Full opinion text
MEMORANDUM DAVIS, District Judge. I. INTRODUCTION Acting at the behest of the Secretary of the federal department of Housing and Urban Development (“the Secretary” or “HUD”), the United States instituted this civil action for damages against the former operator of an affordable housing project known as Riverdale Village Apartments (the “Project”), located in Baltimore County, Maryland, Richard M. Schlesinger, and several companies he owns or controls (hereafter “Schlesinger”). The Government generally alleges that over the ten years Schlesinger operated the Project with the benefit of HUD mortgage insurance, between 1985 and 1995, Schlesinger violated the express terms of his contractual undertakings (“the Regulatory Agreement” or “RA”) and/or applicable HUD regulations. As his principal defense to the Government’s claims, Schlesinger challenges the enforceability of the RA. In addition, he asserts the following general defenses: (1) that the Government’s statutory claims fail because they are barred by the applicable statute of limitations, and its equitable claims are barred by the equitable defense of laches; and that, in any event, (2) he acted reasonably and fully within the spirit of his contractual undertakings in the manner in which he operated the Project. Discovery has concluded and the parties have filed cross motions for summary judgment. A hearing has been held. For the reasons set forth below, I shall enter an order granting in part and denying in part each party’s motion for summary judgment. In particular, consistent with the following determinations made herein, the accompanying order: (1) declares the Regulatory Agreement valid and enforceable against Schlesinger; (2) dismisses all claims against defendants DBD Contracting, Topside Roofing Corporation, and Down-to-Earth Landscaping; (3) enters judgment in favor of the Government on claim 2 of Count II (the $125,000 Stamford loan transaction claim); (4) enters judgment in favor of the Government on claim 3 of Count II (the $17,858 in miscellaneous expenditures claim); (5) enters judgment in favor of the Government on claim 1 of Count II (the $42,335.19 Topside transaction respecting expenditures made to repair a shopping center roof); (6) enters judgment in favor of Schlesinger on that portion of claim 3 of Count II related to an expenditure of $3500 for a tax audit; (7) declares that Schlesinger may not defend the Government’s claims on the basis that his use of “Identity-of-Interest” firms was justified; (8) declares that Schlesinger violated his contractual undertakings by failing to maintain the Project in good repair; (9) dismisses the Government’s unjust enrichment claim; (10) declares that the Government’s Priority Statute claim is limited to payments made by Schlesinger after February 13,1995. II. SUMMARY JUDGMENT STANDARDS Pursuant to Fed.R.Civ.P. 56(c), summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material for purposes of summary judgment, if when applied to the substantive law, it affects the outcome of the litigation. Id. at 248, 106 S.Ct. 2505. Summary judgment is also appropriate when a party “fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A party opposing a properly supported motion for summary judgment bears the burden of establishing the existence of a genuine issue of material fact. Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505. “When a motion for summary judgment is made and supported as provided in [Rule 56], an adverse party may not rest upon the mere allegations or denials of the adverse party’s pleading, but the adverse party’s response, by affidavit or as otherwise provided in [Rule 56] must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). See Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548; Anderson, 477 U.S. at 252, 106 S.Ct. 2505; Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir.1991). Of course, the facts, as well as the justifiable inferences to be drawn therefrom, must be viewed in the light most favorable to the nonmoving party. See Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The court, however, has an affirmative obligation to prevent factually unsupported claims and defenses from proceeding to trial. See Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987). When both parties file motions for summary judgment, as here, the court applies the same standards of review. Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir.1991); ITCO Corp. v. Michelin Tire Corp., 722 F.2d 42, 45 n. 3 (4th Cir.1983) (“The court is not permitted to resolve genuine issues of material facts on a motion for summary judgment — even where ... both parties have filed cross motions for summary judgment.”) (emphasis omitted), cert. denied, 469 U.S. 1215, 105 S.Ct. 1191, 84 L.Ed.2d 337 (1985). The role of the court is to “rule on each party’s motion on an individual and separate basis, determining, in each case, whether a judgment may be entered in accordance with the Rule 56 standard.” Towne Mgmt. Corp. v. Hartford Acc. & Indem. Co., 627 F.Supp. 170, 172 (D.Md. 1985) (quoting Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil 2d § 2720). See also Federal Sav. & Loan Ins. Corp. v. Heidrick, 774 F.Supp. 352, 356 (D.Md.1991). “[C]ross-motions for summary judgment do not automatically empower the court to dispense with the determination whether questions of material fact exist.” Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir.), cert. denied, 464 U.S. 805, 104 S.Ct. 53, 78 L.Ed.2d 72 (1983). “Rather, the court must evaluate each party’s motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed.Cir.1987). Both motions may be denied. See Shook v. United States, 713 F.2d 662, 665 (11th Cir.1983). “[B]y the filing of a motion [for summary judgment] a party concedes that no issue of fact exists under the theory he is advancing, but he does not thereby so concede that no issues remain in the event his adversary’s theory is adopted.” Nafco Oil & Gas, Inc. v. Appleman, 380 F.2d 323, 325 (10th Cir.1967). See also McKenzie v. Sawyer, 684 F.2d 62, 68 n. 3 (D.C.Cir.1982) (stating that “neither party waives the right to a full trial on the merits by filing its own motion”). However, when cross-motions for summary judgment demonstrate a basic agreement concerning what legal theories and material facts are dis-positive, they “may be probative of the non-existence of a factual dispute.” Shook, 713 F.2d at 665. III. THE 1985 HUD-INSURED REFINANCING Schlesinger was a real estate developer and the general partner of Riverdale Village Company (“Riverdale”). Riverdale was the owner of the now-demolished Project. Schlesinger, through Riverdale, acquired the Project in the 1970s. On December 17, 1985, Riverdale secured refinancing of the Project through a private mortgage loan from DRG Funding Corporation (“DRG”) in the amount of $5,683,900. Pursuant to. the HUD mortgage coinsurance program for multifamily rental housing units in operation at the time, HUD endorsed the mortgage, providing mortgage insurance. Thus, in exchange for its agreement to provide mortgage insurance for the Project, HUD required Riverdale and DRG to execute a standard Regulatory Agreement (the “RA”), the principal instrument of HUD’s regulatory control over mortgagors and lenders participating in HUD mortgage insurance programs. The RA was executed contemporaneously with the Note and Mortgage (the “Project Mortgage”) and its terms were incorporated into the deed of trust. The parties do not dispute that over the relevant ten-year span, between 1985 and 1995, the Project was greatly in need of significant maintenance and repair. They do dispute the bona fides of Schlesinger’s efforts to make repairs and otherwise maintain the Project as he was required to do under the terms of the RA. It is undisputed that, in attempting to meet his repair and maintenance obligations, Schlesinger contracted for services provided by firms in which he held an interest, so called Identity-of-Interest Firms (“IOIFs”). In large measure, it is the lack of documentation required by the RA evidencing the reasonableness of the payments made by Schlesinger to the IOIFs, and the Government’s consequent effort to recover the value of those undocumented payments, that lie at the heart of this case. There is no dispute that the Project Mortgage fell into default as of December 1992; Schlesinger made no mortgage payments thereafter. Following a series of assignments of the Project Mortgage, HUD became the ultimate assignee in January 1995. In June 1995, HUD settled insurance claims of approximately $5,406,-644.44. HUD foreclosed on the Project in September 1996. IV. HUD’S MORTGAGE INSURANCE PROGRAMS The Government’s claims are best understood after a brief summary of the statutory and regulatory setting in which they have arisen. In general, Section 207 of the National Housing Act (the “NHA”), see generally 12 U.S.C.A. §§ 1707 - 1715z-20 (West 1989 & 1999 Supp.), authorizes HUD to fully insure the repayment of mortgage loans made by private lenders for the purchase, rehabilitation or refinancing of various types of real estate. See, e.g., id. at § 1709 (generally authorizing the Secretary to insure mortgages for residential real estate properties); id. at § 1713 (authorizing the Secretary to insure mortgages for rental housing); see also DRG Funding Corp. v. Secretary of Dep’t of Hous. & Urban Dev., 898 F.2d 205, 206-07 (D.D.C.1990); Housing Study Group v. Kemp, 732 F.Supp. 180, 181-82 (D.D.C.1990). As it relates to residential real estate, the mortgage insurance program was intended to “facilitate particularly the production of rental accommodations, at reasonable rents, of design and size § 1713(b)(2). With that purpose in mind, Congress directed the Secretary to “take action ... which will direct the benefits of mortgage insurance ... primarily to those projects which made adequate provision for families with children, and in which every effort has been made to achieve moderate rental charges.” Id. Pursuant to this mandate the Secretary promulgated general and “full” insurance regulations under Section 207. These regulations are codified at 24 C.F.R. Part 207. In 1974 Congress amended the NHA by adding Section 244, see 12 U.S.C. § 1715z-9, which generally authorized HUD to coinsure the repayment of mortgages made by private lenders on various types of residential real estate that were eligible for mortgage insurance under Section 207. DRG Funding Corp., 898 F.2d at 206-07; Housing Study Group, 732 F.Supp. at 181-82; 24 C.F.R. § 255.1(a)(1) (1989) (“Section 244 [, 12 U.S.C. § 1915z-9,] authorizes [HUD] ... to insure, under a Coinsurance Contract, any Mortgage otherwise eligible for insurance under Title II [Section 207] of the [NHA].”). HUD was specifically authorized to coin-sure mortgages for multifamily rental housing properties such as the one at issue here under Section 223(f) of the NHA. See 12 U.S.C. § 1715n(f) (authorizing the Secretary to insure mortgages executed in connection with the purchase or refinancing of multifamily housing projects); id. at 1715z-9(f) (authorizing the Secretary to coinsure mortgages on multifamily housing projects); 24 C.F.R. § 255.1(a)(2) (1989) (“Section 223(f) [, 12 U.S.C. § 1715n(f),] authorizes the Secretary to insure a mortgage executed in connection with the purchase or refinancing of an existing multifamily housing project.”). Under sections 244 and 223(f), respectively, 12 U.S.C. §§ 1715z-9(f) and 1715n(f), rather than assuming all of the risk associated with mortgage loans made by private lenders under Section 207, id. at § 1713, HUD would assume up to 90% of the risk with pre-approved private lenders and in exchange, the private lenders would: (a) assume not less than 10% of the mortgage insurance risk on any mortgage coinsured under the program; (b) pay a small mortgage insurance premium to HUD; and (c) assume active roles in processing potential mortgagor credit approvals, conducting and monitoring mortgaged property appraisals and inspections, facilitating HUD mortgage insurance commitment procedures, assisting with mortgaged property dispositions and performing other functions delegated by the Secretary. See id. at § 1715z-9(a), (f). It is clear that Congress’ intent in creating and HUD’s purpose in administering the coinsurance program was to achieve the goals of the NHA by delegating many of the administrative responsibilities under the program to pre-approved private lenders, thereby reducing administrative delays common to the approval of such transactions. See Housing Study Group, 732 F.Supp. at 182 & n. 7. The delays had previously discouraged participation in HUD programs. See id. The mortgage coinsurance program’s successes through the 1970s and early 1980s, see id. at 183 & n. 9, were eclipsed in the late 1980s when HUD discovered that pre-approved private lenders holding two of the largest portfolios of coinsured mortgages under the program — DRG Funding Corporation (the original private lender here) and York Associates, Inc. — had failed to adhere to acceptable underwriting practices and capital requirements and that many of their mortgagors had fallen into default. See id. & n. 10 (noting that “$538 million (nearly 50%) of DRG’s mortgage loans were in default”); see also DRG Funding Corp., 898 F.2d at 205; York Associates, Inc. v. Secretary of Dep’t Hous. & Urban Dev., 820 F.Supp. 14 (D.D.C.1993). HUD acknowledged that it was in part responsible for the failures of the coinsurance program because of its inability to monitor adequately the activities of its pre-approved private lenders. See Housing Study Group, 732 F.Supp. at 183. Reevaluation of the coinsurance program led HUD to issue a series of Coinsuring Lender Letters, policy statements and interim rules placing all pre-approved lenders under the program on probation, which had the effect of prohibiting lenders from making commitments to mortgage loans under the program without HUD pre-approval. See id. Shortly thereafter, following notice and comment under the Administrative Procedures Act, HUD promulgated regulations terminating the coinsurance program effective November 12, 1990. See 24 C.F.R. § 255.1 (1991) (terminating coinsurance program for multifamily rental housing under Section 244). Pursuant to the regulations, HUD transferred previously coinsured mortgages to its full insurance program. See 24 C.F.R. § 255.827. As relevant here, in anticipation of the November 12, 1990 termination of the coinsurance program, the Project Mortgage was converted to full insurance on July 5, 1990, following Reilly’s assignment of the Project Mortgage to GNMA. The principal contention advanced by Schlesinger is that when HUD terminated the coinsurance program, his contractual obligations under the RA evaporated. V. STATUTE OF LIMITATIONS Schlesinger first challenges this action by arguing that it is untimely and therefore barred by limitations. Under the controlling statutory scheme, the Government was required to file this action within six years “after the latest date that the Secretary discovers any use of project assets and income in violation of the regulatory agreement.” See 12 U.S.C.A. § 1715z-4a(d); cf. 28 U.S.C. §§ 2415, 2416 (establishing general six-year period of limitations for government claims based on contract). Schlesinger contends that the Government’s claims accrued on January 5, 1990. If he is correct that the Government’s claims accrued on that date, then the Government filed its complaint (on March 25, 1998) well outside the six year period. In asserting that the date of accrual was January 5, 1990, Schlesinger relies on a statement contained in a written evaluation of the Project prepared for HUD. In that evaluation, a HUD official reported that the Project could not be “rehabilitated.” The contention that the Government’s claims accrued based on this statement plainly lacks merit. The full passage reads from which the statement is lifted reads as follows: Riverdale Village cannot be rehabilitated, if only because the units are so small and the unit mix is so weighted with efficiencies and one-bedrooms that the project would not be competitive with other projects in Essex. But the Essex market is not in collapse. If pnces were cut and units made more presentable, occupancy could be increased. The management says it is going to try that, (emphasis added). When read in context, the conclusion that the Project cannot be “rehabilitated” indicates that HUD believed that investing a significant amount of money to change the distribution of efficiencies (by converting them to one-, two-, or three-bedroom units, i.e., “rehabilitation”) was inadvisable. This reading is consistent with HUD’s later denial (in 1993) of an application by Schlesinger proposing a refinancing, “rehabilitation” and “repositioning” of the Project. Furthermore, while the 1990 report documents the deteriorated condition of the Project, it also indicates unequivocally that HUD believed that Schlesinger was trying to make the units more “presentable.” (“If prices were cut and units made more presentable, occupancy could be increased. The management says it is going to try that.”) (emphasis added). Clearly, then, as the Government contends, HUD did not “discover” in 1990 that Schlesinger was not making an effort to “promptly complete necessary repairs and maintenance;” to the contrary, HUD reasonably believed he was still trying to meet his obligations under the RA. As a matter of law, the Government only discovered the violations charged in this case (and thus its claims only accrued) in 1995, when, after HUD became the assign-ee of the Project Mortgage in February 1995, HUD began auditing the Project and found that adequate documentation was lacking to establish the reasonableness of the IOIF transactions and other Project expenditures. See 12 U.S.C.A. § 1715z-4a(d) (providing that claim may be brought from the latest date the Secretary discovers a violation). Accordingly, the institution of this action in March 1998 was well within the applicable statute of limitations. VI. ENFORCEABILITY OF THE REGULATORY AGREEMENT Schlesinger’s principal defense to this action presents purely a legal issue; his contention enjoys a striking facial attractiveness. The defense hinges on the correctness of his interpretation of a provision in the RA. That provision provides: “This Agreement will continue so long as the contract of coinsurance remains in force” (hereinafter “the termination clause”). Schlesinger argues that since “the contract of coinsurance” effectively terminated on July 5, 1990—the date HUD and GNMA amended the Project Mortgage and the deed of trust to reflect the Project Mortgage’s transfer from the coinsurance program to HUD’s full insurance program— the RA ceased to have effect on that date as well. Accordingly, he asserts, because by the terms of the termination clause the RA ceased to have effect when HUD converted the Project Mortgage from the coinsured program to the fully-insured program on July 5, 1990, the RA was no longer applicable during the period in which he allegedly failed to maintain the Project in good repair and during which the undocumented payments to IOIFs were made. The Government responds that the RA is fully enforceable against Schlesinger, notwithstanding the transfer of the Project Mortgage from the coinsurance program to the full insurance program. In full context, the termination clause reads as follows: In return for the Secretary’s endorsement for mortgage insurance of the Note identified above and to comply with the requirements of the National Housing Act and the regulations and administrative requirements adopted by the Secretary pursuant thereto, the Owner agrees to abide by the provisions of this Agreement. This Agreement will continue so long as the contract for coinsurance remains in force. RA at 1 (emphasis added). The Government contends that, when the termination clause is understood in its proper context, it must be deemed ambiguous as a matter of law. The Government further contends that proper resolution of the ambiguous meaning of the termination clause in light of the purposes and goals of the NHA discloses that Schlesinger’s interpretation is unreasonable and therefore should be rejected. I am persuaded that the Government has the better argument in respect to the parties’ dispute over the interpretation of the RA. For the reasons set forth below, I conclude that the RA is fully enforceable against Schlesinger notwithstanding the conversion of the Project Mortgage from HUD’s coinsurance program to its full insurance program. A. Federal Common Law Applies in this Case Since, undeniably, the parties’ rights and obligations under the RA involves pervasive federal interests, federal common law governs the RA’s interpretation. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 726, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979) (applying federal common law to claims arising under the Small Business Administration and Farmer’s Home Administration lending programs, stating, “[t]his Court has consistently held that federal law governs questions involving the rights of the United States arising under nationwide federal programs”) (citing Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573, 87 L.Ed. 838 (1943)); Caudill v. Blue Cross & Blue Shield of N.C., 999 F.2d 74, 78-79 (4th Cir.1993) (“[F]ederal common law governs the duties and obligations of the federal government under contracts to which it is a party.”) (citing Clearfield Trust Co.). State law may be used if it is not in conflict with federal common law and does not “frustrate specific policy objectives of federal legislation.” Caudill, 999 F.2d at 78 (citing Boyle v. United Tech. Corp., 487 U.S. 500, 507-08, 108 S.Ct. 2510, 101 L.Ed.2d 442 (1988)). B. The RA’s Termination Clause Is Ambiguous Schlesinger, urging a stark “plain meaning” approach, would have me apply the single sentence comprising the termination clause literally and conclude that, all other considerations aside and all other provisions of the RA (and its underlying regulatory pedigree) notwithstanding, HUD’s discontinuation of the coinsurance program and transfer of the Project Mortgage to the full insurance program relieved him of his obligations under the RA, thus depriving the Government of its right of action. One court has adopted the approach urged by Schlesinger here in a case, like this one, in which the Government sued to enforce an RA against a mortgagor under the coinsurance program. See United States v. David, 1998 WL 351693 (E.D.Pa. June 30, 1998); United States v. David, 1998 WL 709292 (E.D.Pa. October 7, 1998) (denying motion for reconsideration). I am persuaded, however, that the court in David erred in failing to conclude that the termination clause was not ambiguous. See 1998 WL 351693 at *1-2. Viewed in proper context, the termination clause is immediately preceded by language — and is, more generally, contained within a document — which seriously undermines the erstwhile “plain” interpretation put forth by Schlesinger. This language (“[i]n return for the Secretary’s endorsement for mortgage insurance of the Note identified above and to comply with the requirements of the National Housing Act and the regulations and administrative requirements adopted by the Secretary pursuant thereto, the Owner agrees to abide by the provisions of this Agreement”) and context suggest (as discussed in detail below) that it is not the continued existence of the contract of coinsurance that is critical to the continuation of Schlesinger’s obligations under the RA, as Schlesinger argues; rather, it is the continued existence of the Secretary’s endorsement for mortgage insurance that is the critical fact obliging Schlesinger to comply with the RA. Thus, the Government’s proposed interpretation is a reasonable one that cannot be rejected summarily. The proper approach to the interpretation of ambiguous contract terms under federal common law was recently and succinctly set forth by the United States Court of Appeals for the Federal Circuit: When a contract is susceptible to more than one reasonable interpretation, it contains an ambiguity. See Hills Materials Co. v. Rice, 982 F.2d 514, 516 (Fed.Cir.1992). To show an ambiguity it is not enough that the parties differ in their respective interpretations of a contract term. See Community Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1578 (Fed.Cir.1993). Rather, both interpretations must fall within a “zone of reasonableness.” See WPC Enters., Inc. v. United States, 163 Ct.Cl. 1, 323 F.2d 874, 876 (1963). If this court interprets the contract and detects an ambiguity, it next determines whether that ambiguity is patent. See Newsom v. United States, 230 Ct.Cl. 301, 676 F.2d 647, 649-50 (1982). The doctrine of patent ambiguity is an exception to the general rule of contra proferentem which construes an ambiguity against the drafter ....; Sturm v. United States, 190 Ct.Cl. 691, 421 F.2d 723 (1970). An ambiguity is patent if “so glaring as to raise a duty to inquire[.]” Newsom, 676 F.2d at 650. If an ambiguity is not patent but latent, this court enforces the general rule. See Fort Vancouver Plywood Co. v. United States, 860 F.2d 409, 414 (Fed.Cir.1988). Metric Constructors, Inc. v. National Aeronautics and Space Admin., 169 F.3d 747, 751 (Fed.Cir.1999). Since I have determined that the termination clause is ambiguous, in order to resolve the dispute between the parties I must first determine whether the ambiguity is patent or latent. Second, if the ambiguity is not patent but latent, I must determine whether Schlesinger’s interpretation of the disputed clause is reasonable. Id.; and see Fort Vancouver Plywood Co. v. United States, 860 F.2d 409, 414 (Fed.Cir.1988) (citing United States v. Turner Constr. Co., 819 F.2d 283 (Fed.Cir.1987)). If Schlesinger’s interpretation is reasonable, then I must accept it and reject the interpretation of the Government — the party that drafted the ambiguous provision. 1. The Ambiguity In The Termination Clause Is Not Patent An ambiguity is patent where, at the time of contracting, it is so “glaring as to raise a duty to inquire [on the part of the party contracting with the government].” Fort Vancouver, 860 F.2d at 414 (citing Turner, 819 F.2d at 286); Newsom v. United States, 230 Ct.Cl. 301, 676 F.2d 647, 650 (1982). When a patent ambiguity exists the duty of inquiry arises “regardless of the reasonableness vel non of [the nondrafter’s] interpretation.” Newsom, 676 F.2d at 650 (citing Mountain Home Contractors v. United States, 192 Ct.Cl. 16, 425 F.2d 1260, 1263 (1970)). This doctrine protects the government from parties with whom it contracts by requiring that ambiguities be raised before the parties become bound, thus avoiding costly litigation after the fact. See Newsom, 676 F.2d at 648 (citing Beacon Constr. Co. v. United States, 161 Ct.Cl. 1, 314 F.2d 501, 504 (1963)). Therefore, when presented with an “obvious omission, inconsistency, or discrepancy of significance, [the nondrafter] must consult the Government’s representatives if he intends to bridge the crevasse in his own favor.” Beacon Constr. Co., 161 Ct.Cl. 1, 314 F.2d 501, 504. Failing to take such action will bar the requested relief. See id. Here, it is quite apparent that at the time Schlesinger entered into the RA, the disputed ambiguity in the RA was not patent. At the time the RA was executed in 1985, neither HUD nor Schlesinger had any premonition of the impending implosion of the HUD multifamily coinsurance program that occurred between 1988 and 1990. Equally important for present purposes, it would have been quite apparent to the parties that even upon the termination of the HUD multifamily coinsurance program in 1990 and the concomitant suspension of HUD’s contracts for coinsurance with private lenders, HUD would continue its mortgage insurance obligations to the Project. Since neither of these eventualities was evident at the time of contracting in 1985, and as a result, the abstruseness of the termination clause was not readily apparent at that time, I conclude that the ambiguity inherent in the termination clause is not patent. Moreover, since one who contracts with the Government is only obligated to bring to the Government’s attention “major discrepancies or errors which they detect ... [and] are not expected to exercise clairvoyance in spotting hidden ambiguities in the ... documents,” Mountain Home, 425 F.2d at 1264 (citing Blount Bros. Constr. Co. v. United States, 171 Ct.Cl. 478, 346 F.2d 962, 973 (1965)), Schlesinger would not have been obligated to bring such concerns about the potential demise of the coinsurance program to the Government’s attention even if they had occurred to him back in 1985. 2. The Ambiguity In The Termination Clause Is Latent and Schlesinger’s Interpretation Is Unreasonable Having concluded that the ambiguity is not patent but latent, I must next “examine whether the interpretation of the contract by the party that did not write it [is] reasonable.” Fort Vancouver, 860 F.2d at 414 (citing Turner, 819 F.2d 283). It is not enough that the parties differ in their respective interpretations of a contract term. See Metric Constr., Inc., 169 F.3d at 751; Community Heating & Plumbing Co., 987 F.2d at 1578; Hills Materials Co., 982 F.2d at 516. Rather, Schlesinger’s interpretation must fall within a “zone of reasonableness.” See Metric Constr., 169 F.3d at 751; WPC Enters., Inc., 323 F.2d at 876. If the asserted interpretation is reasonable, under the rule of contra prof-erentum, the ambiguity must be construed against the drafter, here the Government. See Metric Constr., 169 F.3d at 751; Fort Vancouver, 860 F.2d at 414 (citing Turner, 819 F.2d at 286). The Government relies on the following factors in support of its interpretation as the only reasonable interpretation of the termination provision: (1) HUD’s role in facilitating and effectuating the Congressional and public policy objectives of the NHA by regulating private lenders and project owners who benefit from mortgage insurance; and (2) the terms of HUD mortgage insurance regulatory provisions which run counter to the interpretation of the RA put forth by Schlesinger. See Metric Constr., 169 F.3d at 752 (“The context and intention [of the contracting parties] are more meaningful than the dictionary definition.”) (citing Rice v. United States, 192 Ct.Cl. 903, 428 F.2d 1311, 1314 (1970); Corman v. United States, 26 Cl.Ct. 1011, 1015 (1992)); General Eng’g & Machine Works v. O’Keefe, 991 F.2d 775, 780 (Fed.Cir.1993) (“Federal regulations which are based upon a grant of statutory authority ‘have the force and effect of law, and, if they are applicable, they must be deemed terms of the contract even if not specifically set out therein, knowledge of which is charged to the contractor.’ ”) (citing De Matteo Constr. Co. v. United States, 220 Ct.Cl. 579, 600 F.2d 1384, 1391 (1979), and Condec Corp. v. United States, 177 Ct.Cl. 958, 369 F.2d 753, 757-58 (1966)). I agree with the Government that consideration of these appropriate factors compels rejection of Schlesinger’s proposed interpretation of the termination clause. I explain. First, it should be recalled that the RA was an agreement involving three parties: HUD, Schlesinger, and DRG. As a pre-approved coinsuring lender under the HUD coinsurance program, DRG was authorized to enforce the RA as a surrogate for the Secretary. See 12 U.S.C. § 1715z-9(a)(2) (enabling the Secretary to authorize pre-approved lenders to conduct inspections of and monitor HUD-insured mortgaged property); RA at 16, ¶ C.l (providing that “[i]f the Owner violates any provisions of this Agreement, the Mortgagee or Secretary may send ... written notice of such violation.... If such violation is not corrected to the satisfaction of the Mortgagee or the Secretary ..., the Mortgagee or Secretary ... may initiate the following actions”). Not surprisingly, Schlesinger has downplayed the significance of DRG’s role in the arrangement established by the RA. Because the RA was an agreement between three parties, only two of which are before this court, the terms of the RA must be closely scrutinized in order to determine whether the disputed terms apply generally to all parties to the RA, or particularly to some parties and not others. Keeping DRG’s role in the coinsurance program in mind will assist in determining the intention of the parties as it relates to the ambiguous paragraph. Second, it is clear that the RA did not limit the Secretary’s authority to regulate Schlesinger directly. The contract for coinsurance is the “agreement between the lender and the Commissioner to coinsure a Mortgage under [24 C.F.R. Part 255].” 24 C.F.R. § 255.2 (1989). As discussed above in connection with the general background of the coinsurance program, the contract for coinsurance is the means by which the Secretary regulates private coinsuring lenders, while at the same time authorizing those lenders to regulate participating project owners whose mortgages are insured pursuant to 12 U.S.C. § 1715z-9(a). The contract of coinsurance is evidenced by the HUD representative’s endorsement of the Project Note. See 24 C.F.R. § 255.2. Its terms are the provisions codified by the Secretary at 24 C.F.R. Part 255. See id. (stating that the contract for coinsurance “includes the terms, conditions, and provisions of [24 C.F.R. Part 255]”). Thus, an examination of the terms of the contract of coinsurance (as incorporated by regulation) reveals that the majority of Part 255’s subparts pertain almost exclusively to the administrative requirements imposed upon coinsuring lenders. Among the provisions of the contract for coinsurance only two — subparts G and H — of the nine subparts within Part 255 speak to the obligations imposed upon Schlesinger as Project Owner. See, e.g., 24 C.F.R. § 255.701 (“In order to be eligible for the benefit of insured financing under this part, the Mortgagor must agree to be regulated and restricted by the lender with respect to the ongoing operation of the project as set forth is this subpart [H].”); id. at § 255.505 (providing that the lender and mortgagor enter into a regulatory agreement requiring the mortgagor to comply with subparts G & H). Once the contract of coinsurance is made by the endorsement of the Secretary on the mortgage note, see 24 C.F.R. § 255.2 (stating that the contract for coinsurance is “evidenced by the Secretary’s endorsement” of the project note), the lender is authorized, concurrently with the Secretary, to enforce the provisions of subparts G & H against the project owner. The triggering events for the termination of the contract of coinsurance are found at 24 C.F.R. § 255.813. These events reflect the understanding that if the Secretary had unilaterally withdrawn from the insurance obligation because of the lender’s malfeasance; if the Secretary had been released by the joint consent of the lender and project owner; or if the Secretary’s insurance obligation had expired because the lender’s participation in the financing of the Project had come to an end, the Secretary would no longer have the prerogative to regulate the lender and the lender would no longer have the derivative authority to regulate the project owner under the mortgage insurance program. Properly understood, then, the coinsurance program, as it was effectuated through the contract of coinsurance, was a device that enabled the Secretary to increase the availability of mortgage insurance for residential properties by enlisting the support of and delegating supervisory authority over project owners to pre-ap-proved private lenders in the HUD mortgage insurance process. See 24 C.F.R. § 255.1(a), (b) (stating that the purpose and scope of the coinsurance regulations/contract for coinsurance terms in Part 255 were to “assist significantly in the conservation of neighborhoods and existing housing resources” by approving private lenders to “carry out (subject to monitoring) dnderwriting, commitment, property disposition and other functions that the [FHA] Commissioner approves”); id. at § 255.701 (providing that project owners “must agree to be regulated and restricted by the lender with respect to the ongoing operation of the project”) (emphasis added); id. at 255.505 (requiring the lender and mortgagor to execute a regulatory agreement to comply with subparts G & H of Part 255). Next, it is clear that the delegation of some authority to private lenders through the use of the contract of coinsurance did not purport to limit the Secretary’s independent authority to regulate project owners directly so long as the Secretary continued to have an insurance obligation. The retention of some regulatory authority by the Secretary pursuant to this condition is found within the general mortgagor eligibility requirements in 24 C.F.R. §§ 207.17-21. By Congressional mandate, the Secretary’s authority to regulate project owners under the coinsurance program derived from the full insurance statutes and was exercised through the Secretary’s regulations promulgated thereunder. See 12 U.S.C. § 1715z-9(a) (authorizing the Secretary to provide coinsurance for any “mortgage, advance or loan otherwise eligible” under any provision of the NHA mortgage insurance subchapter) (emphasis added); 24 C.F.R. § 255.1(c) (stating that “[t]his part provides for coinsurance of Mortgages under Section 207 of the [NHA]”). The fact that the Project Mortgage was insured through a coinsurance arrangement did not, as Schlesinger asserts, diminish the Secretary’s regulatory authority pursuant to the general insurance provisions under which Schlesinger became eligible as a Mortgagor. The coinsurance statute and regulations direct primary attention to lenders and do not contain eligibility requirements for mortgagors. To the extent the coinsurance regulations of Part 255 address mortgagor eligibility requirements, they only make reference to “mortgagors approved by the lender in accordance with standards” established by the Secretary. See 24 C.F.R. § 255.202. The omission of eligibility requirements for mortgagors in the coinsurance regulations was not accidental. Since, in order to be eligible for coinsurance, a mortgagor must be eligible under one of the Secretary’s full insurance programs, see 12 U.S.C. § 1715&-9(a), the Secretary’s authority to provide insurance for a mortgage executed in connection with the refinancing of a multifamily housing project like the Project necessarily derived from 12 U.S.C. § 1713 (authorizing mortgage insurance for rental properties in general) and § 1715n(f) (authorizing insurance for mortgages executed in connection with the refinancing of a multifamily housing project in particular). Pursuant to 12 U.S.C. §§ 1713 and 1715n(f), the Secretary promulgated general eligibility and supervisory standards for all mortgagors of multifamily housing projects at 24 C.F.R. §§ 207.17-21 (providing general requirements for mortgagors of multifamily housing projects). These are the relevant eligibility standards. See id. at 255.202 (providing that in order to be eligible for insurance covering the refinancing of an existing multifamily housing project, a mortgagor must be approved “in accordance with standards established by the [Secretary]”). They are, therefore, applicable to Schlesinger. The eligibility provisions state that in order to be approved by the Secretary the mortgagor must be “restricted ... as to rents or sales, charges .. and methods of operation,” id. at 207.17(a), “until the termination of all obligations by the [Secretary] under the insurance contract....” Id. The RA necessarily served the purpose of restricting Schlesinger in this case, as required by § 207.17(a). The duration of the RA as the instrument by which the Secretary regulated the Project is addressed by a provision that accompanies 24 C.F.R. § 207.17(a). That regulation states that “[u]pon the termination of all obligations of the Commissioner under his contract of mortgage insurance, or any succeeding contract or agreement covering the mortgage obligation, all regulations and restrictions of the mortgagor shall cease ... and any regulatory agreement or contract shall terminate.” Id. at § 207.18(c). This review of the eligibility requirements that Schlesinger was obligated to satisfy in order to qualify for mortgage insurance under the coinsurance program and under which Schlesinger was required to be governed for the duration of the period that the Secretary provided mortgage insurance for the Project establishes that he could not have expected that the termination of the contract for coinsurance would extinguish the Secretary’s authority to regulate his operation of the Project. Next, the Government has established that the Amendment to the Deed to Trust Note/Mortgage Note made by HUD and GNMA on July 5, 1990 served as a succeeding contract for mortgage insurance and thereby continued the Secretary’s mortgage insurance obligation through the conversion from co- to full insurance. The Secretary’s authority to regulate Schlesinger under the RA was thereby continued pursuant to 24 C.F.R. §§ 207.17(a) and 207.18(c). For present purposes, under 24 C.F.R. §§ 207.217(a) and 207.218(c), the relevant “contract for mortgage insurance” covering HUD’s insurance obligation was, initially, the contract for coinsurance made between DRG and HUD when the Secretary’s representative endorsed the Mortgage Note for insurance in 1985. That contract continued until the Project was converted from co- to full insurance on July 5, 1990 when, after a series of assignments, GNMA became the holder of the mortgage. On July 5, 1990, HUD and GNMA executed an Amendment to the Mortgage Deed of Trust and Note, which explained that GNMA had “requested that the [FHA] Commissioner endorse the note for full insurance.” The Commissioner endorsed the Note and the parties deleted all references to coinsurance in the Mortgage Note and Deed of Trust. In my view, the Amendment can only be understood to be a “succeeding contract or agreement covering the mortgage obligation,” 24 C.F.R. §§ 207.17(a), 207.18(c), since it served the purpose of continuing the Secretary’s insurance obligation to the Project. Pursuant to 24 C.F.R. §§ 207.217(a) and 207.218(c), therefore, since the Secretary’s insurance obligation under the contract for coinsurance remained in force following the July 5, 1990 conversion of the Project Mortgage from co- to full insurance, Schlesinger remained subject to the Secretary’s regulatory control. The factors discussed above reflect the contemporaneous understanding harbored by the parties at the time the RA was entered into. See General Eng’g, 991 F.2d 775, 780 (stating that regulations promulgated pursuant to a statutory scheme are incorporated into contracts entered into with the Government pursuant to that scheme and that contractors are charged with knowledge thereof). Therefore, for the reasons set forth below, I conclude that Schlesinger’s interpretation of the paragraph at issue is unreasonable. Consequently, the rule of contra proferentum will not apply in this instance and whatever ambiguity arising from the disputed paragraph will not be construed against the Government. See Fort Vancouver, 860 F.2d at 414 (“Under the rule of contra proferentum, the contract is construed against the drafter if the interpretation advanced by the nondrafter is reasonable.”) (citing Turner, 819 F.2d at 286). Accordingly, I will hold that the RA is valid and enforceable against Schlesinger. Turning then to the first clause in the disputed paragraph, it reads: “In return for the Secretary’s endorsement for mortgage insurance ... and to comply with the requirements of the National Housing Act and the regulations and administrative requirements adopted by the Secretary pursuant thereto, the Owner agrees to abide by the terms of this Agreement.” RA at 1. This “in return for” clause, addressed solely to Schlesinger, when read in light of the “regulations and administrative requirements adopted by the Secretary,” id., see also General Eng’g, 991 F.2d at 780, reflects the parties’ intent and understanding, also expressed at 24 C.F.R. § 207.17(a), that the Secretary would retain the authority to regulate Schlesinger “as to rents or sales, charges ... and methods of operation,” id. at 207.17(a), as provided for in the subsequent provisions of the RA, “until the termination of all obligations by the [Secretary] under the insurance contract.” Id. Additionally, since the RA was the principal instrument of the Secretary’s regulatory control over Schlesinger, when read in light of the “regulations and administrative requirements adopted by the Secretary,” RA at 1; see also General Eng’g, 991 F.2d at 780, this clause reflects the parties’ intent and understanding that the RA would terminate “[u]pon the termination of all obligations of the [Secretary] under his contract for mortgage insurance.” 24 C.F.R. § 207.18(c). The termination clause reads: “This Agreement will continue so long as the contract for coinsurance remains in force.” Conceptually, the statutory and regulatory understanding reflected in this “so long as” clause is that DRG would lose its authority to regulate Schlesinger upon the termination of the contract for coinsurance because DRG was enabled by the contract for coinsurance to regulate Schlesinger (concurrently with HUD) as the Project Owner. See General Eng’g, 991 F.2d at 780; 12 U.S.C. § 1715z-9(a) (authorizing the Secretary to approve private lenders to carry out duties delegated under the mortgage insurance program); 24 C.F.R. § 255.701 (requiring the lender and the mortgagor to enter into a regulatory agreement). Since, consistently with 24 C.F.R. §§ 207.17(a) and 207.18(c), the paragraph as a whole establishes that the Secretary’s authority to regulate Schlesinger endures until the Secretary’s insurance obligation has expired, any reading of the termination clause that purports to extinguish the Secretary’s authority while the Secretary retains an insurance obligation is contrary to the statutory and regulatory understanding of the effect of the RA and, necessarily, contravenes the contemporaneous understanding of the parties at the time the RA was executed. See General Eng’g, 991 F.2d at 780. It is clear in light of the operation of the statutory and regulatory scheme that if the termination of the contract for coinsurance coincided with the termination of the Secretary’s insurance obligation — as, presumably, most often is the case — Schlesinger’s interpretation of the clause would be reasonable. However, given that in this instance the Secretary retained a mortgage insurance obligation when the contract for coinsurance was succeeded on July 5, 1990 by the Amendment to the Deed of Trust Note, the Secretary retained the authority to regulate Schlesinger “as to rents or sales, charges ... and methods of operation,” 24 C.F.R. § 207.17(a). And, because the insurance obligation was still extant, the regulatory agreement remained enforceable. See id. at § 207.18(c). Finally, common sense exposes the unreasonableness of Schlesinger’s interpretation. Manifestly, the fundamental benefit of the bargain was not, as Schlesinger’s argument suggests, the form of the mortgage insurance provided by the Secretary but rather was the simple fact or the existence of mortgage insurance provided by the Secretary. Hence, that the form in which the mortgage insurance was initially provided by the Secretary changed from co- to full insurance did not alter the basis of that bargain: the Secretary continued to provide mortgage insurance; accordingly, Schlesinger remained bound by the RA. He was not free to walk away from his obligations. Indeed, this common sense approach is reflected throughout Schlesinger’s opposition to the initiation of debarment proceedings against him by HUD. See generally Exhibit II to Government’s Memorandum in Support of Summary Judgment (Opposition to Notice of Proposed Debarment of Richard Schlesinger Received April 9, 1997). Any reading of the clause contrary to that understanding is tortured and strains both credulity and common sense. Based on the above analysis, therefore, I am persuaded that Schlesinger’s reading of the termination clause is unreasonable because to accept it would render the paragraph of which it is a part, as well as the mortgage insurance regulatory scheme itself, “inexplicable, inoperative, void, insignificant, meaningless, superfluous, [and would] achieve[ ] a weird and whimsical result.” State of Arizona By and Through Arizona Dept. of Trans. v. United States, 216 Ct.Cl. 221, 575 F.2d 855, 863 (1978) (citing ITT Arctic Serv. Inc. v. United States, 207 Ct.Cl. 743, 524 F.2d 680, 683 (1975)); see also Northrop Grumman Corp. v. Goldin, 136 F.3d 1479, 1483 (Fed.Cir.1998) (admonishing that the court “must construe a contract so as ‘to effectuate its spirit and purpose’ and to give ‘reasonable meaning to all of its parts’ ”) (citation omitted). Accordingly, the latent ambiguity surrounding the termination clause will not be construed against the Government, see Fort Vancouver, 860 F.2d at 414, and, as a matter of law, the RA has continued validity and is fully enforceable against Schlesinger. Because I hold the RA valid and enforceable against Schlesinger I will dismiss Count IV of the Complaint, the Government’s unjust enrichment claim. See Lisbon Square v. United States, 856 F.Supp. 482, 495 (E.D.Wis.1994) (“The parties in this case entered into an enforceable agreement upon which the defendants are entitled to recover double damages under § 1715z-4a. Thus, additional recovery for unjust enrichment based on quantum me-ruit is not warranted, and shall not be granted by the Court.”). VII. ANALYSIS OF THE MERITS OF THE GOVERNMENT’S CLAIMS A. Overview Count I of the Complaint states four claims brought under 12 U.S.C. § 1715z-4a, each of which seeks to recover double the value of assets and income used in violation of the RA and applicable regulations. The Government really does not (and in candor, cannot) assert that services performed by the IOIFs were not necessary. At least three inspection reports created for HUD and private lenders reveal that the services provided by the IOIFs were deemed necessary to keep the Project in good repair. The Government’s true complaint is with Schlesinger’s lack of documentation showing that the expenditures made to IOIFs for repair services provided for the Project were “reasonable.” The requirement of reasonableness of expenditures is provided for expressly in the RA, which requires that when dealing with IOIFs, Schlesinger was obligated to demonstrate by adequate documentation that “the charges levied by those [IOIFs] [were] not in excess of the costs that would be incurred in making arms-length purchases on the open market.” RA at ¶ B.7.d. The RA further requires project owners to “[s]olicit oral or written cost estimates as necessary to assure compliance with the provisions of this paragraph [7] and document the reasons for selecting other than the lowest estimate. Maintain [sic] copies of such documentation and make such documentation available for inspection....” Id. at ¶ B.7.g. As to the first claim of Count I, the Government alleges that Schlesinger wrongfully distributed “$521,580.00 in Project funds to [IOIFs] without providing adequate documentation to show that such payments were reasonable in amount and for reasonable operating expenses and necessary repairs.” Complaint at 11, ¶ 31. Specifically, the amounts the Government alleged the Project wrongfully distributed are as follows: $262,335.19 to Topside; $125,144.37 to DBD and $134,100.00 to DTE. As to the second claim of Count I, the Government alleges that Schlesinger “violated the terms of the RA and applicable regulations when [he] repaid an advance to Stamford Apartments Co., an [IOIF], in the amount of $125,000.00, during a time when the Project was not in a surplus cash position.” Id. at ¶ 32. As to the third claim of Count I, the Government alleges that Schlesinger violated the terms of the RA by “failing to provide adequate documentation to support the expenditure of $36,068.00 in Project funds.” Id. at 12, ¶ 33. As to the fourth claim of Count I, the Government alleges that Schlesinger violated the RA by “failing to maintain the Project in good repair and condition.” Id. at ¶ 34. Counts II and III of the Complaint repeat the claims asserted in Count I, but under the common law theory of breach of contract. See id. at 12-13, ¶¶ 38-40, 43. Count IV of the Complaint states a claim under the common law theory of unjust enrichment. Since I have found the RA is valid and enforceable against Schlesinger it is dismissed. Count V of the Complaint states a claim under the Federal Priority Statute, 31 U.S.C. 3713 et seq., which permits the Government to recover the extent of unpaid claims of the Government from an insolvent person who is indebted to the United States and who has committed an act of bankruptcy by making payments to a party other than the Government. See id. at 14-15, ¶ 49-51. B. Dismissal Of IOIF Defendants Before turning to the merits of the Government’s claims, I will at the outset dismiss all claims against the defendants DBD Contracting (“DBD”), Topside Roofing Corporation, (“Topside”) and Down-to-Earth Landscaping (“DTE”). Schlesinger correctly points out that each of these IOIFs should be dismissed as defendants. The Government brings this action under 12 U.S.C.A. § 1715z-4a (West Supp.1999), which permits the Attorney General to bring an action at the request of the Secretary of HUD to recover, in addition to attorneys fees and costs, double the value of “any assets or income used by any person in violation of (A) a regulatory agreement that applies to a multifamily project whose mortgage is insured or held by the Secretary under Title II of the National Housing Act ... or (D) any applicable regulation.” Id. Since the Government has produced no evidence to show that DBD, Topside or DTE, which are IOIFs in relation to Schlesinger, ever held ownership interests in the owner of the Project, Riverdale, it has failed to show they come within the terms of 12 U.S.C. § 1715z-4a. Moreover, since none of these IOIFs were parties to the RA, or otherwise were in privity with HUD, the Government has failed to establish a claim against any one or more of them under common law theories of breach of contract or unjust enrichment. Finally, since the Government has produced no evidence showing that any of these IOIFs controlled Project funds, there is no triable issue relating to whether DBD, Topside and DTE violated the Federal Priority Statute, 31 U.S.C. § 3713 et seq., by making unauthorized payments to third parties while the Project was indebted to the Government. Accordingly, DBD, Topside and DTE will be dismissed. C. Claims For Which Summary Judgment Is Appropriate After a thorough review of the record, I am persuaded that, for the reasons set forth below, with respect to the following claims, there are no genuine issues of material fact and I will enter summary judgment as indicated. 1. The $125,000 Stamford Loan Transaction The Government alleges that Schlesinger “repaid an advance to Stamford Apartments Co. [ (‘Stamford’) ], an [IOIF], in the amount of $125,000 during a time when the Project was not in a surplus cash position and when the payment imposed a financial hardship on the Project.” Complaint at 11, ¶ 32. The uncontradicted evidence of record establishes that the Project borrowed funds from Stamford. Further, the record shows that the Project checks drawn to repay the advance made by Stamford to the Project were dated January 22, 1992 ($55,000) and February 5, 1992 ($70,000). The necessary predicate that the Project was not in a surplus cash position when the payments were made is established by the undisputed findings of a HUD-OIG auditor made pursuant to an audit of the Project accounts in 1996. The RA provides that expenditures of Project funds for other than reasonable operating expenses may be made only when the Project is in a surplus cash position. See RA at ¶¶ B.7.a, .c. Given that the undisputed evidence establishes that the Project was not in a surplus cash position when the Stamford loans were repaid, the only question to be decided is whether the repayment of owner advances constitutes a “reasonable operating expense” under the terms of the RA. In this determination, I am guided by persuasive ease law which holds unequivocally that such repayments are not “reasonable operating expenses.” In general, when determining which expenditures are “reasonable operating expenses” and those that are not courts view those expenditures “arising from the everyday operation and maintenance of the project” as permissible. United States v. Harvey, 68 F.Supp.2d 1010, 1017-18 (S.D.Ind.1998) (citation omitted). Further, courts distinguish between those “payments made for the investors’ benefit from those made for the benefit of the project.” Id.; accord In re RLA of Madison, Inc., 177 B.R. 78, 80 (Bankr.M.D.Tenn.1994). The distinction recognizes that the “National Housing Act was primarily intended to benefit individuals who live in inadequate housing, not commercial developers.” Harvey, 68 F.Supp.2d at 1018 (citing United States v. Winthrop Towers, 628 F.2d 1028, 1036 (7th Cir.1980)); see also M.B. Guran Co., Inc. v. City of Akron, 546 F.2d 201, 204 (6th Cir.1976) (stating that “the class for whose especial benefit the [NHA] was enacted must be the persons who inhabit inadequate housing”). Cases addressing the repayment of owner advances under the relevant RA provisions and the administrative requirements hold that the repayment of an owner advance like the payment to Stamford is not a reasonable operating expense. See Thompson v. United States, 408 F.2d 1075, 1079-81 (8th Cir.1969) (“Neither ... the repayment of the bank loan, the proceeds of which were used to equip and furnish part of the premises for a private club, nor the withdrawal of funds to reimburse any of the partners for prior advances to the operating account constituted payment of reasonable expenses incidental to the operation and maintenance of the project.”) (emphasis added); Lisbon Square, 856 F.Supp. at 494 (citing Thompson). In response to the Government’s showing, Schlesinger first argues that since the funds were held in security deposit trust accounts they were not part of the Project’s assets. This position is contrary to the position taken by Schlesinger at his debarment hearing. There, in summarizing Schlesinger’s position as it relates to this matter, the official noted that Schlesinger “admitt[ed] that security deposits were not properly segregated, but claim[s] that the funds were ne