Franconia Associates v. United States, 536 U.S. 129 (2002)

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certiorari to the united states court of appeals for the federal circuit

No. 01-455. Argued April 15, 2002—Decided June 10, 2002*

Under 515 and 521 of the Housing Act of 1949, the Farmers Home Administration (FmHA) makes direct loans to private, nonprofit entities to develop and/or construct rural housing for the elderly and low- or middle-income individuals and families. Petitioners are property owners who entered into such loans before December 21, 1979. The promissory notes petitioners executed authorized "[p]repaymen[t] of scheduled installments, or any portion thereof, . . . at any time at the option of Borrower." On February 5, 1988, concerned about the dwindling supply of low- and middle-income rural housing in the face of increasing prepayments of mortgages by 515 borrowers, Congress enacted the Emergency Low Income Housing Preservation Act of 1987 (ELIHPA), which amended the Housing Act of 1949 to impose permanent restrictions upon prepayment of 515 mortgages entered into before December 21, 1979. On May 30, 1997, the Franconia petitioners filed suit under the Tucker Act, 28 U. S. C. 1491, charging that ELIHPA abridged the absolute prepayment right set forth in their promissory notes and thereby effected, inter alia, a repudiation of their contracts. In dismissing petitioners' contract claims as untimely under 2501—which provides that a claim "shall be barred unless the petition thereon is filed within six years after such claim first accrues"—the Court of Federal Claims concluded that the claims first accrued on the ELIHPA regulations' effective date. In affirming on statute of limitations grounds, the Federal Circuit ruled that, if the Government's continuing duty to allow petitioners to prepay their loans was breached, the breach occurred immediately upon ELIHPA's enactment date, over nine years before petitioners filed their suit. The court rejected petitioners' argument that ELIHPA's passage qualified as a repudiation, so that their suit would be timely if filed within six years of either the date performance fell due (the date they tendered prepayment) or the date on which they elected to treat the repudiation as a present breach. On September 16, 1998, the Grass Valley petitioners filed an action that was virtually identical to the Franconia suit. The Court of Federal Claims dismissed for the

*Together with Grass Valley Terrace et al. v. United States (see this Court's Rule 12.4), also on certiorari to the same court.


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