JardíN De Las Catalinas Ltd. v. Joyner

• Decision Date: 12 September 2014
• Docket Number: No. 12–1757.,12–1757.
• Citation: 766 F.3d 127
• Court: U.S. Court of Appeals — First Circuit
• Parties: JARDÍN DE LAS CATALINAS LIMITED PARTNERSHIP and Jardín De Santa Maria Limited Partnership, Plaintiffs, Appellants, v. George R. JOYNER, In His Official Capacity as Executive Director of the Puerto Rico Housing Finance Authority, Defendant, Appellee.

766 F.3d 127

JARDÍN DE LAS CATALINAS LIMITED PARTNERSHIP and Jardín De Santa Maria Limited Partnership, Plaintiffs, Appellants,

v.George R. JOYNER, In His Official Capacity as Executive Director of the Puerto Rico Housing Finance Authority, Defendant, Appellee.

No. 12–1757.

United States Court of Appeals,First Circuit.

Sept. 12, 2014.

Ignacio Fernández de Lahongrais, with whom Bufete Fernández & Alcaraz, C.S.P. was on brief, for appellants.

Tomás A. Román–Santos, with whom José L. Ramírez–Coll and Fiddler, González & Rodríguez, PSC were on brief, for appellee.

Before THOMPSON, BALDOCK^* and SELYA, Circuit Judges.

SELYA, Circuit Judge.

This is what might be called a “pick your poison” case. In the proceedings below, the district court identified three justifications supporting its grant of judgment on the pleadings: waiver, untimeliness, and the absence of a constitutionally protected property interest in the tax credits sought by the plaintiffs. Although all of these avenues appear promising, principles of judicial economy and restraint counsel that we write no more broadly than is necessary to resolve this appeal.

When we conduct the necessary triage, what jumps off the page is the tardiness of the plaintiffs' action. We therefore train our sights on this facet of the district court's decision. Concluding, as we do, that the plaintiffs' action was brought outside the applicable limitations period and that equitable tolling does not rescue it, we affirm.

I. BACKGROUND

We start with a brief exposition of the relevant statutory scheme. Section 42 of the Internal Revenue Code provides for tax credits designed to encourage investment in low-income housing. SeeI.R.C. § 42, 26 U.S.C. § 42. The statute requires each state agency to develop a qualified allocation plan, see id. § 42(m)(1)(B), and gives such agencies broad discretion to determine whether and to whom the credits will be allocated, see Barrington Cove Ltd. P'ship v. R.I. Hous. & Mortg. Fin. Corp., 246 F.3d 1, 5–6 (1st Cir.2001). The allocation of such credits to particular taxpayers occurs through the issuance, annually, of Internal Revenue Service (IRS) 8609 forms. See Treas. Reg. § 1.42–1(h).

The amount of the annual credit is equal to the “applicable percentage” of the “qualified basis” of a covered project. SeeI.R.C. § 42(a). The qualified basis is determined with reference to (among other things) the cost of development and the ratio of low-income units to other units in the project. See id. § 42(c)(1), (d). For projects like those at issue here, the applicable percentage is a rate calculated to yield, over a ten-year period, a credit of 70% of the present value of the qualified basis. See id. § 42(b)(1)(B)(i). For any given project, this percentage typically is locked in either upon the execution of a binding agreement between the state agency and the taxpayer or when the building is placed into service. See id. § 42(b)(1).

Even though such allocation agreements are binding, the ultimate award of credits is subject to the state agency's assessment of financial feasibility. SeeTreas. Reg. § 1.42–8(a)(5). The agency may reduce the previously agreed credit amount if, after considering certain factors, it determines that the project would be financially viable without the full subsidy. See id.;I.R.C. § 42(m)(2).

Against this backdrop, we turn to the case at hand. Because this case was decided on a motion for judgment on the pleadings, we assume the accuracy of the well-pleaded facts and supplement those facts by reference to documents incorporated in the pleadings and matters susceptible to judicial notice. See Greenpack of P.R., Inc. v. Am. President Lines, 684 F.3d 20, 25–26 (1st Cir.2012); see also Cruz v. Melecio, 204 F.3d 14, 21 (1st Cir.2000).

The plaintiffs, Jardín de las Catalinas Limited Partnership and Jardín de Santa Maria Limited Partnership, each own an apartment building in Puerto Rico that qualifies (under section 42) for low-income housing tax credits. The defendant is the Executive Director of the Puerto Rico Housing Finance Authority (the PRHFA), which is the agency responsible for allocating these credits in Puerto Rico.¹

The events giving rise to this appeal began when the plaintiffs and the PRHFA entered into so-called carryover allocation agreements (the Agreements) setting the applicable percentage for their covered projects at 8.12%. Based on this rate and estimates of each project's qualified basis, the Agreements provided each plaintiff with a projected tax-credit allocation of more than $1,000,000 annually.

Congress thereafter passed the Housing and Economic Recovery Act of 2008 (HERA), Pub.L. No. 110–289, 122 Stat. 2654. Among its constellation of provisions, HERA amended section 42 to provide temporarily that the applicable percentage for developments such as those owned by the plaintiffs “shall not be less than 9[%].” Id. § 3002(a)(1), 122 Stat. at 2879 (codified at I.R.C. § 42(b)(2)). The new 9% floor applied even to taxpayers, like the plaintiffs, who previously had agreed to lower applicable percentages. SeeI.R.S. Notice 2008–106, 2008–49 I.R.B. 1239 (Dec. 8, 2008).

The plaintiffs allege that, under the HERA amendment, they were entitled to additional credits aggregating over $278,000 annually for their two projects combined.² The plaintiffs further aver that, on April 15, 2010, the PRHFA delivered to them over 300 IRS 8609 forms, each corresponding to a particular apartment unit within one of the covered projects. On each form, line 1b specified the dollar amount of the tax credit allocated to the particular unit; line 2 specified the applicable percentage (9%); and line 3a specified the qualified basis for that unit. The plaintiffs signed the forms and submitted them to the IRS on the same day, apparently without regard to whether the total of the credits matched their expectations.

As matters turned out, the PRHFA had allocated to the plaintiffs the exact amount of credits specified in the Agreements, and no more. To reach this figure, the PRHFA had reduced the qualified basis for each unit such that, when multiplied by the new 9% rate required by HERA, no additional credits were due.

Some months elapsed before the plaintiffs, on November 5, 2010, sent an e-mail to the PRHFA bringing this perceived discrepancy to its attention. In an e-mailed response dated November 8, the agency confirmed its calculation methodology and stood by the amount of the allocation.³

On April 19, 2011—more than one year after they signed and forwarded the IRS 8609 forms to the IRS—the plaintiffs repaired to the federal district court. Invoking42 U.S.C. § 1983, they sought declaratory and injunctive relief against the defendant in his official capacity, charging that the PRHFA had unlawfully seized the additional tax credits to which they ostensibly were entitled under HERA. The defendant answered, denying that any unlawful seizure of tax credits had transpired.

In due course, the defendant moved for judgment on the pleadings, seeFed.R.Civ.P. 12(c), asserting that the plaintiffs' action was time-barred and that, in all events, the plaintiffs had no cognizable property interest in any additional tax credits. The motion was referred to a magistrate judge, who granted the plaintiffs an extension of time within which to file an opposition. However, the plaintiffs failed to file their opposition within the extended period. The magistrate judge then issued a report and recommendation, urging that the defendant's unopposed motion for judgment on the pleadings be allowed.

The plaintiffs unsuccessfully moved for reconsideration. They also filed objections to the magistrate judge's report and recommendation. SeeFed.R.Civ.P. 72(b)(2). The district court overruled these objections, accepted the magistrate judge's recommendation, and granted the defendant's motion for judgment on the pleadings. See Jardín de las Catalinas Ltd. P'ship v. Joyner, 861 F.Supp.2d 12, 18 (D.P.R.2012). This timely appeal followed.

II. ANALYSIS

For simplicity's sake, we do not hereafter distinguish between the district judge and the magistrate judge but, rather, take an institutional view and refer to the determinations below as those of the district court. We review a district court's entry of judgment on the pleadings de novo.⁴See Gulf Coast Bank & Trust Co. v. Reder, 355 F.3d 35, 37 (1st Cir.2004). The applicable standard of review is identical to the standard of review for motions to dismiss for failure to state a claim under Rule 12(b)(6). See Marrero–Gutierrez v. Molina, 491 F.3d 1, 5 (1st Cir.2007).

The district court discussed three possible justifications for the entry of judgment on the pleadings: waiver, untimeliness, and the absence of any cognizable property interest in the additional tax credits. It would serve no useful purpose to explore all of these avenues. Where a trial court decides a case on alternative theories, each of which is independently sufficient to ground its judgment, a reviewing court completes its work when it determines that any one of those theories is fully supportable. So it is here: the plaintiffs' action is plainly time-barred, and we go directly to that dispositive point.

A limitations defense may be asserted through a motion for judgment on the pleadings when it appears on the face of the properly considered documents that the time for suit has expired. See Rivera–Gomez v. de Castro, 843 F.2d 631, 632 (1st Cir.1988); 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1368 (3d ed.2004). Here, we consider not only the pleadings but also the IRS 8609 forms and the Agreements (all of which are relied upon in the complaint).

The plaintiffs brought this suit under 42 U.S.C. § 1983, which creates a private right of action to redress the deprivation of federally protected rights at the hands of state actors. Since section 1983does not contain a built-in statute of limitations, courts borrow the forum...