Smith v. Russellville Production Credit Ass'n, No. 85-7084
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
| Writing for the Court | Before GODBOLD, Chief Judge, JOHNSON, Circuit Judge, and TUTTLE; JOHNSON |
| Citation | 777 F.2d 1544 |
| Docket Number | No. 85-7084 |
| Decision Date | 12 December 1985 |
| Parties | Charles Stinson SMITH and Jimmie Dean Smith, Plaintiffs-Appellants, v. RUSSELLVILLE PRODUCTION CREDIT ASSOCIATION, et al., Defendants-Appellees. |
Page 1544
v.
RUSSELLVILLE PRODUCTION CREDIT ASSOCIATION, et al.,
Defendants-Appellees.
Eleventh Circuit.
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Joe R. Whatley, Jr., Charles F. Norton, Falkenberry, Whatley & Heidt, Birmingham, Ala., for plaintiffs-appellants.
Bedford, Bedford & Rogers, Robert I. Rogers, Jr., Russellville, Ala., Maynard, Cooper, Frierson & Gale, James L. Goyer, III, Maibeth J. Porter, Birmingham, Ala., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Alabama.
Before GODBOLD, Chief Judge, JOHNSON, Circuit Judge, and TUTTLE, Senior Circuit Judge.
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JOHNSON, Circuit Judge:
Appellants, the Smiths, are lifelong family farmers. Starting in 1967, the Smiths became almost totally dependent on appellee Russellville Production Credit Association ("RPCA") for their credit needs. The RPCA is a federally chartered Production Credit Association ("PCA").
In January 1983, the Smiths negotiated a $92,000 loan from the RPCA, payable on January 1, 1984. In return for this loan, the Smiths mortgaged their house, crops, farm equipment, and RPCA stock. The year 1983 was an economic disaster for the Smiths. As of February 23, 1984, the Smiths owed the RPCA about $74,846, the Smiths having failed to discharge their repayment obligation on January 1, 1984. The Smiths received a certified letter from the RPCA on February 23 demanding payment in full of that amount, such payment to be received no later than March 2, 1984.
The Smiths requested that the RPCA enter into a nondisturbance agreement regarding the Smiths' farm equipment so that they could get a disaster loan from the Farmer's Home Administration and make a crop with the equipment in 1984. Then, on March 2, 1984, the Smiths filed a pro se complaint against the RPCA in the United States District Court for the Northern District of Alabama. In their complaint, the Smiths sought compensatory and punitive damages for alleged violations of both federal and state law.
The RPCA, exercising its rights under the security agreement, repossessed the Smiths' farm equipment in June 1984, and applied the sale proceeds to the outstanding loan balance. On September 5, 1984, the United States Small Business Administration ("SBA") purchased the balance of the Smiths' account, eliminating the Smiths' debt to the RPCA.
The pro se complaint was consolidated with three other similar cases filed by farmers, and then dismissed without prejudice on April 9, 1984, with leave to amend. The farmers filed an amended complaint on April 30, 1984, which complaint contained eight counts. The amended complaint included allegations that the RPCA had violated the requirements of the Farm Credit Act, 12 U.S.C.A. Sec. 2001 et seq., and the Truth-in-Lending Act ("TILA"), 15 U.S.C.A. Sec. 1605; and that the RPCA was guilty of fraudulent misrepresentation and wrongful foreclosure. The farmers sought compensatory and punitive damages.
On July 26, 1984, the court granted partial summary judgment in favor of the RPCA on two of the counts. After holding a pretrial hearing in December 1984, the court on January 23, 1985, granted partial summary judgment on four of the other counts and on the issue of punitive damages. The district court retained jurisdiction over the remaining state tort claims for fraudulent misrepresentation and wrongful foreclosure.
The Smiths filed a timely notice of appeal of the district court's order. The issues the Smiths raise on appeal are: (1) that the court erred in holding there is no private cause of action under the Farm Credit Act; (2) that the court erroneously determined as a fact that the loan transactions involved in the present case were made for agricultural purposes, and were therefore exempt from the disclosure requirements of the TILA; and (3) that the court erred in holding that the RPCA could not be liable for punitive damages because of sovereign immunity.
I. Farm Credit Act Does Not Create Private Right of Action
Appellants contend that the Farm Credit Act, 12 U.S.C.A. Sec. 2001 et seq., and the regulations promulgated thereunder provide them with a private right of action against the RPCA. PCAs are required by statute to prepare a program for furnishing credit to "young, beginning, and small farmers." See 12 U.S.C.A. Sec. 2207(a). In addition, a federal regulation states that, as a general policy, PCAs shall provide means of forbearance to cooperative borrowers. 12 C.F.R. Sec. 614.4510(d)(1). Appellants contend that these provisions impose affirmative legal duties on PCAs for the
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benefit of borrowers, and that borrowers have an implied private right of action to ensure that these duties are fulfilled. Appellants also argue that a statutory provision that PCAs may "sue and be sued," see 12 U.S.C.A. Sec. 2093(4), indicates that Congress intended to create an implied private right of action under the Farm Credit Act.The Farm Credit Act was enacted to improve the income and well-being of American farmers by increasing the availability of sound, adequate, and constructive credit. To accomplish this objective, Congress created a farmer-owned cooperative credit system, one component of which was the PCAs. The Farm Credit Act contains no express provision granting individuals a federal cause of action to enforce the provisions of that act. However, courts have held that a statute which fails expressly to provide a private right of action can sometimes create an implied private right of action, where a private right of action is necessary to effectuate the purpose of the statute. See Florida Commercial Banks v. Culverhouse, 772 F.2d 1513, 1515-17 (11th Cir.1985).
In considering whether a statute creates an implied right of action, courts must focus primarily on the question of legislative intent. Culverhouse, supra, at 1517; Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 99 S.Ct. 2479, 2488-89, 61 L.Ed.2d 82 (1979). In the present case, this Court must decide whether, in enacting the Farm Credit Act, Congress intended to create an implied right of action on behalf of borrowers such as the Smiths.
No private remedy exists in a statute which does not provide private rights to an identifiable class, does not prohibit conduct as unlawful, and whose legislative history is silent on the existence of a private right of action. Till v. Unifirst Federal Savings & Loan Association, 653 F.2d 152, 161 (5th Cir. Unit A 1981); Touche Ross, supra, 442 U.S. at 576, 99 S.Ct. at 2489. Appellants fail to bring to this Court's attention any language in the legislative history of the Farm Credit Act which would indicate that the act creates a private right of action. Our search revealed no such language. Also,...
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