6601 Dorchester Inv. Grp., LLC v. United States, No. 20-1427C

CourtCourt of Federal Claims
Writing for the CourtSOLOMSON, Judge.
Docket NumberNo. 20-1427C
Decision Date27 July 2021


No. 20-1427C

United States Court of Federal Claims

July 27, 2021

William B. Jung, Mount Pleasant, SC, for Plaintiff.

Sarah E. Kramer, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for Defendant. With her on the briefs were Brian M. Boynton, Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Elizabeth M. Hosford, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C.



This case arises under an alleged contract between Plaintiff, 6601 Dorchester Investment Group, LLC ("Dorchester"), and Defendant, the United States, acting by and through the United States Department of Housing and Urban Development ("HUD") and the United States Department of Veterans Affairs ("VA"), for the lease of apartment units to veteran participants in the HUD-VA Supportive Housing ("HUD-VASH") program. Dorchester alleges that, in order to incentivize its participation in the HUD-VASH program, the government agreed to reimburse Dorchester for physical apartment damage caused by, and unpaid rent owed by, veteran participants. According to Dorchester, however, the government ultimately failed to do so. Dorchester now brings claims in this Court against the government for breach of an

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express contract and an implied-in-fact contract.1 The government moves to dismiss Dorchester's complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims ("RCFC") for, respectively, lack of subject matter jurisdiction and failure to state a claim upon which relief may be granted. In the alternative, the government moves for a more definite statement under RCFC 12(e). For the reasons explained below, the Court GRANTS the government's motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim.


a. HUD's Housing Choice Voucher Program

Congress created the Housing Choice Voucher ("HCV") program "[f]or the purpose of aiding low-income families in obtaining a decent place to live and of promoting economically mixed housing." 42 U.S.C. § 1437f(a). Through the HCV program, HUD provides participants with HUD-funded vouchers via local public housing agencies ("PHAs"). 24 C.F.R. § 982.1(a)(1). HUD funds the vouchers using annual contributions contracts it enters into with individual PHAs: HUD makes payments to a particular PHA, and the PHA in turn agrees to administer the HCV program in accordance with HUD requirements. 24 C.F.R. § 982.151(a)(1). As part of the HCV program, the PHA issues HUD-funded vouchers to eligible tenants, see 24 C.F.R. § 982.1(a), who then use the vouchers to rent units from property owners participating in the program. 24 C.F.R. § 982.1(a)-(b).

The government does not lease the housing units from a landlord or a PHA. Rather, each individual tenant participating in the HCV program signs a lease with the

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landlord of his or her unit and pays a portion of the rent according to the tenant's ability to pay. 24 C.F.R. § 982.515. The PHA then makes up the difference between the tenant's contribution and the allowable rent under a Housing Assistance Payment ("HAP") contract. 24 C.F.R. § 982.515. Each HAP contract is between the property owner and the PHA, see 24 C.F.R. § 982.162(a)(2), and "must be in the form required by HUD." 24 C.F.R. § 982.451(a)(1). The property owner is responsible for "performing all of the owner's obligations under the HAP contract and the lease," including collecting from the tenant both the tenant's portion of the rent (the amount not covered by the PHA) and any charges for unit damage caused by the tenant. 24 C.F.R. § 982.452(a)-(b).

b. HUD-VASH Program

Established in 2012, HUD-VASH is a collaborative program between HUD and the VA that combines HUD housing vouchers with VA supportive services (e.g., medical centers and community-based clinics) to assist homeless veterans and their families with finding and sustaining permanent housing. 77 Fed. Reg. 17,086 (Mar. 23, 2012); Compl. at 1. To provide housing to eligible veterans, PHAs administer the HCV vouchers provided to veterans under HUD-VASH in accordance with the HCV regulations discussed supra. See 24 C.F.R. § 982; 77 Fed. Reg. 17,087 (Mar. 23, 2012) ("[A]ll regulatory requirements and HUD directives regarding the HCV tenant-based program are applicable to HUD-VASH vouchers, including the use of all HUD required contracts and other forms.").3 Under the HUD-VASH program, as in the general HCV program, a PHA contracts with a property owner to make monthly rent subsidy payments directly to the owner on behalf of the veteran. 77 Fed. Reg. 17,087 (Mar. 23, 2012). The participating veterans enter into separate leases with property owners and pay their share of the rent in accordance with their individual leases. Id.

c. Dorchester's Alleged Involvement With HUD-VASH

Dorchester is a South Carolina limited liability company with its principal place of business located in Charleston County, South Carolina. Compl. ¶ 2. At all relevant times, Dorchester was the owner of the real property located at 6601 Dorchester Road, North Charleston, South Carolina 29418, a multi-unit apartment dwelling (the "Property"). Id. ¶ 7.

In 2014, Dorchester alleges that an agent of the VA solicited Dorchester to lease apartment units at the Property to veteran participants in the North Charleston, South Carolina HUD-VASH program. Id. ¶¶ 8-9. Pursuant to that VA agent's representations and guarantees, Dorchester alleges that it entered into a contract with the VA, whereby

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Dorchester agreed to rent its apartment units to veterans participating in the program, and the VA agreed to reimburse Dorchester for any physical damage to the apartment units that the veterans caused, beyond ordinary wear and tear, as well as for any unpaid rent (if the veterans defaulted under their individual leases). Id. ¶¶ 9, 26.

Between 2014 and 2017, Dorchester leased apartment units to veterans participating in the program. Id. ¶ 10. At various times, several veteran participants breached their individual leases, either by failing to pay rent or vacating the premises prematurely. Id. ¶ 11. Additionally, in multiple instances, the apartment units were damaged beyond ordinary wear and tear, requiring Dorchester to expend funds and time to restore the damaged units in order to re-lease them to new tenants. Id. ¶¶ 12-13. The government initially reimbursed Dorchester on behalf of the veterans for unpaid rent and damage caused to the apartment units, but ultimately ceased making such payments. Id. ¶¶ 14-15. Subsequently, the government either ignored or denied Dorchester's timely written demands for amounts due for property damage and unpaid rent. Id. ¶¶ 16-17.

Based on these allegations, on October 21, 2020, Dorchester filed a complaint in this Court, initially asserting four claims: (1) breach of express contract; (2) breach of implied-in-fact contract; (3) promissory estoppel; and (4) EAJA fees. Id. ¶¶ 19-39. On February 4, 2021, the government moved to dismiss the complaint pursuant to RCFC 12(b)(1) and 12(b)(6) for, respectively, lack of jurisdiction and failure to state a claim. ECF No. 7. In Dorchester's response to the government's motion to dismiss, Dorchester agreed that its claims for promissory estoppel and EAJA fees should be dismissed, but it continues to pursue recovery on its claims of breach of express and implied-in-fact contract.4 ECF No. 12. Appended to its response, Dorchester provided various email

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exchanges between it and a VA employee, as well as several affidavits from Dorchester's management. ECF Nos. 12-1, 12-2, 12-3. The government filed its reply on March 25, 2021. ECF No. 13.


Generally, "the jurisdiction of the Court of Federal Claims is defined by the Tucker Act, which gives the court authority to render judgment on certain monetary claims against the United States." RadioShack Corp. v. United States, 566 F.3d 1358, 1360 (Fed. Cir. 2009). In relevant part, the Tucker Act grants the Court of Federal Claims jurisdiction over "any claim against the United States founded . . . upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort." 28 U.S.C. § 1491(a)(1).

In order to invoke this Court's jurisdiction over a breach of contract claim, the plaintiff must plead "a non-frivolous allegation of a contract with the government." Engage Learning, Inc. v. Salazar, 660 F.3d 1346, 1353 (Fed. Cir. 2011) (emphasis in original). To survive a RCFC 12(b)(1) challenge to jurisdiction based on breach of contract, the plaintiff "bears the burden of establishing the court's jurisdiction over its claims by a preponderance of the evidence." Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011). If the Court determines that "it lacks jurisdiction over the subject matter, it must dismiss the claim." Villars v. United States, 126 Fed. Cl. 626, 631 (2016) (citing and quoting Matthews v. United States, 72 Fed. Cl. 274, 278 (2006)).

In deciding a motion to dismiss for failure to state a claim under RCFC 12(b)(6), the Court views the facts in the light most favorable to the plaintiff and accepts as true all factual allegations — but not conclusory legal assertions — contained in the complaint. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Am. Bankers Ass'n v. United States, 932 F.3d 1375, 1380 (Fed. Cir. 2019). Those facts must yield a "reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plaintiff may not simply plead "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555 (citations...

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