949 F.2d 1007 (8th Cir. 1991), 90-2721, Brown v. Armstrong

Docket Nº:90-2721.
Citation:949 F.2d 1007
Party Name:Walter Steven BROWN; Diane Kay Brown, Appellants, v. Gary C. ARMSTRONG; Robert E. Miller; Richard W. Sharp; Joann M. Muir; Gary Ludington; Chris Beyerhelm, (Defendants Below) United States of America, Appellee.
Case Date:November 25, 1991
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 1007

949 F.2d 1007 (8th Cir. 1991)

Walter Steven BROWN; Diane Kay Brown, Appellants,


Gary C. ARMSTRONG; Robert E. Miller; Richard W. Sharp;

Joann M. Muir; Gary Ludington; Chris Beyerhelm,

(Defendants Below)

United States of America, Appellee.

No. 90-2721.

United States Court of Appeals, Eighth Circuit

November 25, 1991

        Submitted May 14, 1991.

Page 1008

        Marilyn S. Jensen, Osceola, Iowa, argued, for appellants.

        Richard L. Richards, Des Moines, Iowa, argued (Gene W. Shephard and Richard L. Richards, on brief), for appellee.

        Before ARNOLD and LOKEN, Circuit Judges, and FLOYD R. GIBSON, Senior Circuit Judge.

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        LOKEN, Circuit Judge.

        Plaintiffs Walter S. and Diane K. Brown appeal a district court 1 order substituting the United States as sole defendant in their tort action against six employees of the Farmers Home Administration ("FmHA"), and dismissing the action without prejudice for failure to exhaust administrative remedies under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 2671-2680. The Browns argue that the district court erred in denying their post-removal motion to remand and in substituting the United States for the individual defendants, which has the effect of foreclosing their intentional tort claims. We affirm.

       I. Background

        The Browns received FmHA assistance throughout the 1980s in financing their farm operations. In 1985, FmHA helped the Browns refinance an outstanding bank loan. In 1989, the agency notified the Browns it was accelerating their loan. Without filing an administrative claim with the Department of Agriculture, the Browns commenced this action, pro se, in Iowa state court against FmHA employees Gary C. Armstrong, Robert E. Miller, Richard W. Sharp, JoAnn Muir, Gary Ludington, and Chris Beyerhelm.

        The complaint alleges that it is "brought in the alternative and/or in the event the Defendants ... were acting outside the scope of their office and employment ... in undertaking such actions or inactions." The "actions or inactions" alleged include improper documentation of the Browns' FmHA file, broken promises to lend money and to resolve disputes, inducing the Browns to overextend themselves, lying throughout the FmHA appeals process, attempting to put the Browns out of the farming business, and misrepresenting the value of farmland the Browns purchased from another FmHA borrower. The seven enumerated causes of action sound in tort.

        The United States Attorney for the Southern District of Iowa appeared on behalf of the individual defendants and removed the case to federal court. After the Browns' motion to remand was denied, the U.S. Attorney certified that "the individual defendants ... were acting within the scope of their employment as employees of the United States of America at the time of the incidents [alleged in the complaint]," 2 and moved to substitute the United States as defendant, pursuant to § 2679(d)(1), and to dismiss the complaint for failure to exhaust FTCA remedies, as required by § 2675(a).

        The district court granted the government's motion and denied the Browns' motion to strike the certification. The court then dismissed the complaint with prejudice against the individual employee defendants 3 and dismissed the complaint against the United States without prejudice. The Browns appealed and obtained the pro bono services of appellate counsel, who focuses our attention upon the issues addressed below.

       II. Removal

        The Browns argue that the district court erred in denying their motion to remand for two reasons. First, noting that they filed for voluntary bankruptcy shortly after commencing this action, the Browns contend that removal violated the Bankruptcy Code's automatic stay of "the commencement or continuation ... of a judicial ... proceeding against the debtor." 11 U.S.C. § 362(a)(1) (1988) (emphasis added). However, as the plain language of the statute suggests, and as no less than six circuits have concluded, the Code's automatic stay does not apply to judicial proceedings,

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such as this suit, that were initiated by the debtor. See Merchants & Farmers Bank v. Hill, 122 B.R. 539, 541 (E.D.Ark.1990), and cases cited. As the court said in Martin-Trigona v. Champion Fed. Sav. & Loan Ass'n, 892 F.2d 575, 577 (7th Cir.1989):

The fundamental purpose of bankruptcy ... is to prevent creditors from stealing a march on each other ... and the automatic stay is essential to accomplishing this purpose. There is, in contrast, no policy of preventing persons whom the bankrupt has sued from protecting their legal rights.

        Second, the Browns argue that the petition for removal was ineffective because it was made prior to the U.S. Attorney's certification as to scope of employment. Had the government purported to remove under § 2679(d)(2) of the FTCA, this argument might have merit. However, the removal petition was expressly based upon 28 U.S.C. § 1442(a)(1), which generally permits removal of an action against "[a]ny officer of the United States ... for any act under color of such office." See Mesa v. California, 489 U.S. 121, 109 S.Ct. 959, 103 L.Ed.2d 99 (1989). Removal under § 1442(a)(1) does not require a § 2679(d) certification...

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