[00:00:08] Speaker 04:
Good morning, everyone.

[00:00:09] Speaker 04:
The first argued case this morning is number 14, 5135, Normandy Apartments Limited against the United States, Mr. Hoffman.

[00:00:40] Speaker 01:
May it please the court, Your Honor, Terry McHuver for Normandy Apartments Appellant.

[00:00:47] Speaker 01:
In 2004, when Normandy executed the HAP renewal agreement with, for the first time, a HUD contractor, in this case, Oklahoma Housing Finance Authority, OFA for short, the contract renewed previous provisions of the contracts, of the previous HUD contracts signed

[00:01:09] Speaker 01:
between Normandy and HUD.

[00:01:12] Speaker 01:
The only change was that OFA was substituted as contract administrator, that OFA would relay payments to Normandy.

[00:01:22] Speaker 02:
HUD was not a signatory to the OFA agreement, correct?

[00:01:25] Speaker 02:
Correct, Your Honor.

[00:01:26] Speaker 02:
In fact, it doesn't even mention HUD.

[00:01:31] Speaker 01:
I want to understand, when you say it doesn't mention HUD, are you saying it's a party?

[00:01:36] Speaker 01:
Yeah, it's a party.

[00:01:37] Speaker 01:
Well, I think the contract lays out that HUD remains a party to provisions that pertain to it.

[00:01:44] Speaker 01:
And I know in the lower courts we had argued a little bit about that language where it says that there's an assignment during the term of the contract that HUD nevertheless remains a party to the provisions that pertain to HUD.

[00:01:58] Speaker 01:
And we would contend that the

[00:02:01] Speaker 01:
Although that language, there's the intent to remain.

[00:02:05] Speaker 01:
We also have policy guidance from HUD that says even if they don't execute a renewal agreement, that they intend to be bound by that agreement to the provisions that pertain to it.

[00:02:18] Speaker 02:
Your problem is whether HUD is privity to the HOFA agreement.

[00:02:25] Speaker 02:
Right.

[00:02:25] Speaker 01:
That's really the issue.

[00:02:28] Speaker 01:
Do we have privity with HUD?

[00:02:31] Speaker 01:
You know, I think it goes a little bit further than just that particular agreement because I still think that the previous agreements with HUD were still in effect.

[00:02:40] Speaker 01:
The provisions that renewed the previous HAP agreements pertained to HUD as it relates to both enforcement, enforcement in default proceedings, and enforcement of contractual remedies.

[00:02:54] Speaker 01:
And so, those provisions were renewed.

[00:02:57] Speaker 01:
And because there were no changes in the renewal to those provisions, it says that all the previous provisions of the HAP contracts were renewed except for specific changes.

[00:03:06] Speaker 02:
In this case, the OFA just... You have a series of HAP agreements and then time comes when you're not entering into a HAP agreement anymore.

[00:03:17] Speaker 02:
Now you're entering into a HAP renewal agreement, which changed and superseded the HAP agreements.

[00:03:24] Speaker 02:
Then you had the other agreement that came along after that.

[00:03:29] Speaker 01:
Your Honor, if you trace back through all of those agreements, particularly the HAP renewal, even the very first one says that it renews the provisions of the expiring HAP contract.

[00:03:40] Speaker 01:
And then if you trace through the, and I think there was a series in 2000, and then there was, and it was renewed, I think, each year.

[00:03:47] Speaker 01:
I mean, it was an automatic renewal.

[00:03:49] Speaker 01:
And then in 2004, there was a five-year contract term.

[00:03:52] Speaker 01:
But in each one of those, they renewed the existing HAP contracts, the provisions of the existing HAP contracts, except for the specific things that are modified.

[00:04:03] Speaker 01:
And in 2004, the only things, the things that would be modified through these agreements were the contract price, the rental price, and the amount of the reserve account that HAP set aside.

[00:04:14] Speaker 01:
There were certain logistical things that were modified each contract term.

[00:04:18] Speaker 01:
But the other provisions were renewed.

[00:04:22] Speaker 01:
a non-renewal of the terms even in the original HAP contracts.

[00:04:28] Speaker 01:
Again, our allegations allege the head reached those HAP agreements along with regulations pertaining to events of default when head finds a property that's not in safe or sanitary condition.

[00:04:44] Speaker 01:
There's a certain set of steps that were supposed to be taken and we allege that they weren't.

[00:04:49] Speaker 01:
For the argument, our

[00:04:50] Speaker 01:
While we argue that there's privity in the 2004 agreement, we argue that there's privity in the previous agreements and the provisions that were renewed by the 2004 agreement.

[00:05:01] Speaker 02:
I don't see any doubt about there being privity in the HAP agreements or the HAP renewal, but then when you get into the agreement after that, HUD's not a signatory to us.

[00:05:13] Speaker 01:
Right, Your Honor, but again, and I point again to the policy guidance that had issued

[00:05:19] Speaker 01:
At the lower court, we had attached, and I see that it's not in our appendix.

[00:05:23] Speaker 01:
It seems to be missing.

[00:05:25] Speaker 01:
One of the exhibits is missing.

[00:05:27] Speaker 01:
The policy guidance from the secretary was there, and I think we quoted the language, and it said, when a renewal contract is executed by a PHA pursuant to this guidebook in accordance with HUD requirements and on the form prescribed by HUD, HUD is contractionally bound by the renewal contract provisions

[00:05:47] Speaker 01:
that specify HUD to grow pursuant to the renewal contract, including provisions concerning any applicable HUD requirements, statutory changes, distributions, and PHA default.

[00:05:59] Speaker 01:
So with that language from the policy guidance from the Secretary, I think there's evidence that HUD intended to be bound by the renewal agreement for the provisions that pertain to it.

[00:06:11] Speaker 01:
And that would be the renewed provisions dating back to the original HAP agreements and

[00:06:16] Speaker 02:
You're not arguing that policy handbook was incorporated somehow into... No, and I didn't mean to cut you off, but no.

[00:06:28] Speaker 01:
The argument is that, and we made this, we made a couple of arguments about privity.

[00:06:34] Speaker 01:
And even if you looked at it as an implied in fact, we pointed to Herman Ransom, who was the hub director for Kansas City that supervised Oklahoma, his affidavit wherein he said that there was a contract between the parties.

[00:06:46] Speaker 01:
HUD was approved to that 2004.

[00:06:49] Speaker 02:
I looked at that declaration and I just don't see that it says what you say it says.

[00:06:57] Speaker 02:
I don't see that in the declaration that the HUD administrator is assuming liability or is making HUD a party to the contract.

[00:07:10] Speaker 01:
Well, what he says to the court, to that court, is that the

[00:07:17] Speaker 01:
It says in paragraph four, and it's page 243 of the appendix, he says the owner also agreed pursuant to a tap contract with HUD.

[00:07:27] Speaker 01:
So he's saying that HUD is a party to that contract.

[00:07:30] Speaker 01:
And he's referring specifically to the 2004 renewal.

[00:07:37] Speaker 03:
So the... Do you disagree that where there's an express contract, it excludes an implied in fact contract?

[00:07:46] Speaker 01:
Yes, and it's simply a counter argument that if you don't find an express contract, we think there's an express contract and you don't have to go that far.

[00:07:54] Speaker 03:
So you do agree that where there's an express contract, it precludes the existence of an implied contract.

[00:08:01] Speaker 01:
And I want to make sure I understand your question.

[00:08:03] Speaker 01:
Are you saying an express contract between HUD and Normandy or between OFA and Normandy?

[00:08:11] Speaker 03:
What I'm saying is that where you have an express contract,

[00:08:19] Speaker 03:
Well, because it covers the same, an express contract covering the same subject matter.

[00:08:27] Speaker 01:
Right, your honor.

[00:08:28] Speaker 01:
And the, my argument is the, and the implied in fact was simply an argument that if there was no finding of an express contract because HUD was not a signatory to the 2004 renewal, then you could find... But there is an express contract covering the apartments at issue.

[00:08:46] Speaker 01:
Right.

[00:08:46] Speaker 01:
With the state.

[00:08:48] Speaker 01:
as I understand that, but we're talking about a contract between HUD and Normandy.

[00:08:56] Speaker 02:
Why didn't you ever argue a third party beneficiary type theory?

[00:09:05] Speaker 02:
I see there's an injustice here, right?

[00:09:11] Speaker 02:
You've lost some money.

[00:09:14] Speaker 02:
Normandy has

[00:09:17] Speaker 02:
liability on its hand because of what transpired.

[00:09:21] Speaker 02:
And the way things have shaped out, it seems like you have nowhere to turn, and you're left holding the bag, and that's the problem.

[00:09:32] Speaker 02:
But under what you've pled and what you bring to us, your appeal, I just

[00:09:41] Speaker 02:
I'm left thinking about, why didn't you pursue other theories, especially a third-party beneficiary to the agreement between Oklahoma and HUD?

[00:09:54] Speaker 01:
I'll tell you, when we first went into this, we were expecting to be able to stand on our own contractual relationship and not, we've always thought all along that we were

[00:10:07] Speaker 01:
we had a contractual privity with HUD and it wasn't necessary to go that far.

[00:10:12] Speaker 01:
And I understand, as I understand it, the way that these payments work is that there's a contract between HUD and, say, OFA that covers a multitude of parties.

[00:10:25] Speaker 01:
And I could see where we could all be beneficiaries of that contract.

[00:10:29] Speaker 01:
But I'm not so certain that a court wouldn't find that it's probably the tenants that are the beneficiaries of that contract and that they were made for the

[00:10:37] Speaker 01:
for the benefit of the low-income tenants and not necessarily for the project owners.

[00:10:47] Speaker 01:
It just happened to be a conduit.

[00:10:49] Speaker 01:
And the court's right.

[00:10:52] Speaker 01:
We pursue the state action against the contract administrator.

[00:10:55] Speaker 01:
And the state court said, the necessary party here is head.

[00:10:59] Speaker 01:
You have an indispensable party, so I'm going to dismiss.

[00:11:03] Speaker 01:
But we can't bring credit to the state court.

[00:11:08] Speaker 01:
to be frank with the court, we thought that we had sufficient evidence of privity aside from a beneficiary argument.

[00:11:17] Speaker 03:
Let me ask you a factual question.

[00:11:19] Speaker 03:
Okay.

[00:11:19] Speaker 03:
One of the things that disturbs me is that it looked like your client was trying in pretty good faith to improve the property by replacing windows with better insulating

[00:11:38] Speaker 03:
higher quality windows and that the default identified was it hadn't been completed.

[00:11:50] Speaker 03:
What was the problem?

[00:11:52] Speaker 03:
How long did that take?

[00:11:53] Speaker 03:
Was it overly?

[00:11:54] Speaker 01:
It took longer than expected and there were some issues with the weather and some issues with the contractor and that was one of the issues that Normandy tried to appeal

[00:12:06] Speaker 01:
through the reactive inspection system and then kind of got a cold shoulder.

[00:12:12] Speaker 01:
But there was a contract and they were trying to provide, there was a contract under for those windows to be repaired.

[00:12:18] Speaker 01:
And as we read the regulations, those should not have been counted off, which sent the score to the level that it did, which provoked all of this.

[00:12:29] Speaker 04:
But was the default that it hadn't been completed or the appearance of the property while the construction was ongoing?

[00:12:36] Speaker 01:
Well, Your Honor, they marked off for the windows.

[00:12:39] Speaker 01:
There was a scored sheet.

[00:12:40] Speaker 01:
That wasn't the only problem.

[00:12:41] Speaker 01:
The windows weren't the only problem.

[00:12:43] Speaker 01:
There were other issues too, but there's a multi-part checklist that I think has included the appendix, that particular one.

[00:12:52] Speaker 01:
But the windows were a big part of that score that led to the failing score.

[00:12:58] Speaker 01:
But the windows were marked off along with other things.

[00:13:03] Speaker 04:
Okay.

[00:13:03] Speaker 04:
Let's hear from the government and we'll save you rebuttal time.

[00:13:15] Speaker 04:
Okay.

[00:13:15] Speaker 04:
Ms.

[00:13:15] Speaker 04:
Chanton.

[00:13:17] Speaker 00:
Thank you, Your Honor.

[00:13:18] Speaker 00:
May it please the Court.

[00:13:19] Speaker 00:
The trial court correctly concluded that Normandy is not in privity with the United States with regard to the contract that the complaint alleged was breached, the 2004 HAP renewal contract.

[00:13:29] Speaker 00:
that contract was entered into by Normandy and the Oklahoma Housing and Finance Authority, not HUD.

[00:13:35] Speaker 04:
Perhaps you're going to ask the same question.

[00:13:39] Speaker 04:
Why isn't the government stopped from arguing that this is not a contract issue?

[00:13:44] Speaker 04:
It's having moved the case to the court of federal claims on this premise.

[00:13:51] Speaker 04:
How can you now argue that that was incorrect?

[00:13:54] Speaker 04:
Isn't there an obligation of the government to

[00:13:57] Speaker 04:
find the correct law and rely on it?

[00:14:00] Speaker 00:
First, Your Honor, the government didn't move the case to the Court of Federal Claims.

[00:14:04] Speaker 00:
The plaintiff, after filing its complaint for an injunctive relief in the Western District of Oklahoma, ended up at the Tenth Circuit, where the Tenth Circuit informed it it could pursue an APA claim in the District Court or it could pursue a breach of contract claim based upon its contractual claim, a claim for a breach of contract in its complaint.

[00:14:27] Speaker 00:
The plaintiff, as it explains in its reply brief, chose not to move forward with its APA claim in the district court and chose to instead file a complaint in the court of federal claims.

[00:14:39] Speaker 00:
The government had informed the Tenth Circuit of this court's decision unpublished in Senate Manner v. United States.

[00:14:47] Speaker 04:
It's unpublished and it's non-precedential?

[00:14:50] Speaker 00:
Yes.

[00:14:50] Speaker 04:
You can't rely on it?

[00:14:51] Speaker 04:
Are you telling us that that was the basis?

[00:14:53] Speaker 04:
Yes, Your Honor, the court's reasoning was... But how can that be the basis when there's a caption which says, not sightable as precedent?

[00:15:02] Speaker 00:
Your Honor, the government believes that the court's reasoning bound the government to consider the contract, the fact that HUD was not a party to the contract.

[00:15:15] Speaker 00:
The terms of the contract

[00:15:17] Speaker 00:
were clear, there's no ambiguity, and Normandy's not alleged in ambiguity.

[00:15:22] Speaker 00:
In fact, the Court-Senate-Manner decision cited the Court's presidential decisions in Katz v. Cisneros and other decisions such as National Lease Housing Corporation v. United States.

[00:15:35] Speaker 00:
Those decisions, which are presidential, found that it's been settled for some time that funding and supervision of projects that receive

[00:15:46] Speaker 00:
HUD funding and are under the Section 8 program do not create an express or implied contract.

[00:15:54] Speaker 04:
Is the government's position that this plaintiff now should be returned to the District Court in Oklahoma?

[00:16:01] Speaker 00:
No, Your Honor.

[00:16:02] Speaker 00:
The plaintiff has stated, I believe in its reply brief, that it would no longer pursue an APA claim.

[00:16:10] Speaker 00:
And the court, as we noted,

[00:16:16] Speaker 00:
The standard review is abuse of discretion on the application of judicial estoppel.

[00:16:21] Speaker 00:
Here, we believe the trial court did not abuse its discretion.

[00:16:25] Speaker 00:
First of all... Estoppel against the government.

[00:16:29] Speaker 00:
Yes, Your Honor.

[00:16:30] Speaker 00:
The judicial estoppel is not properly applicable to jurisdictional questions because the court must consider its jurisdiction.

[00:16:37] Speaker 02:
It would be... Well, what about estoppel assuming... Let's say I agree with you that the government can't be a stop from asserting lack of jurisdiction.

[00:16:47] Speaker 02:
But what about a stop hole in preventing the government from changing a litigation position?

[00:16:54] Speaker 02:
And that litigation position before the district court is that you can't sue me here.

[00:16:59] Speaker 02:
You have a breach of contract claim, and you can only sue me for breach of contract at the Court of Federal Claims.

[00:17:08] Speaker 02:
That coupled with the fact that you argued in Senate manner that you were a party to the contract under an identical contract

[00:17:18] Speaker 02:
There you argued that you were a party.

[00:17:20] Speaker 02:
The case is transferred to the Court of Federal Claims.

[00:17:23] Speaker 02:
And there, some of you argue, you can't sue me here.

[00:17:26] Speaker 02:
I'm not a party to the contract.

[00:17:31] Speaker 00:
Your Honor, we don't believe that it's a change in a litigating position to point out a lack of jurisdiction.

[00:17:39] Speaker 02:
Not a lack of jurisdiction.

[00:17:42] Speaker 02:
It's a change in litigation position that you don't have a contract.

[00:17:46] Speaker 02:
Below you argue, there's a contract.

[00:17:49] Speaker 02:
If you're going to argue a breach of contract, you can only sue me in the court of federal claims.

[00:17:53] Speaker 02:
You go to federal claims, and now suddenly you say, we don't belong here.

[00:17:59] Speaker 02:
I'm not a party to this contract.

[00:18:01] Speaker 00:
Well, Your Honor, the trial court explained that it didn't believe that the government's position was clearly inconsistent in the court of federal claims with its position in the district court.

[00:18:10] Speaker 00:
HUD had relied in the district court on the allegations of... Is it inconsistent with what you did in Senate Manor?

[00:18:18] Speaker 00:
In Senate Manor, the government had recognized that the contract was not between HUD and Senate Manor.

[00:18:28] Speaker 00:
And that is why when the case came to the Federal Circuit, it pointed out that jurisdictional problem with the transfer to the Court of Federal Claims.

[00:18:38] Speaker 00:
And having seen the court's decision upholding that position.

[00:18:44] Speaker 02:
In Senate manner, isn't it the case that you argued that you were a party to the contract?

[00:18:48] Speaker 00:
That was only below in the district court, I believe.

[00:18:52] Speaker 00:
But in this case, the government has... Let me answer my question.

[00:18:56] Speaker 02:
In Senate manner, the government argued that it was a party to the contract.

[00:19:01] Speaker 02:
Is that correct?

[00:19:02] Speaker 00:
I believe that the government might have relied on the background assumptions in the complaint.

[00:19:07] Speaker 02:
I believe in the district court litigation, the government believed that it was a party to the contract.

[00:19:24] Speaker 00:
However, in this case, in Normandy,

[00:19:27] Speaker 00:
As the trial court noted, the government's position was not clearly inconsistent in the district court.

[00:19:33] Speaker 00:
HUD relied upon the complaint's allegations.

[00:19:37] Speaker 00:
The complaint stated that Normandy and HUD had a contract.

[00:19:43] Speaker 03:
Ms.

[00:19:43] Speaker 03:
Tannen, let me ask you something.

[00:19:45] Speaker 03:
I wasn't going to ask the same question that Judge Newman asked.

[00:19:51] Speaker 03:
One of the things that disturbs me is what I have raised with your opposing counsel.

[00:19:57] Speaker 03:
the questions of the windows.

[00:20:00] Speaker 03:
And it disturbs me because A, it looks like the apartment owner was acting in good faith from the record that they were trying to improve the premises and that the windows which they were trying to improve were a major factor in their failing score.

[00:20:22] Speaker 03:
And what bothers me is it looks like they did indeed fix them

[00:20:27] Speaker 03:
and couldn't get a re-inspection done to demonstrate that they were fixed.

[00:20:33] Speaker 03:
Am I incorrect in reading the record that way?

[00:20:36] Speaker 00:
Well, Your Honor, the issue of whether a re-inspection was required, well, number one, inspection timing and notice regulations, it's noted that they aren't, need not follow those requirements when

[00:20:55] Speaker 00:
It feels that it must take any action to protect the residents.

[00:21:00] Speaker 00:
It's in 24 CFR 200-857-I4.

[00:21:05] Speaker 00:
It's not any sort of requirement on HUD to allow a further re-inspection.

[00:21:12] Speaker 00:
HUD had asked Normandy to certify that it was in compliance with inspection requirements and it stated that it could not.

[00:21:20] Speaker 00:
As Normandy's counsel pointed out, there were many other

[00:21:24] Speaker 00:
problems outside of the windows.

[00:21:27] Speaker 00:
The inspection report, which is at Appendix 819, notes insect infestation.

[00:21:38] Speaker 00:
It notes health and safety problems such as missing smoke detectors, inability to access windows as a means of providing access from an apartment.

[00:21:53] Speaker 00:
So there are many problems that have led to a failing score, which in the record is noted to have occurred several times over the course of 1999 through 2004 and through the time here.

[00:22:11] Speaker 00:
And as for, I wanted to reach the court's question about third-party beneficiaries.

[00:22:15] Speaker 00:
The court found in Cass v. Cisneros, which is at 16F3, 1204,

[00:22:21] Speaker 00:
at 1210 that the tenants would be considered third-party beneficiaries if there were any, if there had been any agreement.

[00:22:31] Speaker 00:
And as Normandy's counsel pointed out, not a property owner.

[00:22:35] Speaker 00:
And similarly, those cases of New Era and Housing Corporation of America, Cass v. Cisneros, they all point out that this two-tiered system where HUD

[00:22:48] Speaker 00:
has supervision and inspection responsibilities and PHAs such as OFA make cap payments is accepted and that, for example, the renewal, the fact that this is a renewal contract, the court in the Senate manner decision, which was unpublished, considered the same contract term.

[00:23:09] Speaker 02:
Let's go back to the case you were citing with respect to third-party beneficiaries.

[00:23:14] Speaker 02:
It's not just the tenants that are the third party beneficiaries, correct?

[00:23:17] Speaker 02:
I mean, it's not limited to just tenants.

[00:23:20] Speaker 00:
That's what the court in CAPS found.

[00:23:22] Speaker 02:
Were they looking at a PHA agreement at that time?

[00:23:25] Speaker 00:
I believe the court was considering whether there could be purview of contract between HUD and a property owner when a PHA was the party that entered into the contract.

[00:23:37] Speaker 02:
So it's your view that there's no way that Normandy can get its money?

[00:23:43] Speaker 00:
Yes, Your Honor.

[00:23:45] Speaker 00:
First of all, Normandy has no contract rights under the HAP contract because the government is not in privity.

[00:23:50] Speaker 00:
HUD has no direct and unavoidable liability under the HAP contract.

[00:23:54] Speaker 02:
What about your opponent's argument that HUD's policy manual claims that it's a party?

[00:24:03] Speaker 00:
Well, the policy manual should not be considered.

[00:24:05] Speaker 00:
It's extrinsic evidence.

[00:24:08] Speaker 00:
unnecessary for interpretation of the HAP contract because the contract is clear as to who the parties are.

[00:24:13] Speaker 00:
Normandy has alleged no ambiguity in the contract and there is none.

[00:24:17] Speaker 00:
The guidebook is from February 2008.

[00:24:19] Speaker 00:
It postdates this contract by not quite four years.

[00:24:23] Speaker 00:
It would not be incorporated into the HAP contract and its guidance isn't relevant to an interpretation.

[00:24:31] Speaker 02:
Similarly, the affidavit... Could it be relevant to a third-party beneficiary claim?

[00:24:36] Speaker 00:
No, Your Honor.

[00:24:36] Speaker 00:
Again, there is no liability under that HAP contract that could be found from the terms of the contract.

[00:24:44] Speaker 00:
And to move on to the question of the use agreement and the alleged implied in fact contract, again, the court below did not use its discretion in

[00:24:58] Speaker 00:
finding that the plaintiff couldn't amend its complaint to add those claims, which were never alleged in any complaint.

[00:25:06] Speaker 00:
The claim that the use agreement incorporated the HAP contract, there's no language of incorporation that would bring in the HAP contract.

[00:25:19] Speaker 00:
Furthermore, the implied in fact contract that Normandy has alleged

[00:25:25] Speaker 00:
relates to the guidebook statements by Mr. Ransom.

[00:25:29] Speaker 00:
Mr. Ransom didn't have authority to bind the government, and the plaintiff hasn't alleged that he did, and his affidavit came long after the contract, the HAP contract here and after the breaches.

[00:25:42] Speaker 00:
To turn to the takings claim, Normandy has not demonstrated property interests, which is a first step in the review of a takings claim.

[00:25:51] Speaker 00:
Contrary to Normandy's assertions, the trial court did not need to reach the pencentral factor.

[00:25:56] Speaker 00:
Normandy voluntarily relinquished the very rights that claims were later taken.

[00:26:00] Speaker 00:
Normandy is complaining that after receiving the benefits of its agreement with HUD through the youth agreement, that HUD is holding Normandy to its side of the bargain, which is continuing to house low-income tenants, that these bargain for terms are less appealing.

[00:26:18] Speaker 00:
It does not mean that HUD cannot enforce

[00:26:21] Speaker 00:
Normandy's obligations.

[00:26:23] Speaker 00:
And in this case, HUD had took the actions that it took because they were necessary to protect tenants from conditions that weren't decent, safe, and sanitary.

[00:26:36] Speaker 00:
And as for Normandy's restitution claim, again, that was not argued in a complaint.

[00:26:41] Speaker 00:
Normandy provided no statutory authority for restitution or a money-mandating source in law that it identified

[00:26:49] Speaker 00:
at the Court of Federal Claims, it's pointing to certain statutes, including 42 U.S.C.

[00:26:55] Speaker 00:
1437 and 24 CFR 982 that don't include any requirement of payment.

[00:27:04] Speaker 00:
They're simply declarations of policy and statements of general information about the Section 8 program.

[00:27:13] Speaker 00:
And if the Court has no further questions,

[00:27:17] Speaker 00:
We ask that the court affirm the decision of the trial court that Normandy was not in privity with the United States, and also that Normandy cannot demonstrate a takings claim.

[00:27:30] Speaker 00:
Thank you.

[00:27:32] Speaker 00:
Mr. McKay, please.

[00:27:40] Speaker 01:
With respect to Senate Manor, as we cited in our briefs,

[00:27:46] Speaker 01:
the non-precedential nature of that decision.

[00:27:51] Speaker 01:
There simply wasn't a factual record to see what the analysis was of the court.

[00:27:57] Speaker 01:
We also think that to the extent that Senate Manor, the property owner in Senate Manor was arguing that had violated certain covenants and they have agreements to which it was a party, then we think the analysis in Senate Manor is

[00:28:16] Speaker 01:
wrong, respectfully.

[00:28:17] Speaker 01:
A couple of things that the re-inspection, in the appendix, there's some, again, guidance from HUD, and this is found at 698, and it talks about the under 60 score on a REAC score disposition and enforcement.

[00:28:43] Speaker 01:
The second paragraph, it says, if the result of the second inspection indicates continued physical condition problems.

[00:28:49] Speaker 01:
I think that there is a requirement under both the regulations and contractually that the second inspection be granted for a failing score.

[00:29:03] Speaker 01:
Ransom clearly, as the director of the HUD facility for Kansas City,

[00:29:10] Speaker 01:
and what had the power to bound the government.

[00:29:14] Speaker 01:
The signatory to the previous head contracts were the Oklahoma had liaison who reported to Mr. Ransom.

[00:29:24] Speaker 01:
So I don't think it's fair to say that Mr. Ransom cannot bound the government.

[00:29:30] Speaker 01:
But I think his affidavit

[00:29:34] Speaker 01:
And it came at the time that we were alleging the board to win months after.

[00:29:38] Speaker 01:
It was during the time.

[00:29:39] Speaker 01:
It was after the contract was executed.

[00:29:41] Speaker 01:
But I think, again, it goes to show the mutual intent and understanding of the parties as it relates to that 2004 half renewal.

[00:29:50] Speaker 01:
So we think that the affidavit is relevant.

[00:29:55] Speaker 01:
One, to show the intent of the parties.

[00:29:57] Speaker 01:
Two, to show that he as the head director overseeing this property

[00:30:03] Speaker 01:
there to be a contractual approving relationship between HUD and Normandy.

[00:30:10] Speaker 01:
Addressing the property interest argument on the takings claim, while HUD gave up certain rights, one of which is to charge market rents, it didn't give up all of its rights.

[00:30:24] Speaker 01:
And the contracts that it voluntarily entered into said that a certain contract rent would

[00:30:31] Speaker 01:
that a certain rent would be received from the tenant and then a certain rent from a HAP subsidy so long as Congress appropriated the funds.

[00:30:40] Speaker 01:
And it understood that such subsidies could be abated, but it would be abated after a certain process was adhered to, according to the regulations, according to the contractual provisions of previous HAP agreements.

[00:30:54] Speaker 01:
So while Normandy concedes that it gave up fee simple rights, it does not

[00:31:01] Speaker 01:
agree that it gave up all of its rights, particularly as it relates to those contracts.

[00:31:07] Speaker 01:
So we think that the court should have gone into a pin central factors analysis because we feel that there was adequate property interest there to protect.

[00:31:19] Speaker 02:
Is Normandy prevented from going back?

[00:31:21] Speaker 02:
Do you have a statute of limitations problems in going back and seeking a third party beneficiary complaint or a detrimental reliance type theory?

[00:31:30] Speaker 01:
It would be a six-year statute.

[00:31:37] Speaker 01:
Going back to that, I think we're out of the statute, but I think that the court could find... The opposing counsel mentioned pleadings, and I disagree somewhat with the argument that you have to plead exactly your theories of recovery in a complaint.

[00:31:56] Speaker 01:
You have to plead the facts.

[00:31:58] Speaker 01:
I think the Supreme Court came out recently and said that your legal theory doesn't have to be right just as long as you establish the facts to put the defendant on notice that there's a claim against the defendant.

[00:32:09] Speaker 01:
And so I still think we have grounds on remand to assert that in the court of claims.

[00:32:17] Speaker 01:
The second thing, too, addressing restitution is that the money-mandating source would be the same money-mandating statute that authorizes a HAP payment.

[00:32:27] Speaker 01:
And if you, in the record, there is an addendum to a HAP contract at 120 in the appendix.

[00:32:39] Speaker 01:
And it says contract language allowing for use of abated Section 8 payments to be used to cover relocating and relocation costs.

[00:32:48] Speaker 01:
And that addresses that if HUD does abate the Section 8 payments, the HAP payments, that it can use those funds to relocate the tenants.

[00:32:58] Speaker 01:
In this case, it didn't relocate the tenants.

[00:33:00] Speaker 01:
It took a while to relocate or switch to vouchers.

[00:33:03] Speaker 01:
And that's part of the record that we established is that out of 118,000, 119,000 approximately we were due the month of November, the first month of abatement, we received about $24,000 in rent.

[00:33:16] Speaker 01:
So the same source of funds for the HAP payments would be the source for any restitutionary payment because the tenants were still residing

[00:33:26] Speaker 01:
And had it been a letter saying you cannot raise the rent, the tenant portion of the rent even though we're not paying you or we're not subsidizing the rent.

[00:33:35] Speaker 01:
So I think that there are grounds that there is a money mandating statute to fund the restitution.

[00:33:43] Speaker 04:
Thank you.

[00:33:45] Speaker 04:
Thank you both.

[00:33:46] Speaker 04:
The case is taken under submission.