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Biafora v. United States

United States Court of Appeals, Federal Circuit

December 10, 2014

JOSEPH R. BIAFORA AND STEFI BIAFORA, Plaintiffs-Appellants,
v.
UNITED STATES, Defendant-Appellee. DOLLY ANN LIMITED PARTNERSHIP, MID-CITY FINANCIAL CORPORATION, EUGENE F. FORD, JOHN WALSH, IRENE WALSH, HILDA ZELDON, JOHN J. MCAVOY, SAUL RITZENBERG, JOSEPH MARILLEY, JULIUS SANKIN, CLARK ENTERPRISES, INC., JANE DEBLOIS HANNAN, ESTATE OF, ISADORE RODIS CREDIT SHELTER TRUST, JANE PARISH REVOCABLE TRUST, AND DELIA LANG, Plaintiffs-Appellants,
v.
UNITED STATES, Defendant-Appellee. THETFORD PROPERTIES IV, L.P., Plaintiff-Appellant,
v.
UNITED STATES, Defendant-Appellee. CARRIAGE HOUSE OF MUSKEGON ASSOCIATES, LP, Plaintiff-Appellant,
v.
UNITED STATES, Defendant-Appellee. CARRIAGE HOUSE SOUTH ASSOCIATES, LP, Plaintiff-Appellant,
v.
UNITED STATES, Defendant-Appellee. THETFORD PROPERTIES III, L.P., Plaintiff-Appellant,
v.
UNITED STATES, Defendant-Appellee

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Page 1328

Appeals from the United States Court of Federal Claims in Nos. 93-CV-6552, 97-CV-5828, 93-CV-6559, 97-CV-5822, 97-CV-5823, 93-CV-6558, Judge Edward J. Damich.

HARRY J. KELLY, Nixon Peabody, LLP, of Washington, DC, argued for plaintiffs-appellants.

DAVID A. HARRINGTON, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were STUART F. DELERY, Assistant Attorney General, ROBERT E. KIRSCHMAN, JR., Director, FRANKLIN E. WHITE, JR., Assistant Director, ELIZABETH A. SPECK and KENNETH D. WOODROW, Trial Attorney.

Before NEWMAN, MOORE, and O'MALLEY, Circuit Judges. MOORE, Circuit Judge.

OPINION

Page 1329

Moore, Circuit Judge.

Appellants, owners of properties with mortgages insured by the United States Department of Housing and Urban Development (HUD), appeal from judgments of the United States Court of Federal Claims dismissing their various takings claims. For the reasons below, we affirm-in-part, reverse-in-part, and remand to the Court of Federal Claims for further proceedings consistent with this opinion.

Background

In the 1950s and '60s, the federal government enacted legislation to encourage private developers to construct, own, and manage housing projects for low- and moderate-income families. The government did so by insuring mortgages on the housing projects in exchange for certain provisions, such as a 40-year mortgage term, an agreement to maintain affordability restrictions on the housing for the duration of the mortgage, and prepayment limitations or prohibitions on the mortgage. Changing this regime, Congress passed the Emergency Low Income Housing Preservation Act of 1987 (ELIHPA), which was superseded by the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) (collectively, Preservation Statutes). The Preservation Statutes, among other things, instituted a pre-approval process to request the right to prepay mortgages. There were substantive restrictions on HUD's ability to grant prepayment requests, which limited its discretion. Cienega Gardens v. United States, 503 F.3d 1266, 1272 n.2 (Fed. Cir. 2007) (" HUD was only permitted to approve immediate prepayment upon finding that the effect of prepayment would not 'materially increase economic hardship for current tenants,' including a finding that alternative housing was available for current tenants and that the supply of vacant, comparable housing would not be affected." ) (citing 12 U.S.C. § 4108(a)). Prepaying the mortgage was one step in removing affordability restrictions on properties so that they could be rented at market prices. The Preservation

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Statutes permitted HUD to grant property owners incentives, such as cash distributions or changes to the regulatory agreement, rather than permission to prepay. Appellants, who each owned one or more properties with mortgages insured by the government, filed suits in the Court of Federal Claims claiming that the Preservation Statutes effected an as-applied taking of their right to prepay mortgages.

Several of the Court of Federal Claims' rulings are being appealed. First, it granted the government's motions for summary judgment that the takings claims for a subset of the properties at issue were unripe because the appellants that owned the subset of properties did not exhaust their administrative remedies. Anaheim Gardens v. United States, 107 Fed.Cl. 404, 422 (Fed. Cl. 2012). Second, it granted the government's motions for summary judgment that no taking occurred for a subset of properties because the mortgages of those properties did not include a right to prepay. Anaheim Gardens v. United States, 107 Fed.Cl. 9, 16 (Fed. Cl. 2012). Third, it granted the government's motion for summary judgment of collateral estoppel as to all of the claims of one appellant, Thetford IV. Anaheim Gardens v. United States, 107 Fed.Cl. 404, 422 (Fed. Cl. 2012). This appeal followed. We have jurisdiction under 28 U.S.C. § 1295(a)(3).

Discussion

We review a determination of ripeness by the Court of Federal Claims de novo. McGuire v. United States, 707 F.3d 1351, 1357 (Fed. Cir. 2013). We review the Court of Federal Claim's grant of summary judgment regarding the existence of a taking de novo. Casitas Mun. Water Dist. v. United States, 708 F.3d 1340, 1351 (Fed. Cir. 2013). We review a trial court's application of collateral estoppel de novo. Shell Petroleum, Inc. v. United States, 319 F.3d 1334, 1338 (Fed. Cir. 2003).

I. Ripeness

An as-applied regulatory takings claim does not ripen " until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue." Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). A plaintiff, however, can be excused from exhausting administrative remedies when it would be futile to do so, such as when the administrative agency has no discretion to grant the requested relief or the parties agree on how the challenged regulation would apply. Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 738-39, 117 S.Ct. 1659, 137 L.Ed.2d 980 (1997). We have held that the futility exception applies where " no uncertainty remains regarding the impact of the regulation, certainty being the basis for the ripeness requirement." Greenbrier v. United States, 193 F.3d 1348, 1359 (Fed. Cir. 1999) (internal citations omitted).

In Cienega Gardens v. United States, we held that " HUD lacks discretion to grant a prepayment request" under the Preservation Statutes " unless (1) implementation of the plan will not materially increase economic hardship for current tenants; and (2) the supply of vacant, comparable housing is sufficient to ensure that prepayment will not materially affect the availability of decent, safe, and sanitary housing affordable to low-income persons in the area." 265 F.3d 1237, 1246 (Fed. Cir. 2001). Certain property owners in Cienega Gardens presented data showing that charging market ...


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