Gross v. U.S.

• Decision Date: 19 December 1983
• Docket Number: No. 83-1280,83-1280
• Citation: 723 F.2d 609
• Parties: John C. GROSS, Appellee, v. UNITED STATES of America, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 609

723 F.2d 609

John C. GROSS, Appellee, v. UNITED STATES of America, Appellant.

No. 83-1280.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 12, 1983.

Decided Dec. 19, 1983.

J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., Philip N. Hogen, U.S. Atty., Sioux Falls, S.D., Leonard Schaitman, Anthony J. Steinmeyer, Marc Johnston, Appellate Staff, Civil Div., Dept. of Justice, Washington, D.C., for appellant.

Dennis C. McFarland, John N. Gridley III, Sioux Falls, S.D., for appellee.

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

HEANEY, Circuit Judge.

The United States appeals from a judgment entered on remand from our previous decision in Gross v. United States, 676 F.2d 295 (8th Cir.1982). On remand, the district court found continuing tortious conduct by the government within the statute of limitations period, and awarded interest on the judgment from March 9, 1981, the date the first judgment was entered. We affirm the district court's finding of tortious conduct but reverse the award of interest.

BACKGROUND:

This litigation involves a lengthy dispute between John C. Gross and the Agricultural Stabilization and Conservation Service (ASCS) over his eligibility for feed grain program payments. Both the district court's first opinion, Gross v. United States, 508 F.Supp. 1085 (D.S.D.1981), and our opinion, 676 F.2d 295 (8th Cir.1982), detailed that conduct. To summarize, the ASCS denied Gross participation in the feed grain program in 1965 and 1969, and required him to refund program payments for 1968, 1970, and 1971. The ASCS had attempted to keep Gross out of the program at least in part because he was a custom farmer. In so doing, it collected and used false and unsupported statements by Gross's tenants. We discuss the ASCS's conduct in greater detail infra.

Gross filed suit in federal district court under the Federal Tort Claims Act (FTCA), 28 U.S.C. Secs. 2671-2680 (1976 & Supp.1981), alleging that ASCS's actions constituted intentional infliction of emotional distress. Following a trial without a jury, the district court found that the actions of ASCS from 1965 through 1971 were intentional and unreasonable, and that ASCS should have recognized it would put Gross in a state of mental distress. The court found further that Gross "may be in a permanent state of anxiety and depression, possibly paranoia." It awarded him damages of $35,000. Gross v. United States, supra, 508 F.Supp. at 1091-1092.

The United States appealed this judgment. We affirmed, except in regard to the government's argument that the FTCA's statute of limitations barred Gross's action. Under the FTCA, a tort claim against the United States is barred unless it is presented within two years after the claim accrues. 28 U.S.C. Sec. 2401 (1976 & Supp.1981). Gross filed his claim on August 7, 1973. We concluded that ASCS's actions constituted a continuing tort, and thus Gross's claim would accrue from the date of the last tortious act. We were unable to determine on the record then before us, however, whether a tortious act occurred after August 7, 1971. For this reason, we remanded to the district court for additional findings to determine whether the ASCS's demand for refund--made in November, 1971--constituted tortious conduct.

On remand, the district court found that several actions by the ASCS after August 7, 1971, constituted intentional, willful, and tortious conduct entitling Gross to the damages awarded in the earlier judgment. ¹ The government then brought this appeal.

DISCUSSION:

Because ASCS's conduct occurred in South Dakota, that state's laws determine whether it was tortious. See Gross v. United States, supra, 508 F.Supp. at 1091; Hungate v. United States, 626 F.2d 60 (8th Cir.1980). Under South Dakota law, one may recover for negligent infliction of mental or emotional distress only if there is accompanying physical injury. In order to recover for mental distress where, as in this case, there is no physical injury, the defendant's conduct must be willful or malicious, as distinguished from being merely negligent. Chisum v. Behrens, 283 N.W.2d 235, 240 (S.D.1979); First National Bank of Jacksonville v. Bragdon, 84 S.D. 89, 167 N.W.2d 381, 382 (1969). The important elements are that "the act is intentional, that it is unreasonable, and that the actor should recognize it as likely to result in illness." Id.

As mentioned above, we have already determined that ASCS's conduct from 1965 until August 7, 1971, constitutes a continuing tort of intentional infliction of emotional distress. In order to determine whether this tortious conduct continued after that date, placing it within the statute of limitations period, it is necessary to appreciate the context of ASCS's November, 1971, demand for refund.

From 1965 to 1971, the ASCS had attempted to keep Gross out of the feed grain program. The county committee denied his participation in 1965 initially because it contended he reduced the number of tenants on his farms in violation of program regulations. In fact, Gross had no tenants in 1964. He appealed to the state ASCS committee which reversed the county committee decision, but the county committee nevertheless continued to deny his participation in the program. Upon his further appeal to the Deputy Administrator of State and County Operations, Gross learned that the county committee improperly denied him participation because he was a custom farmer, and because it contended that Gross did not give his tenant a fair share of the program's benefits. The county committee supported the latter charge with letters from Gross's tenant, Sederstrom; these letters were later repudiated by Sederstrom as false and merely solicited by ASCS in its effort to deny Gross program participation because he was a custom farmer.

ASCS allowed Gross to participate in the program in 1968, but denied him participation in 1969. Again, ASCS contended that Gross had eliminated tenants in anticipation of participating in the program, and had unfairly required them to transfer their program payments to him. Gross v. United States, supra, 508 F.Supp. at 1088. Gross appealed the ASCS county committee's decision without success. He did participate in the program in 1970 and 1971. The district court found that this conduct by the county committee was intentional, unreasonable, and caused Gross emotional distress. We affirmed these findings.

The question now before us is whether the November, 1971, demand for refund of Gross's 1968, 1970, and 1971 program payments was a continuation of ASCS's earlier tortious conduct. In its first decision, the district court found that in demanding a refund for these years in its November 23, 1971, letter to Gross, "the county committee relied on reports that were riddled with inconsistencies." Gross v. United States, supra, 508 F.Supp. at 1092. We could not determine whether this amounted to tortious conduct, and so remanded for additional findings. We suggested that the district court address whether the ASCS committee was entitled in its demand for a refund to rely on an investigation by the Office of the Inspector General (OIG) of the United States Department of Agriculture (USDA) which noted irregularities between Gross and his tenants in the years in question. We observed:

[t]he ASCS committee ordinarily would be entitled to rely on such a report for its further action unless it knew that the report and its conclusions were incorrect, nevertheless requesting a refund and recommending Gross for criminal prosecution.

Gross v. United States, supra, 676 F.2d at 300 n. 12.

In fact, two reports are involved here. The Phillips Report, dated February 24, 1971, was written by Jack L. Phillips, the Deputy Director for the ASCS Northwest Area Office. This report concluded that "one tenant had been coerced into turning his feed grain price support payment over to Gross" in 1970, and that three of four 1968 tenants advised that they were forced off the land in 1969. In its first decision, the district court found these conclusions inconsistent with statements by the same tenants taken under oath. The district court thus concluded the Phillips Report was not a sufficient basis for the county committee's conduct. Gross v. United States, supra, 508 F.Supp. at 1088.

William Pelletier of OIG filed a second report on August 19, 1971. This report serves as the focus for evaluating ASCS's conduct after August 7, 1971. The district court found on remand that the state ASCS committee reviewed the Pelletier Report and could find no evidence on which to take action against Gross. On September 2, 1971, the state committee forwarded the report and this finding to the Northwest Regional Director. The Northwest Regional Director responded to the state committee on November 8, 1971, by directing the county committee to determine whether Gross had violated the ASCS landlord-tenant regulations and take action accordingly. On November 15, 1971, the county committee determined that Gross had violated the regulations in relation to tenants Swier, Hanneman, and Hansen by forcing them to pay over to him their ASCS program payments, and that he therefore must refund his ASCS payments for the years 1968, 1970, and 1971. The county committee wrote to Gross on November 23, 1971, citing the OIG investigation and demanding the refund. The district court concluded that the Pelletier Report in fact showed that neither Swier, Hansen, nor Hanneman were pressured or forced to make any payments to Gross.

Thus, the question is no longer whether the Pelletier Report is so "riddled with inconsistencies" that the county committee was not entitled to rely on it in proceeding against Gross, but rather whether the district court properly found that the report cleared Gross of wrongdoing, and that the ASCS tortiously proceeded against him anyway. Under Fed.R.Civ.P. 52(a), we cannot set aside a district court's findings...