Mahon v. U.S. Dept. of Agriculture

• Decision Date: 10 May 2007
• Docket Number: No. 06-12793.,06-12793.
• Citation: 485 F.3d 1247
• Parties: John MAHON, et al., Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

485 F.3d 1247

John MAHON, et al., Plaintiffs-Appellants, v. UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellee.

No. 06-12793.

United States Court of Appeals, Eleventh Circuit.

May 10, 2007.

Edward P. Jordan, II, Edward P. Jordan, II, P.A., Minneola, FL, for Plaintiffs-Appellants.

Peter J. Sholl, Tampa, FL, for Defendant-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before DUBINA and COX, Circuit Judges, and SCHLESINGER,^* District Judge.

SCHLESINGER, District Judge:

The appellants, John, Shelby, and Paul Mahon, filed a complaint against the United States Department of Agriculture ("USDA") in the United States District Court for the Middle District of Florida. The complaint sought judicial review of final agency determinations in which the USDA had denied the appellants' applications for federal disaster assistance under 7 C.F.R. § 1480.20 (2002) for damage to container-grown crops (citrus trees) at the Mahons' nurseries located in Lake County, Florida. The damage was caused by freezing temperatures that occurred in November and December 2000.

As to John and Shelby Mahon, the complaint asserted that the USDA had (1) "failed to follow its own procedures" by not reviewing the Hearing Officer's determination within ten days, as required, (2) "misapplied" the applicable regulations, (3) "unlawful[ly] discriminat[ed]" against John and Shelby Mahon, and (4) deprived John and Shelby of their "due process rights."

With respect to Paul Mahon, the complaint asked the district court to reverse the final agency determination, in which the USDA had denied his request for an administrative appeal on grounds that the request was untimely, and to remand the matter to the USDA for an evidentiary hearing. The complaint asserted that the USDA had (1) erred in refusing to accept Paul Mahon's appeal for the reasons stated in the Agency's denial letter, (2) "misconstrued" the applicable regulations, and (3) "deprived Paul Mahon of due process."

The parties stipulated that the district court would resolve the case based on the Mahons' motion for summary judgment, the USDA's response to that motion, and the district court's de novo review of the administrative records. The district court denied the Mahons' motion for summary judgment and entered summary judgment in favor of the USDA. In its order, the court concluded that as to John and Shelby Mahon's claims, the USDA's determination denying them benefits was not unreasonable nor contrary to law. With respect to Paul Mahon, the court concluded that it lacked jurisdiction because he had failed to exhaust his administrative remedies by failing to timely file an administrative appeal. This appeal followed.

For the reasons stated below, we vacate the district court's decision with respect to John and Shelby Mahons' claims and remand this case for further proceedings. With respect to Paul Mahon's claims, we affirm the decision of the district court.

I. BACKGROUND

John and Shelby Mahon are owners of a citrus nursery located in Lake County, Florida. The nursery primarily produces citrus trees, however, it also produces other plants, including philodendron selloms and azaleas. The trees and plants are grown in small containers and then sold. Their nursery is situated on approximately 126-acres, and a typical crop can consist of approximately 175,000 trees and plants. Paul Mahon is also the owner of a citrus nursery located in Lake County, Florida.¹ Like John and Shelby Mahon's nursery his nursery primarily produces citrus trees. His nursery is situated on five acres of land, and his crops can consist of as many as 100,000 trees and plants. On several days between November 22 and December 31, the Mahons' citrus crops were destroyed as a result of freezing temperatures.

In January 2001, John, Shelby, and Paul Mahon filed applications for disaster assistance pursuant to the 2000 Crop Disaster Program, 7 C.F.R. Part 1480 (2002), a program established by the USDA. The Mahons requested approximately $1.45 million in benefits.

On May 25, 2001, the Lake County Committee of the Farm Service Agency ("FSA") denied Paul Mahon's application on the ground that he "d[id] not meet the eligibility criteria for a commercial nursery operation" because he had not renewed his certificate of registration to sell or distribute, or to offer for sale or distribution nursery stock under Florida law, § 581.131, Fla. Stat. (2000), and because the State of Florida's records showed that he was "no longer in business." Paul Mahon filed a request for reconsideration, which was denied on November 9, 2001. The denial letter noted that in his request for reconsideration, Paul Mahon had submitted receipts that "reflect[] movement of inventory off of the property [when] he was not certified with the State of Florida."

On November 9, 2001, the Lake County Committee denied John and Shelby Mahon's applications on the ground that they "di[d] not meet the eligibility criteria for a commercial nursery operation" because, like Paul Mahon, their certificate of registration as commercial growers under Florida law had expired and because the State of Florida's records showed that they were "out of business." The denial letter noted that John and Shelby Mahon had submitted receipts which "reflect[ed] that the operation was moving inventory off of the location [when] they were not certified with the State of Florida." In addition, the County Committee concluded that the Plaintiffs did not follow "best management practices." John and Shelby Mahon also sought reconsideration, and their request was likewise denied.

A. PAUL MAHON'S ADMINISTRATIVE APPEAL.

On December 5, 2001, following the denial of his benefits application, Paul Mahon elected to proceed to mediation. After mediation reached an impasse, Paul Mahon's attorney sent a letter purporting to be a notice of appeal on May 29, 2002,² and again on June 7, 2002.³

On June 13, 2002, Paul Mahon signed a written statement in which he authorized his attorney to appeal to the National Appeals Division ("NAD") and "confirmed" his attorney's June 7, 2002 request for appeal. Paul Mahon also signed a letter that forwarded the signed authorization to the NAD and asked the NAD to "consider [the signed authorization] to be [his] formal notice of appeal and request for oral argument." On June 14, Paul Mahon (or someone acting on his behalf) mailed the written appeal authorization and transmittal letter.

The NAD sent a letter to Paul Mahon's counsel denying the June 7, 2002, request for an appeal on the ground that, even after application of 7 C.F.R. § 11.5(c)(1) (2002) (stating that a request for mediation tolls the thirty-day period to appeal to the NAD), based on an impasse date of April 25, 2002, Paul Mahon "[had] not filed[d] a personally signed request for an appeal within the [thirty day] time limit established by [7 C.F.R. § 11.6(b)(1)-(2) (2002).]."

On June 20, 2002, Paul Mahon objected to the denial of his appeal claiming that the NAD did not notify him that the mediation had reached an impasse until May 25, 2002, and that there was never an agreement amongst the parties to have an impasse declared on April 25, 2002. Paul Mahon demanded "a rehearing and an evidentiary hearing as to when the impasse [had] occurred and to the lack of notice." To support his position, Paul Mahon pointed out that the Florida Agricultural Mediation Service, which conducted the mediation, did not consider the mediation to have reached an impasse until May 28, 2002.

The NAD nevertheless denied Paul Mahon's request for reconsideration on the ground that his personally signed notice of appeal, which was signed on June 13, 2002 and postmarked June 14, 2002, was untimely based on either impasse date. The NAD subsequently denied Paul Mahon's numerous motions for reconsideration.

B. JOHN AND SHELBY MAHON'S ADMINISTRATIVE APPEAL.

On June 13, 2002, John and Shelby Mahon timely signed and filed notices of administrative appeal with the NAD. A Hearing Officer conducted a hearing on November 16, 2002. During the hearing, the Officer received evidence that other nurseries in Lake County and elsewhere in Florida had received benefits even though they had not paid the commercial growers registration fees as required by Florida law and that the FSA had not asked those nurseries whether they were registered under Florida law. Although the FSA acknowledged that it erroneously had issued some payments to ineligible applicants, the FSA argued that the applicable federal regulation, 7 C.F.R. § 718.9 (2002), prohibited the FSA from seeking a refund. The FSA also presented sworn testimony that the FSA had not been aware of the "status" of the unregistered recipients when it had approved their applications and that "once the problem was identified, [the] FSA began inquiring into licensure status of all applicants before paying benefits."

On December 4, 2002, the Hearing Officer issued an Appeal Determination in which he found that the Lake County Committee had erred in denying John Mahon's and Shelby Mahon's applications for disaster relief. The Hearing Officer concluded that the Agency's decision to deny disaster relief to John and Shelby Mahon because their state certificate of registration to sell nursery stock had expired, while granting relief to others whose certificates had likewise expired, was arbitrary and contrary to law. According to the Hearing Officer, the Agency "must provide assistance to all producers equally." In addition, the Hearing Officer found that "the [A]gency's use of Florida Statutes as one of the basis [sic] for denying [John and Shelby Mahon's Crop Disaster Program] benefits is not in accordance with the standards established by federal published regulations." In the alternative, the Hearing Officer noted that even if Florida's certification law was applicable, a USDA Official had already concluded in another case that under...