Moralez v. Vilsack
| Decision Date | 20 December 2016 |
| Docket Number | CASE NO. 1:16-CV-0282-AWI-BAM |
| Parties | GLORIA PALACIOS MORALEZ Plaintiff, v. THOMAS J. VILSACK, Secretary, United States Department of Agriculture, Defendants. |
| Court | U.S. District Court — Eastern District of California |
Plaintiff Gloria Palacios Moralez ("Plaintiff") is a Hispanic woman. In the 1970s, Plaintiff found an 80-acre tract of land near Fresno, California, where she intended to farm. She applied to the United States Department of Agriculture's ("USDA") Farmers Home Administration ("FmHA")1 for a farm ownership loan, an operating loan, and an equipment loan that she required to acquire and farm the land. In 1980 and 1981, Plaintiff was approved for the requested loans, albeit in an amounts less than requested. Despite Plaintiff's eligibility, beginning in 1983 and continuing until 1998, FmHA refused to provide Plaintiff any additional credit. Further, FmHA denied Plaintiff loan servicing, denied disaster relief, and attempted to foreclose on Plaintiff's farm during a bankruptcy stay. In 1998, Plaintiff sold her farm. Shealleges that the adverse loan determinations and other actions taken against her by the USDA were based on racial and sex discrimination. Presently pending before the Court are plaintiff's claims for discrimination on the basis of race and sex in (1) denying loans and loan servicing in violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691 et seq., and (2) denying disaster payments in violation of the Administrative Procedures Act ("APA"), 5 U.S.C.§§ 701, et seq.
Defendant Thomas J. Vilsack, Secretary of the USDA (the "Secretary"), moves to dismiss Plaintiff's ECOA claim for lack of subject-matter jurisdiction and, in the alternative, moves for partial summary judgment. For the following reasons, the Secretary's motion to dismiss will be denied and the Secretary's motion for partial summary judgment will be granted.
The UDSA provides—now through the FSA and formerly through FmHA—ownership loans, operating loans, disaster loans, and other credit benefits and payments to farmers. Fourth Amended Complaint ("FAC"), Doc. 391 at ¶ 20; see Shiplet v. Veneman, 620 F.Supp.2d 1203, 1208-1209 (D. Mont. 2009) (). The USDA loans fall into two categories: (1) direct loans where the borrower applies directly to the FSA for financing; and (2) guaranteed loans where the FSA guarantees that it will reimburse a commercial lender for a portion of any loss that the lender may suffer on the loan. FAC at ¶ 21; see Shiplet, 620 F.Supp.2d at 1208.2
The USDA also provides what it refers to as "loan servicing"—a form of lending assistance designed to help borrowers who have trouble paying back their FSA loans. Loan servicing services include principal write downs, loan interest reductions, loan term rescheduling, loan payment deferrals, and a leaseback/buyback program that allows farmers to buyback collateral that had been lost to the USDA through foreclosure. FAC at ¶ 21.3
The USDA implemented the federal farm programs using a "three-tiered management system" broken into a national supervisory level in Washington, DC, a state level, and a county level. FAC at ¶ 24. Although "[t]he credit and benefit programs are federally funded," applications for loans and servicing are submitted, and approved or denied by committee at the county level. Pigford v. Glickman, 185 F.R.D. 82, 86 (D.D.C. 1999) aff'd, 206 F.3d 1212 (D.C. Cir. 2000); see FAC at ¶ 25.
In 1980, Plaintiff applied to FmHA for an ownership loan. FAC at ¶ 28. Immediately, the "agency engaged in discriminatory conduct against her by working hard to discourage her from completing the loan application process" by refusing to permit her to apply until "after she ... wr[o]te a special essay and ma[d]e a special presentation to the Fresno County FmHA staff." FAC at ¶¶ 28, 30. No other similarly-situated white male farmers were required write an essay or make a presentation to the FmHA. FAC at ¶¶ 28, 30. Plaintiff also alleges that the chairman of the FmHA county committee directly told Plaintiff that "farming was 'not a proper business for a woman, much less a Mexican woman with two kids.'" FAC at ¶ 30. Plaintiff's ownership loan application was denied twice for allegedly discriminatory purposes; allegedly pretextual reasons for the loan denials were given. FAC at ¶ 31. After the two denials of Plaintiff's application for an ownership loan but before the end of 1980, Plaintiff obtained a $200,000.00 limited resource farm ownership loan from FmHA. FAC at ¶ 28.
After Plaintiff used the farm ownership loan to purchase her land, "she immediately returned to FmHA for additional credit to fund equipment purchases and operating expenses." FAC at ¶ 34. In 1981, Plaintiff applied for an equipment loan in the amount of $50,000.00. FAC at ¶ 35. She was approved for an equipment loan only in the amount of $26,300.00. FAC at ¶ 35. Plaintiff also sought and obtained a $31,200.00 operating loan to plant cotton. FAC at ¶ 35. However, the funds were distributed into a supervised bank account, a condition that similarly-situated white male farmers were not subject to. FAC at ¶ 35.
In the same year, Plaintiff sought an economic emergency loan. FAC at ¶ 36. The FmHA county committee denied the loan finding that Plaintiff was not a "bona fide farmer" despite the fact that a finding of bona fide farmer status was necessary to have obtained the ownership loan obtained in the previous year. FAC at ¶ 36.
In 1983, Plaintiff was told by "the Fresno County FmHA staff," specifically Mikael Alle and Bob Pearson, to never apply for another FmHA loan again and that "they would make sure she never got one." FAC at ¶¶ 37, 40. The Fresno County FmHA denied Plaintiff's loan requests because, they told her, she had failed to comply with her farm and home plan. FAC at ¶¶ 40-41. Similarly situated white male farmers obtained additional operating and emergency loans from the Fresno County FmHA office throughout the 1980s and 1990s and were not told that variation from their farm and home plans would prevent extension of credit. FAC at ¶ 40.
From 1982 to 1992, Plaintiff annually submitted farm and home plan proposals and sought operating loans but was denied the right to file loan applications or was otherwise discouraged from filing the loan application. FAC at ¶ 41.
In 1986, FmHA proposed a restructuring of Plaintiff's debt. FAC at ¶ 47. Plaintiff agreed, but now believes that the two-year deferral of payments in exchange for a higher interest rate was not in her best interest. FAC at ¶ 47. Plaintiff alleges that no similarly situated white male farmer was required to pay a higher interest rate as a condition of a two-year deferral. FAC at ¶ 47.
In 1989, Plaintiff applied for "1951-S" loan servicing, a program under which "FmHA would write down or modify repayment terms of outstanding FmHA farm debt" to allow a farmer sufficient capital to run a successful farming operation. FAC at ¶ 49. Despite her eligibility for 1951-S servicing, the FmHA denied her proposal. FAC at ¶ 49. Instead, FmHA gave Plaintiff the option to surrender title to her property under the leaseback/buyback program. FAC at ¶ 49. Plaintiff refused the leaseback/buyback proposal in 1991. FAC at ¶ 49. Similarly situated white male farmers were given access to 1951-S servicing in the same time period. FAC at ¶ 50.
After Plaintiff refused the leaseback/buyback proposal, FmHA "aggressively sought toforeclose on [Plaintiff's] farm...." FAC at ¶ 54.
In 1992, Plaintiff filed bankruptcy and FmHA refused to have any further dealings with her. FAC at ¶ 41. However, even after a bankruptcy stay was issued, FmHA continued to try to foreclose on Plaintiff's farm.
In 1993, Plaintiff lost approximately 70% of her raisin crop. FAC at ¶ 55. She believes that the loss was a result of weather conditions or an infection by phomopsis (a grape fungus) and Pierce's Disease (a bacterium that attacks grape vines) or a combination of weather and disease. FAC at ¶ 55. Plaintiff applied to the Agricultural Stabilization and Conservation Service ("ASCS")5 for disaster relief.
Plaintiff alleges that she "filed discrimination complaints with the USDA each year from 1984 through 1990, and again in 1992, 1993, and 1994 regarding the FmHA" discrimination outlined above. FAC at ¶ 58. Plaintiff never received a response to her USDA farm loan program discrimination complaints. FAC at ¶ 58. Plaintiff also submitted similar complaints to Congressmen Ceolho, Pashayan, and Dooley of California, and Congressman Bonilla of Texas.
Since 1964, the USDA has officially prohibited discrimination in the administration of its loan programs. 29 Fed. Reg. 16,966 (Dec. 7, 1964) (promulgating 7 C.F.R. §§ 15.51-52). Since 1966, an administrative complaint process has been in place for farmers to submit claims to the USDA regarding discrimination in connection with its loan programs. See 31 Fed. Reg. 2,645 (Feb. 11, 1966) ().6 Such complaints could be filed with the Secretary, with the Office of Civil Rights Enforcement and Adjudication ("OCREA"), or with FmHA. See Pigford v. Glickman, 182 F.R.D. 341, 343 (D.D.C. 1998).
The ECOA prohibits "any creditor from discriminating against any applicant, with respect to any credit transaction ... on the basis of race, color, religion, national origin, sex or marital status, or age." 15 U.S.C. §1691(a)(1). The term "creditor" as used in the ECOA includes the United States and thereby waives the United...
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