Housing Authority of the City of Slidell

CORRECTED

In the United States Court of Federal Claims

No. 19-1583C

(Filed: July 27, 2020)

)

RCFC 12(b)(1); RCFC 12(b)(6);

HOUSING AUTHORITY OF THE CITY )

Tucker Act jurisdiction; 42 U.S.C.

OF SLIDELL, )

§ 1437; Housing and Urban

)

Plaintiff, Development; annual

)

contributions contract; public

)

v. housing agency; breach of contract;

)

money damages; contract

)

THE UNITED STATES, damages; Bowen v. Massachusetts;

)

“strings-attached” grants; judicial

)

Defendant. estoppel.

)

James M. Williams, Chehardy, Sherman, Williams, Murray, Recile, Stakelum, & Hayes,

LLP, Metairie, LA, for Plaintiff.

Reta E. Bezak, United States Department of Justice, Civil Division, Washington, DC, for

Defendant. With her on the briefs were Joseph H. Hunt, Assistant Attorney General,

Civil Division, Robert E. Kirschman, Jr., Director, and Franklin E. White Jr., Assistant

Director, Commercial Litigation Branch, Civil Division, United States Department of

Justice, Washington, DC.

OPINION AND ORDER

SOLOMSON, Judge.

Plaintiff, the Housing Authority of the City of Slidell (“HACS”), filed its First

Amended Complaint, ECF No. 20 (“FAC”), seeking a judgment against Defendant, the

United States — acting by and through the United States Department of Housing and

Urban Development (“HUD”) — for its breach of an Annual Contributions Contract

(“ACC”).1 See FAC at 10 (“Prayer for Relief”). In particular, HACS asks for an “[a]ward

1On October 10, 2019, HACS filed its initial complaint in this Court. ECF No. 1. The

government moved to dismiss. ECF No. 7. After that motion was fully briefed, see ECF Nos. 10,

17, and following a status conference to discuss that motion, the Court issued an Order, denying

the government’s motion, and granting HACS leave to file an amended complaint. ECF No. 19.

On February 21, 2020, HACS filed its FAC.

[of] monetary damages . . . in the amount [HACS] is owed pursuant to HUD’s

obligations under the ACC” and “any other relief that is proper.” Id.; see id. at 2 & ¶ 17.

The government moved to dismiss the FAC pursuant to Rule 12(b)(1) and Rule

12(b)(6) of the Rules of the United States Court of Federal Claims (“RCFC”),2 essentially

arguing that HACS’s suit for money damages due to an alleged breach of the ACC is

nothing more than an Administrative Procedure Act (“APA”)3 claim masquerading as a

contract claim at the Tucker Act ball. In line, however, with this Court’s recent

decisions involving other ACCs or similar agreements with HUD,4 this Court declines

the government’s invitation to dance at its jurisdictional party, unless and until a higher

court says that we must. Until then, the government’s latest, but by no means only,

reading of applicable precedent — including that of the United States Court of Appeals

for the Federal Circuit, as well as the United States Supreme Court’s decision in Bowen

2The government’s motion to dismiss the FAC has been fully briefed. See ECF No. 22 (“Def.

Mot.”); ECF No. 24 (“Pl. Resp.”); ECF No. 25 (“Def. Rep.”). On June 24, 2020, the Court held

oral argument on the government’s motion, see ECF No. 26, the transcript of which is cited

herein as “Tr.” (ECF No. 31).

3A district court may “set aside agency action” that is “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

4 See, e.g., San Antonio Hous. Auth. v. United States, 143 Fed. Cl. 425, 452 (2019) (“SAHA”) (holding

that “plaintiff is not seeking the repayment of alleged strings-attached funds from HUD’s 2012

Section 9 Operating Fund, but an award of monetary damages to be paid from the Judgment

Fund, and rejecting “defendant’s reliance on Lummi, NCMS, and Bowen for the proposition that

plaintiff cannot recover ‘unrestricted money damages’ for defendant’s alleged breach of

[contract]”)); Boaz Hous. Auth. v. United States, 141 Fed. Cl. 74, 83 (2018) (“Plaintiffs do not seek

prospective relief or the release of funds to which they are entitled under the relevant HUD

regulation. Instead, they seek an award of money damages to compensate them for losses they

suffered as a result of the withholding of the operating subsidies owed to them[]. The purpose

of such a monetary award would be to compensate them for the government’s failure to meet a

past-due obligation, not to enforce the regulatory obligation itself.”); Pub. Hous. Authorities

Directors Ass’n v. United States, 130 Fed. Cl. 522, 536 (2017) (“PHADA”) (holding that “[HUD]

breached its obligations under the ACCs when it applied the operating expense offset in

response to the 2012 Appropriations Act, rather than the pro rata reduction rule prescribed by

Title 24[,]” and thus implicitly establishing this Court’s jurisdiction over breach of ACC claims);

cf. Hous. Auth. of City of New Haven v. United States, 140 Fed. Cl. 773, 787 (2018) (holding that

plaintiffs “breach-of-contract claim is not merely a disguised equitable claim because, in the

context of this case, an order of specific performance . . . or an injunction . . . would be

equivalent to an order requiring the payment of funds owed to plaintiffs”); Hous. Auth. of the

Cty. of Santa Clara v. United States, 125 Fed. Cl. 557, 562 (2016) (holding that the Court of Federal

Claims has jurisdiction to adjudicate breach of contract claims against HUD for “fail[ing] to

provide . . . [funds] to which Plaintiffs [were] entitled”).

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v. Massachusetts5 — strikes this Court as an epic overreach that, if followed, would make

a mess of the dividing line between the Tucker Act and the APA.

For the reasons explained below, HACS’s claims deserve to be heard on the

merits, and thus the government’s motion is DENIED.

I. Factual and Legal Background6

HACS is a public housing agency (“PHA”)7 — a “governmental entity or public

body (or agency or instrumentality thereof) which is authorized to engage in or assist in

the development or operation of public housing.” FAC at 2–3 (citing 42 U.S.C.

§ 1437a(b)(6)(A)); see also 24 C.F.R. § 905.108 (“Any state, county, municipality, or other

governmental entity or public body or agency or instrumentality of these entities that is

authorized to engage or assist in the development or operation of public housing under

this part.”). HACS entered into an ACC with HUD, “by executing a Form HUD-53012,

bearing number FW-1128” (the “HACS ACC”). FAC ¶ 3.8

5 487 U.S. 879 (1988).

6This section does not constitute factual findings by the Court. Rather, this Court assumes, as it

must, that the factual allegations contained in the FAC are true for the purposes of resolving the

pending motion to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[F]or the purposes of

a motion to dismiss we must take all of the factual allegations in the complaint as true.” (citing

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007))). The Court also has considered “matters

incorporated by reference or integral to the claim, items subject to judicial notice, [and] matters

of public record.” Dimare Fresh, Inc. v. United States, 808 F.3d 1301, 1306 (Fed. Cir. 2015)

(quoting 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed.

2004)). RCFC 9(k) provides: “In pleading a claim founded on a contract or treaty, a party must

identify the substantive provisions of the contract or treaty on which the party relies. In lieu of

a description, the party may annex to the complaint a copy of the contract or treaty, indicating

the relevant provisions.” The Court may rely on an annexed copy of the contract in deciding a

motion to dismiss. See Terry v. United States, 103 Fed. Cl. 645, 647 n.1 (2012) (relying on “an

exhibit appended to defendant’s motion containing plaintiff’s concession contract”); see also Def.

Mot. at 1 n.1.

7While “[t]he relevant statutes and regulations generally refer to ‘public housing agencies’

rather than ‘public housing authorities[,]’” that “distinction is purely semantic.” Weeks v. United

States, 144 Fed. Cl. 34, 36 n.2 (2019).

8The FAC included Part A of the HACS ACC as Exhibit 1. See ECF No. 20-1 (HACS ACC, Part

A, pages 1-5), ECF No. 20-2 (HACS ACC, Part A, pages 6-12). The government concurs that

Exhibit 1 of the FAC, indeed, is Part A of the HACS ACC. Cf. ECF No. 28 at 1. Although the

FAC indicates that the parties first executed the HACS ACC in 1984, see FAC ¶ 3, Part A of the

HACS ACC attached to the FAC is dated March 5, 1996. The discrepancy does not appear

material to HACS’s claims or the government’s motion to dismiss.

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A. The HACS ACC

An ACC “is a contract prescribed by HUD for loans and contributions, which

may be in the form of [an] operating subsidy, whereby HUD agrees to provide financial

assistance and the PHA agrees to comply with HUD requirements for the development

and operation of its public housing projects.” 24 C.F.R. § 900.115 (quoted in FAC ¶ 2).

The HACS ACC itself defines “ACC” as “the “Consolidated Annual Contributions

Contract between HUD and [HACS], . . . consisting of Part A (which sets forth

requirements applicable to all projects) and Part B (which sets forth additional

requirements that apply only to certain types of projects).” ECF No. 20-1 at 2 (HACS

ACC, Part A, § 2 (“Definitions”)).9 In referring to itself as a “Contract,” the HACS ACC

explicitly distinguishes between such an instrument and a “Cooperation Agreement,” a

term which the HACS ACC separately defines. Id.

The HACS ACC “incorporates by reference . . . those regulations issued by HUD

for the development, modernization, and operation of public and Indian housing projects

contained in Title 24 of the Code of Federal Regulations, as said Title shall be amended

from time to time.” ECF No. 20-1 at 2 (HACS ACC, Part A, at 1) (emphasis added).10

Moreover, pursuant to that agreement, “[n]othing herein shall release [HACS] from

compliance with all applicable laws, executive orders, and regulations that are not

specifically incorporated herein by reference.” Id.

The government’s contractual obligations, pursuant to the HACS ACC, include

the following:

HUD shall provide maximum responsibility and flexibility to

[P]HAs in making administrative decisions within all

applicable statutes, executive orders, regulations and this

ACC. HUD shall provide annual contributions to the [P]HA in

9In response to the Court’s June 19, 2020 Order, ECF No. 27, each party separately filed Part B

of the HACS ACC. See ECF Nos. 28, 29.

10The parties do not address in any detail the extent of the effect of this incorporation language,

or, in particular, whether “the development, modernization, and operation” phrase serves a

limiting function on any such incorporation. See also HACS ACC, Part A, § 5 (providing that

“[HACS] shall develop and operate all projects covered by this ACC in compliance with all the

provisions of this ACC and all applicable statutes, executive orders, and regulations issued by

HUD, as they shall be amended from time to time, including but not limited to those

regulations promulgated by HUD at Title 24 of the Code of Federal Regulations, which are

hereby incorporated into this ACC by reference as if fully set forth herein, and as such

regulations shall be amended from time to time” (emphasis added)).

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accordance with all applicable statutes, executive orders,

regulations, and this ACC.

FAC ¶ 5 (quoting HACS ACC § 3) (emphasis added).

HUD’s promised “contributions” are comprised of “operating” subsidies and

“capital” funds.11 With respect to operating subsidies, HACS must prepare, submit,

and obtain approval of an operating budget. ECF No. 20-1 at 6 (HACS ACC, Part A, §

11(A) (“Operating Budget”)). With respect to any particular “Federal fiscal year[,]”

HUD “shall not . . . approve any estimate or revision of [HACS’s] operating budget in

an amount which, together with the amount of all operating subsidies then contracted

for by HUD, would exceed the amount as determined by HUD of contracting

authorization for operating subsidies under the Act.” HACS ACC, Part A, § 11(C). In

that regard, “HUD shall not be obligated to make any payments on account of

operating subsidies in an amount in excess of the amount specifically approved by

HUD.” Id.; see id. § 11(D) (“[HACS] shall not incur any operating expenditures except

pursuant to an approved operating budget.”).

Pursuant to the HACS ACC, HACS “must maintain complete and accurate books

of account for the projects of [the housing authority] in such a manner as to permit the

preparation of statements and reports in accordance with HUD requirements, and to

permit timely and effective audit.” ECF No. 20-2 at 2 (HACS ACC, Part A, § 15(A)

(“Books of Account, Records, and Government Access”)). Moreover, HACS “must

furnish HUD such financial and project reports, records, statements, and documents at

such times, in such form, and accompanied by such reporting data as required by

HUD.” HACS ACC, Part A, § 15(B).12

B. HACS’s Claims

In January 2016, a computer crash wiped out the entirety of HACS’s accounting

program. FAC ¶ 8. HACS informed HUD of the crash and of the fact that HACS had to

11 Congress established two sources of funds to accomplish its public housing objectives: the

Capital Fund and the Operating Fund. 42 U.S.C. § 1437g(c)(1). The purpose of the Capital Fund

is to “mak[e] assistance available to public housing [authorities] to carry out capital and

management activities.” Id. § 1437g(d)(1). The purpose of the Operating Fund is to “mak[e]

assistance available to public housing [authorities] for the operation and management of public

housing.” Id. § 1437g(e)(1). “Each public housing authority that manages a project receives, in

addition to rents from tenants, operating subsidies from HUD pursuant to an ‘[a]nnual

contributions contract’ in which the public housing authority ‘agrees to comply with HUD

requirements for the development and operation of its public housing projects.’” Weeks, 144

Fed. Cl. at 36–37 (quoting 24 C.F.R. § 990.115).

12 Notably, the government nowhere invokes HACS ACC § 15.

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“reconstruct[] all of its financial records.” Id. Following a 2017 HUD review, see id. at 1,

HACS received a Public Housing Assessment System (“PHAS”)13 rating of 52 out of

100. Id. ¶ 9. As a result, HACS was placed on the so-called “Troubled” list. Id.

In August 2017, HUD’s New Orleans Field Office informed HACS that it was

being placed on what the agency has termed a “zero-dollar threshold” restriction,

beginning August 27, 2017. FAC ¶ 10. The result of that restriction was that HACS

could not draw its operating or capital funds through the Line of Credit Control System

(“LOCCS”)14 “unless HUD’s unreasonable and burdensome demands were met.” Id.

The zero-dollar threshold prohibits HACS from using any ACC funds absent HUD’s

prior approval. Id. According to HACS, HUD’s prevention of “access to funds earned”

had the effect of “imposing a cash management system on Plaintiff which severely

undermined its efficiency and operation.” Id.

Around that same time, HACS successfully appealed its PHAS score and, on

September 20, 2017, was removed from “Troubled” status. FAC ¶ 9. Indeed, in

September 2017, HUD issued HACS a PHAS score of 81; in July 2018, HACS earned a

score of 86 (both scores were out of a possible 100 points). Id. ¶ 11. HACS’s status thus

moved from “Troubled” to “Small PHA Deregulation” to “Standard” status within a

timeframe of less than a year. Id. ¶¶ 9, 11.

Nevertheless, “HUD refuses to acknowledge the updated PHAS score” and

instead “continues to burden HACS with the burden of ‘zero-dollar threshold’ status.”

FAC ¶ 12. While “HACS continues to submit its request for operating funds to HUD,”

and while HUD continues to approve such requests and “deposits these operating

funds into HACS’s . . . account,” HUD’s “New Orleans Field and Regional HUD offices

refuse to release these funds to HACS with no basis for doing so.” Id. ¶ 13. HACS

alleges that “[t]hese actions constitute a breach of the ACC.” Id. In that regard, HACS

“has relied on [the] contractual language” in the HACS ACC, § 3 — i.e., HUD’s

commitment in the ACC to “provide annual contributions” — and “yearly funding

provided by HUD to HACS pursuant to its obligations under the ACC, in order to keep

[HACS’s] operations running and to provide adequate housing for the residents of

Slidell.” FAC ¶ 6.

1324 C.F.R. § 905.108 (“Definitions”) (“Public Housing Assessment System (PHAS). The

assessment system under 24 CFR part 902 for measuring the properties and PHA management

performance in essential housing operations, including rewards for high performers and

consequences for poor performers.”).

1424 C.F.R. § 905.108 (“Definitions”) (“LOCCS is a HUD grant disbursement system. LOCCS

currently provides disbursement controls for over 100 HUD grant programs.”).

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In addition, HACS alleges that HUD has breached the ACC because despite

HACS’s conforming its requests for funds “with the requirements of the zero-dollar

threshold[,] . . . these requests are often denied without plausible reasons.” FAC ¶ 14.

HACS alleges that it has suffered damages insofar as “[t]hese requests are extremely

time consuming as well as costly in time and funds as they must comply with

[particular] [r]equirements for each . . . invoice along with extensive documentation no

matter how small or repetitive the invoice may be.” Id. HUD also “prohibited HACS

from hiring a staff accountant to aid plaintiff in this burdensome process.” Id.

HACS further alleges that it has been the subject of an unreasonable number of

“costly” and “unduly burdensome” audits — as well as a “bureaucratic nightmare

which HUD is imposing” — all of which have “reduced [HACS’s] ability to oversee its

day-to-day operations.” FAC ¶¶ 15–16 (“The unnecessary and burdensome

requirements which have been placed upon HACS only serve to impede HACS’ ability

to provide the necessary and important services which it renders to its tenants.”). In

effect, and although “HUD is obligated to fund HACS pursuant to the ACC[,] . . . HUD

has not provided the mandatory funding to HACS in over two years.” FAC ¶¶ 18–20.

HACS further asserts that HUD’s rejection of HACS’s requests for the release of

funding is “arbitrary and capricious” which “constitute[s] a breach of contract and

HACS is entitled to money damages.” FAC ¶ 21. Relatedly, HACS claims that HUD’s

alleged conduct also violates the “duty of good faith and fair dealing . . . inherent in

every contract.” Id. ¶ 22; see also id. ¶¶ 23–26. HACS accordingly requests a judgment

against the United States “for damages requested herein, including but not limited to,

judgment as follows:”

(a) Find that HUD breached the Annual Contributions

Contract;

(b) Find that HUD acted in an arbitrary and capricious

manner towards HACS;

(c) Award monetary damages to HACS in the amount it

is owed pursuant to HUD’s obligations under the

ACC;

(d) Award Plaintiff the costs and expenses of this Action,

including attorney fees pursuant to 28 U.S.C. § 2412;

and

(e) Award the Plaintiff any other relief that is proper.

FAC at 10 (“Prayer for Relief”). HACS seeks at least $1,700,000 in damages. Id. ¶ 17; see

Tr. 6:19-23.

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II. Standard Of Review

The government moves to dismiss the FAC pursuant to RCFC 12(b)(1) and

RCFC 12(b)(6) for, respectively, lack of jurisdiction and failure to state a claim upon

which relief can be granted as a matter of law.

In this case, the government’s jurisdictional challenge is clearly a facial attack. A

facial jurisdictional attack “challenges whether the court’s subject-matter jurisdiction

was properly pleaded.” Steven S. Gensler & Lumen N. Mulligan, 1 Federal Rules of Civil

Procedure, Rules and Commentary, Rule 12 (Feb. 2020 Update) [hereinafter Federal Rules &

Commentary]; see also Crow Creek Sioux Tribe v. United States, 900 F.3d 1350, 1355 (Fed.

Cir. 2018) (addressing “facial challenge”). A facial attack itself can take two forms. A

defendant either can “assert that the plaintiff has failed to plead jurisdiction as required

by Rule 8(a)(1)” or “assert that, while properly pleaded per Rule 8(a)(1), the allegations

— even when assumed to be true — fail to establish jurisdiction under the relevant

statute or constitutional provision.” Federal Rules & Commentary. Regarding facial

attacks, the Federal Circuit has explained:

[W]e join the majority of our sister circuits in holding that the

Supreme Court’s “plausibility” requirement for facial

challenges to claims under Rule 12(b)(6), as set out in Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167

L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678, 129

S. Ct. 1937, 173 L.Ed.2d 868 (2009), also applies to facial

challenges to subject-matter jurisdiction under Rule 12(b)(1).

Crow Creek Sioux Tribe, 900 F.3d at 1354–55. Thus, “[t]hreadbare recitals of [claim]

elements . . ., supported by mere conclusory statements, do not suffice” to confer

jurisdiction. Id. (quoting Iqbal, 556 U.S. at 678).

When considering a facial jurisdictional attack or a motion to dismiss a complaint

for failure to state a claim upon which relief may be granted pursuant to RCFC 12(b)(6),

the Court accepts as true all factual allegations — but not legal conclusions — contained

in a plaintiff’s complaint. See Twombly, 550 U.S. at 555. For a plaintiff’s complaint to

survive a motion to dismiss, the Court — viewing the facts in the light most favorable to

the plaintiff — must conclude that “the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “[O]f course, a well-

pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the

facts alleged] is improbable, and that a recovery is very remote and unlikely.” Twombly,

550 U.S. at 556 (citations and internal quotation marks omitted); Chapman Law Firm Co.

v. Greenleaf Constr. Co., 490 F.3d 934, 938 (Fed. Cir. 2007) (noting that the Court’s duty is

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not to determine “whether the claimant will ultimately prevail” when ruling on a

12(b)(6) motion to dismiss). On the other hand, a plaintiff may not simply plead “labels

and conclusions” or “a formulaic recitation of the elements of a cause of action.”

Twombly, 550 U.S. at 555 (citations omitted).15

III. HACS States Claims For Breach Of Contract And The Implied Duty Of

Good Faith And Fair Dealing, Both Of Which Are Within This Court’s

Tucker Act Jurisdiction

The government’s central thesis is that HACS’s contract claim is actually an APA

claim for specific performance of the government’s obligations pursuant to the HACS

ACC — in this case, for HUD to pay HACS the funds to which it claims entitlement. To

be clear, the government agrees that the HACS ACC generally may support a Tucker Act

claim for breach of contract. Def. Rep. at 3 n.1. Thus, the government does not contend

that the HACS ACC is somehow similar to a plea bargain, certain settlement

agreements, or other agreements which this Court and the Federal Circuit have held do

not support contract claims within our Tucker Act jurisdiction.16 Relying upon the

United States Supreme Court’s decision in Bowen as well as various Federal Circuit

decisions,17 the government argues that HACS’s claims for amounts owed pursuant to

the terms of the HACS ACC belong in district court, while claims for consequential

damages (e.g., lost profits) belong in this Court. See Def. Mot. at 18 (“If HACS had

alleged and sued for consequential damages caused by the alleged withholding of

15“Pursuant to RCFC 12(c), the trial court may convert a motion to dismiss into a motion for

summary judgment under RCFC 56 if it relies on evidence outside the pleadings.” Brubaker

Amusement Co. v. United States, 304 F.3d 1349, 1355 (Fed. Cir. 2002). “Whether to accept extra-

pleading matter on a motion for judgment on the pleadings and to treat the motion as one for

summary judgment is within the trial court’s discretion.” Easter v. United States, 575 F.3d 1332,

1335 (Fed. Cir. 2009) (discussing RCFC 12(b)(6)). Neither party challenges the Court’s

consideration of the documents the parties filed along with their respective briefs; and, neither

party suggests the dismissal motion should be treated as one for summary judgment.

16See, e.g., Hymas v. United States, 810 F.3d 1312 (Fed. Cir. 2016) (holding that co-operative

farming agreements are not contracts for Tucker Act purposes); Cunningham v. United States, 748

F.3d 1172, 1176 (Fed. Cir. 2014) (“[T]he alleged breach of a settlement agreement does not

necessarily give rise to Tucker Act jurisdiction.”); Sanders v. United States, 252 F.3d 1329, 1336

(Fed. Cir. 2001) (holding that criminal plea agreement was not within this Court’s subject-matter

jurisdiction); Marchena v. United States, 128 Fed. Cl. 326, 332 (2016) (holding that witness

protection agreements are not contracts for the purpose of establishing this Court’s subject-

matter jurisdiction), aff’d, 702 F. App’x 988 (Fed. Cir. 2017).

17Lummi Tribe of the Lummi Reservation, Washington v. United States, 870 F.3d 1313, 1318-19 (Fed.

Cir. 2017), San Juan City College v. United States, 391 F.3d 1357 (Fed. Cir. 2004), and Nat’l Ctr. for

Mfg. Sciences v. United States, 114 F.3d 196 (Fed. Cir. 1997) (“NCMS”).

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Section 9 assistance, there would be Tucker Act jurisdiction over such a claim. But,

HACS has instead sued for the allegedly withheld Section 9 assistance itself (the res), so

there is no jurisdiction over this suit.”). Because such a distinction finds no support in

the Tucker Act’s language or the case law applying it, the undersigned joins the other

members of this Court who have rejected (explicitly or implicitly) the government’s

argument. See SAHA, 143 Fed. Cl. at 452; Boaz, 141 Fed. Cl. at 83; PHADA, 130 Fed. Cl.

at 536. Indeed, the government’s position, if adopted, would create a sort of Tucker Act

Bizarro World18 in which some contract claims for money must be decided in district

court and others in the Court of Federal Claims. That is not what Congress codified in

the Tucker Act or the APA, what the Supreme Court instructed in Bowen, how the

Federal Circuit has approached these issues, or what the government itself argued to

the United States Court of Appeals for the Seventh Circuit and the district courts.

A. The FAC Contains Allegations Amounting To A Prima Facie Claim For

Breach Of Contract Pursuant To The Tucker Act

An examination of HACS’s allegations in the context of the HACS ACC

demonstrates unequivocal claims for money damages arising from a breach of contract

and the implied duty of good faith and fair dealing. Such claims, of course, fit squarely

within this Court’s Tucker Act jurisdiction. We begin with the Tucker Act’s plain

language:

The United States Court of Federal Claims shall have

jurisdiction to render judgment upon any claim against the

United States founded either upon the Constitution, or any

Act of Congress or any regulation of an executive department,

or upon any express or implied contract with the United States or

for liquidated or unliquidated damages in cases not sounding

in tort.

28 U.S.C. § 1491(a)(1) (emphasis added). Accordingly, “[t]he Tucker Act statutorily

waives the Government’s sovereign immunity for a plaintiff’s substantive common law

contract claims and claims under the Contract Disputes Act[.]” DMS Imaging, Inc. v.

United States, 123 Fed. Cl. 645, 661 (2015) (citing 41 U.S.C. § 7101 et seq. and United States

v. Mitchell, 463 U.S. 206, 212 (1983)).19 Neither party contends that the HACS ACC is

18 https://en.wikipedia.org/wiki/Bizarro_World.

19Matthew H. Solomson, Court of Federal Claims: Jurisdiction, Practice, and Procedure (2016), at 6-

1 – 6-2 (“Contract claims against the United States may be subdivided further into two groups.

The first consists of those claims over which the Court of Federal Claims (COFC) possesses

jurisdiction pursuant to 28 U.S.C. § 1491(a)(1). The second are those claims covered by the

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covered by the Contract Disputes Act as a government procurement of goods or

services. Marquardt Co. v. United States, 95 Fed. Cl. 14, 19 (2010).

The only question for purposes of jurisdiction, then, is whether HACS alleges a

breach of contract claim founded upon an express or implied-in-fact contract with the

government.20 The Court answers that question in the affirmative and holds that

HACS’s claims easily fit within this Court’s Tucker Act jurisdiction. The government’s

creative attempt to avoid the FAC with a quick dismissal finds no support in the Tucker

Act’s language, the ACC, or the case law.

Beginning with the Tucker Act itself, the government does not dispute that the

HACS ACC constitutes a contract with the United States. Def. Rep. at 3 (“[W]e do not

argue that the ACC is not a contract.”). Nor does the government dispute that the

HACS ACC generally may support a Tucker Act claim for breach of contract. Def. Rep.

at 3 n.1. That is hardly surprising, given the parties’ agreement regarding the

documents that constitute the HACS ACC at issue. ECF Nos. 20-1, 20-2 (constituting

Part A of the HACS ACC); ECF Nos. 28, 29 (constituting Part B of the HACS ACC).

Moreover, HUD’s own regulations define “Annual contributions contract (ACC)” as a

“contract prescribed by HUD for loans and contributions, which may be in the form of

operating subsidy, whereby HUD agrees to provide financial assistance and the PHA agrees

to comply with HUD requirements for the development and operation of its public

housing projects.” 24 C.F.R. § 990.115 (emphasis added); see also id. § 883.302 (defining

an ACC as “[t]he contract between the State Agency and HUD under which HUD

commits to provide the Agency with the funds needed to make housing assistance payments

to the Owner and to pay the Agency for administrative fees in cases where it is eligible

for them” (emphasis added)). The government’s primary contractual duty pursuant to

the HACS ACC clearly is to pay money,21 and that duty is reflected in the plain terms of

Contract Disputes Act (CDA), actionable before this Court pursuant to 28 U.S.C. § 1491(a)(2).

The first group of contract claims are often referred to as ‘non-CDA’ claims or simply ‘Tucker

Act contract’ claims. The latter group of contract claims are ‘CDA claims.’” (footnotes omitted)).

20Common non-CDA Tucker Act contract claims, Government Contract Disputes § 13:8 (2019 ed.)

(noting that “[w]hile the majority of contract claims at the COFC involve CDA-covered

contracts, the court also hears claims relating to non-CDA contracts[,]” and explaining that

“whereas the CDA is limited to procurement contracts involving goods or services[,] . . . [f]or

non-CDA contract claims, the Tucker Act provides the exclusive basis for judicial review”).

21In the government’s motion to dismiss, the government argues that the HACS ACC “falls

within the . . . category of a contract that contemplates purely non-monetary relief for the claim

alleged.” Def. Mot. at 26. The government then categorically retracts that argument in its reply

brief. Def. Rep. at 3 n.1 (“Nor do we argue that the ACC does not contemplate money damages

under any scenario. Rather, . . . the remedy that HACS seeks here is simply not money damages

– it is specific performance of the ACC . . . . Thus, although HACS mischaracterizes the Federal

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the parties’ contract. For example, the HACS ACC contains several mutual promises by

both parties, not the least of which is that “HUD shall provide annual contributions to

the [housing agency] in accordance with all applicable statutes, executive orders,

regulations, and this ACC.” ECF No. 20-1 at at 2 (HACS ACC, Part A, § 3) (emphasis

added); see Statesman II Apartments, Inc. v. United States, 66 Fed. Cl. 608, 616–17 (2005)

(quoting Black's Law Dictionary 1233 (5th ed. 1979) (“[T]he term ‘shall’ is a word of

command, and one which has always or which must be given a compulsory meaning;

as denoting obligation. . . . It has the invariable significance of excluding the idea of

discretion.”)).22 HACS, in exchange, promised that it “shall develop and operate all

projects by this ACC in compliance with all of the provisions of this ACC and all

applicable statutes, executive orders, and regulations issued by HUD[.]” HACS ACC,

Part A, § 5.

In sum, the FAC clearly alleges a contract with the government. In turn, the

government does not contest that the HACS ACC is a classic express contract,

consisting of an offer, acceptance, consideration, and a meeting of the minds — all

contained in a written document executed by a HUD official with the authority to bind

the government. See Total Med. Mgmt., Inc. v. United States, 104 F.3d 1314, 1319 (Fed. Cir.

1997) (“The requirements for a valid contract with the United States are: a mutual intent

to contract including offer, acceptance, and consideration; and authority on the part of

the government representative who entered or ratified the agreement to bind the

United States in contract.”); Cty. of Suffolk, N.Y., v. United States, 19 Cl. Ct. 295, 296 (1990)

(holding “grant agreements would appear to satisfy all of the traditional requirements

for an enforceable contract—an offer, an acceptance, and consideration passing between

the parties”).

The elements of a breach of contract claim similarly are straightforward and met

here: “(1) the existence of a valid contract between the parties; (2) an obligation or duty

Circuit’s precedent regarding the types of contracts that do not contemplate money damages,

such argument is not relevant here.” (emphasis added in latter sentence)).

22There are other indications in the plain language of the HACS ACC that the government

promised to pay HACS. See, e.g., HACS ACC, Part A, § 11(A) (“HUD shall review the

[operating subsidy] calculation and, if correct, and subject to the availability of funds, take

action within 45 days of submission to obligate the funds and approve a payment schedule,

unless the [P]HA is notified that it must submit an operating budget as provided in (B)

below.”); id. at § 11(C) (“HUD shall not be obligated to make any payments on account of

operating subsidies in an amount in excess of the amount specifically approved by HUD.”); id.

§ 11(D) (“The [P]HA shall not incur any operating expenditures except pursuant to an approved

operating budget.”); id. § 23 (“[N]one of the provisions of this ACC may be modified or

amended so as to impair in any way HUD’s obligation to pay any annual contributions that have

been pledged as security for any obligations of the HA.” (emphasis added)).

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arising from that contract; (3) a breach of that duty; and (4) damages caused by that

breach.” United Launch Servs., LLC v. United States, 139 Fed. Cl. 664, 681 (2018) (citing

San Carlos Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir. 1989)).

As noted above, the government does not dispute the existence of a Tucker Act

contract, see Def. Rep. at 3 n.1, and, in any event, the FAC and the documents filed with

the Court clearly establish that the HACS ACC is a government contract. See ECF Nos.

20-1, 20-2, 28-1, 29-1. The FAC also contains allegations that, if proven — and which the

Court assumes to be true at this stage — establish a breach of the government’s

contractual duties.

HACS’s breach syllogism is not complicated: (1) HUD was obligated to pay

certain sums (amounting to more than $1.7M) to HACS pursuant to the terms of the

HACS ACC at issue; (2) HUD did not pay HACS those funds when due; and (3) “[b]y

failing to provide funding to HACS under the ACC, HUD has breached its contract

with HACS and is thus liable for monetary damages to HACS.” FAC at 2 (“HUD is

withholding over $1,700,000.00 which it owes to the Plaintiff in accordance with the

terms of the [ACC].”); id. ¶ 20 (“Although HUD is obligated to provide annual

contributions to HACS under the ACC, it has failed to do so in over two years.”).23

The failure to pay money when due and owing is a paradigmatic breach of

contract claim. Westlands Water Dist. v. United States, 109 Fed. Cl. 177, 193 (2013) (“A

contract is breached when a party fails to perform a contractual duty when it is due.”).

Indeed, for the purposes of claim accrual, the Federal Circuit has held that “‘where a

claim is based upon a contractual obligation of the Government to pay money, the claim

first accrues on the date when the payment becomes due and is wrongfully withheld in

breach of the contract.’” Worthington v. United States, 53 F. App’x 77, 81 (Fed. Cir. 2002)

(quoting Oceanic S.S. Co. v. United States, 165 Ct. Cl. 217, 225 (1964), and noting that

“each time the Government failed to pay constituted a new breach of its preexisting

duty under the contract giving rise to a new claim”); see also N. Helex Co. v. United States,

455 F.2d 546, 550 (Ct. Cl. 1972) (“The Government’s failure to pay a large amount over

an extended period of time was a conceded breach of its contractual obligation. . . .

Perhaps mere delay in payment, for a while, would not be a material breach but there is

a clear distinction between delay of that kind and a total failure to pay over many

23HACS explicitly alleges “breach of contract and that HACS is entitled to money damages.”

FAC ¶¶ 21, 25–26. In that regard, HACS’s “Prayer for Relief” seeks “damages requested herein,

including but not limited to [a] judgment . . . [a]ward[ing] monetary damages to HACS in the

amount it is owed pursuant HUD’s obligations under the ACC[.]” FAC at 10.

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months. Our jurisprudence strongly suggests that the latter sort of breach by the

Government is material, just as it would be in the case of a private party.”); Beggs v.

Bismarck Phoenix Equip., Inc., 2006 WL 42355, at *4 (D.N.D. Jan. 5, 2006) (“The Plaintiffs

have set forth a classic case of breach of contract for failure to pay.”).

Assuming the government is correct that any contract sums owed to HACS

normally would come “with strings,” that issue goes to the appropriate measure of

damages, not to whether this Court possesses jurisdiction over HACS’s claims at all.

Englewood Terrace Ltd. P’ship v. United States, 479 F. App’x 969, 972–73 (Fed. Cir. 2012)

(“The Claims Court erred by failing to deduct costs and expenses Englewood saved, i.e.,

did not pay, as a result of the breach. An award of gross revenues is not appropriate;

this is not the measure of Englewood’s loss from HUD’s breach. By failing to deduct

avoided costs, the Claims Court placed Englewood in a better position than it would

have been in had there been no breach.”). In that regard, “a non-breaching plaintiff

bears the burden of persuasion to establish both the costs that it incurred and the costs

that it avoided as a result of a breach of contract.” Bos. Edison Co. v. United States, 658

F.3d 1361, 1369 (Fed. Cir. 2011) (citing S. Nuclear Operating Co. v. United States, 637 F.3d

1297, 1304 (Fed. Cir. 2011)). Another possibility — one that the government fails to

address — is simply that HACS may obtain damages for partial breach, but its

obligations (i.e., the putative “strings”) continue unabated such that any of HUD’s

rights and remedies to control HACS’s spending and performance remain unimpeded.

Stone Forest Indus., Inc. v. United States, 973 F.2d 1548, 1552 (Fed. Cir. 1992) (“If only a

severable portion of a contract was breached, the non-breaching party can recover

damages for that portion of the contract, but its remaining contractual duties are not

discharged.”).24

24In other words, “assuming the government’s actions in this case have amounted to a material

breach of the parties’ contract, plaintiff would have the choice ‘between cancelling the contract

and continuing it.’ In such a situation, ‘[i]f [plaintiff] decides to close the contract and so

conducts [it]self, both parties are relieved of their further obligations . . . ,’ [ ] and plaintiff may

sue for total breach. On the other hand, ‘[i]f [plaintiff] elects . . . to continue the contract, the

obligations of both parties remain in force and the injured party may retain only a claim for

damages for partial breach.’” Pac. Gas & Elec. Co. v. United States, 70 Fed. Cl. 766, 771 (2006)

(some alterations in original) (internal citations omitted) (quoting Cities Serv. Helex, Inc. v. United

States, 543 F.2d 1306, 1313 (Ct. Cl. 1976)); see also Emerald Investments Ltd. P’ship v. Allmerica Fin.

Life Ins. & Annuity Co., 516 F.3d 612, 618 (7th Cir. 2008) (“If a party to a contract breaks it, the

other party can abandon the contract . . . and sue for damages, or it can continue with the

contract and sue for damages . . . . But if it makes the latter election, it is bound to the

obligations that the contract imposes on it.”). Thus, even if a “PHA’s right to keep the funding

depends on its compliance with Federal requirements[,]” Def. Mot. at 7, the government fails to

explain how a money judgment in favor of HACS would preclude HUD from enforcing its

regulatory requirements or requiring HACS to fulfill its contractual obligations.

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B. The Government Fails To Cite Any Precedent That Precludes Tucker

Act Jurisdiction In This Case

Any practitioner familiar with the Tucker Act at this point might be wondering

what possible basis exists for the government to challenge this Court’s jurisdiction to

decide HACS’s claims. The unvarnished truth is that, even after considering the

government’s explanations offered during oral argument, the Court still struggles to

track the government’s jurisdictional contentions.

The most succinct explanation of the government’s position regarding

jurisdiction is contained in this concession in the government’s reply brief:

[W]e do not argue that the ACC is not a contract. . . .

Nor do we argue that the ACC does not contemplate money

damages under any scenario. Rather, as we have repeatedly

stated, the remedy that HACS seeks here is simply not money

damages – it is specific performance of the ACC; namely,

release of the strings-attached funds to which HAC claims

entitlement.

Def. Rep. at 3 & n.1 (emphasis added).

The government also asserts that “Tucker Act jurisdiction does not extend to

claims for strings-attached grants.” Def. Rep. at 3. Yet, the government does not even

attempt to reconcile those various statements, and instead glosses over the fact that

HACS plainly does not seek injunctive relief, pursuant to 28 U.S.C. § 1491(b), for the

award of a grant agreement (or anything else).

The government cites not a single case from any court involving a category of

claims based on contracts, characterized as “strings-attached” grants, that are outside

the Tucker Act’s ambit. The government asserts that a “PHA’s receipt of Section 9

funding is highly contingent, restricted, and subject to HUD’s ongoing supervision and

right to claw back the funds[.]” Def. Mot. at 5. That assertion, however – even if true –

is just another way of saying that the government has contractual rights or regulatory

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powers.25 or that HACS has contractual obligations, too.26 Moreover, the government

never explains what the “highly contingent” nature of the funds at issue has to do with

Tucker Act jurisdiction. Def. Mot. at 3. As this Court has noted in a different context,

“[m]oney is fungible. . . . The dispositive question is not on what the money was spent,

but on what basis [the recipient] qualified to receive the funds in the first place.” Mack,

as Legal Representative of Mack v. Sec’y of Dep’t of Health & Human Servs., 1995 WL 507581,

at *3 (Fed. Cl. Aug. 11, 1995).27 Furthermore, given that HACS’s claims relate to funds

allocated to HACS and allegedly due to be paid under the HACS ACC in the past, see

FAC at 10, the government never explains with any specificity how those funds have

strings attached.

For example, HACS alleges that HUD “prevent[ed] HACS’s access to funds

earned[.]” FAC ¶ 10; see also id. ¶ 13. Assuming that is correct — and that HACS

ultimately proves it already has earned funds which the government improperly

refused to pay in violation of the HACS ACC — the government cannot avoid liability

25See Def. Mot at 7 (noting that “[i]n the event of noncompliance by a PHA, HUD has numerous

available remedies”). The government does not explain how its “numerous available remedies”

in the event of HACS’s noncompliance would be rendered impotent by a money judgment,

assuming HACS demonstrates its entitlement to one; nor does the government explain how the

existence of such remedies translates to this Court’s lacking Tucker Act jurisdiction here. The

government asserts that “a PHA’s right to keep [its] funding depends on its compliance with

Federal requirements.” Id. Assuming the government’s contention is correct, the mere existence

of a contractor’s compliance obligations cannot be deployed to defeat a breach of contract claim

— and certainly not as a matter of Tucker Act jurisdiction. The typical provider of goods or

services to the federal government is subject to literally volumes of compliance requirements,

but the government has never contended that their mere existence precludes a breach of

contract claim. Yet, that is, in essence, what the government argues here. If the government

wants to demonstrate that HACS has failed to meet its compliance obligations in a manner that

permitted HUD to withhold the funds in question, the government remains free to do so, but it

has not done so on the record thus far, and likely could not do so at the motion to dismiss stage

in any event.

26For example, the government argues that certain regulations incorporated into the HACS

ACC “impose conditions on a PHA’s receipt of HUD’s financial assistance.” Def. Mot. at 6.

Certainly, the government is free to demonstrate, as a matter of fact and law, that HACS is not

entitled to breach damages based upon those regulations. The government, however, has not

made such a showing in its motion to dismiss. Again, the fact that there are “various limits on a

PHA’s eligibility to receive Section 9 assistance in the first place[,]” id., merely begs the question

of whether HACS is entitled to money damages by, inter alia, having met eligibility criteria

and/or its obligations under the parties’ ACC.

27Cf. GHS Health Maint. Org., Inc. v. United States, 536 F.3d 1293, 1305 n.7 (Fed. Cir. 2008)

(“OPM’s argument ignores the fungible nature of money. It makes little or no difference

whether reconciliation results in cash payments or in adjustments to future rates.”).

- 16 -

merely because HACS is “subject to HUD’s ongoing supervision.” Def. Mot. at 5.28 The

government certainly cannot engage in such circular reasoning to obtain a jurisdictional

dismissal. Put differently, the government’s “strings-attached” argument merely begs

the question whether HACS is due to be paid the sums in question or not, pursuant to

the terms of the parties’ ACC; but, the answer to that question surely is not dispositive

as to the issue of this Court’s jurisdiction.

While the government concedes that the HACS ACC is a contract that may

support a claim for money damages pursuant to the Tucker Act, see Def. Rep. at 3 n.1 —

and despite HACS’s repeated assertions that it seeks money damages due to HUD’s

breach of its contractual duties — the government nevertheless argues that the FAC

actually requests a form of equitable relief related to a res: i.e., a “strings-attached

grant[,]” in the government’s words. Def. Mot. at 10, 18. The government’s approach is

nothing more than a jurisdictional sleight-of-hand, one which this Court rejects. Stovall

v. United States, 71 Fed. Cl. 696, 699–701 (2006) (cataloging Tucker Act cases where

jurisdiction was upheld, including over HUD contracts and grant agreements, and

explaining that “defendant can anchor its hollow view of this court’s jurisdiction neither

to the natural reading of the language of the Tucker Act nor to any binding precedent

construing that statute”). Putting aside the obvious point that a complaint for money

due and owing under a contract could always be recharacterized as a claim for specific

performance (i.e., injunctive relief to compel payment), there is no support for the

government’s position, which would require this Court to bifurcate its jurisdiction

depending upon the precise nature of the claimed contract damages. In that regard, the

government concedes that “[i]f HACS [had] alleged and sued for consequential

damages caused by the alleged withholding of Section 9 assistance, there would be

Tucker Act jurisdiction over such a claim[,]” but because “HACS has instead sued for

the allegedly withheld Section 9 assistance itself (the res), . . . there is no jurisdiction

over this suit.” Def. Mot. at 18. This Court declines to engineer such a novel,

jurisdictional Frankenstein, in the absence of any binding authority even sketching the

outline of such a creature.

The applicable Federal Circuit precedent entirely forecloses the government’s

argument. HACS is not suing for the return of a thing, the issuance of an order

awarding a grant agreement, or anything similar that would involve an injunction (i.e.,

a coercive order). PGBA, LLC v. United States, 389 F.3d 1219, 1228 n.6 (Fed. Cir. 2004)

28As explained in more detail below regarding the RCFC 12(b)(6) portion of the government’s

motion, HACS appears correct that the sums at issue do not relate to prospective awards of

grants having yet further strings-attached, but rather to amounts already budgeted and

allocated to HACS – and that HACS already has earned (at least allegedly) – but to which the

agency has denied HACS access or otherwise has refused to pay to HACS.

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(“an injunction either mandates or prohibits particular conduct”); Sierra Nevada Corp. v.

United States, 107 Fed. Cl. 735, 761 (2012) (“‘An injunction is a coercive order by a court

directing a party to do or refrain from doing something, and applies to future actions.’”

(quoting Ulstein Mar., Ltd. v. United States, 833 F.2d 1052, 1055 (1st Cir. 1987))). HACS

instead seeks contract damages (in the form of a money judgment) for the government’s

failure to pay what is allegedly due to HACS under the ACC – a classic breach of

contract claim. The Court’s conclusion in this regard is further bolstered by the fact that

the government did not cite in its briefs — and could not cite at oral argument — even a

single case permitting this Court to recharacterize the FAC in a manner that would shut

the courthouse door on HACS.

The remainder of this section of the Court’s opinion addresses the primary

Federal Circuit decisions upon which the government relies — NCMS and Lummi Tribe

— along with other relevant Tucker Act jurisprudence for greater context. Binding

authority demonstrates this Court’s jurisdiction to decide the merits of HACS’s claims.

In Total Medical Management, Inc. v. United States, the government — similar to its

assertions here regarding so-called “strings-attached” grants — argued that certain

memoranda of understanding between a contractor and the government, were

“generally unenforceable.” 104 F.3d 1314, 1320 (Fed. Cir. 1997). The Federal Circuit

rejected the government’s argument, explaining that “[the plaintiff] is to provide

discounted medical services; the [government] hospital is to provide free space and

support staff and to encourage dependents to use [plaintiff’s] services[;] [and] [t]he

. . . regulatory scheme provides payment details.” Id. Thus, the Federal Circuit

concluded that “[t]he determination of damages or specific performance would flow

naturally from a breach of these duties.” Id. (emphasis added). In that case, and unlike

the ACC at issue here, “the resource sharing agreements” were “not labeled ‘contracts’

in the regulatory scheme.” Id. Nevertheless, the Federal Circuit held that “the failure of

Congress to use the word ‘contract’ does not preclude the holding that a binding

contract is formed.” Id. In contrast, in this case, the HACS ACC — both by its terms

and pursuant to HUD’s regulatory definitions — is clearly a government contract, a

point that the government does not dispute. Def. Rep. at 3 n.1.

Moreover, in Total Medical Management, the Federal Circuit expressly relied upon,

and endorsed, this Court’s decision in Thermalon Industries, Ltd. v. United States, which

held that a National Science Foundation research grant constitutes a binding contract,

pursuant to which a plaintiff could assert a breach claim within this Court’s Tucker Act

jurisdiction. 104 F.3d at 1320 (citing Thermalon, 34 Fed. Cl. 411, 415 (1995)). Notably, in

Thermalon, the agreement at issue was quite literally a strings-attached grant, as the

government uses that term in the instant case. See 34 Fed. Cl. at 413-14. The

government similarly attempted to obtain a jurisdictional dismissal, but this Court

rejected the government’s argument: “There is no suggestion . . . that procurement

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contracts are the only type of contracts enforceable under the Tucker Act or that grant

agreements that satisfy all of the ordinary requirements for a government contract

should not be classified as contracts enforceable under the Tucker Act.” Id. at 417.

The Federal Circuit once again endorsed Thermalon in Trauma Service Group, Ltd.

v. United States, 104 F.3d 1321 (Fed. Cir. 1997). In Trauma Service, the Federal Circuit

declined to reach “the question of whether the MOA [at issue] is a valid contract[,]” but

explained that “any agreement can be a contract within the meaning of the Tucker Act,

provided that it meets the requirements for a contract with the Government,

specifically: mutual intent to contract including an offer and acceptance, consideration,

and a Government representative who had actual authority to bind the Government.”

104 F.3d at 1326 (citing City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir.

1990), and Thermalon, 34 Fed. Cl. at 414). The Federal Circuit repeatedly has affirmed

this general principle. See, e.g., Massie v. United States, 166 F.3d 1184, 1188 (Fed. Cir.

1999) (quoting Trauma Service, and holding the Court of Federal Claims has jurisdiction

to consider a claim for breach of an agreement to pay a Military Claims Act claim);

Indus. Door Contractors, Inc. v. United States, 200 F. App’x 977, 979 (Fed. Cir. 2006)

(quoting Trauma Service, and holding Court of Federal Claims had jurisdiction over

contract to settle protest, and ordering that “[o]n remand, the trial court must determine

whether the contract was breached and, if so, fashion an appropriate remedy”); Cal. Fed.

Bank, FSB v. United States, 245 F.3d 1342, 1346 (Fed. Cir. 2001) (quoting Massie and

Trauma Service).

If the Federal Circuit’s repeated agreement with Thermalon were insufficient to

demonstrate that the government’s position here is erroneous, the Federal Circuit’s

decision in San Juan City College, 391 F.3d at 1357, makes the government’s argument in

this case all but untenable. Assuming arguendo that the government is correct that the

payments HUD allegedly must make to HACS (pursuant to the HACS ACC) indeed

may be characterized as “strings-attached” grants —the precise nature of such strings

the government thus far having failed to demonstrate — San Juan City College appears to

have involved an analogous grant contract. In that case, the Court of Federal Claims

“found it unnecessary to determine whether the Department [of Education] had

breached the Agreement . . . because it concluded that ‘as a matter of law, violation of

the agreement insofar as it involves a failure to offer a hearing under [a particular

regulation] creates a right only to equitable relief.’” Id. at 1359 (quoting San Juan City

College v. United States, 58 Fed. Cl. 26, 32 (2004)). The trial court further held that the

agreement at issue “‘even if viewed in traditional contract terms does not, as a matter of

law, permit the recovery of the type of damages they seek.’” 391 F.3d at 1359 (quoting

58 Fed. Cl. at 30). On appeal, the Federal Circuit reversed. Id. at 1365.

The Federal Circuit in San Juan City College first noted that the program

participation agreement at issue required the plaintiff educational institution to comply

with “numerous specific and detailed requirements” pursuant to statute and

regulations. 391 F.3d at 1360. The court explained, however, that “[a]lthough it may

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well be, as the Court of Federal Claims [below] stated, that most (and perhaps all) of

these contractual provisions were required by and incorporated the government

regulations, that does not make them any less contractual obligations or provisions, or

constitute a valid reason for not treating them as such.” Id. Accordingly, the Federal

Circuit held that “nothing in either the Agreement itself or in the governing statute or

regulations that supports the Court of Federal Claims’ view that the parties understood

damages would not be available in the event of breach.” Id. at 1361. Of course, that was

hardly surprising given that “[n]ormally contracts do not contain provisions specifying

the basis for the award of damages in case of breach, with the exception of provisions

governing damages in particular situations, such as liquidated damages for delay or

other specified breaches.” Id.; see Stovall, 71 Fed. Cl. at 699–701.

Accordingly, whether HACS can prove its breach and damages is a merits issue,

not a jurisdictional one. As the Federal Circuit held in San Juan City College, “[t]he fact

that this contract covers government financial grants does not warrant a different

standard. If the government has breached the Agreement, the [Plaintiff] is entitled to

seek whatever damages it is entitled to receive.” 319 F.3d at 1361 (emphasis added). In

so holding, the Federal Circuit relied upon the Supreme Court’s decision in United

States v. Winstar Corp., noting that “‘in the area of government contracts, as with private

agreements there is a presumption in the civil context that a damages remedy will be

available upon the breach of an agreement.’” Id. (quoting Sanders v. United States, 252

F.3d 1329, 1334 (Fed. Cir. 2001), and citing Winstar Corp., 518 U.S. 839, 885 (1996)).

The government, in its motion to dismiss, attempts to distinguish San Juan City

College on the grounds that it involved a claim for consequential damages rather than

ordinary contract damages. Def. Mot. at 18-19. This Court, however, cannot locate an

iota of jurisprudential evidence that there is a jurisdictional distinction arising from the

type of contract damages a plaintiff seeks. In that regard, the government notably failed

to address the following critical language from the Federal Circuit’s decision in San Juan

City College: “There is no reason to believe that, because federal grant programs may be

‘in the nature of a contract,’ special and different rules govern the determination of

damages for a breach of a formal written contract that involves a federal grant of

funds . . . .” 391 F.3d at 1362. Again, the government does not deal at all with this

binding holding. More troubling still, the government does not attempt to distinguish

whatsoever the underlying nature or terms of the agreement at issue in San Juan City

College from the HACS ACC. See Def. Mot. at 18-19 (attempting to distinguish San Juan

City College solely based on the form of damages sought in that case).

In any event, the government, as a factual matter, cannot distinguish San Juan

City College based on the nature of the damages claim in that case. As this Court does

with respect to HACS’s FAC, the Federal Circuit in San Juan City College looked

particularly to the “prayer for relief in the complaint,” noting that the plaintiff in that

case “sought damages including consequential damages for lost profits.” 391 F.3d at

1362 (internal quotes omitted). The government, in contrast to its position in the instant

- 20 -

case, “argue[d] that lost profits cannot be recovered[.]” Id. (emphasis added). The

Federal Circuit declined to reach that question, however, because the court held that

“[t]he recovery the [plaintiff] College seeks is not limited to lost profits, but more broadly

encompasses other types of damages as well.” 391 F.3d at 1362 (emphasis added).29 Thus,

the Federal Circuit implicitly, but clearly, held that the issue of damages is not

jurisdictional. Id. (“[I]t would be premature to decide whether the College could

recover lost profits unless and until the Court of Federal Claims decides the Department

breached the agreement.”); see also id. at 1365 (“The case is remanded to the [Court of

Federal Claims] to determine first, whether the Department breached the agreement. If

the court finds that the Department did so, then it should determine what damages, if

any, the College is entitled to recover.”).

To reiterate, the government cites no authority of any kind — neither binding

nor persuasive — to support the contention that Tucker Act jurisdiction may depend on

the type of damages sought, let alone authority supporting that the Court would have

jurisdiction to consider a claim for lost profits or consequential damages, but not to

consider a claim for a specific sum of money presently due and owing under a contract.

In any event, this Court rejects such a distinction because lost profits are nothing more

than a type of expectancy damages and there is nothing special about either damages

category, aside from the type of proof required. Long Island Sav. Bank, FSB v. United

States, 60 Fed. Cl. 80, 89 (2004) (discussing cases and explaining that “[t]he principle

underlying the availability of contract damages is that the promisee is entitled to the

benefits it reasonably expected to receive had the breach not occurred, i.e., the profits it

would reasonably have earned but for the breach”); Glendale Fed. Bank, FSB v. United

States, 239 F.3d 1374, 1380 (Fed. Cir. 2001) (“expectancy damages” are often fashioned in

terms of lost profits, but may include other damage measures).

If HACS is able to demonstrate that it has complied with the terms of its contract

with the government sufficient to trigger HUD’s payment obligations, and if HUD had

no basis to withhold the funds at issue,30 the government at that point must “perform,

and accept whatever benefits and losses the contract gives them, or they can refuse to

29Although the funds earned by the plaintiff college under the agreement at issue in San Juan

City College appear to have been repaid either prior to, or during the litigation, there is no

suggestion in the Federal Circuit’s decision that any jurisdictional issue turned on that fact. 391

F.3d at 1364. Moreover, as relevant to HACS’s claims, the Federal Circuit’s opinion suggested

that a breach of contract claim could arise from procedural violations related to the agency’s

suspending funding to the college. Id. at 1363-64.

30As discussed below, the government points to many asserted “strings” and oversight powers,

but always in sweeping generalities or with general citations. The government does not

demonstrate, as a matter of law, that it was (or currently is) entitled under the HACS ACC to

withhold the specific funds HACS claims as breach damages.

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perform and pay the consequences.” Glendale Fed. Bank, 239 F.3d at 1379–80.31 “One

way the law makes the non-breaching party whole is to give him the benefits he

expected to receive had the breach not occurred.” Id. (citing Restatement (Second) of

Contracts § 344(a) (1981)).32 In that regard, “[t]he benefits that were expected from the

contract, ‘expectancy damages,’ are often equated with lost profits, although they can

include other damage elements as well.” 239 F.3d at 1379-80 (citing Restatement (Second)

of Contracts § 347). The Federal Circuit has recognized that “[t]he problems of proof

attendant on the burden placed on the non-breaching party of establishing lost profits

— on establishing what might have been — are well recognized.” 239 F.3d at 1379–80

(“[T]he proof problems can in some situations prove to be insurmountable.”). But any

such problems of proof have nothing to do with Tucker Act jurisdiction.33 And, in any

event, the government here concedes that this Court does have jurisdiction over the FAC

to the extent it seeks consequential damages, which the FAC fairly may be read to do.

See FAC ¶ 14 (“Theses requests are extremely time consuming as well as costly in time

and funds as they must comply with Obligation Submission Review Requirements for

each and every invoice along with extensive documentation not matter how small or

repetitive the invoice may be.”); id. ¶ 15 (“These audits were unduly burdensome on

HACS as they are not only costly, but they also reduced Plaintiff’s ability to verse its

day-to-day operations.”); id. at 10 (Prayer for Relief) (“Award the Plaintiff any other

relief that is proper.”).

The government, in support of its motion to dismiss, further relies upon the

Federal Circuit’s decision in NCMS. See Def. Mot. at 19–22. But, despite the significance

the government assigns to that case, the complaint at issue there clearly did not involve

any claim for contract breach damages. In NCMS, the Federal Circuit considered a

district court’s transfer order to this Court on the grounds that the complaint at issue

constituted “a contract claim against the government in excess of $10,000, for which

Lins v. United States, 688 F.2d 784, 786 (Ct. Cl. 1982) (“[W]hen the plaintiff has done all he must

31

do to establish his entitlement to payment, e.g., perform on his contract, the claim accrues.”).

32“The general rule in common law breach of contract cases is to award damages sufficient to

place the injured party in as good a position as he or she would have been had the breaching

party fully performed.” San Carlos Irr. & Drainage Dist. v. United States, 111 F.3d 1557, 1562–63

(Fed. Cir. 1997), as corrected on reh’g (June 18, 1997).

33Cf. Data Mktg. Co. of Virginia v. United States, 107 F. App’x 187, 197 (Fed. Cir. 2004) (“Our

recent decision in Energy Capital Corp. v. United States establishes that a loss of profits claim that

flows directly from the contract is not necessarily a form of consequential or incidental

damages. 302 F.3d 1314 (Fed. Cir. 2002). Consequential or incidental damages are those that

are speculative or otherwise not foreseen by the parties. Lost profits are not necessarily

speculative or consequential per se . . . lost profits may be recovered even if there is a

contractual clause excluding liability for incidental or consequential damages . . . [and] lost

profits should typically be considered direct damages rather than consequential damages in a

business contract[.]” (additional citations omitted)).

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there is no District Court jurisdiction.” 114 F.3d at 198 (internal quotes omitted). The

Federal Circuit reversed the transfer order, agreeing with the plaintiff that the “case was

properly brought in the United States district court.” 114 F.3d at 197. Thus, in NCMS,

the plaintiff itself did not believe it was asserting a contract breach claim. Our appellate

court concurred, concluding that “[t]he first three counts of the amended complaint are

plainly based on the Appropriations Act and therefore do no state a contract-based

claim[,]” while the “[t]he fourth count requests specific performance of the Cooperative

Agreement between NCMS and the Air Force, a remedy the Court of Federal Claims is

not empowered to grant.” 114 F.3d at 198. The Federal Circuit acknowledged, however

— with language helpful for HACS here, albeit in dicta — that “a request for specific

performance of a contract might in some cases be construed as an action for the

payment of money[,]” supporting Tucker Act jurisdiction. Id. That was not the case in

NCMS because the plaintiff effectively had sought “[a]n order directing the Air Force to

supplement the Cooperative Agreement or engage in a new agreement with [the

plaintiff].” Id. at 199. Such relief indisputably “would be equitable in nature and thus

would not be within the jurisdiction of the Court of Federal Claims.” Id. But, HACS

seeks nothing of the kind in its FAC.

In NCMS, the Federal Circuit noted that the complaint “ma[d]e clear that [the

plaintiff] anticipates the need for injunctive relief, such as an order enjoining the

defendants from obligating and disbursing particular funds that should be reserved for

[plaintiff.]” 114 F.3d at 201–02 (“NCMS is in effect asking that the Air Force be required

to expand the existing contractual relationship or to create a new one to cover the

remaining appropriated but unobligated funds.”). Because “[t]he Tucker Act . . . does

not empower the Court of Federal Claims to grant that kind of equitable relief,” the

Federal Circuit concluded that jurisdiction was proper in the district court pursuant to

the APA. Id. In contrast, HACS neither asks for nor requires an injunction of any kind,

but rather seeks contract damages in the form of a money judgment for funds allegedly

due and owing pursuant to the HACS ACC (in addition to, potentially, consequential

damages).34 SAHA, 143 Fed. Cl. at 453–55 (correctly distinguishing NCMS as a case

34Tr. 54:12-54:17 (“THE COURT: Does the Housing Authority request an expansion of their

existing contractual relationship? [DEFENDANT’S COUNSEL]: No, Your Honor. THE

COURT: And does it ask to create a new one? [DEFENDANT’S COUNSEL]: No.”). The

government’s concessions and explanations during oral argument are relevant to the Court’s

instant decision, as “’a lawyer’s statements may constitute a binding admission of a party[ ]’ if

the statements are ‘deliberate, clear, and unambiguous[.]’” Minter v. Wells Fargo Bank, N.A., 762

F.3d 339, 347 (4th Cir. 2014) (quoting Fraternal Order of Police Lodge No. 89 v. Prince George's Cty.,

Md., 608 F.3d 183, 190 (4th Cir. 2010)); see Checo v. Shinseki, 748 F.3d 1373, 1378 n.5 (Fed. Cir.

2014) (questioning the Veterans Court’s “reluctance to accept [a] concession” made at oral

argument and citing case law for the proposition that admissions are generally binding on the

parties).

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involving a request for equitable relief from a claim for “compensatory monetary

damages for the government’s alleged breach” of contract); Boaz, 141 Fed. Cl. at 83

(“Critical to that result [in NCMS] was the fact that the plaintiff’s claims were based on

a statute and that the plaintiff sought equitable relief, not money damages.”).

The government also relies upon Lummi Tribe, but, in that case, the only issue

before the Federal Circuit was whether “the Claims Court erred in finding [Native

American Housing Assistance and Self-Determination Act of 1996 (“NAHASDA”)] to

be a money-mandating statute[.]” 870 F.3d at 1317. The Court still does not understand

where this decision gets the government; the initial Lummi Tribe Federal Circuit decision

did not involve a contract claim. Id. Indeed, the government inexplicably fails to

mention that the Lummi Tribe case in fact came before the Federal Circuit a second time,

where the contract claims were specifically at issue. In that second appeal, the Federal

Circuit considered whether the Court of Federal Claims “erred by dismissing [the

tribe’s] independent claims for breach of contract, breach of fiduciary duty, and breach of

trust.” Lummi Tribe of the Lummi Reservation Washington v. United States, 788 F. App’x

717, 721 (Fed. Cir. 2019) (emphasis added). The Federal Circuit explained that

“[r]esolution of this issue turns on whether these claims were within the scope of our

prior mandate.” Id. The court “conclude[d] that they were not.” Id. Thus, the Federal

Circuit explicitly held that its first decision in the case did not “resolve Lummi’s breach

of contract [and other claims] by ‘necessary implication,’ because resolving those claims

was not necessary to our conclusions that NAHASDA is not a money-mandating statute

or that funds not in Lummi’s possession or control could not be illegally exacted.” Id. at

722 (holding that “Lummi’s breach of contract, breach of fiduciary duty, and breach of

trust claims were therefore not with within the scope of our prior mandate” and that the

“prior mandate resolved only the question of the Claims Court’s jurisdiction of

Lummi’s NAHASDA and illegal exaction claims”). Thus, in Lummi Tribe, the Federal

Circuit necessarily concluded that this Court had Tucker Act jurisdiction over the

contract claims in that case, an outcome that the government simply does not address.

In sum, in NCMS, the plaintiff specifically disclaimed that it was seeking a

Tucker Act remedy; and, in Lummi Tribe, the Federal Circuit expressly remanded the

plaintiff’s contract claim to this Court for a decision on the merits. Brief of Plaintiff-

Appellant, 1996 WL 33455792, *8, 14, National Center For Manufacturing Sciences v. United

States, 114 F.3d 196 (Fed. Cir. 1997) (No. 96-1423) (Fed. Cir. Aug. 26, 1996) (noting that

NCMS “does not seek compensatory money damages,” that “[i]ts claim is based on

rights grounded in federal statutes, not contractual provisions, and that “NCMS seeks

no compensation from the Air Force for a violation of the Cooperative Agreement”);

Lummi Tribe, 788 F. App’x at 721–22. Neither decision supports the government’s

sweeping jurisdictional contentions in this case.

- 24 -

The government’s argument35 that the Supreme Court’s decision in Bowen, 487

U.S. at 879, precludes jurisdiction in this case similarly fails. And for good reason – the

Federal Circuit consistently has recognized Bowen’s limited applicability outside of the

Medicaid context:

In concluding that a Medicaid disallowance claim was not a

contract action, Bowen relied on the congressional intent for

the Medicaid program, the role of state law in Medicaid

disallowance actions, and the long-term Medicaid

interactions between the states and the Federal Government

involving ever-shifting balance sheets.

Brighton Vill. Assocs. v. United States, 52 F.3d 1056, 1059 n.3 (Fed. Cir. 1995).36 With

regard to HUD contracts, in particular, the Federal Circuit has held that “[n]one of these

features unique to Medicaid disallowance disputes applies to Section 8 housing

contracts.” Id. (citing cases and noting that “sister circuits have consistently read Bowen

to reinforce the jurisdictional role of the Court of Federal Claims in resolving contract

disputes outside the complex Medicaid arena.”).37 As in Brighton Village Associates and

35 Def. Mot. at 15-16.

36See also Suburban Mortg. Assocs., Inc. v. U.S. Dep’t of Hous. & Urban Dev., 480 F.3d 1116, 1127

(Fed. Cir. 2007) (“Bowen [was] a dispute between two sovereigns—a state government and the

federal government—implicating federalism issues; the dispute centered on the administration

of a major federal grant, the Medicaid program, involving enormous sums of money and

complex interactions between the governments and the beneficiaries; at issue were the

institutional arrangements between these two governments; the governments were locked into

a fabric of long-term administration of the program; and the money involved in the uncovered

education services was a small fraction of the total reimbursement the state received each year

for its Medicaid costs under the program. In addition, the Court’s focus was on the statutory

requirements set forth in this complex grant program—nowhere in Bowen did the Court make

reference to the existence of any specific contract or express agreement defining the relationship

between the parties.”)

37The Supreme Court also recently distinguished Bowen on similar grounds (albeit in the

context of a money-mandating, and not a contract, claim). Maine Cmty. Health Options v. United

States, 140 S. Ct. 1308, 1330–31 (2020) (holding that “Bowen is distinguishable on several scores”

because “[i]n Bowen, the State did not seek money damages, but instead sued for prospective

declaratory and injunctive relief to clarify the extent of the Government’s ongoing obligations

under the Medicaid program” and “because of the litigants’ ‘complex ongoing relationship,’

which made it important that a district court adjudicate future disputes” (quoting 487 U.S. at

905)); see also Bowen, 487 U.S. 904–05 n.39 (holding that the APA “is tailored” to “[m]anaging the

relationships between States and the Federal Government that occur over time and that involve

constantly shifting balance sheets,” while the Tucker Act is suited to “remedy[ing] particular

categories of past injuries or labors for which various federal statutes provide compensation”).

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“[u]nlike Katz [v. Cisneros], this case features a contractor in privity with the

Government.” 52 F.3d at 1060 (discussing Katz v. Cisneros, 16 F.3d 1204 (Fed. Cir. 1994)).

HACS “seeks unliquidated damages from HUD for breach of an express contract” and,

thus, “[t]his is a contract case.” 52 F.3d at 1060. Just as the plaintiff did in Brighton

Village, HACS, too, “seeks retroactive monetary relief for HUD’s failure to” pay

amounts due, relief that “also more clearly denotes a contract damages action.” Id.

(contrasting Katz, which “involved an award of prospective relief, namely, the builder's

attempt to require HUD to calculate future contract rents in conformity with the

statute” (citing 16 F.3d at 1209)).38

As the Federal Circuit explained in Brighton Village — again, a case involving a

HUD contract — “a ‘pure breach’ claim accrues when a plaintiff has done all he must

do to establish his entitlement to payment and the defendant does not pay.” 52 F.3d at

1060. In this case, HACS does not contend that it is entitled to the sums sought

prospectively or as a result of injunctive or other equitable relief. Rather, HACS alleges

that it is entitled to the sums sought pursuant to previously submitted, proper requests

for payment that the government improperly refused to pay, in violation of either

contract terms or the government’s implied contractual duty of good faith and fair

dealing.39 FAC ¶¶ 18–20, 23–26.

The government attempts to distinguish Brighton Village on the grounds that

“[t]he Federal Circuit did not reach the money-mandating question there.” Def. Mot. at

27. That assertion is a non-sequitur, however, insofar as the Federal Circuit held that

“the Court of Federal Claims properly exercised jurisdiction” where plaintiff sought

“damages from HUD for breach of an express contract.” Brighton Vill. Assocs., 52 F.3d at

1059 (emphasis added). The government baldly asserts that the Section 9 ACC at issue

38Moreover, “[t]his court does have authority to issue rulings of law declaring the rights of

parties under a contract where such rulings are necessary to the resolution of a claim for money

presently due and owing.” Hydrothermal Energy Corp. v. United States, 26 Cl. Ct. 7, 16 (1992)

(citing Pauley Petroleum, Inc. v. United States, 591 F.2d 1308, 1315 (Ct. Cl. 1979) (en banc), cert.

denied, 444 U.S. 898 (1979)). “Labeling an argument ‘equitable’ does not, however, automatically

deprive this Court of jurisdiction.” Ambase Corp. v. United States, 61 Fed. Cl. 794, 797 (2004).

That is, “merely because the court must make a ruling of law . . . in order to arrive at a money

judgment does not render this court's decision a ‘declaratory judgment’. . . .” Pauley Petroleum,

591 F.2d at 1315; see Halim v. United States, 106 Fed. Cl. 677, 685 (2012); Doko Farms v. United

States, 13 Cl. Ct. 48, 60 (1987) (noting that “Court only has jurisdiction” to declare a plaintiff’s

rights when doing so is “incidental and subordinate to” a money judgment).

39Tr. 8:24-9:2 (“[PLAINTIFF’S COUNSEL]: [W]e have been using our own reserve, which are

now depleted, funds to meet the operating expenses of the Housing Authority because HUD

has not authorized the release of these funds.”).

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here and the Section 8 Housing Assistance Payments (“HAP”) contracts40 at issue in

Brighton Village “are very different agreements, so case law on the latter is not

instructive here.” Def. Mot. at 27. The government, however, repeated its similar

omission from its analysis of San Juan City College, offering no specific comparisons of

the terms of the relevant ACC and HAP agreements. Moreover, at least one Federal

Circuit decision has compared those two types of HUD contracts, suggesting more than

a passing similarity between them. CMS Contract Management Services, 745 F.3d at 1381–

82 (discussing Section 8 of the Housing Act of 1937, and comparing ACCs and HAPs).41

Other courts explaining HUD programs likewise suggest that there is no distinction

between the two types of agreements (i.e., ACCs and HAPs) that would result in a

different jurisdictional outcome:

In 1974, the Housing Act of 1937 was amended to create the

Section 8 Housing Program (“Section 8 Program”), which

authorizes [HUD] to provide federally subsidized housing

benefits through rental assistance programs. HUD utilizes

two types of contracts to implement the Section 8 Program:

(1) housing assistance program contracts (“HAP contract”)

and (2) annual contributions contracts (“ACC”). Through a

HAP contract, HUD contracts directly with the owner of a

privately-owned dwelling (“project owner”) to whom HUD

pays subsidies. Alternatively, through an ACC, HUD

contracts with a public housing agency (“PHA”), and the

PHA then enters into HAP contracts with project owners.

40“Traditionally, HUD entered into [HAP] contracts [] directly with project owners and paid the

subsidies directly. However, the 1974 amendment to the Housing Act gave HUD a second

option—to enter into an [ACC] with a [PHA]. The PHA would then enter into HAP contracts

with project owners. HUD provided the PHAs funds to pay the subsidies to the project

owners.” CMS Contract Management Services v. Massachusetts Housing Finance Agency, 745 F.3d

1379, 1381–82 (Fed. Cir. 2014); see 24 C.F.R. § 891.560 (defining the rights and requirements

pursuant to a HAP contract).

41In Gallman v. Pierce, 639 F. Supp. 472, 473–74 (N.D. Cal. 1986), the district court noted that

“[t]he ACC . . . mandates that the PHA incorporate certain contractual provisions in all

agreements with a private landlord participating in the Section 8 HAP program.” The

government provides no basis for this Court to conclude that HUD’s HAP contracts with

housing owners contains materially different terms – for the purposes of Tucker Act jurisdiction

— from those contained in HUD’s ACCs. See Brighton Vill., 52 F.3d 1058 (noting that the parties

executed a “Regulatory Agreement” and that “[t]he HAP contract bound the parties to the

statutes and regulations of the Section 8 program”); Crest A Apartments Ltd. II v. United States, 52

Fed. Cl. 607, 611 (2002) (considering whether “HUD breached the Regulatory Agreement and

the HAP Contract by failing to consider and grant its rent increase requests”); Englewood Terrace

Ltd. P’ship v. United States, 79 Fed. Cl. 516, 550 (2007), aff’d, 479 F. App’x 969 (Fed. Cir. 2012).

- 27 -

HUD provides funds to the PHA, and the PHA then uses

those funds to pay subsidies to project owners.

Ashmore v. CGI Grp. Inc., 138 F. Supp. 3d 329, 333–34 (S.D.N.Y. 2015) (citing CMS

Contract Mgmt. Servs., 745 F.3d at 1381–82) (other internal citations omitted), aff’d, 923

F.3d 260 (2d Cir. 2019)).42 Given the regulatory scheme applicable to the Section 8

program, this Court finds it impossible to buy the government’s claimed jurisdictional

distinction between breach claims based upon Section 8 HAP contracts, on the one

hand, and breach claims based upon ACCs, on the other.43

42See also Evergreen Square of Cudahy v. Wisconsin Hous. & Econ. Dev. Auth., 2016 WL 53871, at *2

(E.D. Wis. Jan. 4, 2016) (“Under the project-based Section 8 program, HUD channels rental

assistance payments through a two-tiered system. At one level, HUD enters into an ACC with a

[PHA] . . . . Under the ACC, HUD provides rental assistance payments (also known as annual

contributions) to fund the housing agency’s rental subsidy payments to an owner of rental

housing. The PHA in turn enters into a HAP contract with the owner, under which the owner

receives monthly housing assistance payments from the PHA.” (footnotes and internal record

citations omitted)); Le Gros Enterprises, LLC v. Wisconsin Hous. & Econ. Dev. Auth., Julian Castro,

2016 WL 5921819, at *1 (E.D. Wis. Oct. 11, 2016) (“Under the ACC, HUD provides annual

contributions to the PHA that enables the PHA to make monthly housing assistance payments

to a property owner pursuant to a HAP contract.”); Price v. Pierce, 615 F. Supp. 173, 178 (N.D. Ill.

1985) (“Under the Section 8 program, the Secretary is authorized to implement the program by

entering into [ACCs] with a [PHA] pursuant to which such agency may enter into [HAP]

contracts with owners of dwelling units to assist eligible persons.”). In CMS Contract

Management, HUD contended that certain performance-based ACCs were “cooperative

agreements, and thus, outside the scope of federal procurement law.” 745 F.3d at 1383. The

Federal Circuit disagreed, holding that the ACCs at issue in that case were “procurement

contracts and not cooperative agreements” because their “primary purpose” is to procure

“services . . . to support HUD’s staff and provide assistance to HUD with the oversight and

monitoring of Section 8 housing assistance.” Id. at 1385. Although we need not reach the issues

here, the government’s view of the HACS ACC would be undermined entirely if it were

categorized as a procurement contract similar to the performance-based ACCs in CMS Contract

Management. In any event, what is evident is that the government’s repeated attempts to avoid

this Court’s Tucker Act jurisdiction (with regard to various HUD contracts) have failed. See

CMS Contract Mgmt. Servs. v. United States, 110 Fed. Cl. 537, 551 (2013), rev’d sub nom. CMS

Contract Mgmt. Servs. v. Massachusetts Hous. Fin. Agency, 745 F.3d 1379 (Fed. Cir. 2014); Brighton

Vill., 52 F.3d at 1059; Stovall, 71 Fed. Cl. at 699–701 (cataloging cases).

43HUD’s own description of Section 8 HAP contracts are similar to the agency’s definition of

the ACC. Compare https://www.hud.gov/program_offices/housing/mfh/rfp/s8bkinfo

(“Section 8 Program Background Information”), last accessed on July 6, 2020 (describing

“Owner Obligations” and explaining that “[i]n consideration for the receipt of Section 8

assistance, the HAP Contracts impose certain general obligation on the owners of assisted

properties”) with 24 C.F.R. § 900.115 (describing an ACC as “a contract prescribed by HUD for

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Nor does the fact that the HACS ACC arises out of a statutory and regulatory

scheme remove Tucker Act jurisdiction. See Alvarado Hospital, LLC v. Price, 868 F.3d 983,

995 (Fed. Cir. 2017) (“[T]he fact that the court may have to interpret an Act or make

other determinations regarding principles of federal law in order to resolve the contract

claim does not deprive [this Court] of jurisdiction to decide that claim.” (citing Del-Rio

Drilling Programs, Inc. v. United States, 146 F.3d 1358, 1367 (Fed. Cir. 1998))).

“In sum, when the plaintiff’s claims, regardless of the form in which the

complaint is drafted, are understood to be seeking a monetary reward from the

Government, then . . . a straightforward analysis calls for determining whether the case

falls within the jurisdiction of the Court of Federal Claims.” Suburban Mortg. Assocs.,

480 F.3d at 1126. If this Court “can provide an adequate remedy—if a money judgment

will give the plaintiff essentially the remedy he seeks—then the proper forum for

resolution of the dispute is not a district court under the APA but the Court of Federal

Claims under the Tucker Act.” Id. (“There is no need at that point to even address the

other APA limitations . . . The three limitations function in the disjunctive; the

application of any one is enough to deny a district court jurisdiction under the APA.”).

That is the case here. A plain and fair reading of the FAC demonstrates that HACS

seeks a money judgment for funds that HUD allegedly owes HACS under the terms of

the ACC, but that HUD has not paid. The Court finds it difficult to conceive of a more

classic breach of contract claim. Thus, far from HACS’s dressing up an APA claim in

Tucker Act clothes, it is the government that attempts to rewrite the FAC so as avoid

this Court’s jurisdiction. The plaintiff, however, is “the master of the complaint,” and

this Court will not reimagine the FAC here for the government’s benefit. Holmes Grp.,

Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002) (internal quotation

omitted); Mients v. United States, 50 Fed. Cl. 665, 671 (2001) (“Plaintiff . . . remains the

master of his complaint[.]”).

Finally, in an argument that barely spans a single page, the government contends

that the FAC’s reference to “arbitrary and capricious” agency conduct “is plainly a

claim alleging an APA violation[.]” Def. Mot. at 27. But, as demonstrated above, HACS

seeks money damages for the government’s breach of contractual duties. Any reference

to “arbitrary and capricious” agency action does not require this Court to recharacterize

the FAC as an APA claim. To the contrary, HACS specifically asserts that HUD’s

“arbitrary and capricious actions constitute a breach of contract” and that “HACS is [thus]

entitled to money damages.” FAC ¶ 21 (emphasis added). The cases are legion

establishing that where a contract affords discretion to the government, “exercise of that

discretion must be fair and reasonable, not arbitrary and capricious.” Everett Plywood

Corp. v. United States, 512 F.2d 1082, 1090 (Ct. Cl. 1975); see Pacific Far East Line v. United

loans and contributions, which may be in the form of [an] operating subsidy, whereby HUD

agrees to provide financial assistance and the PHA agrees to comply with HUD requirements

for the development and operation of its public housing projects[]”).

- 29 -

States, 394 F.2d 990, 998 (Ct. Cl. 1968) (where contract authorized agency to determine

method for calculating subsidies, change in methodology was analyzed to determine

whether it was reasonable); W. G. Cornell Co. of Washington D. C. v. United States, 376

F.2d 299, 313 (Ct. Cl. 1967) (“While the Government had the undisputed right to decide

if the blanket material met the standards set forth in the contract[], ‘it is equally

elementary that the discretion involved must be exercised reasonably and fairly.’”

(quoting Fox Valley Engineering, Inc. v. United States, 151 Ct. Cl. 228, 236 (1960)));

Reservation Ranch v. United States, 39 Fed. Cl. 696, 714–15 (1997) (“[W]hen the parties to a

contract vest one party with the discretion to make a critical factual determination

under the contract, this court narrowly reviews . . . whether that discretion was

arbitrarily or capriciously exercised[.]”), aff’d, 217 F.3d 850 (Fed. Cir. 1999)); Thomas

Creek Lumber & Log Co. v. United States, 32 Fed. Cl. 787, 790 (1995) (“‘a party vested with

contractual discretion must exercise his discretion reasonably and may not do so

arbitrarily or capriciously’” (quoting Pacific Far East Line, 394 F.2d at 998 (1968))).44

Accordingly, HACS’s allegations of arbitrary and capricious agency conduct, at a

minimum, support HACS’s claim for breach of the implied duty of good faith and fair

dealing. See FAC at 10.45 “[T]he implied covenant of good faith and fair dealing implies

a duty on all parties to a contract which ‘limits the manner in which a party who is

vested with discretion under the contract may exercise it by requiring that party to

exercise that discretion reasonably and with proper motive, not arbitrarily, capriciously,

or in a manner inconsistent with the reasonable expectations of the parties.’” Barseback

Kraft AB v. United States, 36 Fed. Cl. 691, 705–06 (1996) (quoting Abbott v. Amoco Oil Co.,

619 N.E.2d 789, 795–96 (Ill. App. 1993)), aff’d, 121 F.3d 1475 (Fed. Cir. 1997); see also RDA

Constr. Corp. v. United States, 132 Fed. Cl. 732, 777 (2017) (holding that “[t]he

Government may breach this duty [of good faith and fair dealing] if it acts

unreasonably under the circumstances”), aff’d, 739 F. App’x 644 (Fed. Cir. 2018); Orange

Cove Irr. Dist. v. United States, 28 Fed. Cl. 790, 800–01 (1993) (“When one party has the

authority to exercise discretion to determine an essential term of a contract, as here, the

covenant of good faith and fair dealing requires that the exercise of that discretion be

reasonable.”).

44 See also Fort Sumter Tours, Inc. v. Babbitt, 66 F.3d 1324, 1331 (4th Cir. 1995) (agency’s unilateral

change of rates charged under National Park concession contract governed by arbitrary and

capricious standard); Neal & Co. v. United States, 36 Fed. Cl. 600, 631 (1996) (“A breach, by the

Government, of [] its duty to exercise its discretion reasonably. . . will result in liability.”), aff’d,

121 F.3d 683 (Fed. Cir. 1997); County of Suffolk v. United States, 26 Cl. Ct. 924, 926–27 (1992)

(finding contract language giving agency the discretion to make critical factual determination

under a contract compelled review under arbitrary and capricious standard).

45See also Pl. Resp. at 25 n.7 (“HACS uses the language ‘arbitrary and capricious’ as a

descriptive means of stating HUD does not have a viable reason for breaching the ACC and

failing to provide HACS with its annual contributions.”).

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C. The Government’s Shifting Positions

Ralph Waldo Emerson, in his essay Self-Reliance,46 famously remarked that “[a]

foolish consistency is the hobgoblin of little minds,” but he was not commenting on the

“[t]he judicial estoppel doctrine[,] [which] protects the integrity of the judicial process

by preventing a party from taking a position inconsistent with one successfully and

unequivocally asserted by the same party in a prior proceeding.” Reynolds v. Comm’r,

861 F.2d 469, 472–73 (6th Cir. 1988). As the United States Court of Appeals for the Sixth

Circuit explained in Reynolds:

The purpose of the doctrine is to protect the courts “from the

perversion of judicial machinery.” Courts have used a variety

of metaphors to describe the doctrine, characterizing it as a

rule against “playing ‘fast and loose with the courts,’”

“blowing hot and cold as the occasion demands,” or “hav[ing]

[one’s] cake and eat[ing] it too[.]”

Id. (internal citations omitted) (quoting Edwards v. Aetna Life Insurance Co., 690 F.2d 595,

599 (6th Cir. 1982), Scarano v. Central R.R., 203 F.2d 510, 513 (3d Cir. 1953), Allen v. Zurich

Insurance Co., 667 F.2d 1162, 1167 n. 3 (4th Cir. 1982), and Duplan Corp. v. Deering

Milliken, Inc., 397 F. Supp. 1146, 1177 (D.S.C. 1974)).

Although the Court acknowledges that the doctrine cannot be applied to confer

jurisdiction where none exists, we write at greater length here to demonstrate that the

government’s position in this case is a 180-degree about-face from what the government

told the United States Court of Appeals for the Seventh Circuit (and apparently several

district courts) regarding Tucker Act jurisdiction in similar ACC breach cases. In

rejecting the government’s motion to dismiss in this case, and as explained below, this

Court simply adopts the government’s view before the Seventh Circuit, which,

apparently, represents the considered and authoritative view of the Office of the

Solicitor General.

In Greenleaf Limited Partnership v. Illinois Housing Development Authority, the

district court considered claims based upon ACCs to which HUD and the Illinois

Housing Development Authority (“IHDA”), a PHA, were parties. 2009 WL 449100

(N.D. Ill. Feb. 23, 2009). This is what the government argued in moving to dismiss

IHDA’s claims against HUD:

[A]s revealed by IHDA’s allegations themselves, the true

nature [o]f IHDA’s third-party complaints are the allegations

46 https://www.owleyes.org/text/self-reliance/read/self-reliance#.

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that HUD has breached the ACCs with IHDA, . . . contract

claims for which money damages would be the remedy and

for which the Tucker Act, not the APA, would provide a forum-

specific waiver of sovereign immunity in the Court of Federal

Claims.

Memorandum In Support of Secretary’s Motion To Dismiss Third-Party Complaints,

ECF No. 30, at 7, Greenleaf Limited Partnership v. Illinois Housing Development Authority,

2009 WL 449100 (N.D. Ill. Feb. 23, 2009) (No. 08-C-2480) (Sept. 29, 2008) (“IHDA Mem.”)

(emphasis added). Indeed, the government cited Portsmouth Redev. & Hous. Auth. v.

Pierce, 706 F.2d 471, 473–75 (4th Cir. 1983), for the proposition “that the Tucker Act vests

exclusive jurisdiction in the Court of Federal Claims over claims arising out of an ACC.”

IHDA Mem. at 7 (emphasis added).47

Although the government now asserts that HACS’s claims should have been

brought in the district court pursuant to the APA, that is not what the government

asserted in Greenleaf, where the government argued that claims against HUD based

upon the ACC, although “cast[] . . . as ‘Administrative Procedure Act,’ [claims] . . . are,

in reality, claims for money.” Id. at 6-7. The government explained to the district court

that “[t]he Seventh Circuit—and every other Circuit Court of Appeals to address the

issue—has concluded that, for claims arising out of contracts, the Tucker Act impliedly

forbids the district courts from exercising jurisdiction over requests for money damages as

well as for injunctions, specific performance, or other equitable relief under the APA.”

Id. at 8 (emphasis added) (citing cases and arguing that “IHDA’s APA claims arise out

of government contracts and, therefore, should be dismissed”).

But the government in Greenleaf did not stop there:

In addition, IHDA cannot seek judicial review of agency

action in a district court under the APA, because IHDA has

an adequate alternative remedy. 5 U.S.C. § 704 (“[F]inal

agency action for which there is no other adequate remedy in a

court [is] subject to judicial review.” (emphasis added)).

Because the true nature of IHDA’s claims are alleged breaches

of contracts, IHDA may bring an action for money damages

47See also Vill. W. Assocs. v. Rhode Island Hous. & Mortg. Fin. Corp., 618 F. Supp. 2d 134, 137

(D.R.I.) (noting that “HUD’s motion rests on the premise that [the] impleader action is a run-of-

the-mill contract claim against the United States” and that “at bottom [plaintiff] seeks money

damages through a complaint grounded upon rights that spring from the ACC contract” and

“[t]hus, the action falls within the Tucker Act, 28 U.S.C. § 1491, and the exclusive forum is the

United States Court of Federal Claims”).

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in the Court of Federal Claims under the Tucker Act. See 28

U.S.C. § 1491(a)(1). . . . Not only does the availability of

breach-of-contract actions provide an adequate alternative

remedy to IHDA’s APA claims, prevailing in that action

would provide IHDA with the very remedy that it seeks in its

APA claims: money damages for HUD’s alleged failure to

provide contributions to IHDA for rent adjustments to which

plaintiffs allegedly were entitled. Accordingly, because

IHDA can bring breach-of-contract actions under the Tucker

Act in the Court of Federal Claims, the APA’s waiver of

sovereign immunity is inapplicable.

Id. at 10 (emphasis added) (internal citations and footnote omitted) (citing Suburban

Mortgage Assocs., 480 F.3d at 1126–27). Thus, just like HACS in this case, IHDA (a PHA)

sought “contributions” to which it alleged entitlement. The government even told the

district court — correctly, in this Court’s view — that “res judicata principles address

any concerns about obtaining prospective relief from potential future rent adjustment

disputes with HUD.” IHDA Mem. at 10 n.4 (citing Consol. Edison Co. of N.Y., Inc. v. U.S.

Dep’t of Energy, 247 F.3d 1378, 1384–85 (Fed. Cir. 2001)).

Regarding the Supreme Court’s decision in Bowen, this Court’s view, supra, is

identical to the government’s position in Greenleaf:

A suit under the Tucker Act is presumptively an adequate

remedy barring relief under the APA. See Suburban Mortgage

Assocs., 480 F.3d at 1126. Bowen v. Massachusetts, 487 U.S. 879

(1988), did not reverse this presumption; rather, the Bowen

Court focused on the unique circumstances presented in that

case, involving review of a disallowance decision made by the

Secretary of Health, Education, and Welfare in administering

the Medicaid program.

Reply Memorandum In Support of Secretary’s Motion To Dismiss Third-Party

Complaints, ECF No. 35, at 5, Greenleaf Limited Partnership v. Illinois Housing Development

Authority, 2009 WL 449100 (N.D. Ill. Feb. 23, 2009) (No. 08-C-2480) (Oct. 24, 2008)

(“IHDA Rep. Mem.”) (emphasis added) (concluding that “the Court of Federal Claims

undoubtedly has jurisdiction over claims arising out of a contract”). Then, there is this

nugget from the government’s brief before the district court regarding the ACCs and

Bowen:

. . . Bowen involved questions of the scope of the Medicaid

program, which is governed by statute and run by the states

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with discretion as to structure and administration. Bowen, 487

U.S. at 883-87; see also Suburban Mortgage Assocs., 480 F.3d at

1127 (“[N]owhere in Bowen did the Court make reference to

the existence of any specific contract or express agreement

defining the relationship between the parties.”). In contrast,

IHDA’s contract claims relate only to the calculation of rents

and HUD’s contributions, with payments made at specific times

according to a specific formula.

Id. at 6 (footnote omitted) (emphasis added) & n. 2 (“The dispute in this action is over

what terms are to be used in that formula. Such a dispute is nothing like the dispute in

Bowen over the proper scope of the Medicaid program as set forth in that program’s

governing statutes.”).

The district court in Greenleaf agreed with the government, holding that the “only

source of rights upon which IHDA has based its claim are the ACCs and the only

remedies it has sought are for breaches of contract. That the actions complained of may

be statutory or administrative in nature is immaterial; IHDA alleges only that HUD’s

actions violated its contract rights.” Greenleaf, 2009 WL 449100, at *5–6 (concluding that

“IHDA’s claims are in substance contract-based action asking for monetary relief from

HUD”). Distinguishing Bowen on the very grounds proposed by the government, the

district court in Greenleaf further concluded that, in contrast to the Medicaid program

relationship between the federal and state governments at issue in Bowen, “the

relationship between [the PHA] and HUD involves a fixed contract and a fixed series of

payments over time relating only to the calculation of rents and HUD’s contributions.”

Id. at *7 (emphasis added) (noting that “nowhere in Bowen did the Court make reference

to the existence of any specific contract defining the relationship between the parties.”).

HUD’s failure to pay contributions to HACS is the primary issue in this case, as well.

In Greenleaf, the district court also held that “[t]he gravamen of IHDA’s claims is

that HUD cannot modify its contractual obligation to pay IHDA for rent adjustments to

which Plaintiffs may allegedly be entitled by unilaterally altering the terms of the ACC”

and that “[t]he answer to this issue depends on whether Congress intended to authorize

the Secretary to modify existing ACCs by incorporating the new provisions of § 1437f[],

and, if this was its intention, whether the modification infringes any of IHDA’s

protected [contract] interests.” Id.48 This, too, is very nearly the same as HACS’s claims

in this case: whether HUD’s actions, in withholding certain contributions, violated

48Greenleaf, 2009 WL 449100, at *8 (holding that a Court of Federal Claims’ judgment pursuant

to the Tucker Act would “also provide relief for [IHDA’s] prospective claims” based upon “res

judicata principles”).

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HACS’s protected contract interests pursuant to the ACC. The comparison is

particularly apt given that the government in the instant case relies upon regulatory

provisions apparently promulgated after the parties executed the HACS ACC (just like

the statutory provision at issue in Greenleaf).49

Having located Greenleaf (and other similar decisions) prior to the June 24, 2020

oral argument on the government’s motion to dismiss the FAC, this Court issued an

Order, instructing the parties to be prepared to discuss a number of issues, including:

whether the government’s position in this case – with regard

to Tucker Act jurisdiction – is consistent with HUD’s position

before various U.S. District Courts. See, e.g., Greenleaf Ltd.

P’ship v. Illinois Hous. Dev. Auth., 2009 WL 449100, at *6–8

(N.D. Ill. Feb. 23, 2009); Vill. W. Assocs. v. Rhode Island Hous. &

Mortg. Fin. Corp., 618 F. Supp. 2d 134, 137 (D.R.I. 2009)

(“HUD’s motion rests on the premise that [the] impleader

action is a run-of-the-mill contract claim against the United

States. It claims that though [the complaint is] conveniently

couched as seeking injunctive and declaratory relief, at

bottom [it] seeks money damages grounded upon rights that

spring from the ACC contract. Thus, the action falls within

the Tucker Act, 28 U.S.C. § 1491, and the exclusive forum is

the United States Court of Federal Claims[.]”).

ECF No. 27 at 2.

Then, during oral argument, the Court and counsel for the United States had the

following exchange on the subject:

THE COURT: Explain to me those District Court cases in

which the Government sought to have them transferred or

dismissed from District Court because they were really

Tucker Act claims, the ones that were in my order from late

last week.

[DEFENDANT’S COUNSEL]: Yes, Your Honor. And

actually . . . about three years after those decisions, the

Government confessed error in those cases, specifically in

Greenleaf on appeal to the Seventh Circuit. And this is [the]

49See 24 CFR § 85.1(a) (“Federal awards with State, local and Indian tribal governments are

subject to the Uniform Administrative Requirements, Cost Principles and Audit Requirements

for Federal Awards at 2 CFR part 200.”) (cited in Def. Mot. at 8).

- 35 -

docket [number] – I don’t think there was a published

opinion, but [it is] Seventh Circuit docket 11-1753[.]

…

THE COURT: Okay. I’ll pull it. So now, the consistent

position of the United States Government is that ACC claims

belong in District Court.

[DEFENDANT’S COUNSEL]: Yes, Your Honor. I mean, to

be fair, those were Title -- or Section 8 claims. . . . [T]he

confession of error is consistent with the position in this case,

yes.

Tr. 65:9–66:9 (emphasis added).50

While the government characterized its “confessed error” as harmonizing its

position in this case with the government’s view in the district court cases, that is

incorrect. The government most assuredly did not confess error before the Seventh

Circuit regarding the government’s view of the PHA’s ACC claims, the applicability of

the Tucker Act, the APA, or Bowen. Rather, all the government did was acknowledge

that the district court possessed concurrent jurisdiction, with the Court of Federal

Claims, based upon an alternative waiver of sovereign immunity adequately covering

contract claims against HUD:

After further consideration, . . . the government has

concluded that its prior view is legally erroneous, and the

Solicitor General has accordingly determined that the

government should confess error. As explained below, the

sue-and-be-sued clause of the United States Housing Act, 42

U.S.C. § 1404a, expressly waives the United States’ sovereign

immunity for all suits “with respect to [HUD’s] functions

under the United States Housing Act of 1937.” By its terms,

that waiver applies to the breach-of-contract claims at issue

here.

50 Although the government repeatedly referred to Greenleaf and other decisions as “Section 8

cases,” Tr. 94:15-95:6, the PHA’s claims against HUD were based on an ACC. See Greenleaf, 2009

WL 449100, at *5 (“The only source of rights upon which IHDA has based its claim are the

ACCs and the only remedies it has sought are for breaches of contract.”); see also Tr. 20:13-14

(“[DEFENDANT’S COUNSEL]: HACS has said [that] the breach is of Part 3 of the ACC

itself[.]”), 44:10-12 (“[DEFENDANT’S COUNSEL]: They’re looking for money damages in the

amount that is owed pursuant to HUD’s obligations under the ACC[.]”).

- 36 -

Brief For Federal Third-Party Defendant/Appellee, ECF No. 23 at 7, Greenleaf Limited

Partnership v. Illinois Housing Development, 2012 WL 1226060, at *7 (7th Cir. Apr. 2, 2012)

(No. 11-1753) (“IHDA Seventh Cir. Br.”) (emphasis added); see id. at 10 (“The

government has now concluded that this interpretation of § 1404a is incorrect, and the

Solicitor General accordingly has determined that the government should confess

error.”).51 Significantly, the government continued to describe the PHA’s claims as

“breach of contract claims.” Id. at 7.

Moreover — and for whatever reason, the government failed to mention this

during oral argument — the government expressly argued to the Seventh Circuit that the

district court’s jurisdiction was not exclusive, but rather was concurrent with the Court

of Federal Claims:

The Tucker Act does not confer exclusive jurisdiction over the

contract claims at issue here in the Court of Federal Claims.

The Supreme Court made clear in Bowen v. Massachusetts, 487

U.S. 879, 910 n.48 (1988), that the Court of Federal Claims’

jurisdiction “is ‘exclusive’ only to the extent that Congress has

not granted any other court authority to hear the claims that

may be decided by the Claims Court.” Here, the district court

has subject-matter jurisdiction to hear IHDA’s claims under

28 U.S.C. § 1331 and 42 U.S.C. § 1404a waives sovereign

immunity.

Id. at 9 n.3. Indeed, the government continued to press its view that, even pursuant to

HUD’s sue-and-be-sued clause, 42 U.S.C. § 1404a, APA jurisdiction would not be proper

in the district court precisely because of the availability of Tucker Act jurisdiction:

[T]he parties are in agreement that there is no need for this

Court to address IHDA’s separate argument regarding the

waiver of sovereign immunity under the APA, 5 U.S.C. § 702.

See IHDA Br. at 18 n.10. Should the Court reach the question,

however, it should affirm the district court’s ruling that the

APA does not provide an applicable waiver of the

government’s sovereign immunity in this context. As IHDA

acknowledges, this Court has held that “the Tucker Act

impliedly forbids injunctive or equitable relief under the

51Role of the Solicitor Gen., 1 U.S. Op. Off. Legal Counsel 228, 231, 234 (1977) (explaining that one

role of the Solicitor General is that she or he “must coordinate conflicting views within the

executive branch” and that “[o]nce the Solicitor General has taken a position with respect to a

pending case, that position will, in most cases, become the Government’s position as a matter of

course”).

- 37 -

Administrative Procedure Act based on a contract with the

United States.” Id. at 19 (citing Wabash Valley Power Ass’n v.

Rural Electrification Admin., 903 F.2d 445, 452 (7th Cir. 1990)).

IHDA attempts to avoid this well-settled rule by

characterizing one of its claims as arising “under the

Administrative Procedure Act.” Ibid. Even that claim,

however, is one that is unmistakably a claim for breach of

contract.

IHDA Seventh Cir. Br. at 15.

The Seventh Circuit accepted the government’s concession in Greenleaf,

recognizing that “the waiver, by its terms, applies to the breach of contract claims at issue

here.” Greenleaf Ltd. P’ship v. Ill. Hous. Dev. Auth., No. 11–1753, slip op. at 2 (7th Cir. Oct.

29, 2012) (emphasis added).52 Thus, if anything, the government’s confession of error

before the Seventh Circuit supports HACS’s position in this case, and patently is

inconsistent with the government’s position. Although this Court cannot apply judicial

estoppel here,53 this Court, like the Seventh Circuit, accepts the government’s position

52 Consistent with the government’s argument to the Seventh Circuit in Greenleaf, various

district courts have agreed that they possess concurrent jurisdiction with this Court’s Tucker Act

jurisdiction to decide ACC-based, breach of contract claims against HUD. See, e.g., Gloucester

Twp. Hous. Auth. v. Franklin Square Assocs., 2013 WL 3990820 at *4 (D.N.J. Aug. 2, 2013) (“[T]he

Tucker Act does not grant the Court of Federal Claims exclusive jurisdiction over federal contract

claims” so long as there is an independent “statutory waiver of the agency’s sovereign immunity

. . . and a statutory grant of subject matter jurisdiction” (emphasis added)); Cathedral Square

Partners Ltd. P’ship v. S. Dakota Hous. Dev. Auth., 875 F. Supp. 2d 952, 961 (D.S.D. 2012)

(explaining that “[i]n HUD’s brief before the Seventh Circuit Court of Appeals in Greenleaf . . . ,

HUD conceded error in its prior view that the sue-and-be-sued clause of 42 U.S.C. § 1404a did

not waive HUD’s sovereign immunity in a breach of contract case” (emphasis added)). The

critical point is that these decisions – based on the government’s own view – have considered

claims for breach of an ACC as contract claims pursuant to an independent waiver of sovereign

immunity, and not as APA claims. See Gloucester Twp. Hous. Auth., 2013 WL 3990820 at *5

(citing Greenleaf Ltd. P’ship v. Ill. Hous. Dev. Auth., No. 11–1753, slip op. at 2 (7th Cir. Oct. 29,

2012), for the proposition that “[s]ince HUD entered into the ACC contract with [the PHA] as

part of its functions under Section 8, Congress has waived HUD’s sovereign immunity with

respect to the contract” (emphasis added)); Vill. W. Assocs., 618 F. Supp. 2d at 138 (noting plaintiff

“seeks . . . monetary relief based on obligations found in [an] ACC contract with HUD”).

53“Judicial estoppel applies equally against the Government as it does private parties.” Agility

Pub. Warehousing Co., K.S.C.P. v. United States, 143 Fed. Cl. 157, 172 (2019) (citing Cuyahoga

Metro. Hous. Auth. v. United States, 65 Fed. Cl. 534, 554–57 (2005). That said, judicial estoppel

cannot confer jurisdiction where none exists. See Lummi Tribe, 788 F. App’x at 724; Palafox St.

Assocs., L.P. v. United States, 114 Fed. Cl. 773, 785 (2014); but see Christianson v. Colt Indus.

- 38 -

as articulated before that court regarding the nature of the breach of contract claims at

issue here – based, as they also are, upon the ACC – as well as the inapplicability of the

APA to such claims.

The government has not adequately explained its evolving views of Tucker Act

jurisdiction; the government’s position in this case is all but impossible to reconcile with

the details of the confession of error brief filed in the Seventh Circuit. This is not the

first time this Court (or the Federal Circuit, for that matter) has been critical of the

government’s ad-hoc approach to jurisdictional issues. Lummi Tribe, 870 F.3d at 1319–20

(criticizing the “government's two faces,” noting “severe misgivings about the

incongruency of its stances in this and related litigation[,]” and explaining that “the

government has taken, essentially, the opposite position in at least one of our sister

circuits in parallel litigation”); NCMS, 114 F.3d at 199 (“This proposed scenario

threatens to turn this case into a jurisprudential Flying Dutchman, casting about in

search of a court that can reach the merits of [plaintiff’s] claims.”); Mata v. United States,

107 Fed. Cl. 618, 624 (2012) (criticizing a “whipsaw litigation strategy” and noting that

“the Department of Justice functions as a unified entity for the United States

Government”); Palafox St. Assocs., 114 Fed. Cl. at 785 n.5.

Even though judicial estoppel is not applicable per se, the doctrine’s “focus” —

preventing “the perversion of the judicial process resulting from adopting inconsistent

legal positions” — applies with equal force in the jurisdictional context. Interactive Gift

Exp., Inc. v. Compuserve Inc., 256 F.3d 1323, 1345 (Fed. Cir. 2001); see Data Gen’l Corp. v.

Johnson, 78 F.3d 1556, 1565 (Fed. Cir. 1996) (“Judicial estoppel is designed to prevent the

perversion of the judicial process and, as such, is intended to protect the courts rather

than the litigants.”); Jackson v. WellSpan Health, 2014 WL 414251, at *5–6 (M.D. Pa. Feb. 4,

2014) (relying upon Third Circuit precedent to conclude that “[t]he doctrine of judicial

estoppel is premised upon the inherent power of the court to punish misfeasance by

parties[,]”and noting that “application of judicial estoppel entails an assessment of a

party's bad faith”).54

Operating Corp., 486 U.S. 800, 818–19 (1988) (criticizing the “game of jurisdictional ping-pong”

and holding that “[u]nder law-of-the-case principles, if the transferee court can find the transfer

decision plausible, its jurisdictional inquiry is at an end”); U.S. Marine, Inc. v. United States, 722

F.3d 1360, 1373 (Fed. Cir. 2013) (“this court’s action in now adopting the government’s

argument and affirming the transfer order, which depends on the Claims Court’s having

jurisdiction, establishes that [] right, as a matter of binding precedent and judicial estoppel”).

54See also Jackson, 2014 WL 414251, at *1 (“In order to promote consistent candor in litigation,

judicial estoppel permits courts to sanction parties who adopt irreconcilably inconsistent

positions in litigation by precluding them from pursuing claims that are wholly inconsistent

with the positions they have previously taken in some other lawsuit.”); Elan Microelectronics

Corp. v. Pixcir Microelectronics Co., 2013 WL 4499006, at *7 (D. Nev. Aug. 14, 2013) (sanctioning

- 39 -

Particularly because the Court gave the government fair warning about the

Court’s interest in understanding the government’s position in Greenleaf (and similar

district court cases), see ECF No. 27 at 2, the Court rejects the government’s fractional

explanation provided during oral argument. The Court nevertheless will provide the

government yet another chance to explain itself. At some point, however, this Court (or

the Federal Circuit) will have to do more than simply issue critiques or admonishments,

particularly when plaintiffs are made the subject of actual or attempted “jurisdictional

ping pong.” 486 U.S. at 818–19.

In light of the above, and consistent with the government’s position before the

Seventh Circuit, the government’s motion to dismiss the FAC for lack of jurisdiction is

DENIED.

D. The FAC States A Claim Upon Which Relief Can Be Granted

The government, in its motion to dismiss, focuses on isolated snippets of the

FAC to argue that HACS has failed to meet RCFC 12(b)(6) pleading requirements, but

simultaneously urges the Court to “consider the complaint in its entirety, as well as

other sources courts ordinarily examine when ruling on 12(b)(6) motions to dismiss, in

particular, documents incorporated into the complaint by reference, and matters of

which a court may take judicial notice.” Def. Mot. at 13. When viewed in its entirety —

and in light of the contractual and other documents that the government itself has

submitted for the Court’s review — the FAC easily survives the government’s motion to

dismiss for failure to state a claim.

As explained above, HACS’s breach of contract claim is straightforward, and is

succinctly summarized in HACS’s response brief, as follows:

[1] The ACC is a valid and binding agreement between the

parties. [2] HUD is obligated under the ACC to provide

funding to HACS. [3] HUD breached that obligation by

failing to pay HACS for over two years despite HACS

continued compliance. [4] HACS has suffered damages as a

result of HUD’s breach.

party for its failure “to candidly acknowledge its change in position and attempts to dance

around and ignore the inconsistent positions it has taken” and describing such behavior as

“violations of its duty of candor to the court and opposing counsel”); Scarano, 203 F.2d at 512–13

(“use of inconsistent positions would most flagrantly exemplify that playing fast and loose with

the courts which has been emphasized as an evil the courts should not tolerate” (internal quotes

omitted)).

- 40 -

Pl. Resp. at 25; see id. at 24 (arguing that “HUD is obligated under the ACC to provide

funding to HACS[,]” but “has failed to do so for over two years”).

The Court is not entirely sure why the government believes those allegations —

which are fleshed out in greater detail in the FAC and the various documents the

parties filed in support of their respective positions — flunk the RCFC 12(b)(6) pleading

standard. Critically, the government only challenges the legal conclusion that HUD

committed a breach in withholding the funds. Indeed, the Court views that as the

critical issue in this case, i.e., whether HUD’s withholding of the sums to which HACS

claims entitlement constitutes breach of the ACC or whether HUD, instead, has a

contractual justification for withholding such sums.55 In fact, during oral argument, the

government all but conceded that, under the ACC, the government is obligated to pay

HACS an annual contribution. See Tr. 14:10-14:15 (“[DEFENDANT’S COUNSEL]:

[T]he first step in this process is that there’s a fairly crisp mathematical calculation done

to determine how much a given PHA is entitled for an annual -- for the year. It’s broken

into 12 pieces and those are the monthly portions and then those are allocated for the

use of the PHA.” (emphasis added)). Given this admitted obligation and HACS’s claim

that HUD failed to make those obligatory payments, the Court is convinced that the

FAC states a plausible claim for monetary relief. In sum, then, the Court agrees with

HACS that, in general, “[t]here is no question that HUD owes a [contractual] duty to

provide HACS its annual contributions” because “[t]his is the purpose of the ACC.” Pl.

Resp. at 24.

The government’s primary arguments for dismissal for failure to state a claim are

that: (1) “the actions HUD took were expressly authorized by the ACC, statute, and

applicable regulations”; and (2) “HACS failed to identify with specificity a violation of

any provision of the ACC that would give rise to a breach of contract claim.” Def. Rep.

at 1. The government is all over the map. In arguing that HUD’s withholding of the

sums at issue was authorized, the government necessarily would have to concede that,

if the government lacked such authorization pursuant to the HACS ACC, the result

would be a breach of contract.

With regard to whether HACS has identified a violation of the HACS ACC with

sufficient specificity, the Court concludes that HACS’s reliance upon Section 3 of the

contract is adequate to satisfy Rule 12(b)(6) standards. The HACS ACC itself suggests as

much since, as explained above, Section 3 of the parties’ contract provides that “HUD

shall provide annual contributions to the [P]HA in accordance with all applicable

55Or, if the ACC provided HUD with some amount of discretion to withhold the funds, did the

agency exercise its discretion reasonably or did HUD act in an arbitrary and capricious fashion,

thus (possibly) violating the implied duty of good faith and fair dealing inherent in every

contract, including the parties’ ACC.

- 41 -

statutes, executive orders, regulations, and this ACC.” ECF No. 20-1, at 2 (HACS ACC,

Part A, § 3) (emphasis added); see FAC ¶¶ 5–6, 19–20. The government contends that

this ACC provision “only states a truism,” relying upon this court’s decision in PHADA,

130 Fed. Cl. at 536. Def. Mot. at 30. Defendant is correct that PHADA characterized the

final sentence of HACS ACC § 3 as “simply recit[ing] a truism[,]” 130 Fed. Cl. at 534,

but the government takes that snippet entirely out of context.

In that part of the PHADA decision, Judge Kaplan addressed the government’s

argument that “HUD’s failure to comply with Title 24 did not constitute a breach of

contract because the ACCs contemplated that their terms were subject to both existing

and future applicable laws, including the 2012 Appropriations Act.” Id. Judge Kaplan

rejected the government’s argument, holding that the “ACCs contain no express

statement of intent to incorporate by reference into the contract any statutory provisions

that might be enacted in the future, or even any statute in existence at the time of the

contracts’ executions.” Id. Thus, in PHADA, the government relied upon the very same

language HACS does here, but for a different purpose — to argue that the terms of the

2012 Appropriations Act were incorporated into the ACC by reference. See Defendant’s

Motion to Dismiss and Cross-Motion for Summary Judgment at 14 (ECF No. 41 at 20),

Pub. Hous. Authorities Directors Ass’n v. United States, 130 Fed. Cl. 522 (2017) (No. 13-

00006) (Feb. 12, 2016) (arguing that “the ACCs require compliance with statutes and

regulations”). Notably, the entire premise of the government’s argument in that case

was that HUD is obligated to pay a housing authority various sums under an ACC, but

that HUD had paid correctly the plaintiffs in that case. The government does not

demonstrate in its motion to dismiss that it correctly has paid HACS as a matter of law.

In any event, the government’s reliance upon PHADA here is puzzling given

that: (1) the government did not contest, in PHADA, this Court’s jurisdiction to decide a

breach of contract claim based upon the ACC and the Tucker Act; and (2) Judge Kaplan

specifically concluded that while the housing authority plaintiffs in PHADA “did not

bargain for the right to have HUD employ a particular methodology for determining

their operating subsidy payments in the event of a budget shortfall[,] . . . they did

bargain for the right to require HUD to use whatever methodology was set forth in the

regulations at Title 24 of the C.F.R., as amended from time to time.” 130 Fed. Cl. at

533.56 Indeed, Judge Kaplan explained the basic purpose of the ACC (and its statutory

framework) as follows:

56See also 130 Fed. Cl. at 532 (“These express statements of intent that HUD’s Title 24

regulations, as amended, are incorporated into the contract, are sufficient to establish that the

parties undertook a contractual obligation to comply with the terms of those regulations.

Indeed, the government does not argue otherwise. The Court turns, therefore, to the question

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The Housing Act requires that “the provisions for [ ] annual

contributions” made to PHAs be embodied “in a contract

guaranteeing their payment.” 42 U.S.C. § 1437c(a)(1); see also

24 C.F.R. § 990.115 (defining an ACC as “a contract prescribed

by HUD for loans and contributions, which may be in the

form of [an] operating subsidy, whereby HUD agrees to

provide financial assistance and the PHA agrees to comply

with HUD requirements for the development and operation

of its public housing projects”). Accordingly, each of the PHA

plaintiffs in this case is a party to an ACC with HUD that

outlines the terms and conditions pursuant to which they are

entitled to receive operating subsidies.

PHADA, 130 Fed. Cl. at 526–27 (emphasis added) (quoting ACC § 3 for the proposition

that “[t]he contracts further require HUD to provide annual contributions to the PHAs

‘in accordance with all applicable statutes, executive orders, regulations, and this ACC’”

(emphasis added)).

Once again, HACS’s claim, as alleged in the FAC, is simple: the HACS ACC

“guarantee[s] . . . payment” of certain funds to HACS, see PHADA, 130 Fed. Cl. at 526–

27 (discussing 42 U.S.C. § 1437c(a)(1)), such funds were allocated to HACS (presumably

as part of the annual budgeting process described in the ACC), but HUD has prevented

HACS, improperly and without basis, from actually utilizing those funds. FAC ¶¶ 21,

25; Pl. Resp. at 24–25. In that regard, HACS certainly has alleged sufficient facts

plausibly demonstrating that HUD had no basis to deny HACS the sums it seeks and to

which it is entitled. If HACS can prove the allegations in its FAC — or if HUD cannot

explain the legal and factual basis for the withholding of funds that otherwise should

have been paid — HACS will have shown a breach of contract or, at the very least, a

breach of the implied duty of good faith and fair dealing.57

of whether HUD violated that contractual obligation in its allocation of operating subsidies to

Plaintiffs in 2012.” (emphasis added)).

57Tr. 24:22-25:1 (“[DEFENDANT’S COUNSEL]: Your Honor, to the extent that you are looking

for, you know, a regulation or term that says, you know, HUD can act with absolute discretion,

you know, unreasonably if it chooses, obviously, there isn’t something like that.”); Tr. 36:5-36:12

(“[DEFENDANT’S COUNSEL]: . . . I mean, ultimately, the question is you unreasonably

exercised the, you know, statutory or regulatory actions. You know, obviously, there isn’t a

regulation out there in this framework of 2 CFR, 24 CFR, that says HUD can act with impunity

to do whatever it wants regardless of reasonableness or arbitrariness.”).

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With that in mind, the Court turns to the government’s second argument in

support of its RCFC 12(b)(6) motion: that HUD’s actions, in withholding HACS’s

funds, “were expressly authorized.” Def. Rep. at 1. In that regard, the government

criticizes the FAC for “offer[ing] no facts explaining . . . nor any reference to the ACC or

applicable statute that would support its assertion that HUD had no grounds to place

HACS on zero-dollar threshold.” Def. Mot. at 32. But how is HACS supposed to allege

facts “proving a negative, a logical impossibility”? DJ Mfg. Corp. v. United States, 33 Fed.

Cl. 357, 359 (1995); see Walther v. Sec’y of Health & Human Servs., 485 F.3d 1146, 1150 (Fed.

Cir. 2007) (“our legal system rarely requires a party to prove a negative”); Pecorell v.

Sec’y of the Dep’t of Health & Human Servs., 2008 WL 1903167, at *1 (Fed. Cl. Apr. 11,

2008) (acknowledging “the general principle that one cannot prove a negative”). The

government asserts that “HUD has explicit authority to impose additional specific

conditions on funds based on a PHA’s performance[,]” but the government cites no

authority whatsoever for that proposition. Def. Mot. at 32.

The government further asserts that “HUD has the right to terminate, withhold,

reduce, or order corrective actions on the availability of program funds to a PHA that

fails to substantially comply with any provision of the public housing program or has a

history of failing to comply with the terms of conditions of a Federal award, fails to

meet performance goals, or is not otherwise responsible.” Def. Mot. at 33 (emphasis

added) (citing ACC, statutory, and regulatory provisions).58 That assertion is

problematic for at least two reasons.

The first problem with that broad assertion is that HACS has alleged facts that,

taken as true at this stage, demonstrate that HACS has been, and is, in substantial

compliance with ACC, statutory, and regulatory requirements. FAC ¶¶ 11–13. To the

extent that HACS was the subject of adverse audit findings, HACS alleges it has cured

any problem, and thus the agency has no basis to continue to withhold the funds HACS

seeks. Id. If the government disagrees, that is a factual disagreement that must be

resolved via summary judgment or at trial. That HUD generally may have a “right,

pursuant to the ACC and the incorporated regulatory framework, to place conditions on

the receipt of PHA subsidies[,]” Def. Rep. at 8 (emphasis in original), does not

demonstrate, as a matter of law, that such a contractual right properly was exercised in

light of the FAC’s alleged facts.

58As explained further below, the government at oral argument relied only upon provisions

from 2 C.F.R., however – and abandoned the others cited in its motion. Tr. 33:11-33:25.

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The second problem with the government’s assertion regarding its putative

power to limit “the availability of programs funds” provided to HACS, Def. Mot. at 33,

is that the government simply could not explain the mechanics of such withholding.59

During oral argument, counsel of record for the government retreated to relying upon

only 2 C.F.R. §§ 200.205, 200.207, and 200.338.60 Putting aside the question of whether

those regulatory provisions were incorporated into the HACS ACC,61 the government

was unable to justify HUD’s particular actions with respect to HACS, and about which

HACS complains in its FAC.

59 For example, the government, in its motion, contends that “[t]hresholds may be set as low as

‘zero-dollar,’ thereby requiring HUD review of each requested draw down.” Def. Mot. at 5.

Conspicuously absent from this quote, from anywhere else in the government’s motion, or from

its oral argument, is any authority supporting the proposition that a so-called “zero-dollar

threshold” exists – much less any explanation concerning how such a restriction operates,

consistent with the regulations upon which the government primarily relied during oral

argument.

60See Tr. 33:11-33:25. Although the government cited 24 C.F.R. § 905.804 (“Sanctions”) in its

motion to dismiss, Def. Mot. at 4 & 8, the government did not rely upon that provision at oral

argument. That regulation provides that “[if] HUD finds that a PHA has failed to comply

substantially with any provision [of] this part, HUD may impose one or a combination of

sanctions, as it determines is necessary.” 24 C.F.R. § 905.804(a) (emphasis added). Perhaps the

government declined to defend that citation because HUD did not or cannot establish such a

compliance failure at the motion to dismiss stage, or because the provision requires HUD to

follow a specific appeals process “[b]efore taking any [such] action” but that did not occur. Id.

§ 905.804(b) (emphasis added). Either way, the citation raises more questions than it answers.

The government also cited 24 C.F.R. § 907.7 in its motion to dismiss, see Def. Mot. at 8. But, that

provision covers “[r]emedies for substantial default[.]” Thus, even assuming that the

government had pressed this provision at oral argument, which it did not, and even assuming

that HUD maintained that HACS was in “substantial default” here, which does not appear to be

the case, that provision cannot be applied to achieve a dismissal as a matter of law at the motion

to dismiss stage, given the facts alleged in the FAC. This extreme lack of clarity further

demonstrates why discovery is warranted.

61The provisions from 2 C.F.R. upon which the government relies were issued after the parties

executed the HACS ACC. While the HACS ACC “incorporates by reference in to this ACC

those regulations issued by HUD for the development, modernization, and operation of public and

Indian housing projects contained in Title 24 of the Code of Federal Regulations, as said Title

shall be amended from time to time[,]” ECF No. 20-1 at 2 (HACS ACC, Part A, at 1) (emphasis

added), the parties thus far appear to assume that the Title 2 C.F.R. provisions were

incorporated into the HACS ACC via the amendment of Title 24 C.F.R. The Court proceeds on

the same basis for the purposes of resolving the government’s motion to dismiss, but is

uncertain whether the government is correct about Title 2 C.F.R. See PHADA, 130 Fed. Cl. at

534-35.

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For example, 2 C.F.R. § 200.205 primarily imposes obligations on a federal

agency to conduct a “review of risk posed by [grant] applicants.” That regulation

further provides that a “prior Federal award recipient must demonstrate a satisfactory

record of executing programs or activities under Federal grants, cooperative

agreements, or procurement awards; and integrity and business ethics.” 2 C.F.R.

§ 200.205(a)(2). In this case, however, the government does not dispute that the ACC

already has been awarded — and the funds themselves allocated via the operating

budget process. See Tr. 14:1-9 (“THE COURT: [§ 200.207] refers to pre-federal award

requirements and contents of federal awards and looks like it has -- it gives the power

to the Government to insert award conditions into the award itself, as opposed to

imposing conditions on already-awarded funds. How do we get to already-awarded

funds? [DEFENDANT’S COUNSEL]: Your Honor, I think -- in this case, I think we’re -

- the award is -- this is where the language gets a little nebulous, I suppose.”); Tr. 27:9-

25 (“THE COURT: [M]y understanding is that the money that’s paid into LOCCS, at

that point, the award has already been made. [DEFENDANT’S COUNSEL]: “[T]he

amount has been allocated[.] . . . THE COURT: I think they’ve demonstrated that the

award has been made already. They’ve already submitted an operating budget, correct,

at that point, once the funds are in the LOCCS account? [DEFENDANT’S COUNSEL]:

Yes, Your Honor.”).

It is far from clear that § 200.205 addresses anything other than pre-award

considerations and conditions that may be imposed at the time of an award. Id.

§ 200.205(b) (“If the Federal awarding agency determines that a Federal award will be

made, special conditions that correspond to the degree of risk assessed may be applied

to the Federal award. Criteria to be evaluated must be described in the announcement of

funding opportunity described in § 200.203 Notices of funding opportunities.” (emphasis

added)); id. § 200.205(a)(2) (“The Federal awarding agency may make a Federal award

to a recipient who does not fully meet these standards, if it is determined that the

information is not relevant to the current Federal award under consideration or there are

specific conditions that can appropriately mitigate the effects of the non-Federal entity’s

risk in accordance with § 200.207 Specific conditions.” (emphasis added)). Section

200.207 is not particularly helpful to the government here either, as that provision

appears to apply only prior to or as part of a specific award. See 2 C.F.R. § 200.207

(“Specific conditions.”). Indeed, both §§ 200.205 and 200.207 are contained within 2

C.F.R. Subpart C - Pre-Federal Award Requirements and Contents of Federal Awards

- 46 -

(emphasis added). These regulations provide no indication that HUD is empowered to

sanction HACS during its performance of the already awarded ACC or to restrict the

funds already allocated to HACS pursuant to the ACC and its budgeting process.62

The government’s reliance upon 2 C.F.R. § 200.338 is an improvement, at least

insofar as it covers “[r]emedies for noncompliance” following the award of an

agreement, contained, as the provision is, within 2 C.F.R. Subpart D - Post Federal

Award Requirements (emphasis added). Thus, that provision at least does appear to

permit a Federal agency to “impose additional conditions” specified in § 200.207, but

only where a “non-Federal entity fails to comply with Federal statutes, regulations or

the terms and conditions of a Federal award.” 2 C.F.R. § 200.338. During oral

argument, however, the government could not identify even a single such triggering

compliance failure on the part of HACS.63 Instead, the government relies solely upon a

letter from HUD to HACS that the government submitted as Exhibit A in support of the

motion to dismiss. See ECF No. 22-1 (Aug. 3, 2017 Letter from Cheryl J. Williams,

Director, Office of Public Housing, New Orleans Field Office, HUD to Sheila Danzey,

Executive Director, HACS). Nowhere in that letter, however, does HUD identify a

single compliance violation of “Federal statutes, regulations, or the terms and

conditions of a Federal award.” 2 C.F.R. § 200.338.64

62Tr. 27:21–28:6 (“THE COURT: I think they’ve demonstrated that the award has been made

already. They’ve already submitted an operating budget, correct, at that point, once the funds

are in the LOCCS account? [DEFENDANT’S COUNSEL]: Yes, Your Honor. THE COURT:

And the operating budget has been approved? [DEFENDANT’S COUNSEL]: I believe so.

THE COURT: That’s how the money winds up in the account in a particular amount.

[DEFENDANT’S COUNSEL]: Yes.”).

63Tr. 17:25-18:11 (“THE COURT: [2 C.F.R. § 200.]338 says that HUD can impose additional

conditions described in .207, as you just said, where a nonfederal entity fails to comply with

statutes, regulations or the terms and conditions of the federal award. So what statute,

regulation or terms and conditions of an existing federal award did the Housing Authority fail

to comply with? [DEFENDANT’S COUNSEL]: Your Honor, to be perfectly frank, I’m not sure

that I have gotten to that point yet because we haven’t really delved into the merits of the

complaint, beyond what is fairly generally, as I think you pointed out, contained in the letter.”

(emphasis added)). That colloquy is a striking admission that (1) disputed facts are at issue

here, and (2) the parties’ disagreement cannot be resolved at this stage, as a matter of law.

Although the government referenced certain audit reports as possibly identifying such

violations, the government did not point to any specific findings, and did not even “know

[whether] they’re attached to anything that we have [filed] yet.” Tr. 18:12-18:21 (the Court

noting that at least some such audit reports had been attached in Exhibit B to the government’s

motion). In any event, the FAC appears to challenge any agency conclusions or actions derived

from the audit reports in question.

64In the August 3, 2017 letter, HUD mistakenly cites regulatory provisions contained in “Title

24 Code of Federal Regulations (CFR).” The provisions HUD intended to reference actually are

- 47 -

Even if the government had been able to identify a putative HACS compliance

failure sufficient to justify HUD’s actions, that would merely beg the question the FAC

fairly raises: whether the government had a factual predicate to support the imposition

of “additional conditions” pursuant to 2 C.F.R. § 200.338; or, if the government had

discretion to impose such conditions, whether it exercised such discretion consistent

with the implied duty of good faith and fair dealing inherent in every contract.

With respect specifically to the zero-dollar threshold review process that HUD

imposed on HACS — and about which HACS complains, see FAC ¶ 12 — the

government relies upon 24 C.F.R. § 990.210(a). Although that regulation does permit

HUD to establish certain “thresholds,” it is entirely unclear what that term actually

means as a practical matter. That is because the regulations, at the outset, appear to

command payment to a housing authority in a particular manner: “HUD shall make

monthly payments equal to 1/12 of a PHA’s total annual operating subsidy under the

formula by electronic funds transfers through HUD's automated disbursement system.”

Id. (emphasis added). The same regulation further provides that “HUD shall establish

thresholds that permit PHAs to request monthly installments.” Id. Nothing suggests

that HUD may employ this regulation, however, to entirely preclude a housing

authority from accessing payments that HUD otherwise is required to make.

The government asserts, without any supporting authority, that “[t]hresholds

may be set as low as ‘zero-dollar[.]’” See Def. Mot. at 5. Although 24 C.F.R. § 990.210(a)

does indicate that “[r]equests by PHAs that exceed these thresholds will be subject to

HUD review[,]” the regulation also provides that “HUD approvals of requests that

exceed these thresholds are limited to PHAs that have an unanticipated and immediate

need for disbursement.” 24 C.F.R. § 990.210(a) (emphasis added). Read literally, however,

the Court does not understand how an amount exceeding a threshold could ever be

“unanticipated” if the total monthly subsidy is computed in advance via a formula. The

government was unable to explain how all of this language actually works (or is

supposed to work), and, a noted above, the government could not point to any HUD

regulation (or even a manual or other sub-regulatory guidance) describing the agency’s

supposed power to impose, or the mechanics of, a zero-dollar threshold.65 See Use of

in Title 2, specifically 2 C.F.R. §§ 200.207, 200.338. ECF No. 22-1, at 2.; see 15:14-16:3 (discussing

the letter’s error). Notably, the letter does not mention any of the other provisions the

government cited in its motion but then declined to defend at oral argument. Def. Mot. at 4, 8.

65E.g., Tr. 38:8-11, 21-25 (“[DEFENDANT’S COUNSEL]: So to be fair, Your Honor, I’m not

entirely confident -- and I will say this, I’m not confident that operating subsidy is the same

thing as operating fund. It may be. . . . THE COURT: So 990, the whole section, is operating

fund. That doesn’t cover capital fund. [DEFENDANT’S COUNSEL]: Yes, . . . I do not know

what the breakdown is in terms of . . . what has been requested that has not been disbursed”);

Tr. 39:6-12 (THE COURT: “[H]ow does it normally work with the request for monthly

- 48 -

eLOCCS (electronic Line of Credit Control System) to Request Operating Subsidy Payments

and Elimination of Form HUD-52721, PIH 2002-28 (HA) (Dec. 24, 2002), at §§ 4.C – 4.E

(describing process for “[e]stablishing the amount available for drawdown in LOCCS,”

noting that there may be a “Retained Disbursement” for “an amount owed HUD,” and

explaining that there are “two threshold edits . . . established to regulate the maximum

drawdown amounts,” including the “[p]er month calculated threshold” and the

“[c]umulative calculated threshold[,]” but without any mention of a zero-dollar

threshold option).66

Moreover, while 24 C.F.R. § 990.210 applies only to the “operating subsidy” or

“operating fund,”67 the restrictions HUD imposed upon HACS applied to both

operating funds and capital funds. ECF 22-1 at 2. The government, however, has no

idea what amounts were being withheld from HACS that fall into the operating, as

opposed to the capital, funds category.68 How, then, can the government confidently

assert that it is nevertheless empowered to impose a so-called “zero-dollar” threshold

on all such funds? See Def. Mot. at 5.

The government does not dispute that it is withholding funds from HACS. That

being the case, if the government is going to argue that the HACS’s claims should be

dismissed as a matter of law, prior to any discovery, the government should be able to

walk the Court through — with a high-degree of precision — exactly what is being

withheld, relating to what years, why, and pursuant to what contractual, statutory

and/or regulatory authority. The fact that the government at oral argument could not

explain, in detail, how the HUD programs and the HACS ACC at issue are supposed to

function, gives the Court little to no confidence in the government’s arguments in favor

of dismissal. For example, consider this exchange during oral argument:

THE COURT: And this [regulation] just says, HUD shall

establish thresholds that permit PHAs to request monthly

installments. I don’t even understand how this normally

installments? [DEFENDANT’S COUNSEL]: Getting into the weeds, I’m not sure I am able to

answer that question.”).

66 https://www.hud.gov/sites/documents/DOC_9306.pdf (last visited July 24, 2020).

67 See 24 C.F.R. Subpart E - Determination and Payment of Operating Subsidy.

68Tr. 37:5-40:3 (“[DEFENDANT’S COUNSEL]: Yeah, no, you’re right, it is. I do believe it is the

operating fund amount. THE COURT: Okay. [DEFENDANT’S COUNSEL]: That this

specifically is to operating fund. THE COURT: Right. So 990, the whole section, is operating

fund. That doesn’t cover capital fund. [DEFENDANT’S COUNSEL]: Yes, Your Honor. And I

do not know what the breakdown is in terms of what is being – what has been requested that

has not been disbursed, to the extent that that is true.”).

- 49 -

works. I mean, normally, just your normal, run-of-the-mill

situation, one-twelfth gets transferred. . . . [H]ow does it

normally work with the request for monthly installments?

[DEFENDANT’S COUNSEL]: When you say normally in

terms of, you know, not in this situation?

THE COURT: Correct.

[DEFENDANT’S COUNSEL]: Getting into the weeds, I’m not

sure I am able to answer that question. I know it goes into --

that one-twelfth goes into the LOCCS system.

...

THE COURT: I guess what I’m trying to understand is what

is the difference between a threshold and the one-twelfth --

whatever the one-twelfth number is?

[DEFENDANT’S COUNSEL]: I will be perfectly honest with

Your Honor, I was going through that this morning and I am

not sure.

Tr. 40:1-4.

Or, take this exchange with government counsel during oral argument:

[DEFENDANT’S COUNSEL]: Well, we are in a very difficult

situation from the one you described because, in this case, it’s

not a reimbursement. These are funds that are intended to be

used in a particular manner for particular activities, and

pursuant to this regulatory scheme, a very complicated –

THE COURT: It’s 2016 and 2017. It’s done. The years are

done. How can that be? It’s not prospective.

[DEFENDANT’S COUNSEL]: I mean, perhaps that’s another

problem.

THE COURT: Give me one example of the type of money that

they want that the Government – you articulate HUD’s

position here for me, the United States’ position that there’s

money in an account in 2016 that was deposited for operating

and capital funds for which they now want money dating

back to 2017 that they cannot get because they’re out of

- 50 -

compliance. Just one example of one dollar of what it is and

what they want and why they can’t have it. I don’t get it.

[DEFENDANT’S COUNSEL]: And, Your Honor, some of this

goes to exactly how that disbursement process works that we haven’t

quite ironed out yet.

Tr. 49:12-50:9 (emphasis added).

The government’s motion to dismiss for failure to state a claim relies upon

HUD’s putative contractual powers. How, then, can the government ask for a merits

dismissal pursuant to RCFC 12(b)(6), but not be prepared to explain the mechanics of

the Capital Fund and Operating Fund programs and the HACS ACC, their

contemplated budgeting and payment processes, and HUD’s contractual powers as

they presumably were employed here? That is not meant as a rhetorical question. The

answer is that the government should not have sought such a dismissal here without

being able to address those questions in detail. The government’s motion to dismiss for

failure to state a claim is DENIED.

Perhaps following some further research and discovery, the parties will be better

positioned to explain the payment and withholding mechanics at issue in this case (i.e.,

in a motion for summary judgment or at trial). At this point, however, HACS has

alleged sufficient facts in support of its claims that HUD improperly has withheld

payments in violation of the HACS ACC.

* * * * *

CONCLUSION

For all of the foregoing reasons, the government’s motion to dismiss is DENIED.

The parties are directed to file a joint status report on or before August 26, 2020,

proposing a schedule for discovery.

Furthermore, if the Justice Department’s Commercial Litigation Branch, after

consulting with the Office of the Solicitor General (“OSG”), in fact no longer stands by the

latter’s view of the Tucker Act and the APA – in the context of an alleged breach of an

ACC – as articulated in the confession of error brief submitted to the Seventh Circuit in

Greenleaf, the government may file a supplemental brief on or before August 10, 2020,

not to exceed five (5) pages. In that brief, the government shall explain the reason for its

revised view, as well as how its new position fits with the government’s representations

at oral argument.

- 51 -

Alternatively, if the government believes that the Greenleaf ACC provisions

and/or the claims at issue in that case are distinguishable – for jurisdictional purposes –

from those at issue here, the government may file a supplemental brief on or before

August 10, 2020, not to exceed five (5) pages, in which the government shall compare

the various ACC provisions and claims. Such supplemental brief shall include as

attachments both the complaint against HUD in Greenleaf, as well as the operative

ACC(s) in that case.

The government may file only one of the supplemental briefs specified above.

To be clear, given the government’

This text is long and has been trimmed here. Open the source document for the complete record.