Court Opinion

ID: 4195255
Source: CourtListenerOpinion
Date Created: 2017-08-11 16:01:46.135393+00
Date Added: 2024-06-11T14:40:29.502196
License: Public Domain

FILED
                                                                      United States Court of Appeals
                     UNITED STATES COURT OF APPEALS                           Tenth Circuit

                            FOR THE TENTH CIRCUIT                           August 11, 2017
                        _________________________________
                                                                          Elisabeth A. Shumaker
                                                                              Clerk of Court
THE HOUSING AUTHORITY OF THE
CITY OF PICHER, OKLAHOMA,

      Plaintiff,

v.                                                          No. 16-5159
                                                (D.C. No. 4:14-CV-00322-CVE-PJC)
UNITED STATES OF AMERICA,                                   (N.D. Okla.)
EX REL. SECRETARY, DEPARTMENT
OF HOUSING AND URBAN
DEVELOPMENT,

      Defendant - Appellee,

and

BOARD OF COUNTY
COMMISSIONERS OF THE COUNTY
OF OTTAWA, OKLAHOMA,

      Defendant - Appellant.
                      _________________________________

                            ORDER AND JUDGMENT*
                        _________________________________

Before MATHESON, McKAY, and MORITZ, Circuit Judges.
                 _________________________________

      *
        After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
      In this interpleader action, the Board of County Commissioners of the County

of Ottawa, Oklahoma (the County) appeals the district court’s entry of summary

judgment to the United States, on behalf of the Secretary of the Department of

Housing and Urban Development (HUD). Exercising jurisdiction under 28 U.S.C.

§ 1291, we affirm.

                                 I. BACKGROUND

      In the 1960s, the Housing Authority of the City of Picher, Oklahoma (PHA)

began operating a low-income public housing project with financial assistance from

HUD pursuant to a Consolidated Annual Contributions Contract (ACC). In 1983, the

federal government designated a portion of Oklahoma, including the City of Picher,

as the Tar Creek Superfund site due to health and environmental hazards from

extensive zinc and lead mining operations. In 2004, the state of Oklahoma began

relocating Picher’s residents due to the health hazards and the risk of unexpected

building collapse. In 2008, a tornado struck Picher and destroyed much of the

housing project, rendering it uninhabitable. Picher, which was located in Ottawa

County, ceased municipal operations in 2009 and began involuntary dissolution

proceedings the next year.

      After the tornado, the PHA obtained an insurance settlement of approximately

$1.7 million and, for several years, explored whether to rebuild the project in the

nearby town of Fairland. The PHA eventually sought HUD’s permission to rebuild

in Fairland, but HUD denied the request and directed that the project be terminated.

When both HUD and the County requested the approximately $1.2 million remaining

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in the PHA’s bank account, PHA filed an interpleader action in Oklahoma state court.

HUD removed the case to federal court and moved for summary judgment, arguing

that the County was not entitled to the interpled funds because it was a stranger to the

ACC, which expressly prohibited the creation of any enforcement right in a third

party; the County was not involved in the project; the County could not claim to be a

successor to the PHA because the project no longer existed; and the interpled funds

belonged to HUD under the plain terms of the ACC. The County responded that the

ACC was ambiguous, the County was the successor in interest to the City of Picher,

HUD waived any claim to the interpled funds by waiting almost six years to make a

claim, and the County had an equitable claim to at least a portion of the interpled

funds for services it supplied to the project.

      Meanwhile, the district court dismissed the PHA from the action because it

disclaimed any interest to the funds. After summary-judgment briefing was

complete, the district court transferred the case to the United States Court of Federal

Claims, reasoning that it lacked jurisdiction. The Claims Court concluded that it

lacked jurisdiction and transferred the case back to Oklahoma.

      After the re-transfer, the Oklahoma district court determined that it in fact had

jurisdiction and granted HUD’s motion for summary judgment. Applying federal

law, the court first ruled that the ACC unambiguously provided that all of the funds

remaining after termination of the project belonged to HUD. It based that conclusion

on the confluence of numerous contractual provisions, the most pertinent of which

we outline.

                                            3
      One contractual provision defined a “General Fund”: “All monies and

investment securities received by or held for the account of the [PHA] in connection

with the development, operation and improvement of projects in accordance with an

ACC with HUD shall constitute the ‘General Fund.’” Aplt. App., Vol. I at 48.

Another required the PHA to “deposit and invest all funds and investment securities

received by or held for the account of the [PHA] in connection with the development,

operation and improvement of the projects . . . in accordance with the terms of [a]

General Depository Agreement,” id., which the parties had executed separately. The

ACC defined “Operating receipts” as “all rents, revenues, income, and receipts

accruing from, out of, or in connection with the ownership or operation of [the]

project.” Id. at 46. The ACC further required the PHA to purchase a variety of

insurance coverages, including a “Commercial Property [policy] . . . written with a

blanket limit, on a replacement cost basis, and with an agreed value clause

eliminating any coinsurance provision.” Id. at 85.1 It also required the PHA to use

any insurance proceeds to “restore, reconstruct, and/or repair any damaged or

      1
         The commercial-property insurance requirement was set out in an attachment
to the ACC that was referred to in Section 13 of the ACC: “The types of insurance
required, or that should be purchased, and other requirements with respect to
insurance coverage are listed in Part B, Attachment VII, of this ACC.” Aplt. App.,
Vol. I at 50. The district court did not discuss this provision but based its view that
the PHA was required to purchase insurance on another provision in Section 13, one
requiring the PHA to “procure adequate insurance to protect the [PHA] from
financial loss resulting from various hazards if the [PHA] determines that exposure to
certain hazards exists.” Id. As the County points out, that provision did not require
the PHA to purchase “various hazards” insurance unless it deemed it necessary to do
so. However, Attachment VII clearly required the PHA to purchase commercial
property insurance.
                                          4
destroyed property of a project, except with the written approval of HUD to the

contrary.” Id. at 50–51. And perhaps most importantly to this case, the ACC

provided that in the event the project was terminated, “all project reserves shall

become part of another project administered by the [PHA] in accordance with the

terms of [the] ACC. If no other project(s) under management exists, the remaining

project reserves shall be distributed as directed by HUD.” Id. at 51 (emphasis

added).

      Here, HUD denied the PHA’s request to rebuild the project in Fairland and

instead terminated the project and directed that the remaining funds be returned to

HUD. Hence, the district court concluded that the funds belonged to HUD. The

court acknowledged that the ACC permitted the PHA to pool funds unrelated to the

project or HUD in the account where it kept project funds: “The [PHA] may

. . . deposit into an account covered by the terms of the General Depository

Agreement, by lump-sum transfers of funds from the depositories of other projects or

enterprises of the [PHA] in which HUD has no financial interest, amounts necessary

for current expenditures of items chargeable to all projects and enterprises of the

[PHA].” Id. at 48 (emphasis added). But the court concluded that the insurance

proceeds did not arise out of “other [PHA] projects or enterprises . . . in which HUD

had no financial interest,” id., but from an insurance policy that the ACC required the

PHA to maintain as part of its deal with HUD and that was paid for with federal grant

money.

                                           5
      The court further concluded that even if the PHA had a claim to the remaining

funds, the ACC unambiguously prohibited third-party claims against either the PHA

or HUD: “[N]othing in this ACC shall be construed as creating any right of any third

party to enforce any provision of the ACC or to assert any claim against HUD or the

[PHA].” Id. at 55. And to the extent the County claimed a right to the remaining

funds as the successor of the dissolved City of Picher, the court pointed out a

distinction between the PHA, which was a party to the ACC, and the City of Picher,

which was not. The court therefore reasoned that the County remained a stranger to

the ACC.

      The district court addressed two other arguments the County made. It first

rejected the contention that by waiting six years to make a claim on the insurance

proceeds, HUD waived its claim to the interpled funds. The court reasoned that HUD

did not need to make a separate claim to the funds because the ACC vested HUD

with the right to request the return of any project reserves in the General Fund (i.e.,

the PHA’s bank account subject to the General Depository Agreement) when the

project was terminated. Second, the court declined the County’s request for

$135,912 in equitable relief for services the County claimed it had provided to the

PHA between 2008 and 2013. The court concluded that the provision of services to

the PHA had no relationship to the ACC and that many of the services were those the

County was bound to provide as the county in which the project was located.

                                            6
                                  II. DISCUSSION

      We review an order granting summary judgment de novo, “applying the same

standards that the district court should have applied.” Fields v. City of Tulsa,

753 F.3d 1000, 1008 (10th Cir. 2014) (internal quotation marks omitted). A “court

shall grant summary judgment if the movant shows that there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). “[W]e examine the record and all reasonable inferences that

might be drawn from it in the light most favorable to the nonmoving party.” Fields,

753 F.3d at 1009 (internal quotation marks omitted).

      After fully considering the record, the parties’ arguments, and the governing

law, we are convinced that the district court properly granted summary judgment to

HUD. We therefore affirm the district court’s judgment for substantially the reasons

the district court provided. We add only the following.

      The County claims the district court overlooked or improperly analyzed a

number of its arguments. But almost all of those arguments concern the PHA’s right

to the funds, not the County’s. Although the County claims it “stepped ‘into the

shoes’ of the City (including [the] PHA)” when Picher was dissolved, Aplt. Opening

Br. at 21 (emphasis added), the only legal authority it cites, M. Anderson, Dissolving

Cities, 121 Yale L.J. 1364 (2012), concerns succession to a dissolved city and makes

no mention of a city’s public housing authority. Further, as the Oklahoma Supreme

Court explained in determining whether bonds issued by a housing authority were an

indebtedness of the state, a housing authority is, by Oklahoma statute, “‘a public

                                           7
body corporate and politic’”—which is how the PHA described itself in its

interpleader petition, see Aplt. App., Vol. I at 13—and therefore not “an agency or

instrumentality of a city or county.” Boardman v. Okla. City Hous. Auth., 445 P.2d

412, 416 (Okla. 1968) (quoting Okla. Stat. tit. 63, § 1055); accord Hon. Charles W.

Van, 11 Okla. Op. Atty. Gen. 482, Okla. A.G. Opin. No. 79-303, 1980 WL 114835,

at *2 (Jan. 22, 1980) (“Public housing authorities created pursuant to [the Oklahoma

Housing Authority Act, which includes § 1055], are not instrumentalities of the city

or county within which they sit and, therefore, are not subject to the Political

Subdivisions Tort Claims Act.”). We therefore conclude that the County failed to

establish that it stepped into the PHA’s shoes by virtue of Picher’s dissolution.

Consequently, we need not address the County’s contentions about the PHA’s rights

to the funds that it claims the district court overlooked or improperly analyzed.

                                 III. CONCLUSION

      The judgment of the district court is affirmed.

                                            Entered for the Court

                                            Monroe G. McKay
                                            Circuit Judge

                                            8