Nichols v. Block

Decision Date05 March 1987
Docket NumberNo. CV-83-173-GF.,CV-83-173-GF.
Citation656 F. Supp. 1436
PartiesThomas Q. NICHOLS and Anna L. Nichols, Plaintiffs, v. John R. BLOCK, Individually and in his capacity as Secretary of the United States Department of Agriculture et al., Defendants.
CourtU.S. District Court — District of Montana


Joseph W. Duffy, Great Falls, Mont., for plaintiffs.

Carl E. Rostad, Asst. U.S. Atty., Great Falls, Mont., for defendants.

HATFIELD, District Judge.

Thomas and Anna Nichols were loan recipients under the Consolidated Farm and Rural Development Act ("CFRDA") as codified at Title 7, Chapter 50, §§ 1921 et seq., of the United States Code, and administered by the Farmers Home Administration ("FmHA"). This case arises from the allegedly improper handling of the Nichols' loan accounts by the FmHA officials charged with that responsibility. The Nichols contend those officials failed to follow the statutes and administrative regulations governing the administration of such accounts. The Nichols seek monetary compensation for the constitutional and tortious injuries they sustained as a result of the alleged nonfeasance on the part of the FmHA officials involved. The Nichols also seek monetary relief for an alleged breach by the FmHA of the rights secured the Nichols by the Privacy Act of 1974 ("Privacy Act"), 28 U.S.C. § 552a.

The Nichols invoke the jurisdiction of this court pursuant to 28 U.S.C. § 1331, the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680, and the Privacy Act, 28 U.S.C. § 552a(g)(5).

The matter is presently before the court on a consolidated Rule 12(b)(6), Fed.R. Civ.P., motion of the defendants, requesting the court to dismiss the complaint, as amended, upon the ground it fails to state a claim against any of them upon which relief can be granted.


During the period of time pertinent to this action, the Nichols owned and operated a farm near Wolf Point, Montana. In 1976, the Nichols obtained a loan from the FmHA to purchase and commence operations of their farm. Subsequently, the FmHA extended additional credit to the Nichols for use in the purchase of livestock and equipment, and otherwise meeting the general operating expenses associated with a modified confinement hog farming operation. In late 1981 economic conditions forced the Nichols to liquidate their hog herd.

The Nichols instituted the present action against the United States, acting through the FmHA, and numerous officials of that entity, both in their official and individual capacities, for damages the Nichols allegedly sustained as a result of the alleged failure of the FmHA officials to abide by the prescriptions of the statutes and regulations governing the application, servicing and collection of loans under the CFRDA.1 The Nichols assert the nonfeasance of the FmHA officials caused the demise of the Nichols' operation. The Nichols further claim the conduct of the FmHA officials in administering the Nichols' loan accounts violated the Nichols' right to due process of law under the fifth amendment to the United States Constitution. Finally, the Nichols seek monetary compensation for certain of the individual defendants' alleged violation of their right to privacy.

The bulk of the Nichols' complaint, as amended, is directed at the allegedly wrongful conduct of the local officials of the FmHA, charged with the responsibility of administering the Nichols' loan accounts during the period of time pertinent to this action. Specifically, the operative allegations of the complaint are directed solely to the conduct of two county level supervisors, i.e., Walker and Netzer, and the Farmer Program Specialist of the state office of the FmHA during the pertinent period, i.e., Greene. As well as can be ascertained from a less than cohesive complaint, the Nichols are contending these individuals wilfully and/or negligently violated the pertinent statutes and regulations in derogation of the Nichols' constitutional and common-law rights.

The complaint names numerous other FmHA officials charged with administration of the CFRDA loan programs, both at the state and national levels. The document, however, is essentially barren of any substantive factual allegations of wrongful conduct on the part of these superior officials. Rather, the Nichols rely solely upon the doctrine of respondeat superior to impose liability upon these superior officials for both the constitutional and common law torts allegedly committed by the local FmHA officials.

With respect to the United States itself, the Nichols invoke the procedural mechanism provided by the Federal Tort Claims Act to impose liability upon the United States for the alleged unconstitutional and tortious conduct of the FmHA officials.2


A. Tort Claims

It is well settled that the United States, as a sovereign, is absolutely immune from suits unless it has expressly waived its immunity and consented to suit. United States v. Shaw, 309 U.S. 495, 500-01, 60 S.Ct. 659, 661, 84 L.Ed. 888 (1940). Waiver cannot be implied, but must be unequivocally expressed. United States v. King, 395 U.S. 1, 4, 89 S.Ct. 1501, 1502, 23 L.Ed.2d 52 (1969). The existence of such consent is a prerequisite for jurisdiction. United States v. Mitchell, 463 U.S. 206, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). In accordance with the principle of sovereign immunity, damage actions against the United States for violation of constitutional rights are barred since there is not an explicit waiver of immunity. See, Bivens v. Six Unknown Named Agents of the Bureau of Narcotics, supra, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) (Harlan, J., concurring); Blackmar v. Guerre, 342 U.S. 512, 515, 72 S.Ct. 410, 411, 96 L.Ed. 534 (1952); Clemente v. United States, 766 F.2d 1358, at 1363-64 (9th Cir. 1985) cert. denied, ___ U.S. ___, 106 S.Ct. 881, 88 L.Ed.2d 917.

Sovereign immunity, likewise, bars claims against federal officials in their official capacities unless a waiver of sovereign immunity is unequivocally expressed. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 1351, 63 L.Ed.2d 607 (1980). Accordingly, government officials share in the sovereign immunity of the United States, enjoying absolute immunity from suits for common law torts provided their acts are discretionary and within the outer perimeters of their duty. See, Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 1006, 10 L.Ed.2d 15 (1963); Clifton v. Cox, 549 F.2d 722, 726 (9th Cir.1977); Owyhee Grazing Association, Inc. v. Field, 637 F.2d 694, 697 (9th Cir.1981); Gray v. Bell, 712 F.2d 490, 495-497 (D.C.Cir.1983), cert. denied, 465 U.S. 1100, 104 S.Ct. 1593, 80 L.Ed.2d 125 (1984). An official does not necessarily lose his sovereign immunity protection due to a violation of a federal statute or regulation. Larson v. Domestic and Foreign Commerce Corporation, 337 U.S. 682, 695, 69 S.Ct. 1457, 1464, 93 L.Ed. 1628 (1949); United States v. Yakima Tribal Court, 794 F.2d 1402, 1407 (9th Cir.1986). As stated by the Court of Appeals for the Ninth Circuit in Aminoil U.S.A., Inc. v. California State Water Resources Control Board, 674 F.2d 1227 (9th Cir.1982):

A simple mistake of fact or law does not necessarily mean that an officer of the government has exceeded the scope of his authority. Official action is still action of the sovereign, even if it is wrong, if it "does not conflict with the terms of the officer's valid statutory authority. ..." (citation omitted.)

674 F.2d at 1234. Consequently, there is no per se divestiture of sovereign immunity when statutes or regulations are violated while an agent is pursuing his authorized duties.

On the other hand, suits that charge federal officials with unconstitutional acts are not barred by sovereign immunity. Larson v. Domestic and Foreign Commerce Corp., 337 U.S. at 690, 696-697, 69 S.Ct. at 1464-65. As noted by the Supreme Court in Larson, when a federal official commits an unconstitutional act, he is necessarily acting outside his official capacity. Id. Therefore, any claim making such constitutional allegations against a federal official is not barred by sovereign immunity and will be within the jurisdiction of the federal court. Larson, 337 U.S. 701-702, 69 S.Ct. at 1467. The claim, however, may be made only against the official and not against the United States, as the official was necessarily acting in his individual capacity and not in his capacity as a government agent. Id.; see also, Clemente v. United States, supra at 1363-64.

In accord with the rationale of Larson is the landmark decision of Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, supra, wherein the Supreme Court recognized that federal officials may be held liable personally for acts beyond the plain limits of their statutory authority if they wilfully or knowingly violate constitutional rights. Bivens establishes that federal officials exercising discretion are divested of their absolute immunity in a suit for damages for injuries due to their unconstitutional acts.

In Butz v. Economou, 438 U.S. 478, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978), the Supreme Court recognized, however, that in a suit for damages arising from unconstitutional action, a federal executive official exercising discretion is entitled to a qualified immunity. 438 U.S. at 478, 98 S.Ct. 2894, 57 L.Ed.2d 895. This qualified immunity is in the nature of an affirmative defense and protects an official from liability only if he can show that his actions did not contravene clearly established constitutional rights of which a reasonable person in his position would have known. See, Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982); Gray v. Bell, supra, at 495-497. The standard is the objective reasonableness of the federal official's conduct. Harlow, 457 U.S. at 818, 102 S.Ct. at 2738. Thus, federal officials who violate constitutional rights are entitled to immunity if the...

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