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Boston Five Cents Savings Bank v. United States

Decided: December 16, 1988.

THE BOSTON FIVE CENTS SAVINGS BANK, FSB, PLAINTIFF-APPELLANT,
v.
THE UNITED STATES, DEFENDANT-APPELLEE



Appealed from: U.S. Claims Court, Judge Weise.

Smith, Bissell, and Michel, Circuit Judges.

Bissell

BISSELL, Circuit Judge.

The Boston Five Cents Savings Bank, FSB (Boston Bank) appeals the judgment of the United States Claims Court, see 14 Cl. Ct. 217 (1988), dismissing its complaint against the United States for damages arising out of an alleged breach of a mortgage contract. We reverse and remand with instructions to stay.

BACKGROUND

Boston Bank holds a $3,114,600 mortgage on a rental apartment building in Boston. The Department of Housing and Urban Development (HUD) guaranteed payment of the mortgage under section 207 of the National Housing Act, 12 U.S.C. § 1713 (1982 & Supp. IV 1986). On December 30, 1980, and over Boston Bank's objections, HUD permitted the mortgagor to convert the building into cooperative housing units.

On January 7, 1981, Boston Bank brought suit in the United States District Court for Massachusetts seeking a declaratory judgment that the conversion would breach the mortgage agreement, breach a regulatory agreement between Boston Bank and HUD, and violate section 207. Damages were not sought because the conversion, although authorized, had not yet occurred. The district court granted summary judgment against Boston Bank and the First Circuit vacated the judgment on appeal. Boston Five Cents Sav. Bank v. Pierce, 601 F. Supp. 38 (D. Mass. 1984), vacated sub nom. Boston Five Cents Sav. Bank v. Secretary of the Dep't of Hous. & Urban Dev., 768 F.2d 5 (1st Cir. 1985).

On remand, Boston Bank moved to amend its complaint to include a claim for money damages. The government moved to dismiss the complaint on the ground that declaratory relief is unavailable for the government's breach of a contract and the exclusive remedy is a damages claim in the Claims Court. On May 8, 1986, the district court denied Boston Bank's motion on the basis of inexcusable delay in seeking to amend and deferred ruling on the government's motion to dismiss. Although originally set for September 29, 1986, trial has yet to begin.

On December 18, 1986, Boston Bank filed this suit in the Claims Court in order to avoid application of the statute of limitations. Later the same day, Boston Bank filed an identical damages suit in the Massachusetts District Court. Thereafter, Boston Bank moved to stay both proceedings pending the outcome of the original declaratory judgment action. The district court granted the unopposed motion to stay. The Claims Court, instead of staying the action, granted the United States' motion to dismiss on the basis of 28 U.S.C. § 1500 (1982). Boston Five, 14 Cl. Ct. at 219. This appeal of the Claims Court judgment followed.

ISSUES

1. Whether 28 U.S.C. § 1500 requires the Claims Court to dismiss Boston Bank's suit against the United States for money damages when another suit seeking only declaratory relief is pending in the district court.

2. Whether Boston Bank's unsuccessful attempt to amend the declaratory judgment complaint in the district court to include a claim for money damages caused the money damages claim to be pending at the time the Claims Court action was filed.

3. Whether Boston Bank's filing of the identical money damages suit in district court on the same day the Claims Court action was filed requires the Claims Court to ...


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