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New York Guardian Mortgagee Corp. v. United States

Decided: October 11, 1990.

NEW YORK GUARDIAN MORTGAGEE CORP., PLAINTIFF-APPELLANT,
v.
THE UNITED STATES, DEFENDANT-APPELLEE



Appealed from U.S. Claims Court; Judge Merow.

Nies, Chief Judge, Cowen, Senior Circuit Judge, and Michel, Circuit Judge.

Cowen

COWEN, Senior Circuit Judge

Appellant, New York Guardian Mortgagee Corporation (Guardian), acquired 76 mortgages, guaranteed by the Veterans Administration (VA), which were defaulted upon. Guardian conveyed the property to the VA in accordance with 38 U.S.C. 1832(5) (1988), and sought payment on the principal amounts. After delays of payment on the principal Guardian brought suit in the Claims Court, seeking interest under the Prompt Payment Act (PPA), 31 U.S.C. §§ 3901-3907(a) (1988). The Claims Court dismissed for failure to state a claim upon which relief can be granted. New York Guardian Mortgagee Corp. v. United States, No. 766-87C (Cl. Ct. Nov. 8, 1989)(Order). We have Jurisdiction of Guardian's appeal and we affirm.

Background

In accordance with 38 U.S.C. § 1803(a)(1)(A) (1988), the VA guarantees a portion of home mortgage loans made to veterans by private lenders in order to assist veterans in purchasing homes. Guardian held 76 of these VA guaranteed home mortgage loans which were defaulted upon. The properties securing the mortgages were foreclosed, and Guardian was the successful bidder at the foreclosure sales. Following the sales, Guardian conveyed the property to the VA under 38 U.S.C. § 1832 and sought payment on the principal amounts. Section 1832(c)(5)(A) provides in pertinent part that "if the holder of the defaulted loan acquires the property securing the loan at a liquidation sale . . . the holder shall have the option to convey the property to the United States in return for payment by the Administrator . . . ." The VA paid the principal amounts due, but took an average of approximately 6 months to do so. No interest was paid to Guardian for the delay.

Guardian brought suit in the Claims Court, seeking interest for the delay in payment under the Prompt Payment Act, 31 U.S.C. § 3902(a), which provides in pertinent part:

The head of an agency acquiring property or service from a business concern, who does not pay the concern for each complete delivered item of property or service by the required payment date, shall pay an interest penalty to the concern on the amount of the payment due.

The trial judge held that a federal contract is required for a Prompt Payment Act claim, and that the procedure under which the VA acquired the properties was pursuant to a scheme which is exclusively statutory and regulatory in nature.

Discussion

In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984), the Supreme Court held that

If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.

(footnotes omitted)

Congress expressly charged the Office of Management and Budget (OMB) with implementing regulations under the PPA. OMB Circular A-125 (June 9, 1987), 52 Fed. Reg. 21926, is the implementing regulation required by Section 3903 of the PPA. There is no provision in the PPA which purportedly authorizes the recovery of interest under the Veterans Loan Guaranty Program. Consequently, OMB Circular A-125 must be given controlling weight in deciding the issue ...


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