Opinion ID: 209417
Heading Depth: 4
Heading Rank: 1

Heading: The text of the operative documents

Text: Appellants contend that the operative documents relied on by the Court of Federal Claims neither tendered prepayment nor rejected tender. The letters submitted to the FmHA in 1988 by Mullica and in 1991 by Park Terrace each state that [t]his letter will serve as a request to pay off the remaining mortgage balance for the above property. Appellants' contention that this does not constitute tender within the meaning of Franconia relies on the definition of tender from Black's Law Dictionary 1477-80 (4th ed.1999), which states that tender is an unconditional offer of money or performance to satisfy a debt or obligation. Appellants also look to Williston on Contracts, which defines tender as an unconditional offer of payment consisting of an actual production of a sum not less than the amount due on a particular obligation. § 72.27 (4th ed.2007). Appellants assert that the 1988 and 1991 letters did not constitute tender, because they were only requesting the right to pay in a perfunctory manner and did not actually tender money or assert a demand to release the property from the use restrictions. Although the Supreme Court did speak in terms of tendering payment in Franconia, the Franconia decision is not authority for tender being satisfied only by the highly formalized and technical process advanced by Appellants. See 536 U.S. at 133, 122 S.Ct. 1993. The Franconia Court also stated that breach would occur when a borrower attempt[s] to prepay and that the government's obligation was ultimately to accept prepayment. Id. at 143, 122 S.Ct. 1993. The Franconia opinion does not suggest that a physical transfer of money must be attempted in order to constitute a tender of payment. Under the terms of the original loans, Mullica and Park Terrace had an unconditional right to prepay the loans at any time, and the government had a corresponding unconditional obligation to accept prepayment. The 1988 and 1991 letters sent by Mullica and Park Terrace to the government were clear, unconditional offers of prepayment sufficient to trigger a duty by the government to accept the tender under the terms of the pre-1979 loans. In the alternative, Appellants contend that even if the letters requesting to prepay the loans are regarded as tenders, the government's response letters were not rejections sufficient to trigger breach under Franconia. The government's responses to Mullica and Park Terrace did not explicitly state that the offers of prepayment were rejected. [14] However, the government did not accept those offers. Pursuant to ELIPHA, instead of accepting prepayment, the government offered incentive loans. ELIHPA provides that, in lieu of accepting prepayment, the government make reasonable efforts to enter into an agreement with the borrower, by which the borrower would be offered incentives to keep the property committed to low-income uses. See 42 U.S.C. § 1472(c)(4)(A)-(B). In other words, by offering incentive loans in response to Appellants' requests for prepayment, the government necessarily rejected the tender and breached its obligation to accept prepayment at any time. This conclusion is reinforced in the case of Mullica, given that the government's offer of incentives was preceded by a letter in which the government expressly declined to accept prepayment. The degree of formalism in communications for which Appellants advocate is unnecessary given Congress' clear repudiation of the unfettered right to prepay in ELIPHA. When the government responded to Appellants' requests to prepay with offers of incentive loans, those offers were functionally co-extensive with a rejection of prepayment. The Franconia decision requires no more formalism than the written request to prepay followed by non-acceptance of the request by the government to trigger the running to the statute of limitations. Although other conduct could constitute breach by the government, the Court of Federal Claims correctly ruled that at least by 1991 and 1992, the dates the Appellants entered into ELIPHA incentive loans, breach-triggering rejections had occurred.