United States Court of Appeals
for the Federal Circuit
______________________
AIRPORT ROAD ASSOCIATES, LTD., CLIFFORD E.
OLSEN--DELTA SQUARE, OAKDALE ASSOCIATES,
LIMITED, SERENITY VILLAGE, A PARTNERSHIP
IN COMMENDAM, SOUTHEASTERN ASSOCIATES,
LTD., A LOUISIANA LIMITED PARTNERSHIP,
SOUTHSIDE APARTMENTS, LTD.,
Plaintiffs
BAYOU DES GLAISES, LTD., BLOOMFIELD
PARTNERSHIP II, A LOUISIANA PARTNERSHIP
IN COMMENDAM, CLIFFORD E. OLSEN--
COLLEGE TOWNE, CLIFFORD E. OLSEN--
COLLINS SQUARE, A LOUISIANA PARTNERSHIP
IN COMMENDAM, CLIFFORD E. OLSEN--
HAMMOND TOWNE, CLIFFORD E. OLSEN--
JEFFERSON SOUTH, CLIFFORD E. OLSEN--OLD
MAN RIVER, CLIFFORD E. OLSEN--WALKER
PARTNERSHIP, CLIFFORD E. OLSEN 1977-B,
CYPRESS COVE ASSOCIATION,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2016-1542
______________________
2 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
Appeal from the United States Court of Federal
Claims in No. 1:13-cv-00152-NBF, Senior Judge Nancy B.
Firestone.
______________________
Decided: August 10, 2017
______________________
MARK BLANDO, Eckland & Blando LLP, Minneapolis,
MN, argued for plaintiffs-appellants. Also represented by
JEFF HOWARD ECKLAND, VINCE REUTER.
MATTHEW PAUL ROCHE, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for defendant-appellee.
Also represented by BENJAMIN C. MIZER, ROBERT E.
KIRSCHMAN, JR., FRANKLIN E. WHITE, JR.
______________________
Before PROST, Chief Judge, LOURIE and TARANTO,
Circuit Judges.
PROST, Chief Judge.
Appellants seeking to exit a federal housing program
through loan prepayment appeal from the decision of the
United States Court of Federal Claims (“Claims Court”)
dismissing their claims against the United States (“gov-
ernment”) for lack of subject matter jurisdiction. We
reverse and remand.
I. BACKGROUND
Appellants are ten limited partnerships 1 that took
1 Bayou des Glaises, Ltd.; Bloomfield Partnership
II; Clifford E. Olsen—College Towne; Clifford E. Olsen—
Collins Square; Clifford E. Olsen—Hammond Towne;
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 3
loans from and entered into housing development agree-
ments with the Rural Housing Service (“RHS”) of the
United States Department of Agriculture (“USDA”) to
provide affordable rental housing in Louisiana. 2 They all
share a common general partner, Clifford E. Olsen, and
wish to prepay their loans and thereby exit the federal
affordable housing program.
A
Under § 515 of the Housing Act of 1949, ch. 338, 63
Stat. 413, amended by the Senior Citizens Housing Act of
1962, Pub. L. No. 87-723, § 4(b), 76 Stat. 670, 671 (codi-
fied as amended at 42 U.S.C. § 1485), the RHS makes
loans to private, nonprofit entities to construct affordable
rental housing for elderly and low- or middle-income
people. Between 1972 and 1982, each Appellant entered
into a fifty-year § 515 loan agreement with the RHS. The
loans all include a “prepayment” provision stating that
each Appellant had the option of paying off the remaining
loan balance and converting its properties to conventional
housing any time after the first fifteen or twenty years. 3
Clifford E. Olsen—Jefferson South; Clifford E. Olsen—Old
Man River; Clifford E. Olsen—Walker Partnership;
Clifford E. Olsen 1977-B; and Cypress Cove Association.
2 The RHS was formerly known as the Farmers
Home Administration (“FmHA”). See Federal Crop In-
surance Reform and Department of Agriculture Reorgani-
zation Act of 1994, Pub. L. No. 103-354, § 233, 108 Stat.
3178, 3219–20 (establishing a successor agency to the
FmHA); see also Agency Name Change, 61 Fed. Reg. 2899
(Jan. 30, 1996) (renaming the successor agency to be the
RHS). To avoid confusion, we refer to both the FmHA and
the RHS throughout this opinion as the RHS.
3 Although borrowers can prepay at any time, the
applicable law when Appellants entered into the loans
included a fifteen- or twenty-year restrictive-use provision
4 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
See, e.g., J.A. 52 (“Prepayments of scheduled installments,
or any portion thereof, may be made at any time at the
option of the Borrower.” (emphasis added)).
By 1987, however, Congress was concerned that § 515
borrowers were choosing to prepay too often, which
threatened the availability of affordable housing under
the program. See Franconia Assocs. v. United States, 536
U.S. 129, 136 (2002) (citing H.R. Rep. No. 100-122, at 53
(1987), reprinted in 1987 U.S.C.C.A.N. 3317, 3369). In
response, it passed the Emergency Low Income Housing
Preservation Act of 1987 (“ELIHPA”), Pub. L. No. 100-
242, 101 Stat. 1877 (1988) (codified as amended at 42
U.S.C. § 1472(c)). Important to this case, ELIHPA pro-
vides that before accepting an offer to prepay a § 515 loan,
the USDA Secretary (“Secretary”) must “make reasonable
efforts to enter into an agreement with the borrower
under which the borrower will make a binding commit-
ment to extend the low income use of the assisted housing
and related facilities.” 42 U.S.C. § 1472(c)(4)(A). The
Secretary can offer the borrower incentives with such an
agreement. Id. § 1472(c)(4)(B). And generally, if an
agreement cannot be reached, the borrower must offer to
sell the housing to “any qualified nonprofit organization
or public agency at a fair market value determined by 2
independent appraisers.” Id. § 1472(c)(5)(A)(i). If no
nonprofit organization makes an offer to buy within 180
(depending on the type of loan) that generally prohibited
the government from accepting prepayment unless the
borrower agreed to maintain low-income use of the rental
housing for fifteen or twenty years from the date of the
loan. Housing and Community Development Amend-
ments of 1979, Pub. L. No. 96-153, § 503, 93 Stat. 1101,
1134–35 (codified as amended at 42 U.S.C. § 1472(c))
(amending § 502 of the Housing Act of 1949).
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 5
days, then the Secretary “may accept the borrower’s offer
to prepay.” Id. § 1472(c)(5)(A)(ii).
As of April 2002, the time relevant to this appeal, the
RHS had regulations in place at 7 C.F.R. § 1965 Subpart
E, implementing ELIHPA. Under these regulations, the
RHS outlined “the chronological order for the actions to be
taken” on a request for prepayment. 7 C.F.R.
§ 1965.204(a) (2002). The regulations specified that
“[p]rior to initiating a formal prepayment request, bor-
rowers considering prepaying their loans should meet
with the [RHS] . . . to discuss the prepayment request and
the requirements of this procedure. The borrower will be
provided with exhibit C of this subpart, to aid in complet-
ing the prepayment request package.” Id. § 1965.205(a).
Sections 1965.205 and 1965.206 set forth the require-
ments for submitting a formal prepayment request.
Notably, for a prepayment request to be considered com-
plete, the regulations required borrowers to make the
request at least 180 days before the anticipated prepay-
ment date and to provide, among other things, “[a] writ-
ten request to prepay . . . on a specified date”; information
“needed to develop an incentive offer”; and
“[d]ocumentation of the borrower’s ability to prepay under
the conditions specified in the prepayment request.” Id.
§ 1965.205(c). If the agency received a prepayment re-
quest that was not “complete,” it would “return the re-
quest to the borrower specifying the additional
information needed.” Id. § 1965.206(a). 4
4 These regulations were consolidated into stream-
lined regulations and handbooks in 2004. Reinvention of
the Sections 514, 515, 516, and 521 Multi-Family Housing
Programs, 69 Fed. Reg. 69,032 (Nov. 26, 2004).
6 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
B
This appeal relates to correspondence between Mr.
Olsen, on behalf of Appellants, and the RHS in April
2002. A nonprofit organization at the time had expressed
interest in acquiring some of Appellants’ properties. On
April 2, 2002, during those negotiations, Mr. Olsen sent
the RHS a letter notifying the agency of these Appellants’
“intent . . . to convert [some] units into conventional
housing” and seeking approval of their “request to pay off
the mortgage(s)” on certain properties. J.A. 31. The
letter stated in its entirety:
We ask that you approved [sic] our request to
pay off the mortgage(s) on the above-captioned
developments. We desire to retain a few of the
developments and we have an arrangement with a
local and national non-profits [sic] to acquire the
rest of the developments. Our intent is to convert
these units into conventional housing. As we un-
derstand the nonprofits’ motive, they, too, are
seeking conventional housing. The total unit
count for all of the developments above is 462
units.
Id.
About two weeks later, the RHS responded with a let-
ter stating: “This will acknowledge your letter dated
April 2, 2002, regarding your request to pre-pay . . . .”
J.A. 32. The letter then pointed Mr. Olsen to a checklist
of items that “must be completed for each loan you are
requesting to pre-pay.” Id. The RHS attached a copy of
instructions, including the checklist, for submitting
prepayment requests. Mr. Olsen never responded to the
RHS’s letter, as the potential acquirer decided shortly
thereafter against purchasing the properties.
Almost a decade later, in May 2011, Mr. Olsen sub-
mitted more definite prepayment requests on behalf of
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 7
four of the Appellants. His requests indicated that he
intended to prepay 180 days after the date of the re-
quests. For one of the Appellants, the RHS responded
with an incentive offer. Mr. Olsen accepted the incentive
offer, thereby remaining in the housing program. For the
other three Appellants, the RHS informed Mr. Olsen that
no incentive offer would be made and that prepayment
was also not an option. Based on the RHS’s responses,
Mr. Olsen purportedly believed that continuing to pursue
prepayment on any of Appellants’ properties would prove
futile. He thus stopped pursuing the prepayment for
those four Appellants and did not submit any additional
prepayment applications for the other six Appellants.
C
In 2013, Appellants filed the underlying lawsuit
against the United States, alleging that the government,
through either Congress’s enactment of ELIHPA or the
RHS’s 2011 responses, violated their right to prepay their
§ 515 loans. Specifically, the four Appellants who sent
prepayment requests to the RHS in 2011 allege that their
claims began to accrue when the RHS failed to honor their
requests to prepay at that time. The other six Appellants
contend that their claims began to accrue when they filed
the underlying suit, at which time they chose to treat
ELIHPA’s repudiation as a breach. Appellants asserted
two causes of action: breach of contract (“the contract
claims”) and just compensation under the Fifth Amend-
ment (“the takings claims”).
The Tucker Act confers jurisdiction upon the Claims
Court over “any claim against the United States found-
ed . . . upon any express or implied contract with the
United States.” 28 U.S.C. § 1491(a). Under 28 U.S.C.
§ 2501, all Tucker Act claims must be filed within six
years of the date they “first accrue[d].” The government
moved to dismiss Appellants’ claims for lack of subject
matter jurisdiction. See John R. Sand & Gravel Co. v.
8 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
United States, 552 U.S. 130 (2014) (holding § 2501 juris-
dictional). Specifically, it argued that the alleged breach
of the obligation to accept prepayment first accrued in
April 2002, and Appellants’ claims were thus time-barred
in 2013, when the complaint was filed. The Claims Court
agreed that the statute of limitations had run and dis-
missed all of Appellants’ claims. 5
Appellants timely appealed. This court has jurisdic-
tion under 28 U.S.C. § 1295(a)(3).
II. DISCUSSION
Appellants seek reversal of the Claims Court’s deci-
sion, arguing that the six-year statute of limitations did
not begin to accrue in April 2002 because the RHS’s letter
response at that time did not constitute a breach of the
RHS’s obligation to accept Appellants’ prepayment. If
Appellants are correct, then there is no dispute that their
2013 contract claims would be timely. Appellants addi-
tionally argue that the Claims Court mistakenly dis-
missed their takings claims without separately
addressing those claims. We take each issue in turn.
We review issues of subject matter jurisdiction de no-
vo. Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329,
1335 (Fed. Cir. 2008). “When a party has moved to dis-
miss for lack of subject matter jurisdiction, we view the
alleged facts in the complaint as true, and if the facts
reveal any reasonable basis upon which the non-movant
may prevail, dismissal is inappropriate.” Pixton v. B & B
Plastics, Inc., 291 F.3d 1324, 1326 (Fed. Cir. 2002).
5 In addition to Appellants, there were thirteen
other plaintiffs—all of whom also share Mr. Olsen as a
common general partner—in the underlying lawsuit, for a
total of twenty-three plaintiffs. The other thirteen plain-
tiffs agreed to dismiss their claims and are not parties to
this appeal.
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 9
A
We turn first to the statute-of-limitations issue re-
garding the contract claims. In Franconia, the Supreme
Court addressed the timeliness of a § 515 borrower’s claim
for breach of the RHS’s obligation to accept prepayment.
536 U.S. at 132. Prior to that decision, this court had
held that Congress’s enactment of ELIHPA in 1988 con-
stituted an immediate breach of § 515 loan agreements
and triggered the accrual of the six-year statute of limita-
tions. Franconia Assocs. v. United States, 240 F.3d 1358
(Fed. Cir. 2002), rev’d, 536 U.S. 129 (2002); see also Grass
Valley Terrace v. United States, 7 F. App’x 928 (Fed. Cir.
2001), rev’d sub nom., Franconia Assocs. v. United States,
536 U.S. 129 (2002). The Supreme Court reversed, hold-
ing that the enactment of ELIHPA “effected a repudiation
of the [§ 515] loan contracts, not an immediate breach.”
Franconia, 536 U.S. at 143. The Court relied, in part, on
the purpose of the repudiation doctrine, which is “to avoid
an unnecessary lawsuit by allowing the promisor an
opportunity to adhere to its undertaking.” Id. at 148.
The Court reasoned that “[j]ust as Congress may an-
nounce the government’s intent to dishonor an obligation
to perform in the future through a duly enacted law, so
may it retract that renouncement prior to the time for
performance.” Id. The Court thus held that “[u]nless [a
borrower] treated ELIHPA as a present breach by filing
suit prior to the date indicated for performance, breach
would occur when a borrower attempted to prepay, for
only at that time would the government’s responsive
performance become due.” Id. at 143.
Appellants argue that the April 2002 correspondence
between Mr. Olsen and the RHS at most constituted a
repudiation, rather than a breach, of the RHS’s obligation
to accept Appellants’ prepayment. They take the position
that under Franconia a request for prepayment must
indicate a time for performance in order to trigger the
RHS’s obligation to accept prepayment, and Mr. Olsen’s
10 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
2002 letter did not specify when Appellants intended to
prepay. Appellants also argue that nothing in the RHS’s
2002 response could be construed as a rejection or disal-
lowance of prepayment.
Taking the contrary view, the government relies pri-
marily on our post-Franconia decision in Tamerlane, Ltd.
v. United States, 550 F.3d 1135 (Fed. Cir. 2008). There,
we stated that “[t]he Franconia decision requires no more
formalism than the written request to prepay followed by
non-acceptance of the request by the government to
trigger the running to the statute of limitations.” 550
F.3d at 1143. According to the government, Tamerlane
therefore made clear that the formalism of a prepayment
request is not important; all that is required to trigger the
RHS’s obligation to accept prepayment is a written re-
quest to prepay, after which anything but outright ac-
ceptance would constitute a breach of contract. Here, the
government contends, Mr. Olsen’s 2002 letter was a clear
written request to prepay so, like the letters at issue in
Tamerlane, it triggered the RHS’s duty to accept the
prepayment. It further submits that, because we have
described the ability to prepay as an “unfettered right,”
id., the RHS breached the loan agreements “simply by not
accepting the request.” Appellee’s Br. 27. We disagree.
The Supreme Court’s decision in Franconia expressly
distinguished between repudiation and breach by drawing
the line at “the time for performance”—until the govern-
ment’s obligation to “allow” or “accept” prepayment comes
“due,” it has at most repudiated its obligation to accept
prepayment. 536 U.S. at 139, 148. The Franconia Court
relied on well-established contract principles to observe
that a “promisor’s renunciation of a ‘contractual duty
before the time fixed in the contract for . . . performance’ is
a repudiation,” whereas a “[f]ailure by the promisor to
perform at the time indicated for performance in the
contract establishes an immediate breach.” Id. at 142–43
(second emphasis added) (quoting 4 A. Corbin, Contracts
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 11
§ 959, p. 855 (1951)) (citing Restatement (Second) of
Contracts §§ 235(2), 250 (1979)).
As Appellants argue, Tamerlane “cannot be read as
eliminating Franconia’s requirement of a time fixed for
performance.” Appellants’ Reply Br. 8. Appellants sur-
mise that the borrowers in that case had submitted
complete requests for prepayment that included a date for
prepayment, at least 180 days after the date of the re-
quests, consistent with the then-governing regulations.
We need not rely on such speculation. In Tamerlane, we
held that a physical transfer of money was not required to
trigger the government’s duty to accept prepayment;
rather, “clear, unconditional offers of prepayment” can
suffice. 550 F.3d at 1143. But the parties did not dispute,
and this court did not address, whether the particular
requests for prepayment in that case sufficiently fixed a
time for performance. Tamerlane could not have elimi-
nated the Franconia Court’s reliance on general contract
principles.
Mr. Olsen’s 2002 letter did not expressly indicate
when he planned to prepay. And in context, we think it
unreasonable to view the letter, with no specification of
the time for prepayment, as going beyond an exploratory
notification and triggering the contractual duty on the
part of the government “to accept prepayment and exe-
cute the appropriate releases.” Franconia, 536 U.S. at
142.
The Supreme Court in Franconia relied on the gov-
ernment’s own equating of “a duty to allow petitioners to
prepay and a duty to accept tendered prepayments.” Id.
at 144. Appellants did not “tender prepayments” with Mr.
Olsen’s 2002 letter or indicate a time they would tender
them if the government indicated it would accept them.
Indeed, there were many properties involved, for which
the borrowers’ actual ability and readiness to prepay
could be expected to depend on completion and effectua-
12 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
tion of the referred-to arrangements or other financing
deals. Two of the properties were actually still within
their covenants periods and not even eligible for prepay-
ment by their terms, as the RHS would know.
More generally, the government’s view of Mr. Olsen’s
2002 letter as immediately triggering the government’s
duty is unreasonable, in context, from each side’s perspec-
tive. From the government’s perspective, it is unreasona-
ble to make the government liable for breach for
responding with a request for more information in late
April 2002 (as it did). Such a view would make the gov-
ernment possibly responsible for damages the borrowers
would have suffered from losing a limited-time opportuni-
ty in late April or early May of that year, even though the
borrowers never more definitely specified a time by which
the government had to accept prepayment and effect the
associated releases. It is likewise unreasonable from the
borrowers’ perspective to treat Mr. Olsen’s 2002 letter—
with no definite time for prepayment specified making
clear when the government had to perform in response—
as having the effect the government proposes: exhausting
a one-time right of prepayment, never available again
after an initial exercise, during the long life of the loan.
Yet the government must insist on that one-time-exercise
view of the prepayment right, or else this suit would be
timely based on the 2011 requests and 2013 complaint
regardless of what occurred in 2002.
Under the circumstances, the letter must be read, ob-
jectively, as not requesting effectuation of prepayment
either immediately or by a specified time. The Claims
Court did not conclude otherwise, except by relying on
Tamerlane—which does not justify such a conclusion. 6
6 That is so notwithstanding the government’s
stressing that Mr. Olsen’s 2002 letter is similar to the
letters in Tamerlane. Tamerlane held only that formal
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 13
Mr. Olsen’s 2002 letter thus did not trigger the govern-
ment’s obligation to accept prepayment. Simply put,
without specifying when Mr. Olsen wanted to prepay, the
letter was akin to an open-ended exploratory notification
that he intended to prepay.
Furthermore, we disagree with the government’s posi-
tion that any response other than outright acceptance
(even informing a borrower about procedural require-
ments) qualifies as conduct constituting breach. Such a
requirement reads our “unfettered right” language in
Tamerlane too rigidly. Indeed, in that case, we did not
rest our decision on the RHS’s initial responses to the
plaintiff’s prepayment requests as constituting a breach.
Rather, we held that the RHS had breached “at least” by
the dates of the incentive loans, which occurred more than
two years later. 550 F.3d at 1143.
Here, as Appellants contend, “[t]he [RHS’s 2002 re-
sponse] letter . . . contain[ed] no rejection or disallowance
of prepayment, either explicit or implicit.” Appellants’
Opening Br. 35. The RHS’s response merely acknowl-
edged Appellants’ contractual right to prepay and provid-
ed instructions on how to proceed with the process. Such
a response offering guidance cannot be characterized as
non-acceptance of Appellants’ request to prepay.
The regulations in force at the time further bolster
the conclusion that there was not yet any non-acceptance
of prepayment. The RHS required a “complete” prepay-
ment request—a written request with a time for perfor-
mance, plus additional documentation, including proof of
ability to repay—before it would substantively review the
tender was not required. It did not hold that an informal
request set the time for performance as of that very day,
and as noted infra, we did not rest our decision in Tamer-
lane on the initial request letter.
14 AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES
request, and an incomplete request would be returned
with a request for more information. 7 C.F.R.
§§ 1965.205(c), 1965.206(a) (2002). Although these regu-
lations, like ELIHPA itself, might arguably constitute a
repudiation of the RHS’s obligation to accept prepayment,
they support Appellants’ argument that the RHS’s re-
sponse was nothing more than a request for more infor-
mation. 7
In sum, the Supreme Court in Franconia explained
that “the essential purpose of the repudiation doctrine” is
“to avoid an unnecessary lawsuit by allowing the promisor
an opportunity to adhere to its undertaking.” 536 U.S. at
148. During the 2002 correspondence between Appellants
and the RHS, Appellants did not trigger the RHS’s duty to
accept prepayment, and the RHS did not take any steps
inconsistent with allowing prepayment. Indeed, the RHS
retained the option to retract its repudiation after the
2002 correspondence. The government therefore did not
breach its contractual obligation to accept Appellants’
prepayment in 2002. Because the alleged breaches oc-
curred for some Appellants in 2011 and for the others
when the underlying suit was filed in 2013, Appellants’
contract claims are not time-barred under the six-year
statute of limitations.
B
The Claims Court also dismissed Appellants’ takings
claims that had been pled separately from the breach-of-
contract claims. In doing so, it did not separately allude
to or analyze the takings claims. According to Appellants,
this constituted error because “there is no reason to
assume without discovery that [Appellants’] takings
7 We need not decide what other government ac-
tions or non-actions would constitute non-acceptance of a
prepayment request.
AIRPORT ROAD ASSOCIATES, LTD. v. UNITED STATES 15
claims accrued on the same day and based on the same
event as their contract claims.” Appellants’ Opening Br.
42.
Because the Claims Court implicitly premised the
dismissal of Appellants’ takings claims on the same
erroneous rationale as the dismissal of their contract
claims, we also reverse the dismissal of the takings
claims. We leave for the Claims Court on remand to
address the viability of the takings claims in the first
instance. 8
III. CONCLUSION
For the foregoing reasons, we reverse the dismissal of
Appellants’ claims and remand for further proceedings.
REVERSED AND REMANDED
8 The Supreme Court in Franconia did not provide
guidance as to when the statute of limitations begins to
run on takings claims brought by a § 515 borrower. See
536 U.S. at 149 (“The Federal Circuit’s holding that
takings relief was time barred hinged entirely upon
passage of ELIHPA. Because that conclusion was incor-
rect, we hold, the Federal Circuit erred in dismissing
petitioners’ takings theory on grounds of untimeliness.”).