Court Opinion

ID: 3039046
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:59:55.184504+00
Date Added: 2024-06-11T10:52:34.118586
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

DBSI/TRI IV LIMITED                     
PARTNERSHIP, an Idaho limited
partnership; FOREST HILLS
INVESTORS OF COQUILLE, OREGON
LTD., an Oregon limited
partnership; JADIN INVESTMENTS,
LTD., an Oregon limited
partnership; NORSEMAN VILLAGE, an
Oregon limited partnership;
PARKSIDE DEVELOPMENT, an Oregon              No. 04-36066
limited partnership,
                          Plaintiffs,
                                               D.C. No.
                                            CV-98-01325-AJB
                and
SHERRY GOLDAMMER; DONALD
GERHARD; RON VEILLON; CARMEN
THOMAS; DIANA RHODES,
                        Appellants,
                 v.
UNITED STATES OF AMERICA,
                Defendant-Appellee.
                                        

                            17223
17224            GOLDAMMER v. UNITED STATES

SHERRY GOLDAMMER; DONALD                
GERHARD; RON VEILLON; CARMEN
THOMAS; DIANA RHODES,
               Plaintiffs-Appellants,
                 v.
FOREST HILLS INVESTORS OF
COQUILLE, OREGON LTD., an
Oregon limited partnership; JADIN
INVESTMENTS, LTD., an Oregon
limited partnership; NORSEMAN
VILLAGE, an Oregon limited                   No. 05-35748
partnership,
                         Defendants,           D.C. No.
                                            CV-03-01749-AJB
                and                            OPINION
ANN VENEMAN, in her official
capacity as secretary of the United
States Department of Agriculture;
DBSI/TRI IV LIMITED
PARTNERSHIP; DBSI REALTY CORP.,
an Idaho corporation; NORTHWEST
REAL ESTATE CAPITAL
CORPORATION, an Idaho
corporation; DBSI/TRI VII,
              Defendants-Appellees.
                                        
        Appeal from the United States District Court
                 for the District of Oregon
         Anna J. Brown, District Judge, Presiding

                  Argued and Submitted
           September 13, 2006—Portland, Oregon

                    Filed October 3, 2006
             GOLDAMMER v. UNITED STATES          17225
Before: Michael Daly Hawkins, Barry G. Silverman, and
           Ronald M. Gould, Circuit Judges.

             Opinion by Judge Silverman
17228            GOLDAMMER v. UNITED STATES

                          COUNSEL

Arthur Schmidt, Oregon Law Center, Portland, Oregon,
argued the cause for the appellant. Michelle Ryan, Oregon
Law Center, was on the briefs.

Robert E. Bakes, Moffatt, Thomas, Barrett, Rock & Fields,
Chartered, Boise, Idaho, argued the cause for appellee DBSI.
Andrew R. Gardner, Stoel Rives, Portland, Oregon, was on
the brief.

Kelly A. Zusman, Assistant United States Attorney, Portland,
Oregon, argued the cause for appellee United States. John
Muson, Special Assistant United States Attorney, Portland,
Oregon, was on the brief.

                          OPINION

SILVERMAN, Circuit Judge:

   This consolidated appeal concerns the prepayment of a Sec-
tion 515 loan by owners of low-income housing in Oregon
contrary to the prepayment procedures required by the Emer-
gency Low Income Housing Protection Act of 1987, 42
U.S.C. § 1472 (“ELIHPA”). Appellants are residents who
presently live in this housing property.

   First, they appeal the district court’s denial of their motion
to intervene in a quiet title lawsuit, DBSI/TRI IV Limited Part-
                  GOLDAMMER v. UNITED STATES                17229
nership, et al. v. United States, No. 04-36066, between the
property owners and the Rural Housing Service (“RHS”), an
administrative division of the United States Department of
Agriculture. Second, appellants appeal the district court’s
grant of summary judgment in favor of the owners and RHS
in appellants’ Administrative Procedure Act (“APA”) claim,
which alleged that RHS accepted prepayment on a Section
515 loan in violation of ELIHPA.

   We affirm the district court’s denial of appellants’ motion
to intervene in the quiet title lawsuit because their interests are
sufficiently protected by their APA lawsuit. However,
because the district court misconstrued our holding in Kim-
berly Associates v. United States, 261 F.3d 864 (9th Cir.
2001), we reverse the grant of summary judgment and remand
for further proceedings. Kimberly merely held that certain
defenses were not available to the government in a quiet title
action brought by Section 515 borrowers to enforce their con-
tractual right to prepay their loans. However, ours is an APA
case brought by residents challenging the agency’s non-
compliance with the Emergency Low Income Housing Pro-
tection Act. Kimberly did not hold that ELIHPA was invalid
or that the Department of Agriculture was free to violate it.
The district court therefore erred in granting summary judg-
ment to the agency on the tenants’ claim that the agency acted
contrary to law.

                        I.   Background

  The facts are not disputed.

  Section 515 of the National Housing Act of 1949 was
enacted by Congress to encourage private investment in hous-
ing for elderly and low-income individuals in rural areas. See
42 U.S.C. § 1471 et seq. Section 515 authorized the Farmers
Home Administration, which was later subsumed into RHS,
to make direct loans to finance affordable housing. In
exchange for favorable interest rates and operating subsidies,
17230               GOLDAMMER v. UNITED STATES
the housing owners agreed to rent to qualified low-income
tenants at affordable rates for as long as the loans were out-
standing.

   Defendant-appellees DBSI/TRI IV, Forest Hills, Jadin,
Norseman, and DBSI/TRI VII (hereinafter collectively
“DBSI”) entered into loan agreements with RHS in the mid-
to late- 1970s to finance six properties: Forest Village, Sea-
crest, Hillside Terrace, Vittoria Square, Norseman Village,
and Meadowbrook I. The loan agreements gave DBSI the
right to prepay the loans and exit the Section 515 program at
any time, even before the 40- or 50-year terms of the loans
expired, stating: “Prepayments of scheduled installments, or
any portion thereof, may be made at any time at the option of
Borrower.” The loan agreements also provided: “This Note
shall be subject to the present regulations of the Farmers
Home Administration and to its future regulations not incon-
sistent with the express provisions hereof.”

   Plaintiff-appellants are six tenants currently residing in
these properties. Sherry Goldammer, Donald Gerhard, Ron
Veillon, and Carmen Thomas are elderly low-income resi-
dents of Seacrest; Diana Rhodes is a low-income resident of
Meadowbrook.

  In 1987, Congress enacted ELIHPA. Pub. L. No. 100-242,
101 Stat. 1877 (1988).1 In passing this legislation, Congress
was motivated by concerns that RHS loans were vulnerable to
prepayment, which removed housing from Section 515 ahead
of schedule, thus undermining the purpose of the program.
  1
   In 1992, Congress extended and made permanent the 1988 Act, which
had only temporarily prohibited prepayment. Pub. L. No. 102-550, 106
Stat. 3672, 42 U.S.C. § 1472(c)(1) (1992). The 1992 amendment also
extended prepayment restrictions to all Section 515 projects financed
between December 21, 1979, and December 15, 1989. Id. The 1988 Act
had restricted prepayments on projects financed on or before December
21, 1979. It is undisputed that the loans in question are covered by ELI-
HPA.
                    GOLDAMMER v. UNITED STATES                     17231
Thus, Congress imposed “elaborate requirements for prepay-
ments” in order to “discourage project owners from prepaying
their loans,” despite the terms of the loan contracts. Kimberly,
261 F.3d at 867. ELIHPA provides, in pertinent part:

      The Secretary may not accept an offer to prepay . . .
      any loan made or insured under [Section 515] . . .
      unless the Secretary takes appropriate action which
      will obligate the borrower (and successors in interest
      thereof) to utilize the assisted housing and related
      facilities for the purposes specified in [Section 515],
      as the case may be, for a period of [fifteen or twenty
      years, depending on the type of loan], or until the
      Secretary determines (prior to the end of such
      period) that there is no longer a need for such hous-
      ing and related facilities to be so utilized or that Fed-
      eral or other financial assistance provided to the
      residents of such housing will no longer be provided.

42 U.S.C. § 1472(c)(1)(A).

   Specifically, ELIHPA requires an owner to give notice of
its intent to prepay, 42 U.S.C. § 1472(c)(3), at which point the
Secretary of Housing and Urban Development (“HUD”) must
offer the owner a series of financial incentives to remain in
the program, id. § 1472(c)(4). If the owner insists on prepay-
ing, the owner is obligated to offer the project for sale to any
“qualified nonprofit organization or public agency at a fair
market value” determined by independent appraisers. Id.
§ 1472(c)(5)(A)(I). If no such sale is made within 180 days,
then and only then may RHS accept prepayment. Id.
§ 1472(c)(5)(A)(ii).2 The prepayment process is subject to
  2
   If a qualified nonprofit organization does offer to buy the property,
RHS is authorized to facilitate the sale by providing financial assistance
“to ensure that the monthly rent payment made by each low income family
or person residing in the housing does not exceed the maximum rent per-
mitted” by Section 515. 42 U.S.C. § 1472(c)(5)(C)-(D).
17232            GOLDAMMER v. UNITED STATES
agency regulations now found at 7 C.F.R. Part 3560 et seq.
(2005).

   In 1998, DBSI submitted final payments on their loans on
four Section 515 properties, including Seacrest. No prepay-
ment was offered for Meadowbrook I. RHS, relying upon
ELIHPA and the accompanying regulations, refused to accept
the prepayment tenders and refused to reconvey the deeds of
trust or issue satisfactions of the mortgages that encumbered
the properties.

   On October 27, 1998, DBSI filed a quiet title lawsuit
against the United States in the District of Oregon. In its com-
plaint, DBSI claimed that they were entitled to quiet title
judgments because RHS wrongfully rejected the 1998 prepay-
ment tenders.

   On February 28, 2003, DBSI and RHS entered into an
“Agreement in Principle” to settle the quiet title lawsuit.
DBSI and RHS agreed to negotiate values for the four proper-
ties involved in the quiet title lawsuit, as well as for Meadow-
brook I, and to offer the properties initially to non-profit
entities that would keep the properties in Section 515. If no
such sale occurred, however, the Agreement provided that
RHS would accept DBSI’s prepayment and release the prop-
erties from Section 515 “without regard to any prepayment
restrictions, including but not limited to the restrictions con-
tained in 42 U.S.C. § 1472(c) and 7 C.F.R. 1965.201 et seq.”

   Although DBSI and RHS agreed to values for the four
properties, the government did not agree to finance the sale of
these properties to nonprofit entities. Therefore, pursuant to
the Agreement, DBSI paid the balance of the loan for Seacrest
on October 28, 2003 and the government accepted this pre-
payment on December 1, 2003. On December 15, 2003, RHS
reconveyed the deed of trust for the Seacrest property and
released Seacrest from the Section 515 program. On Decem-
ber 19, 2003, DBSI and RHS stipulated to a quiet title judg-
                    GOLDAMMER v. UNITED STATES                      17233
ment pursuant to Fed. R. Civ. P. 54(b).3 Also on December
19, 2003, appellants — the tenants — brought suit against the
Secretary of the Department of Agriculture and various other
federal defendants under the Administrative Procedure Act, 5
U.S.C. § 702, alleging that the agency acted contrary to law
in allowing DBSI to exit the Section 515 program without
complying with ELIHPA.

   It is undisputed that RHS accepted prepayment of the Sea-
crest loan without requiring DBSI to comply with the require-
ments of ELIHPA.

   After prepaying the Seacrest loan, DBSI conveyed Seacrest
to Northwest Real Estate Capital Corporation (“Northwest”),
which had previously purchased Seacrest from DBSI. North-
west eventually procured United States HUD Section 8 hous-
ing vouchers for the Seacrest tenants from a local housing
authority, allowing the tenants to continue paying below-
market rents.

  DBSI has not initiated prepayment of the Section 515 loan
on Meadowbrook I.

                     II.   Motion to Intervene

   Approximately one month after DBSI and RHS stipulated
to the quiet title judgment in the DBSI/TRI IV lawsuit, appel-
lants filed their motion to intervene as of right in that action,
pursuant to Fed. R. Civ. P. 24(a), seeking the opportunity to
set aside the quiet title judgment on the ground that it was
issued in violation of ELIHPA. The district court denied the
motion on the grounds that appellants’ APA claim sufficiently
protected their interests. We have jurisdiction pursuant to 28
U.S.C. § 1291, and we affirm.
  3
   Pursuant to the stipulation, the district court entered an order of dis-
missal with prejudice on June 5, 2006.
17234                GOLDAMMER v. UNITED STATES
  A district court’s denial of a motion to intervene is
reviewed de novo. See United States v. Alisal Water Corp.,
370 F.3d 915, 918 (9th Cir. 2004).

   [1] As a preliminary matter, DBSI contends that the June
5, 2006, dismissal with prejudice of the quiet title lawsuit
moots appellants’ appeal of the denial of their motion to inter-
vene. The law is otherwise. Although the district court entered
final judgment in the underlying case during the pendency of
the appeal, “the intervention controversy is still alive because,
if it were concluded on appeal that the district court had erred
in denying the intervention motion, and that the applicant was
indeed entitled to intervene in the litigation, then the applicant
would have standing to appeal the district court’s judgment.”
Canatella v. California, 404 F.3d 1106, 1109 n.1 (9th Cir.
2005) (citing League of United Latin Am. Citizens v. Wilson,
131 F.3d 1297, 1301 n.1 (9th Cir. 1997)) (internal punctuation
omitted); see also Leisnoi, Inc. v. United States, 313 F.3d
1181, 1184 n.4 (9th Cir. 2002) (refusing to dismiss for moot-
ness and reaching merits of appeal because appellant’s motion
“might not be moot if intervention would permit him to
appeal the judgment of dismissal”) (citing Wilson, 313 F.3d
at 1301 n.1). Therefore, we proceed to the merits of the claim.4

  [2] To intervene as of right under Rule 24(a), appellants
must meet all elements of the four-part test set out in South-
west Center For Biological Diversity v. Berg, 268 F.3d 810,
817 (9th Cir. 2001):

      “(1) the application for intervention must be timely;
      (2) the applicant must have a ‘significantly protect-
      able’ interest relating to the property or transaction
      that is the subject of the action; (3) the applicant
  4
    Meadowbrook appellant Rhodes does not appeal the district court’s
ruling that she did not have a protectable interest in the quiet title lawsuit,
in which Meadowbrook was not at issue. Therefore, we address only the
Seacrest appellants’ claim.
                 GOLDAMMER v. UNITED STATES                17235
    must be so situated that the disposition of the action
    may, as a practical matter, impair or impede the
    applicant’s ability to protect that interest; and (4) the
    applicant’s interest must not be adequately repre-
    sented by the existing parties in the lawsuit.”

   [3] We agree with the district court that appellants failed to
meet the third factor — i.e., they failed to demonstrate that
“the disposition of the action may, as a practical matter,
impair or impede the applicant’s ability to protect that inter-
est.” Id. The relief sought by appellants in their APA action
is essentially the same relief they say they wish to obtain by
intervening in the quiet title lawsuit. Under the APA, the dis-
trict court has the power to set aside agency action found to
be “arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law.” 5 U.S.C. § 706(2)(A); see, e.g.,
Lifgren v. Yeutter, 767 F. Supp. 1473, 1494 (D. Minn. 1991)
(setting aside RHS acceptance of Section 515 prepayment in
similar case, and ordering property returned to Section 515 to
be operated in accordance with ELIHPA). Therefore, if suc-
cessful on the APA claim, appellants will receive the same
remedy they sought by intervening in the quiet title lawsuit.
The action to intervene was correctly denied.

                        III.   APA Claim

  A.   Justiciability

   On appeal, for the first time in the case, DBSI and RHS
raise various issues of justiciability. Standing, mootness, and
ripeness are jurisdictional issues that may be raised at any
time, even for the first time on appeal. See, e.g., Laub v. U.S.
Dept. of Interior, 342 F.3d 1080, 1085 (9th Cir. 2003).

  [4] The APA provides: “A person suffering legal wrong
because of agency action, or adversely affected or aggrieved
by agency action within the meaning of a relevant statute, is
entitled to judicial review thereof.” 5 U.S.C. § 702. To estab-
17236              GOLDAMMER v. UNITED STATES
lish standing to sue under the APA, appellants must first meet
the “ ‘irreducible constitutional minimum of standing [which]
contains three elements: (1) injury in fact; (2) causation; and
(3) likelihood that a favorable decision will redress the inju-
ry.’ ” Schneider v. Chertoff, 450 F.3d 944, 959 (9th Cir. 2006)
(quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992)). A party suing under the APA must also show “(1)
that there has been final agency action adversely affecting the
[party], and (2) that, as a result, it suffers legal wrong or that
its injury falls within the zone of interests of the statutory pro-
vision the [party] claims was violated.” Citizens for Better
Forestry v. U.S. Dept. of Agric., 341 F.3d 961, 976 (9th Cir.
2003) (internal quotation marks and citations omitted).

   RHS argues that appellants lack standing because they have
not suffered injury in fact, given that Meadowbrook remains
in the Section 515 program and Seacrest is now involved in
HUD’s Section 8 program.

   [5] As to Seacrest appellants, it is undisputed that North-
west has not increased their rent as the result of moving Sea-
crest from Section 515 to Section 8. However, it is also
undisputed that Section 515 offers procedural safeguards and
statutory protections that are unavailable under Section 8. For
example, at the end of a lease under Section 8, the landlord
may refuse to renew the lease consistent with state law, gener-
ally for no cause; 42 U.S.C. § 1437f(o)(7); Section 515 land-
lords may refuse to renew a lease only for “material non-
compliance” with lease terms or for other “good causes.” 7
C.F.R. § 3560.159 (2005).5 “It has long been clear that eco-
  5
    Other differences between Section 8 and Section 515 include the fact
that Section 515 rent cannot be raised to more than 30% of the tenant’s
monthly adjusted income, 7 C.F.R. § 3560.203(a)(1), whereas Section 8
assistance could require tenants to pay more than 30% of their monthly
adjusted income under certain circumstances. See 42 U.S.C.
§§ 1437f(o)(2)(A), 1437f(o)(3). Also, Section 8 tenants do not enjoy the
statutory right to grievance and appeals procedures provided by Section
515. Compare 42 U.S.C. § 1480(g) with 7 C.F.R. § 3560.160.
                 GOLDAMMER v. UNITED STATES                17237
nomic injury is not the only kind of injury that can support a
plaintiff’s standing.” Vill. of Arlington Heights v. Metro.
Hous. Dev. Corp., 429 U.S. 252, 262-63 (1977) (citations
omitted). Moreover, parties such as appellants have been “al-
lowed to bring lawsuits challenging actions which affect their
future opportunity to obtain housing.” Lifgren, 767 F. Supp.
at 1488 n.7 (citing Arlington Heights, 429 U.S. at 264 and
Allen v. Pierce, 689 F.2d 593, 595 n.5 (5th Cir. 1982)); see
also Keith v. Volpe, 858 F.2d 467, 477 (9th Cir. 1988) (hold-
ing that tenants had standing where defendant city’s housing
plans caused injury by making affordable housing unavailable
to tenants) (citing Arlington Heights, 429 U.S. at 264).

   [6] Seacrest appellants suffered injury in fact when their
housing status changed. This change allegedly was caused by
the agency’s action, and appellants’ injuries are redressable
by a successful claim under the APA. Therefore, we hold that
Seacrest appellants have standing to sue.

   [7] However, because Meadowbrook appellant Rhodes has
not yet suffered concrete injury, nor is injury sufficiently
imminent, we hold that she lacks standing and that her APA
claim is not ripe for review. Where, as here, “injunctive relief
and a declaratory judgment are sought with regard to an
administrative determination, the courts traditionally have
been reluctant to grant such relief unless there is a controversy
ripe for judicial resolution.” Mt. Adams Veneer Co. v. United
States, 896 F.2d 339, 343 (9th Cir. 1990) (quoting Abbott
Labs. v. Gardner, 387 U.S. 136, 148-49 (1967)) (internal
punctuation omitted).

   [8] “ ‘[A] case is not ripe where the existence of the dispute
itself hangs on future contingencies that may or may not
occur.’ ” Porter v. Jones, 319 F.3d 483, 490 (9th Cir. 2003)
(quoting Clinton v. Acequia, Inc., 94 F.3d 568, 572 (9th Cir.
1996)). It is undisputed that DBSI has not tendered prepay-
ment on the Meadowbrook I loan, nor has it indicated an
intention to do so. Moreover, Rhodes has not shown that she
17238            GOLDAMMER v. UNITED STATES
has been “adversely affected” by “final agency action” —
specifically, RHS’s acceptance of prepayment — as required
for standing under the APA. See Citizens for Better Forestry,
341 F.3d at 976.

   [9] Finally, respondents argue that Seacrest appellants’
claim is mooted by the sale of the Seacrest property to North-
west. This is not so. We have held that “[c]onveyance of
property to another does not moot a case.” Muckleshoot
Indian Tribe v. U.S. Forest Serv., 177 F.3d 800, 815 (9th Cir.
1999) (citation omitted). Federal courts “are authorized to
‘void a property transaction’ where necessary.” Id. (quoting
Nat’l Wildlife Fed. v. Espy, 45 F.3d 1337, 1342 (9th Cir.
1995)); see also Goodwin v. United States, 935 F.2d 1061,
1064 (9th Cir. 1991) (rejecting mootness argument because
court could “still determine the validity” of seller’s acquisi-
tion of property before it was sold to eventual buyer). “Where
the actions involved in a title transfer can be undone, this
court will not find meritorious the defense of mootness.”
Muckleshoot, 177 F.3d at 815 (citing Burbank Anti-Noise
Group v. Goldschmidt, 623 F.2d 115 (9th Cir. 1980)).
Because the sale to Northwest can be undone and the prepay-
ment reversed, the claim is not moot. See, e.g., Lifgren, 767
F. Supp. 1473 (setting aside the borrower’s prepayment in a
similar APA action).

  B.    Kimberly and Summary Judgment

   A district court’s grant of summary judgment is reviewed
de novo. See Soldano v. United States, 453 F.3d 1140, 1143
(9th Cir. 2006). Viewing the evidence in the light most favor-
able to the non-moving party, we determine whether there are
“any genuine issues of material fact and whether the district
court correctly applied the controlling substantive law.” Id.

  In its orders denying the preliminary injunction and grant-
ing summary judgment in favor of defendants, the district
court ruled that its decision “was mandated” by the Ninth Cir-
                     GOLDAMMER v. UNITED STATES                      17239
cuit’s decision in Kimberly Associates v. United States. We
disagree. There is a critical distinction between Kimberly and
the present case. Kimberly was a quiet title action in which
borrowers claimed to be entitled to pay off their loans in
accordance with their contracts. In the present case, the ques-
tion is entirely different — whether the agency acted contrary
to federal law in failing to comply with ELIHPA to the detri-
ment of the residents.

   Kimberly involved a dispute similar to the DBSI/TRI IV
quiet title lawsuit, in which Kimberly Associates (a subsidiary
of DBSI) attempted prepayment of a Section 515 loan on a
property in Idaho. Kimberly, 261 F.3d at 867. When RHS
rejected the prepayment, citing ELIHPA, Kimberly sued to
quiet title of the Idaho property. Id. The government moved
to dismiss pursuant to Fed. R. Civ. P. 12(b), raising two initial
defenses: sovereign immunity and the unmistakability doctrine.6
  6
    Without doubt, there is substantial inconsistency in courts’ descriptions
of “the unmistakability doctrine.” See, e.g., United States v. Winstar
Corp., 518 U.S. 839, 871-72 (1996) (defining unmistakability doctrine as
the notion that “[s]overeign power . . . governs all contracts subject to the
sovereign’s jurisdiction, and will remain intact unless surrendered in
unmistakable terms,” but then holding that “application of the doctrine . . .
turns on whether enforcement of the contractual obligation alleged would
block the exercise of a sovereign power of the Government”); First
Nationwide Bank v. United States, 431 F.3d 1342, 1351-52 (Fed. Cir.
2005) (discussion that unmistakability doctrine and sovereign acts doctrine
are separate); Kimberly, 261 F.3d at 869 (trying to clarify the analysis that
must be undertaken under the “so-called ‘unmistakability doctrine’ ”);
Rhode Island Laborers’ Dist. Council v. Rhode Island, 145 F.3d 42, 44
(1st Cir. 1998) (discussing “[w]hat has been called the ‘unmistakability
doctrine’ ”); Tamarind Resort Assocs. v. Virgin Islands, 138 F.3d 107, 112
(3d Cir. 1998) (unclear after Winstar what type of contract the unmistaka-
bility doctrine applies to).
   As we read Kimberly, the “unmistakability doctrine” refers to the sec-
ond step in the two-step “unmistakability analysis”: the first step is to
determine if the act in question qualifies as a “sovereign act,” and it is
only after the act is deemed “sovereign” that the question of an “unmistak-
able waiver” of the government’s sovereign power becomes relevant. See
Kimberly, 261 F.3d at 869. Therefore, to say that the unmistakability doc-
trine does not apply (as we do here) is to say that the court need not reach
the second step of the unmistakability analysis because the act in question
is not a sovereign act.
17240            GOLDAMMER v. UNITED STATES
Id. The district court ruled that the United States had waived
sovereign immunity under 28 U.S.C. § 2410, but that “the
unmistakability doctrine nevertheless barred Kimberly from
any remedy under its contract with the government.” Id. The
court then granted the government’s motion to dismiss.

   [10] On appeal from the motion to dismiss, we agreed with
the district court that sovereign immunity had been expressly
waived, but held that the unmistakability doctrine did not
apply. When the doctrine applies, it is a defense available to
the government when the complaining party in a contract dis-
pute claims that the original contract terms control, even when
they conflict with subsequent legislation. Then, the court
determines whether, in the contract language, the government
waived its sovereign right to affect the contract through legis-
lation “in unmistakable terms.” See United States v. Winstar
Corp., 518 U.S. 839, 872 (1996) (“Sovereign power governs
all contracts subject to the sovereign’s jurisdiction, and will
remain intact unless surrendered in unmistakable terms.”)
(citation and internal punctuation omitted); Kimberly, 261
F.3d at 869 (The doctrine allows “the Government to make
agreements that bind future Congresses, but only if those con-
tracts contain an unmistakable promise.”) (internal quotation
marks and citation omitted). As we noted in Kimberly, this
doctrine “governs the tension between the exercise of sover-
eign power and private contractual relations with the govern-
ment.” 261 F.3d at 869.

   However, the unmistakability doctrine does not apply to
every situation in which legislation affects a prior government
contract. As we noted, “when the government is acting as a
private contracting party, then the doctrine does not apply,
and the government’s rights and duties are governed by law
applicable to private parties unaltered by the government’s
sovereign status.” Id. (citations omitted).

  [11] We divided the inquiry into two questions: “(1) in
what capacity was the United States acting when it breached
                    GOLDAMMER v. UNITED STATES                      17241
its contractual obligations? and (2) if the United States acted
in its sovereign capacity, did the contract waive sovereign
rights in unmistakable terms?” Id. In answering the first ques-
tion, we held in Kimberly that, because ELIHPA was not an
act of sovereign power, the government was not acting in a
sovereign capacity when it altered the Section 515 loan con-
tract.7 Id. at 869-70. We thus held in Kimberly that the
unmistakability doctrine did not apply, and the government
could not use the doctrine as an initial defense warranting dis-
missal pursuant to Rule 12(b). Id. at 870.

   [12] Kimberly remains good law as far as it goes, but
nowhere does Kimberly hold that ELIHPA is invalid or that
the government is free to disobey it. Bearing in mind that
Kimberly was a quiet title action, we had no occasion then to
opine on whether the government violated the APA by affir-
matively allowing borrowers to ignore ELIHPA’s statutory
requirements.

   [13] Thus, the district court erred in relying on Kimberly as
the basis for granting summary judgment on the appellants’
APA claim. On remand, the district court should decide
whether RHS acted contrary to law as alleged in appellants’
APA complaint.

  We note that, if appellants’ APA claim proves successful
and Seacrest is returned to the Section 515 program, DBSI
may still have recourse for RHS’s apparent breach of contract.
In Franconia Associates, 536 U.S. 129 (2002), the Supreme
Court noted the availability of a damages action under the
  7
    This decision created a split with the Eighth Circuit, which in similar
ELIHPA cases had ruled that the unmistakability doctrine did bar the own-
ers’ attempts to circumvent ELIHPA in prepaying Section 515 loans. See
Charleston Hous. Auth. v. U.S. Dept. of Agric., 419 F.3d 729, 738 (8th Cir.
2005); Parkridge Investors Ltd. Partnership v. Farmers Home Admin., 13
F.3d 1192, 1198 (8th Cir. 1994).
17242               GOLDAMMER v. UNITED STATES
Tucker Act, 28 U.S.C. § 1491, to compensate owners for con-
tracts breached because of ELIHPA.8

   [14] Because the district court erroneously relied on Kim-
berly in deciding the summary judgment motion, it never
reached the merits of appellants’ APA claim. We therefore
reverse the grant of summary judgment and remand to the dis-
trict court for further proceedings consistent with this opinion.

   REVERSED and REMANDED.

  8
   We recognize that the Supreme Court did not directly state that dam-
ages under the Tucker Act would be available in all circumstances; how-
ever, given the Court’s resolution of the statute of limitations issue that
was before it in Franconia, the Court seemed to imply the suitability of
such a remedy.