829 F.2d 671 (8th Cir. 1987), 86-5119, Arcoren v. Peters
|Citation:||829 F.2d 671|
|Party Name:||Terry L. ARCOREN, Appellant, v. Wenton PETERS and John Schooler, Appellees.|
|Case Date:||September 25, 1987|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
Submitted May 12, 1987.
B.J. Jones, Mission, S.D., for appellant.
James M. Spears, Dept. of Justice, Washington, D.C., for appellees.
Before LAY, Chief Judge, HEANEY, ROSS, [*] McMILLIAN, ARNOLD, JOHN R. GIBSON, FAGG, BOWMAN, WOLLMAN and MAGILL, Circuit Judges, En Banc.
JOHN R. GIBSON, Circuit Judge.
Two Farmers Home Administration (FmHA) officials repossessed and sold Terry Arcoren's cattle, in which FmHA held a security interest, without giving him prior notice or an opportunity to be heard. Arcoren brought a Bivens-style action against the two FmHA officials under the fifth amendment, alleging a due process violation. See Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). The central issue in this case is whether it was clearly established in 1980 that the FmHA officials could not, consistent with the fifth amendment, use the self-help remedy permitted under South Dakota's Uniform Commercial Code, S.D. Codified Laws Ann. Sec. 57A-9-503 (1980), in repossessing Arcoren's cattle when they believed he was in default on his FmHA loan. The district court 1 held that Arcoren's constitutional right to notice and a hearing before the cattle were repossessed and sold was not clearly established and therefore dismissed the action against the government officials on the basis of qualified immunity. A panel of this court reversed the district court's dismissal, Arcoren v. Peters, 811 F.2d 392 (1987), and we granted a rehearing en banc. We now vacate the panel's decision and affirm the judgment of the district court.
Arcoren received two FmHA loans, one in 1976 and one in 1978, totaling $18,800. He used part of the proceeds to purchase cattle, and he signed a security agreement giving FmHA a security interest in the livestock. In the winter months, Arcoren's cattle were located on either the trust land belonging to his father and his uncle, John Arcoren, Sr., or on land belonging to Richard Hand, his neighbor. In March 1980, Hand and Arcoren's uncle visited the office of Wenton Peters--a County Supervisor for FmHA who had previously been in contact with the plaintiff on other matters concerning his loan--and complained to Peters that they were providing all of the care for Arcoren's cattle and had been doing so for some months. They told Peters that they would turn Arcoren's cattle out onto the road if FmHA did not take some action. About a week later they visited Peters' office again, and told him that they had placed the cattle in a corral for FmHA to repossess. That day, Peters contacted his supervisor, John Schooler, an FmHA District Director, and Schooler agreed that FmHA should repossess and sell Arcoren's
cattle. 2 They did not make any attempt to verify with Arcoren the allegations made by Hand and John Arcoren, Sr. They repossessed Arcoren's cattle on March 27, 1980, and the cattle were sold on March 28. Arcoren first learned of the repossession and sale of the cattle on April 1, when he received from the Winner Livestock Auction Company a copy of a bill of sale for twenty head of cattle.
Arcoren then brought this Bivens action and the district court dismissed for failure to state a claim, concluding that the availability of the FmHA appeals process supplanted any constitutionally based remedy. On appeal, we held that the administrative appeals process does not defeat an action brought directly under the fifth amendment. Arcoren v. Farmers Home Admin., 770 F.2d 137 (8th Cir.1985). We reversed and remanded for further consideration of whether Arcoren could establish a Bivens action. Id. at 141. On remand, the district court concluded that the claims were barred by qualified immunity and dismissed the action. Arcoren v. Peters, 627 F.Supp. 1513 (D.S.D.1986). The only issue before us on this appeal is the propriety of the ruling on qualified immunity.
Qualified immunity accommodates competing social interests by ensuring that "plainly incompetent" officials or officials who "knowingly violate the law" are held accountable, while officials who reasonably exercise their discretion may do so without fear of being sued. See Malley v. Briggs, 475 U.S. 335, 106 S.Ct. 1092, 1096, 89 L.Ed.2d 271 (1986); Harlow v. Fitzgerald, 457 U.S. 800, 813-14, 102 S.Ct. 2727, 2735-36, 73 L.Ed. 396 (1982). When performing a discretionary function, a government official is entitled to qualified immunity from suit if, at the time of his conduct, it was not "clearly established" that his actions would violate the plaintiff's constitutional or statutory rights. Harlow, 457 U.S. at 818-19, 102 S.Ct. at 2738-39. As the district court aptly noted, determining what constitutes clearly established law is no simple task. See Arcoren, 627 F.Supp. at 1515-16.
The qualified immunity defense fails when the official acts in a manner that disregards undisputed constitutional guarantees. See Wood v. Strickland, 420 U.S. 308, 321-22, 95 S.Ct. 992, 1000-01, 43 L.Ed.2d 214 (1975). For this reason, we have held that public officials must "apply well-developed legal principles in carrying out their duties." Lappe v. Loeffelholz, 815 F.2d 1173, 1177 (8th Cir.1987). An official is not expected to anticipate the law's development or its possible application to a unique situation. See Harlow, 457 U.S. at 818, 102 S.Ct. at 2738; Wood, 420 U.S. at 319-20, 95 S.Ct. at 999-1000; Lappe, 815 F.2d at 1176. Such a requirement would " 'dampen the ardor of all but the most resolute, or the most irresponsible [public officials], in the unflinching discharge of their duties.' " Harlow at 814, 102 S.Ct. at 2736 (quoting Gregoire v. Biddle, 177 F.2d 579, 581 (2d Cir.1949), cert. denied, 339 U.S. 949, 70 S.Ct. 803, 94 L.Ed. 1363 (1950)). Moreover, the official could not have "known" that his conduct would violate the law unless that conduct had been identified as unlawful. Id. Thus, an official does not forfeit his immunity because he "gambled and lost on the resolution of [an] open question." Mitchell v. Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 2820, 86 L.Ed.2d 411 (1985).
Whether Arcoren had a clearly established constitutional right to prior notice and a hearing turns in large part on whether Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct.
1983, 32 L.Ed.2d 556 (1972), is directly applicable to the facts before us. In Fuentes, the Court held the prejudgment replevin provisions of Florida and Pennsylvania statutes invalid under the fourteenth amendment because they permitted a deprivation of property without an opportunity for a pre-seizure hearing. The challenged statutes allowed any person who claimed that his goods were being wrongfully detained to obtain a writ of replevin from a court clerk simply by filing a complaint and a security bond. The issuance of the writ allowed the creditor to invoke state power to effect a prejudgment seizure. The writ directed the state officer to seize the property, and allowed him to use force when necessary. 3 Concluding that due process requires "an opportunity for a hearing before the State authorizes its agents to seize property in the possession of a person upon the application of another," id. at 80, 92 S.Ct. at 1994, the Court held the Florida and Pennsylvania replevin statutes unconstitutional. Id. at 96, 92 S.Ct. at 2002.
Immediately after Fuentes, the constitutionality of self-help repossession under U.C.C. Sec. 9-503--as used here by the FmHA--came into question. See, e.g., Brodsky, Constitutionality of Self-Help Repossession Under the Uniform Commercial Code: The Eighth and Ninth Circuits Speak, 19 S.D.L.Rev. 295 (1973). Since then, however, the courts have almost uniformly upheld statutes allowing a creditor to proceed by self-help. 4 In Bichel Optical Laboratories, Inc. v. Marquette National Bank of Minneapolis, 487 F.2d 906 (8th Cir.1973), this court distinguished the state action involved in the Fuentes replevin procedure from the U.C.C.'s self-help remedy, which "involve[s] only private actions arising out of the express written agreements between the parties." Id. at 907; see also Adams v. Southern Cal. First Nat'l Bank, 492 F.2d 324 (9th Cir.1973), cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282 (1974). Thus, if a private creditor had financed Arcoren's loan, the creditor would have been entitled under S.D. Codified Laws Ann. Sec. 57A-9-503, to take possession of the property without notice or a hearing in the event of default, and Arcoren would have no claim that his constitutional rights were violated. 5 Arcoren asserts, however, that because the FmHA is a governmental agency, it could not rely on the self-help provisions of the U.C.C. He argues that the FmHA had additional responsibilities under the fifth amendment and could not operate in the same manner as a commercial lender. We reject this argument. We do not believe that the cases clearly establish this proposition even as of today, much less as of 1980.
In 1980, when the repossession occurred, there was strong authority to support the FmHA officials' position that when the FmHA acted as a lender, it acted in a commercial rather than a sovereign capacity. In United States v. Kimbell Foods, Inc., 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979), a case involving the relative priorities of private liens and government liens stemming from federal lending programs, the Court held that government security interests are controlled by the commercial law of each state. The Court stated that the FmHA does not require the special priority of a sovereign power...
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