Nelson v. Farm Credit Services of North Dakota

Decision Date09 August 2005
Docket NumberCase No. A4-05-012.
Citation380 F.Supp.2d 1061
PartiesKevin M. NELSON and Julie R. Nelson, Plaintiffs, v. FARM CREDIT SERVICES OF NORTH DAKOTA, PCA, Defendant.
CourtU.S. District Court — District of North Dakota

Kevin M. Nelson, Kenmare, ND, pro se.

Richard P. Olson, Olson, Burns, Lee, Minot, ND, for defendant.

Julie Nelson, Kenmare, ND, pro se.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

HOVLAND, Chief Judge.

Before the Court is the Defendant's "Motion to Dismiss Verified Complaint" filed on February 15, 2005. The Nelsons have filed a response opposing dismissal and seeking summary judgment in their favor. As the Defendant has cited to materials outside the pleadings — a supporting affidavit as well as bank records — the Court will treat their motion to dismiss as a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Country Club Estates, L.L.C. v. Town of Loma Linda, 213 F.3d 1001, 1005 (8th Cir.2000).1 For the following reasons, the Defendant's motion is granted.

I. BACKGROUND

On May 8, 2002, Kevin Nelson and Julie Nelson (hereinafter referred to as "the Nelsons") executed and delivered to Farm Credit Services of North Dakota, PCA (Farm Credit Services) a Promissory Note and Addendum to Note/Loan Agreement for $210,000 with interest at 5.50% per annum. See Defendant's Ex.'s A and B. The Addendum included, among other things, a cross-default provision. See Defendant's Ex. B. By its terms, the Note was secured by "[a]ll existing and future security agreements" and a mortgage of the same date. See Defendant's Ex. A. To secure payment, the Nelsons executed and delivered to Farm Credit Services a mortgage upon the following tracts or parcels of land lying in Ward County, North Dakota:

Township 160 North, Range 89 West

Section 18: Outlot 2 of the NE¼ NE¼

See Defendant's Ex. C. The mortgage was filed in the Office of the Recorder for Ward County on May 14, 2002.

On September 8, 2003, the Nelsons executed and delivered to Farm Credit Services a Promissory Note and Addendum to Note/Loan Agreement for $44,600 with interest at 4.75% per annum. See Defendant's Ex.'s D and E. As before, the Addendum included a cross-default provision. See Defendant's Ex. E. The note was secured by "[a]ll existing and future security agreements" and a mortgage dated August 18, 2003. See Defendant's Ex. D. To secure payment, the Nelsons executed and delivered to Farm Credit Services a mortgage upon the following tracts or parcels of land lying in Ward County, North Dakota:

Township 160 North, Range 89 West

Section 18: Outlot 2 of the NE¼ NE¼

See Defendant's Ex. F. The mortgage was filed in the Office of the Recorder for Ward County on August 21, 2003.

The Nelsons failed to make installment payments as agreed upon and defaulted on their obligation to Farm Credit Services. On January 21, 2005, Farm Credit Services sent the Nelsons a Notice Before Foreclosure regarding the mortgaged land. See Defendant's Ex. F.

On January 24, 2005, Kevin Nelson, acting pro se, filed the underlying action against Farm Credit Services in United States District Court for the District of North Dakota which includes the following factual allegations:

This is an action for rescission of an illegal and void Mortgage and Note to certain real estate. This purported mortgage and note and the actions taken by Defendant certain unfair trade practices and predatory lending practices. Plaintiff also seeks recovery for damages for non-disclosure of Plaintiff's right to cancel, non-disclosure of certain Truth in Lending disclosures and Federal violations of numerous consumer rights.

. . . . .

Either before, during and/or after the settlement of the two loans, Defendant failed and/or refused to provide Plaintiff with copies of important documents, including the complete mortgage and note, which would explain their consumer rights, as well as other rights, including but not limited to, the right to cancel the contract and the Federal Truth in Lending Disclosures.

Defendant also intentionally failed and/or refused to provide Plaintiff various disclosures that would indicate to Plaintiff that the contract entered into was void and illegal. Defendant's attorney and/or settlement officer did not furnish Plaintiff with copies of numerous important settlement documents, ever in the loans history, which would have concealed to the Plaintiff that the loan encompassed the Plaintiffs principal dwelling. Plaintiff was told by the settlement agent that the transaction only secured the farm related items and animals.

Defendant or their agent did not properly disclose all mandated items to be disclosed under the Farm Credit Act. The Defendants herein and at all times relevant thereto, was under legal obligation as a fiduciary and had the responsibility of overseeing the purported loan consummation and make sure that the Plaintiffs received all mandated documentation and disclosures, before and after the purported loan transactions.

See Complaint, ¶¶ 4-5, 7-10. The Complaint includes seven "counts," summarized as follows:

Count One — Farm Credit Services failed to make required disclosures under 12 U.S.C. § 2199, resulting in a loss of property and damages. See Complaint, ¶¶ 12-15.

Count Two — Farm Credit Services failed to make required disclosures under 15 U.S.C. § 1635 et seq., resulting in loss of property and damages. See Complaint, ¶¶ 16-21.

Count Three — Farm Credit Services failed to make required disclosures under 15 U.S.C. § 1638 et seq., resulting in loss of property and damages. See Complaint, ¶¶ 22-26.

Count Four — Farm Credit Services failed to make required disclosures under 12 C.F.R. § 226 et seq., resulting in loss of property and damages. As a result, the Plaintiff seeks to rescind the loan transaction. See Complaint, ¶¶ 27-31.

Count Five — Farm Credit Services failed to advise the Plaintiff of his right to rescind the loan transaction under 12 C.F.R. § 226 et seq., resulting in loss of property and damages. See Complaint, ¶¶ 32-35.

Count Six — Farm Credit Services failed to make required disclosures under Regulation Z, 12 C.F.R. § 226 et seq., resulting in loss of property and damages. As a result, the Plaintiff seeks to rescind the loan transaction. See Complaint, ¶¶ 36-39.

Count Seven — Farm Credit Services committed fraud in its dealings with the Plaintiff resulting in loss of property and damages. See Complaint, ¶¶ 40-50.

The Complaint was later amended to include Kevin Nelson's wife, Julie R. Nelson, as a plaintiff. See Docket No. 16. The Nelsons seek rescission of the loan transaction, damages in an amount up to $2,000 for each violation, damages in the amount of $500,000 for the overall violation, punitive damages in the amount of $500,000, return of the down payment and other payments, with interest, and costs. See Complaint, ¶¶ 51-57.

II. LEGAL ANALYSIS
A. STANDARD OF REVIEW

It is well-established that summary judgment is appropriate when, viewed in a light most favorable to the non-moving party, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Graning v. Sherburne County, 172 F.3d 611, 614 (8th Cir.1999). A fact is "material" if it might affect the outcome of the case and a factual dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The basic inquiry for purposes of summary judgment is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376 (8th Cir.1996). The moving party has the initial burden of demonstrating to the Court that there are no genuine issues of material fact. If the moving party has met this burden, the non-moving party cannot simply rest on the mere denials or allegations in the pleadings. Instead, the non-moving party must set forth specific facts showing that there are genuine issues for trial. Fed.R.Civ.P. 56(e). A mere trace of evidence supporting the non-movant's position is insufficient. Instead, the facts must generate evidence from which a jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. COUNT ONE

The Nelsons allege that Farm Credit Services failed to make required disclosures under 12 U.S.C. § 2199. It is well-established that the Agricultural Credit Act (12 U.S.C. § 2001 et seq.), did not create a private right of action. Wagner v. PennWest Farm Credit, 109 F.3d 909, 913 (3d Cir.1997); Grant v. Farm Credit Bank of Texas, 8 F.3d 295, 296 (5th Cir.1993); Saltzman v. Farm Credit Services of Mid-America, ACA, 950 F.2d 466, 467-69 (7th Cir.1991); Zajac v. Federal Land Bank of St. Paul, 909 F.2d 1181 (8th Cir.1990); Griffin v. Federal Land Bank of Wichita, 902 F.2d 22, 24 (10th Cir.1990); Harper v. Federal Land Bank of Spokane, 878 F.2d 1172, 1177 (9th Cir.1989); Mendel v. Production Credit Ass'n of Midlands, 862 F.2d 180 (8th Cir.1988). The same rule applies to its predecessor statute, the Farm Credit Act and the Farm Credit Amendments of 1985. See Mendel v. Production Credit Ass'n of Midlands, 862 F.2d 180 (8th Cir.1988); Bowling v. Block, 785 F.2d 556, 557 (6th Cir.1986); Smith v. Russellville Production Credit Ass'n, 777 F.2d 1544 (11th Cir.1985). Farmer-borrowers are limited to administrative review as their exclusive remedy under the Act. Zajac, 909 F.2d 1181, 1183. As a result, there are no genuine issues of material fact with regard to Count One and this count is dismissed.

C. COUNTS TWO AND THREE

The Nelsons allege that Farm Credit Services failed to make required disclosures under 15 U.S.C. §§ 1635 and 1638. The Nelsons seek money damages for...

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