Crowel v. Administrator of Veterans' Affairs of Washington, D.C.

• Decision Date: 26 January 1983
• Docket Number: No. 82-1570,82-1570
• Citation: 699 F.2d 347
• Parties: Larry D. CROWEL, Plaintiff-Appellant, v. ADMINISTRATOR OF VETERANS' AFFAIRS OF WASHINGTON, D.C., and his Successors and Agents of such office and Chief, Property Management Section, Veterans Administration, Indianapolis, Indiana, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 347

699 F.2d 347

Larry D. CROWEL, Plaintiff-Appellant, v. ADMINISTRATOR OF VETERANS' AFFAIRS OF WASHINGTON, D.C., and

his Successors and Agents of such office and Chief, Property

Management Section, Veterans Administration, Indianapolis,

Indiana, Defendants-Appellees.

No. 82-1570.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 23, 1982.

Decided Jan. 26, 1983.

Jerry L. Colglazier, James K. Whitaker & Assoc., Hammond, Ind., for plaintiff-appellant.

Charles B. Miller, Hammond, Ind., for defendants-appellees.

Before BAUER, POSNER and COFFEY, Circuit Judges.

COFFEY, Circuit Judge.

This is an appeal from an order of the United States District Court for the Northern District of Indiana, denying the plaintiff's rehearing motion to compel the Administrator of Veterans' Affairs to convey title to a certain piece of real property located in Highland, Indiana to the plaintiff, or in the alternative, to recover money damages. Upon the petition of the defendant the federal district court accepted the removal of the case from the state court pursuant to 28 U.S.C. Sec. 1442. After receipt of consent forms signed by counsel, Magistrate Moody was given the authority to hear the case. Thereupon, the plaintiff and the defendant filed motions for summary judgment, and the magistrate granted the defendant's motion for summary judgment and denied the plaintiff's motion. The plaintiff's subsequent motion for a new trial was denied and the plaintiff appeals. Affirmed.

In June, 1969 Frank and Beverly Paymaster entered into an installment contract with the Administrator of Veterans' Affairs to purchase a certain piece of real estate. The real estate contract provided in part that the Paymasters were to make monthly payments of $90.90, and if the Paymasters defaulted the Administrator, at his option, could terminate the Paymasters' equitable interest in the property. Further, if the Paymasters assigned any portion of their interest in the real estate to another without the prior written consent of the Veterans Administration, the whole of the unpaid balance on the contract would immediately become due and owing. Thus, it is evident the Administrator of Veterans' Affairs retained legal title in the real estate while the Paymasters' interest was only that of an equitable titleholder pursuant to the contract.

In Spring of 1975, Mr. Paymaster called the plaintiff, Larry D. Crowel, and asked him to "come out and look at his home and purchase his (Paymaster's) home." Crowel went to the Paymaster residence, inspected the property and told Paymaster he would need some time to make a decision on the purchase. Several days later, Crowel returned to the Paymaster home and offered to purchase the home upon the occurrence of the following events: (1) Crowel making a $4,500 down payment to the Paymasters; (2) the Paymasters' assignment of their equitable interest in the home to Crowel; and (3) the approval by the Veterans Administration of Crowel's assumption of the Paymasters' mortgage. The Paymasters agreed to Crowel's proposition and signed an "Offer to Purchase."

In April, the Veterans Administration notified the plaintiff Crowel with a letter that the Veterans Administration required that certain documents be filed as a condition precedent to the Administrator of Veterans' Affairs approving the transfer of the Paymasters' equitable interest to Larry D. Crowel: (1) four copies of the assignment of installment contract for the sale of real estate completed and signed by the proposed new purchasers and the sellers; (2) a copy of the sale agreement between the sellers and the proposed purchasers; (3) a copy of the proposed sales closing statement; (4) a financial statement completed by the proposed purchasers; and (5) a credit report on the proposed buyers from a recognized credit agency. In response, the following letter, labeled as a "Letter of Direction" by Crowel's attorney was sent to the Veterans Administration:

LETTER OF DIRECTION

Comes now the undersigned, FRANK GEORGE PAYMASTER, JR. and BEVERLY JEAN PAYMASTER and state as follows:

1. That on the 12th day of June, 1969, they entered into a certain real estate contract for the purchase of real estate ... with the Administrator of Veterans' Affairs ...;

2. That said real estate has not been deeded from the Administrator of Veterans' Affairs to them;

3. That they desire to sell, assign or transfer their interest therein;

4. That the Administrator of Veterans' Affairs is hereby directed to deed said real estate by warranty deed directly to LARRY D. CROWEL and THOMAS R. CROWEL;

5. That BEVERLY JEAN PAYMASTER will receive the sum of five hundred ($500.00) dollars as and for her interest in said real estate; and

6. That said warranty deed to LARRY D. CROWEL and THOMAS R. CROWEL will not be recorded or released until obligations of the PAYMASTERS to the Veterans Administration pursuant to the above mentioned contract have been paid in full.

The above Letter of Direction prepared by Crowel's attorney was not signed by the plaintiff, Larry Crowel, but was signed by Frank and Beverly Paymaster.

Some days after the Paymasters signed the Letter of Direction the date for the real estate closing was agreed upon. Also after the Letter of Direction was signed, Crowel applied for a real estate mortgage loan in the amount of $12,800.00 (the amount the Paymasters owed the Veterans Administration) from Security Federal Savings & Loan Association of Highland, Indiana, and received a mortgage commitment in that amount. Crowel executed and properly recorded the real estate mortgage to secure the $12,800.00 loan intending to use the real estate he was to receive from the Veterans Administration as collateral. Shortly thereafter, the Chicago Title Insurance Company issued a preliminary title insurance commitment.

On the proposed date for the real estate closing Paymaster notified the Veterans Administration that "the deal had fallen through," and at the same time because his account with the Veterans Administration was in arrears, he "indicated a desire to bring his delinquent account to a current status." After making arrangements with the Veterans Administration the Paymasters made several payments on their delinquent account but failed to ever bring their account to a current status and as a result in April of 1976 the Veterans Administration canceled their account for nonpayment, took possession of the property and on July 12, 1978 sold and transferred the property to a disinterested third party.

On August 2, 1976 the plaintiff, Larry Crowel brought an action against the defendant, the Administrator of Veterans' Affairs, in the Indiana state courts for specific performance on the Letter of Direction, or in the alternative, for the fair market value of the real estate ($25,000). The United States District Court accepted the removal of the case pursuant to 28 U.S.C. Sec. 1442(a)(1) and the parties filed cross motions for summary judgment. The court

granted the defendant's motion for summary judgment, reasoning that the Letter of Direction was "nothing more than a tentative proceeding in expectation of an assignment" and did not constitute a valid present assignment to Crowel of the Paymasters' rights and obligations under the installment contract. The magistrate found that because additional steps (such as obtaining the approval of the Veterans Administration, setting a date for closing, establishing an escrow account and working out the details with the Paymasters) were necessary before an interest in the real estate vested in Crowel, Crowel did not have a present enforceable interest in the property and therefore his action for specific performance or in the alternative damages was without merit. The plaintiff's motion for a new trial was denied and the plaintiff appealed.

ISSUES PRESENTED

1. Did the district court gain subject matter jurisdiction over an action originally brought in a state court and removed to federal court against the Administrator of the Veterans' Affairs Department for specific performance and/or damages on the real estate contract?

2. Did the district court err in granting the defendant's motion for summary judgment?

1. Jurisdiction

During oral argument this court, sua sponte, raised the question and requested briefs on the issue of whether an action involving the Veterans Administration could originally be brought in the state court and later transferred to the federal district court. Both parties briefed the issue and we now address this jurisdictional issue.

"It is elementary that '[t]he United States, as sovereign, is immune from suits save as it consents to be sued ..., and the terms of its consent to be sued in any court define that court's jurisdiction to entertain this suit.' United States v. Sherwood, 312 U.S. 584, 586 [61 S.Ct. 767, 769, 85 L.Ed. 1058] (1941). A waiver of sovereign immunities 'cannot be implied but must be unequivocally expressed' United States v. King, 395 U.S. 1, 4 [89 S.Ct. 1501, 1503, 23 L.Ed.2d 52] (1969). In the absence of clear congressional consent, then, 'there is no jurisdiction ... in any ... court to entertain suits against the United States.' United States v. Sherwood, supra, at 587-588 ."

United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607 (1980). To resolve this jurisdiction problem, we first look to whether the state court of Indiana had original subject matter jurisdiction. It is well established that "[w]here the state court lacks jurisdiction of the subject matter or of the parties, the federal court acquires none, although in a like suit originally brought in a federal court it would have had jurisdiction." Minnesota v. United States, 305 U.S. 382, 389, 59 S.Ct. 292, 295, 83 L.Ed. 235 (1939). See also Lambert Run Coal Co. v. Baltimore & Ohio R.R., 258 U.S. 377, 382, 42 S.Ct. 349, 351, 66 L.Ed. 671 (1922). Thus, to determine if the district court and this court have...