In re Jarrett Ranches, Inc., Bankruptcy No. 88-10117

• Decision Date: 16 August 1989
• Docket Number: Bankruptcy No. 88-10117,Adv. No. 89-1001.
• Citation: 107 BR 969
• Parties: In re JARRETT RANCHES, INC., Debtors. JARRETT RANCHES, INC., Jarrett Elevators, Inc.; Donald D. and Jeannine Jarrett, husband and wife; and Ronald R. and Jacqueline Jarrett, husband and wife, Plaintiffs, v. FARM CREDIT BANKS OF OMAHA, Production Credit Association of the Midlands and Federal Land Bank Association of Aberdeen, Defendants.
• Court: U.S. Bankruptcy Court — District of South Dakota

107 B.R. 969 (1989)

In re JARRETT RANCHES, INC., Debtors JARRETT RANCHES, INC., Jarrett Elevators, Inc.; Donald D. and Jeannine Jarrett, husband and wife; and Ronald R. and Jacqueline Jarrett, husband and wife, Plaintiffs, v. FARM CREDIT BANKS OF OMAHA, Production Credit Association of the Midlands and Federal Land Bank Association of Aberdeen, Defendants.

Bankruptcy No. 88-10117, Adv. No. 89-1001.

United States Bankruptcy Court, D. South Dakota.

August 16, 1989.

Norman J. Baer, Minneapolis, Minn. and Philip Morgan, Britton, S.D., for plaintiffs.

Brent A. Wilbur, Pierre, S.D., for defendants.

MEMORANDUM DECISION

IRVIN N. HOYT, Chief Judge.

The Court has before it Farm Credit Bank of Omaha's (FCBO) motions for summary judgment in the above captioned matter. After considering the evidence, briefs, and arguments, of counsel, the Court is prepared to render its decision.

The undisputed facts are as follows: In August, 1988, the Jarrett family, on behalf of Jarrett Elevators, Inc. and Jarrett Ranches, Inc., entered into a settlement agreement with the Federal Land Bank of Omaha and the Production Credit Association of the Midlands (hereinafter referred to as FCS). The agreement performed several functions including: (1) dismissal with prejudice of several state court actions, (2) turnover of certain machinery to FCS, (3) Jarretts' retention of eight quarters of land free of any FCS liens, (4) FCS's assistance to Jarretts with the tax aspects of their Chapter 11 plan, (5) forbearance by FCS from seeking deficiency judgments against Jarretts, (6) Jarretts waiver of restructure rights under the Agricultural Act of 1987 concerning real estate in South Dakota subject to a Federal Land Bank mortgage, and (7) Jarretts' waiver of restructure and repurchase rights under the Act concerning similarly mortgaged property in North Dakota.

This Court, on November 28, 1988, entered an order approving all aspects of the settlement agreement. There was no resistance to entry of the order and no appeal concerning the order was taken within the prescribed time frame.

In December, 1988, the individual Jarretts and Jarrett Elevators, Inc. conveyed their interest in the South Dakota and North Dakota properties to Jarrett Ranches, Inc. Jarretts and their corporate entities then conveyed certain of the real estate to the Production Credit Association of the Midlands and the remainder to Farm Credit Bank of Omaha. On February 3, 1989, FCBO gave notice to Jarretts of its intention to sell the property.

Jarretts commenced an adversary action against FCBO on March 24, 1989. Jarretts claim that: (1) FCBO failed to comply with certain notice provisions of the Agricultural Credit Act of 1987, Pub.L. No.100-233, 101 Stat. 1568-1718 (1987), (2) Jarretts' waiver of rights concerning the North Dakota property was void, (3) FCBO failed to properly appraise the subject property, and (4) FCBO's proposed sale of the property violated the Act. All claimed violations fall under § 108 of the Act, codified at 12 U.S.C. § 2219a.

FCBO answered Jarretts' complaint on May 1, 1989. On May 10, FCBO moved for judgment on the pleadings and for summary judgment. Both parties submitted memoranda supporting their various arguments. FCBO's motion for judgment on the pleadings was denied this same date.

I. Summary Judgment

Summary judgment is authorized by Federal Rule of Civil Procedure 56 and Bankruptcy Rule 7056 when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Summary judgment should not be viewed as a disfavored procedural shortcut, but rather as an important method to be used to secure the just, speedy and inexpensive determination of every action. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden is on the movant to demonstrate that no genuine issue of material fact exists, and the non-moving party is entitled to all reasonable inferences to be taken from the evidence. Savage v. Snow, 575 F.Supp. 828 (S.D.N.Y.1983).

This case is currently in an interesting procedural posture. FCBO, the movant here, asserts that no genuine issues of material fact exist and that it is entitled to a judgment in its favor as a matter of law. Jarretts, who have made no formal motion for summary judgment, concur that no fact issues exist, but claim that they, rather than FCBO, are entitled to summary judgment. Jarretts first made this claim in their memorandum in opposition to FCBO's motions for summary judgment dated May 25, 1989.

When there has been a motion for summary judgment but no cross-motion, the Court is already engaged in determining whether a genuine issue of material fact exists and the parties have been given an opportunity to present evidence designed either to support or refute the request for entry of such judgment. 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2720 (1983). Granting summary judgment for the non-movant may be proper if both sides agree that there are no issues of material fact. However, the fact that both parties argue that no factual issues exist does not automatically establish that a trial is unnecessary and that the Court is empowered to enter judgment. Id. See also, Wermager v. Cormorant Township Board, 716 F.2d 1211 (8th Cir.1983). The weight of authority suggests that summary judgment may be rendered in the non-movant's favor regardless of the fact that no formal cross-motion was made. Lowenschuss v. Kane, 520 F.2d 255 (2nd Cir.1975), Local 33, International Hod Carriers Building & Common Laborers' Union of America v. Mason Tenders District Council of Greater New York, 291 F.2d 496 (2nd Cir.1961) ("It is most desirable that the court cut through mere outworn procedural niceties and make the same decision as would have been made had defendant made a cross-motion for summary judgment." Id. at 505). See also cases collected in Wright, Miller & Kane, supra, at note 20.

In a large sense, entry of summary judgment for a non-movant in the absence of a formal cross-motion is in keeping with Rule 56's objective to expedite the disposition of cases and with Rule 54's requirement that a court grant the relief to which a party is entitled even if the party has not demanded such relief in his pleadings. Wright, Miller & Kane, supra. In this case, Jarretts have informally requested that summary judgment be granted in their favor. FCBO has been provided with notice of Jarretts' request and has not responded to the same. Given the fact that FCBO knew of Jarretts' request, Williams v. City of St. Louis, 783 F.2d 114 (8th Cir.1986), and that the interests of the parties and judicial economy would be served by consideration of Jarretts' request, this Court holds that Jarretts may receive a summary judgment in their favor regardless of their failure to bring a formal cross-motion. Thus, the Court may, if all requirements for summary judgment are met, grant such judgment for either FCBO or Jarretts.

II. Waiver

FCBO first submits that it is entitled to summary judgment concerning Jarretts' waiver of their right to restructure or repurchase their North Dakota property. Jarretts claim that the waiver of these rights is void as a matter of law or alternatively that FCBO should be estopped from demanding enforcement of the waiver because FCBO offered Jarretts the right to repurchase after previously securing the waiver. Thus, Jarretts submit that summary judgment should be granted in their favor. FCBO claims that waiver of these rights was not void and that the matter is res judicata per this Court's approval of the settlement agreement.

Jarretts first claim that their waiver was void as a matter of law because allowing such waiver of statutory rights to restructure and/or repurchase "flies in the face of congressional intent." Relying on Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945), Jarretts assert that their restructure and repurchase rights under the Agricultural Credit Act of 1987 may not be waived or released. This Court has no quarrel with Brooklyn Savings Bank's statement that "a statutory right conferred on a private party, but affecting the public interest, may not be waived or released if such waiver or release contravenes the statutory policy," and that "where a private right is granted in the public interest to effectuate a legislative policy, waiver of a right so charged or colored with the public interest will not be allowed where it would thwart the legislative policy it was designed to effectuate." Id. at 704, 65 S.Ct. at 900 (citations omitted) (footnote omitted). However, unlike the Fair Labor Standards Act (which was the legislation construed in Brooklyn Savings Bank), or the protection afforded under the Bankruptcy Code (the subject of United States v. Royal Business Funds Corp., 724 F.2d 12 (2nd Cir.1983)), this Court is not convinced that the Agricultural Credit Act is one of those statutes which contains a strong public interest component. Rather it appears that the Act is intended to provide credit to qualified agricultural borrowers and to shore up the ailing Farm Credit System. Thus, the Court concludes that Jarretts' waiver of the right to restructure or repurchase under the Act was not void as a matter of law, and that Jarretts voluntarily abandoned their rights. In re Zirpel, 53 B.R. 422 (Bkrtcy.D.S.D.1985).

Jarretts next contend that FCBO should be estopped from demanding enforcement of the waiver because FCBO extended Jarretts the right to repurchase the North Dakota property after the settlement agreement had been executed. Estoppel requires a "representation, to a party without knowledge of the facts and without the means to ascertain them, upon which the party asserting the estoppel justifiably relies in good faith to his detriment." U.S. v. Schoenborn, 860 F.2d 1448, 1452 (8th Cir.1988) (citation omitted).

Testimony received from Donald...