Opinion
No. C8-96-410.
Filed August 13, 1996.
Appeal from the District Court, Hennepin County, File No. 958837.
Neil Polstein, Hillstrom, Bale, Anderson, Polstein, Pearson Hill, Ltd., (for Appellant).
Brett A. Perry, Jensen Swanson, P.A., (for Respondent).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
Appellant, a former owner of a Section 8 housing complex, argues that the district court erred by holding that it was not entitled to retroactive HUD payments for the time period it owned the property and granting summary judgment against appellant. We affirm.
FACTS
On July 1, 1987, appellant The Labor Retreat sold to respondent Nath Associates a Section 8 rental housing complex, named (as is appellant) The Labor Retreat. As part of the sale, the parties agreed to numerous assignments by the following documents:
Assignment of Assets and Liabilities, in which Labor Retreat assigned "any and all reserve and operating accounts, any and all operating accounts that are in existence and used in the operation and maintenance of the Labor Retreat," as well as "all contracts with which it has an interest pertaining to the maintenance and operation of The Labor Retreat."
Assignment and Assumption Agreement and Amendment to Mortgage, Regulatory Agreement and Housing Assistance Payments Contract (HAP contract), by which Labor Retreat "assign[ed] and transfer[ed] to the Assignee, all of its right, title and interest in, and obligations under, the * * * Original Financing Agreements and HAP Contract, together with all funds, accounts or deposits relating thereto."
Assignment and Release, by which Labor Retreat "grant[ed], transfer[ed], and assign[ed] to the Assignee all of the right, title, and interest of the Assignor in and to, any and all present and future leases or tenancies, whether written or oral, covering or affecting any or all of the premises designated as The Labor Retreat or all or any part of any present or future improvements located on this property, together with any and all extensions, modifications and renewals thereof and to all rents, issue, profits and other income or payments of any kind due or payable or to become due or payable to the Assignor by virtue of the Leases or otherwise due or payable or to become due or payable to the Assignor as the result of any use possession or occupancy of any portion or portions of the property."
The complex had been financed by the Minnesota Housing Finance Agency (MHFA), which regulates the financing contract in accordance with Department of Housing and Urban Development (HUD) regulations. In 1989, Congress authorized additional Section 8 housing assistance payments retroactive to October 1, 1979. The apartment project was eligible for $211,662 of these additional payments.
Appellant alleges that it is entitled to the portion of the retroactive payments attributable to the years during which it owned the project. The district court disagreed and granted summary judgment to respondent. The court found that, under the conveyance documents, respondent "has exclusive rights under the HAP contract and, as a matter of law, * * * is entitled to the entire retroactive payment."
DECISION
This court must consider two questions on appeals of summary judgment:
(1) whether there are any genuine issues of material fact and (2) whether the lower courts erred in their application of the law.
State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
I.
Appellant argues that the HAP contract rights that it assigned are irrelevant because "[t]he retroactive payments are a matter of legislative largesse, not contractual entitlement."
Regardless of the merits of this argument, appellant gave up the right to receive the payments. By the assignment and release, appellant assigned to respondent, all rents, issue, profits and other income or payments of any kind due or payable or to become due or payable to the Assignor by virtue of the Leases or otherwise due or payable or to become due or payable to the Assignor as the result of any use, possession or occupancy of any portion or portions of the property.
The retroactive payments clearly fall either within "rents, issue, profits" or within "other income or payments of any kind" due to appellant as a result of its "use, possession or occupancy" of the property, and, in either case, the payments were assigned to respondent pursuant to the assignment and release.
Appellant disagrees, and claims — unpersuasively — first, that under rules of contract construction, it retained its rights to income from past leases and, second, that Congress overrode any such assignment.
Appellant's first argument is futile, for, under even the most strained construction, it retained no rights to the money at issue here. With the assignment documents, appellant transferred to respondent the entirety of its rights in the housing complex.
As to its second argument, appellant relies entirely on speculation, for there is no evidence of an intent by Congress to override lawful assignments.
II.
Appellant relies heavily on the following four cases for the proposition that unexpected payments from government agencies belong to the party whose efforts or expenditures provide the reason for the government to make the payments: Klass v. Twin City Fed. Sav. Loan Ass'n, 291 Minn. 68, 190 N.W.2d 493 (1971); Seastrand v. D.A. Foley Co., 144 Minn. 239, 175 N.W. 117 (1919); Jennison Bros. Co. v. Chicago N.W. Ry., 133 Minn. 268, 158 N.W. 398 (1916); and Vetter v. Sandbo, 114 Minn. 144, 130 N.W. 450 (1911). These cases are inapplicable here.
Three of the cases (Seastrand, Jennison, and Vetter) do not involve a contractual assignment. Here, however, there is a valid, comprehensive contract between the parties and we cannot employ the equitable doctrine that appellant suggests, for "equitable relief cannot be granted where the rights of the parties are governed by a valid contract." United States Fire Ins. v. Minnesota State Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981).
In the fourth case, Klass, the lessor received a real estate tax refund, though the lessee had, in effect, paid the tax. 291 Minn. at 69-70, 190 N.W.2d at 493-94. The court awarded the refund to the lessee because it had actually paid the refunded sums. 291 Minn. at 71-72, 190 N.W.2d at 494-95. But here, neither party paid anything to the government for which a refund is now paid; to the contrary, regardless of who receives the payment, it is plainly an unexpected windfall, independent of any payment made to the government.
Affirmed.
The legislature gave no indication of the reason for the payments. Appellant would like us to speculate that they were simply a generous gift; this is a doubtful theory, for Congress is not generally so soft-hearted. A more compelling theory is that the money was intended to make funds available to repair buildings that had been allowed to deteriorate because of insufficient revenue.