Source: https://law.justia.com/cases/federal/appellate-courts/F2/695/366/443635/
Timestamp: 2019-09-16 16:34:48
Document Index: 286869827

Matched Legal Cases: ['§ 1715', '§ 1715', '§ 1701', '§ 1715', '§ 1715', '§ 551', '§ 1441', '§ 1701', '§ 1441', '§ 1715', '§ 1715', '§ 1715', '§ 1715', '§ 1715']

Beck Park Apartments; Carson Apartments; Casa Bienassociation; Centralia Apartments; Ceriseinvestment Co. Ltd., et al., Plaintiffs-appellants, v. United States Department of Housing and Urban Development;moon Landrieu; Emma D. Mcfarland; Arthur Timmel,et al., Defendants-appellees, 695 F.2d 366 (9th Cir. 1982) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1982 › Beck Park Apartments; Carson Apartments; Casa Bienassociation; Centralia Apartments; Ceriseinvestmen...
Beck Park Apartments; Carson Apartments; Casa Bienassociation; Centralia Apartments; Ceriseinvestment Co. Ltd., et al., Plaintiffs-appellants, v. United States Department of Housing and Urban Development;moon Landrieu; Emma D. Mcfarland; Arthur Timmel,et al., Defendants-appellees, 695 F.2d 366 (9th Cir. 1982)
US Court of Appeals for the Ninth Circuit - 695 F.2d 366 (9th Cir. 1982)
Argued and Submitted Aug. 13, 1982. Decided Dec. 23, 1982
Beck Park Apartments, et al. (Beck Park), are owners of thirty-four federally subsidized multifamily housing projects in California. Each owner participates in Housing and Urban Development (HUD) programs pursuant to section 221(d) (3), 12 U.S.C. § 1715l(d) (3), or section 236, 12 U.S.C. § 1715z-1, of the National Housing Act (Act), 12 U.S.C. § 1701 et seq.
Pursuant to the Act, HUD drafted and entered into a Regulatory Agreement (agreement) with each project owner. 12 U.S.C. § 1715z-1(h); 12 U.S.C. § 1715l (d) (3). The agreement establishes certain rights and obligations of the parties with respect to each project.
Following the passage of Proposition 13, which lowered real property taxes in California, HUD reevaluated rent schedules in section 221(d) (3) and section 236 projects in California.1 The purpose of the reevaluation was to insure that the rents reflected expenses necessary to operate the projects. The reevaluation, based on owner submitted data concerning all operating expenses, resulted in decreasing rents for some projects.
After HUD ordered Beck Park to reduce rents charged, Beck Park instituted this action, alleging that HUD's actions breached the agreement and violated the notice and opportunity for comment provisions of the Administrative Procedures Act, 5 U.S.C. § 551 et seq. The district court granted partial summary judgment for HUD on the breach claims and directed entry of judgment under Fed. R. Civ. P. 54(b). On appeal, Beck Park contends that the agreement, described below, precluded HUD from initiating decreases in rents.
The goal of the National Housing Act is to provide a "decent home and suitable living environment for every American family." 42 U.S.C. § 1441a(a); 12 U.S.C. § 1701t. HUD must act in a manner consistent with the objectives and priorities of the Act. 42 U.S.C. § 1441; Portela v. Pierce, 650 F.2d 210, 211 (9th Cir. 1981); Russell v. Landrieu, 621 F.2d 1037, 1041-42 (9th Cir. 1980) Abrams v. Hills, 547 F.2d 1062, 1064 (9th Cir. 1976), vacated on other grounds, Pierce v. Abrams, --- U.S. ----, 102 S. Ct. 1700, 72 L. Ed. 2d 127 (1982).
The section 221(d) (3) program was designed to assist private industry in providing housing for low and moderate income families and displaced persons. 12 U.S.C. § 1715l (a). To achieve that purpose, project owners receive a subsidized interest rate and are subject to controls on admissions, rents, and profits. 12 U.S.C. 1715l (d) (3), Geneva Towers Tenants Organization v. Federated Mortgage Investors, 504 F.2d 483, 486-87 (9th Cir. 1974). With respect to rents in the section 221(d) (3) program, the Secretary's regulations require the Secretary to consider the income necessary to maintain a project's economic soundness and to provide a reasonable return to owners on their investment consistent with providing reasonable rentals to tenants. 24 C.F.R. Secs. 221.531(c) (1), 221.531(c) (2).
The section 236 program was designed to reduce rentals for lower income families by providing federal mortgage insurance and interest reduction payments to owners. 12 U.S.C. § 1715z-1(a); Abrams, 547 F.2d at 1064-65. Project owners must agree to be regulated by HUD with respect to rents. 12 U.S.C. § 1715z-1(e). Rents are based on the cost of operating the project. 12 U.S.C. § 1715z-1(f) (1). The Secretary is authorized to make regulations, enter agreements, and adopt procedures to carry out the program. 12 U.S.C. § 1715z-1(h). The Secretary's regulations with respect to rental charges are set forth at 24 C.F.R. Secs. 236.55, 236.56, 236.60.
This court may affirm the district court's grant of summary judgment on the breach of contract claims if the record shows, after reviewing the evidence and factual inferences in the light most favorable to the appellant, that there are no genuine issues of material fact and the appellee is entitled to prevail as a matter of law. EEOC v. County of Santa Barbara, 666 F.2d 373, 378 (9th Cir. 1982); Dosier v. Miami Valley Broadcasting Corp., 656 F.2d 1295, 1300 (9th Cir. 1981).
Interpretation of a contract is a matter of law. Libby, McNeill and Libby v. City National Bank, 592 F.2d 504, 512 (9th Cir. 1978). Whether a contract is ambiguous is also a question of law. United States v. Sacramento Municipal Utility District, 652 F.2d 1341, 1343 (9th Cir. 1981). If a contract is unclear, summary judgment is ordinarily inappropriate. Id. at 1344.
The agreement for a section 221(d) (3) project provides in part:
The Sixth Circuit addressed an analogous situation in Texas Gas Transmission Corp. v. Federal Power Commission, 441 F.2d 1392 (6th Cir. 1971). The court interpreted a settlement agreement that was silent on the issue of whether Texas Gas had to flow through certain refunds to their customers. Texas Gas argued that because the agreement referred to two specific categories of refunds that it agreed to flow through to customers, and the refunds at issue fell outside of those categories, the refunds at issue did not have to be flowed through to customers. Id. at 1395. The court rejected that argument, stating:
Id. at 1395-96. See also Board of Directors and Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777, 784 (10th Cir.), cert. denied, 414 U.S. 924, 94 S. Ct. 233, 38 L. Ed. 2d 158 (1973) (interpreting charter amendment in accordance with the Federal Credit Union Act, in part because to interpret otherwise would mean that the administrative body contracted in a manner contrary to the statute it was charged with administering).
Beck Park overlooks the fact that this is not a private contract. Where, as here, a public interest is involved, "an interpretation is preferred which favors the public." Restatement of Contracts Sec. 236(f). Consideration of the contract against the backdrop of the National Housing Act is appropriate in these circumstances. See Rehart v. Clark, 448 F.2d 170, 173 (9th Cir. 1971) (laws which exist at the time of entering into a contract form a part of the contract); Trans-Bay Engineers v. Builders, Inc. v. Hills, 551 F.2d 370, 377 (D.C. Cir. 1976) (responsibilities of HUD under the National Housing Act, in addition to contracts signed by HUD, govern the rights and obligations of the parties); Maryland National Capital Park & Planning Commission v. Lynn, 514 F.2d 829, 833 (D.C. Cir. 1975) (consideration of Housing Act in construing Secretary's authority proper in determining whether a grant contract was breached).
HUD's failure to initiate rent reductions in the past does not mean that HUD forfeited or surrendered its rights. See, e.g., United States v. Weiss, 642 F.2d 296, 2907-09 (9th Cir. 1981) (noting that an agency's failure to promulgate regulations pursuant to statutory authority did not destroy its authority to later promulgate the regulations because failure to act does not surrender government rights).
The fact that HUD's handbook encourages owners to decrease rents when appropriate does not preclude HUD from initiating rent reductions itself. Moreover, provisions in an agency's handbook do not have the force of law. See Rank v. Nimmo, 677 F.2d 692, 698-99 (9th Cir. 1982) (citing, with approval, cases holding that HUD handbooks are merely advisory).
Pursuant to the section 236 and section 221(d) (3) programs of the National Housing Act, HUD has the duty to maintain reasonable rents, based on operating costs, and to allow project owners a reasonable return on their investment. HUD's statutory power to initiate rent adjustments is necessarily implied in Congress' broad delegation of power. HUD may not contract in a way to impair the exercise of that power. Nothing in the regulatory agreement suggests that HUD did in fact renounce its statutory power.
Proposition 13 (Cal. Const., art. XIII A), approved by California voters on June 6, 1978, became effective on July 1, 1978. The California Supreme Court upheld the constitutionality of Proposition 13 in Amador Valley Joint Union High Sch. Dist. v. State Bd. of Equalization, 22 Cal. 3d 208, 149 Cal. Rptr. 239, 583 P.2d 1281 (1978)
This is the language contained in the regulatory agreement of Appellant De Soto Gardens, a Sec. 221(d) (3) project owner. Because the Secretary has amended the Sec. 221(d) (3) and Sec. 236 agreements, language used in a particular appellant's agreement may differ
That a public body may not by contract delegate its congressionally mandated duty is implicit in cases holding that estoppel is not applicable against the Government because of unauthorized acts of its agents, at least when the Government acts in its sovereign capacity. See generally Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 383-85, 68 S. Ct. 1, 2-3, 92 L. Ed. 10 (1947) (regulation precluding insurance recovery for loss of type of wheat crop controlling, although Corporation advised the insured that his wheat was insurable and accepted his application); United States v. City and County of San Francisco, 310 U.S. 16, 28, 60 S. Ct. 749, 755-756, 84 L. Ed. 1050 (City's transfer of sale and distribution of Hetch-Hetchy power to private utility violated Congressional grant and thus city required to discontinue that course of conduct). Saulgue v. United States, 663 F.2d 968, 974-76 (9th Cir. 1981) (equitable estoppel inapplicable where government acting as protector of public lands and not as a private concern)
Beck Park implies that to so interpret the agreement is to allow HUD to profit from an ambiguity and to not hold HUD to a standard of fair dealing. We disagree. A contract provision is ambiguous if it is reasonably susceptible of more than one meaning. Castaneda v. Dura-Vent Corp., 648 F.2d 612, 619 (9th Cir. 1981). Given the language of the agreement and the statutory background, against which the agreement must be read, the agreement is not ambiguous. Because laws and regulations having the effect of laws are read into contracts to fix the right and obligation of the parties, Rehart v. Clark, 448 F.2d 170, 173 (9th Cir. 1971), Beck Park was not misled by the contract's silence
In discussing Proposition 13, Justice Mosk noted "Although California is renowned for its earthquakes, no tremor of high Richter-scale proportion has shaken it quite like the enactment of Proposition 13." Jarvis v. Cory, 28 Cal. 3d 562, 573, 170 Cal. Rptr. 11, 620 P.2d 598 (1980)