In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 18-1787

CITY OF JOLIET, ILLINOIS,

Plaintiff-Appellee,

v.

NEW WEST, L.P., AND NEW BLUFF, L.P.,

Defendants-Appellants.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 05 C 6746 — Charles R. Norgle, Judge.

____________________

ARGUED FEBRUARY 21, 2019 — DECIDED APRIL 18, 2019

____________________

Before EASTERBROOK, SYKES, and BARRETT, Circuit Judges.

EASTERBROOK, Circuit Judge. This appeal is New West V in 

a saga that began in 2005 when Joliet proposed to condemn 

and raze the Evergreen Terrace apartments as a public nuisance. By 2017 the district court had held that Joliet is entitled to condemn the buildings, had set just compensation at 

about $15 million, and had held that New West cannot obtain relief against the City under federal housingdiscrimination statutes. New West, L.P. v. Joliet, 891 F.3d 271 
2 No. 18-1787

(7th Cir. 2018) (New West IV), affirms the last of those decisions, and we supposed that the litigation was over.

Back in the district court, however, the parties disputed 

the status of a reserve fund, worth about $2.8 million, that 

the Department of Housing and Urban Development held to 

provide for the needs of the federally subsidized apartment

complex. The City asked the judge to order HUD to transfer 

these funds to an account for Joliet’s benefit. New West opposed this motion, contending that the money in the reserve 

fund came from rents to which it was entitled by contract 

with HUD and that, once it no longer had responsibility for

the apartment buildings, HUD must write it a check.

The district court recognized that the status of the reserve 

fund had not been part of either the City’s condemnation 

proceeding or New West’s housing-discrimination suit. 

Nonetheless, the court proceeded to resolve the motion on 

the merits. It rejected New West’s claim of ownership, concluded that the fund should accompany the buildings, and 

ordered: “Defendants shall deposit the Reserves in an account or accounts designated by Joliet for the benefit of the 

Properties, as determined by HUD.” New West asked the 

judge to reconsider, but he declined.

The judge did not say much about why he came to this 

conclusion. And an order requiring “[d]efendants” to transfer the money is anomalous, for the defendants are New 

West and its fraternal business New Bluff. They lack ability 

to transfer the money to themselves or anyone else. HUD 

controls the reserve fund and is the only entity that can use 

(or direct its use) for the benefit of Joliet or disburse it to 

New West. But HUD was dismissed as a party in 2013. As 

part of a sellement that year, HUD agreed that it could be 
No. 18-1787 3

reinstated as a party if necessary to resolve a dispute about 

the reserves. But that was not done. HUD was not a party 

when the district court acted and is not a party now, so the 

district court lacked authority to issue orders requiring HUD 

to do anything. The orders appealed from are ineffectual.

Instead of prolonging this condemnation suit, which 

reached its end in 2016, when Joliet v. New West, L.P., 825 

F.3d 827 (7th Cir. 2016) (New West III), affirmed the award of 

compensation, and the Supreme Court declined to review 

our decision, 137 S. Ct. 518 (2016), New West needs to file a 

new action in which it is the plaintiff and HUD is the defendant. It is improper to keep adding issues to a condemnation suit that has been resolved. (New West, rather than Joliet, would be the proper plaintiff, because HUD is currently 

administering the reserve for the City’s benefit.)

One natural place for a new suit would be the Court of 

Federal Claims. New West contends that it owns the reserve 

fund as a result of contracts between itself and HUD, read in 

light of regulations that (New West believes) require release 

of the funds if the subsidized parcel is sold. In other words, 

New West wants a court to order the federal government to 

pay it a sum of money. The Tucker Act, 28 U.S.C. §1491, 

waives sovereign immunity for contract claims, provided 

that the litigation occurs in the Court of Federal Claims. 

Contrast 28 U.S.C. §1346(a)(2) (the “Lille Tucker Act,” which 

permits contract suits seeking $10,000 or less to proceed in 

district courts).

Until oral argument of this appeal the litigants, the district judge, and HUD (appearing as amicus curiae) all had ignored the Tucker Act. Indeed, they had ignored the fact that 

HUD is not a party and that the district court’s directive to 
4 No. 18-1787

“[d]efendants” ordered the impossible. We asked the parties, 

plus HUD, to file supplemental memoranda addressing 

these subjects. HUD and New West both replied that 42 

U.S.C. §1404a permits litigation about the reserves to occur 

in the district court, in a newly filed suit against HUD. This 

is not as clear to us as it is to the parties.

Section 1404a permits HUD to “sue and be sued ... with 

respect to its functions under the United States Housing Act 

of 1937”. According to New West, the status of the reserve 

fund is a “function[] under the United States Housing Act of 

1937”. Yet New West principally relies on its housingsubsidy contract with HUD, not on the terms of any statute. 

Indeed, at oral argument counsel for all sides represented 

that the statute does not resolve this dispute.

But 12 U.S.C. §1702, which the parties’ supplemental 

briefs do not mention, appears to cover the subject. It provides that “[t]he Secretary shall, in carrying out the provisions of [several subchapters of the National Housing Act], 

be authorized, in his official capacity, to sue and be sued in 

any court of competent jurisdiction, State or Federal.” FHA v. 

Burr, 309 U.S. 242 (1940), holds that this statute must receive 

a generous construction and provides that the FHA (which is 

now part of HUD) may be sued to the same extent as a private enterprise, when the topic of the suit comes within one 

of the listed subchapters and the money to satisfy the judgment will come from funds within the FHA’s control. The 

statute behind the mortgage insurance provided to New 

West, 12 U.S.C. §1715l, is within one of these chapters, and 

HUD controls the reserve fund, so New West’s claim to that 

fund, whether based on contract, regulation, or statute, 

comes within the waiver in §1702. See, e.g., Merrill Tenant 
No. 18-1787 5

Council v. HUD, 638 F.2d 1086 (7th Cir. 1981); Selden Apartments v. HUD, 785 F.2d 152, 156–57 (6th Cir. 1986) (collecting 

authority). One decision, United States v. Adams, 634 F.3d 

1261, 1265 (10th Cir. 1980), might be seen as contrary, but it 

is incompatible with Merrill and does not reflect this circuit’s 

understanding of §1702.

New West thus has a choice: the district court or the 

Court of Federal Claims. It cannot pursue both options at 

once, however. See 28 U.S.C. §1500; United States v. Tonoho 

O’odham Nation, 563 U.S. 307 (2011). In either forum, the 

judge should start from scratch, disregarding the missteps in 

the condemnation suit. We have nothing to say here about 

the merits of that dispute, which must receive a proper airing before it is resolved on appeal—and if the suit proceeds 

in the Court of Federal Claims, final decision on the merits 

belongs to the Federal Circuit rather than to us.

The district court’s decision is vacated.