Village West Associates v. Rhode Island Housing and Mortgage Finance Corp.Village West Associates v. Rhode Island Housing and Mortgage Finance Corp.
DECISION AND ORDER
Third Party Defendant Secretary of the United States Department of Housing and Urban Development (“HUD”) moves to dismiss Defendant and Third Party Plaintiff Rhode Island Housing and Mortgage Finance Corporation’s (“RIHMFC”) complaint. HUD’s argument is that the United States Court of Federal Claims has exclusive jurisdiction over RIHMFC’s impleader claims. As then Circuit Judge Scalia once remarked, “[i]f there is a less profitable expenditure of the time and resources of federal courts and federal litigants than resolving a threshold issue of which particular federal court should have jurisdiction, it does not come readily to mind.”
Sharp v. Weinberger,
I. Background
The United States Housing Act of 1937, as amended in 1974 and most commonly referred to as “Section 8,” created a national low-income housing program.
HUD provides rent subsidies in two ways. In the first instance, HUD contracts directly with an owner through a Housing Assistance Payments (“HAP”) contract. HAP contracts establish an agreed upon contract rent, and HUD pays the subsidy to the owner. In the second instance, a public housing agency is involved. HUD enters into an Annual Contributions Contract (“ACC”) with the public housing agency, and the agency enters into a HAP contract with the owner. The ACC obligates HUD to provide funding to the agency so the agency can pay the subsidy to the owner under its respective HAP contract. In both scenarios, HUD provides all funding for the subsidies and prescribes, approves and directs the form of the HAP and ACC agreements.
See generally
The details of the evolution of the Section 8 program would add little value to the instant jurisdictional discussion.
2
Suffice it to say HAP contract rents paid by HUD were not static. Rather, as first set forth in
The 1994 amendments required owners in some circumstances to demonstrate that an adjusted rent would not exceed the rent for a similar unassisted housing unit. Id. They also reduced the annual rent adjustment factor where a given housing unit was occupied by the same tenant during a prior year. Id. On March 7, 1995, HUD issued Notice H 95-12 to implement the 1994 amendments. 3 Although there is more to the story, the gist of the matter is that following the 1994 amendments, rents were often not increased at all, increased less than they had previously been, and/or increased only after owners submitted required materials.
II. Procedural Travel
Village West filed a complaint in May of 2008 against RIHMFC alleging breach of contract. Under its HAP contract with RIHMFC, Village West contends it is entitled to annual rent increases based on published adjustment factors; yet because of the 1994 amendments and subsequent HUD Notices, RIHMFC has failed to increase rents in accordance with the contract since 1995, thus damaging Village West. Understandably, RIHMFC filed a third party complaint against HUD pursuant to
It is worth noting that the substantive issues behind this procedural quandary are not novel. Other owners with pre-1994 contracts have launched similar challenges against HUD.
4
See Park Props.
Assocs.,
L.P. v. United States,
III. Standard of Review
HUD moves to dismiss for lack of subject matter jurisdiction.
IV. Discussion
It is hornbook law that federal courts have limited jurisdiction. See
Steel Co. v. Citizens for a Better Env’t,
RIHMFC sees it a different way. It retorts that this is by no means “just” a contract case, and offers two purported bases for this Court’s jurisdiction: the Administrative Procedure Act,
The Tucker Act provides the most common path for a suit against the United States involving a contract, because it provides jurisdiction
and
waiver of immunity in the Claims Court so long as the action: 1) is against the United States; 2) seeks relief over $10,000; and 3) is founded upon the Constitution, federal statute, executive regulation or governmental contract.
The question becomes, then, whether an independent basis for subject matter jurisdiction exists in this Court for RIHMFC’s claims? Answering this question requires close examination of the nature of the relief RIHMFC requests, and the source of the rights upon which its claim is founded. This is because if RIHMFC’s prime objective is to recover over $10,000 from the United States based on contract rights, then the claim belongs in the Claims Court under the Tucker Act, and this Court must reject RIHMFC’s attempt to “cast a contract dispute in different terms so as to subject it to the jurisdiction of the district court.”
Am. Sci & Eng’g, Inc. v. Califano,
While RIHMFC’s claims are dressed in equitable and declaratory garb, underneath it all what RIHMFC seeks is monetary relief based on obligations found in its ACC contract with HUD. Its complaint seeks traditional contract remedies.
See,
RIHMFC seeks to avoid this result by mis-characterizing the case as an APA action, but this misplaced reliance only highlights why this is most properly deemed a contract case. RIHMFC professes to seek “judicial interpretation of the statutory and administrative provisions” that govern calculation of contract rent increases for owners with pre-1994 HAP contracts.
See
Dkt. No. 14, p. 14. But what is it that the Court is being called upon to interpret? RIHMFC offers no satisfying response. It cannot be that the Court will interpret the propriety of the 1994 amendments, because the APA does not apply to Congressional action and, indeed, RIHMFC launches no real challenge to the law.
See Cuyahoga Metro. Hous. Auth. v. United States,
Two final points on this issue. First, RIHMFC cannot manufacture an APA claim by way of a blanket request that the Court declare HUD’s actions “arbitrary, capricious, an abuse of discretion, contrary to law, and/or contrary to constitutional right.” Third Party Compl. p. 7. Stripped down, there is no basis for this demand— simply calling something an APA claim does not make it so.
See J.C. Prods., Inc. v. United States,
Moving on, RIHMFC suggests the Court has federal question jurisdiction under
Lastly, the Court sees no need to delve into the final topic upon which the parties have touched but not fully briefed nor argued: whether sovereign immunity has been waived under
When all is said and done, dismissing HUD is a frustrating result for RIHMFC and, frankly, the Court because of its overarching interest in judicial economy. Yet jurisdiction cannot be created where none exists. To that end, after the Order to dismiss RIHMFC’s complaint against HUD is entered, the Clerk is directed to schedule a status conference with Village West and RIHMFC in which the Court will set a schedule and discuss the possibility of accelerating resolution of Village West’s claim. 12
For the foregoing reasons, HUD’s motion to dismiss is GRANTED. RIHMFC’s third-party complaint shall be DISMISSED without prejudice for refiling at the appropriate time in the Court of Federal Claims.
IT IS SO ORDERED.
Notes
. The reader interested in a more extensive description should consult
Cuyahoga Metro. Hous. Auth. v. United States,
. Although Notice H 95-12 expired on September 30, 1995, later HUD Notices made the provisions permanent.
. The parties agree, and are correct, that Village West cannot maintain a direct contract action against HUD because of a lack of privity — its HAP contract is with RIHMFC, not HUD.
See Nat’l Leased Hous.,
. The Claims Court and federal district courts do have concurrent jurisdiction under the so-called Little Tucker Act (inapplicable here) when the claim against the United States is for less than $10,000.
. Though the distinction gets blurred, the APA is not an independent source of jurisdiction. It waives sovereign immunity for judicial review of non-monetary actions against the United States when there is no other adequate remedy in a court.
. RIHMFC relies on
Bowen v. Massachusetts
for the notion that a money judgment in the Claims Court would be insufficient, and that this Court could grant monetary relief to RIHMFC as an “adjunct” to the prospective relief it seeks through the APA.
. Moreover, the Court agrees with two recent decisions on near identical issues that the agency's prospective concerns as to other Section 8 contracts will be alleviated by the practical
res judicata
effect of a retrospective money judgment against HUD in the Claims Court.
See Cathedral Square Partners Ltd. P'ship v. S. Dakota Hous. Dev. Auth.,
.
Katz,
.There appears to be no dispute that RIHMFC's action against the Secretary in his official capacity is against the United States.
See Echevarria-Gonzalez v. Gonzalez-Chapel,
. This debate centers on whether
. Though no party raised the issue, the Court
sua sponte
considers its jurisdiction over Village West’s claim against RIHMFC.
See In re Recticel Foam Corp.,