Opinion ID: 2759280
Heading Depth: 2
Heading Rank: 2

Heading: Right to Prepay

Text: In evaluating a takings claim, the court must first determine “whether the claimant has identified a cognizable Fifth Amendment property interest that is asserted to be the subject of the taking.” Hearts Bluff Game Ranch, Inc. v. United States, 669 F.3d 1326, 1329 (Fed. Cir. 2012). The Court of Federal Claims granted the government’s motions for summary judgment that no right was taken regarding Millwood Apartments, Parthenia Manor Apartments, Dolly Ann Apartments, Stewarts Creek Apartments #1, Holiday Town Apartments, and Market North II Apartments (Prepayment Properties). It concluded that enactment of the Preservation Statutes could not 10 BIAFORA v. US have taken a right to prepay from appellants Biafora, Dolly Ann, Thetford III, and Thetford IV (Prepayment Appellants) because the mortgage notes for the Prepayment Properties do not include a right to prepay. The Prepayment Appellants admit that the mortgage notes “stated that the note[s] could not be prepaid for the 40 year term of the mortgage.” Br. of Appellant in No. 2013-5136 at 37; Br. of Appellant in No. 2013-5134 at 23; Br. of Appellant in 2013-5130 at 13; Br. of Appellant in No. 2013-5144 at 25. Nonetheless, the Prepayment Appellants argue that before the Preservation Statutes, HUD would have, by practice, allowed the Prepayment Appellants to prepay the mortgages of, and remove the affordability restrictions on, the Prepayment Properties. In support, they provide legal opinions and letters from HUD stating that HUD’s regulations would supersede any contrary language in a mortgage note. We hold that no contractual right to prepay existed for the Prepayment Properties. The Prepayment Appellants admit that the contracts expressly stated that they could not be prepaid. Even if HUD had a regulation that nonetheless allowed prepayment, such regulation would not create a contractual right. The Prepayment Appellants admit that no takings claim would exist where a right bestowed by regulation is subsequently withdrawn. Oral Argument at 29:59–31:03, available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2 013-5130.mp3. “No person has a vested interest in any rule of law entitling him to insist that it shall remain unchanged for his benefit.” New York Cent. R. Co. v. White, 243 U.S. 188, 198 (1917); see also Branch v. United States, 69 F.3d 1571, 1577–78 (Fed. Cir. 1998). Even if we construed HUD’s practice or regulations favorably to the Prepayment Appellants, it would not convert a regulatory benefit into a contractual right. Thus, because we hold that no contractual right existed where the mortgages clearly prohibited prepayment, we affirm the Court of BIAFORA v. US 11 Federal Claims’ determination that with regard to the Prepayment Properties, enactment or implementation of the Preservation Statutes did not take a contract-based property right to prepay the mortgages without HUD approval.