3d 1309 (Fed.Cir.2006) (remanded to develop factual record on futility under Ciénega VI)
- Greenbrier v. United States, 193 F.3d 1348 (Fed.Cir.1999) (ripeness/exhaustion interplay; no discretion exception without finality)
- Palazzolo v. Rhode Island, 533 U.S. 606 (2001) (certainty/discretion framework for regulatory takings ripeness)
- Cienega Gardens v. United States, 67 Fed.Cl. 434 (2005) (Cienega IX; Windfall Profits Test and LIHPRHA context)