One & Ken Valley Housing Group v. Maine State Housing Authority
2013 U.S. App. LEXIS 9678
| 1st Cir. | 2013Background
- Five Maine multifamily projects under HAP contracts with MaineHousing participate in Section 8 and seek higher annual payments.
- Plaintiffs allege MaineHousing breached contracts by refusing to grant automatic adjustments despite HUD factors; MaineHousing and HUD deny material breach.
- Contracts include an overall limitation clause: adjustments shall not create material differences between assisted and unassisted rents, except for initial differences at contract inception.
- HUD historically used automatic adjustment factors; concerns arose in the 1980s about above-market rents, leading to 1994 and later amendments restricting adjustments.
- Notice H 95-12 (1995) prescribed a comparability framework using HUD’s fair market rent data to determine if adjustments are above market, with a 10% of initial rent threshold.
- This case involves whether the overall limitation clause and Notice H 95-12 method authorize MaineHousing to withhold automatic adjustments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do HAP contracts permit invoking the overall limitation clause to withhold adjustments? | MaineHousing did not breach by withholding; landlords challenge the use of the clause. | The clause expressly allows withholding where adjustments would cause material differences. | Yes; the clause authorizes withholding when material differences would result. |
| Is the Notice H 95-12 method a reasonable means to determine material differences? | Notice H 95-12 is not a proper method; it is not a required site-specific comparability approach. | Notice H 95-12 provides a reasonable framework; courts may defer to agency method and data. | Yes; the method is reasonable and within contract interpretation. |
Key Cases Cited
- Alpine Ridge Grp. v. Kemp, 508 U.S. 10 (U.S. 1993) (overall limitation clause controls other contract provisions; stay within Alpine Ridge framework)
- Rainier View Assocs. v. United States, 848 F.2d 988 (9th Cir. 1988) (early limitation ruling rejecting market-rate cap)
- Carmichaels Arbors Assocs. v. United States, 789 F. Supp. 683 (W.D. Pa. 1992) (district court on limitations interpretation under Section 8 contracts)
- National Leased Housing Ass'n v. United States, 22 Cl. Ct. 649 (Cl. Ct. 1991) (contractual rights to comparability considerations in HAP context)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg, 545 U.S. 308 (Supreme Court 2005) (establishes federal question jurisdiction under Grable framework)
- Corr. Servs. Corp. v. United States, 534 U.S. 52 (Supreme Court 2001) (federal question and contract-interpretation principles in public context)
- Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677 (Supreme Court 2006) (federal ingredients doctrine and questions of federal jurisdiction)
- Gully v. First Nat'l Bank in Meridian, 299 U.S. 109 (Supreme Court 1936) (federal ingredient doctrine requires broad factual assessment)
- Price v. Pierce, 823 F.2d 1114 (7th Cir. 1987) (uniformity considerations favor federal resolution of significant questions)
- Almond v. Cap. Props., Inc., 212 F.3d 20 (1st Cir. 2000) (federal ingredient considerations in contract disputes)