our first case for the day is evergreen square of cudahy and others again it is against the wisconsin housing and economic development authority and secretary castro sixteen fourteen seventy five mr cohn for morning economic development authority more specifically washington square apartments watch the square apartments has alleged that we had reese's contact contract by extensions correct that is correct and i also correct that they knew this was we just practiced at the time they signed those that course of dealing continue contract none of the terms or vision of the contract were changed if we'd had wanted to you know impose this requirement why didn't put in that in the renewal that you know it was changing the way the rents should be adjusted with the directives of notice ninety five twelve and the subsequent notices that were issued after nine hundred twelve expire and under those notices all projects owners not just watch and square would you argue that washington square passed up four hundred thousand dollars in additional rent because it didn't want to pay me twenty five hundred dollars for competent study i would argue  that that's an unknown your honor what i do know is the fact that that they did that their failure to approve the running races did result in a loss of over four hundred thousand dollars in revenue and and this and this this request  a very diminished requirement because the other two projects don't have that don't have that requirement and so obviously it seems that we've had no problem in a ministry other have contracts and approving running courses without any increase so that's why we believe it's a very dim minimalist requirement and when you contrast that with the over four hundred thousand dollars in revenue that was lost by washington square at the balance tips you know it's the balance as much greater in favor of in terms of disproportionate forfeits your favor washington square during those years council i am any hostile i your answer just a minute ago counsel during those think i believe we have it in one of our secular facts that might have been a couple of million dollars i'm not i don't remember exactly how much it was i'm trying to get a sense of four hundred thousand dollars compared to what did not have not actually i paddled out so it's not onerous to ask for the that the adjustment be requested but it does seem that there is can be a pretty onerous burden if someone in your client's position waits and waits and waits for public the public agency sets its budgets manages its finances for several years and then you come in years later and say oh we forgot to ask you for all these things and now we'd like to go back and redo a year's worth of budgeting well in essence though what what we to say if you want your money chris you have to pay us to get it so that be like that be like me telling telling my client that if you want if you know you have to pay me to pay me and i know you referring there to the rent comparability study yes you are there because i thought you were just telling one called those studies had been submitted within the six year statute of limitations so we withdrew that claim i am very hostile fire disproportionate forfeiture argument the why should this doctrine apply at all i mean if we ran the restatement in the manner that you suggest a party would never ever ever ever have to sell a condition within its own saying if you want your own increase you have to pay us and before they changed it before they unilaterally impose this requirement on washington square and the other two plaintiffs and other section a project on ours you didn't have to pay to get your rent increase you just had to you know if you were like washington square you had to request it and there's no there was no process or procedure for requesting that in you know that washington square i mean we don't prescribe in fact there's no evidence that's what a and then then after you've spent your money then will we might give you a run increase but we don't know what it will give you or any crease so i think that that is you know that's a unilateral revision modification of the contract which is which is which is a breach which is which is another alternative grounds for excusing the condition precedent is the fact but because of the fact that we debriefed the contract by imposing unilaterally imposing this requirement  procedures that were required or what notices they could have done so and they did not that does the language the ritual have contract was on alter the renewals were not written did not sign  of this requirement which all course that i've looked at it has found it to be up breach of the contract that's including district courts federal district court which have dealt with such a contract between a private project owner and a public housing all projects in all regions and all geographic areas of the country are not a reasonable formula is gone why is this a claim against the state agency which as i understand it just had to apply that factor under hud regulations well why isn't your claim really against home while we can't we don't have time we have said because an accredited contract and again be sure a regulated party why couldn't you challenge the regulations under the administrative procedure act i just don't think we would have standing to do that and plus you know there's not there's nothing in the happy talk between the owners and and we do that says that you know this is this is especially contingent upon you of hearing t comply with hud regulations right i mean that's the program that's that's normal in federal regulations and several of the writ federally regulated programs have to has a contract between with it between it and hud and it's not essentially the save money and there's no correlation with the savings even if you can see that the costs associated with not tary units is less than the cost of turnover units there's nothing that there's nothing that indicates at this point zero one  ninety five act in the entire damage period is at least two extensions into the contracts at paragraph thirty one of documents seventy two the stipulation that they administer back to a year later and that washington square always made request it never stopped question and we got rent increases when it made requests paragraph forty two of documents seventy two and the amount they received over three million dollars and  eight of documents seventy two and i need to point out that the forty four hundred thousand dollars that mr holmes says is disproportionate include all the down years both were his his count for the automatic wearing all three projects they sign contracts for the other two landlords without a request condition and they were willing to enter into one with this change the change we think indicates importance in the hug regular action to move the monitoring the landlord make a request i think in seven i'm sorry ninety four excuse me congress found that over seventy percent of the section eight housing subsidized under this program were over fair market rents when you're generally not going to labor intensive process to which the district court reheard does their record quantify the burden i don't think it rent levels unless the landlord made a request it was a burglar shifting a risk shifting and of course clear contract law says the court should not rewrite the party's wrists i think that is the burden that we your honor it's a two step process is explained much better in the first circuits opinion than i probably can do in the few minutes here we've made an initial determination based on the hud published rent levels that you were  market rents if you were in that situation then the landlord had the option of submitting a rent comparable to study to show that was not true remember the supreme court now part of ridge said no landlord is entitled to a formula not so we would the hud regulations require to rent comparable to study after an initial determination was made that it appeared that the landlord was not entitle to the rent increase because his  your honor washington square if after we does initial finding that they were above it under the hood regulations would have been required to submit or incompatibility study i think it was never resolved in the court below whether that was at his own expense or that was a project expense that would ultimately be reimbursed amount of the cash flow of the project so i can't answer that question but is as as the panel pointed out to come in with a twenty five hundred dollar renting priest to get whatever portion let's just say it is what i think it is thirty thousand a year to get ten times the benefit for that it seems to me that either washington square felt it was not entitled to it that one collect that amount of damages now even if  was a larger amount of money and did not go through those steps mr jaffe one of the contracts particularly with washington square but also the other plaintiffs say about compliance with federal law and perhaps changing regulations and federal laws affecting the program yes i think two things your honor is the the statute section eight and the contract that we'd enters into administered in conformity with laws and regulations and as the panel pointed out by the time we get to the contracts allegedly breached during this damage period those are renewed adding time when the law is as mr cohen complains about it so if we look at the law at the time of contracting the met in i think that the panel's correct that that's the time for new because you could take your housing go back to the  the table to a s but i think as entering into a programmer receives government subsidies and perhaps this is more your question your honor it taste the risk that the contracting party switching it we didn't make the switch we just followed govern iraq we did what it it had to do so as a general matter in those kinds of situations there at least theoretically can be room for constitutional challenges of flu changes are drastic enough but when i have caught generally the law if you if you enter into a long term contract and are going to regulate it spending program like this there is some inher modification of the program yes i think the general rule is every private contractor supreme court has said contracts of state agencies are treated not as u s government contracts but as private contracts comes with the inherent risks that the law would change i see my yellow light is come on if i can just take a minute we can totally agree on the the the adjustment factors there are imposed on wheat a weed is contractual obligation is to apply what hud publishes  plaintiffs have local time stated in stipulated that the table to are the applicable factors that we think you know the cases that have reached that conclusion and in all cases that have discussed it in terms of the state agency for secretary morning your honour's the first focus on the condition present specifically the disproportionate forfeiture argument one aspect of that that has not been discussed yet this morning is a requirement in the rest atement this is fundamental to the definition of a forfeiture that forfeiture occurs only want to party loses its right to the agreed exchange after israelites stand surely as by preparation or performance on the expectation of that exchange here however there is absolutely no evidence that washington square took any action in reliance on the rent and just adjustments that it did not request nor could it have relied on those right adjustments when year after year failed to request them and year after year it didn't didn't receive so i just want to point that out because there's been some discussion about this proportionality but in fact it wasn't even a forfeiture in the first place because there was no substantial square receiving annually from the section eight program good game i don't have that number in front of me i calculated it enough to say in our in our brief that it received millions of about disproportionate force forfeiture it's will have odd nobody seems to have done the math right we think you know we don't know how large a part of total revenues the loss would represent well that include total rent that is both the federal share and the tenants share that would include moneys provide no i believe that would include the monies provided by  by the public housing authority by rita that might my point you're my point your honor was that even apart from the disproportionality issue there was a requirement under the law substantial alliance so the court doesn't even need to wade into disproportionality because there's no evidence that that washington square substantially relied on annual adjustments that that it didn't request and didn't receive argument that it would be limited to the so called overall limitation  to are you referring your honor to the dart their argument the reply brief against the against the application of the overall limitation this case and the facts of this case so i think you know the first the first circuit set that out in the one can valid case and there's the clause in the contract the overall limitation clause provides that notwithstanding any other provisions of the contract the judgement sh provides a reasonable means of applying that clause so specifically under the fair market rent comparison in this case we would compare the current contract rents with published fair market rents and washington square did not receive the current contract rents exceeded fair market rents or other words the overall limitation applied as held by the first circuit in the want to can valid a citizen and washington square was not titled rent defined term capital laugh have capital and capital r are not the same as lower case market rents five washington where claims that hud has long recognized that fair market rents are not the same as market rent on the next page however they state correctly that  be the same type of housing that would be provided for under section  bases in our brief for why that's wrong but ultimately judge hamilton is correct that the federal circuit rejected that exact argument in the head and housing case that's all i have unless  briefly if you would suggest in your brief the federal law contracts controls here first was that ever raised in this record i don't think we we  expressly raise i just don't think the issue was briefed at all one way or the other but it's a good idea well and i would have thought that a federal contract law applied here the jurisdictional issue that brought this case a couple of years ago would have been much simpler i understand your point your honor i think that's i think that's correct i think we know we cited a pricey piercer pearcey price case by this court seven circuit case  which indicates that that federal law federal common law applies to do you have contracts but i do take your point thank you so i noticed was adopted twelve years after the contract was signed so there was no labor intensive process in effect when the contract was executed even though that the condition precedent was in effect  pine ridge you know that legal underpinning of ken valley is legal deficient because alzheimer's decided the question of the issue of whether the fifth amendment whether whether changes the law can be breaches of the contract and to the extent they are even though if the government hires a governmental agency met may have to follow all that that that means that the that doesn't mean that the contractor party is not