Court Opinion

ID: 8127856
Source: CourtListenerOpinion
Date Created: 2022-09-09 16:01:38.80003+00
Date Added: 2024-06-11T16:39:09.664352
License: Public Domain

SERCOMBE, P. J.,
dissenting.
The majority concludes that (1) plaintiff had standing to enforce the low-income rental obligations in the extended use agreement and recorded declarations by filing a complaint seeking declaratory and injunctive relief, (2) plaintiff lost that standing when she no longer qualified as a prospective low-income tenant in the apartment building, (3) the case was no longer justiciable when that standing was lost, and (4) the only authority that remained with the trial court was to dismiss the case. The majority errs in concluding that only prospective low-income tenants— that is, persons who currently meet the income restrictions to qualify as low-income tenants — have standing to enforce the extended use agreement and recorded declarations.
As noted by the majority, “‘[standing’ is a legal term that identifies whether a party to a legal proceeding possesses a status or qualification necessary for the assertion, enforcement, or adjudication of legal rights or duties.” Kellas v. Dept. of Corrections, 341 Or 471, 476-77, 145 P3d 139 (2006). “ [W]hether a person is entitled to seek judicial relief depends upon the type of relief sought and commonly is governed by a specific statutory standard.” Eckles v. State of Oregon, 306 Or 380, 384, 760 P2d 846 (1988). Here, as a former qualified tenant in the building, plaintiff has continued standing to enforce the agreement and the recorded declarations, and to seek a determination of the validity of the release agreement. That standing is conferred by federal statute and explicit provisions in the agreement and declarations, and, for class action purposes, by ORCP 32 A. In the first round of this litigation, we recognized “qualified *188tenants enforcement rights” under the federal Low-Income Housing Tax Credit (LIHTC) program. Nordbye v. BRCP/GM Ellington, 246 Or App 209, 229, 266 P3d 92 (2011), rev den, 352 Or 33 (2012) (.Nordbye I). In my view, those enforcement rights are not limited to current or prospective tenants, and, accordingly, regardless of the fact that in the time since this action was filed plaintiffs income has increased and she no longer desires to move back into the building, she continues to have standing to maintain this action. I respectfully dissent from the majority’s analysis to the contrary.
As a former occupant, plaintiff has standing to seek enforcement of the extended use agreement and declaration under federal statute. Specifically, Internal Revenue Code section 42(h)(6)(B) sets forth the required content of an “extended low-income housing commitment” agreement between a taxpayer seeking low-income housing tax credits and the state agency administering the tax credit program. Section 42(h)(6)(B) requires, among other things, (1) that the agreement commit the taxpayer and its successors to provide housing to low-income tenants for a specified period of time, (2) that “individuals who meet the income limitation applicable to the building under subsection (g) (whether prospective, present, or former occupants of the building)” have the right to enforce the extended low-income housing commitment “in any State court,” and (3) that those commitments be “recorded pursuant to State law as a restrictive covenant.” The majority understands IRC section 42(h)(6)(B) to reference only persons who currently meet the income limitation for an existing or future tenancy. In my view, that understanding of the statute is incorrect.
The “income limitation applicable to the building under subsection (g)” is an income limitation while occupying the building as a tenant. Thus, subsection 42(g) requires a specified percentage of the residential units in the building to be “occupied by individuals whose income is 50 percent or less of area median gross income [or 60 percent in other cases].” Furthermore, the statutory suit authorization specifically allows enforcement by “former occupants” of the building. IRC § 42(h)(6)(B). Reading those provisions *189together, in my view, the phrase “individuals who meet the income limitation applicable to the building” in IRC section 42(h)(6)(B) refers to the income of the person at the time they became a tenant. In other words, the phrase refers to prospective, present, or former tenants who met the income limitation at the time they became past or current tenants or who meet the income limitation for purposes of a prospective tenancy. That understanding is also consistent with IRC section 42(g)(2)(D), which provides, generally, that, “notwithstanding an increase in income of the occupants of a low-income unit above the [applicable income limitation], such unit shall continue to be treated as a low-income unit if the income of such occupants initially met such income limitation * * *.” In other words, an increase in a tenant’s income does not disqualify a tenant from continuing to be qualified as low-income.
In view of those provisions, I conclude that a former tenant who met applicable income limitations at the time of his or her tenancy has standing to enforce the extended use agreement and declarations. Here, plaintiff is a former occupant of defendant’s building who qualified as low-income during her tenancy. See Nordbye I, 246 Or App at 213 n 3. In light of that status, she is authorized by IRC section 42(h)(6)(B) to bring an action to enforce the extended low-income housing commitment in the extended use agreement and declarations.
That understanding of the statute is also supported by Congress’s design of the LIHTC program, as we discussed in Nordbye I. As we recognized in Nordbye I, the “private enforcement rights conferred on qualified low-income tenants are an integral part of Congress’s comprehensive design.” 246 Or App at 229. Furthermore, those tenant enforcement rights continue throughout the entire 30-year extended-use period:
“To effectuate continued enforcement, Congress conferred on qualified tenants enforcement rights for the duration of the 30-year extended-use period. IRC § 42(h)(6)(B)(ii). The private enforcement mechanism included in the tax code and restated in the declaration ensures full performance of the promises made by a recipient taxpayer after *190the tax credits are fully allocated and the recapture period has passed.”
Id. In other words, once a person becomes a qualified tenant, that person can enforce the extended use agreement anytime during the 30-year extended-use period. Thus, again, as a former tenant who was income-qualified at the time she occupied the building, plaintiff has standing to enforce the declaration and extended use agreement.
I further note that the department’s administrative rules similarly recognize a former tenant as qualified to enforce an extended use agreement and related declarations. As part of its authority under ORS 456.559(1)(f) to administer the LIHTC program, the department adopted a set of rules.1 One of those rules, former OAR 813-090-0029(2) (12/19/91), provides:
“An executed Reservation and Extended Use Agreement shall be enforceable in any State court by an individual who qualified for occupancy by virtue of the income limitation set for such buildings', shall be binding on all successors of the Applicant; and the Declaration of Land Use Restrictive Covenants incorporated within the Reservation and Extended Use Agreement shall be recorded pursuant to State law as a restrictive covenant.”
(Emphasis added.) Former OAR 813-090-0070(5) and (6) (12/19/91) provide for enforcement of the recorded declarations by tenants and allowance of attorney fees to those tenants in any enforcement action:
“(5) The Declaration of Land Use Restrictive Covenants shall be deemed a contract enforceable by one or more tenants as third-party beneficiaries of the Declaration of Land Use Restrictive Covenants and Reservation and Extended Use Agreement.
*191“(6) In the event the Project owner fails to satisfy the requirements of the Declaration of Land Use Restrictive Covenants and Reservation and Extended Use Agreement and legal costs are incurred by the Department or one or more tenants or beneficiaries, such legal costs, including legal charges and court costs (including the costs of an appeal), are the responsibility of and may be recovered from the project owner.”
In Nordbye I, we explained that those administrative rules appeared to preclude the “abrogation of plaintiffs enforcement rights.” 246 Or App at 228 n 18. Likewise, here, that rule is consistent with my conclusion that, as an individual who qualified for occupancy by virtue of the income limitation set for defendant’s building, and as a tenant and beneficiary of the declarations, plaintiff has standing to bring and maintain the enforcement action.
To reiterate, provisions of IRC section 42 specifically authorize plaintiff — as a former tenant of the building who met the relevant income limitations at the time of her tenancy — to bring an action to enforce the extended use agreement and declarations. Plaintiffs amended complaint seeks “a permanent injunction prohibiting the Current Owner and any successor or assign from renting any apartment at the Property to members of the public who are not Qualified Low-Income Tenants, which injunction shall remain in effect until January 1, 2021 or such later date determined by the Court.” Thus, plaintiffs action is just the type of enforcement action authorized by rule and statute and she continues to have standing to maintain that action.
Furthermore, contrary to the majority’s conclusion, plaintiff has standing to maintain her action for declaratory judgment under ORS 28.020. That statute provides:
“Any person interested under a deed, will, written contract or other writing constituting a contract, or whose rights, status or other legal relations are affected by a constitution, statute, municipal charter, ordinance, contract or franchise may have determined any question of construction or validity arising under any such instrument, constitution, statute, municipal charter, ordinance, contract or franchise and obtain a declaration of rights, status or other legal relations thereunder.”
*192Thus, as recognized by the majority, ORS 28.020 provides two alternative classes of persons who have standing to seek a declaratory judgment: (1) persons who are interested under a deed, will, written contract, or other writing constituting a contract; and (2) persons whose rights, status or other legal relations are affected by a constitution, statute, municipal charter, ordinance, contract, or franchise. With respect to that second group of persons who seek declaratory relief, our case law recognizes that we consider three things in determining whether a person’s “rights, status or other legal relations” are “affected” by a governmental policy or a contract: an injury or other impact upon a legally recognized interest beyond an abstract interest in the policy or contract; an injury that is real or probable, and not hypothetical or speculative; and whether the declaratory relief will have practical effect. See 271 Or App at 176-77. However, those particular considerations flow from the requirement that the person’s “rights, status or other legal relations” are “affected” by the policy or contract, see Morgan v. Sisters School District #6, 353 Or 189, 194-98, 301 P3d 419 (2013), and relate to that part of ORS 28.020.
With respect to the first group of persons who may seek declaratory relief under ORS 28.020, the statute requires only that a person be “interested under a deed, will, written contract or other writing constituting a contract.” Thus, the statute unambiguously provides that, where a person has a legal “interest[]” in a contract under its terms, that person may seek to have the court determine questions relating to the construction or validity of the contract and obtain a declaration of rights, status, or other legal relations thereunder. In other words, under ORS 28.020, a person’s interest under a contract is sufficient alone to give that person standing to obtain declaratory relief. In my view, at the very least, persons interested under a contract include parties to and intended beneficiaries of the contract. As to those persons, the court has authority under ORS 28.010 “to declare rights, status, and other legal relations, whether or not further relief is or could be claimed.” Similarly, rights may be declared under a contract “either before or after there has been a breach thereof.” ORS 28.030.
*193Here, plaintiff asserts that the court has “broad power to issue declaratory judgments in actions brought by parties ‘interested’ under a written contract.” I agree that she has standing as such an interested person. The written declarations provide that their “‘benefits shall inure to the Department and any past, present or prospective tenant of the Project.’” Nordbye I, 246 Or App at 214. The declarations also recognize that those “‘beneficiaries of the Owner’s obligations hereunder cannot be adequately compensated by monetary damages in the event of any default hereunder,”’ and to allow that
“‘THE DEPARTMENT AND ANY INDIVIDUAL WHO MEETS THE INCOME LIMITATION APPLICABLE UNDER SECTION 42 (WHETHER PROSPECTIVE, PRESENT OR FORMER OCCUPANT) SHALL BE ENTITLED, FOR ANY BREACH OF THE PROVISIONS HEREOF, AND IN ADDITION TO ALL OTHER REMEDIES PROVIDED BY LAW OR IN EQUITY, TO ENFORCE SPECIFIC PERFORMANCE BY THE OWNER OF ITS OBLIGATIONS UNDER THIS DECLARATION IN A STATE COURT OF COMPETENT JURISDICTION.’”2
Id. at 214-15 (capitalization in original). Plaintiff, then, is a third-party beneficiary of the declarations and associated provisions in the extended use agreement, and has a specific interest in the parts of those agreements that obligate defendant under IRC section 42 and authorize her to enforce those agreements. That is the law of this case. See Nordbye I, 246 Or App at 223 (“[U]nder the declaration, plaintiff is an intended third-party beneficiary of the use-restrictions and *** she is independently entitled to enforce those use restrictions ***.”). As a “person interested” in the declarations and extended use agreement, then, plaintiff is entitled to a determination of rights in the declarations. Thus, she can bring and maintain the declaratory judgment action pleaded in the amended complaint under ORS 28.020.
Finally, plaintiff has standing to sue under ORCP 32 A as a representative party of the class described in the amended complaint. Plaintiff pleaded that she “brings this *194action on behalf of a class consisting of all Qualified Low-Income Tenants” who “have lived at the Property since the Current Owner purchased it” or “live at the Property now” or “would want to live at the Property in the future if the Current Owner complied with the Declaration.” The amended complaint alleges that: (1) joinder of all members of the class is impractical, (2) common fact and law questions exist about whether the property owner evicted qualified tenants without cause, rented to persons who were not qualified low-income tenants, charged excessive rents, and allowed long vacancies, and whether the release by the department violated the declarations, (3) plaintiffs claims are typical of the class claims and “based on the same factual, legal and remedial theories as the claims of the class,” and (4) plaintiff will adequately represent the interests of the class.
Accepting those allegations as true for purposes of determining defendants’ motion to dismiss under ORCP 21 A(1), see Hale v. State of Oregon, 259 Or App 379, 382, 314 P3d 345 (2013), rev den, 354 Or 840 (2014), plaintiff has standing to bring the class action claim under ORCP 32 A. That class action rule of civil procedure provides that
“[o]ne or more members of a class may sue or be sued as representative parties on behalf of all only if:
“A(1) The class is so numerous that joinder of all members is impracticable;
“A(2) There are questions of law or fact common to the class;
“A(3) The claims or defenses of the representative parties are typical of the claims or defenses of the class;
“A(4) The representative parties will fairly and adequately protect the interest of the class; and
“A(5) In an action for damages, the representative parties have complied with the prelitigation notice provisions of section H of this rule.”3
Here, the common claims of plaintiff and the class members— whether defendants remain obligated under the extended *195use agreement and declarations, notwithstanding the release of those obligations by the department — are precisely the claims that we determined in Nordbye I. Whether the particulars of future supplemental relief for plaintiff under ORS 28.080 differ from the supplemental relief that might be given to other class members is beside the point in determining whether plaintiffs present pleaded claims are typical of the class. See Ken Leahy Construction, Inc. v. Cascade General, Inc., 329 Or 566, 572, 994 P2d 112 (1999) (warning against “conflat[ing] the analysis necessary for granting a declaratory judgment with the separate analysis necessary for determining what, if any, coercive relief is appropriate to effectuate the declaration”). Having prevailed in proving those claims in the first appeal, plaintiff is doing a good job so far in adequately protecting the interests of the class.4 Plaintiff remains entitled to sue as a class representative under ORCP 32 A.
The court’s denial of defendants’ motion to dismiss is correct for each of those reasons. The majority errs in concluding that plaintiffs standing ended when she was no longer a qualified prospective tenant. Plaintiffs standing exists because she was a qualified past tenant under federal law, a third-party beneficiary of the contract sought to be enforced, and a class representative under ORCP 32 A. For those reasons, I dissent.5

 As described by former OAR 813-090-0005 (12/19/91),
“[t]he rules of OAR 813, division 090, are established to administer and enforce ORS 456.515 through 456.720, and specifically ORS 456.559(1)(f). These rules implement the Low-Income Housing Tax Credit Program. The Program’s objective is to assist and encourage the development of affordable housing rental units for low-income households through the allocation of housing tax credits as provided by Section 42 of the Internal Revenue Code (IRC).”

 The declaration is intended “to assure compliance of the Project and the Owner with IRC Section 42 and the applicable regulations.”

 The class action was not brought as an action for damages, so the notice provisions under ORCP 32 H did not apply.

 The trial court was troubled by dismissing the class action claims when plaintiff had already prevailed on some of those claims before this court. The court noted, “If a party is declared by the Court of Appeals to have prevailed on part of their claim, and it comes back to the Circuit Court, how can the Circuit Court enter a judgment of dismissal as if the — that Plaintiff prevailed on nothing?”

 Defendants concede that, if the trial court did not err in denying their motion to dismiss, it did not err in allowing the motion to intervene by plaintiffs Jackson and Knoke.