February 21, 2019
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 05 C 6746 -
Charles R. Norgle, Judge.
Easterbrook, Sykes, and Barrett, Circuit Judges.
EASTERBROOK, CIRCUIT JUDGE.
appeal is New West V in a saga that began in 2005
when Joliet proposed to condemn and raze the Evergreen
Terrace apartments as a public nuisance. By 2017 the district
court had held that Joliet is entitled to condemn the
buildings, had set just compensation at about $15 million,
and had held that New West cannot obtain relief against the
City under federal housing-discrimination statutes. New
West, L.P. v. Joliet, 891 F.3d 271 (7th Cir. 2018)
(New West IV), affirms the last of those decisions,
and we supposed that the litigation was over.
the district court, however, the parties disputed the status
of a reserve fund, worth about $2.8 million, that the
Department of Housing and Urban Development held to provide
for the needs of the federally subsidized apartment complex.
The City asked the judge to order HUD to transfer these funds
to an account for Joliet's benefit. New West opposed this
motion, contending that the money in the reserve fund came
from rents to which it was entitled by contract with HUD and
that, once it no longer had responsibility for the apartment
buildings, HUD must write it a check.
district court recognized that the status of the reserve fund
had not been part of either the City's condemnation
proceeding or New West's housing-discrimination suit.
Nonetheless, the court proceeded to resolve the motion on the
merits. It rejected New West's claim of ownership,
concluded that the fund should accompany the buildings, and
ordered: "Defendants shall deposit the Reserves in an
account or accounts designated by Joliet for the benefit of
the Properties, as determined by HUD." New West asked
the judge to reconsider, but he declined.
judge did not say much about why he came to this conclusion.
And an order requiring "[d]efendants" to transfer
the money is anomalous, for the defendants are New West and
its fraternal business New Bluff. They lack ability to
transfer the money to themselves or anyone else. HUD controls
the reserve fund and is the only entity that can use (or
direct its use) for the benefit of Joliet or disburse it to
New West. But HUD was dismissed as a party in 2013. As part
of a sellement that year, HUD agreed that it could be
reinstated as a party if necessary to resolve a dispute about
the reserves. But that was not done. HUD was not a party when
the district court acted and is not a party now, so the
district court lacked authority to issue orders requiring HUD
to do anything. The orders appealed from are ineffectual.
of prolonging this condemnation suit, which reached its end
in 2016, when Joliet v. New West, L.P., 825 F.3d 827
(7th Cir. 2016) (New West III), affirmed the award
of compensation, and the Supreme Court declined to review our
decision, 137 S.Ct. 518 (2016), New West needs to file a new
action in which it is the plaintiff and HUD is the defendant.
It is improper to keep adding issues to a condemnation suit
that has been resolved. (New West, rather than Jo-liet, would
be the proper plaintiff, because HUD is currently
administering the reserve for the City's benefit.)
natural place for a new suit would be the Court of Federal
Claims. New West contends that it owns the reserve fund as a
result of contracts between itself and HUD, read in light of
regulations that (New West believes) require release of the
funds if the subsidized parcel is sold. In other words, New
West wants a court to order the federal government to pay it
a sum of money. The Tucker Act, 28 U.S.C. §1491, waives
sovereign immunity for contract claims, provided that the
litigation occurs in the Court of Federal Claims. Contrast 28
U.S.C. §1346(a)(2) (the "Lille Tucker Act,"
which permits contract suits seeking $10, 000 or less to
proceed in district courts).
oral argument of this appeal the litigants, the district
judge, and HUD (appearing as amicus curiae) all had
ignored the Tucker Act. Indeed, they had ignored the fact
that HUD is not a party and that the district court's
directive to "[d]efendants" ordered the impossible.
We asked the parties, plus HUD, to file supplemental
memoranda addressing these subjects. HUD and New West both
replied that 42 U.S.C. §1404a permits litigation about
the reserves to occur in the district court, in a newly filed
suit against HUD. This is not as clear to us as it is to the
1404a permits HUD to "sue and be sued … with
respect to its functions under the United States Housing Act
of 1937". According to New West, the status of the
reserve fund is a "function under the United States
Housing Act of 1937". Y e t New West principally relies
on its housing-subsidy contract with HUD, not on the terms of
any statute. Indeed, at oral argument counsel for all sides
represented that the statute does not resolve this dispute.
U.S.C. §1702, which the parties' supplemental briefs
do not mention, appears to cover the subject. It provides
that "[t]he Secretary shall, in carrying out the
provisions of [several subchapters of the National Housing
Act], be authorized, in his official capacity, to sue and be
sued in any court of competent jurisdiction, State or
Federal." FHA v. Burr, 309 U.S. 242 (1940),
holds that this statute must receive a generous construction
and provides that the FHA (which is now part of HUD) may be
sued to the same extent as a private enterprise, when the
topic of the suit comes within one of the listed subchapters
and the money to satisfy the judgment will come from funds
within the FHA's control. The statute behind the mortgage
insurance provided to New West, 12 U.S.C.
§1715l, is within one of these chapters, and
HUD controls the reserve fund, so New West's claim to
that fund, whether based on contract, regulation, or statute,
comes within the waiver in §1702. See, e.g., Merrill
Tenant Council v. HUD, 638 F.2d 1086 (7th Cir. 1981);
Selden Apartments v. HUD, 785 F.2d 152, 156-57 (6th
Cir. 1986) (collecting authority). One decision, United
States v. Adams, 634 F.3d 1261, 1265 (10th Cir. 1980),
might be seen as contrary, but it is incompatible with
Merrill and does not reflect this circuit's
understanding of §1702.
West thus has a choice: the district court or the Court of
Federal Claims. It cannot pursue both options at once,
however. See 28 U.S.C. §1500; United States v.
Tonoho O'odham Nation, 563 U.S. 307 (2011). In
either forum, the judge should start from scratch,
disregarding the missteps in the condemnation suit. We have
nothing to say here about the merits of that dispute, which
must receive a proper airing before it is resolved on
appeal-and if ...