Walker v. Federal Land Bank of St. Louis

• Decision Date: 27 November 1989
• Docket Number: No. 88-3315.,88-3315.
• Citation: 726 F. Supp. 211
• Parties: Donald WALKER, Barbara Walker, Plaintiffs, v. The FEDERAL LAND BANK OF ST. LOUIS, Defendant.
• Court: U.S. District Court — Central District of Illinois

726 F. Supp. 211

Donald WALKER, Barbara Walker, Plaintiffs, v. The FEDERAL LAND BANK OF ST. LOUIS, Defendant.

No. 88-3315.

United States District Court, C.D. Illinois, Springfield Division.

November 27, 1989.

COPYRIGHT MATERIAL OMITTED

Donald Walker, Butler, Ill., for plaintiffs.

John E. Evans, Evans & Evans, Hillsboro, Ill., for defendant.

OPINION

RICHARD MILLS, District Judge:

We deal here with the Agricultural Credit Act of 1987.

As involved here, that Act has been interpreted by both the Eighth and Ninth Circuits, but not our Seventh Circuit. Thus we will address this case in this manner.

Plaintiffs Donald and Barbara Walker, appearing pro se, filed a "civil rights complaint" against the Defendant in conjunction with a motion to preliminarily enjoin a state court proceeding between the parties. The facts giving rise to the suit are not in dispute, although the legal effect of those facts is disputed.

FACTS

The Walkers borrowed some $103,600 from the Federal Land Bank of St. Louis, now known as the Farm Credit Bank of St. Louis (hereinafter referred to FCB) in December of 1978. The note signed by the Walkers included, at the bottom, the following words:

For value received, the undersigned hereby guarantees the payment of the within note, according to the terms thereof, both as to principal and as to interest.

This short paragraph was signed by the manager of the Federal Land Bank Association of Hillsboro (hereinafter FLBH).

Apparently all did not go well with the Walkers' agricultural endeavors, because the FCB, on May 5, 1988, forwarded to the Walkers a copy of FCB's distressed loan restructuring policy and an application to restructure their loan. The Walkers were to complete these forms and return them by June 22, 1988. Instead, though, the Walkers returned to the FCB the forms which were in most respects wholly incomplete; the distressed loan restructuring application information requests were responded to with the question "Does this comply with H.R. 3030?" This question refers to the House Resolution which was later crafted into the Agricultural Credit Act of 1987, Part C of which is entitled "Rights of Borrowers; Loan Restructuring"—in other words, the Walkers were obliquely questioning whether the restructuring application complied with their rights under the Agricultural Credit Act of 1987 (hereinafter 1987 Act). Also forwarded with this incomplete restructuring application were some ten pages of requests for information from the FCB.

On June 24, 1988, in response to the Walkers' submissions, FCB sent a second letter apprising the Walkers of their right to apply to have their distressed loan restructured, and noted the FCB's receipt of the incomplete application. This second letter detailed the information necessary to be supplied in order for consideration of the restructuring application, and allowed the Walkers until July 5, 1988, to comply prior to the commencement of foreclosure proceedings on the loan.

The Walkers never responded, though, and so on July 6, 1988, FCB informed the Walkers that their distressed loan restructuring application was denied for being incomplete, and that commencement of foreclosure proceedings was imminent. This prompted the Walkers to send a letter to FCB requesting a credit review committee reconsideration of the denial of the restructuring application and for the names of three approved appraisers; this letter was dated July 12, 1988. On July 21, 1988, FCB responded by letter that a credit review committee hearing was only available when a completed application was submitted. Additionally, FCB responded to the Walkers' request for the names of three approved appraisers by noting that such appraisers are only to be made available by the FCB in the event restructuring is denied on the merits, whereas the Walkers' application was denied because it was not completed.

PROCEDURE

Following the above actions, FCB commenced foreclosure proceedings in the Illinois state courts. This prompted the Walkers to file the instant suit, and also to seek preliminary injunctive relief to stay the state court proceedings pending resolution of their federal cause of action. The original complaint filed by the Walkers, dubbed a "civil rights complaint," raised four different grounds why the Walkers believed the FCB had infringed upon their federal constitutional rights in bringing the foreclosure action.

After oral argument, this Court denied the Walkers' request for preliminary injunctive relief in part on the ground that the complaint had little likelihood of succeeding on the merits. Specifically, we found that the complaint, framed in terms of 42 U.S.C. § 1983, would likely fail for want of any state action.

As we further noted, neither the mere institution of a foreclosure proceeding nor the use of a state's tribunals establish state action; by the same token, the FCB is, itself, not a state actor, and thus is not a "person" for purposes of § 1983. We also denied injunctive relief on the grounds that no private remedy exists under the 1987 Act, and also that any preliminary injunctive relief was likely barred by virtue of the Anti-Injunction Act, 28 U.S.C. § 2283.

Following their unsuccessful bid to enjoin the state court proceeding in our Court, the Walkers filed a bankruptcy petition and thus automatically stayed the foreclosure proceeding. That petition, though, was dismissed, and the FCB immediately filed a motion for summary judgment. The Walkers responded to this motion by moving to dismiss without prejudice, but we denied that motion on authority of Rule 41(a)(2) of the Federal Rules of Civil Procedure. The Walkers then responded to the motion for summary judgment and asked for leave to file an amended complaint. The proposed amended complaint raises essentially the same factual basis as their original complaint, but this time the pleading is framed in terms of a declaratory judgment action, and is premised upon the Walkers' view that the 1987 Act confers a private right of action which gives this Court the power to declare that the FCB did not comply with the terms of that Act and to order the FCB to retrace its steps and to comply.

The FCB has objected to the Walkers' proposal that we allow them to amend their complaint. Nevertheless, the FCB also has renewed its motion for summary judgment as to the proposed amended complaint.

We consider first the Walkers' motion to file an amended complaint. It is clear that the original complaint could not possibly have established liability against the FCB on the basis of § 1983. See Harper v. Federal Land Bank of Spokane, 878 F.2d 1172, 1178 (9th Cir.1989). The motion to file an amended complaint, hence, was a wise move on the Walkers' part. The proposed amended complaint arises from the same factual backdrop as the original complaint, and so FCB is not blindsided by the new complaint, as is borne out by the fact that FCB has already moved for summary judgment as to the new complaint. Hence, the Walkers' motion to file an amended complaint is allowed, and we shall only consider FCB's motion for summary judgment with respect to this new complaint.

We now consider FCB's motion.

Under Fed.R.Civ.P. 56(c), summary judgment should be entered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Unquestionably, in determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970). Nevertheless, the rule is also well established that the mere existence of some factual dispute will not frustrate an otherwise proper summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986). Thus, the "preliminary question for the judge is not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it upon whom the onus of proof is imposed." Id. at 251, 106 S.Ct. at 2511 (quoting Improvement Co. v. Munson, 14 Wall. 442, 448, 20 L.Ed. 867 (1872)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Applying this standard, the Court now turns to the case at bar.

FCB, in its summary judgment motion, makes two arguments; first, it argues that we have no jurisdiction to hear this case because the 1987 Act confers no private remedy, and second, FCB argues that even if a private remedy is available in some cases, it is not available here since FCB followed all procedures required. We agree with FCB on both contentions, and we so rule in the alternative.

THE 1987 ACT

When the FCB first filed its motion for summary judgment, no federal court of appeals had decided whether the 1987 Act conferred a private right of action on borrowers. Shortly thereafter, though, the Ninth Circuit decided the Harper case, 878 F.2d 1172, which found that the 1987 Act did not confer such a private right of action. The issue was not entirely clear, though, because several earlier district court cases had resolved the issue with the opposite conclusion, and certain of those cases were pending appeal. Very recently, the decision in Zajac v. Federal Land Bank of St. Paul, 887 F.2d 844 (8th Cir. 1989), was issued in which the majority decided that the 1987 Act did, in fact, confer a private right of action; one judge, however, was persuaded by the Harper court's reasoning and filed a dissenting opinion to that effect.

The waters are therefore substantially muddied, and we are forced to choose between these two non-controlling appellate court cases. After careful consideration of these cases, we must side...