VanLeeuwen v. Farm Credit Admin.

• Decision Date: 12 December 1984
• Docket Number: Civ. No. 83-1413-PA.
• Citation: 600 F. Supp. 1161
• Parties: George VanLEEUWEN, Herbert C. Coleman, William A. Kessi, Ed Ammon, and Fred Kaser, Plaintiffs, v. The FARM CREDIT ADMINISTRATION; Donald J. Wilkinson; the Federal Intermediate Credit Bank of Spokane, Washington; Larry K. Butterfield; Twelfth Farm Credit District; and Ronald Bokma, Defendants.
• Court: U.S. District Court — District of Oregon

600 F. Supp. 1161

George VanLEEUWEN, Herbert C. Coleman, William A. Kessi, Ed Ammon, and Fred Kaser, Plaintiffs, v. The FARM CREDIT ADMINISTRATION; Donald J. Wilkinson; the Federal Intermediate Credit Bank of Spokane, Washington; Larry K. Butterfield; Twelfth Farm Credit District; and Ronald Bokma, Defendants.

Civ. No. 83-1413-PA.

United States District Court, D. Oregon.

December 12, 1984.

COPYRIGHT MATERIAL OMITTED

William D. Brandt, Ferder, Ogdahl & Brandt, Salem, Or., Henry A. Carey, Henry A. Carey, P.C., Portland, Or., for plaintiffs.

Clifford N. Carlsen, Jr., R. Alan Wight, Richard A. Edwards, Miller, Nash, Wiener, Hager & Carlsen, Portland, Or., for defendants The Federal Intermediate Credit Bank of Spokane, Wash., Larry K. Butterfield, Twelfth Farm Credit Dist. and Ronald Bokma.

Charles H. Turner, U.S. Atty., Jack G. Collins, Asst. U.S. Atty., Portland, Or., Richard K. Willard, Acting Asst. Atty. Gen., Sandra M. Schraibman, Stanley Dalton Wright, Wendy B. Kloner, U.S. Dept. of Justice, Civ.Div., Washington, D.C., for defendants The Farm Credit Ass'n and Donald J. Wilkinson.

PANNER, Chief Judge.

Plaintiffs are five shareholders and former directors of the Willamette Production Credit Association (WPCA). Defendants are The Farm Credit Association (FCA); its Governor, Donald J. Wilkinson; The Federal Intermediate Credit Bank of Spokane, Washington (FICB); its President, Larry K. Butterfield; the Twelfth Farm Credit District; and the Chairman of its Board, Ronald Bokma. Plaintiffs' first complaint alleged that the FCA improperly devalued security on loans and charged off assets when performing a special audit of the WPCA's books. On October 5, 1983, I restrained defendants from appointing a receiver for the WPCA and from beginning its liquidation. On October 26, 1983, I granted a preliminary injunction which declared the FCA's June 30, 1983, special audit to be null and void, set aside the August 10, 1983, order of the FCA governor, enjoined defendants from soliciting or assisting any WPCA borrower to transfer to the Central Oregon Production Credit Association, and restored the status quo of the WPCA to what it was as of August 9, 1983 (this restoration included reinstatement of plaintiffs as WPCA directors, reinstatement of the WPCA's bylaws, and withdrawal of a finding of impairment of the WPCA's stock). See generally VanLeeuwen v. The Farm Credit Assoc., 577 F.Supp. 264 (D.C.Or.1983).

On May 15, 1984, I dismissed this action with prejudice. My dismissal was based on a stipulated agreement filed with the court and signed by all parties. See Appendix I, Stipulation and Agreement of Dismissal. The parties agreed that the WPCA was in default and insolvent. They further agreed that, based on an adequate second examination of the WPCA, the FCA had the authority to place the WPCA into involuntary liquidation. The WPCA requested the FCA approve the Board's March 8, 1983, resolution and place the WPCA in voluntary liquidation in accord with that resolution (except for item 2). The FCA agreed to approve the charter of a new production credit association in accordance with the terms of a May 4, 1984, letter of Governor Wilkinson. The parties agreed to dismissal with prejudice and that each party would bear its own costs and attorneys' fees.

DISCUSSION

On June 18, 1984, plaintiffs filed a related case, Coleman, et al. v. Federal Intermediate Bank of Spokane, Washington, et al., CV 84-6251E-PA, involving essentially the same parties. I dismissed that case on the grounds that it was barred by res judicata.

On September 25, 1984, plaintiffs filed a motion to set aside judgment, to show cause, and for leave to file an amended complaint in the present case. After a hearing on that motion and extensive briefing by all parties, I grant plaintiffs' motion to set aside the judgment pursuant to Fed. R.Civ.P. 60(b)(6). I will hold an evidentiary hearing on whether defendants have violated the terms of the stipulation. I grant plaintiffs' motion to file an amended complaint. I will not decide plaintiffs' motion for an order to show cause until the evidentiary hearing is held.

Plaintiffs ask that the judgment in this case be set aside pursuant to Fed.R.Civ.P. 60(b), subsections (1), (2), (3), or (6). Rule 60(b) states, in relevant part:

On motion and upon such terms as are just, the court may relieve a party ... from a final judgment, ... for the following reasons: (1) mistake, inadvertance, surprise, or excusable neglect; (2) newly discovered evidence by which due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; ... or (6) any other reason justifying relief from the operation of the judgment ....

RELIEF FROM JUDGMENT PURSUANT TO FED.R.CIV.P. 60(b)(6).

Relief under subsection (6) can be obtained only for reasons other than the five listed in subsections (1)-(5) of the rule. Corex Corp. v. United States, 638 F.2d 119, 121 (9th Cir.1981). Subsection (6) only applies where there are extraordinary circumstances. Id. A motion under Rule 60(b) is within the district court's discretion and is reviewed only for an abuse of that discretion. United States v. Sparks, 685 F.2d 1128, 1130 (9th Cir.1982). A party's inability to seek timely relief under Rule 60(b)(3), which is brought about by repudiation of the settlement agreement by the other party, might constitute an extraordinary circumstance sufficient to invoke Rule 60(b)(6). Id. at 1131. Subsection (6) gives the district court the power to vacate judgments "whenever such action is appropriate to accomplish justice." Id., (quoting Klapprott v. United States, 335 U.S. 601, 615, 69 S.Ct. 384, 390, 93 L.Ed. 1099 (1949)).

Upon repudiation of a settlement agreement which terminates litigation pending before it, a district court has the authority under Fed.R.Civ.P. 60(b)(6) to vacate the prior dismissal order and restore the case to its docket. Fairfax County-wide Citizens v. Fairfax County, 571 F.2d 1299, 1302-03 (4th Cir.), cert. denied, 439 U.S. 1047, 99 S.Ct. 722, 58 L.Ed.2d 706 (1978). The Fairfax court stated that the district court can only enforce a settlement agreement if the agreement had been approved and incorporated into the court's order or there is another basis for jurisdiction. Id. Otherwise, after the motion to set aside judgment is granted, the case must be litigated.

In Arco Corp. v. Allied Witan Co., 531 F.2d 1368, 1371 (6th Cir.), cert. denied, 429 U.S. 862, 97 S.Ct. 165, 50 L.Ed.2d 140 (1976), the court stated that the district court was "clearly" correct in vacating its order of dismissal and enforcing a settlement agreement repudiated by the defendant when the agreement was the basis for the dismissal. Courts retain inherent power to enforce agreements which settle litigation pending before them. Id. When a settlement agreement is repudiated, a motion pursuant to Rule 60(b)(6) for relief from the court order is appropriate. Backers v. Bit-She, 549 F.Supp. 388, 389 n. 2 (N.D.Cal.1982).

These cases establish that repudiation of a settlement agreement can be an "extraordinary circumstance" as required by Rule 60(b)(6) for relief from a judgment for "other reasons." They further suggest an evidentiary hearing is appropriate to determine whether there has been a repudiation of a settlement agreement. Once a judgment is vacated under Rule 60(b)(6), the court can enforce the original agreement if it has been the basis for dismissal and incorporated into the court's order or the case can proceed to a trial on the merits.

The settlement agreement in the present case states that the FCA approves voluntary liquidation of the WPCA according to terms contained in the March 8, 1984, Resolution of the Board of Directors of the WPCA with the exception of No. 2. Therefore, it appears that the terms of the resolution as well as those of the actual "Settlement Agreement" are the terms of the settlement.

Plaintiffs allege numerous actions by defendants which, if true, constitute violations of the settlement agreement. These alleged actions include: lack of properly promulgated regulations leading to a "fire-sale" approach to liquidation, filing an action against the Board and its counsel for attorneys' fees, filing materials in state court which are under a protective order of this court, failure to provide meaningful reports to the directors of the WPCA, and fraudulent representations concerning class two loans. See Plaintiffs' Reply Memorandum in Support.

LACK OF PROPERLY PROMULGATED REGULATIONS.

The March 8 WPCA resolution states, in part:

It is in the best interest of the shareholders of the WPCA to voluntarily liquidate the WPCA pursuant to Section 1130 of the Farm Credit Regulations subject to the satisfaction of the following conditions by the FICB and the FCA:

....

5. FICB will appoint a liquidating agent and WPCA will be liquidated under the Bank's regular plan of liquidation....

Plaintiffs' Memorandum in Support, Stipulation and Agreement of Dismissal, Exhibit D, pp. 4-5. The only FCA regulation referring to liquidation procedures is 12 C.F.R. § 611.1140. Section 611.1140 states, in relevant part:

The board of directors of an association, by the adoption of an appropriate resolution, may place an association in voluntary liquidation, subject to approval of the bank board and the FCA, whereupon the supervising bank shall appoint a liquidating agent ....

Plaintiffs allege that defendants' failure to promulgate more specific regulations for liquidation and their failure to actually have a "regular" liquidation plan promulgated under the requirements of the Administrative Procedures Act (APA) is a violation of the settlement.

"FIRE-SALE" APPROACH TO LIQUIDATION.

The March 8 WPCA resolution states that one of the major objectives of the plan is to safeguard against a "fire-sale"...