Speck v. Federal Land Bank of Omaha

• Citation: 494 N.W.2d 628
• Decision Date: 13 January 1993
• Docket Number: Nos. 17629,17733,s. 17629
• Parties: Marvin SPECK, Ellen Speck, Shannon Speck and Shawn Speck, Plaintiffs and Appellants, v. The FEDERAL LAND BANK OF OMAHA, a corporation now identified as Farm Credit Bank of Omaha, Milton E. Nelson and Wayne Williamson, Defendants and Appellees, and Leonard Von Eye, Defendant.
• Court: Supreme Court of South Dakota

Page 628

494 N.W.2d 628

Marvin SPECK, Ellen Speck, Shannon Speck and Shawn Speck Plaintiffs and Appellants, v. The FEDERAL LAND BANK OF OMAHA, a corporation now identified as Farm Credit Bank of Omaha, Milton E. Nelson and Wayne Williamson, Defendants and Appellees and Leonard Von Eye, Defendant.

Nos. 17629, 17733.

Supreme Court of South Dakota.

Argued May 26, 1992.

Decided Jan. 13, 1993.

Rick Johnson of Johnson, Eklund & Abourezk, Gregory, for plaintiffs and appellants.

Brent A. Wilbur of May, Adam, Gerdes & Thompson, Pierre, for defendants and appellees Farm Credit Bank of Omaha and Wayne Williamson.

Carl J. Koch, Mitchell, for defendant and appellee Milton E. Nelson.

MOSES, Circuit Judge.

Marvin Speck and Ellen Speck appeal from an order granting summary judgment to the Federal Land Bank (now known as Farm Credit Bank of Omaha) and court appointed receiver Milton E. Nelson which denied their claims for violations of their civil rights and infliction of emotional distress. Shannon Speck and Shawn Speck also appeal from an order granting summary judgment which denied their claims for intentional interference with their property rights against Federal Land Bank and court receiver Nelson. The claims in this case arise from a foreclosure proceeding brought by Federal Land Bank against Marvin and Ellen Speck. We affirm.

Marvin Speck and his brother purchased a section of land in Buffalo County, South Dakota in 1967 through an FHA loan. On April 2, 1981, Marvin and Ellen Speck borrowed $85,000.00 from the Federal Land Bank to purchase the interest of Marvin Speck's brother in this section of land. The Speck's 1982 and 1983 payments were made, at least in part. The May 1, 1984 payment was never made.

On May 7, 1984, Marvin and Ellen Speck filed for protection under Chapter 11 of the United States Bankruptcy Code (reorganization of debts.) During that bankruptcy, the Bankruptcy Court issued an "automatic stay" denying any attempts by any creditor to perfect or collect a lien against the property, without waiver from the Bankruptcy Court. See 11 U.S.C. 362.

It appears that the debtors, Marvin and Ellen Speck, reached a settlement agreement with the Federal Land Bank and an order was issued approving the settlement agreement and incorporating it into a Chapter 11 plan.

Since the Specks never completed the Chapter 11 plan, the Federal Land Bank obtained a waiver from the automatic stay and commenced foreclosure proceedings. An order was obtained from the Bankruptcy Court dated July 31, 1987, nunc pro tunc to November 20, 1986. The order dismissing this first bankruptcy petition was filed by Judge Ecker on August 21, 1987.

On May 15, 1987, the Federal Land Bank commenced foreclosure proceedings against Marvin and Ellen Speck in Buffalo County.

On September 25, 1987, Marvin and Ellen Speck filed a petition for Chapter 12 bankruptcy (family farmer reorganization) which was dismissed on April 29, 1988.

On October 11, 1988, Marvin and Ellen Speck filed a petition for Chapter 11 bankruptcy. The Federal Land Bank obtained a waiver from the automatic stay on March 30, 1989. The petition was dismissed on April 19, 1990.

At no time during the foreclosure process that the Federal Land Bank started on May 15, 1987, did Marvin or Ellen Speck file an "answer" to the foreclosure complaint. Marvin and Ellen Speck represented themselves at all of the foreclosure proceedings.

On February 3, 1988, a hearing to take a default judgment on the mortgage foreclosure was held in Buffalo County. Marvin and Ellen Speck appeared at that hearing without an attorney. Marvin argued that he had been in contact with South Dakota United States Congressman Johnson's office and that under the newly enacted Agricultural Credit Act of 1987, the foreclosure could not continue until he had been offered restructuring rights and had been given certain notices. Marvin further argued that according to South Dakota United States Senator Daschle's office and Congressman Johnson's office the Agriculture Credit Act "stops any foreclosure."

The Agricultural Credit Act was signed into law on January 8, 1988, which was 25 days prior to the February 3, 1988 hearing but nine months after the commencement of the action to foreclose on the mortgage.

On February 3, 1988, some four years after the Specks had defaulted on the mortgage, a judgment of foreclosure was granted to the Federal Land Bank for the amount of the loan together with interest of $159,783.79.

All of Marvin and Ellen Speck's claims for the violation of their civil rights and infliction of emotional distress against the Federal Land Bank arose from the alleged violations of the Agricultural Credit Act of 1987. The trial court granted summary judgment to the Federal Land Bank and also to Milton E. Nelson (court appointed receiver).

Shannon and Shawn Speck alleged that they were the assignees of their parents' rights of redemption with respect to the foreclosed property. They sought to recover damages for injury to the property by Leonard Von Eye, for non-payment of real estate taxes by Milton E. Nelson acting as the receiver, and from all of the defendants for conspiring to prevent Shawn and Shannon Speck from having their possessory rights to the property and for causing emotional distress. The trial court granted summary judgment to Federal Land Bank and court receiver Milton E. Nelson denying these claims. Shannon and Shawn Speck's claims against Leonard Von Eye are not included in this appeal.

Summary judgment is proper remedy only when the moving party shows that judgment is merited as a matter of law because there is no genuine issue of material fact. First Western Bank v. Livestock Yards, 444 N.W.2d 387 (S.D.1989); Caneva v. Miners and Merchants Bank, 335 N.W.2d 339 (S.D.1983). The burden of clearly showing that no genuine issues of fact exist is on the moving party. Klatt v. Continental Ins. Co., 409 N.W.2d 366 (S.D.1987). The facts must be viewed in a light most favorable to the nonmoving party. Wilson v. Great Northern Railway Company, 83 S.D. 207, 157 N.W.2d 19 (1968). See also, Kaarup v. St. Paul Fire and Marine Insurance, 485 N.W.2d 802 (S.D.1992).

Marvin Speck and Ellen Speck pled a cause of action for intentional infliction of emotional distress against the defendants:

1. That the defendant Federal Credit Bank of Omaha disregarded plaintiffs rights under the Agricultural Credit Act of 1987 in completing the foreclosure.

2. That Defendant Nelson, the court appointed receiver, failed to comply with federal law (The Agricultural Credit Act of 1987) in proceeding to lease out the property to Marvin and Ellen Speck following the foreclosure hearing.

3. That defendants, Federal Land Bank, Wayne Williamson and Nelson, conspired together and acted to intentionally inflict emotional distress upon the plaintiffs by their actions in and around the foreclosure.

4. That defendant Nelson exacerbated the intentional infliction of emotional distress by making defamatory statements to others that Marvin Speck was dangerous.

The Eighth Circuit Court of Appeals has determined that there is no private right of enforcement under the Agricultural Credit Act of 1987. See, Zajac v. Federal Land Bank of St. Paul, 909 F.2d 1181 (8th Cir.1990). See also In re Jarrett Ranches, Inc., 107 B.R. 963 (Bkrtcy.D.S.D.1989); Harper v. Federal Land Bank of Spokane, 878 F.2d 1172 (9th Cir.1989); cert. denied, 493 U.S. 1057, 110 S.Ct. 867, 107 L.Ed.2d 951 (1990). The prevailing view of the federal courts is that by enacting a comprehensive scheme with the integrated system of procedures for enforcement Congress clearly intended administrative review to be the exclusive remedy available to borrowers for alleged violations of the Agricultural Credit Act. The result is that the state courts are precluded from creating additional legal or equitable remedies. Zajac v. Federal Land Bank of St. Paul, supra; Harper v. Federal Land Bank, supra; Griffin v. Federal Land Bank of Wichita, 902 F.2d 22 (10th Cir.1990). See also, Federal Land Bank of Spokane v. Wright, 120 Idaho 32, 813 P.2d 371 (Idaho App.1991); Federal Land Bank of Omaha v. Jensen, 415 N.W.2d 155 (S.D.1987); Yankton Prod. Credit Ass'n. v. Jensen, 416 N.W.2d 860 (S.D.1987); Mendel v. Production Credit Ass'n. of the Midlands, 656 F.Supp. 1212 (D.S.D.1987); Mendel v. Production Credit Ass'n. of the Midlands, 862 F.2d 180 (8th Cir.1988).

Marvin and Ellen Speck claim that the Federal Land Bank disregarded their rights under the Agricultural Credit Act of 1987 by not stopping the foreclosure and failing to comply with the provisions of the Agricultural Credit Act. 12 U.S.C. 2202a(b)(3) provides that:

No qualified lender may foreclose or continue any foreclosure proceeding with respect to any distressed loan before the lender has completed any pending consideration of the loan for restructuring under this section.

In Federal Land Bank of Spokane v. L.R. Ranch Co., 926 F.2d 859 (9th Cir.1991), the borrowers characterized 12 U.S.C. 2202a(b)(3) as a mandatory statutory provision stopping foreclosure. The Ninth Circuit Court of Appeals stated:

While we agree that its language clearly prohibits lenders from initiating or continuing foreclosure proceedings before they have "completed any pending consideration of the loan for restructuring," neither the section itself nor any other section of the Act suggests that it operates directly on a state court foreclosure proceeding or that the borrower can enforce the provision in that setting. Nor do the borrowers cite any provisions of Montana law that would allow or require importation of the requirements of a federal statute directed at a federal agency into state foreclosure actions.

926 F.2d at 863. From the record it appears that the Federal Land Bank complied with all of the provisions of the Agricultural Credit Act of 1987, and delayed proceedings in the state foreclosure action to comply with the...