67 F.3d 567 (5th Cir. 1995), 94-41204, Saraw Partnership v. United States

Docket Nº:94-41204.
Citation:67 F.3d 567
Party Name:SARAW PARTNERSHIP, et al., Plaintiffs-Appellants, v. UNITED STATES of America, et al., Defendants-Appellees.
Case Date:October 31, 1995
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 567

67 F.3d 567 (5th Cir. 1995)

SARAW PARTNERSHIP, et al., Plaintiffs-Appellants,


UNITED STATES of America, et al., Defendants-Appellees.

No. 94-41204.

United States Court of Appeals, Fifth Circuit

October 31, 1995

Page 568

Scot G. Doyen, Kyle Wheelus, Jr., Beaumont, TX, for appellants.

O. Kenneth Dodd, Asst. U.S. Atty., Mike Bradford, U.S. Atty, Beaumont, TX, for U.S.

Appeal from the United States District Court for the Eastern District of Texas.


REYNALDO G. GARZA, Circuit Judge:


Saraw Partnership, Wilburn A. Roberts, Shirley J. Roberts, and Robert Schlegel (collectively Saraw or the partnership) sued the United States and Citizens and Southern National Bank (the bank) pursuant to the Federal Tort Claims Act (FTCA) for alleged mishandling of a Veterans' Administration (VA) loan. 1 The partnership was formed in 1984 for the purpose of acquiring residential real property which was in the process of being foreclosed on or had already been foreclosed. Saraw would improve the property for rental use and eventual sale. In the same year that it was formed, Saraw purchased parcels of real estate from the United States, acting through the VA. Saraw executed nine promissory notes in favor of the VA, each of which was given an internal loan number by VA.

This dispute centers on the purchase of a property in Jefferson County, Texas. The VA financed the purchase of the property and assigned it Loan # 28541. Saraw was to make monthly loan payments to VA and VA was to send a payment coupon on each loan. The payment coupon contained information such as the payment due date, the amount due, and the VA loan number. The VA sent Saraw payment coupons for all of the loans except Loan # 28541. This failure to send payment coupons for Loan # 28541 apparently was caused by an erroneous computer data entry made by one of the VA's employees. Saraw notified the VA that it did not have a payment coupon for the loan and sent the payment for Loan # 28541 with other

Page 569

payments, designating the checks for Loan # 28541.

Saraw alleged that the payments it sent for Loan # 28541 were applied to their various other loans, allowing Loan # 28541 to fall into arrears. The bank was not permitted to credit loan payments without payment coupons attached. As a result, the VA twice foreclosed on the property securing Loan # 28541, placed a cloud on Saraw's title, continued to demand payments for Loan # 28541 and refused to account for and return Saraw's prior payments. During the period 1987-1989, Saraw continued to make payments on Loan # 28541 while it worked with VA to resolve the dispute. VA admitted by letter that the problem arose because of erroneous data entry and VA's failure to correct that erroneous entry.

Saraw settled its claim against the bank but pursued its action against the VA, claiming that the VA acted negligently in the handling of Saraw's loans. The parties consented to have a magistrate judge conduct the proceedings. Several pleadings followed. The magistrate judge granted...

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