Boaz Hous. Auth. v. United States

Citation994 F.3d 1359
Decision Date16 April 2021
Docket Number2019-2325
Parties BOAZ HOUSING AUTHORITY, et al., Plaintiffs-Appellees v. UNITED STATES, Defendant-Appellant
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Carl Coan, III, Coan & Lyons, Washington, DC, for plaintiffs-appellees.

Anna Bondurant Eley, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, for defendant-appellant. Also represented by Jeffrey B. Clark, Robert Edward Kirschman, Jr., Franklin E. White, Jr.

Before Newman, O'Malley, and Wallach, Circuit Judges.

O'Malley, Circuit Judge.

The government appeals from a decision of the United States Court of Federal Claims ("Claims Court") denying its motion to dismiss for lack of subject matter jurisdiction and failure to state a claim. See Boaz Hous. Auth. v. United States , 141 Fed. Cl. 74 (2018). For the reasons explained below, we affirm.

A. The Statutory Framework

Section 9 of the United States Housing Act of 1937 ("Housing Act") provides two funds for public housing: the Capital Fund and the Operating Fund. 42 U.S.C. § 1437g ; see Quality Housing and Work Responsibility Act of 1998, Pub. L. No. 105–276, 112 Stat. 2461, 2518, 2551–62. The purpose of the Capital Fund is to make assistance available for carrying out "capital and management activities," e.g. , the redesign, reconstruction, and reconfiguration of public housing sites and buildings. See 42 U.S.C. § 1437g(d)(1). The purpose of the Operating Fund is to make assistance available for "the operation and management of public housing," e.g. , activities to ensure a program of routine preventative maintenance, the costs of insurance, and energy costs associated with public housing units. See id. § 1437g(e)(1).

Congress tasked the United States Department of Housing and Urban Development ("HUD") with allocating amounts in the Capital Fund and Operating Fund to eligible public housing agencies. See id. § 1437g(c)(1). See generally id. § 1437a(b)(8). Public housing agencies ("PHAs") include "any State, county, municipality, or other government entity or public body (or agency or instrumentality thereof)" that "is authorized to engage in or assist in the development or operation of public housing." Id. § 1437a(b)(6). Each fiscal year, HUD allocates money from the Capital Fund and Operating Fund to PHAs using a multi-factored formula. See id. § 1437g(c)(1), (d)(2), (e)(2) ; see also 24 C.F.R. §§ 905.400, 990.110. HUD regulations refer to a PHA's yearly amount of assistance from the Operating Fund as its "operating subsidy." See 24 C.F.R. § 990.115.

Section 9 of the Housing Act constrains the ways in which PHAs may use their operating subsidy. First, except for certain qualifying small PHAs that enjoy total fungibility between their Capital Fund and Operating Fund amounts, PHAs may use no more than 20% of their operating subsidy for Capital Fund uses.1 See 42 U.S.C. § 1437g(g)(1)(B), (g)(2). Second, with some exceptions, PHAs may not use any of their operating subsidy "for the purpose of constructing any public housing unit, if such construction would result in a net increase from the number of public housing units owned, assisted, or operated by the public housing agency on October 1, 1999." Id. § 1437g(g)(3). And third, through appropriations acts, Congress has forbidden paying to PHAs any amount appropriated under the heading "Public Housing Operating Fund" for the costs of operation and management of public housing of any prior year. See, e.g. , Consolidated Appropriations Act, 2010, Pub. L. No. 111–117, 123 Stat. 3034, 3080 (2009); see also 42 U.S.C. § 1437g note.

Finally, the Housing Act authorizes HUD to sanction a PHA that receives assistance under Section 9 of the Housing Act if HUD finds that the PHA "has failed to comply substantially with any provision of this chapter relating to the public housing program." See 42 U.S.C. § 1437d(j)(4). Potential sanctions include terminating, withholding, reducing, or limiting the PHA's assistance payments under Section 9 and ordering other corrective action against the PHA. Id.

B. The PHAs' Breach of Contract Claim

Each of the 553 PHAs in this case executed an Annual Contributions Contract ("ACC") with HUD. HUD regulations define an ACC as "a contract prescribed by HUD for loans and contributions, which may be in the form of operating subsidy, whereby HUD agrees to provide financial assistance and the PHA agrees to comply with HUD requirements for the development and operation of its public housing projects." See 24 C.F.R. § 990.115.

HUD's definition comports with the terms of HUD's standard form "Consolidated Annual Contributions Contract Between Housing Authority and the United States of America." See J.A. 124–38. The contract requires HUD to "provide annual contributions to the [PHA] in accordance with all applicable statutes, executive orders, regulations, and this ACC." J.A. 128. It also requires the PHA to "develop and operate all projects covered by this ACC in compliance with all the provisions of this ACC and all applicable statutes, executive orders, and regulations issued by HUD, as they shall be amended from time to time." J.A. 129.

The standard form ACC also incorporates by reference HUD's regulations contained in Title 24 of the Code of Federal Regulations. See J.A. 127, 129. Relevant to this appeal is 24 C.F.R. § 990.210(c), which provides HUD with "discretion to revise, on a pro rata basis, the amounts of operating subsidy to be paid to PHAs" where "insufficient funds are available." 24 C.F.R. § 990.210(c).

In 2012, Congress made insufficient funds available when it funded only approximately 80% of the total operating subsidies of all PHAs (the plaintiffs here and others). See Consolidated and Further Continuing Appropriations Act, 2012, Pub. L. No. 112–55, 125 Stat. 552, 680 (2011). Congress also directed HUD to "take into account public housing agencies' excess operating fund reserves, as determined by the Secretary," in determining their 2012 operating subsidy. Id. As instructed, HUD considered the excess reserves of each PHA when it apportioned the available funding and did not prorate the available funding as required by 24 C.F.R. § 990.210(c) and the ACCs. Some PHAs therefore received more funding in 2012 than they would have if HUD prorated the available funding. Other PHAs, including all the PHAs in this case, received less than they would have or received no funding at all.

The PHAs in this case brought suit in the Claims Court under the Tucker Act, 28 U.S.C. § 1491(a)(1), alleging that HUD breached their ACCs when it reduced their 2012 operating subsidy on a non-pro rata basis. J.A. 105, 121 (¶¶ 15, 81). The PHAs sought compensatory damages for "the difference between the amounts they should have received under their ACCs and the amounts they actually received." J.A. 119–20 (¶ 71); see J.A. 121 (Prayer for Relief).

The PHAs moved for summary judgment as to liability, and the government moved to dismiss pursuant to Rule 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims ("RCFC"). The Claims Court stayed further briefing on the PHAs' motion for summary judgment pending resolution of the government's motion to dismiss. As to jurisdiction, the government argued that the allegedly breached provisions of the ACCs did not mandate an award of money damages in the event of breach because the true nature of the PHAs' claim is the violation of a regulation that implements a non-money mandating statutory scheme. According to the government, the statutory scheme was not money-mandating because it attached strings to the PHAs' use of their operating subsidies. As to the merits, the government similarly argued that the PHAs were not entitled to an unrestricted money judgment under any law or contract with HUD.

The Claims Court denied the government's motion to dismiss. The Claims Court first concluded that the PHAs' claim was contract-based because contractual provisions that "were required by and incorporated governing regulations" are not "any less contractual obligations or provisions." Boaz , 141 Fed. Cl. at 80 (quoting San Juan City Coll. v. United States , 391 F.3d 1357, 1360 (Fed. Cir. 2004) ). The court found that "the essential purpose of the ACCs is to contractually obligate HUD to pay monetary subsidies to Plaintiffs in exchange for their operation of public housing projects in accordance with regulatory and statutory requirements." Id. at 82. The Claims Court then held that the "strings-attached" nature of the operating subsidy did not preclude the court from exercising Tucker Act jurisdiction over the PHAs' claim. Id. The court distinguished both Lummi Tribe of the Lummi Reservation v. United States , 870 F.3d 1313 (Fed. Cir. 2017), and National Center for Manufacturing Sciences v. United States (NCMS ), 114 F.3d 196 (Fed. Cir. 1997), because (1) the PHAs sought compensatory damages for their losses from the government's failure to meet a past-due obligation and not equitable relief to enforce a regulatory obligation and (2) the PHAs' claim is based on a breach of contract and not a statute. Boaz , 141 Fed. Cl. at 83–84.

After the Claims Court denied its motion to dismiss, the government did not oppose the PHAs' motion for summary judgment on liability in light of Public Housing Authorities Directors Ass'n v. United States (PHADA ), 130 Fed. Cl. 522 (2017), but reserved its right to appeal the Claims Court's judgment.2 The Claims Court granted the PHAs summary judgment on liability for the reasons set forth in PHADA , and the parties subsequently stipulated to damages with respect to all but one of the PHAs in this case.3

On June 25, 2019, the Claims Court entered judgment pursuant to Rule 54(b) of the RCFC. The government timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

A. Standard of Review

We review the denial of a motion to dismiss for lack of jurisdiction de novo . Inter-Tribal...

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