Northwest Title Agency, Inc. v. United States
126 Fed. Cl. 55
Fed. Cl.2016Background
- NWTA contracted with HUD in 2010 under three nearly identical contracts to provide closing services for HUD-owned single‑family properties in WI, MN, and MO; compensation was set by CLINs and described as "inclusive of all costs."
- Contracts contained a general provision (B.4.4.1–B.4.4.2) disallowing purchasers, lenders, or sellers from paying additional closing costs except as "explicitly allowed" in a specified special‑program paragraph (C.4.4.2.2).
- NWTA alleges HUD prevented NWTA from charging buyers closing fees (entitling NWTA to roughly $4.24M in lost revenue) and claims the contracts unambiguously allowed such charges.
- HUD moved for dismissal (later converted to summary judgment), arguing the contracts unambiguously barred charging buyers except for properties governed by the Asset Control Area (ACA) special program.
- NWTA submitted an affidavit asserting industry custom allows a single closing agent to charge both buyer and seller and argued trade practice evidence should be considered to show ambiguity.
- The Court found the contract language clear and limited the buyer‑charge exception to ACA properties; trade practice affidavits could not create ambiguity in unambiguous contract language and thus granted summary judgment for the United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract permits NWTA to charge purchasers separate closing fees | NWTA: contracts unambiguously allow charging buyers; contracts were intended to compensate HUD only and not to preclude charges to buyers | Gov: CLIN prices are "inclusive of all costs" and B.4.4.2 expressly bars purchasers/lenders/sellers from paying additional closing costs except as C.4.4.2.2 permits | Court: Contracts unambiguous—NWTA may not charge purchasers except under the ACA exception, which NWTA did not allege applies |
| Whether extrinsic evidence of trade practice may create or show ambiguity | NWTA: industry custom (affidavit) shows common practice to charge both sides and shows CLINs insufficient, so court should consider trade practice | Gov: Contract is clear on its face; trade practice cannot be used to create an ambiguity where none exists | Court: Refused to admit trade‑practice evidence to create ambiguity; Jowett controls—affidavits irrelevant when terms are unambiguous |
| Scope of the ACA (special program) exception | NWTA: the language in C.4.4.2.2 allows charging buyers generally for "all other closing costs" referenced there | Gov: The ACA exception is located under "Special Programs" and applies only to properties subject to ACA agreements | Court: Exception is limited to ACA properties by contract structure and labeling; not applicable to NWTA's claims |
| Whether other contract provisions (C.4.3, H.3) create a duty to provide buyer services or a limitation on HUD preventing buyer charges | NWTA: provisions allowing buyers to retain their own agents and prohibiting forced use of a title company imply buyers could be charged or use NWTA voluntarily | Gov: Those clauses only preserve buyer choice; they don't require HUD to permit charging buyers or negate the express no‑charge rule | Court: Those clauses do not override the unambiguous prohibition on charging purchasers except as expressly provided |
Key Cases Cited
- Foley v. United States, 11 F.3d 1032 (Fed. Cir.) (plain‑language starting point for contract interpretation)
- Teg‑Paradigm Envtl., Inc. v. United States, 465 F.3d 1329 (Fed. Cir.) (unambiguous contract language precludes resort to extrinsic evidence; trade practice exception recognized)
- Hunt Constr. Group, Inc. v. United States, 281 F.3d 1369 (Fed. Cir.) (trade practice may serve lexicographic function in limited instances)
- Jowett, Inc. v. United States, 234 F.3d 1365 (Fed. Cir.) (trade practice cannot be used to manufacture ambiguity where contract is clear)
- Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d 747 (Fed. Cir.) (discussion of extrinsic evidence and industry practice in contract interpretation)
- Edward R. Marden Corp. v. United States, 803 F.2d 701 (Fed. Cir.) (ambiguity exists when a contract is susceptible to more than one reasonable interpretation)