[00:00:01] Speaker 03: We have four argued cases. [00:00:04] Speaker 03: The first of these is number 15-5102, Park Properties Associates versus United States, Mr. Gentile. [00:00:18] Speaker 01: Thank you, Your Honor, and may it please this honorable court, Thomas Gentile of Wilson, Elsa, for the appellants. [00:00:24] Speaker 01: The appellant's position is straightforward. [00:00:26] Speaker 01: The Court of Federal Claims erred in not granting legal fees to these plaintiffs under the Equal Access to Justice Act. [00:00:34] Speaker 03: I was surprised in reading both sides' briefs not to see any discussion really about the reasonableness of the government's position on the central issues in this case. [00:00:49] Speaker 03: There's a lot of discussion about what other Court of Federal Claims judges did and [00:00:57] Speaker 03: argue that the government didn't appeal some of those decisions, but there's just no discussion of the merits of the government's positions that it took and whether those positions were reasonable or not. [00:01:10] Speaker 01: Well, it's a very interesting situation, Your Honor, because the positions that the government took are not reflected, we believe, in the opinion of the Court of the Federal Claims below. [00:01:19] Speaker 01: The opinion of the Court of Federal Claims asserts various reasons why they think legal fees should not be granted under the substantial justification standard [00:01:27] Speaker 01: And we argue in our brief as to the reasons as to why the Court of Federal Claims was wrong on that. [00:01:32] Speaker 03: Yeah, but you don't argue about the reasonableness of the government's position with respect to the statutory requirement about the comparability studies of the 1%. [00:01:42] Speaker 03: There's no discussion of whether that was reasonable or unreasonable. [00:01:46] Speaker 01: We believe that the primary position that needs to be addressed here is [00:01:54] Speaker 01: the conduct of the underlying agency in this case, that HUD took unreasonable positions when it carried, when it did not follow the previous order of this court. [00:02:08] Speaker 01: And that that is what merits the awarding of attorney's fees here. [00:02:12] Speaker 00: Can I ask you when, when you, you filed an each emotion, right? [00:02:15] Speaker 00: And then the government opposed in the government's opposition, did it set forth a explanation why? [00:02:23] Speaker 00: Even though it had lost on the contract issue, its position was reasonable? [00:02:27] Speaker 01: Well, respectfully, I'd leave that to the government to... I'm sorry. [00:02:31] Speaker 00: That was a question about what was in their papers. [00:02:33] Speaker 00: Yes. [00:02:33] Speaker 00: So did they set forth an explanation for why their ultimately losing position on breach of contract was nevertheless a reasonable position? [00:02:44] Speaker 01: I don't believe they did, Your Honor. [00:02:45] Speaker ?: Okay. [00:02:48] Speaker 03: The inquiry is to... But you haven't raised that issue. [00:02:53] Speaker 03: You haven't argued that the government failed to argue that, and I think you're correct. [00:02:58] Speaker 03: I've read their opposition before the Court of Federal Claims, but you haven't argued that on appeal. [00:03:04] Speaker 03: There's nothing in your briefs about that. [00:03:06] Speaker 01: Well, Your Honor, as we've stated, the position of our clients is that the primary issue here is the conduct of the government in abrogating these contracts, the conduct of HUD in failing to follow the previous orders of this court. [00:03:20] Speaker 01: the conduct of the government in dragging out this litigation. [00:03:23] Speaker 01: We believe that those are the bases of awarding attorney's fees here. [00:03:28] Speaker 01: Okay. [00:03:29] Speaker 01: Thank you, your honor. [00:03:30] Speaker 01: There was no justification for the government's conduct. [00:03:32] Speaker 01: It certainly wasn't a substantial one. [00:03:34] Speaker 01: The 1994 amendments gutted the automatic increases set forth in the housing assistance program contracts. [00:03:41] Speaker 01: And when the court of federal claims ruled that these 1994 amendments constituted a breach, HUD basically ignored that ruling. [00:03:49] Speaker 01: What we have to emphasize here is that the conduct of the government and HUD towards these plaintiffs affected not only these plaintiffs, but numerous thousands of other Section 8 housing owners. [00:04:01] Speaker 01: Only these plaintiffs had the fortitude to endure the seemingly endless litigation against the United States Justice Department to see that justice was in fact done. [00:04:10] Speaker 00: If the government's defense of the breach of contract claim was itself reasonable, then nothing else you say matters, right? [00:04:20] Speaker 01: I'm sorry. [00:04:21] Speaker 01: Can you say that again, Your Honor? [00:04:23] Speaker 00: If the government, though having lost the breach of contract issue, was asserting a defense that was reasonable, though wrong, then nothing else you say matters. [00:04:40] Speaker 00: It is a necessary condition for you to get fees that the government's position not be substantially justified. [00:04:47] Speaker 00: That's correct. [00:04:47] Speaker 00: The standard is substantial justification. [00:04:49] Speaker 00: So can you explain, even though it's not in the briefs on either side, which I do find remarkable, why the government's defense, conceivably wrong, was actually unreasonable? [00:05:02] Speaker 01: It was unreasonable, Your Honor, because the underlying conduct was unreasonable. [00:05:05] Speaker 01: And that's the position of these plaintiffs and these appellants. [00:05:08] Speaker 01: That there was no justification for what HUD and the government did in abrogating these contracts. [00:05:12] Speaker 00: So that there was no reasonable basis for the government to have said, for example, based on the overall limitation provision, the 1994 legislation wasn't actually a breach. [00:05:24] Speaker 01: But the court did find that it was a breach, Your Honor. [00:05:30] Speaker 01: You can continue. [00:05:31] Speaker 01: Thank you, Your Honor. [00:05:33] Speaker 01: The court of claim cited an issue that it believes the plaintiffs did not prevail on. [00:05:37] Speaker 01: It's not the standard in the statute that the plaintiffs must prevail on every issue. [00:05:42] Speaker 01: The standard in the statute is that they must be the prevailing party. [00:05:46] Speaker 01: And the only issue that they point to on which the plaintiffs did not prevail was a procedural issue about whether the plaintiffs needed to bring renewal rents claims in that then existing lawsuit or bring them into [00:06:00] Speaker 01: a new lawsuit. [00:06:01] Speaker 01: So that is not an issue on which the plaintiffs did not prevail. [00:06:05] Speaker 01: Plaintiffs, in fact, did bring it in another lawsuit, and Judge Lawrence Smith of the Court of Federal Claims has granted summary judgment on that claim, and proceedings are going forth now as to damages. [00:06:15] Speaker 01: If you're honest and have no further questions, I'll defer to my adversary. [00:06:19] Speaker 01: Thank you. [00:06:23] Speaker 03: Mr. Toder, is that how you pronounce it? [00:06:25] Speaker 03: Toder. [00:06:35] Speaker 02: Thank you and may it please the court. [00:06:37] Speaker 02: With respect to whether the government gave papers as to the reasonableness of its position in the underlying litigation we did in the Court of Federal Claims in our opposition to the huge emotion. [00:06:48] Speaker 02: I did not see that in there. [00:06:49] Speaker 03: It is at docket 168. [00:06:51] Speaker 03: I read the file on March 16, 2015. [00:06:55] Speaker 03: That paper seems to be somewhat similar to your brief here. [00:07:00] Speaker 03: which also doesn't address the reasonableness of the government's position on the two key issues. [00:07:07] Speaker 02: And with respect to that, Your Honor, on the core question of whether the 1994 statute breached the HAP contracts, the Court of Federal Claims decision here relied upon the earlier decision of the court in Cuyahoga. [00:07:23] Speaker 02: The Cuyahoga case states explicitly that this is a knotty question, described it as tenebrous, which is an obscure word meaning obscure, because it involves the application of the unmistakability doctrine, the Sovereign Acts doctrine. [00:07:35] Speaker 03: Well, why don't you argue in your brief that the government's position on the key issues was reasonable, on the comparability studies and on the one percent? [00:07:44] Speaker 03: You don't argue that. [00:07:45] Speaker 02: We don't talk about that in the briefing. [00:07:47] Speaker 02: We respond to the arguments that were put forth when we were discussing the trial court's opinion on IJA, which doesn't discuss those issues explicitly one by one. [00:07:56] Speaker 02: I'm prepared to do so now if the court would prefer. [00:08:01] Speaker 02: With respect to Cuyahoga. [00:08:02] Speaker 02: Can you, please? [00:08:03] Speaker 02: Yes. [00:08:03] Speaker 02: With respect to Cuyahoga, the issue of whether [00:08:06] Speaker 02: the statute of Congress breached the contracts. [00:08:09] Speaker 02: There is an issue of whether sovereign immunity prohibited that under the unmistakability doctrine. [00:08:14] Speaker 02: Cuyahoga said this is a very difficult question, involved interpretation of the Winstar opinion, which had three different opinions, none of which was a total majority, acknowledged it was a very difficult issue. [00:08:25] Speaker 02: The future decisions of the Court of Federal Claims, even though they came out against this, all were relying upon Cuyahoga, which conceded that that's [00:08:32] Speaker 02: a very difficult issue under the standard for substantial justification, which is whether there's a reasonable basis of law and fact, whether reasonable minds can differ. [00:08:40] Speaker 02: The fact that the seminal case, which stemmed all these other cases, said that this is a very hard issue and there have been no appellate court decision going further than that. [00:08:52] Speaker 02: is enough to justify the position that the government was substantially justified in continuing to litigate the position, which was acknowledged to be a very difficult question by the seminal decision by the same judge who decided the Egypt decision here. [00:09:05] Speaker 02: The Egypt decision doesn't go through all those steps one by one, but in part, perhaps that's because the court was relying upon the earlier decision that acknowledged it was a hard question. [00:09:13] Speaker 03: As to the 1%, this judge had come out the other way originally, right? [00:09:18] Speaker 02: Yes. [00:09:18] Speaker 02: And there's also a dispute among [00:09:21] Speaker 02: the Court of Federal Claims with respect to some of the other subsidiary issues. [00:09:27] Speaker 02: For example, there was an issue whether this 1% deduction would apply. [00:09:31] Speaker 02: There was also an issue whether the statute abrogated the overall limitation clause in the HAP contracts. [00:09:38] Speaker 02: The overall limitation clause pre-existed [00:09:42] Speaker 02: the 1994 statute, it said HUD had the option to come up with market data to show that there's a material difference and limit rent increases. [00:09:51] Speaker 02: The issue was whether it was that statute, HUD was no longer able to do that after the 1994 statute had changed the procedure for the rent increases. [00:10:02] Speaker 02: Could HUD still go on its own? [00:10:03] Speaker 02: There was a dispute in the lower courts. [00:10:05] Speaker 02: There was a case called Statesman II, [00:10:07] Speaker 02: I believe it was from Judge Aletto. [00:10:09] Speaker 02: And then there was a difference of opinion between that opinion and this court's opinion. [00:10:17] Speaker 02: And ultimately, this court came out the other way. [00:10:19] Speaker 02: But again, the fact that there is a dispute among the Court of Federal Claims with respect to one of the questions, which was found to be a breach, supports the finding that the government's position was substantially justified. [00:10:30] Speaker 02: Also with respect to the overall limitation clauses, we cite [00:10:34] Speaker 02: our papers, the First Circuit in the one in Ken Valley case had actually come out the other way from the way the Federal Circuit appears to have done in the Haddon Housing Associates case, although the First Circuit distinguished Haddon in a footnote, because the First Circuit [00:10:47] Speaker 02: ruled that the overall limitation clause apparently still could be applied, which would be a different outcome from what appears to have been the outcome in Haddon with respect to that question. [00:10:56] Speaker 03: It could still be applied, but not by putting the burden on the landlord to come up with a comparability study. [00:11:03] Speaker 03: Right. [00:11:03] Speaker 02: And the question on the overall limitation clause is whether HUD could do it itself after the 1994 statute. [00:11:09] Speaker 02: whether HUD still preserved the options it had under the original contract for HUD to affirmatively come up with the market data, or whether the 1994 statute, because it had put the onus on the property owner, that means HUD couldn't do it itself anymore. [00:11:23] Speaker 02: That clause was just simply out of the contract. [00:11:26] Speaker 03: In these cases, the government was trying to come in with comparability studies which supported its position on the rents? [00:11:33] Speaker 03: That seemed to be what happened in one in Ken. [00:11:35] Speaker 02: That was a state housing authority in Maine. [00:11:38] Speaker 02: In these cases, it may have been the case in States and I'm not sure, but the issue that was dealt with by the court in this case was whether the provision that put the onus on the owner to come up with the rent comparability study, whether that meant that HUD couldn't still do it itself. [00:12:01] Speaker 02: i don't believe that had tried to do it itself in this one it's just whether that provisions completely written out of the contract but again the fact there's tension the fact that you have two different circuits have come with you know positions that are intentional with one another again gives basis that the government's position was substantially justified that there is a legitimate basis for dispute on that question which is uh... separate downstream question from whether the nineteen ninety four statutes affected a breach him but i think you the government is uh... [00:12:30] Speaker 03: going to get itself into trouble if it doesn't bother to address the reasonableness of its position before the Court of Federal Claims and this court in these cases. [00:12:41] Speaker 03: I mean, that's an essential ingredient of the substantially justified question. [00:12:46] Speaker 03: And you just can't ignore that. [00:12:49] Speaker 03: Yes, Your Honor. [00:12:50] Speaker 02: And to the extent that we were simply responding to the arguments that were put by plaintiffs in defending the decision of the trial court, that was why we weren't going point by point on this. [00:13:00] Speaker 02: I'm here to provide any clarification that the court needs on any of these questions. [00:13:06] Speaker 00: I also want to address... I think you may have answered this, but there's a lot of detail that is new as of this morning to me. [00:13:18] Speaker 00: There were, as Judge Allegra said, several different judicial decisions in the area. [00:13:27] Speaker 00: You've mentioned, I think, additional ones. [00:13:29] Speaker 00: Which ones precisely and on what issues bore on the issues that were in this case, as opposed to other aspects of HAP contract litigation? [00:13:40] Speaker 02: The HAP and Housing Associates decision of this court defined that the 1994 statutes were a breach of the underlying contracts. [00:13:50] Speaker 02: So that was the basis for the court's decision saying that the decision of law was unsettled in this circuit. [00:13:56] Speaker 02: Therefore, the government's position had a substantial basis in law in fact prior to that decision. [00:14:01] Speaker 00: That seems to me like an incorrect proposition of law that just because a court of appeals hasn't ruled on a position, it is therefore substantially justified. [00:14:12] Speaker 02: We're not saying that that's always the case. [00:14:14] Speaker 02: We're saying in a case like this, where you're dealing with the application of a statute where the court that is issuing the same each opinion had [00:14:22] Speaker 02: in this seminal opinion said that this is a very difficult question that involves application of the unmistakability doctrine, which is very difficult based upon the Winstar Supreme Court decision, which doesn't have even a majority. [00:14:35] Speaker 02: This was acknowledged to be a very difficult question. [00:14:38] Speaker 02: And in that context, the fact that there had been no court of appeals decision makes it reasonable to conclude that the government's position was substantially justified, even though we lost. [00:14:47] Speaker 02: given that this was acknowledged to be a difficult question from the outset, and no one had resolved it beyond that. [00:14:54] Speaker 02: We're not saying in every case there has to be a court of appeals decision for the law to be possible for our position not to be substantially justified. [00:15:02] Speaker 02: But in a case like this, where it's acknowledged to be a difficult question, the fact that it had not been litigated and given guidance by the court of appeals does support the finding that our position was substantially justified. [00:15:17] Speaker 02: I also want to address a point that opposing counsel made with respect to footnote six of the court's each opinion, where the court had set apart from the substantial justification provision of the statute. [00:15:30] Speaker 02: Additionally, court notes that the plaintiffs did not prevail on all issues, and this would also be an additional reason not to grant attorney's fees. [00:15:39] Speaker 02: First, we want to note that that's [00:15:41] Speaker 02: states by its terms that it's dicta and not the basis for the decision because it says it's totally apart from the substantial justification standard under the statute. [00:15:50] Speaker 02: We disagree with the court that that would be a correct statement of the law, that the plaintiffs did not prevail on every issue would be sufficient reason. [00:16:01] Speaker 02: They are a prevailing party. [00:16:03] Speaker 02: We do not contest that they are a prevailing party. [00:16:05] Speaker 02: What we will say is the fact that we did prevail on some issues, which includes the statute of limitations issue, which includes foreseeability on their lost profits claims for the renewal contracts. [00:16:16] Speaker 02: That does, again, give additional support to the conclusion that our position was substantially justified. [00:16:22] Speaker 02: If one could imagine a case where plaintiffs brought 100 issues and the government prevails on 99 of the 100 issues. [00:16:28] Speaker 02: The plaintiffs could be a prevailing party under EJA. [00:16:31] Speaker 02: They got judicially sanctioned relief. [00:16:33] Speaker 02: If the government won on 99 out of 100 issues, that would be relevant to a consideration of whether the government's position was substantially justified in the whole. [00:16:43] Speaker 02: That's not exactly the point that the court was making in footnote six, but I would say that the fact that we did prevail on some issues is again relevant to the substantial justification analysis. [00:17:02] Speaker 02: With that, the Court has no further questions. [00:17:04] Speaker 02: We respectfully request that the Court affirm the decision of the Court of Federal Claims denying plaintiffs each a claim. [00:17:10] Speaker 03: Thank you. [00:17:14] Speaker 01: Mr. Gentile. [00:17:16] Speaker 01: Thank you, Your Honor. [00:17:17] Speaker 01: Just a few quick points in rebuttal. [00:17:19] Speaker 01: With regard to what my adversary said about a hypothetical in which 100 issues were brought, the Court must understand that an attorney has an ethical obligation to his client to assert every issue. [00:17:29] Speaker 01: We cannot put an attorney representing a client in a position in which he is carefully picking and choosing only the best possible arguments to advance out of a fear that losing other arguments on which he may have a chance but not the best chance might impact his ability to get attorney's fees. [00:17:45] Speaker 01: That would be a very, very dangerous situation for this court. [00:17:48] Speaker 01: Second, with regard to the issue of there having been no governing appellate case, there's no standard like that in the equal access to justice statute. [00:17:56] Speaker 01: There's nothing in the statute that says that there must be an appellate case on point. [00:18:01] Speaker 01: And as we have argued in our briefs, it was the government that tactically did not appeal many of these cases so that there would not be an appellate case on point, so that plaintiffs, Section 8 housing owners, would be in a position where they faced tremendous uphill battle and tremendous legal fees, which they couldn't sustain, especially under the pressure of the reduced rents, which had much of the Section 8 [00:18:24] Speaker 01: housing owners throughout the country on the brink of foreclosure and bankruptcy. [00:18:29] Speaker 01: Finally, the decision of the court of federal claims in this case did not address many of the issues which your honors believe are the most important, specifically the underlying arguments of the government as to the reasonableness of their positions [00:18:44] Speaker 01: But you didn't argue that to the Court of Federal Claims either, right? [00:18:48] Speaker 01: And that's why I suggest respectfully to this Court, Your Honor, that perhaps the correct proceeding might be for this case to be remanded to the Court of Federal Claims for that to be argued. [00:18:56] Speaker 01: And with that, I rest, Your Honor. [00:18:58] Speaker 01: Okay. [00:18:58] Speaker 01: Thank you. [00:18:59] Speaker 01: Thank you, Your Honor.