Allison v. Block, 83-1194

Decision Date28 December 1983
Docket NumberNo. 83-1194,83-1194
PartiesRoger L. ALLISON and Shirley A. Allison, Appellees, v. John R. BLOCK, U.S. Department of Agriculture; Allen Brock, Acting Assistant Administrator of Farmer Programs; Charles Shuman; John O. Foster; William T. Shay; and David E. Cox, Appellants.
CourtU.S. Court of Appeals — Eighth Circuit

Sarah M. Vogel, Robert Vogel, Grand Forks, N.D., William R. King, Lipshutz, Frankel, Greenblatt, King & Cohen, Atlanta, Ga., Burt Neuborne, American Civil Liberties Union Foundation, New York City, Allan Kanner, Philadelphia, Pa., for amicus curiae.

Williams, Reesman & Tate, Dale Reesman, Boonville, Mo., for Gulf & Great Plains Legal Foundation of America.

B. Luann Ridgeway, Kansas City, Mo., for appellees.

Robert G. Ulrich, U.S. Atty., Mark J. Zimmermann, Asst. U.S. Atty., Kansas City, Mo., for appellants.

Before LAY, Chief Judge, and HEANEY and ARNOLD, Circuit Judges.

HEANEY, Circuit Judge.

In 1978, Congress enacted 7 U.S.C. Sec. 1981a (1982), an amendment to the Consolidated Farm and Rural Development Act of 1961 (CFRDA), 7 U.S.C. Secs. 1921 et seq. (1982). Two years thereafter, Roger and Shirley Allison defaulted on farm loans granted to them by the Farmers Home Administration (FmHA) of the United States Department of Agriculture (USDA) under the CFRDA. The Allisons brought suit in the United States District Court for the Western District of Missouri seeking consideration of their eligibility for a section 1981a deferral on the foreclosure of their farm by the Secretary of Agriculture (Secretary). The district court enjoined foreclosure on the Allisons' farm until the Secretary complied with the letter and spirit of section 1981a. Allison v. Block, 556 F.Supp. 400 (W.D.Mo.1982). We affirm.

I BACKGROUND

The Allisons own and operate a farm in Howard County, Missouri. On December 20, 1977, they obtained FmHA financing under the CFRDA in the amount of $103,800, secured by a deed of trust on their realty. Because of adverse weather conditions in 1977 and low grain and livestock prices in 1978, they failed to turn a profit on the operation of the farm during those years. On December 22, 1978, Roger Allison applied for an FmHA economic emergency loan. The FmHA Howard County Committee denied the application. On appeal, the State Director of the FmHA approved a $29,000 operating loan but denied refinancing assistance. On June 26, 1979, the Assistant Administrator of the FmHA reversed the State Director's decision insofar as it denied Allison's reorganization loan request, holding that the denial "was unreasonable because [he] met the eligibility requirements * * * [and] the proposed Farm and Home Plan submitted by Allison on April 9, 1979, showed reasonable repayment ability." Allison v. Block, supra, 556 F.Supp. at 402. On August 24, 1979, the Allisons received a $190,000 reorganization loan, secured by a deed of trust on their farm. On April 28, 1980, they received a $29,750 operating loan, secured by a deed of trust and liens on their equipment, livestock, supplies, and inventory.

Adverse weather and economic conditions continued to hamper the Allisons' farming operations. In 1979, a dry planting season followed by an early frost reduced their crop yield significantly. In 1980, a severe drought contributed to an eighty-seven percent reduction in corn yield and a sixty-eight percent reduction in bean yield. Following these losses, the Allisons became delinquent on their FmHA loan payments.

On November 6, 1980, an FmHA County Supervisor advised Roger Allison to sell the Allisons' breeding stock and equipment in order to make payments on their loans. Allison complied and, in the spring of 1981, the FmHA applied the proceeds of these sales to reduce the delinquency on the Allisons' April 28, 1980, operating loan.

On May 14, 1981, the FmHA accelerated the Allisons' indebtedness, as to both principal and interest, for failure to make timely payments and failure to pay real estate taxes. It notified them that their loans, which were classified as emergency (EM) and economic emergency (EE) loans, would be foreclosed unless the total indebtedness was paid by June 15, 1981. The Allisons appealed the acceleration notice to the FmHA District Director and Assistant Administrator; both upheld the decision. The Allisons then brought their final administrative appeal before the Administrator of the FmHA (Administrator). Pending this appeal, Roger Allison read in a farming magazine about possible loan deferral relief under federal statute and requested such relief from the Administrator. On August 10, 1982, the Program Assistant to the Administrator denied the Allisons' appeal, rejecting the alternatives of consolidation, rescheduling, reamortization, or deferral because the Allisons "did not have the potential to generate sufficient farm income to repay family living and farm operating expenses plus debt service even if a deferral had been granted." Allison v. Block, supra, 556 F.Supp. at 403 (quoting statement from FmHA Program Assistant).

On October 27, 1982, the Allisons filed the present action requesting declaratory and injunctive relief from the acceleration of their loans and foreclosure on their property. They alleged that the Secretary's failure to promulgate adequate procedural and substantive regulations creating a program for loan deferrals under 7 U.S.C. Sec. 1981a (1982) violated that statute, amounted to a denial of equal protection and due process, and constituted an abuse of administrative discretion. The district court agreed with the Allisons that the Secretary violated section 1981a and abused his discretion in failing to give them proper notice of the availability of deferral possibilities and in neglecting to create a procedure under which they could apply for administrative consideration of such deferral relief. The court enjoined the Secretary from foreclosing on the Allisons' property "until such time as the necessary compliance with 7 U.S.C. Sec. 1981a * * * is made." Allison v. Block, supra, 556 F.Supp. at 406.

II STATUTORY REQUIREMENTS

On appeal, the Secretary asserts that the district court erred in requiring special procedures or standards to be followed by virtue of section 1981a with regard to FmHA loan servicing and foreclosure activities. 1 The gist of his argument is that section 1981a merely created an additional power to be wielded at the discretion of the agency, or placed in the Secretary's "back pocket" for safekeeping. We reject this argument and affirm the district court. The full text of section 1981a is as follows:

In addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferral of principal and interest on any outstanding loan made, insured, or held by the Secretary under this chapter, or under the provisions of any other law administered by the Farmers Home Administration, and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrower's control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower. The Secretary may permit interest that accrues during the deferral period on any loan deferred under this section to bear no interest during or after such period: Provided, That if the security instrument securing such loan is foreclosed such interest as is included in the purchase price at such foreclosure shall become part of the principal and draw interest from the date of foreclosure at the rate prescribed by law.

7 U.S.C. Sec. 1981a (1982).

The Secretary would have us hold that this statute requires no adjudicatory or regulatory administrative action because it creates no administrative procedural requirements nor any substantive right to relief from loan acceleration or foreclosure. We refuse to so hold. In our view, section 1981a creates a right to have certain uniform procedures established and requires the Secretary to develop substantive standards applicable to deferral applications. 2

A. Procedural Requirements

Section 1981a expressly conditions the Secretary's authority to grant relief to CFRDA borrowers upon two actions by the borrower: (1) a request for such relief; and (2) a showing that, because of circumstances beyond the borrower's control, he or she is temporarily unable to continue payments of principal and interest without unduly impairing his or her standard of living. Following such a request and showing, the Secretary "may permit" deferral of payments of principal and interest and "may forego" foreclosure.

We agree with several federal district courts which have held that, reading the statute as a whole and giving meaning to each word therein, Congress intended the Secretary to give notice of the availability of section 1981a relief to all CFRDA borrowers subject to loan acceleration or foreclosure and to establish a uniform procedure under which borrowers can make the requisite request and prima facie showing. See, e.g., Jacoby v. Schuman, 568 F.Supp. 843, 846 (E.D.Mo.1983); Matzke v. Block, 564 F.Supp. 1157, 1166-1167 (D.Kan.1983); Coleman v. Block, 562 F.Supp. 1353, 1361-1362 (D.N.D.1983); Allison v. Block, supra, 556 F.Supp. at 405-406; Curry v. Block, 541 F.Supp. 506, 523-526 (S.D.Ga.1982). The requirement of a request by the borrower prior to consideration for section 1981a relief presupposes that the borrower has knowledge of the availability of such relief. Notice to the borrower is therefore indispensable. In like manner, the requirement of a showing of prima facie eligibility is necessarily premised upon the expectation that some procedure will be provided under which the borrower may make the requisite showing....

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37 cases
  • Coleman v. Block
    • United States
    • U.S. District Court — District of North Dakota
    • February 17, 1984
    ...established and requires the Secretary to develop substantive standards applicable to deferral applications." Allison v. Block, 723 F.2d 631 at 635, 634 (8th Cir.1983). The ruling in Allison is controlling law in this case. Therefore, the Court rejects the government's arguments that 1981a ......
  • Johnson v. U.S. Dept. of Agriculture
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • June 18, 1984
    ...and then used those bad credit histories as a reason to deny the moratorium once the situation had gotten crucial. Cf. Allison v. Block, 723 F.2d 631 (8th Cir.1983) (Secretary's discretion under CFRDA should be governed by substantive regulations).4 For example, Mrs. Johnson was notified of......
  • Coleman v. Block
    • United States
    • U.S. District Court — District of South Dakota
    • June 2, 1987
    ...mandated by the statute. This position is correct. See Curry v. Block, 738 F.2d 1556, 1561 (11th Cir.1984), citing Allison v. Block, 723 F.2d 631, 637 (8th Cir.1983). In adopting the ten additional requirements, then, the agency was not acting "in excess of statutory jurisdiction." An order......
  • Zajac v. Federal Land Bank of St. Paul
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • July 31, 1990
    ...I do not agree. To the contrary, I believe that the past cases of this Circuit support the right to equitable relief. In Allison v. Block, 723 F.2d 631 (8th Cir.1983), we held that farmers were entitled to declaratory and injunctive relief against the Secretary of Agriculture and other offi......
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1 books & journal articles
  • The 75 Billion Dollar Question: Why Is HAMP Not an Entitlement Program?
    • United States
    • Iowa Law Review No. 97-4, May 2012
    • May 1, 2012
    ...for a Preliminary Injunction, supra note 72; see also Johnson v. U.S. Dep’t of Agric., 734 F.2d 774 (11th Cir. 1984); Allison v. Block, 723 F.2d 631 (8th Cir. 1983); Gamradt v. Block, 581 F. Supp. 122 (D. Minn. 1983); Coleman v. Block, 562 F. Supp. 1353 (D.N.D. 1983). 77. Allison , 723 F.2d......

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