Opposition — Portsmouth Redevelopment & Housing Authority v. Pierce

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No. 83-90

Ditice Susseme Court, US,

FILED

In the Supreme Court of the Unite b Ptyps 1983

OCTOBER TERM, 1983

ALEXANDER L. STEVAS,

PORTSMOUTH REDEVELOPMENT AND HOUSING AUTHORIP¥E®*

PETITIONER

SAMUEL R. PIERCE, JR., SECRETARY OF HOUSING AND

URBAN DEVELOPMENT, ET AL.

ON PETITION FORA WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

Rex E. LEE

Solicitor General

J. PAUL McGRATH

Assistant Attorney General

ROBERT S. GREENSPAN

FREDDI LIPSTEIN

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

GERSHON M. RATNER

Associate General Counsel

for Litigation

HOWARD M. SCHMELTZER

Special Assistant

SUZANNE CURT

Attorney

Department of Housing and

Urban Development

Washington, D.C. 20410

QUESTION PRESENTED

Whether the court of appeals correctly concluded that

jurisdiction over this suit seeking operating subsidies, in

excess of $10,000, pursuant to a contract between petitioner

and the Department of Housing and Urban Development

lies exclusively in the United States Claims Court.

(I)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

A.L. Rowan & Son vy. Department of Housing

& Urban Development, 611 F.2d 997 ......... 9

Alamo Navajo Bd., Inc. v. Andrus,

664 F.2d 229, cert. denied, 456 U.S.

| RIGA Pe EPG ares Pg ete 7

American Science & Engineering, Inc. v.

Ce STE CME Sictcecesecuceeeneanes 7

Austin vy. United States, 206 Ct. Cl. 719,

COTE, RIE, Ge Fee EE cde secccciccwseces 8

B.K. Instrument, Inc. v. United States,

No. 83-6124 (2d Cir. Aug. 4, 1983) .......008. &

Breitbeck v. United States, 500 F.2d 556........ 6

Chicago Consortium, Inc. v. Brennan,

DN aE Cas ccahera nt cave deaweteaeeerens 7

Estate of Watson v. Blumenthal, 586 F.2d

Ds d vi Laveen a neavehs anes b ih eaneesensanewe 7

FHA Vv. Burr, 309 U.S. 242 .. ccc ccc cece eenees 10

(III)

Cases—Continued:

Ferguson vy. Union National Bank,

ee hr ere ee

Graham vy. Henegar, 640 F.2d 732 ....ccceeeees

Hoopa Valley Tribe v. United States,

FIG P.E GSS: é etetacvectcovcecscenebeaaese

International Engineering Co. v. Richardson,

512 F.2d 573, cert. denied, 423 U.S. 1048 ......

Keifer & Keifer v. RFC, 306 U.S. 381 ......005-

Rotter ¥. MSPR GTO F.2e AMM sok cccoscivenes

L’Enfant Plaza Properties, Inc. v. United States,

O66 Fae S20) ccc civevcansiasseucnasenaenan

Lee v. Blumenthal, 588 F.2d 1281 .......0eeees

Lenoir v. Porters Creek Watershed District,

SO6 Fe POS nnd cccdsacewdessntiereeen

Lomas & Nettleton Co. v. Pierce,

GOS Fie ST) es cwavcsdbuccbecsbececeens are

Mar v. Kleppe, 520 F.2d 867 ........eeeeeveees

Marcus Garvey Square, Inc. v. Winston Burnett

Construction Co., 595 F.2d 1126 ......eeeeeee

RFC v. Menihan Corp., 312 U.S. 81 ....eeeeees

S.J. Groves & Sons Co. v. United States,

OS F. Sam. BOE a cccccccccvcceccvecceseces

S.S. Silberblatt v. East Harlem Pilot

- |S > BPR ee

United States v. Mitchell, No. 81-1748

et EE, Ge «6-0 2-0.6-504000500008405000n0RN

Page

Statutes and regulation:

National Housing Act, 12 U.S.C. 1702 ........ 8,9

Tucker Act:

28 U.S.C. (& Supp. V) 1331 .......eeee 4,6,7

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United States Housing Act of 1937, 42 U.S.C.

(& Supp. V) 1401 ef seq. :

MU Es BOE co cccccccccccns 2, 4, 5, 6, 8,9

42 U.S.C. (Supp. V) 1437c(a) ... cee cee ee eee 3

42 U.S.C. (& Supp. V) 1437g ...... ee ees 3,4

42 U.S.C. (Supp. V) 1437g(a)(1) ow. ce eee eee 3

42 U.S.C. (Supp. V) 1437] wn. cece eee eens 3

Pub. L. No. 97-248, § 402(c)(17), 96 Stat.

aCe U.8.0. ESOGLR)) 2c ccccccsccecces &

Pub. L. No. 97-164, § 133(a)(1), 96 Stat. 39

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In the Supreme Court of the Wnited States

OCTOBER TERM, 1983

No. 83-90

PORTSMOUTH REDEVELOPMENT AND HOUSING AUTHORITY,

PETITIONER

Vv.

SAMUEL R. PIERCE, JR., SECRETARY OF HOUSING AND

URBAN DEVELOPMENT, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. Al-A21) is

reported at 706 F.2d 471. The opinion and order of the

district court (Pet. App. B1-B54) are unreported.

JURISDICTION

The judgment of the court of appeals was entered on

April 27, 1983 (Pet. App. A2). A petition for rehearing was

denied on June 20, 1983 (Pet. App. A22-A23). The petition

for a writ of certiorari was filed on July 19, 1983. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATUTES INVOLVED

The Tucker Act, 28 U.S.C. 1346(a)(2) and 1491, as

amended, provides in pertinent part:

(1)

1346(a) The district courts shall have original juris-

diction, concurrent with the United States Claims

Court, of:

(2) Any other civil action or claim against the

United States, not exceeding $10,000 in amount,

founded either upon the Constitution, or any Act of

Congress, or any regulation of an executive depart-

ment, or upon any express or implied contract with the

United States, or for liquidated or unliquidated dam-

ages in cases not sounding in tort, except that the

district courts shall not have jurisdiction of any civil

action or claim against the United States founded upon

any express or implied contract with the United States

or for liquidated or unliquidated damages in cases not

sounding in tort which are subject to sections 8(g)(1)

and 10(a)(1) of the Contract Disputes Act of 1978.

1491 The United States Claims Court shall have

jurisdiction to render judgment upon any claim against

the United States founded either upon the Constitu-

tion, 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.

42 U.S.C. 1404a provides in pertinent part:

The United States Housing Authority may sue and

be sued only with respect to its functions under this

chapter, and sections 1501 to 1505 of this title.

STATEMENT

1. Petitioner Portsmouth Redevelopment and Housing

Authority (PRHA) is a public housing authority that oper-

ates six low income housing projects in Portsmouth, Vir-

ginia. PRHA receives debt service subsidies and operating

subsidies pursuant to provisions of the United States Hous-

ing Act of 1937,42 U.S.C. (& Supp. V) 1437c(a) and 1437g,

and a consolidated annua! contributions contract (ACC)

with the Department of Housing and Urban Development

(HUD).

When PRHA entered into the ACC in 1976, 42 U.S.C.

1437g provided in pertinent part: “The Secretary shall

embody the provisions for such annual contributions

[operating subsidies] in a contract guaranteeing their pay-

ment subject to the availability of funds.” The ACC itself

embodies this statutory provision.' In 1979, Congress

amended that provision by adding to the above-quoted

sentence the following clause: “and such contract shall

provide that no disposition of the lower income housing

project, with respect to which the contract is entered into,

shall occur during and for ten years after the period when

contributions were made pursuant to such contract unless

approved by the Secretary.”42 U.S.C. (Supp. V) 1437g(a)(1).

The Secretary implemented the amendment by issuing a

regulation requiring amendments to all ACCs embodying

the housing authority's agreement to continue operating its

low income housing after it stops receiving federal subsi-

dies. 24 C.F.R. 869.105. PRHA refused to execute the

amendment to its ACC, and HUD began withholding oper-

ating subsidies. See Pet. App. B2-B3; B25-B31. HUD also

declined to consider PRHA'’s application for moderniza-

tion funds under 42 U.S.C. (Supp. V) 1437/ because PRHA

failed to sign the amendment to its ACC. See Pet. App.

B31-B33.

‘Paragraph 415(D) of the ACC states:

The Government shall also make Additional Annual Contribu-

tions to the Local Authority (a) for each Fiscal Yearinan amount

which together with all other Operating Receipts of the Projects

will be sufficient to pay the Operating expenditures of such Pro-

jects in accordance with the Operating Budgets for such projects

as approved by the Government * ® °.

2. PRHA filed suit in the United States District Court

for the Eastern District of Virginia seeking to compel HUD

to release the withheld operating subsidies pursuant to the

ACC. PRHA sought to recover more than $676,000 in

withheld funds. It also sought an order requiring HUD to

consider its application for modernization funds without

regard to whether PRHA had signed the required amend-

ment to the ACC.

Ruling on cross motions for summary judgment, the

district court first rejected HUD’s contention that exclusive

jurisdiction over this contract action was in the United

States Claims Court, holding that it had federal question

jurisdiction under 28 U.S.C. (& Supp. V) 1331 (Pet. App.

B7-B17). The district court also concluded that 42 U.S.C.

1404a waived HUD's sovereign immunity and therefore

that PRHA was entitled to pursue its claim (Pet. App.

B!1-B12). On the merits, the court held that HUD could not

apply the statutory amendment to 42 U.S.C. (& Supp. V)

1437g and its implementing regulation to PRHA’s existing

ACC or to its application for modernization funds, and it

permanently enjoined HUD from doing so (Pet. App.

B33-B54).

3. The court of appeals agreed that 42 U.S.C. 1404a

waived HUD’s sovereign immunity (Pet. App. A20). The

court held, however, that exclusive jurisdiction over the

action lay in the United States Claims Court. The court of

appeals therefore vacated the district court's judgment and

remanded with instructions to transfer the case to the

Claims Court (id. at Al-A21).

The court of appeals explained that PRHA’s lawsuit

satisfies all the criteria needed to vest subject matter juris-

diction exclusively in the Claims Court under the Tucker

Act, 28 U.S.C. (& Supp. V) 1346(a)(2). First, the claim is

asserted against a federal agency and its officials for acts

performed in their official capacity, and any judgment

recovered would expend itself on the federal Treasury (Pet.

App. Al0-A11). Second, the recovery sought plainly exceeds

$10,000 (id. at All-A12). Third, the claim is primarily

founded on a contract with the government (id. at Al4-

A16) and, in any event, the Tucker Act confers jurisdiction

on the Claims Court to consider claims founded on the

Constitution or federal statutes (id. at A16).

The court of appeals further held that jurisdiction in the

Claims Court was not defeated because the complaint also

seeks declaratory and injunctive relief. The court explained

that “framing an essentially monetary claim in injunctive or

declaratory terms” does not affect Claims Court jurisdic-

tion (Pet. App. Al2, quoting Hoopa Valley Tribe v. United

States, 596 F.2d 435, 436 (Ct. Cl. 1979)), and, moreover, it

stated that the Claims Court can issue declaratory relief that

is “tied to and subordinate to a monetary award” (Pet. App.

A13, quoting S.J. Groves & Sons Co. v. United States, 495

F. Supp. 201, 209 (D. Colo. 1980)). Finally, the court

rejected PRHA's argument that 42 U.S.C. 1404a, establish-

ing that the United States Housing Authority may “sue and

be sued,”? confers subject matter jurisdiction on the district

courts to hear such suits (Pet. App. Al7-A20).

ARGUMENT

The only issue presented here concerns the appropriate

federal forum for this litigation. It is not disputed that

sovereign immunity presents no bar to petitioners’ lawsuit;

the dispute concerns which court has subject matter juris-

diction. Petitioners contend (Pet. 11-29) that jurisdiction

lies in the district court; the court of appeals held that

exclusive jurisdiction lies in the United States Claims Court

because this is a suit “against the United States” within the

?The functions of the United States Housing Authority have been

transferred to the Secretary of HUD. 42 U.S.C. 3534.

meaning of the Tucker Act. and the Tucker Act's specific

grant of Claims Court jurisdiction prevails over the general

grant of federal question jurisdiction in 28 U.S.C. 1331. The

decision below is correct and does not conflict with any

decision of this Court or of another court of appeals.

Accordingly, further review of the question of the proper

forum for this lawsuit is unwarranted.

1. Petitioner does not seriously dispute that the Tucker

Act would permit the Claims Court to exercise jurisdiction

over this case. There is little question that the three

requirements for Tucker Act jurisdiction are satisfied here:

PRHA seeks a money judgment in excess of $10,000; the

claim is founded upon a government contract or federal

law; and the claim is “against the United States” because it is

brought against a federal agency based on its actions (see

L’Enfant Plaza Properties, Inc. v. United States, 668 F.2d

1211, 1212 (Ct. Cl. 1982); Breitbeck v. United States, 500

F.2d 556, 558 (Ct. Cl. 1974)). See generally Pet. App. A8-

A17.) Petitioner instead maintains that the court of appeals

erred in finding that Claims Court jurisdiction was exclu-

sive, thereby rejecting the argument that either 28 U.S.C. (&

Supp. V) 1331 or 42 U.S.C. 1404a confers subject matter

jurisdiction on the district court. See Pet. 14-15, 23.

a. Thecourt of appeals correctly held that subject matter

jurisdiction exists here only in the Claims Court in spite of

the general grant of federal question jurisdiction to the

Petitioners contend (Pet 16-20) that they do not seek to recover

“Treasury funds” because the monies for the operating subsidies have

already been appropriated by Congress and have passed into the con-

trol of the Secretary. We agree with the court of appeals that these

annually appropriated funds are still “Treasury funds” (see Pet. Anp.

All), but this question is not relevant to whether subject matter juris-

diction exists in the Claims Court. Regardless of who has control of the

funds when the lawsuit is filed, a suit against a federal agency to recover

funds already appropriated by Congress plainly satisfies the Tucker Act

requirement of a suit “against the United States.”

district courts in 28 U.S.C. (& Supp. V) 1331. The courts of

appeals have widely recognized that the Claims Court (or its

predecessor, the Court of Claims) has exclusive jurisdiction

over contract actions against the United States where the

amount in controversy exceeds $10,000 and, therefore, that

an action based on a contract may not be pursued under 28

U.S.C. (& Supp. V) 1331, even where the action involves

federal statutes or regulations. Alamo Navajo Bd., Inc. v.

Andrus, 664 F.2d 229, 233 (10th Cir. 1981), cert. denied, 456

U.S. 963 (1982); Lee v. Blumenthal, 588 F.2d 1281, 1282-

1283 (9th Cir. 1979); Estate of Watson v. Blumenthal, 586

F.2d 925, 928, 932 (2d Cir. 1978); American Science &

Engineering, Inc. v. Califano, 571 F.2d 58, 62-63 (Ist Cir.

1978). See also Chicago Consortium, Inc. v. Brennan, 599

F.2d 138, 141 (7th Cir. 1979); International Engineering Co.

v. Richardson, 512 F.2d 573, 577 (D.C. Cir. 1975), cert.

denied, 423 U.S. 1048 (1976).

Moreover, even if this suit is treated as one arising under

the Constitution, federal statutes, or regulations, rather

than as a contract action, it has been held that the more

specific grant of jurisdiction in the Tucker Act for suits over

$10,000, where applicable, prevails over the general grant in

Section 1331. See Keller v. MS PB, 679 F.2d 220, 222(1 1th

Cir. 1982); Graham v. Henegar, 640 F.2d 732, 734-735 (Sth

Cir. 1981); Lenoir v. Porters Creek Watershed District, 586

F.2d 1081, 1087-1088 (6th Cir. 1978). Otherwise, the exclu-

sive jurisdiction of the Claims Court would be largely de-

stroyed because most cases falling within its jurisdiction

could also be brought within the general terms of Section

1331. See Graham v. Henegar, 640 F.2d at 734. Indeed, the

distinction deliberately drawn by Congress in the Tucker

Act between suits for greater than or less than $10,000

would be obliterated. Accordingly, there is no basis here for

Section 1331 jurisdiction in the district court.

Petitioner also objects (Pet. 20-22) that Claims Court

jurisdiction is improper because of the declaratory and

injunctive relief sought. However, as the court of appeals

found (Pet. App. Al2-A14), the essence of this action is the

disgorgement of withheld operating subsidies claimed to be

due under petitioner's contract with HUD,‘ and hence the

lawsuit belongs in the Claims Court. The jurisdiction of the

Claims Court cannot be avoided by masking a monetary

claim as one for equitable relief. See, e.g., B.K. Instrument,

Inc. v. United States, No. 83-6124 (2d Cir. Aug. 4, 1983),

Slip op. 28. Petitioner suffers no deprivation of rights by

being routed to the Claims Court to pursue its action; that

court is empowered to award declaratory relief that is “tied

and subordinate to a monetary award.” Austin v. United

States, 206 Ct. Cl. 719, 723, cert. denied, 423 U.S. 911

(1975). See United States v. Mitchell, No. 81-1748 (June

27, 1983), slip op. 10. n.15.

b. Petitioner contends (Pet. 14-15) that 42 U.S.C. 1404a

itself confers subject matter jurisdiction on the district

courts. This contention finds no support in the language of

the statute, and petitioner cites no case in which 42 U.S.C.

1404a has been held to permit a suit for damages against the

United States in district court. Instead, petitioner relies

(Pet. 24-25) on cases involving the National Housing Act,

12 U.S.C. 1702, which provides in relevant part that the

Secretary may “sue and be sued in any court of competent

jurisdiction, State or Federal” (emphasis added). As the

court of appeals recognized in distinguishing its own prece-

dent under Section 1702 (Pet. App. A18-A20), these cases

‘Indeed, petitioner sought relief other than money damages only after

it amended its complaint. See Pet. &.

‘Petitioner also relies on one case, Mar v. Kleppe, $20 F.2d 867 (10th

Cir. 1975), involving a suit against the Smal! Business Administration

under 1S U.S.C. 634, which contains the same language as 12 U.S.C.

1702.

are manifestly inapposite because the language of that sta-

tute is so different from the language involved here that

decisions under Section 1702 have little bearing on the

question of jurisdiction under Section 1404a. Plainly, Sec-

tion 1702, by authorizing suit “in any court of competent

jurisdiction, State or Federal,” provides a basis for district

court jurisdiction that is absent here. See A.L. Rowan &

Son v. Department of Housing & Urban Development,

611 F.2d 997, 1000-1001 n.3 (Sth Cir. 1980).°

2. Petitioner's contention (Pet. | 1-20) that the decision

below conflicts with decisions of this Court is without merit.

The cases relied upon by petitioner considered only the

question whether the government had waived sovereign

immunity, not which court had subject matter jurisdiction

over the action. Keifer & Keifer v. RFC, 306 U.S. 381

(1939), and RFC v. Menihan Corp., 312 U.S. 81 (1941),

concerned the scope of the waiver of sovereign immunity of

*There is a sound policy justification for this difference between 42

U.S.C. 1404a and 12 U.S.C. 1702. Programs under the National Hous-

ing Act involve HUD as an insurer of private initiatives to construct and

operate lower income housing. Because the principals are private par-

ties, and may be sued in state courts, the statute provides that the

Secretary too may be sued in state court — whether as a necessary party

or simply in the interest of judicial economy. Against this background,

as the Fourth Circuit held in Ferguson v. Union National Bank, 126

F.2d 753, 756 (1942), it would be anomalous to allow suit against the

Secretary in any state court yet restrict federal suits to the Claims Court.

Moreover, unlike the United States Housing Act programs that are

federally funded, many National Housing Act programs are funded by

self-generated insurance funds that do not originate in the federal

Treasury, and thus suits for money judgments commenced under 1|2

U.S.C. 1702 would not necessarily expend themselves on the public fisc.

Indeed, the courts generally have held that Section 1702 constitutes a

waiver of sovereign immunity at all only for actions where the money

judgment would be satisfied out of a separate fund, not out of the

Treasury. Compare Lomas & Nettleton Co. v. Pierce, 636 F.2d 971,

973 (Sth Cir. 1971), and Marcus Garvey Square, Inc. v. Winston

Burnett Construction Co., $9$ F.2d 1126 (9th Cir. 1979), with S.S.

Silberblatt vy. East Harlem Pilot Block, 608 F.2d 28 (2d Cir. 1979).

a governmental corporation, the Reconstruction Finance

Corporation. FHA vy. Burr, 309 U.S. 242 (1940), concerned

whether the waiver of sovereign immunity under 12 U.S.C.

1702, which, as discussed above, has little relevance to this

case, authorized garnishment of an employee's wages.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.