Zajac v. Federal Land Bank of St. Paul

• Decision Date: 31 July 1990
• Docket Number: No. 88-5353ND,88-5353ND
• Parties: Raymond P. ZAJAC and Helen Ann Zajac, Appellants, v. FEDERAL LAND BANK OF ST. PAUL, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1181

909 F.2d 1181

59 USLW 2089

Raymond P. ZAJAC and Helen Ann Zajac, Appellants, v. FEDERAL LAND BANK OF ST. PAUL, Appellee.

No. 88-5353ND.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 19, 1990.

Decided July 31, 1990.

Mark A. Bohnhorst, St. Paul, Minn., for appellants.

James B. Loken, Minneapolis, Minn., for appellee.

Before LAY, Chief Judge, HEANEY, Senior Circuit Judge, McMILLIAN, ARNOLD, JOHN R. GIBSON, FAGG, BOWMAN, WOLLMAN, MAGILL, and BEAM, Circuit Judges, En Banc.

FAGG, Circuit Judge.

Raymond P. and Helen Ann Zajac appeal from a district court order dismissing their lawsuit against the Federal Land Bank of St. Paul (the Bank) to enforce borrowers' rights provisions of the Agricultural Credit Act of 1987 (the Act). See 12 U.S.C. Secs. 2202-2202a (1988). In Harper v. Federal Land Bank of Spokane, 878 F.2d 1172, 1173 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 867, 107 L.Ed.2d 951 (1990), the Ninth Circuit held the Act does not provide an implied private right of action for farmer-borrowers. After the Supreme Court denied the petition for certiorari in Harper, the Tenth Circuit embraced the Ninth Circuit's holding. Griffin v. Federal Land Bank of Wichita, 902 F.2d 22, 24 (10th Cir.1990). We now join in the holdings of Harper and Griffin and affirm the decision of the district court.

The Zajacs contend the Agricultural Credit Act of 1987 implies a private right of action permitting them to enforce the Act's borrowers' rights provisions. The Zajacs correctly recognize that, "[i]n implied right of action cases, we employ the [tests announced in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975), ] to determine 'whether Congress intended to create [a] private remedy.' " Wilder v. Virginia Hosp. Ass'n, --- U.S. ----, ---- n. 9, 110 S.Ct. 2510, 2517 n. 9, 110 L.Ed.2d 455 (1990) (quoting Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15, 100 S.Ct. 242, 245, 62 L.Ed.2d 146 (1979)). Since the Ninth Circuit in Harper also recognized Cort as controlling, 878 F.2d at 1174, we consider the Zajacs' contention in the framework of the Harper decision.

The Zajacs first argue farmer-borrowers comprise a class " 'for whose especial benefit the [Act] was enacted.' " Cort, 422 U.S. at 78, 95 S.Ct. at 2088 (emphasis and quoted citation omitted). Although the Bank conceded at oral argument that farmer-borrowers represent a class intended to benefit from the Act, the Ninth Circuit has concluded Congress addressed the Act primarily to the financial crisis in the Farm Credit System, Harper, 878 F.2d at 1174-75. We need not decide which of these views should prevail because the Zajacs cannot make the other showings required by Cort. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 388, 102 S.Ct. 1825, 1844, 72 L.Ed.2d 182 (1982) (quoting California v. Sierra Club, 451 U.S. 287, 302, 101 S.Ct. 1775, 1783, 68 L.Ed.2d 101 (1981) (Rehnquist, J., concurring)).

The Zajacs next argue the Act's legislative history supports an implied private right of action even though "an express private right of action was proposed in both houses of Congress," Harper, 878 F.2d at 1176, and the conference committee considering the House and Senate bills chose to delete the private right of action provision from the final version of the Act, see H.R.Conf.Rep. No. 490, 100th Cong., 1st Sess. 178, reprinted in 1987 U.S.Code Cong. & Admin.News 2956, 2973. We disagree. The conference committee's report stating that the committee deleted the private right of action provision " 'represents the final statement of the terms agreed to by both houses.' " Harper, 878 F.2d at 1176 (quoting Demby v. Schweiker, 671 F.2d 507, 510 (D.C.Cir.1981)). " '[N]ext to the statute itself it is the most persuasive evidence of congressional intent.' " Id.; see also United States v. Jones, 811 F.2d 444, 447 (8th Cir.1987). The Zajacs nevertheless contend congressional statements made during floor debate on the House and Senate versions of the Act show the private right of action provision was deleted by the conference committee because some members The Zajacs also argue the comprehensive administrative remedies provided by the Act do not show Congress intended to withhold private enforcement of the borrowers' rights provisions. Again, we disagree. " 'The presumption that a [private] remedy was deliberately omitted from a statute is strongest when Congress has enacted a comprehensive legislative scheme including an integrated system of procedures for enforcement.' " Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 3093, 87 L.Ed.2d 96 (1985) (quoting Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S. 77, 97, 101 S.Ct. 1571, 1583-84, 67 L.Ed.2d 750 (1981)). In this instance, the Act provides what the Zajacs themselves consider "a series of detailed and precise procedural rights[,] all of which are ... phrased in mandatory terms." We thus agree with Harper that "Congress intended administrative review to be the exclusive remedy" for violations of the Act. 878 F.2d at 1176.

                of Congress mistakenly believed farmers already had the right to bring suit in federal court.  This contention is misplaced.  Nothing in the conference committee's report suggests the committee gave any weight to the congressional statements.  Indeed, "[t]o permit [the Act's final version] to be materially altered by [these] colloquies, which [took] place before the [Act] ha[d] achieved its final form, would open the door to the inadvertent, or perhaps even planned, undermining of the language actually voted on by Congress and signed into law by the President."    Harper, 878 F.2d at 1176 (quoting Regan v. Wald, 468 U.S. 222, 237, 104 S.Ct. 3026, 3035, 82 L.Ed.2d 171 (1984))
                

Finally, the Zajacs argue the rights Congress created in the Act address the exclusively federal concern of keeping farmers on their land. We cannot ignore, however, the section of the Act that restricts foreclosure proceedings. See 12 U.S.C. Sec. 2202a(b)(3). Because foreclosure is an area "traditionally controlled by state law," Harper, 878 F.2d at 1177, "it would be inappropriate to infer a [private] cause of action based solely on federal law," Cort, 422 U.S. at 78, 95 S.Ct. at 2088.

Having carefully considered all of the Zajacs' arguments, we agree "the Ninth Circuit's analysis in Harper v. Federal Land Bank of Spokane is correct." Griffin, 902 F.2d at 24. We thus join the Ninth and Tenth Circuits in holding there is no implied private right of action available to enforce the Act, and affirm the district court.

ARNOLD, Circuit Judge, concurring in the judgment, with whom McMILLIAN, Circuit Judge, joins.

I fully agree with Judge Heaney's persuasive dissenting opinion with respect to a private right of action for farmer-borrowers under the Agricultural Credit Act of 1987. I would nevertheless affirm this judgment, on the ground that the Anti-Injunction Act, 28 U.S.C. Sec. 2283, deprived the District Court of jurisdiction to entertain this suit for an injunction against a proceeding pending in a state court. Accordingly, I concur in the result reached by the Court en banc, which is to affirm.

According to the dissenting opinion, the Anti-Injunction Act is not a bar when "an Act of Congress, clearly creating a federal right or remedy enforceable in a federal court of equity, could be given its intended scope only by the stay of a state court proceeding." Mitchum v. Foster, 407 U.S. 225, 238, 92 S.Ct. 2151, 2160, 32 L.Ed.2d 705 (1972) (emphasis added), quoted by the dissent, post pp. 1192-1193. I agree that this is the correct standard. I cannot agree that it is met in this case. The Zajacs were completely free to set up, by way of defense to the state-court foreclosure proceeding, their rights to an independent appraisal under the Agricultural Credit Act of 1987. This is true though during the foreclosure proceeding, and indeed for almost a month after judgment had been entered against them, their rights under the Act were uncertain. The Technical Corrections Act of 1988--retroactively amending the 1987 Act to accord with the Zajacs' interpretation that it required an independent appraisal when restructuring is proposed--was approved by Congress and signed by the President in late August The Anti-Injunction Act embodies a fundamental policy of federalism. It is a limitation on the jurisdiction of the federal courts, and one that should be scrupulously observed. Exceptions to the Act should be narrowly construed, and doubts should be resolved in favor of applying it. Atlantic Coast Line R.R. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970). On this basis, I would affirm the District Court's dismissal of this case.

                1988.  At that time, the Zajacs' appeal of foreclosure was still pending before the North Dakota Supreme Court.  This federal defense, if ultimately rejected by the state courts, could have been vindicated by the Supreme Court of the United States on appeal from the Supreme Court of North Dakota.  (The remedy now would be by certiorari, rather than by appeal, because most of the Supreme Court's mandatory jurisdiction has been repealed, but the point remains that a federal court would be available to vindicate this federal right, if the state courts should disregard it.)    It therefore cannot be said that the only way for the Zajacs' federal statutory rights to be enforced was by suit for injunction in a federal district court.  The state courts are open to consider, and in fact are obligated under the Supremacy Clause to consider, assertions of federal statutory right, whether they arise as part of someone's claim or as part of a defense
                

HEANEY, Senior Circuit Judge, dissenting with whom LAY, Chief Judge, joins.

We are always hesitant to create a conflict between circuits on important issues of the law. This is one instance, however,...