Production Credit Ass'n of Kalamazoo v. US, K85-316.
| Decision Date | 22 October 1986 |
| Docket Number | No. K85-316.,K85-316. |
| Citation | 646 F. Supp. 197 |
| Parties | PRODUCTION CREDIT ASSOCIATION OF KALAMAZOO, Plaintiff, v. The UNITED STATES, Farmer's Home Administration of the United States Department of Agriculture, John R. Block, Secretary of Department of Agriculture, Defendants. |
| Court | U.S. District Court — Western District of Michigan |
Edith A. Landman, Asst. U.S. Atty., Grand Rapids, Mich., for plaintiff.
Deming, Hughey, Lewis, Keiser, Allen & Chapman by Anne M. Fries, Kalamazoo, Mich., for defendants.
Plaintiff Production Credit Association of Kalamazoo (PCA) is a federally chartered corporation organized and existing under the Farm Credit Act of 1971. Plaintiff asserts that this Court has jurisdiction pursuant to the Federal Tort Claims Act (Act), 28 U.S.C. § 2671, et seq. and 28 U.S.C. § 1346(b). PCA alleges that the Farmers Home Administration (FmHA) was negligent in carrying out its statutory duties concerning the administering of an economic emergency loan contract of guarantee between PCA and FmHA for a loan made to Stanley Wojewnik, Jr. by PCA.
Mr. Wojewnik apparently defaulted on the PCA loan and subsequently filed bankruptcy. On April 5, 1984, PCA tried to recover its losses from FmHA based on PCA's alleged contract of guarantee. PCA alleges that it presented its administrative claim in person to the FmHA in Lansing, Michigan. PCA asserts that it supported its claim with numerous documents, including a loan summary setting forth the loan history and proposed liquidation plan.
On May 1, 1984, the State Director of FmHA reviewed the FmHA county office file and determined that no such contract of guarantee existed. See Letter of May 1, 1984 from Calvin C. Lutz to Steve May, Exhibit A attached to Plaintiff's Memorandum of Law in Support of Answer to Motion to Dismiss. On June 22, 1984, PCA, through counsel, appealed the FmHA's decision to the United States Department of Agriculture (U.S.D.A.). On October 5, 1984, PCA supplied supplemental documentation at FmHA's request. See Aff. Anne M. Fries, Exhibit B attached to Plaintiff's Memorandum of Law in Support of Answer to Motion to Dismiss. On January 14, 1985 the United States Department of Agriculture affirmed the State Director's decision.
On July 5, 1986, PCA filed an action in this Court based upon defendants' alleged breach of statutory duties. PCA alleges that the defendants, their employees, agent and/or representatives are negligent per se because of the violation of federal law. PCA also alleges that to the extent that the economic emergency loan contract of guarantee does not exit, it is as a result of the negligence of the defendants.
PCA seeks monetary damages in the amount of $332,047.04, plus interest which is 90 percent of the $368,941.15 deficiency due and owing to PCA from Stanley Wojewnik, Jr. (Ninety percent of the deficiency was the amount to be covered by the contract of guarantee.)
On July 5, 1985, PCA filed the present action "against all defendants" under the Act in this Court. On the same day PCA also filed suit in the United States Court of Claims. The Court of Claims complaint consists of three counts of express contract, implied contract, and promissory estoppel. On September 10, 1985, Judge Merow of the United States Claims Court issued an order dismissing without prejudice plaintiff's complaint against the United States pending a determination of plaintiff's monetary claim pending in this Court. Plaintiff then amended its complaint in this Court to include the contract counts alleged in the United States Claims Court action.
Following the stipulation and order of October 7, 1985 these contract counts, that is, Counts II, III, and IV, of plaintiff's first amended complaint, were held in abeyance pending the disposition of Count I, the present tort cause of action, of plaintiff's first amended complaint. It was also agreed to by the parties and ordered by this Court that after the resolution of count I of plaintiff's first amended complaint, Counts II, III, and IV, would be transferred pursuant to 28 U.S.C. § 1631 to the United States Claims Court.
The action is presently before the Court on defendant United States' motion to dismiss pursuant to Rule 12 of the Federal Rules of Civil Procedure on grounds of lack of subject matter jurisdiction.
The Act permits suits against the government for certain torts committed by government employees acting within the scope of their employment. 28 U.S.C. § 1346(b). However, before a party can bring suit in federal court, the Act requires that the claim be presented to the appropriate federal agency and there be a final denial of that claim. 28 U.S.C. § 2675(a).
The Sixth Circuit has noted that the requirements of § 2675 are met "if the claimant (1) gives the agency written notice of his or her claim sufficient to enable the agency to investigate and (2) places a value on his or her claim." Douglas v. United States, 658 F.2d 445, 447 (6th Cir.1981) (citations omitted).
Plaintiff alleges that it has satisfied the statutory prerequisite in that it "received a final determination from the United States Department of Agriculture ("U.S.D.A.") in which the decision of the State Director was affirmed, and it was determined that no valid contract of guarantee was in place." Complaint, paragraph 14. Plaintiff notes that "at both the state level and the administrative appeal level, FmHA was notified that PCA intended to make a claim on the guarantee and/or a claim based upon the events surrounding the issuance or non-issuance of the guarantee." Plaintiff's Memorandum of Law in Support of Answer to Motion to Dismiss at 5. Plaintiff also asserts that it set forth the regulations which recited the duty of the County Supervisor to provide assistance to the lender and that those duties formed the basis of this lawsuit. Finally, plaintiff notes that documentation it supplied to the FmHA provided information as to the county supervisor responsible for implementing the regulation, the amount of Mr. Wojewnik's outstanding loan balance, and the maximum amount (90%) of FmHA's liability as to the loan guarantee. Id. at 5-6.
Defendant argues that plaintiff failed to allege any negligence or fault and that the agency did not review the claim with the same degree of scrutiny to which it gives an administrative claim filed under the Act.
Defendant argues that the administrative decision that plaintiff appealed to the U.S.D.A. was the State Director's decision that there was no contract of guaranty between PCA and FmHA concerning Mr. Wojewnik's loan. Defendants' position is that this unsuccessful appeal does not satisfy the exhaustion of administrative remedies requirement which is the jurisdictional prerequisite to filing suit under the Act.
In essence, plaintiff argues that it has substantially complied with the stated purpose of Section 2675(a). Plaintiff asserts that its present claim is based upon the same operative facts of its administrative claim, and to require plaintiff to file a second claim would be to allow the government to stand on technicalities and to elevate form over substance. Plaintiff also suggests that the Court should consider equitable factors in determining the jurisdictional prerequisites have been met. See Forest v. United States, 539 F.Supp. 171 (D.Mont.1982).
Other courts, however, have noted that Gordon H. Ball, Inc. v. United States, 461 F.Supp. 311, 314 (D.C.NV.1978). But see Rogers v. United States, 675 F.2d 123 (6th Cir.1982) () (emphasis added).
The case at bar presents a close question and requires that plaintiff's factual assertions be explored in greater detail. It is clear that the State Director's decision indicated that the review of the county file was focused on the issue of whether a contract guarantee existed. In a letter addressed to Mr. Steve May of the PCA, Mr. Lutz noted the following:
See Letter of May 1, 1984 from Calvin C. Lutz to Steve May, Exhibit A attached to Plaintiff's Memorandum of Law in Support of Answer to Motion to Dismiss. The appeal of Mr. Lutz's decision was brought by PCA through legal counsel, and it is the rejection of that appeal which plaintiff alleges constitutes a final administrative decision which in turn satisfies the jurisdictional prerequisite to bringing suit under the Act.
It is true that the letter from Anne Fries, counsel for PCA, to the U.S.D.A. requesting a review of the decision of Calvin C. Lutz, State Director of the Farmer's Home Administration, contained language which indicated certain duties which the Farmer's Home Administration or its representatives have towards lenders concerning the completion of Farmer's Home Administration Forms. For example the letter indicated that:
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