FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALBERTA E. SCHROEDER, 

Plaintiff-Appellant,

v.

UNITED STATES OF AMERICA, acting

through the FARMERS HOME

ADMINISTRATION, UNITED STATES

DEPARTMENT OF AGRICULTURE; its

successor in interest, THE RURAL No. 07-36073

HOUSING SERVICE OF THE UNITED D.C. No.

STATES DEPARTMENT OF  2:06-cv-00818-SU

AGRICULTURE; and STATE DIRECTOR OPINION

FOR THE FARMERS HOME

ADMINISTRATION FOR THE STATE OF

OREGON its successor STATE

DIRECTOR FOR OREGON OF THE

RURAL HOUSING SERVICE OF THE

UNITED STATES DEPARTMENT OF

AGRICULTURE,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Oregon

Anna J. Brown, District Judge, Presiding

Argued and Submitted

March 5, 2009—Portland, Oregon

Filed June 22, 2009

Before: Susan P. Graber, Raymond C. Fisher, and

Milan D. Smith, Jr., Circuit Judges.

7393
Opinion by Judge Milan D. Smith, Jr.

7394 SCHROEDER v. UNITED STATES
COUNSEL

William F. Schroeder, Vale, Oregon, for the plaintiffappellant.

Suzanne A. Bratis and Kelly A. Zusman, Assistant United

States Attorneys, United States Attorney’s Office for the District of Oregon, Portland, Oregon, for the defendant-appellee.

Gideon Anders, National Housing Law Project, Oakland, California, and Ed Johnson, Oregon Law Center, Portland, Oregon, for the amici curiae.

OPINION

MILAN D. SMITH, JR., Circuit Judge:

Plaintiff-Appellant Alberta Schroeder appeals a grant of

summary judgment for the United States in her suit seeking

7396 SCHROEDER v. UNITED STATES
to quiet title in an apartment complex she owns and operates.

Under the National Housing Act loan program into which she

entered in 1984, Schroeder was required to use her property

exclusively as low-income housing until she fully repaid her

loans. Schroeder argues that, although the loans have not yet

come due, the government must now accept payment in full

on her loans, thereby allowing her to terminate her participation in the National Housing Act program. The district court

ruled that the Emergency Low Income Housing Preservation

Act of 1987 (ELIHPA) forecloses Schroeder’s arguments and

declined to grant equitable relief. We affirm the decision of

the district court.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Housing Act of 1949 and the Emergency Low

Income Housing Preservation Act of 1987

Congress passed the Housing Act of 1949, 42 U.S.C.

§§ 1441-1490, to encourage private investment in housing for

elderly and low-income rural residents. Section 515 of Title

V of the Housing Act authorized the Department of Agriculture Farmers Home Administration (FmHA) (which was later

incorporated into the Rural Housing Service (RHS)) to make

direct loans to borrowers seeking to finance affordable housing (RHS loans or § 515 loans). See 42 U.S.C. § 1485.

Involved property owners, in exchange for reduced interest

rates and other subsidies, agreed to rent their covered properties only to qualified elderly and low-income tenants at

affordable rates until the owners had fully repaid their RHS

loans. 42 U.S.C. § 1490a. Initially, loans made under this program provided borrowers with an unrestricted right to repay

their loans at any time. Franconia Assocs. v. United States,

536 U.S. 129, 135 (2002). 

In 1987, responding to fears that the supply of affordable

rural housing was dwindling because borrowers were prepaying their RHS loans, Congress enacted ELIHPA, 42 U.S.C.

SCHROEDER v. UNITED STATES 7397
§ 1472(c).1

 Under ELIHPA, RHS may accept “prepayments”

on covered loans only if the property owner first complies

with ELIHPA’s “elaborate requirements” designed to preserve low-income housing. DBSI/TRI IV Ltd. P’ship v. United

States, 465 F.3d 1031, 1035-36 & n.2 (9th Cir. 2006)

(describing prepayment procedures under 42 U.S.C.

§ 1472(c)); see also Kimberly Assocs. v. United States, 261

F.3d 864, 867 (9th Cir. 2001).

Under these procedures, the owner must first give notice of

intent to prepay. 42 U.S.C. § 1472(c)(3). Then, the government must offer the owner a financial incentive to remain in

the program. Id. § 1472(c)(4)(A). If the owner still wishes to

prepay, the owner must offer to sell the property to any qualified nonprofit organization or public agency at fair market

value. Id. § 1472(c)(5)(A)(i). If the property is not sold within

180 days, RHS may then accept the prepayment from the

owner. Id. § 1472(c)(5)(A)(ii); DBSI/TRI, 465 F.3d at 1035.

In 2002, in response to property owners’ legal challenges

to ELIHPA, the Supreme Court held that the Act “effected a

repudiation of” the existing loan contracts. Franconia, 536

U.S. at 143. On remand, the Court of Federal Claims clarified

the property owners’ rights and recourse: “The promissory

notes at issue could not be much clearer in allowing plaintiffs

to prepay at any time, indicating unambiguously that

‘[p]repayments of scheduled installments, or any portion

thereof, may be made at any time at the option of the Borrower.’ ” Franconia Assocs. v. United States, 61 Fed. Cl. 718, 730

(2004) (alteration in original). The government, therefore, has

1ELIHPA originally applied only to loans entered into with RHS before

December 21, 1979. See Franconia, 536 U.S. at 136. In 1992, Congress

extended the Act’s restrictions to include loans made between December

21, 1979 and December 15, 1989, exclusive. Id. at 137 n.3 (citing 42

U.S.C. § 1472). 

. 

7398 SCHROEDER v. UNITED STATES
a “concomitant obligation” to accept the prepayment, and

ELIHPA repudiated the property owners’ rights. Id. at 730-

33. As a result, a property owner whose contracts have been

adversely affected by ELIHPA may bring a claim for damages against the government. Franconia, 536 U.S. at 143. 

Because the United States was not acting in its capacity as

sovereign in enacting ELIHPA, the government may not

assert a sovereign immunity defense in such an action. Id. at

141 (“‘When the United States enters into contract relations,

its rights and duties therein are governed generally by the law

applicable to contracts between private individuals.’ ” (quoting Mobil Oil Exploration & Producing Se., Inc. v. United

States, 530 U.S. 604, 607 (2000))); see also Kimberly, 261

F.3d at 867-70. But the United States is not “free to disobey”

ELIHPA; it may accept a borrower’s prepayment only after

following the procedures described in ELIHPA. DBSI/TRI,

465 F.3d at 1041. Therefore, borrowers who wish to prepay

must either comply with ELIHPA’s procedures or seek damages under the Tucker Act in the Court of Federal Claims. See

Franconia, 536 U.S. at 138; DBSI/TRI, 465 F.3d at 1041.

II. Schroeder’s Property and Loans

Schroeder currently owns and operates a six-unit lowincome housing project located in Heppner, Oregon, known

as the Willow View Apartments. Schroeder’s predecessor, the

Midas Company, purchased the property in 1975 using a

forty-year, $170,300 loan from the FmHA (the 1975 Loan),

the terms of which were evidenced by a promissory note and

mortgage on the property. 

Schroeder purchased the Willow View Apartments in

August 1984, approximately three years before ELIHPA

became law. With the government’s consent, Schroeder

assumed the 1975 Loan and executed another promissory

note, a deed of trust, and a loan agreement as part of a fiftyyear, $3500 Housing Act loan (the 1984 Loan). Accordingly,

SCHROEDER v. UNITED STATES 7399
Schroeder became liable for two loans on the property (collectively, the Loans), which respectively became due in 2015

and 2034. Both promissory notes gave Schroeder the unconditional right to prepay in full the principal sums due thereon at

any time. However, the deed of trust associated with the 1984

Loan included a provision requiring Schroeder to use the

property only for low-income housing for a twenty-year

period, beginning in August 1984 (the Loan Covenant). In

addition, the 1984 loan agreement (which referenced both of

the Loans) included a provision further restricting the use of

the property by stating that, “[s]o long as the loan obligations

remain unsatisfied, the Borrower shall not use the house for

any purpose other than as rental housing and related facilities

for eligible [i.e., elderly and low-income] occupants.”

Schroeder operated the property for the next twenty years,

making regular payments on the Loans.

The Loan Covenant expired on September 1, 2004. That

same day, Schroeder attempted to tender the full amount outstanding on both Loans. In her payment request, Schroeder

stated that she had difficulty managing the property due to her

advanced age and that the property’s rental income was insufficient to permit her to hire a manager. In March 2006, the

government sent Schroeder an incentive offer to continue

operating the property as low-income housing. In April 2006,

Schroeder tendered full payment on both Loans, but her tender was rejected by RHS. Schroeder, in turn, rejected RHS’s

incentive offer and attempted to sell the property to a local

housing authority at a substantially higher price than RHS’s

appraisal value. RHS continued to refuse to allow Schroeder

to prepay the remaining debt owed on the Loans, maintaining

that ELIHPA prohibits prepayment unless a property owner

specifically complies with the Act’s procedural requirements.

III. Procedural History

In May 2006, Schroeder filed this suit in Morrow County,

Oregon, Circuit Court, seeking to compel the government to

7400 SCHROEDER v. UNITED STATES
accept her full payment of the Loans, and to quiet title to her

property. The government removed the case to federal court.

The parties filed cross-motions for summary judgment.

Schroeder argued that ELIHPA does not apply to her property

because the Loan Covenant had expired in 2004 and because

she did not tender a “prepayment” within the meaning of ELIHPA. She also offered equitable arguments in support of her

quiet title action. 

A magistrate judge recommended granting Schroeder’s

motion for summary judgment and denying the government’s

motion for summary judgment. The magistrate judge concluded that, because the Loan Covenant had expired, equity

favored granting Schroeder’s quiet title action. The government filed objections. The district court rejected the magistrate judge’s proposed findings and conclusions, and held that

Schroeder was not entitled to quiet title to her property.

Schroeder appeals.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over this appeal pursuant to 28 U.S.C.

§ 1291. We review de novo the district court’s grant of summary judgment. See Buono v. Norton, 371 F.3d 543, 545 (9th

Cir. 2004). We review for abuse of discretion the district

court’s decision to grant or deny equitable relief. See Rabkin

v. Or. Health Scis. Univ., 350 F.3d 967, 977 (9th Cir. 2003).

Federal common law applies to the contracts at issue. N. Side

Lumber Co. v. Block, 753 F.2d 1482, 1484 (9th Cir. 1985).

DISCUSSION

I. The Application of ELIHPA to the Loans

Schroeder first argues that ELIHPA does not apply to her

Loans because (A) the final attempted payment on the Loans

was not a “prepayment,” which triggers ELIHPA’s proceSCHROEDER v. UNITED STATES 7401
dures but, rather, a regularly scheduled payment; and (B) ELIHPA does not create a new, enforceable restricted-use period.

We address these arguments in turn. 

A. Schroeder’s Attempted Payment Constituted a 

Prepayment.

Schroeder argues that the Loans’ maturity dates are the

dates by which the total loan balances would be paid based on

the loan documents’ monthly installment schedules (the

installment dates). Using this approach, she maintains, her

1975 and 1984 loans matured in 1995 and 1993, respectively,

and thus, her 2004 attempted payment was not a “prepayment” under ELIHPA and should have been allowed.2 The

government contends that the maturity dates are instead the

dates the loan documents identify as the “due and payable”

dates, i.e., 2015 and 2034, respectively (the horizon dates).

[1] Schroeder’s novel argument fails. In interpreting contractual terms under federal common law, we give effect to

the parties’ intentions as ascertained from the terms themselves. Flores v. Am. Seafoods Co., 335 F.3d 904, 910 (9th

Cir. 2003) (quoting Klamath Water Users Protective Ass’n v.

Patterson, 204 F.3d 1206, 1210 (9th Cir. 1999)). In this case,

a review of the relevant loan documents reveals that the parties intended the horizon dates, not the installment dates, to

constitute the maturity dates. 

2The government argues that Schroeder is making this argument for the

first time on appeal and, therefore, she has waived it. See O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957 (9th Cir. 1989)

(“[A]ppellate courts will not consider arguments that are not ‘properly

raise[d]’ in the trial courts. . . . [T]he argument must be raised sufficiently

for the trial court to rule on it.” (citations omitted) (second alteration in

original)). Schroeder, however, argued generally before the district court

that she had not tendered a prepayment. We therefore consider the merits

of her argument. 

7402 SCHROEDER v. UNITED STATES
[2] First, at the time of the notes’ execution, the horizon

dates were the only dates certain. At that point, the parties

could not have known the exact date by which the monthly

installments would ultimately satisfy the principals because

the dates were subject to unpredictable factors (e.g., the total

rent received from tenants, which in turn determined the interest rate applied to the principal). Therefore, the parties could

not have intended to establish the 1993 and 1995 installment

dates as the maturity dates, because they could not have

known that the principals would be satisfied on those dates.

[3] Second, Schroeder’s interpretation linking the installment dates to the maturity dates would effectively nullify the

prepayment clause. The promissory notes’ clauses explicitly

permit prepayments at the borrower’s option. Therefore,

under Schroeder’s theory, the final payments would necessarily coincide with—indeed, they would establish—the maturity

dates. Under this reading, no final payment could constitute

a prepayment, and the language permitting prepayments

would essentially be a nullity. Consistent with common law

principles of contract interpretation, we assume that the agreement’s drafters did not intend such a result. Cf. Matsuo

Yoshida v. Liberty Mut. Ins. Co., 240 F.2d 824, 827 (9th Cir.

1957) (declining to interpret agreement so as to render clause

a nullity); 17A C.J.S. Contracts § 303.

[4] Third and finally, under common law property standards, a mortgage instrument’s prepayment clause generally

accompanies, and is distinct from, the specified loan maturity

date. See, e.g., Trident Ctr. v. Conn. Gen. Life Ins. Co., 847

F.2d 564, 566 (9th Cir. 1988); 55 Am. Jur. 2d Mortgages

§ 345. To read the notes to equate the maturity dates with the

final payments under the prepayment clause, as Schroeder

urges, would violate this principle. Thus, common law further

supports our conclusion that the parties intended the loan documents’ horizon dates, not their installment dates, to constitute the loans’ maturity dates. 

SCHROEDER v. UNITED STATES 7403
[5] Having determined as much, it is apparent that

Schroeder’s 2004 payment tender constituted a “prepayment”

under ELIHPA. The regulations interpreting ELIHPA define

a loan “prepayment” as “[p]ayment in full of the outstanding

balance on an Agency loan prior to the note’s originally

scheduled maturity date.” 7 C.F.R. § 3560.11. Schroeder cites

no authority contrary to this reasonable regulatory interpretation, to which we must defer, see Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984). Therefore,

because the “note[s’] originally scheduled maturity date[s]”

were in 2015 and 2034, respectively, Schroeder’s 2004

attempted payment constituted a prepayment under the applicable regulations. 

The Eighth Circuit recently confronted a similar scenario

and came to the same conclusion. See Charleston Hous. Auth.

v. U.S. Dep’t of Agric., 419 F.3d 729, 739 (8th Cir. 2005)

(reasoning that “[p]ermitting a Section 515 debtor who has

made substantial prepayments to label a final payment thirty

years prior to the original maturity date as anything other than

a prepayment would be to elevate technical form over substance”). To hold otherwise, the Charleston Housing Authority court concluded, “would create a loophole in [ELIHPA’s]

prepayment restrictions large enough [to] swallow all of Congress’s clearly expressed intent.” Id.3

[6] We therefore conclude that Schroeder’s final payment

tender in 2004 was not a final payment, but a prepayment. As

3Charleston Housing Authority’s interpretation of the “unmistakability

doctrine” differed from our approach in Kimberly. See DBSI/TRI, 465 F.3d

at 1041 n.7 (noting that, contrary to our conclusion in Kimberly, Charleston Housing Authority held that the “unmistakability doctrine did bar the

owners’ attempts to circumvent ELIHPA in prepaying Section 515 loans);

Kimberly, 261 F.3d at 869 (noting that the doctrine allows “the Government to make agreements that bind future Congresses, but only if those

contracts contain an unmistakable promise” (internal quotation marks

omitted)). However, we have never taken issue with Charleston Housing

Authority’s view on the meaning of prepayment under ELIHPA. 

7404 SCHROEDER v. UNITED STATES
a result, it was subject to the terms—including the elaborate

procedural requirements—of ELIHPA that govern prepayments.

B. ELIHPA Created a New Restricted-Use Period.

[7] Schroeder next contends that ELIHPA does not extend

the Loan Covenant and, thus, she had the right to pay the balance on her Loans as of September 2004. The relevant provision in the 1984 deed of trust states:

The borrower and any successors in interest agree to

use the housing for the purpose of housing people

eligible for occupancy as provided in Section 515 of

Title V of the Housing Act of 1949 and FmHA regulations then extant during this 20 year period beginning August 31, 1984. No person occupying the

housing shall be required to vacate prior to the close

of such 20 year period because of early repayment.

Thus, Schroeder contends, she was free to discontinue offering § 515 housing upon the expiration of the aforementioned

twenty-year period. Schroeder’s argument, however, overlooks the fact that the deed of trust is not the only document

imposing obligations on the use of the property; the loan

agreement, which she voluntarily executed in 1984, imposes

additional restrictions. That agreement requires her to use the

property as low-income housing “so long as the loan obligation remains unsatisfied.” Under ELIHPA, Schroeder may not

repay the loans—and thus the “loan obligation [will]

remain[ ] unsatisfied”—until either: (1) she completes the prepayment procedures outlined in ELIHPA; or (2) the loan

period expires. See Franconia, 536 U.S. at 143. Thus, until

one of these events occurs, Schroeder is bound to continue

using her property as low-income housing. 

[8] It is undisputed that Schroeder has not completed ELIHPA’s procedures and that the latter of the Loan terms will

SCHROEDER v. UNITED STATES 7405
not expire until 2034. Therefore, Schroeder is still bound by

the requirements, as imposed by the loan agreement and ELIHPA, to use the property as low-income housing. The district

court did not err in so holding. 

II. The District Court Did Not Abuse its Discretion in

Declining to Quiet Title to Schroeder’s Property.

Finally, Schroeder argues that the district court abused its

discretion in declining to quiet title to her property. As stated

above, because this suit involves contracts with the federal

government, federal common law applies. See Clearfield

Trust Co. v. United States, 318 U.S. 363, 366 (1943); N. Side

Lumber Co., 753 F.2d at 1484.

We assume, without deciding, that a quiet title remedy is

available to Schroeder under federal common law. See Kimberly Assocs., 261 F.3d at 870. But see DBSI/TRI, 465 F.3d

1041 (questioning scope and validity of Kimberly). Even

under this assumption, however, we conclude the district

court did not abuse its discretion in declining to grant that

relief. 

[9] First, equitable relief is not appropriate where an adequate remedy exists at law. Mort v. United States, 86 F.3d

890, 892 (9th Cir. 1996) (“‘It is a basic doctrine of equity

jurisprudence that courts of equity should not act . . . when the

moving party has an adequate remedy at law . . . .’ ” (quoting

Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381

(1992))). Here, as the district court rightly determined, an adequate remedy exists. The Supreme Court has made clear that,

by prohibiting unfettered prepayment, ELIHPA “effected a

repudiation of” existing loan contracts. Franconia, 536 U.S.

at 143; see also Franconia, 61 Fed. Cl. at 740. Therefore,

Schroeder may seek compensation for that repudiation in the

Court of Federal Claims under the Tucker Act, 28 U.S.C.

§ 1491. See DBSI/TRI, 465 F.3d at 1041 & n.8 (“[T]he

Supreme Court noted the availability of a damages action

7406 SCHROEDER v. UNITED STATES
under the Tucker Act to compensate owners for contracts

breached because of ELIHPA.” (citation omitted) (citing

Franconia, 536 U.S. 129)). 

[10] Second, Schroeder has not shown that the equities

favor relief. In declining to grant equitable relief, the district

court concluded that “the importance of preserving that which

ELIHPA seeks to preserve (i.e., a reduction in Section 515

mortgage repayments, a reduction in the loss of low-income

housing units, and a reduction in the displacement of Section

515 residents) outweighs the burden to Plaintiff of complying

with ELIHPA.” We agree.

CONCLUSION

For the reasons stated above, the district court did not err

in holding that ELIHPA applies to Schroeder’s property.

Moreover, the district court did not abuse its discretion in

declining to quiet title to Schroeder’s property. 

AFFIRMED.

SCHROEDER v. UNITED STATES 7407