[00:00:01] Speaker 03:
Okay, first our group case this morning is number 171688, Sailing Associates Against the United States, Mr. Blando.

[00:00:22] Speaker 04:
May it please the court and good morning.

[00:00:23] Speaker 04:
My name is Mark Blando of Eklund and Blando and I represent the plaintiffs and appellants in this matter.

[00:00:29] Speaker 04:
We seek reversal of the decision of the court below on three separate grounds based on the three alternative grounds on which that court ruled against the plaintiffs.

[00:00:39] Speaker 04:
And those issues are, number one, whether the material change of position doctrine still applies after the Franconian decision by the Supreme Court.

[00:00:47] Speaker 04:
Number two, if so, whether Mrs. Garner's actions here are qualified as such a material change of position.

[00:00:54] Speaker 04:
And number three, again, if so, at what point in time that change in position

[00:00:59] Speaker 04:
was effective for purposes of accrual of the statute of limitations.

[00:01:03] Speaker 02:
But she essentially bailed out more than six years before suit, right?

[00:01:10] Speaker 04:
I would not agree with that, Your Honor.

[00:01:11] Speaker 04:
She took action to mitigate her damages.

[00:01:15] Speaker 04:
And once that mitigation was complete and she was no longer performing the contract, she brought suit within six years of that point.

[00:01:23] Speaker 04:
So she did the best she could under the situation where the government repudiated her contract

[00:01:29] Speaker 04:
took away the right to prepay, basically devalued her property to the extent that it had barely any of the original value it would have under the original contract terms.

[00:01:39] Speaker 02:
But she sold her interest more than six months before.

[00:01:43] Speaker 04:
She sold the property and completed the sale less than six years before she filed suit.

[00:01:53] Speaker 02:
That's your argument.

[00:01:54] Speaker 02:
Absolutely.

[00:01:55] Speaker 02:
That the completion of the

[00:01:58] Speaker 02:
agreement is the date that counts?

[00:02:01] Speaker 04:
Absolutely, Your Honor, because there's so much that has to happen between the date that that sale agreement is signed and the date that the closing actually occurs.

[00:02:11] Speaker 04:
Everything points to the closing.

[00:02:13] Speaker 04:
If you look at this purchase and sale agreement, there's a hundred references to the closing.

[00:02:18] Speaker 04:
If you look at the agency's regulations, which we have in the addendum at pages one through five, there are

[00:02:26] Speaker 04:
plethora of things that have to happen between the time of the sale agreement and the closing.

[00:02:31] Speaker 01:
They have to get... Under your argument, would it be that you have to look at the contract each time to determine whether entering into the contract or closing would be the material change?

[00:02:45] Speaker 04:
That certainly would be a factor, Your Honor, but I think the biggest thing to look at and the easiest rule to apply in this case is when did the party's performance stop?

[00:02:54] Speaker 04:
So remember, this is a contract that the parties, the government, and the original owners had been performing for 20 years up until the time when the sale occurred.

[00:03:03] Speaker 01:
But that's not what the law says.

[00:03:04] Speaker 01:
What the law says is you look at when there was a material change in reliance on the government's decision to repudiate, right?

[00:03:16] Speaker 04:
Yes, Your Honor.

[00:03:16] Speaker 04:
The case law says you look at when the change occurred in here.

[00:03:19] Speaker 04:
Our argument is, well, when did the change actually occur?

[00:03:22] Speaker 01:
I think it's your hardest position, so I'm really trying to dig in to when the change occurred.

[00:03:28] Speaker 01:
When is it that a material change occurred in reliance on the repudiation?

[00:03:34] Speaker 01:
Is it when there was an entrance into the contract, when the contract was formed for the sale of the property, or when it was closed?

[00:03:43] Speaker 01:
And one of the arguments that could be made for why it should be when the contract was entered into is because

[00:03:49] Speaker 01:
when the material change occurs, at that point the repudiating party could no longer rescind its repudiation, right?

[00:04:00] Speaker 01:
And so it seems a little odd under the way you're looking at the law to say that even though your client had entered into the contract, the government could at that point still repudiate, I mean rescind its repudiation.

[00:04:13] Speaker 04:
Right, Your Honor, we would disagree with the notion that the government could no longer retract their repudiation.

[00:04:18] Speaker 04:
So the way they would retract for the Franconia Supreme Court decision is by repealing the legislation.

[00:04:24] Speaker 04:
And we say, absolutely, the government could have repealed OLIPA after the point that we entered into the sale agreement.

[00:04:32] Speaker 04:
And you can bet if Ms.

[00:04:33] Speaker 04:
Garner had filed suit at that point in time, the government would say, well, why are you suing on the prepayment right?

[00:04:39] Speaker 04:
We've already repealed the legislation.

[00:04:41] Speaker 04:
You haven't suffered a loss.

[00:04:43] Speaker 04:
And again, I think the fact that the parties are still performing the contract is a key difference here.

[00:04:48] Speaker 04:
There's never been, in all of the material change of position cases that have been decided, there's never been one that found a change to occur while the parties are still performing.

[00:04:59] Speaker 02:
What is the continued performance?

[00:05:02] Speaker 02:
Payment of interest?

[00:05:04] Speaker 04:
A number of things.

[00:05:04] Speaker 04:
They own the property.

[00:05:05] Speaker 04:
They are operating it.

[00:05:06] Speaker 04:
They are responsible for the management of the property.

[00:05:09] Speaker 04:
the care of it, the care of the tenants, the submission of budgets, compliance with all kinds of government regulations in the 35-60 rules.

[00:05:17] Speaker 04:
And to your point, absolutely, they're responsible for paying the mortgage.

[00:05:21] Speaker 04:
So at the time they sign that sale agreement, they are still paying the mortgage every month.

[00:05:25] Speaker 04:
The government is accepting those payments.

[00:05:28] Speaker 04:
So when does the change occur?

[00:05:29] Speaker 04:
Only upon the closing.

[00:05:31] Speaker 04:
Everything points to the closing.

[00:05:32] Speaker 04:
Everything changes at the closing.

[00:05:34] Speaker 04:
That's the point at which

[00:05:36] Speaker 04:
The property is actually transferred.

[00:05:38] Speaker 04:
If you look at the agency's regs, they talk about what has to happen before the transfer and that transfer that they're pointing to is the closing.

[00:05:46] Speaker 04:
Again, before then there's environmental reviews, civil rights reviews, capital needs assessment, appraisals that has to be done.

[00:05:55] Speaker 04:
Even under the sale agreement, you need every party to that sale agreement has the right to void it one way or another.

[00:06:02] Speaker 04:
Even on the seller's part, they need

[00:06:04] Speaker 04:
approval of their limited partners before the transfer can occur.

[00:06:08] Speaker 04:
The buyer has a whole list of due diligence items they have to do, and it's all subject to the consent of the agency, which again is where all those other requirements come into play.

[00:06:19] Speaker 01:
What law do you have to help us understand precedent on what is a material change in this context?

[00:06:27] Speaker 04:
The case law has consistently dealt with the question of

[00:06:32] Speaker 04:
election and at what point are you making an election to treat the repudiation as a breach?

[00:06:37] Speaker 04:
And in terms of the material change, it's when do you finally close the door?

[00:06:41] Speaker 04:
What is the final act?

[00:06:42] Speaker 01:
Where is your final act?

[00:06:44] Speaker 01:
I mean, I think one of these treatises you mentioned does have the word final in it, but I haven't seen a whole lot of cases that emphasize final like you are here today.

[00:06:52] Speaker 01:
Right.

[00:06:53] Speaker 01:
Yeah.

[00:06:53] Speaker 01:
So the final act here again would be... I mean, the truth is this probably doesn't matter in a lot of cases.

[00:06:58] Speaker 01:
Right?

[00:06:59] Speaker 01:
Because whether it's entering the contract or closing, it doesn't matter.

[00:07:03] Speaker 01:
Probably both of them, if there's no statute of limitations or any other fact pattern, it really doesn't matter, in probably most cases, which event is the trigger.

[00:07:11] Speaker 04:
I think you're absolutely right, Your Honor.

[00:07:13] Speaker 04:
I think that's what you're seeing in so many cases.

[00:07:14] Speaker 04:
There's no question of accrual.

[00:07:16] Speaker 04:
It's just a question of, through this course of conduct, when you agree that you're going to sell that grain to someone else, is it when you sign the contract?

[00:07:24] Speaker 04:
Is it when you actually deliver the grain?

[00:07:26] Speaker 04:
Is it when the other party accepts the grain?

[00:07:28] Speaker 04:
The other cases don't have to specify exactly which date along that path it is because there's no statute of limitations issue here.

[00:07:35] Speaker 04:
So I think we have to look at what makes the most sense, what's the most logical rule supported by the case law to say when that change really occurs.

[00:07:43] Speaker 04:
And remember, you don't actually, this owner, Ms.

[00:07:44] Speaker 04:
Garner, didn't suffer a loss.

[00:07:46] Speaker 04:
That loss was not realized until the moment of the closing because that's when money finally changed hands.

[00:07:53] Speaker 04:
That's when, per the closing statement, she received the cash to owner as it says,

[00:07:58] Speaker 04:
on the HUD-1 statement.

[00:07:59] Speaker 04:
So now she suffered a loss.

[00:08:01] Speaker 04:
Only now is she no longer performing under that contract with the government.

[00:08:05] Speaker 04:
Only now is she no longer paying the mortgage.

[00:08:08] Speaker 04:
Now the buyer is the owner of the property and the one who's responsible on the mortgage.

[00:08:13] Speaker 04:
I mean, everything in all of these regulations throughout the sale agreement, everything points to the closing.

[00:08:19] Speaker 01:
What is the impact of the material change?

[00:08:22] Speaker 01:
Do I understand correctly that once there's a material change, then the repudiating

[00:08:27] Speaker 01:
party can no longer retract its repudiation.

[00:08:32] Speaker 04:
That's absolutely correct.

[00:08:33] Speaker 04:
And that's a rule that both parties agree on for the restatement and all the other authorities.

[00:08:39] Speaker 04:
And that's where you get the phrase closing the door to repentance.

[00:08:42] Speaker 04:
Because once you have taken that change, and really this is about the parameters of election, which Franconia talked about, and there are really at least two ways that you can elect to change your position.

[00:08:54] Speaker 04:
One is by filing suit.

[00:08:56] Speaker 04:
And the other, and this is right along the lines of what was held by the trial court in Franconia after the remand where the trial court judge said, this notion of election means you could file a suit or you could change position.

[00:09:09] Speaker 04:
And so that's exactly what Ms.

[00:09:12] Speaker 04:
Garner did here by mitigating her damages.

[00:09:14] Speaker 04:
And I think that's really another important point here is we don't want to discourage parties from mitigating their damages.

[00:09:22] Speaker 04:
And that's exactly the course of action.

[00:09:25] Speaker 04:
the prudent course of action that Ms.

[00:09:27] Speaker 04:
Garner took as soon as she reached the 20 year anniversary when she otherwise would have been able to prepay but for the repudiation.

[00:09:35] Speaker 04:
She said, I know I can't get out.

[00:09:37] Speaker 04:
I've talked to people.

[00:09:38] Speaker 04:
I know that filing a prepayment request is going to do me no good because I know I still can't get out.

[00:09:43] Speaker 04:
That's what the law says.

[00:09:44] Speaker 02:
This wasn't a conditional sale.

[00:09:45] Speaker 02:
It's not like buying a put on the stock market and you're still owning the stock.

[00:09:52] Speaker 02:
This was a sale of the property, right?

[00:09:54] Speaker 02:
The buyer was the beneficial owner.

[00:09:57] Speaker 04:
The buyer became the owner upon the closing.

[00:10:01] Speaker 04:
That's correct.

[00:10:01] Speaker 04:
And that's why the closing is so important.

[00:10:03] Speaker 02:
Wasn't the buyer the beneficial owner at the time of the contract?

[00:10:10] Speaker 04:
I don't think so, Your Honor.

[00:10:11] Speaker 04:
The sale agreement is just a commitment to go through a process that may or may not end up in a closing where the property is actually transferred.

[00:10:20] Speaker 04:
I mean, that's what makes real estate deals different from other

[00:10:24] Speaker 04:
contracts where maybe you agree to sell your wine to someone else or buy someone else's oats when the other party repudiates the contract.

[00:10:35] Speaker 03:
But what were some of the contingencies then in the contract such that the seller could not get out of the contract?

[00:10:45] Speaker 04:
So many contingencies in the sale agreement, which is at appendix page 39.

[00:10:49] Speaker 04:
Number one, government approval of the sale, which neither party has

[00:10:54] Speaker 04:
any control over and that's where you get into those regulations that talk about there's 14 different conditions on the government's approval and five different submissions and all those regulations talk about here's the process we're going to go through and if all these conditions are met only if and only if all these 14 submissions are made then we will close on the sale and then the actual assumption of the mortgage and transfer of the property will occur.

[00:11:20] Speaker 04:
I mean they actually use the term sale or transfer

[00:11:23] Speaker 04:
and point to the closing as the date that that sale or transfer will occur.

[00:11:29] Speaker 04:
So if it changes the sale, the change of position can occur until the sale actually occurs.

[00:11:35] Speaker 04:
And both the sale agreement and the regs point to the closing as the date of sale.

[00:11:40] Speaker 04:
In terms of the other conditions you asked about, I mentioned the government approval.

[00:11:44] Speaker 04:
There's the requirement for the seller to get the consent of all the limited partners.

[00:11:49] Speaker 04:
Remember, these are limited partnerships.

[00:11:51] Speaker 04:
So that's a good example of a condition that's actually in the control of the seller, who say the law had changed using your hypothetical.

[00:12:01] Speaker 04:
Ms.

[00:12:02] Speaker 04:
Garner would have to write to her limited partners and say, the government has repealed the legislation.

[00:12:09] Speaker 04:
We have the sale agreement, but we should probably try to get out of it.

[00:12:13] Speaker 04:
So you can approve it if you want, but the LPs could also disapprove.

[00:12:19] Speaker 01:
Did you look in other

[00:12:20] Speaker 01:
analogous areas of the law, maybe even in contract law, for just generally what a material change would be outside of this particular context of the law, like outside of repudiation.

[00:12:33] Speaker 01:
I would think that the term material change would be something that's a legal term that is recognized in other areas.

[00:12:42] Speaker 04:
Yes, Your Honor.

[00:12:42] Speaker 04:
If you look at the long, long string site in our reply brief,

[00:12:46] Speaker 04:
at pages five through six.

[00:12:48] Speaker 04:
Those are all cases that discuss the change of position doctrine.

[00:12:51] Speaker 04:
And they all deal with situations like I've described where the other party repudiates.

[00:12:56] Speaker 04:
And so you buy the wine from someone else.

[00:12:58] Speaker 04:
You sell the oats to someone else.

[00:13:00] Speaker 04:
In terms of accrual... I looked at those cases.

[00:13:02] Speaker 01:
My problem was that none of them really turned on the unique question presented here of whether it's when you enter the contract or when there's a closing.

[00:13:11] Speaker 04:
Right.

[00:13:12] Speaker 04:
And I think that's correct, Your Honor.

[00:13:14] Speaker 04:
The change of position cases haven't needed to go that far.

[00:13:17] Speaker 04:
But I think nonetheless, given the nature of this transaction, given all the contingencies in the sale agreement, and really just at the bottom, the fact that performance by the parties to the original contract, Ms.

[00:13:29] Speaker 04:
Garner and the government, continued until the date of the closing.

[00:13:33] Speaker 04:
And you can't have a change of position with respect to a contract.

[00:13:36] Speaker 01:
What is your case to support that idea, that you couldn't have a change in position

[00:13:41] Speaker 01:
while you're continuing to have performance?

[00:13:44] Speaker 04:
Well, because if you look at every single one of the cases where there was found to be a change of position, the performance either has not occurred yet or has ceased.

[00:13:51] Speaker 01:
Do you have any cases that expressly say what you've said, or is it just the facts in those case happen to turn out that way?

[00:13:56] Speaker 04:
There's no case that's ever held otherwise, and that's the only workable and logical rule.

[00:14:01] Speaker 04:
I mean, I'll give you another example.

[00:14:03] Speaker 04:
What if the sale fell through?

[00:14:04] Speaker 04:
What if you say the purchase agreement marked the change of position,

[00:14:10] Speaker 04:
And then you go through this process and everything that could go wrong, one of those umpteen things goes wrong.

[00:14:15] Speaker 04:
The sale falls through and now there's been no change at all.

[00:14:19] Speaker 04:
You'd actually have a contract claim that has accrued and then somehow unaccrued.

[00:14:24] Speaker 04:
It can only accrue once and that accrual needs to happen when the change occurs.

[00:14:30] Speaker 03:
Let's hear from the government and we'll save you rebuttal time.

[00:14:46] Speaker 03:
Mr. Roche.

[00:14:48] Speaker 00:
Good morning, Your Honor.

[00:14:50] Speaker 00:
Matthew Roche for the United States.

[00:14:54] Speaker 03:
Is the government's position that this claimant could have brought this action under lifted before the closing, based on the contract?

[00:15:06] Speaker 00:
Under the articulation of the rule that the Supreme Court gave in Franconia, the court said that

[00:15:13] Speaker 00:
with these specific categories of plaintiffs that fall under this program in the section 515 loans, that once the government had repudiated through OLIPA, to have a breach, you have two options.

[00:15:27] Speaker 00:
And that is to await performance and the government doesn't fulfill its duty to accept the prepayment request or to sue and to treat the repudiation as a breach through the lawsuit.

[00:15:39] Speaker 03:
And if there's never a closing, what happens?

[00:15:43] Speaker 00:
If there's never, to the extent that rule, our interpretation and the trial court's interpretation of Franconia governs, then it's immaterial because you wouldn't have a change of position that could be an election for the place the government would reach.

[00:15:58] Speaker 03:
So how can the statute start to run until the closing?

[00:16:00] Speaker 00:
There would be no claim because the rights to assert that claim were transferred to the buyer, if I'm understanding your question correctly.

[00:16:11] Speaker 03:
Well, I'm really trying to understand.

[00:16:12] Speaker 03:
I mean, there's enough of a gap.

[00:16:15] Speaker 03:
Suit was filed in the brink of time if the date is the closing date.

[00:16:22] Speaker 03:
And yet, if the statute has already been running before then, then they should have been able, without a lot of contingencies, to bring suit during that period before closing.

[00:16:35] Speaker 03:
The closing didn't matter.

[00:16:38] Speaker 00:
Well, if the rule of Franconi doesn't preclude this, doesn't preclude the material change... Franconi didn't deal with this issue, as I recall.

[00:16:50] Speaker 00:
Okay, so if the court is going to... If the plaintiffs are permitted to elect to treat the government's repudiation as a breach through a change of position, that election occurred when they entered into the sales contracts, and that's for a very specific reason, and that is that

[00:17:07] Speaker 00:
when they entered into the sales contracts, they warranted, as part of their warranties, that they were not going to make a prepayment request.

[00:17:15] Speaker 00:
They were going to continue to operate the apartment complexes under this program up until the date of closing.

[00:17:25] Speaker 00:
And so there was no opportunity for the government to retract its repudiation or to accept a performance.

[00:17:33] Speaker 00:
And that's Appendix 48.

[00:17:36] Speaker 03:
So how can the statute be running?

[00:17:39] Speaker 03:
This is what bothers me.

[00:17:40] Speaker 03:
I agree, there's no opportunity because these final steps haven't been taken.

[00:17:46] Speaker 03:
So how can the statute of limitations be running against them during that period?

[00:17:51] Speaker 00:
Because that entering into that sales contract that was that transaction, which gave rights to the buyer and the obligations to each of the partnerships,

[00:18:02] Speaker 00:
you know, to go up, to make the apartment complexes available for inspection, all those things, those duties that you have to do when you're selling your home after you enter into the contract but before closing, they still had to carry those out.

[00:18:16] Speaker 00:
So that constitutes, that is the type of thing that's change of position.

[00:18:19] Speaker 00:
If they had not done that then, the buyer could hold them liable for breach of contract.

[00:18:26] Speaker 01:
How do you respond to Mr. Blander's point that until there's closing, it's not final?

[00:18:32] Speaker 01:
At that point, the contract could fall through.

[00:18:35] Speaker 01:
And what are you going to have?

[00:18:36] Speaker 01:
A breach of contract claim and then suddenly no breach of contract claim anymore?

[00:18:39] Speaker 01:
So what's your response to that point?

[00:18:46] Speaker 00:
It would still constitute, even if the closing fell through, they still entered into an agreement.

[00:18:52] Speaker 00:
And that still constitutes a change in position by itself.

[00:18:55] Speaker 00:
They no longer have a change in position.

[00:18:59] Speaker 00:
They changed their position, and even if the sales contract falls through, that still doesn't change the fact that they'd entered into a contract in reliance on the government's repudiation.

[00:19:10] Speaker 00:
At that point, they have six years to bring a claim for breach of contract.

[00:19:15] Speaker 00:
They did so outside one day too late.

[00:19:21] Speaker 02:
Now, your opposing counsel says there were 14 points, sounds like Woodrow Wilson's 14 points, 14 conditions that had to have been fulfilled.

[00:19:32] Speaker 02:
Were those merely ministerial or did they suggest that the contract was not a done deal until it was closed?

[00:19:43] Speaker 00:
No, I mean it's still, it is, yes there are conditions and let's say one of those, an example of a condition that was offered by

[00:19:50] Speaker 00:
Opposing counsel was you had to go to the limited partners and get their approval.

[00:19:56] Speaker 00:
What if they don't approve and it falls through because of that?

[00:19:58] Speaker 00:
Well, that assumes they still had an obligation, the duty of good faith and fair dealing, to make an effort to obtain their approval.

[00:20:05] Speaker 00:
If they just sat down and didn't even talk about this with the limited partners, done nothing, and then said, oh, well, that condition isn't satisfied and so we're out of the sales contract and no harm, no foul.

[00:20:16] Speaker 00:
No.

[00:20:18] Speaker 00:
the union street, the other party, could still bring an action for either money damages or specific performance on that sales contract.

[00:20:26] Speaker 00:
And the other thing here that is key is if treating the closing as the material change of position, unlike any of the other cases that were cited in the appellant's briefs and then the reply brief, none of them involve the situation in which

[00:20:49] Speaker 00:
The non-repudiating party went to the repudiating party and asked for their assistance and permission to cover their loss, to enter into the cover transaction.

[00:21:01] Speaker 00:
Here, the non-repudiating party, the appellants, actually went to the agency.

[00:21:07] Speaker 00:
They asked for the agency's approval of the sales contract and it was obtained.

[00:21:11] Speaker 00:
They asked for approval of the assumption and transfers and it was obtained.

[00:21:18] Speaker 00:
They then got a loan forgiven.

[00:21:20] Speaker 00:
Their loan debt was discharged by $1.2 million, calculating, assuming all three properties.

[00:21:26] Speaker 00:
So there's never been a case, certainly none of the ones that were cited by the appellants, in which the repudicating party

[00:21:36] Speaker 00:
is a party to the transaction that constitutes a breach of contract or a change of position that would be a breach of contract.

[00:21:43] Speaker 01:
I think it makes it even stronger, because clearly not only was there a material change in reliance on the repudiation, but also it was communicated to the repudiating party.

[00:21:53] Speaker 01:
Is that what you're saying?

[00:21:55] Speaker 00:
That it would not be... You're saying it's even stronger than the other cases?

[00:22:00] Speaker 00:
It's a completely different situation, right.

[00:22:03] Speaker 00:
It's not a situation where

[00:22:07] Speaker 00:
where the repudiating party is asked essentially to place itself in breach by cooperating with the non-repudiating party.

[00:22:15] Speaker 00:
The government here was a party to all of these transactions except for entering into the sales contracts.

[00:22:20] Speaker 00:
That was the only separate deal, separate agreement that was entered into in which the government didn't have any control.

[00:22:27] Speaker 00:
They didn't form the contract.

[00:22:28] Speaker 00:
They proved it.

[00:22:30] Speaker 00:
But they were not a party to that contract.

[00:22:32] Speaker 00:
In everything else, the government was involved.

[00:22:36] Speaker 00:
They went to the table and negotiated in good faith with the appellants here.

[00:22:43] Speaker 00:
And then six years later, the appellants are now saying, oh, by the way, that deal that you did with us, that was really a breach of contract.

[00:22:52] Speaker 00:
It doesn't make sense.

[00:22:54] Speaker 00:
If this exception to the rule to Franconia applies, then the only way it could apply, as the trial court determined, is through the sales contracts.

[00:23:05] Speaker 00:
And that would render their claim untimely.

[00:23:10] Speaker 03:
And Franconia dealt with it on a takings theory, did it not?

[00:23:17] Speaker 00:
I believe Franconia remanded the takings to the trial court for an adjudication.

[00:23:24] Speaker 00:
But here, there is the takings claim.

[00:23:30] Speaker 00:
But because that takings claim is predicated on breach of contract claim, there's a long

[00:23:35] Speaker 00:
line of cases from this court that says your remedies and rights flow out of the contract.

[00:23:40] Speaker 00:
And so you have a contract right.

[00:23:44] Speaker 00:
You don't really have a takings claim in that circumstance.

[00:23:47] Speaker 01:
Some of the cases, and also Williston, refer to all that's required to close the door to repentance is definite action indicating that the anticipatory breach has been accepted as final.

[00:24:03] Speaker 01:
What about this emphasis on the word final that we find, at least in some of the treatises that emphasize it?

[00:24:11] Speaker 01:
And how does that impact your argument?

[00:24:13] Speaker 01:
You're saying it has to be just entry of this contract that could fall through is enough.

[00:24:19] Speaker 01:
But how is that final?

[00:24:23] Speaker 00:
It's final because it's a separate action that doesn't involve the repudiating party.

[00:24:30] Speaker 00:
They entered into a sales contract.

[00:24:34] Speaker 00:
That contract created rights and obligations that are separate from the contract that was repudiated here.

[00:24:45] Speaker 00:
Once that was done, it doesn't take much to constitute a change of position.

[00:24:52] Speaker 00:
In fact, if you look at the case of Rome versus Hearst, sorry, I have the quote here.

[00:25:02] Speaker 00:
that quoted the Hoxha case from England, and it said that the rule is if the injured party, once there's a repudiation, is at liberty to seek the service under another employer.

[00:25:17] Speaker 00:
And in the Hoxha case, it was an employment contract that had been repudiated.

[00:25:21] Speaker 00:
And so they said you can, once there's a repudiation, you can go seek service.

[00:25:25] Speaker 00:
You don't have to actually enter into a final other contract or final other agreement, just seeking the service,

[00:25:31] Speaker 00:
that would constitute a change of position.

[00:25:34] Speaker 00:
So the point being that the bar, the threshold to change position is very, very low.

[00:25:39] Speaker 00:
And that's consistent with the other statement in Williston that says if you want to notify, you can place the other party in breach just by saying, I am holding you in breach and sending them a letter or some kind of notification.

[00:25:49] Speaker 00:
It doesn't take much.

[00:25:56] Speaker 00:
And it would be its final because had the

[00:26:00] Speaker 00:
The government attempted to, or I'm sorry, it was once again entering into the sales contract because the party, the petitioners said no, we're not going to, they warranted that they would not attempt to prepay.

[00:26:13] Speaker 00:
So they said, we are not going to try and enforce our rights.

[00:26:16] Speaker 01:
What is the case that you just cited?

[00:26:18] Speaker 01:
What's the name of that one?

[00:26:20] Speaker 01:
Could you give me, do you have a site for it?

[00:26:22] Speaker 00:
Yeah, that was, sorry, it's the Rome case, I have it here.

[00:26:35] Speaker 00:
It is 20 Supreme Court 780.

[00:26:39] Speaker 00:
And the language that I'm referring to is I believe it's 783.

[00:26:47] Speaker 03:
Any more questions for Mr. Rush?

[00:27:01] Speaker 03:
No.

[00:27:01] Speaker 03:
Any more questions?

[00:27:03] Speaker 03:
Anything else you need to tell us?

[00:27:04] Speaker 00:
No, thank you, Your Honor.

[00:27:05] Speaker 00:
We would just ask that the court affirm the trial court.

[00:27:07] Speaker 03:
Thank you, Mr. Roche.

[00:27:14] Speaker 03:
Mr. Canda.

[00:27:18] Speaker 04:
Mr. Roche mentioned the Hotchter case, which is the original case from England that actually started the whole theory of anticipatory repudiation.

[00:27:28] Speaker 04:
And it's not correct that just the idea of seeking services from someone else

[00:27:33] Speaker 04:
constituted the change of position.

[00:27:35] Speaker 04:
The party in that case actually did enter into services with someone else.

[00:27:40] Speaker 04:
And that's a good example, talking about the case analogs, where it was actually when they made the decision, when it was final, that they took employment with someone else, that it was a change of position.

[00:27:51] Speaker 04:
In this case, there was no change until the sale was final.

[00:27:55] Speaker 04:
And so the Hotchter case and the other cases involving change of position fully support

[00:28:02] Speaker 04:
our interpretation of the doctrine that you can't have a change until you take that definitive action showing that the door to repentance has been closed.

[00:28:14] Speaker 04:
And the Hofstra case in turn was construed in the Rome case, and the Rome case is what was cited in the Franconia case.

[00:28:21] Speaker 04:
So all of this law leads up to the decision on Franconia and what really constitutes an election to treat a repudiation as a breach.

[00:28:32] Speaker 04:
In terms of the regulations, I want it to be even more specific.

[00:28:36] Speaker 04:
If you look at 7 CFR 3560.406, Section B talks about the agency consent requirements and says that agency consent must be obtained prior to an ownership transfer or sale.

[00:28:52] Speaker 04:
And then again in subsection C of that same part,

[00:28:57] Speaker 04:
It states that all these things have to occur at least 45 days prior to the proposed ownership transfer or sale date.

[00:29:06] Speaker 04:
And the regs also make clear that that sale date is the closing.

[00:29:10] Speaker 04:
So there's no agency consent, there's no transfer allowed until that closing occurs.

[00:29:15] Speaker 04:
And really that's just the nature of these programs that the owner's choices are very much limited.

[00:29:23] Speaker 04:
The whole reason for this case at the get-go is that the government repudiated

[00:29:27] Speaker 04:
the right to prepay, leaving the owner with very few options.

[00:29:31] Speaker 04:
And the only way an owner like Ms.

[00:29:33] Speaker 04:
Garner can rid herself of these properties is to find an owner who will agree to take over the restrictions, which is exactly why it was such a fire sale.

[00:29:43] Speaker 04:
She had to take such an extreme loss upon that sale.

[00:29:48] Speaker 04:
And so the fact that she's still obligated to the government only reflects the fact that she's locked into this program and therefore continuing to perform

[00:29:57] Speaker 04:
therefore not able to change her position until that new buyer finally steps in and takes over those loan obligations, which again occurs at the closing.

[00:30:10] Speaker 04:
So I really think when we look at this case, we need to think about what did Ms.

[00:30:15] Speaker 04:
Garner do wrong here?

[00:30:16] Speaker 04:
If you take the classic case of we have a contract and you agree to buy my harvest of oats, but you repudiate the contract, so I find someone else

[00:30:26] Speaker 04:
I complete that sale.

[00:30:29] Speaker 04:
Let's say I lost $10,000 on that resale.

[00:30:32] Speaker 04:
Of course, I, as the victim of the repudiation, have the right to go to court and seek recovery of my loss.

[00:30:39] Speaker 04:
And that's no different from what Ms.

[00:30:41] Speaker 04:
Garner did here.

[00:30:42] Speaker 04:
She got rid of the property after the government's repudiation in the only way that she could step away from it by finding someone else to take over.

[00:30:50] Speaker 04:
She went through the process.

[00:30:52] Speaker 04:
And once that sale was completed and closed,

[00:30:55] Speaker 04:
Her claim at that point accrued, and she did file suit within six years of that point.

[00:31:01] Speaker 04:
And therefore, owners like Ms.

[00:31:03] Speaker 04:
Garner, who've done the right thing, who have mitigated their damages, who have reduced the loss for which the government is responsible, should not be penalized with having forfeited their claims.

[00:31:15] Speaker 03:
Any questions for Mr. Blando?

[00:31:16] Speaker 03:
Any more questions?

[00:31:18] Speaker 03:
Thank you, Mr. Blando.

[00:31:19] Speaker 03:
Thank you both.

[00:31:20] Speaker 03:
The case is taken under submission.