Hagemeier v. Block, s. 86-1144

• Decision Date: 29 December 1986
• Docket Number: Nos. 86-1144,86-1279,s. 86-1144
• Citation: 806 F.2d 197
• Parties: Henry H. HAGEMEIER, and Mary L. Hagemeier, his wife, Appellants, v. John BLOCK, Individually and in his capacity as Secretary of the United States Dept. of Agriculture; Allen Brock, Individually and in his capacity as Acting Assistant Administrator for Farmer Programs and former Acting Administrator of the Farmers Home Administration, Charles Shuman, Individually and in his capacity as Administrator of the Farmers Home Administration; John O. Foster, Individually and in his capacity as State Director of Missouri; Rande S. Bryan, Individually and in his capacity as District Director; Terry A. Luetkemeyer, Individually and in his capacity as County Supervisor, United States Department of Agriculture, Appellees. Charles RULE, Jr. and Wanda F. Rule, his wife, Appellants, v. John BLOCK, Individually and in his capacity as Secretary of the United States Department of Agriculture; Allen Brock, Individually and in his capacity as Acting Asst. Adm. for Farmer Programs and former Acting Adm. of the Farmers Home Adm.; Charles Shuman, Individually and in his capacity as Adm. of the Farmers Home Adm; John O. Foster, Individually and in his capacity as State Director for MO; William T. Shay, Individually and in his capacity as District Director; and Ronald Moody, Individually and in his capacity as County Supervisor, U.S. Dept. of Agriculture; Robert Noellsch, Individually and in his capacity as County Supervisor U.S. Dept. of Agriculture, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 197

806 F.2d 197

Henry H. HAGEMEIER, and Mary L. Hagemeier, his wife, Appellants, v. John BLOCK, Individually and in his capacity as Secretary of

the United States Dept. of Agriculture; Allen Brock,

Individually and in his capacity as Acting Assistant

Administrator for Farmer Programs and former Acting

Administrator of the Farmers Home Administration, Charles

Shuman, Individually and in his capacity as Administrator of

the Farmers Home Administration; John O. Foster,

Individually and in his capacity as State Director of

Missouri; Rande S. Bryan, Individually and in his capacity

as District Director; Terry A. Luetkemeyer, Individually

and in his capacity as County Supervisor, United States

Department of Agriculture, Appellees.

Charles RULE, Jr. and Wanda F. Rule, his wife, Appellants, v. John BLOCK, Individually and in his capacity as Secretary of

the United States Department of Agriculture; Allen Brock,

Individually and in his capacity as Acting Asst. Adm. for

Farmer Programs and former Acting Adm. of the Farmers Home

Adm.; Charles Shuman, Individually and in his capacity as

Adm. of the Farmers Home Adm; John O. Foster, Individually

and in his capacity as State Director for MO; William T.

Shay, Individually and in his capacity as District Director;

and Ronald Moody, Individually and in his capacity as

County Supervisor, U.S. Dept. of Agriculture; Robert

Noellsch, Individually and in his capacity as County

Supervisor U.S. Dept. of Agriculture, Appellees.

Nos. 86-1144, 86-1279.

United States Court of Appeals Eighth Circuit.

Submitted Sept. 10, 1986.

Decided Nov. 26, 1986.

Rehearing Denied Dec. 29, 1986.

Susan M. Hais, Clayton, Mo., for appellants.

Wesley D. Wedemeyer, Asst. U.S. Atty., St. Louis, Mo., for appellees.

Before ROSS, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and MAGILL, Circuit Judge.

ROSS, Circuit Judge.

Henry H. and Mary L. Hagemeier appeal from the district court's ¹ grant of summary judgment and dismissal of their claims against various officials and administrators of the Farmers Home Administration (FmHA) arising out of the FmHA's attempted foreclosure of the Hagemeiers' FmHA loans. Charles W. and Wanda F. Rule appeal the district court's ² dismissal of their claims which were brought on similar grounds. These cases have been consolidated on appeal. For the reasons discussed below, we affirm.

I. Facts

A. Hagemeiers

The Hagemeiers, who are farmers, obtained a total of seven loans from the FmHA between 1975 and 1979 pursuant to the Consolidated Farm and Rural Development Act (CFRDA), 7 U.S.C. Sec. 1921 et seq. (1982). These loans were secured by security agreements and deeds of trust in favor of the FmHA covering the Hagemeiers' farm, equipment, livestock and inventory.

The FmHA accelerated the Hagemeiers' loans due to nonpayment on April 6, 1982. This was administratively affirmed three times. On July 12, 1983, the Hagemeiers filed suit seeking to enjoin foreclosure based on a preliminary injunction which had been issued in Coleman v. Block, 562 F.Supp. 1353 (D.N.D.1983). ³ The Coleman injunction prohibited the FmHA from foreclosing loan collateral without first providing the debtors certain preliquidation procedures, including notice of possible loan deferral under 7 U.S.C. Sec. 1981a (1982). Id. at 1367. The FmHA agreed not to foreclose on the Hagemeiers' property until the courts had resolved the question of whether certain preliquidation procedures were required under 7 U.S.C. Sec. 1981a, and the Hagemeiers' suit was dismissed on December 28, 1983.

The FmHA subsequently adopted new procedures and notices with regard to the acceleration of defaulted loans pursuant to the Coleman injunction. On February 7, 1984, the FmHA notified the Hagemeiers that it again intended to accelerate their loans and foreclose. The notice informed the Hagemeiers of loan deferral alternatives, and set forth the procedures for applying for deferral and the procedures for appealing the proposed acceleration. Although the Hagemeiers received this notice, they did not contact the FmHA about deferral or appeal. On May 25, 1984, the FmHA notified the Hagemeiers that their loans were being accelerated.

The Hagemeiers brought this action seeking declaratory and injunctive relief and damages. The Hagemeiers sought to have the FmHA enjoined from foreclosing without first providing the Hagemeiers with timely personal notice of the opportunity to apply for loan deferral or other loan servicing devices. The Hagemeiers also sought damages for the FmHA's alleged failure to fulfill their statutory and constitutional obligations.

B. Rules

The Rules' case is similar to the Hagemeiers'. In 1977 and 1978 the Rules obtained a total of four FmHA loans pursuant to the CFRDA. These loans were secured by deeds of trust covering the Rules' real estate. The FmHA sent the Rules notice of acceleration of their loans due to nonpayment on June 10, 1983. On October 3, 1983, the FmHA purchased the real estate security at a foreclosure sale in full satisfaction of the Rules' debt.

The Rules brought this action on June 7, 1984, seeking damages for the FmHA's failure to provide them notice of an opportunity to apply for loan deferral and other loan servicing devices. The complaint also alleged that the FmHA officials failed to fulfill their statutory and constitutional obligations in failing to implement a loan of emergency funds, failing to follow proper procedures in the foreclosure and subsequent sale of the Rules' property, and failing to follow the preliquidation procedures mandated by the Coleman injunction.

In both the Rules' and the Hagemeiers' cases, the district court dismissed the claims pursuant to a motion to dismiss, or in the alternative for summary judgment, determining that: 1) the defendants were qualifiedly immune from liability in their individual capacities; and 2) the defendants were not liable in their official capacities under the doctrine of sovereign immunity. In the Hagemeiers' case, the district court also determined that the Hagemeiers' claims for declaratory and injunctive relief were moot. It is from these determinations that the Hagemeiers and Rules appeal.

II. Qualified Immunity.

The Rules contend that the FmHA officials failed to follow FmHA procedures and failed to inform them of loan deferral alternatives when foreclosing on their property, in violation of their clearly established statutory and constitutional rights. The Hagemeiers make the same contentions with regard to the acceleration of their loans in 1982. In both the Rules' and the Hagemeiers' cases, the district court determined that the FmHA officials were qualifiedly immune because at the time of the acts in question there were no clearly established preliquidation procedures required. We agree with the district court.

Government officials performing discretionary functions are protected from liability for civil damages under the doctrine of qualified immunity "insofar as their conduct does not violate clearly established statutory or constitutional rights." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982). This court has previously determined that prior to Allison v. Block, 723 F.2d 631 (8th Cir.1983), decided in December 1983, FmHA borrowers had no clearly established right to certain preliquidation procedures. Culbreath v. Block, 799 F.2d 1248, 1250 (8th Cir.1986).

The Culbreaths had advanced claims similar to the Hagemeiers' and Rules' with regard to the FmHA's acceleration of the Culbreath's loans in September 1983. This court stated:

Here, at the time the challenged actions occurred, it was not clearly established that the Culbreaths were constitutionally entitled to any preliquidation process. Only after this court's decision in Allison v. Block, 723 F.2d 631 (8th Cir.1983), was the constitutional right to preliquidation notice of the right to apply for a loan deferral clearly established. Id. at 634. Compare Allison v. Block 556 F.Supp. 400, 405-06 (W.D.Mo.1982), aff'd, 723 F.2d 631 (8th Cir.1983) (notice required), with Neighbors v. Block, 564 F.Supp. 1075, 1080 (E.D.Ark.1983) (no notice required). Even then, Allison was limited to the question of preliquidation deferral notice and did not address or recognize the existence of additional constitutionally mandated preliquidation procedures, such as notice of the right to appeal from the preliminary liquidation decision itself. See, e.g., Coleman v. Block, 580 F.Supp. 194, 211 (D.N.D.1984); Gamradt v. Block, 581 F.Supp. 122, 134 (D.Minn.1983).

Id. Thus, the Culbreath court concluded that the "FmHA officials could not reasonably be expected to know either that any type of preliquidation process was constitutionally required or equally important that the various statutory and regulatory provisions here involved bear upon or implicate such a constitutional right." Id. at 1250-51.

Likewise, in these cases the FmHA officials could not have reasonably known that the appellants were entitled to certain preliquidation procedures when they accelerated the Hagemeiers' loans in 1982, or when they foreclosed on the Rules in October, 1983. Therefore, the FmHA officials are protected by qualified immunity.

The Hagemeiers also argue that the FmHA failed to follow required preliquidation procedures when it accelerated their loans in 1984. In Coleman v. Block, supra, 580 F.Supp. at 211, the court set forth the required notice which the FmHA must send a borrower before accelerating indebtedness. ⁴ The district court determined that the notice sent to the Hagemeiers fully comported with the Coleman injunction. A review of the record indicates that the district court did not err in its determination.

The Hagemeiers also contend that the notice they received in 1984 was untimely because their problems with the FmHA loans and resulting damages dated back to 1975 when the first loan was made. Certainly the Hagemeiers had no clearly...