United States Court of Appeals for the Federal Circuit ______________________

SAGE ACQUISITIONS LLC, Appellant

v.

SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Appellee ______________________

2023-1907 ______________________

Appeal from the Civilian Board of Contract Appeals in No. 7319, Administrative Judge Kyle E. Chadwick, Administrative Judge Harold D. Lester, Jr., Administrative Judge Patricia J. Sheridan. ______________________

Decided: October 18, 2024 ______________________

MICHAEL ROBERT RIZZO, Pillsbury Winthrop Shaw Pittman LLP, Los Angeles, CA, argued for appellant. Also represented by DINESH CHRISTOPHER DHARMADASA, AARON RALPH.

JESSICA R. TOPLIN, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for appellee. Also represented by BRIAN M. BOYNTON, WILLIAM JAMES GRIMALDI, PATRICIA M. MCCARTHY. Case: 23-1907 Document: 34 Page: 2 Filed: 10/18/2024

2 SAGE ACQUISITIONS LLC v. HUD

______________________

Before DYK, CHEN, and CUNNINGHAM, Circuit Judges. DYK, Circuit Judge. This case involves contracts between the appellant, Sage Acquisitions LLC (“Sage”), and the United States Department of Housing and Urban Development (“HUD”) for management and marketing services. These services were to be provided in connection with properties that had been foreclosed and were subsequently in possession of HUD as part of its Real Estate Owned (“REO”) disposition program. Sage is an asset management contractor that was awarded three of these contracts (the “REO Contracts”). Sage filed certified claims with the HUD contracting officer for settlement costs from the termination for convenience of the REO Contracts, equitable adjustments based on the reduction in scope of properties assigned to the REO Contracts, and damages for scope reduction. Sage also sought damages for HUD’s alleged breach of: (1) a contractual option provision of the three REO Contracts and (2) a related bridge contract (“Bridge Contract”), covering performance for a period after the REO Contracts were terminated. The Civilian Board of Contract Appeals (“Board”) denied relief. We affirm. BACKGROUND I HUD has adopted a single-family mortgage insurance program, which insures approved lenders against the risk of loss on loans for purchases of single-family homes. HUD administers the program through the Federal Housing Administration, which is an organizational unit within the agency. In the typical case, if a debtor of a HUD-insured loan defaults, the property becomes part of HUD’s REO portfolio. The property is foreclosed on by the lender and conveyed to HUD, and the lender files a claim for insurance Case: 23-1907 Document: 34 Page: 3 Filed: 10/18/2024

SAGE ACQUISITIONS LLC v. HUD 3

benefits with HUD. HUD then contracts with asset managers like Sage to manage and market the properties for sale. HUD also uses alternatives to the REO disposition program that do not involve HUD’s acquisition of the properties. Under the Claims Without Conveyance of Title procedure, the lender bids for properties at the foreclosure sale. If the lender is the successful bidder, it may retain the properties and file for insurance benefits or convey the properties to HUD and file for benefits. If a third party is the successful bidder, the lender in certain circumstances can file a claim for insurance benefits. Under the Distressed Asset Stabilization Plan, the insured amount is paid to the lender, notes securing the loans and accompanying lien