Free Motion for Protective Order - District Court of Federal Claims - federal

Case 1:93-cv-00655-MMS

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ANAHEIM GARDENS, et al., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 93-655 C Judge Robert H. Hodges, Jr.

DEFENDANT'S MOTION FOR PROTECTIVE ORDER Pursuant to Rule 26(c) of the Rules of the Court of Federal Claims ("RCFC"), defendant, the United States, respectfully requests that the Court enter a protective order limiting discovery on ripeness to the projects identified in paragraph seven of the operative complaint, i.e., those projects for which the complaint seeks compensation for an alleged as-applied, regulatory taking. The United States has attempted in good faith to resolve this dispute without Court action, but such efforts have not been successful. BACKGROUND The plaintiffs filed their Fourth Amended Complaint on September 16, 1997. The Fourth Amended Complaint asserts claims by 22 plaintiffs with respect to 28 HUD-insured projects. Pls.' Fourth Am. Compl. ¶ 7 (docket no. 113) (excerpts attached as Exhibit A). Each of the projects was constructed at a different time, was funded by a different HUD-insured mortgage, was assigned a unique FHA identification number, and was subject to its own regulatory agreement. See generally Pls.' Fourth Am. Compl. ¶¶ 10-25. On August 14, 2006, the Court ordered that discovery limited to the issue of ripeness should proceed. Order of Judge Hodges at 1 (Aug. 14, 2006). Plaintiffs served interrogatories, requests for the production of documents, and requests for admissions on October 27, 2006.

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These discovery requests sought information about "subject properties," which the plaintiffs defined generally as projects "that are the subject of the claims asserted by the Plaintiffs in this litigation." Pls.' First Set of Interrogs. at 1-2 (attached as Exhibit B); Pls.' First Requests For Production of Docs. at 1-2 (same); Pls.' First Request for Admissions at 1-2 (same). At the same time, however, plaintiffs identified 65 specific projects as "subject properties."1 Id. Most of these projects are not identified ­ or even mentioned ­ in the operative complaint. See Pls.' Fourth Am. Compl. ¶ 7 (identifying the projects about which taking claims are being asserted). On March 27, 2007, having recognized the plaintiffs were seeking discovery about projects that had not asserted a claim, we raised this issue in a letter to plaintiffs' counsel. We explained:

The plaintiffs identified the following specific projects as "subject properties:" Anaheim Gardens, 1550 Beacon Street, 100 Centre Plaza, Cedar Gardens, Victorian Arms Apartments, Florian Meadows I, Florian Meadows II, Creekside Terrace, Glenview Gardens, Hillview Townhouses, Hillview Townhouses No. 1, Indian Head Manor Apartments, Jewel Lake Villa II, Millwood Apartments (Joseph & Stefi Biafora), Metro West Ltd., Millwood Townhomes (Millwood Assoc.), Napa Park Apartments, Halawa View Apartments, Ontario Townhomes, Waipahu Tower, Rock Creek Terrace, Sierra Vista One, Silverlake Village, The Palomar Apartments, Beaumont Avenue Apartments, Coleridge Road Apartments, Icemorlee Street Apartments, Hardee Street Apartments, Holloway Court Apartments, Holiday Town Apartments, Henry Street Apartments, Market North Apartments #2, Millbank Court Apartments, Johnson Court Apartments, Oakwood Avenue Apartments, Person Court Apartments, Raleigh North Apartments, River Falls Apartments, Washington Street Apartments Tucker Street Apartments, Young Avenue Apartments, Calico Court Apartments, Chowan Court Apartments #1, Columbus Court Apartments, Franklin Court Apartments, Glendale Court Apartments, Holiday Town Apartments #2, Jefferson Court Apartments, Long Drive Apartments #1, Market North Apartments #1, Oakwood Avenue Apartments #2, Peachtree Court Apartments, Southgate Apartments, Stewart's Creek Apartments #1, Carteret Court Apartments, Chowan Court Apartments #2, LaGrange Village Apartments, Long Drive Apartments #2, Mount Olive Court Apartments, Stewart's Creek Apartments #2, Washington Plaza Apartments, St. George Plaza, Su Casa Por Cortez, San Tomas Apartments, Foothill Apartments. Ex. B at 12. 2

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The operative complaint in Anaheim Gardens names the plaintiffs filing suit and identifies those projects for which compensation is being sought. See Fourth Amended Compl. ¶ 7 (filed Sept. 16, 1997). The pending discovery seeks documents for "subject properties," which is defined generally as those projects "that are the subject of the claims asserted by the Plaintiffs in this litigation." Pls.' First Request for Production of Docs. ¶ 2. However, the definition of "subject properties" also includes a lengthy list of projects, many of which are not the subject of claims asserted in the Fourth Amended Complaint. We will be producing documents for those projects referenced in the definition of "subject properties," but only insofar as they are identified in paragraph seven of the Fourth Amended Complaint in Anaheim Gardens. . . . We will not be producing documents relating to projects that are not at issue, i.e., projects not listed in the operative complaint. I trust this approach will meet with your approval. See Letter from David A. Harrington to Harry Kelly at 1-2 (Mar. 27, 2007) (attached as Exhibit C). A list of the projects for which discovery would be provided was enclosed. See Ex. C at 3. On April 16, 2007, we served answers to the plaintiffs interrogatories and request for admissions and, at plaintiffs' request, had previously begun producing responsive documents on a rolling basis.2 In responding to plaintiffs' discovery, we objected that the plaintiffs' definition of "subject properties" was overly broad, unduly burdensome and not reasonably calculated to lead to the discovery of admissible evidence. On April 20, 2007, plaintiffs responded to our March 27, 2007 letter. See Letter from Harry Kelly to David A. Harrington (Apr. 20, 2007) (attached as Exhibit D). Plaintiffs first conceded that their discovery requests sought information about ten "subject properties" that had

The production of documents to plaintiffs has recently been completed, with the last installment of documents being delivered to plaintiffs on May 2, 2007. 3

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been dismissed by Judge Robinson in 1995 (i.e., Florin Meadows I, Florin Meadows II, Jewel Lake Villa I, Jewel Lake Villa II, St. George's Plaza, Creekside Apartments, Victorian Arms, Hillview Townhouses, Hillview Townhouses No. 1, and Washington Plaza). Id. at 2. With respect to these projects, plaintiffs acknowledged that no response to plaintiffs discovery was necessary. Id. On the other hand, plaintiffs stated that they anticipated receiving ripeness discovery for 23 "additional properties owned by Thetford III and Thetford IV that, although not identified in the complaint," purportedly suffered a regulatory taking similar to projects included in the operative complaint. Id. at 2-3 (emphasis added) (calling these the "additional Thetford properties"). Upon receiving this letter, we responded that we respectfully disagreed with plaintiffs' position "that the Court may entertain claims relating to projects that are not identified in the operative complaint." Letter from David A. Harrington to Harry Kelly at 1 (Apr. 26, 2007) (attached as Exhibit E). We explained that "no claims concerning `additional Thetford properties' are before the Court" and, consequently, that no discovery regarding such properties would be provided. Id. Additionally, we pointed out that plaintiffs' letter had failed to address seven projects that were listed in the definition of "subject properties," but that were not listed in the operative complaint (i.e., Holiday Town Apartments #2, Carteret Court Apartments, Chowan Court Apartments, LaGrange Village Apartments, Long Drive Apartments #2, Mount Olive Court Apartments, and Stewart's Creek Apartments #2). Id. at 1 n.1. During a discussion on May 1, 2007, plaintiffs' counsel stated that these seven properties were not HUD-insured projects and are not at issue in this action. Consequently, he

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acknowledged that no response to ripeness discovery was necessary as to the seven projects not addressed in plaintiffs' April 20, 2007 letter. DISCUSSION I. The Court Should Enter A Protective Order Providing That The United States Need Not Respond To Ripeness Discovery Concerning Projects Not Identified In The Operative Complaint The scope of civil litigation is defined and circumscribed by the allegations made by the plaintiff in the operative complaint. RCFC 8 (requiring "a short and plain statement" of the plaintiff's claim). The plaintiffs in this action have amended their original complaint four times ­ twice over the opposition of the United States. See Pls.' First Am. Compl. (filed Mar. 14, 1994) (docket no. 13); Pls.' Second Am. Compl. (filed Aug. 18, 1995) (docket no. 58); Pls.' Third Am. Compl. (filed Apr. 30, 1996) (docket no. 75); Pls.' Fourth Am. Compl. (filed Sept. 16, 1997) (docket no. 113). The operative complaint is, thus, the Plaintiffs' Fourth Amended Complaint. Paragraph seven of the Fourth Amended Complaint lists 28 HUD-insured projects that are at issue in this action.3 The United States has properly responded to plaintiffs' discovery as

The plaintiffs' original complaint was brought on behalf of 25 plaintiffs and asserted claims as to 30 HUD-insured projects. Compl. ¶ 6. The second amended complaint added ten plaintiffs, bringing the total number of plaintiffs to 35, and asserted claims as to 41 HUD-insured projects. Second Am. Compl. ¶ 7. The Third Amended Complaint added three plaintiffs (B-L Associates, C-W Associates, and Glenview Gardens Limited Partnership), while dropping claims by 16 plaintiffs (Araspark Associates, Florin I, Florin II, Hillview Townhouses, Ltd., Hillview Townhouses, Inc., Internal Trust, Jewel Lake Villa Two, Earl W. Kellenbeck & Denise A Kellenbeck, J. Derrick V. Ward & Frances T. Ward, Washington Plaza Apartments, Ltd., James W.Y. Wong, Janey S. Wong, William H. Zenklusen and Joseph F. McDonald, Jr., 185-225 Parkhill Corp., Floral Gardens, and Fountain West). See Third Am. Compl. ¶ 7. Thus, the third amended compliant asserted claims by 22 plaintiffs with respect to 28 HUD-insured projects. Id. Neither the plaintiffs, nor the projects asserting as-applied taking claims, changed (continued...) 5

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to each of these 28 projects. The plaintiffs maintains, however, that the United States must respond to discovery directed to the ripeness of claims of an additional 23 projects ­ projects that are not identified in the operative complaint and, therefore, that are not at issue in the pending action. By defining "subject properties" to include projects that are not identified in the operative complaint, the plaintiffs' discovery requests are overly broad, unduly burdensome and seek information not reasonably calculated to lead to the discovery of admissible evidence. The Court should enter a protective order precluding discovery concerning the ripeness of claims that are not asserted in the operative complaint. RCFC 26(b)(1) (limiting discovery to matters "relevant to the claim or defense of any party"); Fed. R. Civ. P. 26 (advisory committee notes) (explaining that Rule 26(b)(1) was changed to signal to parties that "they have no entitlement to discovery to develop new claims or defenses that are not already identified in the pleadings"); Siesta Village Market LLC v. Perry, ___ F. Supp. 2d ___, 2007 WL 445985 at *3 (Feb. 12, 2007) (granting a protective order for discovery going beyond the scope of the complaint). In demanding discovery regarding the "additional Thetford properties," plaintiffs assert that these projects are owned by plaintiffs who are asserting claims in this action. See Ex. D at 2. This misses the point. While plaintiffs may well own properties above and beyond those identified in the operative complaint, only taking claims concerning those projects identified in the operative complaint are pending before the Court. See RCFC 8(a) (requiring that the complaint provide a plain statement of the claims being asserted). It is the ripeness of claims pending before the Court that is the only legitimate focus of discovery. Order of Judge Hodges

(...continued) in the fourth amended complaint. Fourth Am. Compl. ¶ 7. 6

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(Aug. 14, 2006); see also Fed. R. Civ. P. 26 (advisory committee notes) (parties "have no entitlement to discovery to develop new claims or defenses that are not already identified in the pleadings"). If the plaintiffs want to assert new claims that concern additional projects, they may file a new lawsuit or may seek leave to amend the complaint.4 RCFC 15(a). However, at this juncture, the plaintiffs are entitled only to discovery about the ripeness of the taking claims of projects listed in the Fourth Amended Complaint. Claims concerning the "additional Thetford properties" are, by the plaintiffs own admission, "not identified in the complaint." Ex. D at 2-3. The Court should, therefore, grant the United States' motion for a protective order. CONCLUSION For these reasons, the United States respectfully requests that the Court enter a protective order limiting discovery on ripeness to those projects specifically listed in paragraph seven of plaintiffs' Fourth Amended Complaint. PETER D. KEISLER Assistant Attorney General JEANNE E. DAVIDSON Director s/ Brian M. Simkin BRIAN M. SIMKIN Assistant Director

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The United States reserves the right to oppose any motion to amend the complaint 7

in this action.

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s/ David A. Harrington DAVID A. HARRINGTON Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 307-0277 Fax: (202) 307-0972 May 8, 2007 Attorneys for Defendant

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CERTIFICATE OF FILING I hereby certify that on the 8th day of May 2007, a copy of "DEFENDANT'S MOTION FOR PROTECTIVE ORDER" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ David A. Harrington

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Case 1:93-cv-00655-MMS

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IN THE. UNITED STATES COI~T OF FEDERAL CLAIMS

) ) ) ) ) ) ) ) B-L Associates, a limited partnership ) c/o Roger W. Stern ) 1560 Beacon Street ) Br0okline, MA 02146 ) ) JOSEPH R. BIAFORA and STEFI BIAFORA ) c/o Joseph R. Biafora ) 7133 Etiwanda Avenue ) Suite 100 ) Reseda, CA 91335 ) ) CEDAR GARDENS ASSOCIATES, a partnership ) No. 93-655C c/o James R. Bancroft ) Bancroft & McAlister ) (Judge Robinson) 601 Montgomery Street, Suite 900 ) San Francisco, CA 94111-2612 ) FOURTH AMENDED COMPLAINT ) C-W ASSOCIATES, a limited partnership ) c/o Roger W. Stern ) 1560 Beacon Street ) Brookline, MA 02146 ) ) GLENVIEW GARDENS LIMITED PARTNERSHIP ) c/o Mid-._City Financial Corporation ) 4340 East-West Highway ) Suite 300 ) Bethesda, MD 20814 ) ) .PETER HWEI-YANG HSI and PRISCILLA ) LAI-FONG HSI dba GENERAL PARTNERS ) OF WAIPAHU TOWER, A HAWAII LIMITED ) PARTNERSHIP ) 615 Piikoi Street ) Suite 2001 ) Honolulu, HI 96814 ) )
ANAHEIM GARDENS, a limited partnership c/o L.S. Ames P.O. Box 515 25332 Narbonne Avenue Suite 200 Lomita, CA 90717
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INDIAN HEAD MANOR LIMITED PARTNERSHIP I c/o Mid-City Financial Corporation 4340 East-West Highway, Suite 300 Bethesda, MD 20814 NORMAN M. KRONICK and LOUIS DULIEN as Tenants in Common dba Halawa View Apartments, a registered general partnership c/o Norman Kronick Halawa View Apartments 3605 Manamana P1. Honolulu, HI: 96822 METRO WEST LIMITED, a Limited Partnership c/o Tod Spieker 1032 Elwell Court #115 Palo Alto, CA 94303

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

MILLWOOD ASSOCIATES LIMITED PARTNERSHIP) c/o Mid-City Financial Corporation ) 4340 East-West Highway, Suite 300 ) Bethesda, MD 20814 ) NAPA PARK APARTMENTS, a limited partnership c/o Mid-City Financial Corporation 4340 East-West Highway, Suite 300 Bethesda, MD 20814 ONTARIO TOWNHOUSES, a limited partnership c/o Mid-City Financial Corporation 4340 East-West Highway, Suite 300 Bethesd_a, MD 20814 THE PALOMAR APARTMENTS, a Limited Partnership c/o Jerald L. Katleman 3990 Old Town Avenue Suite 305-C San Diego, CA 92110

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

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ROCK CREEK TERRACE LIMITED PARTNERSHIP) c/o Mid-City Financial Corporation ) 4340 East-West Highway ) Suite 300 ) Bethesda, MD 20814 ) SIERRA VISTA ONE, a limited partnership c/o Tod Spieker 1032 Elwell Court #I 15 Palo Alto, CA 94303 SILVERLAKE VILLAGE, a Limited Partnership c/o Tod Spieker 1032 Elwell Ct., #115 Palo Alto, CA 94303 THETFORD PROPERTIES III, LIMITED PARTNERSHIP c/o Richard A. Urban P.O. Box 168 Richmond, VA 23201 THETFORD PROPERTIES IV, LIMITED PARTNERSHIP c/o Richard A. Urban P.O. Box 168 Richmond, VA 23201 620 SU CASA POR CORTEZ, a California general partnership c/o Tod Spieker 1032 Elwell Ct., #i15 Palo Alto, CA 94303 825 SAN TOMAS APARTMENTS, a Califorr~a Limited Partnership c/o Tod Spieker 1032 Elwell Ct., #115 Palo Alto, CA 94303

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

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5324 FOOTHILL APARTMENTS, a California General Partnership c/o Tod Spieker 1032 Elwell Ct., #115 Palo Alto, CA 94303 Plalnt~ffs,
Vo

THE UNITED STATES OF AMERICA Defendant.

) ) ) ) ) ) ) ) ) ) ) ) ) )

FOURTH AMENDED COMPLAINT I. PRELIMINARY STATEMENT 1. Plaintiffs (hereinafter also referred to as "Owners") bring this action to recover damages for the failure of the United States (hereinafter referred to as "United States") to pay them compensation to which the Plaintiffs are lawfully entitled. The Plaintiffs are owners of various multifamily apartment projects.located throughout the United States. 2. These projects provide below-market rate affordable housing in exchange for receiving mortgage guarantees and interest subsidies.from the'United States. This arrangement provided Owners with certain returns, and required the Owners to rent their apartments to lower-income persons. Under the terms of their agreements with the United States, the Owpers were entitled to prepay their mortgages after 20 years and terminate the Government's restrictions on the Owners' use of their properties. 3. Because Congress perceived that large-scale prepayments would begin to occur in the late 1980s which could lead to significant reductions in the stock of affordable housing, Congress enacted the Emergency Low Income Housing Preservation Act of 1987, Pub. L. 101-242, 101 Stat. 1815, 1877 (February 5, 1988) (hereinafter "ELIHPA"), which

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was intended to halt prepayments temporarily S(_S_e_f! ¶I 34-35, ~. Congress later enacted the Low Income Housing Preservation and Resident Homeownership Act of 1990 (hereinafter "LIHPRHA") 12 U.S~C.A. §§ 4101 et seq. (West Supp. 1993). LIHPRHA was intended by Congress to prevent prepayment in virtually all cases and was consciously known by Congress to constitute a taking of the Owners' original prepayment rights. LIHPRHA therefore also incorporated other provisions which, in Congress' estimation, provided just compensation for the taking of the prepayment rights. S(.~e2. 11 36-38,' infra.) To obtain that compensation, however, Owners were required to apply to the Department of Housing and Urban Development (hereinafter as "HUD"), which was directed to.process the requests for compensation, generally known as incentives, to be provided to the Owners pursuant to strict statutory definition. (See 11 38~39, ~. 4. HUD, however, has thwarted Congress' intent -- and denied the Plaintiffs' right~ to compensation -- byfailing to timely issue and put into effect its regulations implementing LIHPRHA and to process the Owners' applications for compensation as LIHPRHA required. As a result, five years after Congress deprived the Owners of their right to prepay, the Owners have sti~ not received the compensation Congress intended. 5. Without waiving any issues and claims and pursuant to the Orders, the Owners seek damages on two remaining theories. Count Three seeks damages for LIHPRHA's taking of the C~vners' property rights without just compensation. Count Five seeks damages for breach of contract resulting from HUD's abrogation of the Owners' right to prepay. ~ 1¶ 33-85,.in~a). II. JURISDICTION AND VENL~ 6. This is a civil action against the UnitedStates of America, acting through HUD, arising under contracts entered into between HUD and each of the Plaintiffs~ arising under

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LIHPRHA, and arising under the Fifth Amendment to the U.S. Constitution. Therefore, this Court has jurisdiction pursuant to 28 U.S.C.A. § 1491 (West 1989 and Supp). Accordingly, venue is appropriate in this Court.

III. PARTIES
7. The Plaintiffs are 22 individuals, partnerships, and corporations. The following is a list of each Owner's name and the project it owns: Anaheim Gardens, a limited partnership c/o L.S. Ames Box 515 Narbonne Avenue - Suite 200 Lomita, CA 90717 B-L Associates, a limited partnership c/o Roger W. Stern Beacon Street Brooldine, MA 02146
o

Anaheim Gardens

1550 Beacon Plaza

Joseph R. Biafora and Stefi Biafora c/o Joseph R. Biafora Etiwanda Avenue Suite 100 Reseda, CA 91335 C-W Associates, a limited partnership c/o. Roger W. Stern Beacon Street Brookline, MA 02146 ..Cedar Gardens Associates, a partnership c/o James R. Bancroft "Bancroft & McAlister Montgomery Street, Suite 900 San Francisco, CA 94111'2612 Glenview Gardens Limited Partnership c/o Mid-City Financial Corporation East-West Highway Suite 300 Bethesda, MD 20814

Millwood Apts. Parthenia Manor Apts.

°~

100 Centre Plaza

o

Cedar Gardens

Glenview Gardens Apartments

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Peter Hwei-Yang Hsi and Priscilla Lai-Fong Hsi, dba General Partners of Waipahu Tower, a Hawaii limited partnership Piikoi Street Suite 2001 Honolulu, HI 96814 Indian Head Manor Limited Partnership I c/o Mid-City Financial Corporation East-West Highway Suite 300 Betl~esda, MD 20814 Norman M. Kronick and' Louis Dulien as Tenants in Common dba Halawa View Apartments, a registered general partnership c/o Norman Kronick . Halawa View Apartments Manamana P1. Honolulu, HI 96822 10. Metro West Limited, a Limited Partnership c/o Tod Spieker Elwell Court #115 Palo Alto, CA 94303 Millwood Associates Limited Partnership c/o Mid-City Financial Corporation East-West Highway Suite 300 Bethesda, MD 20814 12. Napa Park Apartments, a limited partnership ' c/o Mid-City Financial Corporation East-West Highway s~ite 300 Bethesda, MD 20814

Waipahu Tower

Indian Head Manor Apartments

Halawa View Apartments

Metro West Apartments

Millwood Townhouses

Napa Park Apartments

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13.

Ontario Townhouses, a hmited partnership c/o Mid-City Financial Corporation East-West Highway Suite 300 Bethesda, MD 20814 The Palomar Apartments, A Limited Partnership c/o Jerald L. Katleman Old Town Avenue, Suite 305-C San Diego, CA 92110 Rock Creek Terrace Limited Partnership c/o Mid-City Financial Corporation East-West Highway, Suite 300 B~thesda, MD 20814 Sierra Vista One, a limited partnership c/o Tod Spieker Elwell Court #115 Palo Alto, CA 94303 Silverlake Village, a Limited Partnership c/o Tod Spieker Elwell Ct., #115 Palo Alto, CA 94303 Thetford Properties III, Limited Partnership c/o Richard A. Urban Box 168 Richmond, VA 23201

Ontario Townhouses

14.

The Palomar

15.

Rock .Creek Terrace Apartments

16.

Sierra Vista I

17.

Silverlake Village

18.

River Falls Apts. Market North Apts. II Deanswood Apts. Southgate Apts JeffErson Court Apts Glendale Court Apts Market North Apts. I

19. ..Thetford Properties IV, Limited Partnership c/o Richard A. Urban Box 168 Richmond, VA 23201 20. 620 Su Casa Por Cortez, a California general partnership' c/o Tod Spieker Elwell Ct., #115 Palo Alto, CA 94303

Su Casi~ Por Cortez

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21.

825 San Tomas Apartments, a California Limited Partnership c/o Tod Spieker Elwell Ct., #115 Palo Alto, CA 94303 5324 FOothill Apartments, a California General Partnership c/o Tod Spieker Elwell Ct., #115 Palo Alto, CA 94303

San Tomas Gardens

22.

Foothill Plaza

Three of the above-noted Plaintiffs were added through the Third Amended Complaint. These Plaintiffs and corresponding execution dates of their notes are as

follows:
OWNER Glenview Gardens Limited Partnership B-L Associates C-W Associates ' FHA NO. 052-44007-LDP 023-016NI 023-35NI ORIGINAL NOTE DATE 09/21/72 12/19/72 07/01/70

8. HUD is an agency of the Defendant United States, and at all times relevant to the allegations in this Complaint, was acting as an agent of the Defendant, and acts of HUD are imputed to the Defendant. HUD acts through its Secretary and other authorized officials. HUD is authorized by Acts of Congress, including the National Housing Act of 1934 (as amended, 12 U.S.C.A. §§ 1701 et seq.) (West 1989 and Supp.) to enter into contracts with private property owners, including the Owners. IV. STATEMENT OF FACTS 9. Plaintiffs are Owners of multifamily housing projects which participated in programs established by Section 221(d)(3) (the "221(d)(3) program") or Section 236

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("Section 236") of the National Housing Act, as amended, to encourage private development of housing for lower income persons. A. Section 221~d)(3) Program. 10, Under the Section,221(d)(3) program, the government offered Owners contracts for 40-year loans at a below market three percent interest rate, but required that the Owners pass the benefit of such reduced interest to the tenants in the form of lower rents. 12 U.S.C.A. § 17151(d)(3) (West 1989 and Supp.). Participating Owners undertook the risk of building and operating such housing and agreed to a limitation on distribution of any earnings to a maximum of 6% of their initial equity investment. 11. To participate in the Section 221(d)(3) program, the Owners were required to execute a contract called a Regulatory Agreement ("221 Regulatory Agreement"), that restricts the Owners' use and operation of their projects with respect to rents, charges, and methods of operation, Both the 221 Regulatory Agreement and applicable regulations place restrictions on the Owner's use of their property including: (1) restrictions limiting occupancy for new tenants to low and moderate income families; (2). restrictions on the rent actually charged tenants; (3) restrictions on the capital structure and the rate of return from the project; (4) restrictions on the procedures for increasing rents; and (5) restrictions on the procedures for evicting tenants. 12. The 221 Regulatory Agreement also provides that its restrictions continue as long as the contract for mortgage insurance continues in effect. 13. Project'owners also entered into a long-term deed of trust with a private lender and executed a standard promissory note (hereinafter as "Note") which, notwithstanding the.original 40 year term of the loan, permits project owners to prepay the note twenty years after the date of the mortgage without having to obtain Government approval. HUD

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endorsed the Note, stating that the Note was insured under Section 221(d)(3) and the federal regulations thereunder in effect on the date of execution. Contemporaneous with the execution of the 221 Regulatory Agreement and the Note, HUD and the lender entered into a contract of mortgage insurance. 14. Prepayment of the Note terminates both the mortgage and the HUD mortgage ' insurance. Thus, if the mortgage is prepaid, the mortgage insurance ceases and the project owner is no longer bound by the terms of the Regulatory Agreement to maintain the project's use restrictions. 15. Specifically, the Note widely used in the Section 221(d)(3) program and endorsed by HUD, FHA Form No. 4104-3, provided in part as follows: "The debt evidenced by this Deed of Trust Note may not be prepaid, either in whole or in part, prior to the final maturity date hereof without the prior written approval of the Federal Housing Commissioner, except a maker which is a limited distribution mortgagor may prepay without such approval after twenty (20) years from the date of final endorsement of this note "by. the Federal Housing Commissioner." B. Section 236 Program. 16. The Section 236 program was enacted in 1968 (12 U.S.C.A. § 1715z-1 (West 1989 and Supp.)). The Section 236 program was essentially intended to replace the Section 221(d)(3) program. The Section 236 program offered project Owners contracts for 40-ye~r loans at market rate but with an interest subsidy so that the Owner effectively paid interest at only a'l% rate. The Owner was .required to pass the benefits of the federallyassisted loans to the tenants in the form of lower rents. Participating owners still undertook the risk of building and operating such housing and agreed to a limitation on distribution of any earnings to 6%.

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17. To participate in the Section 236 program, Owners were required.to enter into a series of agreements, including a contract, also called the Regulatory Agreement ("236 Regulatory Agreement") that restricts Owners' use and operation of their projects with respect to rents, charges, and methods of operation. Like the 221 Regulatory .Agreement, the 236 Regulatory Agreement and applicable regulations place restrictions on the Owners' use of their property including: (i) restrictions limiting occupanc~ for new tenants to low and moderate income families; (2) restrictions on the rent actually charged tenants; (3) restrictions on the capital structure, and the rate of return from the project; (4) restrictions on the procedures for increasing rents; and (5) restrictions on the procedures for evicting tenants. 18. The 236 Regulatory Agreement also provides that its restrictions continue as long as the contract for mortgage insurance continues in effect. 19. Project owners also entered into a long-term deed of trust with a private lender and executed a standard Note which permitsproject owners to prepay the Note twenty years after the date of the mortgage, without having to obtain Government approval. HUD endorsed the Note, stating that the Note was insured under Section 236 and the federal regulations thereunder in effect on the date of execution. Contemporaneous with the execution of the Regulatory Agreement and the Note, HUD and the lender entered into a contract Of mortgage insurance. 20. Under the Section 236 program, prepayment of the Note terminates both the mortgage and the~HUD mortgage insurance. Thus, if the mortgage is prepaid, the mortgage insurance ceases and the project owner is no longer bound by the terms of the Regulatory Agreement to maintain the project's use restrictions.

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21. Specifically, the Note widely used in the Section 236 program and endorsed by HUD, FHA Form No. 4104-3, provided in part as follows: "The debt evidenced by this Deed of Trust Note may not be prepaid, either in whole or in part, prior to the final maturity date hereof without the prior written approval of the Federal Housing Commissioner, except where: (1) the prepayment is in connection with the release of an individual unit for sale to a lower income, elderly, or handicapped person; or (2) the Maker is a limited distribution mortgagor which is not receiving payments from the Commissioner under a rent supplement contract pursuant to Section 101 of the Housing and Urban Development Act of 1965, and the prepayment occurs after the expiration of twenty (20) years from the date of final endorsement of this Deed of Trust Note by the Commissioner .... " C. Massachusetts Plaintiffs. 22. In the case of two Owners, C-W Associates and B-L Associates (jointly, the "Massachusetts Plaintiffs"), the lender is the Massachusetts Housing Finance Agency, an instrumentality of the Commonwealth of Massachusetts ("state agency lender"). 23. In the case of a state agency lender, HUD did not insure payment of the mortgage under Section 236, but did subsidize the mortgage payments pursuant to Section 236(b), making interest reduction payments identical to those made for projects insured by HUD. In such cases, HL~, in lieu of entering into the Regulatory Agreement described in ¶¶ 11 and 17, above, enters into a tri-party Interest Reduction Contract ("IRC") with borrowers such as the aforementioned Owners and the state agency lender. 24. Sectior~ 4 of the C-W Associates IRC and Section 6 of the B-L Associates IRC set forth the same low income occupancy restrictions contained in the Regulatory Agreement described in ¶¶ 11 and 17 for projects insured by HUD. Section 8 of the C-W Associates

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IRC and Section I0 of the B-L Associates IRC provide that these contracts terminate upon the prepayment of the mortgage,~ thereby terminating the aforesaid occupancy restrictions. 25. In Section 17 of its Mortgage with the Massachusetts Housing Finance Agency, plaintiff C-W Associates received the right to prepay the mortgage note; said right was reaffirmed in Section 3 of the Modification and Restatement of Mortgage and Security Agreement and Assignment of Rents. In Section 12 of its Mortgage with the Massachusetts Housing Finance Agency, plaintiff B-L Associates received the right to prepay the mortgage note; said right was reaffirmed in Section 2 of the Modification and Restatement of Mortgage and Security Agreement and Assignment of Rents. 26. ELIHPA and LIHPRHA are specifically made applicable to plaintiffs in Section 233 (1)(A)('~ii) and Section 229(I)(A)('~) respectively. ELIHPA and LIHPRHAthus made the above cited prepayment right impossible to exercise, thereby denying plaintiffs C-W Associates and B-L Associates the right to receive a valuable benefit of the contra.ct. The Massachusetts Plaintiffs are situated similarly to the other Owners and have suffered from the same injuries resulting from loss of their 20 year prepayment rights. Status of Owners' Prepayment Prospects 27. Consistent with the language of the Notes endorsed by HUD, HUD regulations codified at 24 C.F.R. § 221.524(a)(ii) (1986) (and predecessors thereto), implementing Sections 221 a~d 236 of the National Housing Act, permitted limited distribution mortgagors to prepay their mortgages twenty years after endorsement and to terminate their Regulatory Agreements with HUD. 28. All of the plaintiffs qualified as limited distribution mortgagors, and none of the plaintiffs that entered into Regulatory Agreements pursuant to Section 236 of the National Housing Act, 12 U.S.C.A. § 1715z-I, is receiving payments from the Commissioner under a

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COUNT II [Deleted Pursuant to March 27, 1995 Order] COUNT III THE OWNERS HAVE NOT RECEIVED JUST COMPENSATION FOR LIHPRHA'S TAKING OF THEIR PREPAYMENT RIGHTS 79. Paragraphs 1 through 78 are incorporated as if repeated herein. 80. The Plaintiffs entered into contracts with the Defendant, which provided Plaintiffs with the right to prepay their mortgages, and terminate project use restrictions, after 20 years. Plaintiffs had reasonable investment-backed expectations that they could exercise such right, and realize the appreciation of their property values. Plaintiffs' prepayment rights are property rights, protected by the Fifth Amendment to the U.S. Constitution. 81. LIHPRHA prohibits the Plaintiffs' exercise of their contract right to prepay. Accordingly, LIHPRHA takes the Plaintiffs' contract rights and investment expectations. The taking occurred as to each Owner when such Owner became eligible to prepay their mortgage at will, but was unable to prepay because of LIHPRHA. Accordingly: the Fifth Amendment requires that just compensation, including interest, should be paid from the date of the taking. 82. LIHPRHA provides a process for payment of just compensation to Owners for the taking that each Owner suffers thereunder. However, the Owners have not received LIHPRHA's just compensation because of HUD's failure to implement LIHPRHA according to its terms. Accordingly, Owners are entitled to damages equal to the eight percent annual return provided by LIHPRHA for the period of such taking.

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~,.

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COUNT IV [Deleted Pursuant to March 27, 1995 Order] COUNT V BREACH OF CONTRACT [Applicable To .All Plaintiffs Except For Thetford Properties IV, Limited Partnership (Southgate and Jefferson Court Apartments)] 83. Paragraphs 1 through 82 are incorporated as of repeated herein. ¯ 84. HUD has breached its contractual obligations to Owners by abrogating Owner's right to prepay their mortgages and terminate their participation in HUD's low-income housing programs. 85. Owners have been damage~l by the Defendant's breach in an amount to be shown at trial. Owners are continuing to suffer injury and resulting damages each day they are denied their contractual right to prepay their mortgages. PRAYER FOR RELIEF WHEREFORE, Plaintiffs demand money damages, interest, and other relief for the amounts they should have received as required under LIHPRHA and]or damages from the date when the takings alleged herein occurred. Owners specifically demand that they be awarded monetary relief for the damages suffered to date and for the damages Owners continue to suffer as a result of HUD's breach of Owners' contracts, in an amount to be determined at trial. Plaintiffs further demand interest from the date of the taking, or such additional amounts as this Court determines, including attorneys fees pursuant to the Equal Access to Justice Act or other applicable Law.

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Dated: August ~-'~., 1997

Respectfully submitted,

By:

1255 23rd Street, N.W. Washington, D.C. 20037 (202) 973-7700 Of Counsel: Harry J. Kelly, Esq. Stephen J. Wallace, Esq. Richard M. Price, Esq. PEABODY & BROWN 1255 23rd Street, N.W. Washington, D.C. 20037 (202) 973-7700 Attorneys for Plaintiffs

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U.S.. Department of Justice Civil Division

JED:BMS :DHarrington DJ No. 154-93-655

Tel: (202) 616-0465 Fax: (202) 307-0972
Washington, D.C. 20530

March 27, 2007 Via Facsimile & U.S. Mail Harry J. Kelley, Esq. Nixon Peabody, LLP ¯ 40I Ninth Street, NW Suite 900 Washington, DC 20004-2129 (202) 585-8712 Re: Anaheim Gardens, et al. v. United States, No. 93-655C (Fed. CI.~... Dear Mr. Kelley: " At your request, we are producing on a rolling basis documents responsive to the plaintiffs' first request for production of.documents in the Anaheim Gardens matter. Per our agreement, we are aiming to conclude the production of documents on or about April 9, 2007. However, one aspect of the requested production of documents in Anaheim Gardens is problematic. The operative complaint in Anaheim Gardens names the plaintiffS filing suit and identifies those projects for which compensation is being sought. See Fourth Amended Compl. ¶ 7 (filed Sept. 16, 1997).. The pending discovery seeks documents for "subject properties," which is defined generally as those projects "that are the Subject of the claims asserted by the Plaintiffs in this litigation." Pls.' First Request for Production of Does. ¶ 2. However, the definition of"subject properties" also includes a lengthy list of projects, many of which are not the subject of claims asserted in the Fourth Amended Complaint.~ We will be producing documents for those projects referenced in the definition of "subject properties," but only insofar as they are identified in paragraph seven of the Fourth Amended Complaint in Anaheim Gardens. A list of the projects for which we are compiling and producing documents is attached to this letter. We will not be producing documents relating to projects that are not at issue, i.e., projects not listed in the operative complaint.

~ There is no analogous problem with the definition of"subject properties" used in the plaintiffs' first request for production in Algonquin Heights.

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.2I trust this approach will meet with your approval. However, if you do not agree with the parameters described in this letter, please contact me to discuss the matter further. Very truly yours,

David A. Harrington Trial Attorney Commercial Litigation Branch

Enclosure cc: ¯ Terri L. Roman, Esq. Alice A. Peterson, Esq.

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Document Production In Progress
Anaheim Gardens, et aL v. United States, No. 93-655 (Fed. C1.)..

Named Plaintiff Anaheim Gardens, LP B-L Associates, LP Joseph R. Biafora & Stefi Biafora

Project Name Anaheim .Gardens 1550 Beacon Plaza Millwood Apartments Part'henia Manor Apts.

Cedar Gardens Associates, GP C-W Associates, LP Glenview Gardens, LP Peter Hwei-Yang Hsi & Priscilla Lai-Fong Hsi Indian Head Manor LP I Norman M. Kronick & Louis Dulein Metro West Limited, LP ' Millwo0d Associates LP
Napa Park Apartments, LP

Cedar Gardens 100 Centre Plaza Glenview Gardens Apartments ¯ Waipahu Tower Indian Head Manor Apts Halawa View Apts

Metro West Apts. Millwood Townhouses Napa Park Apartments
omario Townhouses

Ontario Townhouses, LP

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Named Plaintiff The Palomar Apartments, LP Rock Creek Terrace, LP sierra Vista One, LP Silverlake Village, LP Thetford Properties III, LP

Project Name
The Palomar

RockCreek Terrace Apts. Sierra VistaI Silverlake Village Ri-cer Falls Apts. Market North Apts II Deanswood Apts.

Thetford Properties IV, LP

Southgate Apts. Jefferson Court Apts. Glendale Court Apts. Market North Apts. I

620 Su Casa Por Coretz, GP 825 San Tomas Apartments, LP 5324 Foothill Apartments, GP

Su Casa Por Cortez San Tomas Gardens Foothill Plaza

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Suite 900 401 9th Street, N.W. Washington, D.C. 20004-2128 (202) 585-8000 Fax: (202) 585-8080 Harry J. Kelly Direct Dial: (202) 585-8712 E-Marl: h kelly@nixon peabody.corn

April 20, 2007

VIA ELECTRONIC MAIL/U.S. MAIL David Harrington, Esq. Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 1100 L Street, NW Room 12136 Washington, DC 20530
Re:

Anaheim Gardens/Algonquin Heights -- Scope of Government Document Production and Discovery Responses

Dear Mr. Harrington: This letter responds to your letter to me date March 27, 2007 (the "March Letter"), and summarizes our telephone conversation last week. The March Letter noted that there were a number of plaintiffs and/or properties listed in our discovery requests to you that did not appear in the most recent complaint in the Anaheim Gardens case. The March Letter included a list of the plaintiffs and properties that appeared in that complaint and for which you would provide responsive information in your discovery responses. The March Letter also noted that there appeared to be no inconsistency between the plaintiffs and properties listed in our discovery requests in the Algonquin Heights case and the names listed in the complaint there. Upon receipt of the March Letter, we reviewed our lists of plaintiffs and properties in the Anaheim Gardens case, to determine which specific plaintiffs and properties were in dispute. As a precaution, we also reviewed the list of plaintiffs in the Algonquin Heights case, to verify that the list we provided to you was correct. The results of those reviews follow:

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David Harrington, Esq. April 20, 2007 Page 2

"Dismissed" Anaheim Plaintiffs. There are several plaintiffs listed in the "Subject Properties" in our discovery requests that were apparently dismissed by order of the Court (Judge Robinson) on April 30, 1996, along with several other plaintiffs in the Anaheim Gardens case. These "dismissed" plaintiffs who were listed in our discovery requests are: Florin I, L.P.
Florin II, L.P.

J.W.Y. Wong Jewel Lake Villa II, L.P.
185-255 Parkhill Corp. J. Ward and F.T. Ward, Joint Tenants

Florin Meadows I Florin Meadows II Jewel Lake Villa I Jewel Lake Villa II St. George's Plaza
Creekside Apartments

E. Kellenbeck and D. Kellenbeck, d/b/a Victorian Arms Apartments
Hillview Townhouses, Ltd.

Victorian Arms
Hillview Townhouses No.1 Hillview Townhouses

Hillview Townhouses, Inc. Washington Plaza Apts., Ltd.

Washington Plaza

It should be noted that each of these plaintiffs was included in the definition of "Plaintiffs" contained in the Government's discovery requests last summer. See, e.g., Defendant's First Request For Production Of Documents at 1. In preparing our responses to those requests, we provided information concerning these properties and, in return, included them in our discovery requests to the Government. We are in the process of contacting these plaintiffs concerning their status. Under the circumstances, we do not expect the Government to respond to the portions of the Plaintiffs' discovery requests applicable to these plaintiffs and properties. Additional Thetford Properties. The March Letter indicated that you would provide responsive information for those properties owned by Plaintiffs Thetford III and Thetford IV that were listed in the most recent complaint in Anaheim Gardens. Using the definition of "Subject Properties" contained in your discovery requests last July, we identified additional properties owned by Thetford III and Thetford IV that, although not listed in the complaint, have
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David Harrington, Esq. April 20, 2007 Page 3 suffered the same taking and the same sort of damages as the other Thetford properties listed there. These additional Thetford properties are as follows: Thetford III Beaumont Avenue Apartments Coleridge Road Apartments Icemorlee Street Apartments Hardee Street Apartments Holloway Court Apartments Holiday Town Apartments Henry Street Apartments Millbank Court Apartments
Johnson Court Apartments Oakwood Avenue Apartments Person Court Apartments

Raleigh North Apartments Washington Street Apartments (Deanswood) Tucker Street Apartments Young Avenue Apartments Thetford IV
Calico Court Apartments Chowan Court Apartments # 1

Columbus Court Apartments Franklin Court Apartments
Long Drive Apartments # 1 Oakwood Avenue Apartments #2

Peachtree Court Apartments
Stewart's Creek Apartments # 1

As we discussed, the Thetford partnerships were somewhat unique in that, unlike most owners of HUD-insured properties, the Thetford partnerships owned multiple properties. The plaintiffs themselves have not changed; in identifying these additional properties, they have simply specified in more detail the scope of the injury and damages that they alleged in their original complaint. The plaintiffs have provided documents and other information responsive to your discovery requests with respect to these additional Thetford properties and we anticipate receiving responsive documents and information about them from the Government. My notes indicate that you would review these properties and that we would have additional discussions after your receipt of this letter, at which time we can discuss a date for production of responses concerning these properties.
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David Harrington, Esq. April 20, 2007 Page 4

Co

Additional Algonquin Height Plaintiffs. As noted, the March Letter indicated there were no discrepancies between the list of the plaintiffs in that letter and the Subject Properties identified in our discovery requests. To be thorough, we reviewed the pleadings in the Algonquin Heights case and determined that the list of "Subject Properties" in that case, which was based on the caption from the appellate case, omitted several plaintiffs. As far as we can determine, the appellate caption was prepared by the clerk from the plaintiffs listed in the original complaint. As we discussed, there were two amended complaints filed in Algonquin Heights. The first amended complaint was filed as a matter of right on September 19, 1997, before the Government answered the original complaint, and added several new plaintiffs to the case. A second amended complaint was filed ¯ on May 8, 1998, and added four new plaintiffs. As noted, the first amended complaint was filed as a matter or right and the Government did not object to the second amended complaint. The additional plaintiffs in the Algonquin Heights case are: Cambridge Sq. North I Cambridge Sq. North Associates, A Limited Partnership Cambridge Sq. of Ft. Cambridge Sq. of Ft. Wayne Associates I, A Wayne I Limited Partnership Cambridge Sq. of Grand Cambridge Sq. of Grand Rapids Associates I, A Rapids Limited Partnership Cambridge Sq. of Grand Cambridge Sq. of Grand Rapids Associates II, A Rapids II Limited Partnership. Carriage House North Carriage House North Associates, A Limited Partnership Carriage House of Elkhart Carriage House of Elkhart Associates, A Limited Partnership. Carriage House of Carriage House of Mishawaka Mishawaka Associates I, A Limited Partnership

First Amended Complaint

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David Harrington, Esq. April 20, 2007 Page 5

Carriage House of Mishawaka Associates II, A Limited Partnership Carriage House of Muskegon Associates, A Limited Partnership Carriage House South Associates, A Limited Partnership Carriage House West I Associates, A Limited Partnership. Carriage House West II Associates, A Limited Partnership Carriage House West III Associates, L.P. Carriage House West IV Associates, A Limited Partnership Second Amended Complaint
Briar Crest, A Michigan General Partnership

Carriage House of Mishawaka II Carriage House of Muskegon Carriage House South Carriage House West I Carriage House West II Carriage House West III Carriage House West IV Briar Crest I Briar Crest II Briar Hills Townhouses Church Park Apartments

Briar Crest Apartments II, a Michigan Limited Partnership Briar Hills, A Michigan Limited Partnership The United Company Limited Partnership, A Massachusetts Limited Partnership

Before it acted on the second amended complaint, the Court first stayed and then dismissed the Algonquin Heights complaint. Nevertheless, the Notice of Appeal (attached) included all of these additional plaintiffs and they are properly parties in the appeal and the present litigation. Because these plaintiffs were not listed in the discovery requests we served last fall, we do not expect to receive responsive information concerning them in your forthcoming responses. We will prepare and serve separate discovery requests concerning these plaintiffs shortly.

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David Harrington, Esq. April 20, 2007 Page 6 I believe that addresses all of the outstanding issues concerning the plaintiffs and properties that we discussed during our telephone conversation last s week. If we become aware of any additional information pertinent to these matters, we will pass it along to you. If you have any further questions, please call me, and in any event, I look forward to hearing from you concerning responses relating to the additional Thetford plaintiffs at your earliest opportunity. Very truly yours,

CC:

Alycia A. Ziarno, Esq.

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U.S. Department of Justice Civil Division JED:BMS:DHarrington DJ No. 154-93-655 Tel: (202) 616,0465 Fax: (202) 307-0972 '
Washington, D.C. 20530

April 26, 2007 Via Facsimile & U.S. Mail

Harry J. Kelley, Esq. Nixon Peabody, LLP 401 Ninth Street, NW Suite 900 Washington, DC 20004-2129 (202)585-8712 Re: Anaheim Gardens,.et al. v. United States, No. 93-655C (Fed. el.). Dear Mr, Kelley: On March 27, 2007, I wrote youregarding the scope of the plaintiffs' discovery requests in the Anaheim Gardens case. Inmy letter, I explained that the scope of discovery is limited by the allegations in the operative complaint (i.er, the Plaintiffs' Fourth Amended Complaint) and that your discovery requests sought information about projects that were not mentioned in. "plaintiffs' complaint. I further noted that the discovery sought in Algonquin Heights was appropriately limited to projects identified in the operative complaint in that action (i.e., the Plaintiffs' First Amended Complaint). I received your response on April 20, 2007. Your letter addresses four categories of projects in Anaheim Gardens and Algonquin Heightsi (1) "'Dismissed' Anaheim Plaintiffs;" (2) "Additional Thetford Properties;" (3) "Additional Algonquin Heights Plaintiffs'.' from the First Amended Complaint; .and (4) "Additional Algonquin Heights Plaintiffs" from the Second Amended Complaint.~. We respectfully disagree with your position that the Court may entertain claims relating to projects that are not identified in the operative complaint in Anaheim Gardens. As such, no claims concerning "additional Thetford properties" are before the Court.

~ During our discussion yesterday, I informed you that your April 20, 2007 letter fails to address a number of projects that are included in the definition of"Subject Property" in Anaheim Gardens: Holiday Town Apartments #2; Carteret Court Apartments; Chowan Court Appartments; LaGrange Village Apartments; Long Drive Apartments #2; Mount Olive Court Apartments; and Stewart's Creek Apartments #2.

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-2We also respectfully disagree with your position that four additional projects were added to the Algonquin Heights case by the second amended complaint in that action. The plaintiffs'. filed a motion for leave to file a second amended complaint on May 8, 1998. Although the motion was unopposed, the motion was never granted and the proposed second amended complaint was not filed. Indeed, as you note in your letter, before acting on the motion for leave to file "the second amended complaint, the Court first stayed and then dismissed the Algonquin Heights complaint." By dismissing the case and entering judgment in favor of the United States, the Court implicitly denied the plaintiffs' motion for leave to amend the complaint. See, e._g~., Goodman v. New Horizons Community Serv. Bd., 2006 WL 940646 at *3 (1 lth Cir. Apr. 12, 2006) ("the entry of a final judgment implicitly denies any pending motions"); Addington v. Farmers Elevator Mut. Ins. CO,., 650 F.2d 633,666 (5th Cir. 1981) (holding ttiat the entry of final judgment operated as a denial of plaintiff's motion for leave to amend the complaint). The operative complaint in Algonquin Heights is the first amended complaint, which was filed on September 19, 1997, and only as-applied taldng claims of projects identified in the first amended complaint currently are before the Court. Putting aside these issues, there are several other outstanding matters concerning discovery that must be resolved. First, we have received no documents, responses to interrogatories, or responses to ~equests for admissions concerning the Deanswood Apartments project in Anaheim Gardens and the Cambridge Square North I, Cambridge Square of Fort Wayne I, Cambridge Square of Grand Rapids, Cambridge Square of Grand Rapids II, Carriage House North, Carriage House of Elkhart, Carriage House of Mishawalca I, Carriage House of Mishawaka II, Carriage House of Muskegon, Carriage House South, Carriage House West I, Carriage House West II, Carriage House West III, Carriage House West IV and Glenreed Apartments projects in Algonquin Height~. These projects are identified in the operative complaints and as-applied, regulatory taldng claims concerning these projects are pending. If we have received no documents because a search of the plaintiffs' files failed.to identify responsive documents, please so inform us. On the other hand, if responsive documents concerning these projects exist, please produce them as soon as possible. In addition, your answers to the United States' first set of interrogatories should be supplemented to include information about these projects.2 Second, we have received no discovery concerning the Briar Crest I, Briar Crest II, Briar Hills Townhouses and Church Park Apartments projects. Given your position that claims relating to these projects are pending before the Court, information concerning these projects should have been proffered in response to our discovery requests. See Def.'s.First Set of Interrogatories at ii (defining "subject properties" as "properties owned by the plaintiffs that are the subject of claims asserted in this litigation"). Please supplement your discovery responses to provide information about these projects. 2 The United States' first set of requests for admission are deemed admitted as to these projects. RCFC 36(a). The plaintiffs should promptly request Court authorization if they wish to withdraw any such admissions. RCFC 36(b).

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-3Third, in your answers to various interrogatories, as well as in response to theUnited States' motions to compel, you stated that supplemental interrogatory answers would be served once the plaintiffs had received responses to discovery requests served on the United States. Documents have been produced on a rolling basis over the past three months, interrogatory answers and responses to request for admissions were served on April 16, 2007, and ripeness discovery is currently scheduled to close May 31, 2007. Accordingly, please supplement your interrogatory answers to provide complete, responsive answers to all of the UnitedStates' interrogatories per your prior representations. Se__~e RCFC 26(e). In order to enable deposition discovery to go forward in these cases, please produce documents and provide supplemental interrogatory answers as soon as possible, but in no event later than May 16, 2007. Further, given the various discovery issues currently outstanding (e._.~., the United States' motions to compel, the parties disagreement about projects at issue, and the need for plaintiffs' to supplement their discovery responses), as well as the number of depositions that may be necessary, we propose seeldng an additional 30 days for the completion of deposition discovery. Please contact me at your earliest convenience to discuss further the issues addressed in this letter. Very truly yours,

David A. Harrington Trial Attorney Commercial Litigation Branch Terri L. Roman, Esq. Alice A. Peterson, Esq.

CC: