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Normandy Apartments, Ltd. v. U.S. Dep't of Housing and Urban Development

February 9, 2009

NORMANDY APARTMENTS, LTD., PLAINTIFF-APPELLANT,
v.
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, KIMBERLY K. WAITS, IN HER CAPACITY AS SUPERVISORY PROJECT MANAGER OF THE MULTIFAMILY PROGRAM CENTER IN THE TULSA FIELD OFFICE FOR THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, AND HERMAN S. RANSOM, IN HIS CAPACITY AS DIRECTOR OF THE KANSAS CITY MULTIFAMILY HUB FOR THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, DEFENDANTS-APPELLEES.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. No. CIV-07-1161-R).

The opinion of the court was delivered by: McCONNELL, Circuit Judge

PUBLISH

Before KELLY, BALDOCK, and McCONNELL, Circuit Judges.

In 2007, the United States Department of Housing and Urban Development ("HUD") terminated its contractual relationship with Normandy Apartments. Pursuant to this contract, Normandy had received financial subsidies for making housing available to low-income tenants who were qualified to receive assistance under the Section 8 federal housing program. Normandy sought injunctive and declaratory relief against HUD in the United States District Court for the Western District of Oklahoma, seeking to prevent HUD from abating its subsidy payments. It alleged that HUD had violated its regulations and breached its contractual obligations by the manner in which it terminated its payments to Normandy. The district court construed Normandy's claim as one for specific performance of a contract, and concluded that only the Court of Federal Claims had jurisdiction. Because we conclude, however, that the district court should have exercised jurisdiction over Normandy's claim that HUD violated its own regulations by terminating the Section 8 payments, we reverse and remand for consideration on the merits.

I. Background

Normandy Apartments has contracted with HUD since 1968 to provide Section 8 rental housing for qualified low-income tenants at its Tulsa apartment project. Under Section 8's project-based assistance program, tenants pay a portion of their rent, according to their means, but the bulk of the rent is paid by HUD. The district court determined that the value of the funds paid out by HUD to Normandy amounted to roughly $110,000 per month. Normandy Apartments, Ltd. v. United States Dep't of Hous. and Urban Dev., No. CIV-07-1161-R, 2007 WL 3232610, at *2 (W.D. Okla. Nov. 1, 2007).

Under HUD regulations and Normandy's contract with HUD, Normandy was required to maintain the units it makes available for Section 8 tenants in "decent, safe, and sanitary" condition. 24 C.F.R. § 886.323; Aplt. App. 394 § 6(b). About once a year, HUD's Real Estate Assessment Center ("REAC") conducted a physical inspection of the property to ensure compliance with HUD standards, and issued a numerical score on a 100-point scale. A facility fails to meet HUD standards when it receives a score below sixty.

In November 2004, REAC inspected Normandy's complex and issued a failing score of fifty-nine. Although the parties contest Normandy's efforts to correct deficiencies at the complex following this initial inspection, it is undisputed that Normandy failed an August 2006 inspection, receiving an even lower score of fifty-four. This was the sixth time in eight inspections that Normandy's complex received a failing score.

In June 2007, HUD informed Normandy that it was in default of its obligation to maintain the complex in "decent, safe, and sanitary condition" and indicated that all Section 8 subsidy payments would be terminated. See Aplt. App. 236--39. Normandy sought reconsideration of this determination to no avail. After receiving notice on September 28, 2007 that all subsidy payments would be "suspended and abated" effective November 1, 2007, Normandy filed the instant suit, seeking injunctive and declaratory relief in the United States District Court for the Western District of Oklahoma. In particular, it sought a preliminary and permanent injunction preventing HUD from following through on its decision to terminate assistance payments.

Normandy asserted that, in terminating their relationship, HUD had violated both its regulations and the terms of its contract. Count I of Normandy's complaint alleged that HUD had "violat[ed] [its] regulations" by, among other things, "fail[ing] to consider Normandy's request for an adjustment of its REAC physical condition score" and failing to give Normandy a "reasonable amount of time in which to cure the default." Complaint ¶¶ 48--49 (citing 24 C.F.R. § 200.857(c)(3) and 24 C.F.R. § 886.320). Count II averred that HUD had breached its contract for similar reasons (e.g., by failing to allow it to implement corrective actions within a reasonable time following its default (Complaint ¶ 55)).

The district court heard oral argument both on the question of whether it had jurisdiction to issue a preliminary injunction against HUD and on the merits of Normandy's claims. The court first concluded that it was without subject-matter jurisdiction to issue a preliminary injunction. Construing Normandy's claim as an action against the government seeking specific performance of a monetary contract, the value of which exceeded $10,000, the court determined that the Tucker Act, 28 U.S.C. § 1491, endowed the United States Court of Federal Claims with exclusive jurisdiction to entertain Normandy's claims. Normandy Apartments, Ltd., 2007 WL 3232610, at *3. It therefore concluded that the United States had not waived its sovereign immunity to suit in federal district court. See id. at 2. Because the district court recognized the jurisdictional issues to be "complex," however, it also proceeded to address the merits of a preliminary injunction. Id. at 3. Although it found that Normandy had not made a sufficient showing of irreparable injury in order to justify a preliminary injunction, it noted that "[t]he evidence was likely sufficient to establish the other elements" necessary, id. at *4, including a substantial likelihood of success on the merits. Id. at *3.

Normandy subsequently filed a motion to set aside the district court's dismissal of its motion for preliminary injunction. This too was denied on December 5, 2007. This appeal followed.*fn1

II. Discussion

Sovereign immunity generally shields the United States, its agencies, and its officers acting in their official capacity from suit. Wyoming v. United States, 279 F.3d 1214, 1225 (10th Cir. 2002). The defense of sovereign immunity is jurisdictional in nature, depriving courts of subject-matter jurisdiction where applicable. Robbins v. U.S. Bureau of Land Mgmt., 438 F.3d 1074, 1080 (10th Cir. 2006). Because general jurisdictional statutes, such as 28 U.S.C. § 1331, do not waive the Government's sovereign immunity, a party seeking to assert a claim against the government under such a statute must also point to a specific waiver of immunity in order to establish jurisdiction. See Lonsdale v. United States, 919 F.2d 1440, 1443--44 (10th Cir. 1990). Here, neither party disputes the existence of a federal issue sufficient to confer ...


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