Bellevue Manor Assocs. v. United State

Facts

Congress enacted the Section 8 low-income housing program embodied in 42 U.S.C. § 1437f ('Section 1437f'). Under that program, tenants make rental payments to private landlords based on the tenants' income and ability to pay, and D subsidizes that rent with assistance payments intended to provide the landlords with a fair rent. Under Section 1437f(c)(2)(A) \the contracts with private landlords provide for periodic rent adjustments 'to reflect changes in the fair market rentals established in the housing area for similar types and sizes of dwelling units or, if the Secretary determines, on the basis of a reasonable formula.' D began to conduct independent comparability studies. It suspected that the rent adjustments it provided using the statutorily authorized 'reasonable formula' were allowing landlords to collect total rents much higher than the market rents in their areas. D used those studies to cap the rent payments that it made under Section 8 contracts. P and the other 43 appellants, in this case, are private landlords who entered into Housing Assistance Payment contracts with D to lease apartments to low-income tenants in return for federal rent subsidies. P filed for a declaratory judgment in 1986, asking the district court to declare that D was restricted to making its rent adjustments based on D's published 'Automatic Annual Adjustment Factors' ('AAAFs') and that D was precluded from limiting future rent increases by using market rent comparability studies. P argued that D had chosen to adjust rent payments based on a 'reasonable formula' (the AAAFs) as allowed by statute and had written that choice into the assistance contracts so that D could not rely on a different method (comparability studies) to limit the periodic rent increases. While P’s suit was pending Rainier View Assocs. v. United States, 848 F.2d 988 (9th Cir. 1988) (per curiam), was decided which required D to rely solely on the AAAFs in adjusting the Section 8 rent subsidies. Within months after the issuance of that ruling, the statutory and decisional law regarding Section 8 rent adjustments changed. In December 1989 Congress responded to the Rainier View decision and the controversy over D's adjustment methods by passing Section 801 of the HUD Reform Act (Pub. L. 101-235). Section 801 offered a compromise: It specifically authorized D to limit future Section 8 rent adjustments by using market comparability studies, but it provided Section 8 landlords with a partial return of the adjusted rents that they had been denied through the use of comparability studies before the enactment of the 1989 legislation. In 1993, Alpine Ridge upheld Section 801 and found that the landlords did not have pre-existing contract rights to 'formula-based rent adjustments that materially exceed market rents for comparable units.' The Supreme Court found that the Alpine Ridge contract provisions did not guarantee landlords the right to rent adjustments based solely on the AAAFs without consideration of market rents in the area. D petitioned under Rule 60(b)(5) for relief from those 1989 orders. In 1995, the district court summarily granted D’s motion, and P appealed to our court. Because recent Supreme Court cases had thrown into doubt the appropriate standard for assessing such a Rule 60(b)(5) motion, on September 8, 1997 this court issued an unpublished memorandum disposition (Bellevue Manor Assocs. v. United States, 1997 U.S. App. LEXIS 23784, No. 95-35929, 1997 WL 582818, cited in table, 124 F.3d 210 (9th Cir. 1997)) that vacated and remanded the district court's decision for the entry of appropriate findings as to that standard. On remand, the district court determined that it need not decide what standard should apply because D had met the requirements of the most stringent test, and so the court again granted the relief requested. P then took the current appeal. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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