Supreme Court of the United States
Franconia Associates v. United States
June 10, 2002536 U.S. 129
Summary
Justice Ginsburg delivered the unanimous opinion. Assuming the loan agreements guaranteed unrestricted prepayment, the Court held that ELIHPA repudiated those agreements rather than immediately breaching them. Unless a borrower elected to treat the repudiation as a present breach, the six-year limitations period began when the Government wrongly rejected tendered prepayment. Section 2501 does not impose a special accrual rule requiring suit upon repudiation, and repudiation through legislation does not change the analysis. The Court also rejected the dismissal of the takings theory because that dismissal depended on the erroneous contract-accrual ruling. It reversed both Federal Circuit judgments and remanded for further proceedings, leaving application to individual borrowers to the lower courts.
Holding
- When the contract claims accrued following enactment of ELIHPA.. Assuming the asserted unrestricted prepayment right existed, ELIHPA constituted repudiation rather than immediate breach. Unless a borrower elected to treat repudiation as a present breach, the claim accrued when the Government wrongly rejected tendered prepayment.
- Whether the statutory phrase “first accrues” or the legislative character of the repudiation required immediate accrual.. Section 2501 does not establish a special accrual rule displacing ordinary repudiation principles, and an Act of Congress can repudiate a government contract without immediately breaching it.
- Whether the takings theory was properly dismissed as untimely.. The Federal Circuit erred in dismissing the takings theory on timeliness grounds because that ruling depended entirely on its incorrect conclusion that the contract claims accrued upon ELIHPA’s enactment.
Docket 01-455
Cited authorities
- 42 U.S.C. § 1490a
- 28 U.S.C. § 1491
- 101 Stat. 1877
- 42 U.S.C. § 1472
- 28 U.S.C. § 2501
- 76 Stat. 671
- 82 Stat. 551
- 42 U.S.C. §§ 1485
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