Housing Authority of Picher v. United States Ex Rel. Secretary, Department of Housing & Urban Development

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT August 11, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
THE HOUSING AUTHORITY OF THE
CITY OF PICHER, OKLAHOMA,
Plaintiff,
v. No. 16-5159
(D.C. No. 4:14-CV-00322-CVE-PJC)
UNITED STATES OF AMERICA, (N.D. Okla.)
EX REL. SECRETARY, DEPARTMENT
OF HOUSING AND URBAN
DEVELOPMENT,
Defendant - Appellee,
and
BOARD OF COUNTY
COMMISSIONERS OF THE COUNTY
OF OTTAWA, OKLAHOMA,
Defendant - Appellant.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before MATHESON, McKAY, and MORITZ, Circuit Judges.
_________________________________
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
In this interpleader action, the Board of County Commissioners of the County
of Ottawa, Oklahoma (the County) appeals the district court’s entry of summary
judgment to the United States, on behalf of the Secretary of the Department of
Housing and Urban Development (HUD). Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm.
I. BACKGROUND
In the 1960s, the Housing Authority of the City of Picher, Oklahoma (PHA)
began operating a low-income public housing project with financial assistance from
HUD pursuant to a Consolidated Annual Contributions Contract (ACC). In 1983, the
federal government designated a portion of Oklahoma, including the City of Picher,
as the Tar Creek Superfund site due to health and environmental hazards from
extensive zinc and lead mining operations. In 2004, the state of Oklahoma began
relocating Picher’s residents due to the health hazards and the risk of unexpected
building collapse. In 2008, a tornado struck Picher and destroyed much of the
housing project, rendering it uninhabitable. Picher, which was located in Ottawa
County, ceased municipal operations in 2009 and began involuntary dissolution
proceedings the next year.
After the tornado, the PHA obtained an insurance settlement of approximately
$1.7 million and, for several years, explored whether to rebuild the project in the
nearby town of Fairland. The PHA eventually sought HUD’s permission to rebuild
in Fairland, but HUD denied the request and directed that the project be terminated.
When both HUD and the County requested the approximately $1.2 million remaining
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in the PHA’s bank account, PHA filed an interpleader action in Oklahoma state court.
HUD removed the case to federal court and moved for summary judgment, arguing
that the County was not entitled to the interpled funds because it was a stranger to the
ACC, which expressly prohibited the creation of any enforcement right in a third
party; the County was not involved in the project; the County could not claim to be a
successor to the PHA because the project no longer existed; and the interpled funds
belonged to HUD under the plain terms of the ACC. The County responded that the
ACC was ambiguous, the County was the successor in interest to the City of Picher,
HUD waived any claim to the interpled funds by waiting almost six years to make a
claim, and the County had an equitable claim to at least a portion of the interpled
funds for services it supplied to the project.
Meanwhile, the district court dismissed the PHA from the action because it
disclaimed any interest to the funds. After summary-judgment briefing was
complete, the district court transferred the case to the United States Court of Federal
Claims, reasoning that it lacked jurisdiction. The Claims Court concluded that it
lacked jurisdiction and transferred the case back to Oklahoma.
After the re-transfer, the Oklahoma district court determined that it in fact had
jurisdiction and granted HUD’s motion for summary judgment. Applying federal
law, the court first ruled that the ACC unambiguously provided that all of the funds
remaining after termination of the project belonged to HUD. It based that conclusion
on the confluence of numerous contractual provisions, the most pertinent of which
we outline.
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One contractual provision defined a “General Fund”: “All monies and
investment securities received by or held for the account of the [PHA] in connection
with the development, operation and improvement of projects in accordance with an
ACC with HUD shall constitute the ‘General Fund.’” Aplt. App., Vol. I at 48.
Another required the PHA to “deposit and invest all funds and investment securities
received by or held for the account of the [PHA] in connection with the development,
operation and improvement of the projects . . . in accordance with the terms of [a]
General Depository Agreement,” id., which the parties had executed separately. The
ACC defined “Operating receipts” as “all rents, revenues, income, and receipts
accruing from, out of, or in connection with the ownership or operation of [the]
project.” Id. at 46. The ACC further required the PHA to purchase a variety of
insurance coverages, including a “Commercial Property [policy] . . . written with a
blanket limit, on a replacement cost basis, and with an agreed value clause
eliminating any coinsurance provision.” Id. at 85.1 It also required the PHA to use
any insurance proceeds to “restore, reconstruct, and/or repair any damaged or
1
The commercial-property insurance requirement was set out in an attachment
to the ACC that was referred to in Section 13 of the ACC: “The types of insurance
required, or that should be purchased, and other requirements with respect to
insurance coverage are listed in Part B, Attachment VII, of this ACC.” Aplt. App.,
Vol. I at 50. The district court did not discuss this provision but based its view that
the PHA was required to purchase insurance on another provision in Section 13, one
requiring the PHA to “procure adequate insurance to protect the [PHA] from
financial loss resulting from various hazards if the [PHA] determines that exposure to
certain hazards exists.” Id. As the County points out, that provision did not require
the PHA to purchase “various hazards” insurance unless it deemed it necessary to do
so. However, Attachment VII clearly required the PHA to purchase commercial
property insurance.
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destroyed property of a project, except with the written approval of HUD to the
contrary.” Id. at 50–51. And perhaps most importantly to this case, the ACC
provided that in the event the project was terminated, “all project reserves shall
become part of another project administered by the [PHA] in accordance with the
terms of [the] ACC. If no other project(s) under management exists, the remaining
project reserves shall be distributed as directed by HUD.” Id. at 51 (emphasis
added).
Here, HUD denied the PHA’s request to rebuild the project in Fairland and
instead terminated the project and directed that the remaining funds be returned to
HUD. Hence, the district court concluded that the funds belonged to HUD. The
court acknowledged that the ACC permitted the PHA to pool funds unrelated to the
project or HUD in the account where it kept project funds: “The [PHA] may
. . . deposit into an account covered by the terms of the General Depository
Agreement, by lump-sum transfers of funds from the depositories of other projects or
enterprises of the [PHA] in which HUD has no financial interest, amounts necessary
for current expenditures of items chargeable to all projects and enterprises of the
[PHA].” Id. at 48 (emphasis added). But the court concluded that the insurance
proceeds did not arise out of “other [PHA] projects or enterprises . . . in which HUD
had no financial interest,” id., but from an insurance policy that the ACC required the
PHA to maintain as part of its deal with HUD and that was paid for with federal grant
money.
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The court further concluded that even if the PHA had a claim to the remaining
funds, the ACC unambiguously prohibited third-party claims against either the PHA
or HUD: “[N]othing in this ACC shall be construed as creating any right of any third
party to enforce any provision of the ACC or to assert any claim against HUD or the
[PHA].” Id. at 55. And to the extent the County claimed a right to the remaining
funds as the successor of the dissolved City of Picher, the court pointed out a
distinction between the PHA, which was a party to the ACC, and the City of Picher,
which was not. The court therefore reasoned that the County remained a stranger to
the ACC.
The district court addressed two other arguments the County made. It first
rejected the contention that by waiting six years to make a claim on the insurance
proceeds, HUD waived its claim to the interpled funds. The court reasoned that HUD
did not need to make a separate claim to the funds because the ACC vested HUD
with the right to request the return of any project reserves in the General Fund (i.e.,
the PHA’s bank account subject to the General Depository Agreement) when the
project was terminated. Second, the court declined the County’s request for
$135,912 in equitable relief for services the County claimed it had provided to the
PHA between 2008 and 2013. The court concluded that the provision of services to
the PHA had no relationship to the ACC and that many of the services were those the
County was bound to provide as the county in which the project was located.
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II. DISCUSSION
We review an order granting summary judgment de novo, “applying the same
standards that the district court should have applied.” Fields v. City of Tulsa,
753 F.3d 1000, 1008 (10th Cir. 2014) (internal quotation marks omitted). A “court
shall grant summary judgment if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). “[W]e examine the record and all reasonable inferences that
might be drawn from it in the light most favorable to the nonmoving party.” Fields,
753 F.3d at 1009 (internal quotation marks omitted).
After fully considering the record, the parties’ arguments, and the governing
law, we are convinced that the district court properly granted summary judgment to
HUD. We therefore affirm the district court’s judgment for substantially the reasons
the district court provided. We add only the following.
The County claims the district court overlooked or improperly analyzed a
number of its arguments. But almost all of those arguments concern the PHA’s right
to the funds, not the County’s. Although the County claims it “stepped ‘into the
shoes’ of the City (including [the] PHA)” when Picher was dissolved, Aplt. Opening
Br. at 21 (emphasis added), the only legal authority it cites, M. Anderson, Dissolving
Cities, 121 Yale L.J. 1364 (2012), concerns succession to a dissolved city and makes
no mention of a city’s public housing authority. Further, as the Oklahoma Supreme
Court explained in determining whether bonds issued by a housing authority were an
indebtedness of the state, a housing authority is, by Oklahoma statute, “‘a public
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body corporate and politic’”—which is how the PHA described itself in its
interpleader petition, see Aplt. App., Vol. I at 13—and therefore not “an agency or
instrumentality of a city or county.” Boardman v. Okla. City Hous. Auth., 445 P.2d
412, 416 (Okla. 1968) (quoting Okla. Stat. tit. 63, § 1055); accord Hon. Charles W.
Van, 11 Okla. Op. Atty. Gen. 482, Okla. A.G. Opin. No. 79-303, 1980 WL 114835,
at *2 (Jan. 22, 1980) (“Public housing authorities created pursuant to [the Oklahoma
Housing Authority Act, which includes § 1055], are not instrumentalities of the city
or county within which they sit and, therefore, are not subject to the Political
Subdivisions Tort Claims Act.”). We therefore conclude that the County failed to
establish that it stepped into the PHA’s shoes by virtue of Picher’s dissolution.
Consequently, we need not address the County’s contentions about the PHA’s rights
to the funds that it claims the district court overlooked or improperly analyzed.
III. CONCLUSION
The judgment of the district court is affirmed.
Entered for the Court
Monroe G. McKay
Circuit Judge
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