Hous. Auth. of Slidell v. United States
| Decision Date | 27 July 2020 |
| Docket Number | No. 19-1583C,19-1583C |
| Parties | HOUSING AUTHORITY OF THE CITY OF SLIDELL, Plaintiff, v. THE UNITED STATES, Defendant. |
| Court | U.S. Claims Court |
CORRECTED
RCFC 12(b)(1); RCFC 12(b)(6); Tucker Act jurisdiction; 42 U.S.C. § 1437; Housing and Urban Development; annual contributions contract; public housing agency; breach of contract; money damages; contract damages; Bowen v. Massachusetts; "strings-attached" grants; judicial estoppel.
James M. Williams, Chehardy, Sherman, Williams, Murray, Recile, Stakelum, & Hayes, LLP, Metairie, LA, for Plaintiff.
Reta E. Bezak, United States Department of Justice, Civil Division, Washington, DC, for Defendant. With her on the briefs were Joseph H. Hunt, Assistant Attorney General, Civil Division, Robert E. Kirschman, Jr., Director, and Franklin E. White Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC.
Plaintiff, the Housing Authority of the City of Slidell ("HACS"), filed its First Amended Complaint, ECF No. 20 ("FAC"), seeking a judgment against Defendant, the United States — acting by and through the United States Department of Housing and Urban Development ("HUD") — for its breach of an Annual Contributions Contract ("ACC").1 See FAC at 10 ("Prayer for Relief"). In particular, HACS asks for an "[a]ward [of] monetary damages . . . in the amount [HACS] is owed pursuant to HUD's obligations under the ACC" and "any other relief that is proper." Id.; see id. at 2 & ¶ 17.
The government moved to dismiss the FAC pursuant to Rule 12(b)(1) and Rule 12(b)(6) of the Rules of the United States Court of Federal Claims ("RCFC"),2 essentially arguing that HACS's suit for money damages due to an alleged breach of the ACC is nothing more than an Administrative Procedure Act ("APA")3 claim masquerading as a contract claim at the Tucker Act ball. In line, however, with this Court's recent decisions involving other ACCs or similar agreements with HUD,4 this Court declines the government's invitation to dance at its jurisdictional party, unless and until a higher court says that we must. Until then, the government's latest, but by no means only, reading of applicable precedent — including that of the United States Court of Appeals for the Federal Circuit, as well as the United States Supreme Court's decision in Bowen v. Massachusetts5 — strikes this Court as an epic overreach that, if followed, would make a mess of the dividing line between the Tucker Act and the APA.
For the reasons explained below, HACS's claims deserve to be heard on the merits, and thus the government's motion is DENIED.
HACS is a public housing agency ("PHA")7 — a "governmental entity or public body (or agency or instrumentality thereof) which is authorized to engage in or assist in the development or operation of public housing." FAC at 2-3 (citing 42 U.S.C. § 1437a(b)(6)(A)); see also 24 C.F.R. § 905.108 (). HACS entered into an ACC with HUD, "by executing a Form HUD-53012, bearing number FW-1128" (the "HACS ACC"). FAC ¶ 3.8
An ACC "is a contract prescribed by HUD for loans and contributions, which may be in the form of [an] 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." 24 C.F.R. § 900.115 (quoted in FAC ¶ 2). The HACS ACC itself defines "ACC" as "the "Consolidated Annual Contributions Contract between HUD and [HACS], . . . consisting of Part A () and Part B ()." ECF No. 20-1 at 2 (HACS ACC, Part A, § 2 ("Definitions")).9 In referring to itself as a "Contract," the HACS ACC explicitly distinguishes between such an instrument and a "Cooperation Agreement," a term which the HACS ACC separately defines. Id.
The HACS ACC "incorporates by reference . . . those regulations issued by HUD for the development, modernization, and operation of public and Indian housing projects contained in Title 24 of the Code of Federal Regulations, as said Title shall be amended from time to time." ECF No. 20-1 at 2 (HACS ACC, Part A, at 1) (emphasis added).10 Moreover, pursuant to that agreement, "[n]othing herein shall release [HACS] from compliance with all applicable laws, executive orders, and regulations that are not specifically incorporated herein by reference." Id.
The government's contractual obligations, pursuant to the HACS ACC, include the following:
HUD shall provide maximum responsibility and flexibility to [P]HAs in making administrative decisions within all applicable statutes, executive orders, regulations and this ACC. HUD shall provide annual contributions to the [P]HA in accordance with all applicable statutes, executive orders, regulations, and this ACC.
FAC ¶ 5 (quoting HACS ACC § 3) (emphasis added).
HUD's promised "contributions" are comprised of "operating" subsidies and "capital" funds.11 With respect to operating subsidies, HACS must prepare, submit, and obtain approval of an operating budget. ECF No. 20-1 at 6 (HACS ACC, Part A, § 11(A) ("Operating Budget")). With respect to any particular "Federal fiscal year[,]" HUD "shall not . . . approve any estimate or revision of [HACS's] operating budget in an amount which, together with the amount of all operating subsidies then contracted for by HUD, would exceed the amount as determined by HUD of contracting authorization for operating subsidies under the Act." HACS ACC, Part A, § 11(C). In that regard, "HUD shall not be obligated to make any payments on account of operating subsidies in an amount in excess of the amount specifically approved by HUD." Id.; see id. § 11(D) ().
Pursuant to the HACS ACC, HACS "must maintain complete and accurate books of account for the projects of [the housing authority] in such a manner as to permit the preparation of statements and reports in accordance with HUD requirements, and to permit timely and effective audit." ECF No. 20-2 at 2 (HACS ACC, Part A, § 15(A) ("Books of Account, Records, and Government Access")). Moreover, HACS "must furnish HUD such financial and project reports, records, statements, and documents at such times, in such form, and accompanied by such reporting data as required by HUD." HACS ACC, Part A, § 15(B).12
In January 2016, a computer crash wiped out the entirety of HACS's accounting program. FAC ¶ 8. HACS informed HUD of the crash and of the fact that HACS had to "reconstruct[] all of its financial records." Id. Following a 2017 HUD review, see id. at 1, HACS received a Public Housing Assessment System ("PHAS")13 rating of 52 out of 100. Id. ¶ 9. As a result, HACS was placed on the so-called "Troubled" list. Id.
In August 2017, HUD's New Orleans Field Office informed HACS that it was being placed on what the agency has termed a "zero-dollar threshold" restriction, beginning August 27, 2017. FAC ¶ 10. The result of that restriction was that HACS could not draw its operating or capital funds through the Line of Credit Control System ("LOCCS")14 "unless HUD's unreasonable and burdensome demands were met." Id. The zero-dollar threshold prohibits HACS from using any ACC funds absent HUD's prior approval. Id. According to HACS, HUD's prevention of "access to funds earned" had the effect of "imposing a cash management system on Plaintiff which severely undermined its efficiency and operation." Id.
Around that same time, HACS successfully appealed its PHAS score and, on September 20, 2017, was removed from "Troubled" status. FAC ¶ 9. Indeed, in September 2017, HUD issued HACS a PHAS score of 81; in July 2018, HACS earned a score of 86 (both scores were out of a possible 100 points). Id. ¶ 11. HACS's status thus moved from "Troubled" to "Small PHA Deregulation" to "Standard" status within a timeframe of less than a year. Id. ¶¶ 9, 11.
Nevertheless, "HUD refuses to acknowledge the updated PHAS score" and instead "continues to burden HACS with the burden of 'zero-dollar threshold' status." FAC ¶ 12. While "HACS continues to submit its request for operating funds to HUD," and while HUD continues to approve such requests and "deposits these operating funds into HACS's . . . account," HUD's "New Orleans Field and Regional HUD offices refuse to release these funds to HACS with no basis for doing so." Id. ¶ 13. HACS alleges that "[t]hese actions constitute a breach of the ACC." Id. In that regard, HACS "has relied on [the] contractual language" in the HACS ACC, § 3 — i.e., HUD's commitment in the ACC to "provide annual contributions" — and "yearly funding provided by HUD to HACS pursuant to its obligations under the ACC, in order to keep [HACS's] operations running and to provide adequate housing for the residents of Slidell." FAC ¶ 6.
In addition, HACS alleges that HUD has breached the ACC because despite HACS's conforming its requests for funds "with the requirements of the zero-dollar threshold[,] . . . these requests are often denied without plausible reasons." FAC ¶ 14. HACS alleges that it has suffered damages insofar as "[t]hese requests are extremely time consuming as well as costly in time and funds as they must comply with [particular] [r]equirements for each . . . invoice along with extensive documentation no matter how small or repetitive the invoice may be." Id. HUD also "prohibited HACS from hiring a staff accountant to aid plaintiff in this burdensome process." Id.
HACS further alleges that it has been the subject of an unreasonable...
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