Matzke v. Block, s. 83-1866

• Decision Date: 24 April 1984
• Docket Number: Nos. 83-1866,83-1867 and 83-2091,s. 83-1866
• Citation: 732 F.2d 799
• Parties: Alvin MATZKE, William Leonard, Janice Stoss, Don Lorlovick, Delmar Turley, and Cheryl Turley, on behalf of themselves and all others similarly situated, Plaintiffs, Appellees, Cross-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 Deputy Administrator and former Acting Administrator of the Farmers Home Administration; Charles Shuman, Individually, and in his capacity as Administrator of the Farmers Home Administration; Larry Davis, Individually, and in his capacity as State Director for Kansas Farmers Home Administration, United States Department of Agriculture; James W. Smith, Individually, and in his capacity as District Director, Farmers Home Administration, United States Department of Agriculture, Defendants, Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 799

732 F.2d 799

Alvin MATZKE, William Leonard, Janice Stoss, Don Lorlovick,

Delmar Turley, and Cheryl Turley, on behalf of

themselves and all others similarly

situated, Plaintiffs, Appellees, Cross-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 Deputy

Administrator and former Acting Administrator of the Farmers

Home Administration; Charles Shuman, Individually, and in

his capacity as Administrator of the Farmers Home

Administration; Larry Davis, Individually, and in his

capacity as State Director for Kansas Farmers Home

Administration, United States Department of Agriculture;

James W. Smith, Individually, and in his capacity as

District Director, Farmers Home Administration, United

States Department of Agriculture, Defendants, Appellants,

Cross-Appellees.

Nos. 83-1866, 83-1867 and 83-2091.

United States Court of Appeals, Tenth Circuit.

April 24, 1984.

Thomas D. Edmondson, Atty., U.S. Dept. of Agriculture, Washington, D.C. (James Michael Kelly, Associate Gen. Counsel, Raymond W. Fullerton, Asst. Gen. Counsel, Washington, D.C., for defendants, appellants, cross-appellees.

Thomas D. Kershaw, Jr. of American Constitutional Rights Ass'n, Klamath Falls, Or., for plaintiffs, appellees, cross-appellants.

Before SETH, Chief Judge, and HOLLOWAY and LOGAN, Circuit Judges.

SETH, Chief Judge.

This is a class action brought by farmers living in Kansas who had received loans from the Farmers Home Administration (FmHA) under the general Farm and Rural Development Act. The FmHA had security interests in plaintiffs' homes, crops, livestock and equipment.

Plaintiffs assert that the Secretary of Agriculture has taken no action to place in operation or to implement the remedies provided for them by 7 U.S.C. Sec. 1981a (Pub.L. No. 95-334, Sec. 122) and has refused to do so. They assert that no regulations, procedures, or standards have been adopted by the Secretary as contemplated by Sec. 1981a. Thus the deferrals of principal and interest payments therein permitted under certain circumstances have not been made available nor has a way for the exercise of the Secretary's discretion to "forego foreclosure" there described been provided for.

The Secretary takes the position that he has the discretion whether or not to administer what Congress described as the "program" therein provided for, and that discretion whether to take any action or not is in permissive language in Sec. 1981a. He acknowledges that no regulations or procedures have been adopted in response to the enactment of Sec. 1981a. He asserts that in any event preexisting regulations adopted in response to other legislation are adequate.

The case was presented on motions for summary judgment filed by both parties. The facts were supplied by testimony and by documentary material. The trial court granted summary judgment for the plaintiffs on their general claim for relief, but held that the statute did not provide for notice and hearing on the applications by borrowers and none would be required. 564 F.Supp. 1157 (D.Kan.) The trial court did not require specific regulations for procedure, but held that the Secretary must "accept requests for deferral ... and ... determine eligibility based on relevant statutory factors." This apparently contemplated an ad hoc determination of requests. The trial court denied plaintiffs' claims for attorney fees on the merits and on lack of a timely request. Both parties have appealed.

We agree with the trial court's determination that there has been final agency action, in this context, for review and that the agency decision is one of law. It is a construction of the statute by silence. There is no construction contained in rules or regulations, but only in the litigation of this and similar suits. We agree with the conclusion of the trial court that the statutory language is clear. This apparently is agency "action" which was not taken after either rulemaking or adjudication. We considered such informal action in City & County of Denver, Etc. v. Bergland, 695 F.2d 465 (10th Cir.), and described the scope of review. The authority of the agency "action" is thus examined. See also Rocky Mountain Oil and Gas Ass'n. v. Watt, 696 F.2d 734 (10th Cir.).

We also agree with the discussion and determination by the trial court of the standing issue, the case and controversy requirement, and that plaintiffs have suffered actual or threatened injury. The court cites Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99 S.Ct. 1601, 60 L.Ed.2d 66.

The Secretary here urges that the trial court was in error in holding that Congress intended the Secretary "to structure the exercise of discretion to allow deferral of loans to borrowers within the zone of interests to be protected under the statute," and in holding that the Secretary's "refusal" to implement the statutory provisions as to standards for deferrals was "unreasonable" and "not within the Secretary's authority."

Section 1981a was inserted into the complex farm loan structure, but its purpose and scope is clear. It provides for fundamental forms of relief in particular situations--thus for deferral of interest payments, of payments on principal, and importantly it provides that the Secretary could "forego" foreclosure under certain described circumstances all in his discretion exercised within the statutory conditions.

Congress has many times in connection with farm legislation expressed its objective to foster and encourage family farms (7 U.S.C. Sec. 2266(a)) and to keep existing farms operating (7 U.S.C. Sec. 1921). In 1978 Congress passed the Agricultural Credit Act of 1978 (Pub.L. No. 95-334) with the expressed intention to expand the power of FmHA to meet the then acute financial needs and problems of the farmers (H.Rep. 986, 95th Cong., 2d Sess. (1978)), U.S.Code Cong. & Admin.News 1978, p. 1106.

Section 122 of Pub.L. No. 95-334 became 7 U.S.C. Sec. 1981a with which we are concerned and it reads in part:

"In addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferral of principal and interest on any outstanding loan made, insured, or held by the Secretary under this chapter, or under the provisions of any other law administered by the Farmers Home Administration, and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrower's control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower. The Secretary may permit interest that accrues during the deferral period on any loan deferred under this section to bear no interest during or after such period ...."

Congress intended to create a remedy or permit relief for certain borrowers for whom...