Stahl v. U.S. Dept. of Agriculture
| Decision Date | 06 May 2003 |
| Docket Number | No. 02-2915.,02-2915. |
| Citation | 327 F.3d 697 |
| Parties | Clarice A. STAHL; Loretta A. Anderson; Thomas K. Anderson; Don A. Armstrong; Mary A. Armstrong; Joseph Bauer; Coy Beardsley; Sue Beardsley; Anna Lou Bergtoll; Leo O. Bergtoll; Edwin C. Berkholtz, Jr.; Lois J. Berkholtz; Becky Bizzle; Gilbert Bizzle; Edroy Boe; Solveig Boe; Dennis D. Bromaghin; Phyllis G. Bromaghin, Plaintiffs/Appellants, Darrell Bukaske, Plaintiff, Kathleen W. Burgess; Lesley W. Burgess; James E. Clark; Lillian Clark; Donald R. Cloose; Elvera O. Cloose; Robert H. Cotton; Delma K. Delp; Jay E. Delp; Robert N. Dettenhaim; Vicky R. Dettenhaim; Eleanor A. Gladish; Charles Leland Gladish; Frances A. Glinsmann; Wendell C. Glinsmann; Marvin F. Greiner; James A. Hamilton; Karla K. Ibes; Robert D. Ibes, Jr.; Don L. Jensen; Leola F. Jensen; Gladys M. Jourdan; Paul M. Jourdan; Catherine R. Kainz; Dennis L. Kainz; Carol Kinnischtzke; Karyl Kinnischtzke; Don A. McClanahan; Krystal G. McClanahan; Carol McCrery; Dennis McCrery; Gerald Mercer; Sharon O. Mercer; Terry R. Mercer; Allen H. Merrick; Carol A. Merrick; Clarence A. Merrick; Verna Merrick; Raymond Meyer; Raymond Meyer; Valerie Meyer; Mary Katherine Miller; Ralph A. Miller; Arlen W. Morgan; Lois E. Morgan; Linda A. Novak; Melvin J. Novak; Lindsay Orr; Julie Orr; Carl P. Palczewski; Esther L. Palczewski; Frank L. Privratsky; Lonnie J. Privratsky; Marilyn J. Rahe; Robert F. Rahe; Johnny W. Roberts; Norma H. Roberts; Carol M. Roth; J. Richard Roth; Helen Rowan; Robert Rowan; D.L. Simmons; Cynthia L. Simmering; Donald C. Simmering, II; Bernadette L. Sobolik; Miles P. Sobolik; William J. Spiczka; Janice D. Spiczka; Harris O. Stevens; Jacqueline Stevens; Dennis Strom, doing business as Strom Ranch, Inc.; Phyllis Sullivan; Wayne Sullivan; Jennings D. Sunderland; Clarice Sunderland; Noelle J. Swanson; Richard A. Swanson; Jay R. Thacker; Valerie Thacker; Donna S. Throgmorton; Guy L. Throgmorton; Harold D. Volbrecht; Sheryl K. Volbrecht; Glenn O. Wagner; Herman F. Werle; Marsha L. Werle; Larry L. Zechiel; Ruth A. Zechiel; Arlene M. Ziemer; Rynold W. Ziemer; Terry W. Thomas, Plaintiffs/Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Secretary of Agriculture, in her Official Capacity, Agent Ann M. Veneman, Defendant/Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Sarah M. Vogel, argued, Bismarck, ND (Beth A. Baumstark, Bismarck, ND; Allan Kanner and Conlee Whiteley, New Orleans, LA; Richard Quintus and Charles Darwin "Skip" Davidson, Little Rock, AR and Dale Reesman, Booneville, MO, on the brief), for appellants.
Eric D. Miller, argued, U.S. Dept. of Justice, Civil Division, Washington, DC (Michael Jay Singer, on the brief), for appellee.
Before WOLLMAN, RICHARD S. ARNOLD, and MURPHY, Circuit Judges.
The appellants entered into agreements with the United States Department of Agriculture (USDA) whereby the USDA agreed to write-down a portion of their debt in exchange for part of the appreciation in the value of their farms or ranches during the term of the agreement. Appellants initiated this declaratory judgment action, arguing that their obligation to pay ended with the term of the agreement and challenging the USDA's determination of the maximum amount collectible under the agreements. The district court1 granted the USDA's motion to dismiss. We affirm.
The Agricultural Credit Act of 1987, 101 Stat. 1679 (1988), allowed farmers and ranchers who were delinquent in payments on various agricultural loans to restructure their debts. The Act provided for write-down of secured debt to reflect the market value of the land securing the loan. In exchange for the write-down, the USDA required each of the appellants to sign a Shared Appreciation Agreement (Agreement). The Agreement provided in part:
As a condition to, and in consideration of, [USDA] writing down the above amounts and restructuring the loan, Borrower agrees to pay [USDA] an amount according to one of the following payment schedules:
1. Seventy-five (75) percent of any positive appreciation in the market value of the property securing the loan as described in the above security instrument(s) between the date of this Agreement and either the expiration date of this Agreement or the date the Borrower pays the loan in full, ceases farming or transfers title of the security, if such event occurs four (4) years or less from the date of this Agreement.
2. Fifty (50) percent of any positive appreciation in the market value of the property securing the loan above as described in the security instruments between the date of this Agreement and either the expiration date of this Agreement or the date Borrower pays the loan in full, ceases farming or transfers title of the security, if such event occurs after four (4) years but before the expiration date of this Agreement.
The amount of recapture by [USDA] will be based on the difference between the value of the security at the time of disposal or cessation by Borrower of farming and the value of the security at the time this Agreement is entered into. If the borrower violates the term of this agreement [USDA] will liquidate after the borrower has been notified of the right to appeal.
Appellants submitted affidavits asserting that the USDA county supervisors with whom they signed the agreements had informed them that, if they had not paid the loan in full, sold their land, or quit farming before the expiration of the agreement, they would owe nothing.
Appellants filed a declaratory judgment action, seeking a determination that they owed no money to the USDA under the Agreement or, alternatively, that they owed at most an amount specified on an exhibit attached to the Agreement. The district court granted the USDA's motion to dismiss for failure to state a claim on which relief could be granted. On appeal, appellants contend that the district court erred by considering matters outside the pleadings in resolving the USDA's motion to dismiss. In addition, the appellants contend that several issues of law cannot be resolved in the USDA's favor on the existing record.
We review de novo the district court's grant of a motion to dismiss, affirming only if, accepting all allegations as true, it appears that the plaintiff can prove no set of facts that would entitle him to relief. Schaller Tel. Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 740 (8th Cir.2002). If the district court considered "matters outside the pleading" in deciding a motion to dismiss, Rule 12(b)(6) requires that the motion "be treated as one for summary judgment." Fed.R.Civ.P. 12(b)(6); Casazza v. Kiser, 313 F.3d 414, 417-18 (8th Cir.2002).
Appellants contend that the district court erred by considering matters outside the pleadings and by refusing to convert the motion to one for summary judgment, thereby denying the appellants an opportunity to conduct discovery or present evidence. The government's Rule 12(b)(6) motion to dismiss was accompanied by a Rule 12(b)(1) motion to dismiss for lack of jurisdiction and six documentary exhibits. Exhibits 1 and 5 were the Agreement and the "Exhibit B" form, both of which were also attached to the appellants' complaint. In a case involving a contract, the court may examine the contract documents in deciding a motion to dismiss. See In re K-tel Int'l, Inc. Sec. Litig., 300 F.3d 881, 889 (8th Cir.2002); Rosenblum v. Travelbyus.com. Ltd., 299 F.3d 657, 661 (7th Cir.2002). Exhibit 2 was a copy of instructions to farmers regarding the Agreements that had been published in the Code of Federal Regulations. 7 C.F.R. Part 1951, Subpart S, Exh. A (1989). Exhibit 4 was a copy of a Department of Agriculture regulation. The district court may take judicial notice of public records and may thus consider them on a motion to dismiss. Faibisch v. Univ. of Minn., 304 F.3d 797, 802-03 (8th Cir.2002). Exhibit 6, an Administrative Notice issued by the USDA in June 1989, is a public record and was referenced by appellants' complaint. Accordingly, each of these exhibits properly could be considered by the district court in ruling on a motion to dismiss. See Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999).
Exhibit 3 was the affidavit of Arthur Hall, Director of Farm Loan Servicing and Property Management Division of the USDA's Farm Service Agency. Although primarily relevant to the USDA's Rule 12(b)(1) motion to dismiss for failure to exhaust administrative remedies, the affidavit contained a statement that recapture "is triggered by certain events including expiration of the [Agreement]." In addition, the USDA presented to the district court a 1989 Internal Revenue Service advisory letter concerning the tax treatment of the Agreement and suggesting that the borrower would owe the amount of write-down at the expiration of the Agreement. If considered for purposes of interpreting the Agreement, Exhibit 3 and the IRS advisory letter would constitute matters outside the pleadings and would require the district court to convert the motion to dismiss into one for summary judgment. However, "[t]he court has complete discretion to determine whether or not to accept any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion." 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1366, at 491 (2d ed.1990); Casazza, 313 F.3d at 417-18. Despite the district court's statement that it had considered the "entire file," these materials were irrelevant to its resolution of the merits of the motion. Consequently, we conclude that the district court did not err in resolving the USDA's motion as one to dismiss rather than as one for summary judgment.
"When the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals." Mobil Oil Exploration & Producing...
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