Alpine Ridge Group v. Kemp
| Decision Date | 07 February 1992 |
| Docket Number | Nos. 91-35267,91-35573 and 91-55354,s. 91-35267 |
| Citation | 955 F.2d 1382 |
| Parties | ALPINE RIDGE GROUP, a partnership; Monroe Associates, a limited partnership; Brentwood, a limited partnership; Campbell Courts Associates, a partnership; Cheney Gardens Limited Partnership, a limited partnership, et al., Plaintiffs-Appellees, and Bitterroot Manor, a limited partnership, et al., Plaintiffs-Intervenors, v. Jack F. KEMP, in his official capacity as Secretary of the United States Department of Urban Development; U.S. Department of Housing and Urban Development, Defendants-Appellants. ALPINE RIDGE GROUP, a partnership; Monroe Associates, a limited partnership; Brentwood, a limited partnership; Campbell Courts Associates, a partnership; Cheney Gardens Limited Partnership, a limited partnership, et al., Plaintiffs-Appellees, v. Jack F. KEMP, in his official capacity as Secretary of the United States Department of Urban Development; U.S. Department of Housing and Urban Development, Defendants-Appellants. ACACIA VILLA; Alicia Park Apartments; Amerige Villa; Antelope Valley, et al., Plaintiffs-Appellees, v. Jack KEMP, Sec. HUD, United States of America, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Douglas Letter, U.S. Dept. of Justice, Washington, D.C., for defendants-appellants.
Warren J. Daheim, Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, Tacoma, Wash., Henry A. Hubschman, Fried, Frank, Harris, Shriver & Jacobson, Washington, D.C., for plaintiffs-appellees.
Appeal from the United States District Court for the Western District of Washington.
Appeal from the United States District Court for the Central District of California.
Before WALLACE, Chief Judge, HUG and RYMER, Circuit Judges.
The Secretary of the Department of Housing and Urban Development (HUD) appeals from decisions of two district courts, 764 F.Supp. 1393, (W.D.Wash.) 774 F.Supp. 1240, (C.D.Cal.) each of which entered a summary or partial summary judgment; one to the Alpine Ridge Group (Alpine) and one to Acacia Villa (Acacia), holding an act of Congress unconstitutional. The district courts had jurisdiction under 28 U.S.C. §§ 1331 and 1361. We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291. We affirm.
Alpine and Acacia (owners) are developers and owners of housing projects covered by section 8 of the United States Housing Act of 1937, as amended, 42 U.S.C. § 1437f (Housing Act). Pursuant to the authority granted by Congress in section 8, HUD solicited private developers to submit construction bids for low-income rental housing. HUD or its local designate awarded selected developers Housing Assistance Payment contracts. Under the contracts, the developer/owner collects a portion of the rent from the tenant, based on the tenant's income, while the remainder is paid by the United States as a subsidy. Section 8 also requires HUD to include a provision in the contracts with owners permitting at least annual rent adjustments "to reflect changes in the fair market rentals established in the housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula." 42 U.S.C. § 1437f(c)(2)(A).
The owners brought suit against HUD claiming entitlement to yearly "formula" rent increases, basing their claim primarily upon the interpretations of section 8(c)(2)(A) of the Housing Act and section 1.9(b) of the contracts adopted in Rainier View Associates v. United States Department of Housing and Urban Development, 848 F.2d 988 (9th Cir.1988) (Rainier View), cert. denied, 490 U.S. 1066, 109 S.Ct. 2065, 104 L.Ed.2d 630 (1989). Rainier View held that HUD elected to use the "reasonable formula," rather than the "fair market value," method for determining annual rent adjustments in section 8 contracts. Id. at 991. The formula method obliges the government to calculate and publish Automatic Annual Adjustment Factors (factors), which are then used to adjust contract rents. Our court reasoned that because HUD elected the formula method, it could employ "fair market" comparability studies only to the extent that it incorporated those studies into the factors used to calculate the formula rent adjustments. Id. Rainier View rejected HUD's argument that an "Overall Limitation" provision in the contracts permitted HUD to use market rates to cap rent adjustments under the formula method to prevent "material differences between the rents charged for assisted and comparable unassisted units, as determined by the Government...." Id. at 990-91.
Despite our decision in Rainier View, HUD has continued to adjust rents, not according to the formula method, but on the basis of market comparability studies. HUD has done this in reliance on the Overall Limitation provision and subsequent congressional amendments to section 8 which adopted HUD's interpretation of the Overall Limitation clause. In 1989, Congress enacted section 801 of the Department of Housing and Urban Development Reform Act of 1989, Pub.L. No. 101-235, 103 Stat. 1987, 2057 (HUD Reform Act), ostensibly to change the result in Rainier View and settle the dispute between HUD and section 8 owners regarding the method for calculating annual rent adjustments. Section 801 prescribes one new procedure for computing past rent adjustments, and a different procedure for future adjustments. Under these new methods, owners receive a rent increase that is smaller than, but not less than thirty percent of, the rent adjustments they would have been entitled to under the original formula method.
Both district courts held that the HUD Reform Act violated the fifth amendment due process clause by impairing the owners' vested rights to annual rent adjustments pursuant to their section 8 contracts. The cases were consolidated for purposes of appeal.
The constitutionality of a statute is a question of law and, therefore, we review the district courts' rulings de novo. Trerice v. Pedersen, 769 F.2d 1398, 1400 (9th Cir.1985). In order to assert a due process claim under the fifth amendment, the owners must first establish that they have cognizable property rights arising out of their contracts with HUD. Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41, 54-55, 106 S.Ct. 2390, 2397-98, 91 L.Ed.2d 35 (1986) (Bowen); Peterson v. United States Department of Interior, 899 F.2d 799, 807 (9th Cir.) (Peterson), cert. denied, --- U.S. ----, 111 S.Ct. 567, 112 L.Ed.2d 574 (1990). Relying on Rainier View, the district courts held that such property rights had been established.
HUD argues that Rainier View was incorrectly decided. It urges us to reconsider the issues decided in Rainier View in light of section 801 of the HUD Reform Act and section 142 of Public Law No. 100-242, 101 Stat. 1850 (1988). HUD alleges that through these amendments, Congress retroactively clarified the original meaning of section 8. HUD also points to two lower court decisions as authority contrary to Rainier View. See Sheridan Square Partnership v. United States, 761 F.Supp. 738 (D.Colo.1991); National Leased Housing Association v. United States, 22 Cl.Ct. 649 (1991).
We have previously held that in certain cases involving statutory interpretation, a three-judge panel may reconsider the decision of an earlier panel when intervening legislation retroactively clarifies the meaning of a statute. Landreth v. Commissioner, 859 F.2d 643, 648 (9th Cir.1988) (Landreth). There, we held that we were not bound by a prior circuit decision interpreting the IRS Code because a subsequent congressional amendment clarified the meaning of the disputed section. The owners argue that Landreth is inapplicable because Rainier View was principally a contract, and not a statutory, interpretation case, thereby rendering intervening legislative clarification irrelevant.
Although Rainier View discussed the provisions of section 8 in conjunction with its contract analysis, its decision turned on HUD's election in the contracts of the "formula" method for determining rent adjustments. Rainier View, 848 F.2d at 990. As a matter of contract law, Rainier View held that:
In the contract, HUD elected the formula method. Having made its choice, HUD cannot now change its mind. The overall limitation provision of the statute and the contract permit HUD to adjust the formula factors in light of market conditions, but it does not permit HUD to abandon entirely the formula method it chose and to adjust rents solely on the basis of a market survey. HUD's interpretation of the overall limitation provision would render the formula method authorized by the statute and elected in the contract a nullity.
....
We thus hold that the contract unambiguously support [sic] Rainier's interpretation.
HUD correctly points out that the statute is not wholly irrelevant here because any contract entered into by HUD without congressional authorization would be invalid as ultra vires. Peterson, 899 F.2d at 807. Even so, Rainier View's interpretation of the contracts, while not the only approach available to that court, is nevertheless consistent with the language of section 8. Thus, Peterson is not an impediment to affirmance. Although HUD disagrees with the interpretation of the contracts set forth in Rainier View, this does not disturb the basis for that court's decision, or the consistency of that decision with the underlying statutory language. Because we hold that Rainier View was decided as a matter of contract law, we are not free to reexamine the issues in that case under the Landreth rule.
HUD contends that if we hold this dispute to be contractual and not statutory for purposes of reexamination under Landreth, we lack jurisdiction and must transfer this case to the court of claims. 28 U.S.C. § 1491. We point out that Rainier View faced the same question. Because that court d...
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...party whose rights have been determined by such judgment." 29 Federal Defendants' Reply Brief, p. 6 (citing Alpine Ridge Group v. Kemp, 955 F.2d 1382, 1386 (9th Cir.1992)). 30 At hearing, Plaintiffs also suggested that the Court could retain jurisdiction over the "nonmonetary aspects" of th......
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National Leased Housing Ass'n v. U.S., 95-5069
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