The opinion of the court was delivered by: CHARLES R. RICHEY
The Plaintiff York Associates ("York") brought this action against the Defendants the Department of Housing and Urban Development ("HUD") and the Government National Mortgage Association ("GNMA") pursuant to violations of contracts and agreements among the parties.
This action was transferred to the United States Court of Federal Claims by this Court on February 17, 1993 with the voluntary consent of the parties. Following the withdrawal of the Plaintiff's consent, the Court vacated its transfer order on February 24, 1993. The Court now retains the action and considers the Defendants' Motion to Dismiss, which, following voluminous briefs by both sides and a status conference, is ripe for decision. The Defendants move to dismiss the Plaintiff's eleven counts for lack of subject matter jurisdiction and sovereign immunity under Fed. R. Civ. P. 12(b)(1) and (6) arguing only the United States court of Federal Claims has jurisdiction over the Plaintiff's claims. As Justice Scalia, then Circuit Judge, remarked "if there is a less profitable expenditure of the time and resources of federal courts and federal litigants than resolving a threshold issue of which particular federal court should have jurisdiction, it does not come readily to mind." Sharp v. Weinberger, 255 U.S. App. D.C. 90, 798 F.2d 1521, 1522 (D.C. Cir. 1986).
For the reasons set forth herein, the Court holds that it does not have subject matter jurisdiction as to Counts II, III, IV,
V, and VI of the Plaintiff's Complaint and grants the Defendants' Motion to Dismiss as to those counts excepted in the footnote below. The motion is denied as to all other claims and the Court will retain them.
This case involves several loan contracts between the Plaintiff York Associates and the Defendant, Department of Housing and Urban Development (HUD), and guaranty agreements among York, HUD and the Defendant, Government National Mortgage Association (GNMA). The terms and operations of these loans is very complicated, but only a limited description of the facts is necessary to decide this motion. The dispute is essentially whether HUD must pay interest on cash reimbursements allegedly made to York (and to GNMA on behalf of York) pursuant to the terms of the loan contracts.
The issue raised by the Defendants' Motion to Dismiss is whether violations of federal statutes and regulations, which were incorporated into the terms of the contracts at issue in this case, state a cognizable claim in federal district court.
York is a multifamily housing mortgage lender, which issued mortgage loans coinsured by the Department of Housing and Urban Development (HUD) pursuant to the National Housing Act (NHA), 12 U.S.C. § 1701 et seq. The multi-family housing loans in this case were made by York which were co-insured by HUD and guaranteed by GNMA. York sought reimbursement following default and cancellation of the loans at various times between April 1988 and April 1990. When a borrower defaults on loans to a lender such as York, that lender allegedly may, under prescribed conditions, elect to seek reimbursement from HUD (called a "default" of the lender). It allegedly may also select reimbursement payments in debentures or in cash. If payment is made in debentures, interest is due from the date of the lender's default.
The payments which are the subject of this litigation, were made in cash and did not include an amount equal to the interest on debentures. The Plaintiff asserts that cash payments must include the interest pursuant to 12 U.S.C. § 1735d (a)
and seeks to recover that amount in this case.
Additionally, under the terms of some of these loans, GNMA becomes the successor-in-interest to the lender who is in default. In that case, HUD makes reimbursement payments to GNMA, and HUD looks to the lender to make up the shortfall in funds. HUD has made a demand upon York for such a shortfall. It is the Plaintiff's position that the shortfall for which HUD has demanded money from York is the result of HUD withholding interest. GNMA is named as a defendant, because the Plaintiff alleges that GNMA also caused this shortfall by requesting payment in cash when it knew that HUD makes lesser payments in cash than it does when payment is made in debentures.
The Plaintiff seeks damages and declaratory and injunctive relief from HUD and GNMA.
II. FOR EACH OF THE PLAINTIFF'S CLAIMS, THERE MUST BE SUBJECT MATTER JURISDICTION AND A WAIVER OF SOVEREIGN IMMUNITY IN THE DISTRICT COURT
Although the issues of sovereign immunity waiver and subject matter jurisdiction are closely related, they are two separate requirements which must be satisfied for each claim. When an action involving a contract is brought against an agency of the United States government, the key inquiry for disposition of these two questions is whether the source of rights which the Plaintiff asserts is the contract, or if the source is the laws and Constitution of the United States. Transohio Savings Bank v. Director, OTS, 967 F.2d 598 (D.C. Cir. 1992).
A. This Court Has No Jurisdiction Over Plaintiff's Claims Which Allege Breach of Contract and Seek Monetary Damages, Because the United States Court of Federal Clams Has Exclusive Jurisdiction Under the "Tucker Acts."
The Plaintiff has explicitly stated a claim for breach of contract and prayed for damages in excess of $ 10,000 in Counts II, IV, V, and VI of its Complaint. The Plaintiff claims that violation of the contracts and agreements creates federal question subject matter jurisdiction.
However, federal question subject matter jurisdiction exists only for "civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331(a). The contracts and guaranty agreements among the parties are not laws or treaties of the United States, and accordingly, a violation of those agreements alone does not create a federal question. There is no other statute that provides subject matter jurisdiction for the Plaintiff's breach of contract claims in a United States District Court. In fact, jurisdiction over contract and damages claims for over $ 10,000 is granted exclusively to the United States Court of Federal Claims by the "Tucker Acts." 28 U.S.C. §§ 1346(a)(2) and 1491(a)(1).
See Sharp v. Weinberger, 255 U.S. App. D.C. 90, 798 F.2d 1521, 1523 (D.C. Cir. 1986). Therefore, this Court cannot adjudicate these claims and need not decide whether sovereign immunity has been waived as to these claims, because a finding that the Court has jurisdiction is a threshold requirement that must be met before considering other grounds for dismissal. Jones v. State of Georgia, 725 F.2d 622, 623 (11th Cir. 1984).