[00:00:00] Speaker 03:
1542 Airport Road Associates versus the United States.

[00:00:51] Speaker 03:
When are we ready?

[00:01:30] Speaker 05:
Good morning.

[00:01:31] Speaker 05:
Chief Judge Prost, members of the panel, may it please the Court.

[00:01:34] Speaker 05:
My name is Mark Lando of Epplin & Lando.

[00:01:36] Speaker 05:
I represent the ten appellants in this matter who I will refer to as the owners or the partnerships.

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This appeal is about the proper application of the Supreme Court's holding in Franconia,

[00:01:50] Speaker 05:
the analysis and holding of that decision regarding the time for performance.

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In terms of how I'll approach the argument today, I'll begin with the discussion of Franconia.

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In particular, its focus on time for performance and the requirements of the time there to design it.

[00:02:07] Speaker 03:
Well, how much specificity?

[00:02:07] Speaker 03:
I mean, your argument that there has to be a time for performance.

[00:02:10] Speaker 03:
What does that mean?

[00:02:11] Speaker 03:
How much specificity is required with respect to the time for performance?

[00:02:15] Speaker 03:
I sent a letter and saying,

[00:02:17] Speaker 03:
I'm thinking about doing this over the next three years.

[00:02:19] Speaker 03:
I presume you wouldn't think that that was sufficient for time and performance, right?

[00:02:24] Speaker 05:
Yes.

[00:02:24] Speaker 05:
I think the issue, Judge Prost, is whether the notice puts the government on sufficient notice of what they have to do and when.

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Remember, this is an option contract.

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So it's within the option holder's purview.

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The power that that option holder has is to decide whether and when the government

[00:02:44] Speaker 01:
the other side will actually perform its obligation.

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So there needs to be some sufficient notice as to when that will happen.

[00:02:53] Speaker 05:
So you think of the classic example of an anticipatory repudiation where the contract says, I'm going to paint your house on July 1 this summer.

[00:03:02] Speaker 05:
I repudiate the contract before that.

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And the issue is, does the other side know when they will be required

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to perform.

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So the letter has to have enough specificity to either specify a date, or at least a reasonable time period, or be deemed reasonably construed as a demand for immediate performance.

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And we would submit that the letter at issue here, Mr. Olson's letter of April 2, 2002, does not do either of those.

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It does not set a day for performance.

[00:03:37] Speaker 05:
There's no dispute between the parties that there's no specific date or time for performance specified.

[00:03:43] Speaker 03:
So without that... What about if he had said, I'm trying to get this done as soon as possible?

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Is that sufficient?

[00:03:51] Speaker 05:
I think arguably it would.

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I think you'd have to look at the content of the letter, the evidence you have to look at the government's response to that letter and say, what did the parties understand here?

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And in this case, I don't think there's any... Isn't that the point, the government's response?

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Isn't your point that the government didn't repudiate the obligation?

[00:04:12] Speaker 05:
They did repudiate it.

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The question is, when did that repudiation ripen into a breach?

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And that's exactly what the Franconi decision is all about.

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The repudiation happened back in 1988 and 1992.

[00:04:23] Speaker 06:
I think your point is they didn't refuse to accept.

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They just didn't get to that point.

[00:04:29] Speaker 05:
Yes, Your Honor.

[00:04:30] Speaker 05:
It's both.

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There's the tender which needs to specify, or at least reflect, be reasonably construed as pointing to a time for performance.

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And then the second step is that you need that rejection or dishonor

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tender and dishonor are the terms that the Supreme Court used in Franconia.

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You have to have both of those.

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That's the whole nature of the difference between a repudiation and a breach.

[00:04:50] Speaker 03:
Well, what if the government had lost the letter or hadn't responded at all?

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At what point does it count as a rejection?

[00:04:59] Speaker 05:
It would never count as a rejection unless there was a time for performance.

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Again, no breach can occur.

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until the time for performance arrives.

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So it still comes back to the question of whether.

[00:05:07] Speaker 03:
So if I go in and I say, I want to do this, and I want to do it within the next six months, and six months pass, and the government hasn't responded at all, that's sufficient, right?

[00:05:17] Speaker 05:
Absolutely.

[00:05:18] Speaker 05:
And that's a great example of the Parkwood case.

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I think if you want to look at a decision that pulls everything together, Franconia, Cameron Lane, and all of these rules, the Parkwood case, Judge Allegra got it exactly right.

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In Cameron Lane, this court said,

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We're going to look at the rejection based on when the government basically made a counteroffer by providing an offer of incentives.

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You're saying you want to prepay.

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We're going to give you something else.

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That's a breach.

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This court also said there could be other conduct.

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It could happen sooner.

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And the Parkwood case and the Ramona one and Ramona two cases following it nicely applied that principle to say, OK, how early could it be under the Federal Circuit's decision in Amelie?

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And the earliest it could possibly be

[00:06:01] Speaker 05:
is at the time for performance.

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So in your example, I want to prepay in six months.

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There, the owner has set a time for performance.

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That time for performance arrives.

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There's no response by the government.

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And that is a breach.

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And that's also consistent with the Kaczarski decision from this court, which they are not.

[00:06:20] Speaker 03:
And what if you say, I want to do it as soon as possible, and six months passes, and you don't hear from the government?

[00:06:29] Speaker 05:
I think if you say,

[00:06:30] Speaker 05:
as soon as possible, then that is implying now.

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I want to prepay now.

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And therefore, you are setting a time for performance.

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So if that letter, I think in that case, Your Honor, that letter could, or that communication could reasonably be construed as saying, now is the time.

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I want to do it.

[00:06:47] Speaker 03:
So how do we cap in the statement in Tamil language everybody seems to be having concern over, which is this rejection of a need for formalism?

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Are you cabining it to simply

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the direct transfer of money, of payment in Franconia?

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How do we cabin that?

[00:07:06] Speaker 05:
Yes, I think the issue on tender and formalism is that tender is the word that the Supreme Court puts in Franconia.

[00:07:15] Speaker 05:
The plaintiffs, the appellants in Kamerling said, well, tender means you've got to show up with the money.

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And this court, I think, properly rejected that.

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The court said it doesn't have to be that formalistic.

[00:07:28] Speaker 05:
But it still does have to be something that sets a time for performance.

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That's really the rule that it comes back to.

[00:07:34] Speaker 06:
The actual initial letter, am I remembering right, in Tamerlane didn't set a time for performance.

[00:07:43] Speaker 06:
It used slightly more performative language than your letter does.

[00:07:47] Speaker 06:
But there wasn't a time set.

[00:07:49] Speaker 06:
Was there in the letters in Tamerlane?

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The letter that was in the record

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before this court, you're correct, did not specifically set a time for performance.

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And I think that's the tricky issue that if this court were to rule in favor of the appellants here, that would have to be dealt with.

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And the simple answer, Your Honor, is simply that the time for performance was not raised by the parties in that case because it was a non-issue.

[00:08:21] Speaker 05:
As we know from the record, as we presented in our record in the court below,

[00:08:25] Speaker 05:
There was, in fact, a full loan repayment request, which under the agency's rules requires a time for performance to be set.

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And it always has to be at least six months after the date of the request.

[00:08:37] Speaker 05:
In fact, even before the recudation, before the Olympus statute was passed, the agency's regulations even then said there has to be at least a six-month waiting period.

[00:08:47] Speaker 06:
Just on that point, I think all of your agreements say, all of your loan agreements say,

[00:08:55] Speaker 06:
Unless inconsistently something else in this agreement, these agreements are subject to applicable government regulations or something like that.

[00:09:05] Speaker 06:
And at least by 1988, as I understand it, there were regulations in place before the Congressional repudiation that required at a minimum specification of the date of prepayment.

[00:09:20] Speaker 06:
Is that relevant to and helpful to you

[00:09:25] Speaker 06:
deciding what the necessary interpretation of the 2002 letter is here, and the silence on the government's part, namely.

[00:09:36] Speaker 06:
Without that, they weren't saying no, because there was a perfectly applicable legitimate precondition, which you didn't specify.

[00:09:44] Speaker 05:
Yes, sir.

[00:09:44] Speaker 05:
I think those regulations do help us.

[00:09:47] Speaker 05:
I have to make one correction.

[00:09:49] Speaker 05:
The regulations in place before OLEPA, the repudiating statute,

[00:09:54] Speaker 05:
did include 180-day waiting period.

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And that may have been inconsistent with your absolute right to prepay.

[00:10:04] Speaker 06:
And so maybe that one wasn't applicable.

[00:10:07] Speaker 06:
But one of the things the regulations required was date of prepayment, number 19 on whatever the exhibit C or something to 1965.90 regulations from 1988.

[00:10:22] Speaker 06:
That one, it seems to me, is not at all inconsistent with your right to repay, just give us the date.

[00:10:31] Speaker 06:
And since you didn't say that, then you hadn't really made a qualifying tender even in, made a qualifying tender.

[00:10:41] Speaker 05:
Yes, I agree with Your Honor, though what I was getting at is I don't believe the regulation that said you must specify a date was issued until after

[00:10:48] Speaker 05:
Aleppo with the repudiation.

[00:10:51] Speaker 06:
Well, I'm looking at the 1988 CFR and it's in here.

[00:10:55] Speaker 05:
Aleppo was passed in 88.

[00:10:57] Speaker 05:
In 88.

[00:10:58] Speaker 05:
Yes, I think the confusion here might be that there were actually two repudiating statutes.

[00:11:02] Speaker 06:
Well, this was actually issued in the Federal Register in 1987, so I just have the 88 CFR.

[00:11:07] Speaker 05:
Okay.

[00:11:09] Speaker 05:
I think Aleppo was actually initially passed in 88, but maybe not effective in 87, but not effective until 88.

[00:11:15] Speaker 05:
But it all happened around the same time period.

[00:11:18] Speaker 05:
But I think it all does reflect the fact that if you're trying to prepay a mortgage, it can't happen overnight like that.

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You need to line up the financing.

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If the prepayment is going to be based on a sale, you need to know if the sales are actually going to come through.

[00:11:32] Speaker 05:
It doesn't happen automatically for those same reasons.

[00:11:35] Speaker 05:
The government would not reasonably understand when they get a letter like Mr. Olson's letter that they're being asked to perform that day.

[00:11:43] Speaker 04:
That's right.

[00:11:43] Speaker 04:
The Olson letter, isn't that reasonably interpreted as being within a reasonable period of time?

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And in fact, the government answered within 15 days.

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and said, well, give us more information.

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It wasn't a deviation.

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But then your client dropped the ball, right, and didn't proceed further.

[00:12:03] Speaker 04:
Isn't that what happened?

[00:12:04] Speaker 05:
That is exactly what happened, Your Honor.

[00:12:05] Speaker 05:
And that shows that the 11 partnerships here never set a date for performance.

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They just indicated that they had some potential sales.

[00:12:14] Speaker 05:
If you read the whole letter, you can see Mr. Olson is talking about 11 properties all over the state of Louisiana with different partnership entities involved.

[00:12:24] Speaker 05:
saying that they're potentially going to be selling some of these properties, maybe keeping and prepaying the ones that will not be sold, that they may be converting them to conventional housing, but the nonprofit may or may not be doing so.

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So those are all uncertainties and all reasons why the letter could not reasonably be construed as setting any time for performance.

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And as you say, Your Honor, the government responds, and what do they say?

[00:12:52] Speaker 05:
Oh, if you want to prepay, fine.

[00:12:54] Speaker 05:
Here's what you do.

[00:12:55] Speaker 05:
Here's the checklist.

[00:12:57] Speaker 05:
Included in that checklist, of course, is the requirement to say when to specify when you are going to prepay.

[00:13:03] Speaker 05:
The owners never did that.

[00:13:05] Speaker 05:
And the reason, of course, is because the sales fell through.

[00:13:08] Speaker 05:
And so that time for performance never arrived.

[00:13:11] Speaker 03:
Can I just ask you a little technical question on the regulations, the CFR 1965?

[00:13:16] Speaker 03:
They were in effect in 2002, right?

[00:13:20] Speaker 03:
But they seem to have been removed

[00:13:22] Speaker 03:
several years later.

[00:13:24] Speaker 03:
Are they still in effect?

[00:13:25] Speaker 03:
Were they just put in some other place?

[00:13:27] Speaker 05:
They were moved, Your Honor.

[00:13:28] Speaker 05:
Yes, so they're now in 7 CFR 3560.

[00:13:31] Speaker 05:
I think there's a footnote in our opening brief that mentions the fact that we're talking about the regulations that were in effect in 2002, and it was, I believe, in 2004 that they were moved within 7 CFR 3560.

[00:13:47] Speaker 06:
And can I ask you a question on

[00:13:50] Speaker 06:
different topic from the one we've discussed.

[00:13:53] Speaker 06:
Suppose I were to think that under these loans, every time you made a request to repay and the government said no, it was a new breach, which seems to me pretty much what normal standards for what is it continuing harm or whatever that law would say in the employment context and elsewhere, new wrong.

[00:14:20] Speaker 06:
How, if I thought that were the case, would that be consistent with Tamerlane?

[00:14:28] Speaker 05:
Your Honor, I think that if the owner sets a time for performance and the government does not perform as of that date, then you have a breach.

[00:14:38] Speaker 06:
And if you ask seven years later and they say no, you have another breach.

[00:14:43] Speaker 06:
Suppose I thought that that were true.

[00:14:49] Speaker 06:
Can I say that, consistent with Tamerly?

[00:14:52] Speaker 05:
I don't think so, Your Honor.

[00:14:54] Speaker 05:
I think in this context, at least, where the government has repudiated the contract, way back in 1988 and 92, that as an owner, once you try to exercise that option, your original contractual option has been repudiated, and the government, you have the tender and you have the dishonor

[00:15:13] Speaker 05:
under Franconia, I think you have a breach.

[00:15:16] Speaker 05:
You've got to file a suit.

[00:15:17] Speaker 05:
And I don't think you would be able to bring a subsequent suit under a continuing breach.

[00:15:22] Speaker 06:
So once they say no and you don't sue, you're stuck for 50 years, even though the express terms of the loan say you can prepay at any time?

[00:15:36] Speaker 05:
Well, I think the answer is that although you're stuck for 50 years, as all of our clients unfortunately are, you do have a remedy.

[00:15:44] Speaker 05:
which is to bring suit in the court of federal claims, which is tying things up exactly what these owners did in a timely manner within six years of when there was finally a breach many years later for some of the properties, or by electing to file suit in light of the repudiation, as is their other option under anticipatory repudiation law.

[00:16:03] Speaker 03:
So is the differentiation you're making to the cases that Judge Toronto is referring to that rely on a continuing violation so that you can

[00:16:12] Speaker 03:
request over and over again.

[00:16:14] Speaker 03:
Is that because of the repudiation here?

[00:16:17] Speaker 03:
That differentiates the circumstance?

[00:16:19] Speaker 05:
I believe so.

[00:16:20] Speaker 05:
I believe there's other authority in this context stating that you can't rely on a continuing breach theory.

[00:16:29] Speaker 05:
That may have actually been addressed either in Tamerlane or on remand.

[00:16:32] Speaker 06:
Right.

[00:16:32] Speaker 06:
So I guess I put it this way.

[00:16:33] Speaker 06:
The Court of Federal Claims did reject this theory in Tamerlane.

[00:16:40] Speaker 06:
Suppose I thought it was just plain wrong.

[00:16:43] Speaker 06:
What do I do then?

[00:16:45] Speaker 05:
If Your Honor believes it's wrong, then I think you could make a ruling that you would have another opportunity to sue.

[00:16:51] Speaker 06:
Obviously, if it were only the Court of Federal Claims that said that, that wouldn't be a problem.

[00:16:56] Speaker 06:
Of course not.

[00:16:57] Speaker 06:
But if this court said, held, implicitly ruled that, that would be a problem.

[00:17:04] Speaker 05:
It wouldn't be a problem for these owners.

[00:17:07] Speaker 05:
It means that tomorrow you can ask again.

[00:17:11] Speaker 05:
In theory, I suppose they could ask again and be denied again.

[00:17:15] Speaker 05:
But I think the proper rule is that once you know the time for performance has come and you want to prepay, and you make the request, and the government doesn't follow through, they dishonor that request, then you know you've been damaged.

[00:17:32] Speaker 05:
You can think of it in those terms.

[00:17:34] Speaker 05:
When has the repudiation actually been applied to your situation

[00:17:38] Speaker 05:
to your property.

[00:17:40] Speaker 05:
And Bub, why isn't the answer to that every single time you ask?

[00:17:43] Speaker 06:
Because you've already suffered the damages the first time.

[00:17:46] Speaker 05:
Right.

[00:17:46] Speaker 06:
So damages clearly would not reach back to the first time, but it would start again with a new denial.

[00:17:54] Speaker 05:
I think, Your Honor, that once you're damaged, damages have been suffered, that you need to earn your claim within six years.

[00:18:00] Speaker 05:
And you shouldn't get a second bite at the apple.

[00:18:02] Speaker 05:
That's certainly not what these partnerships are looking to do.

[00:18:06] Speaker 03:
Thank you.

[00:18:07] Speaker 03:
Will we store two minutes of rebuttal, because we can see your time.

[00:18:10] Speaker 03:
Thank you.

[00:18:28] Speaker 00:
Good morning, and may it please the Court.

[00:18:31] Speaker 00:
The Court should affirm the judgment of the Court of Federal Claims, because the Court

[00:18:36] Speaker 00:
correctly applied this court's precedent in Tamerlane as well as the Supreme Court's precedent in Franconia in holding that the letters submitted by the owners did constitute a ballot prepayment request and that by not accepting that request the government breached the prepayment rights in the contracts.

[00:18:56] Speaker 06:
Before ALIPPA were there any regulatory requirements such as give us the date that we're in

[00:19:05] Speaker 06:
that were applicable?

[00:19:07] Speaker 06:
To my knowledge, there were not, I believe.

[00:19:10] Speaker 06:
So the regulations I was looking at weren't in place before ALIPPA.

[00:19:16] Speaker 06:
They were somehow anticipatory.

[00:19:20] Speaker 00:
To the best of my knowledge, the regulations in 1965 were promulgated in response to ALIPPA.

[00:19:27] Speaker 00:
I'm not familiar with any regulations that required that, that predate that.

[00:19:32] Speaker 00:
That wasn't a year.

[00:19:35] Speaker 04:
How was the government's action on April 17, the repudiation?

[00:19:40] Speaker 00:
Well, the repudiation occurred when Congress passed the LIBA.

[00:19:43] Speaker 00:
As the Supreme Court said in Franconia, by restricting the prepayment right and announcing the intention that we're not going to accept a prepayment, that was repudiation.

[00:19:53] Speaker 04:
If that's true, there were long stints that that's not beholding here, right?

[00:19:59] Speaker 00:
Well, under an anticipatory repudiation,

[00:20:03] Speaker 00:
the repudiation ripens into a breach, and this is straight out of Franconia, when an owner attempts to exercise the prepayment right, and that's when the government's duty first arises, and by not simply accepting the exercise of prepayment,

[00:20:21] Speaker 00:
that repudiation ripens into a full-blown breach.

[00:20:24] Speaker 04:
But the letter on April 17th was more an acceptance than a repudiation.

[00:20:30] Speaker 04:
It just said, fill in the data.

[00:20:32] Speaker 04:
It was information.

[00:20:34] Speaker 00:
And I think it's important, if I can, to walk through.

[00:20:37] Speaker 00:
What the letter said is to follow this application process.

[00:20:41] Speaker 00:
This process, that's part of a LIPA.

[00:20:44] Speaker 00:
That's part of the original repudiation.

[00:20:46] Speaker 00:
And it's much more cumbersome than simply

[00:20:49] Speaker 00:
filling out a simple form, writing a check, and nailing it in.

[00:20:54] Speaker 00:
The owners have to figure out what the projected rents on the property are going to be after prepayment.

[00:21:01] Speaker 04:
The letter says to further assist you.

[00:21:04] Speaker 04:
I would consider this letter to be positive rather than negative.

[00:21:10] Speaker 00:
Under Tamerlane, this court said that once someone has made, as an owner has exercised their prepayment right, the government has no choice

[00:21:18] Speaker 00:
It has to accept that right.

[00:21:21] Speaker 00:
And that by doing anything that's inconsistent with just sabbatical checks, that ripens right into a breach.

[00:21:29] Speaker 03:
I don't understand.

[00:21:30] Speaker 03:
Isn't it fair to differentiate between the government coming back and saying, you've got to give us this information before we'll consider your application, meaning that the government did not consider the application on the merits?

[00:21:44] Speaker 03:
Isn't that precisely what happened here?

[00:21:45] Speaker 03:
And under the regulations, this is sort of a

[00:21:48] Speaker 03:
requirement for how the request procedure works, right?

[00:21:55] Speaker 00:
The government did not consider, did not accept.

[00:21:58] Speaker 00:
It acknowledged in its response, yes, this is a prepayment.

[00:22:00] Speaker 00:
You wrote, you requested a prepay.

[00:22:02] Speaker 00:
It did not say, okay, we're going to accept your prepayment.

[00:22:06] Speaker 03:
No, and it didn't say, we're not going to accept your prepayment.

[00:22:09] Speaker 03:
It suggested, as I think Judge Lawyer was saying, that we need more information before we can consider this request.

[00:22:17] Speaker 00:
And that's precisely where Tamerlane holds, that by not accepting, the repudiation ripens into a full-blown breach.

[00:22:25] Speaker 06:
In Tamerlane, where all the papers filled out before the government said no?

[00:22:30] Speaker 00:
No, I believe

[00:22:34] Speaker 00:
The only documents that this court was looking at in Tamerlane were the two letters that are very similar to the letters that were submitted in this case.

[00:22:45] Speaker 00:
The court was not presented with applications or anything of the sort.

[00:22:52] Speaker 00:
The appellants were simply inferring their existence from the

[00:22:55] Speaker 06:
the fact that the government didn't respond for six months, which was kind of a period.

[00:23:00] Speaker 06:
And they eventually accepted the incentive deal, right?

[00:23:03] Speaker 06:
So they must have filled out the papers.

[00:23:05] Speaker 00:
I think over a year later, there was, they must have filled out something probably.

[00:23:10] Speaker 00:
But there's a note in Tamerlane that says one of the initial reaction for at least one of those properties was just an outright rejection from the government.

[00:23:22] Speaker 00:
But there's also a note in Tamerlane where the court

[00:23:28] Speaker 00:
The court says, although other conduct could constitute breach by the government, the Court of Federal Claims correctly ruled that at least by 1991 and 1992, when the offers of incentives were made, the breach-triggering rejections had occurred.

[00:23:54] Speaker 06:
And under the rules that were in place at that time,

[00:23:58] Speaker 06:
Did the offers of incentives precede the filling out of the papers, or do they follow the filling out?

[00:24:10] Speaker 00:
They follow the filling out.

[00:24:11] Speaker 06:
So one can probably actually infer that those papers were filled out.

[00:24:16] Speaker 00:
You can probably infer that those papers were filled out?

[00:24:19] Speaker 06:
So we don't have a situation like the present one where there is nothing more than

[00:24:26] Speaker 06:
We're interested in prepaying, response from the government, fill out these papers.

[00:24:31] Speaker 06:
They haven't gotten to the point of saying, and we're not going to pay you.

[00:24:36] Speaker 06:
I mean, let me, sorry, it's even worse than that.

[00:24:39] Speaker 06:
We're not going to accept your money.

[00:24:42] Speaker 00:
The agency under ALIPPA is not even permitted to consider a prepayment request unless the application is deemed complete.

[00:24:52] Speaker 00:
in order to have an application deemed complete.

[00:24:55] Speaker 03:
Yeah, how does that help you though?

[00:24:56] Speaker 03:
I mean, doesn't that demonstrate that the response in 2002 was not a consideration of the application?

[00:25:04] Speaker 00:
That it's almost equivalent of ignoring it.

[00:25:07] Speaker 00:
It's simply not accepting it.

[00:25:08] Speaker 00:
As Tamerlane and Francona just clear.

[00:25:10] Speaker 03:
What is equivalent to ignoring it?

[00:25:14] Speaker 03:
Are you talking about the government's response here in 2002?

[00:25:16] Speaker 00:
I just want to be clear what you're saying.

[00:25:18] Speaker 00:
Excuse me, Your Honor.

[00:25:19] Speaker 00:
The what's equivalent to ignoring it is the government's policy, the requirement that we will not consider a pre-payment request until you have submitted a completed application, which is very, very onerous and burdensome.

[00:25:33] Speaker 00:
It requires a lot of money, a lot of investigation by the owners, takes months to complete.

[00:25:40] Speaker 00:
And those are precisely the fetters.

[00:25:44] Speaker 00:
That's precisely repudiation.

[00:25:46] Speaker 00:
It's implementing the repudiation that the Supreme Court

[00:25:50] Speaker 00:
held a little bit constituted.

[00:25:52] Speaker 03:
What's implementing the repudiation, the onerous requirements through this application process?

[00:25:57] Speaker 00:
It's not simple.

[00:25:58] Speaker 00:
It's not like buying a car.

[00:25:59] Speaker 00:
We fill it in form.

[00:26:02] Speaker 00:
That was pretty onerous.

[00:26:03] Speaker 06:
Have you bought a car recently?

[00:26:06] Speaker 06:
Well, I just refilled it.

[00:26:07] Speaker 03:
So that was in the debt balance.

[00:26:09] Speaker 03:
Oh, well, then you know.

[00:26:13] Speaker 03:
Yeah.

[00:26:13] Speaker 03:
So the government doesn't have to, I mean, just by the existence of this regime,

[00:26:20] Speaker 03:
It's a rejection even before there's a request, no matter what the request says or how tentative.

[00:26:27] Speaker 00:
Essentially, yes.

[00:26:28] Speaker 00:
I mean, when the government, there's still a chance for the government, Congress could amend the law and say, you know, this is an unfettered right.

[00:26:35] Speaker 00:
They can exercise it.

[00:26:36] Speaker 00:
And back in the pre-olipid days, plaintiffs would, or property owners would literally just, you know, call up or write letters and say, I want to prepay.

[00:26:45] Speaker 00:
The response was, OK, send us your check.

[00:26:47] Speaker 00:
That still happens today.

[00:26:49] Speaker 00:
where owners will sometimes even just go to the regional offices with a check in hand.

[00:26:55] Speaker 00:
And there is a number of instructions provided by the agency that says you cannot accept an actual certified check until they've gone through this whole burdensome process.

[00:27:07] Speaker 00:
So by requiring them to do that, that does constitute that's a fact.

[00:27:12] Speaker 03:
Is there anything in Franconia that suggests that?

[00:27:16] Speaker 00:
Yes, Your Honor.

[00:27:17] Speaker 00:
In Franconia, it says

[00:27:19] Speaker 00:
the property owners had an unfettered right to prepay their contracts.

[00:27:24] Speaker 00:
And that won't ripen into a breach until they attempt to prepay, which I think is what we have here.

[00:27:31] Speaker 00:
You have an attempt to prepay.

[00:27:33] Speaker 00:
At that point, the government's duty is triggered.

[00:27:36] Speaker 00:
That duty, consistent with these mortgages, is simply to accept

[00:27:40] Speaker 00:
the prepayment request.

[00:27:42] Speaker 04:
But everything involving transfer of real estate and loans involves paperwork.

[00:27:52] Speaker 04:
Just requiring filling out a form completing the application isn't a repudiation.

[00:28:02] Speaker 00:
If it was as simple as, you know, they write the letter, we want to prepay,

[00:28:07] Speaker 00:
OK, let's sit down and figure out what the amount that you owe is, what the payoff amount is going to be.

[00:28:13] Speaker 00:
There may be a de minimis amount of work involved with that.

[00:28:18] Speaker 00:
We'll concede that.

[00:28:19] Speaker 00:
And it may take a few days to do that.

[00:28:22] Speaker 00:
But you're still in the process of accepting it.

[00:28:25] Speaker 00:
You're not saying we're not going to.

[00:28:27] Speaker 00:
And the point of this application process, the point of the regulations, is to avoid accepting it.

[00:28:35] Speaker 00:
The first thing the government does whenever it receives a completed application is it looks to see if there's other, you know... So I guess I just want to be clear on what you're saying.

[00:28:45] Speaker 03:
Let's assume that you're saying that the system that's set up which requires that somebody fill out papers before the government will consider the application is in and of itself a rejection because the government is requiring that you fill out some papers.

[00:29:05] Speaker 00:
because the government is not immediately accepting the request.

[00:29:10] Speaker 00:
And it's, again, it's more than filling out papers.

[00:29:12] Speaker 03:
But is there anything in the regime that existed before Aleppo suggested

[00:29:17] Speaker 03:
The government couldn't require you to do anything other than hand over it.

[00:29:21] Speaker 03:
I mean, we're all in Washington, right?

[00:29:24] Speaker 03:
I mean, doing anything, as my colleague suggested, requires that you fill out some paperwork and that you comply with certain requirements before it will even be considered.

[00:29:33] Speaker 03:
That's why I'm kind of puzzled by your suggestion that when the government is requiring that you fill out some papers, that that in and of itself

[00:29:42] Speaker 00:
is a rejection.

[00:29:43] Speaker 00:
Because it's substantially more than simply filling out some papers.

[00:29:47] Speaker 02:
So filling out a lot of papers is a rejection and filling out a few papers is not?

[00:29:52] Speaker 00:
It involves conducting market surveys.

[00:29:56] Speaker 00:
They have to have statistics on the percentage of minorities in the market area that will be affected.

[00:30:03] Speaker 03:
So are you suggesting that the government requires all these onerous requirements as

[00:30:08] Speaker 03:
In other words, rejecting it.

[00:30:09] Speaker 03:
Rather than saying no, we're going to lead to a rejection simply by requiring owner's paperwork.

[00:30:19] Speaker 00:
That actually is what it's designed to do.

[00:30:21] Speaker 00:
It's designed to avoid prepayment.

[00:30:23] Speaker 00:
That's why Congress implemented the LIPA, was to do precisely that.

[00:30:27] Speaker 00:
And in fact, once you've completed your application, then the government will offer incentives.

[00:30:34] Speaker 00:
If you reject the incentives, you still can't prepay.

[00:30:37] Speaker 00:
before you can repay, you have to offer to sell your property to a non-profit.

[00:30:44] Speaker 03:
But if they're serious about the incentives, why would they even need incentives there?

[00:30:49] Speaker 03:
If you're saying the decision has been made, they're going to reject it.

[00:30:54] Speaker 03:
And for that purpose, rather than just saying no, they're requiring somebody to fill out some onerous litany of paperwork.

[00:31:02] Speaker 00:
That was the structure that Congress devised and came up with.

[00:31:06] Speaker 00:
in response to, and this is a key point here, the reason the liberal was passed was because too many of the owners were exercising their prepayment rights and there was a drop, a shortage of affordable housing.

[00:31:18] Speaker 00:
And so Congress repudiated that very straightforward right and constructed this elaborate scheme, which as the trial court in Franconia on Greenland found, as the trial court in this case analyzed and found,

[00:31:33] Speaker 00:
was all designed to avoid allowing an owner to prepay.

[00:31:38] Speaker 04:
You're saying that the government's letter should be interpreted in that context.

[00:31:42] Speaker 06:
Yes, Your Honor.

[00:31:43] Speaker 06:
Exactly.

[00:31:44] Speaker 06:
Do you happen to have with you, what was the exact date?

[00:31:47] Speaker 06:
Is it 2002 that Franconia was decided?

[00:31:51] Speaker 06:
I don't happen to have a copy of this.

[00:31:55] Speaker 04:
June 10th.

[00:31:57] Speaker 06:
So this exchange took place about six weeks before.

[00:32:00] Speaker 06:
A few weeks before Franconia was decided.

[00:32:04] Speaker 04:
It was an argument.

[00:32:09] Speaker 06:
Can I ask you about this topic that I discussed with your friend on the other side about this idea which I must say I find deeply strange that a provision that says you have a right to repay at any time means a right to try to repay once and if denied you never get to ask again.

[00:32:33] Speaker 06:
if you don't sue on the first one.

[00:32:36] Speaker 00:
Well, I think once, as a court held in Tamerlane, once you've exercised the prepayment right, this is all post-repudiation, once you've exercised that right, the accrual period is triggered.

[00:32:52] Speaker 00:
For that refusal?

[00:32:54] Speaker 06:
I really do not understand how, under standard law,

[00:33:01] Speaker 06:
like the kind of law that has been in place in the employment context forever that's discussed and led better, that when I commit a wrong each year, that it's not a new, even if it's the same wrong, discriminating against you for some impermissible reason, how that's not a new wrong.

[00:33:24] Speaker 06:
And actionable from then, not reaching back to the first one.

[00:33:27] Speaker 06:
And this is a right to prepay at any time for 50 years.

[00:33:31] Speaker 00:
Your Honor, respectfully, that the precise question of continuing claims was argued and raised and considered by this court in Tamerlane.

[00:33:40] Speaker 00:
It was rejected by Tamerlane.

[00:33:43] Speaker 00:
And this court is, whether it agrees with it or not, still is bound until that decision is overruled on bond.

[00:33:52] Speaker 00:
It is binding precedent and the court must follow it.

[00:33:56] Speaker 03:
And is that a standard that's been applied in the context of contract law?

[00:34:01] Speaker 03:
in terms of the differentiation between continuing violations, Judge Toronto points out, that exists in the employment context.

[00:34:08] Speaker 00:
I'm not familiar with whether or not it's been applied in other contract law cases.

[00:34:14] Speaker 00:
I'm happy to look at that and provide some more briefing on that issue if the court requires it.

[00:34:21] Speaker 00:
Thank you.

[00:34:22] Speaker 00:
Thank you.

[00:34:32] Speaker 05:
Just a few points in rebuttal.

[00:34:34] Speaker 05:
Regarding the question of the regs that were in place prior to OLIPA and what they required and after, I think the other issue that might be coming into play here is before OLIPA was passed, there were a number of congressional moratoria on prepayment.

[00:34:49] Speaker 05:
And so there may have been regulations related to those moratoria that were basically a precursor to OLIPA restricting the right to prepay.

[00:34:57] Speaker 05:
But our point there is that this is addressed in footnote three on page five of our brief.

[00:35:04] Speaker 05:
Even before Aleppo, even before this new regime, there was a 180-day waiting period.

[00:35:09] Speaker 05:
You couldn't just walk in and say, here's my check, I'm out today.

[00:35:12] Speaker 05:
Even then, even before this repudiation, there was that 180-day waiting period and a number of other requirements, including showing that you needed to establish that you could actually get commercial financing

[00:35:26] Speaker 05:
and the like.

[00:35:26] Speaker 05:
So again, showing that these things just do not happen overnight.

[00:35:31] Speaker 05:
Regarding Tamerlane and what was found to be a rejection there, it's a very, very different situation that this court addressed in Tamerlane versus our case in terms of a rejection.

[00:35:44] Speaker 05:
There, again, it was the government coming back and saying, you want a prepay.

[00:35:49] Speaker 05:
And by the way, there's no debate that the owners must have.

[00:35:54] Speaker 05:
specified a date for performance because they never could have gotten to the point of receiving an incentive offer from the government had they not done so.

[00:36:02] Speaker 05:
And the agency came back and said, you want X, we're going to give you Y. You want to prepay, instead we're going to only allow you these incentives.

[00:36:11] Speaker 05:
And that was a rejection as of a time for performance.

[00:36:14] Speaker 06:
So the language in the Tamerlane opinion may be overbroad given the circumstances actually presented.

[00:36:23] Speaker 05:
I think so, Your Honor.

[00:36:24] Speaker 05:
I think the main issue is that the time for performance was just not at issue there, and therefore not specifically addressed.

[00:36:31] Speaker 05:
It's kind of like a jurisprudential game of telephone, where the whole basis of the Supreme Court's decision was about time for performance.

[00:36:41] Speaker 05:
It wasn't specifically at issue in Camerland, so it wasn't fully addressed.

[00:36:46] Speaker 05:
And then we have Airport Road.

[00:36:48] Speaker 05:
basically trying to apply camera lane but losing sight of the very foundation of Franconi, which again is time for performance.

[00:36:56] Speaker 05:
And that brings me to, in terms of the agency's regulatory process, our position has never been that an owner needs to go through that entire process or necessarily even initiate that process to arrive at a breach.

[00:37:10] Speaker 05:
What they need to do under contract law is specify or at least

[00:37:16] Speaker 05:
produce a writing that communicates a demand for performance as of a certain time, if not immediate performance, and then have the government reject that demand as of the date for performance.

[00:37:31] Speaker 05:
And do you do not have other points here?

[00:37:33] Speaker 03:
And what are the governments coming back to a specific request for a time performance and saying, well, you need to fill out more paperwork?

[00:37:39] Speaker 03:
Would that constitute a rejection?

[00:37:41] Speaker 03:
Would that be sufficient for rejection in your view?

[00:37:43] Speaker 03:
Not without a time for performance.

[00:37:45] Speaker 03:
Again, the starting point.

[00:37:45] Speaker 03:
No, if you have a time for performance.

[00:37:48] Speaker 03:
If you say, I want to do this within 180 days, and the government comes back and says, well, you've got to fill out this paperwork first.

[00:37:57] Speaker 05:
That's a great example, Your Honor.

[00:37:59] Speaker 05:
And the answer is clear under Franconi and all the common law that it's based on is that you would have a breach once that time for performance comes if the government has not actually let you out by that date.

[00:38:12] Speaker 05:
Because you've drawn the line in the sand.

[00:38:14] Speaker 05:
You're saying, here's my time for performance.

[00:38:17] Speaker 05:
Here's when I plan to get out.

[00:38:19] Speaker 05:
It's going to be 180 days.

[00:38:20] Speaker 05:
That's what I need in order to get my financing lined up and maybe more realistic if it's one property instead of 11, as we have here.

[00:38:30] Speaker 05:
And then, yes, even a non-response, and that goes to the Kazarsky case.

[00:38:34] Speaker 05:
It goes to the Parkwood case.

[00:38:36] Speaker 05:
A non-response as of the time for performance is a breach.

[00:38:39] Speaker 05:
But again, you need to have that time for performance under Franconia.

[00:38:43] Speaker 03:
Thank you.

[00:38:44] Speaker 03:
Thank both sides, and the case is submitted.