994 F.3d 1359
Fed. Cir.2021Background
- Section 9 of the Housing Act funds public housing via a Capital Fund and an Operating Fund; HUD allocates Operating Fund subsidies to PHAs under statutory formulae and regulations.
- Each of the 553 PHAs here executed HUD Annual Contributions Contracts (ACCs) that incorporate HUD regulations and obligate HUD to provide annual operating contributions, with 24 C.F.R. § 990.210(c) authorizing pro rata reductions if insufficient funds exist.
- For FY2012 Congress funded roughly 80% of total operating subsidies and directed HUD to account for PHAs’ excess reserves; HUD applied reserves instead of prorating, so some PHAs (including the plaintiffs) received less than a prorated share.
- The PHAs sued in the Court of Federal Claims under the Tucker Act for breach of their ACCs, seeking compensatory damages equal to the difference between amounts due under the ACCs and amounts received.
- The Claims Court denied the government’s Rule 12(b)(1) and 12(b)(6) motions, treated the claim as a contract claim (not a statutory equitable claim), granted liability per PHADA, and entered judgment; the government appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Claims Court has Tucker Act jurisdiction (is source money-mandating) | ACCs are contracts that obligate HUD to pay operating subsidies; contracts carry a presumption that money damages are available | The underlying statutory/regulatory scheme attaches strings to funds so the ACCs cannot be fairly interpreted to contemplate money damages (relying on Lummi/NCMS) | Jurisdiction exists: ACCs are money-mandating; presumption that contractual breaches permit money damages applies and no exception fits |
| Whether the PHAs seek equitable relief (redistribution/increase of FY2012 funds) rather than damages | PHAs seek compensatory money damages (difference between promised and paid amounts), not redistribution or injunctive relief | The claim’s true object is larger, strings-attached subsidies requiring equitable relief | Held for PHAs: claim is for compensatory money damages, not equitable relief |
| Whether Lummi or NCMS require dismissal because of "strings-attached" funds | PHAs’ contract claim differs from statutory grant claims in Lummi/NCMS; ACCs create contractual monetary obligations | Lummi and NCMS show that programs with use restrictions are not money-mandating and require equitable remedies | Distinguishes Lummi/NCMS: those cases concerned statutory/grant claims; they do not control a breach-of-contract claim under ACCs |
| Whether the complaint fails to state a claim under Rule 12(b)(6) | Complaint pleads breach of ACC terms and damages; relief requested is monetary and within contract remedies | A money judgment would overcompensate because it must respect use restrictions and HUD’s bargained protections | Dismissal denied: jurisdictional analysis controls; government did not make a separate merits attack on contract elements, so 12(b)(6) dismissal improper |
Key Cases Cited
- Holmes v. United States, 657 F.3d 1303 (Fed. Cir. 2011) (contracts carry a presumption that money damages are available under Tucker Act)
- Lummi Tribe of the Lummi Reservation v. United States, 870 F.3d 1313 (Fed. Cir. 2017) (statutory NAHASDA grants were not money-mandating)
- National Ctr. for Mfg. Sciences v. United States, 114 F.3d 196 (Fed. Cir. 1997) (statutory appropriations with restrictions may require equitable relief; limits on Claims Court jurisdiction for such relief)
- United States v. Winstar Corp., 518 U.S. 839 (U.S. 1996) (damages are the default remedy for breach of contract)
- Bowen v. Massachusetts, 487 U.S. 879 (U.S. 1988) (distinguishing compensatory damages from specific performance or restitutionary remedies)
- Higbie v. United States, 778 F.3d 990 (Fed. Cir. 2015) (contracts that plainly supply non-monetary remedies may not fairly be interpreted to contemplate money damages)