Coleman v. Block

• Decision Date: 05 May 1983
• Docket Number: No. A1-83-47.,A1-83-47.
• Citation: 562 F. Supp. 1353
• Parties: Dwight COLEMAN, Lester Crowsheart, Sharon Crowsheart, Russel Folmer, Anna Mae Folmer, George Hatfield, June Hatfield, Donna McCabe, Diane McCabe, on behalf of themselves and others similarly situated, v. John R. BLOCK, Secretary of Agriculture, Charles W. Shuman, Administrator of the Farmers Home Administration, Ralph W. Leet, State Director of the Farmers Home Administration; Harold T. Aasmundstad, Glen W. Binegar, Allen G. Drege, Dennis W. Larson, Odell O. Ottmar, and Joseph J. Schneider, as District Directors of the Farmers Home Administration of North Dakota; and Samuel Delvo, Lorace Hakanson, Larry Leier, Charles Schaefer and James Well, as County Supervisors of the Farmers Home Administration of North Dakota.
• Court: U.S. District Court — District of South Dakota

562 F. Supp. 1353

Dwight COLEMAN, Lester Crowsheart, Sharon Crowsheart, Russel Folmer, Anna Mae Folmer, George Hatfield, June Hatfield, Donna McCabe, Diane McCabe, on behalf of themselves and others similarly situated, v. John R. BLOCK, Secretary of Agriculture, Charles W. Shuman, Administrator of the Farmers Home Administration, Ralph W. Leet, State Director of the Farmers Home Administration; Harold T. Aasmundstad, Glen W. Binegar, Allen G. Drege, Dennis W. Larson, Odell O. Ottmar, and Joseph J. Schneider, as District Directors of the Farmers Home Administration of North Dakota; and Samuel Delvo, Lorace Hakanson, Larry Leier, Charles Schaefer and James Well, as County Supervisors of the Farmers Home Administration of North Dakota.

No. A1-83-47.

United States District Court, D. North Dakota, Southwestern Division.

May 5, 1983.

Gary Annear, Asst. U.S. Atty., Fargo, N.D., for defendants.

Sarah M. Vogel, Grand Forks, N.D., William R. King, Atlanta, Ga., Burt Neuborne, A.C.L.U., New York City, Allan Kanner, Philadelphia, Pa., for plaintiffs.

ORDER

VAN SICKLE, District Judge.

In this litigation, plaintiffs seek to represent North Dakota farmers who now hold or will hold farmer program loans from the Farmers Home Administration (FmHA). Plaintiffs are suing several named officials of the FmHA alleging that they have violated constitutional, statutory, and regulatory requirements. Among other things, they allege that FmHA has refused to allow the farmers' applications for deferment of loans under 7 U.S.C. § 1981a, terminated funds to farmers for necessary living and operating expenses, and subjected farmers to a biased and unconstitutional appeals process.

In the motions currently before the court, plaintiffs move for class certification and a preliminary injunction. Defendants resist these motions and in turn move for dismissal under Fed.R.Civ.P. 12 or summary judgment. This court must first consider procedural objections that defendants raise concerning exhaustion of remedies and liability to suit and then turn to the motions for class certification and preliminary injunction.

I. Have plaintiffs exhausted their administrative remedies?

Defendants argue that plaintiffs have failed to exhaust their administrative remedies and hence cannot appeal to this court. They point out that under 7 C.F.R. § 1900.51 et seq. plaintiffs have available three tiers of administrative review of FmHA's decision to accelerate and then foreclose a loan. However, defendants fail to note that the regulations they rely on were overhauled, effective April 1, 1982, to streamline FmHA appeals. The new regulations eliminate some of the steps required by the old.

Given these new regulations, the court must determine (1) whether the defendants have failed to exhaust the remedies available and if so, (2) whether it is necessary for them to exhaust those remedies under the circumstances of this suit.

As to the first determination, the plaintiffs have presented facts which they say show that they exhausted the required remedies, thereby shifting the burden to the defendant to show nonexhaustion. The defendants have not met this burden: quite simply, they have failed to specify which of the named plaintiffs did not exhaust their remedies and further which remedies were not exhausted by the specified individual. Hence, the defendants have not established their contention.

As to the second determination, this court finds it is premature under the circumstances of this case to hold that the foreseeable plaintiffs must exhaust all administrative review, and in particular, administrative review of the FmHA decision to foreclose. If the plaintiffs are considered to be the class of persons who now have FmHA loans, the majority of which have not been foreclosed, then the requirement of exhaustion would impose an impossible burden since it is only possible to exhaust remedies once the decision to foreclose or accelerate has been made. So, the defendants' argument can only apply to those plaintiffs who hold FmHA loans which the FmHA has decided to foreclose or accelerate.

As to these plaintiffs, application of the doctrine of exhaustion of remedies would be pointless. The doctrine is designed to allow administrative rather than judicial resolution of disputes so that the agency may have an opportunity to correct its own errors, to afford the parties the benefits of its experience, and to compile a record that is adequate for judicial review. Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 2466-2467, 45 L.Ed.2d 522 (1975). Here, the plaintiffs are contending, among other things, that FmHA has not granted their statutory rights to notice of the availability of loan deferrals, an opportunity to present evidence which establishes their eligibility for a loan deferral, and a written decision specifying the reasons why such a deferral was denied. However, FmHA categorically denies that the plaintiffs have any of these rights. In fact, several courts have already ordered the FmHA to recognize these rights, yet the agency remains firm in its refusal to do so. See, Curry v. Block, 541 F.Supp. 506 (S.D.Ga.1982); Alison v. Block, 556 F.Supp. 400 (W.D.Mo., 1982). Further, it appears doubtful that FmHA would even entertain an appeal directed to these disputed rights.¹ And finally, the thrust of this litigation does not concern a matter that the agency has a unique expertise to determine. Rather, this litigation is about the existence of several rights that the plaintiffs claim are statutory and constitutional in origin, a matter falling squarely within the expertise of the judiciary.

For the above reasons, the court finds that the plaintiffs' action is not barred by their alleged failure to exhaust administrative remedies.

II. Is there jurisdiction over the individual defendants?

Defendants argue that the court lacks jurisdiction over the individual defendants under the rule that public officials performing acts within their authority are not personally liable for damages resulting from those acts. Youngstrom v. Dunn, 447 F.2d 948, 950 (8th Cir.1971). However, the plaintiffs are not seeking to hold the individual defendants liable for damages and hence the above doctrine has no application here.

III. Do the plaintiffs qualify as a class under Fed.R.Civ.P. 23?

The named plaintiffs seek to represent a class of persons composed of "all persons who have obtained a farmer program loan from the Farmers Home Administration (FmHA) and who are or may be eligible to obtain a farmer program loan from the FmHA and whose loans are or will be administered through the FmHA offices located within the State of North Dakota."

To qualify this class under Rule 23, the plaintiffs must meet the requirements of both 23(a) & (b).

(i) Requirements of 23(a)

1. Is the described class so numerous that joinder of all members is impracticable?

Since the class is stated to be all persons who currently have or will acquire FmHA farmer program loans within North Dakota, a class that may encompass thousands, many of whom cannot be currently identified, this class is too numerous to make joinder practicable.

Apparently, defendants believe that this class is overbroad in that the plaintiffs' claims could be brought by a more narrowly defined class. Defendants premise their arguments on the assumption that the appropriate class is those persons who have or will acquire FmHA farmer program loans and who are or will be subject to FmHA foreclosure. Once the class is so restricted the defendants claim that it is practicable to join all plaintiffs as they allege there were only 14 judicial foreclosures by FmHA since August 4, 1978.

However, a class so restricted would be improper because the newly defined class would not adequately cover the relief which the plaintiffs are seeking. The relief sought is not just for improper foreclosure procedures, but is also for a broad range of actions taken by the FmHA, including liquidation, allowance of operating and living expenses, foreclosure, and acceleration.

Further, defendants' arguments that the class is not sufficiently definite are not persuasive since the class can be definitely identified by a clear characteristic — the holding of a farmer program loan from FmHA. The fact that future holders cannot be now identified does not undercut the fact that a clear criterion exists to identify them when they do indeed obtain a loan.

As a final parry to plaintiffs' definition of the class, the defendants maintain that many of the plaintiffs in the prospective class would lack standing to sue because they would not suffer the same injuries. Apparently, defendants claim that the plaintiffs would suffer diverse injuries since the circumstances of each foreclosure are different. This argument misses the point of the plaintiffs' suit for injunctive relief. The injury claimed is that the plaintiff class is not given (1) notice of the availability of a loan deferral if a farmer is unable to make payments due to circumstances beyond his control, (2) an opportunity to present evidence proving such circumstances, (3) a written decision specifying why deferral was not granted, and (4) an opportunity to prove eligibility for operating or living allowances. These are injuries that are common to the plaintiff class since it is FmHA policy not to accord any of these benefits.

For the above reasons, the court finds that the plaintiff class meets the requirements of Rule 23(a)(1).

2. Are there questions of law or fact common to the class?

As just pointed out, the plaintiffs claim that as FmHA borrowers they have statutory and constitutional rights to notice of the deferral option, an opportunity to present evidence for deferral, a written decision specifying why deferral was not given, and an opportunity to prove eligibility for living or operating allowances. Whether or not the plaintiffs have these rights is a common issue of law. It is also a...