Opinion ID: 209417
Heading Depth: 4
Heading Rank: 2

Heading: The context surrounding the operative events

Text: Relatedly, Appellants contend that the Court of Federal Claims erred by refusing to consider evidence concerning the context of the actions that it held had accrued the claims. The primary thrust of this contention is that the requests for prepayment were pro forma and were part of a charade designed to secure incentives in lieu of insistence on prepayment. In other words, Appellants contend that the prepayment letters were just part of a mechanical process to get incentives, and were never intended to declare the government in breach of the underlying loan agreements. [15] In support of this theory, Appellants cite a number of government documents that speak in terms of incentives to avert prepayment of the FmHA loans. Appellants also rely on FmHA Guidelines for Accepting Prepayment in Order to Ensure Tenant Protections, which state: [E]very borrower who requests to prepay, and can document the ability to prepay, will be offered an incentive not to do so. The size of the incentive will be based on whether this housing is needed by current tenants and other low- and moderate-income people in the market area, and on the loss to the borrower by remaining in the FmHA program. The size of the incentive may not be based on whether the borrower actually wishes to prepay or wishes to receive an incentive not to repay, or on whether the borrower is a servicing problem. Appellants suggest that this passage from the Guidelines evidences a charade because of its reference to offering incentive loans under circumstances where the borrower might not actually wish to prepay but offers to do so in order to qualify for an incentive loan. Appellants are misreading the Guidelines. The cited language instructs that the size of the incentive should be independent of the motivation or payment history of the borrower and does not transform the process into a charade. Further, Appellants' assertions that their prepayment requests and the government's response letters were mere paperwork in the context of a charade, in which they never intended to call the government into breach, are undermined by the allegations in their own Complaint. For example, the Complaint alleges: But for the [g]overnment's conduct, plaintiffs would have terminated their contracts by prepaying their mortgage loans. As a consequence of the [g]overnment's conduct, certain of the plaintiffs have submitted applications for prepayment and/or an offer of incentives from the [g]overnment. The [g]overnment has in every instance refused to accept prepayment from plaintiffs pursuant to the provisions of their contracts. Those plaintiffs have been compelled to change their position to their detriment in reliance upon the [g]overnment's repudiation, including accepting incentives in lieu of a sale at fair market value. The allegations in the Complaint suggest both that Appellants desired to prepay their FmHA loans and that their requests to do so were rejected by the government. The Complaint speaks of the incentives as a form of detrimental reliance, not as something Appellants sought to secure in the absence of any attendant desire to repay their loans. Accordingly, we affirm the Court of Federal Claims' determination that the transactions underpinning Appellants' acceptance of incentive loans triggered breach of the original loan agreements and commencement of the six-year statute of limitations. As a consequence, the six-year statute of limitations expired in 1997 for Mullica and in 1998 for Park Terrace.