DeLaigle v. Federal Land Bank of Columbia
| Decision Date | 01 August 1983 |
| Docket Number | Civ. A. No. CV183-109. |
| Citation | 568 F. Supp. 1432 |
| Parties | Avner W. DeLAIGLE and Allen B. DeLaigle, Plaintiffs, v. The FEDERAL LAND BANK OF COLUMBIA; The Federal Land Bank Association of Louisville, Georgia, Waynesboro Branch Office; John M. Lovett, Jr., individually and in his official capacity as Vice-President/Branch Manager of The Federal Land Bank of Louisville, Georgia, Waynesboro Branch Office; and the Farm Credit Administration, Defendants. |
| Court | U.S. District Court — Southern District of Georgia |
COPYRIGHT MATERIAL OMITTED
Martha A. Miller, Atlanta, Ga., Jerry M. Daniel, Waynesboro, Ga., for plaintiffs.
R.U. Harden, Waynesboro, Ga., J. Douglas Stewart, Telford, Stewart, Melvin & House, Gainesville, Ga., Patrick J. Rice, Hull, Towill, Norman & Barrett, Augusta, Ga., for Federal Land Bank of Columbia, Federal Land Bank Ass'n of Louisville, Ga., Waynesboro Branch Office and John M. Lovett, Jr.
Benjamin B. Boyd, Columbia, S.C., for other defendants.
Henry L. Whisenhunt, Jr., Augusta, Ga., Kathleen M. Mullarkey, Washington, D.C., for Farm Credit Admin.
Before this Court is the plaintiffs' request for a preliminary injunction to halt the nonjudicial foreclosure of the plaintiffs' real property securing their farm loans with the Federal Land Bank of Columbia.1
On April 11, 1983, the plaintiffs filed a complaint alleging an unconstitutional violation of their Fifth Amendment rights to be advised of appropriate loan adjustment procedures for their farm loans. The plaintiffs, in essence, contended that they have a legitimate property interest in this information from the Federal land bank and that the Federal land bank, as a governmental agency, may not deprive them of this property interest without affording them constitutional due process.
On July 5, 1983, the plaintiffs filed a motion for a temporary restraining order to enjoin the Federal land bank from foreclosing on the plaintiffs' defaulted farm loans. Subsequently an order was entered requiring the defendants to show cause why the scheduled foreclosure should not be enjoined. On July 14, 1983, the Court held a hearing on the plaintiffs' motion where both parties addressed substantially similar issues raised by the complaint. Since the defendants had notice of the plaintiffs' motion and all parties engaged in a full hearing, the Court converted the motion for a temporary restraining order into one for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure.
The Court initially notes "that a preliminary injunction is an extraordinary and drastic remedy which should not be granted unless the movant clearly carries the burden of persuasion." Canal Authority v. Callaway, 489 F.2d 567 (5th Cir.1974). It is well-established that a movant must prove four essential elements in order to prevail on a motion for a preliminary injunction: 1) a substantial likelihood that the movant will eventually prevail on the merits; 2) a substantial threat that the movant will suffer irreparable injury if the injunction is not granted; 3) that the threatened injury to the movant outweighs the threatened harm the injunction may do to the opposing party; and 4) that granting the preliminary injunction will not disserve the public interest. See Hardin v. Houston Chronicle Publishing Co., 572 F.2d 1106, 1107 & n. 2 (5th Cir.1978) (citing other cases).
The parties in this case have correctly focused their attention upon the first prerequisite that there must be a substantial likelihood that the movant will eventually prevail on the merits before the Court will order a preliminary injunction. Without a doubt, the plaintiffs will suffer an irreparable injury if the Court does not enjoin this foreclosure. The plaintiffs will lose their farm property and their farming business. This threatened loss definitely outweighs the threatened harm to the defendants that would result if the Court preliminarily enjoins the foreclosure on the plaintiffs' defaulted farm loans. While the adverse farming weather and poor economic conditions have caused defaulting on farm loans to be a matter of public concern, the Court refuses to determine whether a grant or a denial of a preliminary injunction would better serve the public interest. The Court will state, however, that granting a preliminary injunction in this case would not seem to disserve the public interest.
Even though the plaintiffs quickly satisfy three of the four requirements for the issuance of a preliminary injunction, the Court must observe the instructions of the former Fifth Circuit in Texas v. Seatrain International, S.A., 518 F.2d 175 (5th Cir. 1975):
No matter how severe and irreparable an injury one seeking a preliminary injunction may suffer in its absence, the injunction should never issue if there is no chance that the movant will eventually prevail on the merits. Nor is there need to weigh the relative hardships which a preliminary injunction or the lack of one might cause the parties unless the movant can show some likelihood of ultimate success. Obviously, it is inequitable to temporarily enjoin a party from undertaking activity which he has a clear right to pursue.
Id. at 180. This Court, therefore, must proceed to determine whether the plaintiffs in this case show a substantial likelihood of eventual success on the merits.
The plaintiffs contend that they are entitled to be advised of and considered for the loan servicing mechanisms prescribed by statute and regulation. This entitlement is a legitimate property interest protected by the Fifth Amendment. The Federal land bank, as a governmental agency, may not deprive the plaintiffs of this property interest by foreclosing on the defaulted farm loans without affording the plaintiffs constitutional due process.
The Farm Credit Act of 1971, 12 U.S.C. §§ 2001 et seq. (1976), states in part:
The Federal land banks may provide technical assistance to borrowers, members, and applicants and may make available to them at their option such financial related services appropriate to their on-farm operations as determined to be feasible by the board of directors of each district bank, under regulations of the Farm Credit Administration.2
Id. at § 2019. The Code of Federal Regulations, applicable to this statutory section, specifies that the objective of the policies and procedures for federal land banks concerning the servicing of loans 12 C.F.R. § 614.4510(d)(1) (1981).3
The plaintiffs allege that this statutory language and the corresponding regulation establish a legitimate entitlement that the plaintiffs be advised of and considered for all the loan servicing techniques appropriate for their farm loans, before the Federal land bank forecloses on these loans. They contend that they are "cooperative, making an honest effort to meet the conditions of the loan contract, and are capable of working out of the debt burden." Id. The plaintiffs claim that they have received no advice about any loan servicing techniques to avoid default; therefore, they ask for general information rather than any specific procedure.
The defendants counter these contentions with the broad denial that any statute or regulation bestows on the plaintiffs a right to receive information from the Federal land bank concerning loan servicing techniques. Even if the cited statute and regulation did entitle the plaintiffs to such a right, the defendants alternatively allege that the Federal land bank supplied the appropriate information to the plaintiffs through the plaintiffs' use of "loan service" applications to the Federal land bank on four separate occasions.4
Against these contentions by both plaintiffs and defendants, the Court must decide whether the plaintiffs are entitled to receive information on and be considered for loan servicing techniques. While the statute appears to allow the board of directors of an appropriate district to exercise discretion in determining the feasibility of any loan service,5 this discretion is subject to the applicable regulations. These regulations clearly require that Federal land banks "shall provide a means of forebearance." 12 C.F.R. § 614.4510(d)(1).6 The natural implication from such regulatory language is that the Federal land banks not only should establish loan servicing techniques but also should advise the borrowers about these procedures. There would be no reason to require a "means of forebearance" if the borrowers did not have the knowledge to request that the techniques be applied to their loans. The Court finds that if the plaintiffs do actually meet the three conditions mentioned in 12 C.F.R. § 614.4510(d)(1) in regards to the exercise of forbearance, then they should have received information from the defendants concerning any loan servicing techniques appropriate for the defaulted farm loans.
One factual dispute remains, however. The plaintiffs allege that they either never received any loan servicing information or did not understand whatever information they did receive. The defendants contend that the Federal land bank properly advised the plaintiffs about all loan servicing procedures. The Court notes that one of the plaintiffs testified at the hearing that both plaintiffs have jointly engaged in many diverse business endeavors. These plaintiffs are experienced businessmen rather than naive consumers. The Court holds that the standards for the plaintiffs' right to receive information from the Federal land bank does not approach the stringent disclosure standard for consumers rights guaranteed by the Consumer Credit Protection Act, 15 U.S.C. §§ 1601 et seq. (1976). The plaintiffs only have a right to be apprised in some fashion by the Federal land bank of the loan servicing techniques available. Sinc...
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