978 F.2d 1244 (Fed. Cir. 1992), 92-7013, Travelstead v. Derwinski

Docket Nº:92-7013.
Citation:978 F.2d 1244
Party Name:Charles W. TRAVELSTEAD, Claimant-Appellee, v. Edward J. DERWINSKI, Secretary, of Veterans Affairs, Respondent-Appellant.
Case Date:November 03, 1992
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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978 F.2d 1244 (Fed. Cir. 1992)

Charles W. TRAVELSTEAD, Claimant-Appellee,


Edward J. DERWINSKI, Secretary, of Veterans Affairs,


No. 92-7013.

United States Court of Appeals, Federal Circuit

November 3, 1992

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Stuart Cane, Wilmer, Cutler & Pickering, of Washington, D.C., argued for claimant-appellee. With him on the brief was Keith D. Snyder, of Brookeville, Md.

John R. Lapiana, Attorney, Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., argued for respondent-appellant. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen. and David M. Cohen, Director.

Before NIES, Chief Judge, MAYER and LOURIE, Circuit Judges.

LOURIE, Circuit Judge.

The government appeals from the July 3, 1991 decision of the Court of Veterans Appeals (CVA), Appeal No. 89-5, reversing the decision of the Board of Veterans' Appeals, which affirmed the Veterans Administration's (VA's) decision denying eligibility for retroactive release from liability on a VA-guaranteed home loan. The court remanded the case for a new evaluation. 1 Vet.App. 344. We find that we have jurisdiction to decide this appeal and we affirm on the merits.


In December 1980, Charles W. Travelstead purchased a home with money advanced by a private lender. The loan was secured in part by a VA home loan guaranty in the amount of $27,500. In 1984, Travelstead sold the home to Hollis Copeland. As stated in the standard instructions printed in every guaranty application, such sale did not release Travelstead from liability to the VA if Copeland defaulted. Application for release must have been made to the Secretary and evaluated under standards set forth at 38 U.S.C.S. § 3713(a) (Law Co-op. Supp.1992) 1 Travelstead made no such application.

In February of 1987, the VA received notices of foreclosure and default from the private lender. It promptly informed Travelstead that he would be liable to the government if the VA paid a claim under its guaranty. In November of 1987, a foreclosure and sale of the house left a deficiency of $20,145.74. Pursuant to its guaranty, the VA paid the private lender this amount and then demanded indemnity from Travelstead.

In November of 1988, Travelstead applied to the VA for a waiver of indebtedness under 38 U.S.C.S. § 5302(b) (Law Co-op. Supp.1992) (formerly 38 U.S.C.

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§ 3102(b)) 2. This statute permits the VA to "waive payment of an indebtedness" with respect to a guaranteed loan "where the Administrator determines that collection of such indebtedness would be against equity and good conscience." The application was denied by the Veterans Affairs Committee on Waivers and Compromises; the denial was affirmed by both the Board and the court. 3 Because the court's § 5302 ruling was not appealed, this waiver provision is not before us.

The statutory basis for Travelstead's entitlement to a waiver then shifted from § 5302 to 38 U.S.C.S. § 3713(b) (Law Co-op. Supp.1992) 4 when the Court of Veterans Appeals raised sua sponte the applicability of this statute, which provides for a retroactive release from liability. To justify its consideration of this issue, the court cited its jurisdictional statute, 38 U.S.C. § 4052(b) (1988), 5 which states that "[r]eview in the Court shall be on the record of proceedings before the Administrator and the Board." Because the record showed that a VA examiner had considered Travelstead (apparently without request) for a retroactive release, the court reviewed his entitlement to such release as part of its plenary review of the administrative record.

The court found the procedure applied by the VA in evaluating Travelstead's eligibility for a retroactive release to be contrary to the express language of the statute. The procedure was evidenced by a document styled "Check Sheet--Release from Liability Under Section 1817(b) 38 U.S.C.," in which a VA examiner marked a box indicating that Copeland had "defaulted during 1st 12 mos; not considered satisfactory risk." The check sheet contained no other possible reasons for denial of release, implying that the post-transfer default was all that was considered. The court found this evaluation inadequate, stating that:

The law requires the VA to look at the facts as they existed at the time of transfer, not after transfer, in order to determine whether a veteran would have been entitled to a release from liability had he applied for it. We trust that the VA will change this form to eliminate the legally incorrect language and that determinations as to eligibility for a release of liability under a guaranty will thereafter be made in accordance with the law.

Accordingly, the court remanded to the Board for a "proper adjudication of [Travelstead]'s entitlement to a release of liability." The government appeals.


  1. Does the "finality rule" bar this court from reviewing a decision of the Court of Veterans Appeals which: 1) overturns the Secretary's established standard for denying a retroactive release; and 2) remands to the Board for application of the proper standard?

  2. May the VA rely solely upon the post-transfer payment record of a transferee who has defaulted in determining that a veteran is not eligible for a retroactive release under 38 U.S.C. § 3713(b)?

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At oral argument, we sua sponte questioned our jurisdiction over the government's appeal and requested supplemental briefing on the subject. Having reviewed the parties' submissions on this question, we find that we do have jurisdiction despite the fact that the court did not finally adjudicate Travelstead's entitlement to a retroactive waiver.

We have previously held that an order remanding a matter to an administrative agency for further findings and proceedings is not a final appealable order. Cabot Corp. v. United States, 788 F.2d 1539, 1542-43 (Fed.Cir.1986) (finding no jurisdiction over agency appeal of order of the Court of International Trade remanding to the International Trade Administration). If one were to substitute the Court of Veterans Appeals for the Court of International Trade, and the Board of Veterans' Appeals for the International Trade Administration, then the procedural posture of this case is similar to that of Cabot Corp. 6 Furthermore, our Cabot Corp. analysis was general and uncategorical, suggesting that appeals of such orders would vitiate the important interests served by the final judgment rule. 7 We noted that this rule "helps preserve the respect due trial judges by minimizing appellate-court interference...." Cabot Corp. 788 F.2d at 1542, (citing Flanagan v. United States, 465 U.S. 259, 263-64, 104 S.Ct. 1051, 1053-54, 79 L.Ed.2d 288 (1984)). This rule also saves "the expense and delays of repeated appeals in the same suit." Woodard v. Sage Products, Inc., 818 F.2d 841, 845, 2 USPQ2d 1649, 1651 (Fed.Cir.1987) (in banc) (citing McLish v. Roff, 141 U.S. 661, 666, 12 S.Ct. 118, 120, 35 L.Ed. 893 (1891)). We add to this our preference for review of a fully-developed record in contrast to determination of legal questions in the abstract.

Nevertheless, the subsequent decision of the United States Supreme Court in Sullivan v. Finkelstein, 496 U.S. 617, 110 S.Ct. 2658, 110 L.Ed.2d 563 (1990), requires us to decide this appeal at the present stage of proceedings. The remand order in Finkelstein was rendered under circumstances similar to those present here. Mrs. Finkelstein's application for widow's disability benefits under 42 U.S.C. § 423 was denied by the Social Security Administration and appealed to an administrative judge. The Social Security Act makes administrative adjudication decisions subject to review in the United States District Courts. 42 U.S.C. § 405(g) (1988). 8 Like the Court of

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Veterans Appeals here, the district court found the Secretary's procedure for determining entitlement contrary to the statute, and remanded for a redetermination under the proper legal standard. 9 The Supreme Court held this order to be a final "judgment" under § 405(g) appealable by the Secretary under 28 U.S.C. § 1291. Justice White reasoned that:

What happened in this case is that the District Court entered "a judgment ... reversing the decision of the Secretary, with ... remanding the cause for a rehearing." The District Court's remand order was unquestionably a "judgment," as it terminated the civil action challenging the Secretary's final determination that respondent was not entitled to benefits, set aside that determination and finally decided that the Secretary could not follow his own regulations in considering the disability issue. Furthermore, should the Secretary on remand undertake the inquiry mandated by the District Court and award benefits, there would be grave doubt, as the Court of Appeals recognized, whether he could appeal his own order.

496 U.S. at 625, 110 S.Ct. at 2664.

Although the specific holding of Finkelstein is limited to appeals under § 405(g) of the Social Security Act, we do not find its precedential effect so limited. Cf. Monongahela Valley Hosp., Inc. v. Sullivan, 945 F.2d 576, 586 (3d Cir.1991) (following Finkelstein to find appealable a remand to Health and Human Services, ordered on judicial review under 42 U.S.C. § 1395 oo(f)(1) of a Medicare reimbursement determination). If, under the statute governing the jurisdiction and practice of the Court of Veterans Appeals, its order in this case "reversing the decision of the Secretary," and deciding "that the Secretary could not follow his own regulations" "terminated the [ ] action challenging the Secretary's final determination," then it is final and appealable under Finkelstein. Monongahela Valley Hosp., 945 F.2d at 587.

We review "decision[s] of the United States Court of Veterans Appeals" that have been "entered in a case." 38 U.S.C.S. § 7292(a)(2) (Law Co-op. Supp.1992). The court is itself required, "to...

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