Mitchell v. Johanns, 4:04 CV 90003(L).
| Decision Date | 15 November 2005 |
| Docket Number | No. 4:04 CV 90003(L).,No. 4:04-CV-90128.,4:04 CV 90003(L).,4:04-CV-90128. |
| Citation | 400 F.Supp.2d 1133 |
| Parties | Maurice D. MITCHELL, Sr., Plaintiff, v. Mike JOHANNS, Secretary of Agriculture in his official capacity, Defendant. Marvin Mitchell and Marlene Mitchell, Plaintiffs, v. Mike Johanns, Secretary of Agriculture in his official capacity and the United States of America, Defendants. |
| Court | U.S. District Court — Southern District of Iowa |
Gary L Hayward, United States Attorney, Des Moines, IA, for Department of Agriculture Sued as: Ann Venneman, Secretary of Agriculture in Her Official Capacity, Defendant.
David L Leitner, Leitner Law Office, Johnston, IA, for Marlene Mitchell, Marvin Mitchell, plaintiffs.
Peter C Riley, Riley Law Firm, Cedar Rapids, IA, for Maurice Mitchell, Sr., plaintiff.
In 1998, the United States Department of Agriculture (USDA) found that Plaintiffs Maurice D. Mitchell, Sr., Marvin Mitchell, and Marlene Mitchell, together with Steve Agan and George Paul, devised a scheme to evade limitations placed upon the amount of farm program benefits they could receive from the federal government in 1997. All three Plaintiffs repaid the farm program benefits they had received for the years 1997 and 1998, as they were required to do under the applicable penalty regulation. In 2002, the USDA determined that the three Plaintiffs were jointly and severally liable for the farm program benefits received by Agan and Paul in the years 1997 and 1998. Having exhausted their administrative remedies, the Plaintiffs now appeal that determination.
In 1998, the Farm Service Agency (FSA) initiated administrative proceedings against Maurice Mitchell, Sr., and his son and daughter-in-law, Marvin and Marlene Mitchell, alleging that they participated in a scheme or device to evade FSA payment limitations for the year 1997. The FSA concluded the Mitchells did participate in such a scheme, along with Agan and Paul, who worked as contractors on the Mitchell's farm (Admin Rec. 1710-21). The FSA found that Maurice Mitchell, Sr., Marvin and Marlene Mitchell, Agan, and Paul had applied as five separate persons for FSA payment purposes, even though FSA records reflected that there were only two persons eligible for payments in 1996 (Admin Rec. 4, 1718; Appeal Rec. 12, 13). The FSA also found that the Mitchells did not actively engage in farming in 1997 despite collecting FSA payments for that year (Admin Rec. 1718, Appeal Rec. 9, 11, 17). The Mitchells appealed the decision to the USDA National Appeals Division (NAD), which upheld the findings against them (Appeal Rec. 13, 17). The Mitchells did not attempt to appeal the findings any further. As required under the relevant penalty regulation, 7 C.F.R. § 1400.5, the Mitchells repaid the FSA farm payments they had received in 1997 and 1998.1
In 2002, Marvin and Marlene Mitchell filed for bankruptcy. Apparently prompted by the bankruptcy proceedings, the Iowa State Committee of the USDA ("Committee") determined, on September 18, 2002, that Marvin and Marlene Mitchell were jointly and severally liable for the repayment of the farm payments that Agan and Paul received in 1997 and 1998 (Appeal Rec. 26). The Committee made the same determination with respect to Maurice Mitchell, Sr. Brief of Maurice Mitchell, Sr. at 1.
The Mitchells appealed the September 18, 2002 decision to the National Appeals Division, which denied their appeals on the ground that the decisions were not appealable because joint and several liability is a matter of general applicability (Appeal Rec. 3). See 7 C.F.R. § 11.6(a)(2) ().
Maurice Mitchell, Sr. filed a Complaint (Clerk's No. 1) with this Court on January 5, 2004, seeking declaratory relief. Marvin and Marlene Mitchell also filed a Complaint with this Court on February 27, 2004, seeking declaratory relief and a refund of monies withheld from them, plus interest. Marvin and Marlene Mitchell also sought damages (Case No. 4:04-cv-90128). On April 27, 2004, the Court consolidated the two cases (Clerk's No. 7). On February 25, 2005, the Court ordered dismissal of the Mitchells' claim for monetary damages because none of the statutes waiving sovereign immunity permitted an award of monetary damages against the federal government (Clerk's No. 13). The Court did not dismiss the Mitchells' claims seeking declaratory relief. Maurice Mitchell, Sr. filed a brief with the Court on July 27, 2005, as did Marvin and Marlene Mitchell (Clerk's Nos. 21, 27). The Government filed a brief on August 24, 2005 (Clerk's No. 24). The Plaintiffs did not file a reply brief. The matter is fully submitted. See Local Rule 7.1(g) ().
Judicial review of a NAD decision is authorized under 7 U.S.C. § 6999, which states: "A final determination of the [National Appeals] Division shall be reviewable and enforceable by any United States district court of competent jurisdiction in accordance with chapter 7 of Title 5." Judicial review is also appropriate under the Administrative Procedure Act, 5 U.S.C. § 704.
An agency's interpretation of the statutes and regulations it administers is subject to de novo review, a standard under which the Court accords substantial deference to the agency's interpretation. Patel v. Ashcroft, 375 F.3d 693, 696 (8th Cir.2004) (citing Regalado-Garcia v. INS, 305 F.3d 784, 787 (8th Cir.2002)). The Court "will defer to an agency's interpretation of ... a statute if that interpretation is consistent with the plain meaning of the statute or is a permissible construction of an ambiguous statute." Coal. for Fair and Equitable Reg. of Docks on Lake of the Ozarks v. FERC, 297 F.3d 771, 778 (8th Cir.2002) (citing Escudero-Corona v. INS, 244 F.3d 608, 613 (8th Cir.2001)), cert. denied, 538 U.S. 960, 123 S.Ct. 1749, 155 L.Ed.2d 511 (2003); see generally Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The Court also accords substantial deference to an agency's interpretation of its own regulations and will uphold that interpretation "unless it violates the Constitution or a federal statute, or unless the interpretation is `plainly erroneous or inconsistent with the regulation'" Coal. for Fair and Equitable Reg. of Docks on Lake of the Ozarks, 297 F.3d at 778 (quoting Univ. of Iowa Hosps. and Clinics v. Shalala, 180 F.3d 943, 950-51 (8th Cir.1999)); see also Gardebring v. Jenkins, 485 U.S. 415, 430, 108 S.Ct. 1306, 99 L.Ed.2d 515 (1988); 5 U.S.C. § 706(2)(B) & (C).
The Mitchells do not challenge the outcome of the 1998 and 1999 proceedings, and, as the Defendants note in their brief, the deadline for appealing those proceedings has passed. See 28 U.S.C. § 2401(a); Spannaus v. U.S. Dep't of Justice, 824 F.2d 52, 56 (D.C.Cir.1987). The Mitchells challenge only the finding, in 2002, that they are jointly and severally liable for debts incurred by Paul and Agan as a result of the 1998 and 1999 proceedings.
Under regulations promulgated by the USDA, parties may be held jointly and severally liable if they are considered to be "one person" under the regulatory scheme:
If two or more individuals or entities are considered to be one person and the total payment received is in excess of the applicable payment limitation provision, such individuals or entities shall be jointly and severally liable for any liability that arises therefrom. The provisions of this section shall be applicable in addition to any liability that arises under a criminal or civil statute.
7 C.F.R. § 1400.7. The Mitchells argue that the five participants in the scheme — Maurice Mitchell, Marlene and Marvin Mitchell, Paul, and Agan — were not "one person" within the meaning of the term in 7 C.F.R. § 1400.7 and, therefore, cannot be held jointly and severally liable for one another's debts under the regulation. The term "person" is defined in 7 C.F.R. § 1400.3, which the Court sets forth below: Person. (1) A person is:
(i) An individual, including any individual participating in a farming operation as a partner in a general partnership, a participant in a joint venture, or a participant in a similar entity;
(ii) A corporation, joint stock company, association, limited partnership, limited liability partnership, limited liability company, irrevocable trust, revocable trust combined with the grantor of the trust, estate, or charitable organization, including any such entity or organization participating in the farming operation as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or as a participant in a similar entity;
(iii) A State, political subdivision, or agency thereof.
7 C.F.R. § 1400.3 (def. of person (1)). The regulation goes on to explain that, in order to be considered a separate person, an individual must meet certain requirements:
(2) In order for an individual or entity, other than an individual or entity that is a member of a joint operation, to be considered a separate person for the purposes of this part, in addition to other provisions of this part, the individual or entity must:
(i) Have a separate and distinct interest in the land or the crop involved;
(ii) Exercise separate responsibility for such interest; and
(iii) Maintain funds or accounts separate from that of any other individual or entity for such interest.
7 C.F.R. § 1400.3 (def. of person (2)). The Government contends that, in 1999, the NAD Hearing Officer found, and the NAD Director Review affirmed, that the Mitchells were not separate persons because they did not maintain separate...
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