95 Fed. Cl. 250
Fed. Cl.2010Background
- Henry Housing owns Martins Landing Apartments in Martinsville, Virginia and obtained a 1982 FmHA loan secured by the property.
- Loan terms required renting to low-income eligible tenants, rent caps, and cash reserves for twenty years, with a 50-year amortization and a repayable loan schedule.
- Congressional acts in 1992 and earlier EL-IHPA constrained prepayment and compelled continuation of low-income use; options included incentives or forced sale/relocation if no extension agreed.
- Henry Housing applied to prepay the loan in 2004; the government allegedly refused prepayment and offered incentives not to prepay.
- Henry Housing asserted two claims: breach of contract and a takings claim alleging government-imposed low-income housing requirements violated the Fifth Amendment.
- The government moved for judgment on the pleadings on the takings count, arguing contract-based remedies are exclusive for such rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a takings claim can proceed alongside a contract claim. | Henry Housing maintains both theories may be viable and pled in the alternative. | Government contends takings depend on contract rights; remedies lie in contract. | Both contract and takings claims may be pled and litigated together. |
| Whether the takings claim is time-barred under 28 U.S.C. § 2501. | Complaint was timely filed within six years of the prepayment refusal. | Six-year accrual statute applies; limitations bar the takings claim. | Rule 12(c) dismissal based on statute of limitations is not warranted on the pleadings. |
| Whether the court should dismiss the takings claim on non-constitutional grounds prior to contract resolution. | Prudentially preserve takings claim until contract claim is resolved. | Advocates prioritizing contract-based remedy and potentially dismissing takings. | Courts may preserve both claims and proceed; not sua sponte dismiss takings. |
Key Cases Cited
- Lynch v. United States, 292 U.S. 571 (1934) (fifths amendment protections for contract-derived rights)
- Stockton E. Water Dist. v. United States, 583 F.3d 1344 (Fed. Cir. 2009) (preserve contract and takings claims; decide non-constitutional grounds first)
- System Fuels Inc. v. United States, 65 Fed.Cl. 163 (2005) (maintain both contract and takings claims until contract judgment; trumps by contract outcome)
- Centex Corp. v. United States, 395 F.3d 1283 (Fed. Cir. 2005) (legislation targeted at government contracts can create liability as contract or takings)
- Mob il Oil Exploration and Producing Se., Inc. v. United States, 530 U.S. 604 (2000) (contractual obligations as signals of government intent to breach)