Schroder v. Volcker

• Citation: 646 F. Supp. 132
• Decision Date: 15 October 1986
• Docket Number: Civ. A. No. 85-C-2650.
• Parties: Derral SCHRODER and Gladys F. Schroder, Plaintiffs, v. Paul VOLCKER, Chairman of the Federal Reserve Board, et al., Defendants.
• Court: U.S. District Court — District of Colorado

646 F. Supp. 132

Derral SCHRODER and Gladys F. Schroder, Plaintiffs, v. Paul VOLCKER, Chairman of the Federal Reserve Board, et al., Defendants.

Civ. A. No. 85-C-2650.

United States District Court, D. Colorado.

October 15, 1986.

Roger C. Elletson, Elletson, Doby & Felde, Cheyenne, Wyo., for plaintiffs.

Richard J. Nolan, Sp. Asst. U.S. Atty., Charles M. Johnson, Jack L. Smith, Holland & Hart, Denver, Colo., for defendants.

ORDER

CARRIGAN, Judge.

On or about January 29, 1985, either the defendant Federal Land Bank of Wichita, Kansas, or the defendant Federal Land Bank Association of Lamar, Colorado, commenced foreclosure proceedings on the plaintiffs' property. Plaintiffs subsequently brought this action alleging numerous claims against the defendants. Defendants have moved to dismiss the action. The parties have thoroughly briefed all issues and oral argument would not materially assist my decision. Jurisdiction is based on 28 U.S.C. §§ 1331 and 1334.

Plaintiffs are stockholders in and borrowers from various defendant farm credit institutions. Defendants can be divided into two groups: (1) The farm credit defendants are affiliated with the Farm Credit System. They are the Board of Directors of the Ninth Farm Credit District, Sam G. Eberly, the Federal Land Bank of Wichita, Jack Perry, the Federal Land Bank Association of Lamar, Alton B. Warren, the Federal Intermediate Credit Bank of Wichita, the Farm Credit Center Servicing of Southeast Colorado (formerly the Production Credit Association of LaJunta, Colorado) and Charles Armstrong. (2) The federal defendants are affiliated with the Federal Reserve System. They are Paul Volcker, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of Kansas City-Denver Branch, Wayne M. Martin, the Federal Reserve Bank of Chicago, Silas Keehn, John W. Gabbert, Barry F. Sullivan, O.J. Tomson and Donald E. Wilkinson. The complaint is unclear as to whether the defendants are being sued in their individual capacities, official capacities, or both. For purposes of this motion, I will assume that they are being sued in both capacities.

The farm credit defendants move to dismiss the plaintiffs' complaint arguing that it fails to state a claim upon which relief can be granted. The farm credit defendants also seek attorneys' fees and costs. The federal defendants move to dismiss the plaintiffs' complaint on several grounds, including the argument that the complaint fails to state a claim upon which relief can be granted. Because the plaintiffs' complaint fails to state a claim upon which relief can be granted, I will not address the other issues raised by the federal defendants' motion to dismiss.

On a motion to dismiss, the court must construe the complaint in the light most favorable to the plaintiff. 5 C. Wright & A. Miller, Federal Practice and Procedure, § 1357 at 594 (1969). The court should not dismiss the complaint for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief". Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).

Plaintiffs allege in their first claim for relief that the defendants violated 7 U.S.C. § 2266. Defendants assert that the statute does not create a private right of action in favor of the plaintiffs.

The central inquiry in determining whether a private remedy is implicit in a statute is "whether Congress intended to create, ... a private cause of action." Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S.Ct. 2479, 2489, 61 L.Ed.2d 82 (1979). Courts traditionally consider three factors:

First, is the plaintiff "one of the class for whose especial benefit the statute was enacted," ... that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? ... Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087-88, 45 L.Ed.2d 26 (1975). (Id. 442 U.S. at 575, 99 S.Ct. at 2489.)

Here, 7 U.S.C. § 2266 does not expressly grant a federal right in favor of the plaintiffs. Nor does its legislative history indicate whether it creates a private right of action. Moreover, 7 U.S.C. § 2266 does not proscribe any conduct as unlawful. My inquiry must end there. See Touche Ross & Co., 442 U.S. at 576, 99 S.Ct. at 2489. I cannot hold that Congress either expressly or by implication intended to create a private right of action under 7 U.S.C. § 2266. Accordingly, the plaintiffs' first claim for relief fails to state a claim upon which relief can be granted.

Plaintiffs allege in their second claim for relief that the defendants violated a provision of the Farm Credit Act, 12 U.S.C. § 2001. Courts have consistently held, however, that Congress did not intend to create a private right of action under the Farm Credit Act. Bowling v. Block, 785 F.2d 556 (6th Cir.1986); Smith v. Russellville Production Credit Association., 777 F.2d 1544, 1546-48 (11th Cir.1985); Farmer v. Wilkinson, No. 4-85-1448, slip op. at 7-8 (D.Minn. March 20, 1986 Available on WESTLAW, DCTU database); Apple v. Miami Valley Production Credit Association., 614 F.Supp. 119, 120-23 (S.D.Ohio 1985). I agree with these decisions. Therefore, the plaintiffs' second claim for relief fails to state a claim under 12 U.S.C. § 2001.

Plaintiffs allege in their third claim for relief that the defendants violated RICO, 18 U.S.C. §§ 1961 et seq., through collection of an unlawful debt and by means of mail and wire fraud. A plaintiff bringing a RICO claim must allege that the defendant, through the commission of acts constituting a pattern of racketeering activity, directly or indirectly participated in an "enterprise," the activities of which affected interstate or foreign commerce. Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2nd Cir.1983), cert. denied, 465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984); Saine v. A.I.A., Inc., 582 F.Supp. 1299, 1302 (D.Colo.1984); 18 U.S.C. § 1962(a)-(c). The alleged enterprise cannot be the same as the RICO defendant. Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir.1984); United States v. Computer Sciences Corp., 689 F.2d 1181, 1190-91 (4th Cir. 1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983); Lee v. Anderson, No. 86-C-233, slip op. at 5-6 (D.Colo. April 21, 1986).

Here, the plaintiffs have not alleged that any defendant was associated with an enterprise other than the banks named as defendants in this action. Moreover, the plaintiffs have not alleged any facts to support their claim that the debt was unlawful under 18 U.S.C. § 1961. Nor have the plaintiffs alleged facts to show that the federal defendants have devised or intended to devise a scheme to defraud in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343. Therefore, the plaintiffs have failed to state a claim under RICO.

Plaintiffs assert in their fourth claim for relief that the defendants violated 42 U.S.C. § 1983 by using the foreclosure laws of the state of Colorado to deprive the plaintiffs of their property. "Title 42 U.S.C. § 1983 provides a remedy for deprivations of rights secured by the Constitution and laws of the United States when that deprivation takes place `under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory ...'" Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922, 925, 102 S.Ct. 2744, 2747, 73 L.Ed.2d 482 (1982). State action occurs when the defendants are state actors or when the defendants use state legal procedures which allow state officials to attach property on an ex parte application. Id. at 943, 102 S.Ct. at 2756-57; Earnest v. Lowentritt, 690 F.2d 1198, 1201 (5th Cir.1982). A private party's misuse of a state statute, standing alone, does not constitute conduct that can be attributed to the state. Id.

Here, the plaintiffs do not allege that the defendants were state actors or that the foreclosure laws of the state of Colorado permitted state officials to sell the plaintiffs' property without first giving notice to the plaintiffs and the opportunity for the plaintiffs to contest the seizure and sale of their property. Therefore, the plaintiffs have failed to allege that the defendants acted under color of state law as required by 42 U.S.C. § 1983.

Plaintiffs also assert in their fourth claim for relief that the defendants violated 42 U.S.C. § 1985. I am assuming that the plaintiffs are asserting a claim under 42 U.S.C. § 1985(3), since §§ 1985(1) and (2) do not seem to apply to this case. A plaintiff bringing a claim under 42 U.S.C. § 1985(3) must allege a "racial, or perhaps otherwise class-based, invidiously discriminatory animus behind the conspirator's action." Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971). Plaintiffs do not allege this in their complaint. Plaintiffs assert in their "Memorandum in Support of Farm Credit Defendants' Motion to Dismiss" that the family farmers of America, including the plaintiffs, constitute a political class. Assuming that the family farmers of America constitute a class, animus directed against them would be motivated by their economic status rather than their political or racial status. Section 1985(3), however, does not reach "conspiracies motivated by bias towards others on account of their economic views, status, or activities." United Brotherhood of Carpenters & Joiners of America, Local 610, AFL-CIO v. Scott, 463 U.S. 825, 837, 103 S.Ct. 3352, 3361, 77 L.Ed.2d 1049 (1983). Therefore, the plaintiffs' § 1985(3) claim fails to state a claim upon which relief can be granted.

Finally, the plaintiffs assert in their fourth claim for relief that the defendants violated 42 U.S.C. § 1988. Since the plaintiffs have failed...