Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-92-01002/USCOURTS-ca10-92-01002-0/pdf.json

Parties Involved:
Farmers Home Administration
Appellee
Joe Reed
Appellant
Reed & Sons, Inc.
Appellant

Document Text:

FIL"'·~ i> UNITED STATES COURT OF APPEAitfni1:ed Sta~ C<,μrt of Appeal, 

Tenth Circuit 

TENTH CIRCUIT 

JOE REED; REED & SONS, INC., 

a Colorado corporation, 

Plaintiffs-Appellants, 

v. 

FARMERS HOME ADMINISTRATION, 

Defendant-Appellee. 

ORDER AND JUDGMENT* 

DECO 4 1992 

ROBERT L. HOECKER 

Clerk 

No. 92-1002 

(D.C. No. 90-B-1982) 

(D. Colo.) 

Before TACHA and BRORBY, Circuit Judges, and BROWN, Senior 

District Judge.** 

Petitioners Joe Reed and Reed & Sons, Inc. ("Reed") appeal a 

district court order affirming a decision by respondent Farmers 

Home Administration ("FmHA") to sell a parcel of farmland to 

Godwin and Kami Oliver ("Olivers") and not to Reed. We exercise 

jurisdiction under 28 U.S.C. § 1291 and affirm. 

In 1987, FmHA acquired through foreclosure a parcel of 

property known as the Ives Farm, which it classified as inventory 

property suitable for farming. FmHA is required to sell such 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

** Honorable Wesley E. Brown, Senior District Judge, United 

States District Court for the District of Kansas, sitting by 

designation. 

Appellate Case: 92-1002 Document: 010110149257 Date Filed: 12/04/1992 Page: 1 
farmland to eligible program applicants as determined by the 

County Committee ("Committee"). FmHA advertised the property for 

sale in June, 1983. The advertisement did not disclose that the 

sale included mineral rights. 

There were five eligible applicants for the property, 

including Reed and the Olivers. The Olivers did not own a farm 

and did not have an asset base with which to buy one. They earned 

$17,795 in farm income, all of which came from leased property. 

Reed owned farm property and a substantial interest in another 

business, and had a net worth of over $300,000 and farm income of 

$39,550. 

The Committee selected the Olivers, reasoning that Mr. Oliver 

was a young farmer who was trying to establish himself as an 

owner, had the greatest need for farm income, and best met the 

eligibility requirements. One of the three committee members was 

Joe Mahaffey. Mr. Oliver leased 86 acres of farmland from 

Mahaffey pursuant to an agreement under which Mr. Oliver received 

60% of the farm's proceeds and paid the other 40% to Mahaffey. 

Reed appealed, and an Appeals Hearing Officer upheld the 

Committee's decision, relying in part on updated financial 

information submitted by Mr. Oliver. After exhausting his 

remaining administrative remedies, Reed filed this action in the 

district court. The district court upheld FmHA's decision, and 

Reed appealed. 

Reed raises three arguments on appeal: (1) the district court 

should have set aside the Committee's decision because Mr. 

Mahaffey was biased in favor of the Olivers; (2) the district 

2 

Appellate Case: 92-1002 Document: 010110149257 Date Filed: 12/04/1992 Page: 2 
f 

court should have set aside the hearing officer's decision because 

it was based on materials not before the Committee; and (3) the 

district court should have set aside the decision because of 

defective notice and other procedural errors. 

For Reed to prevail on his first argument, he must establish 

a disqualifying interest that rebuts the presumption that Mahaffey 

was unbiased. See Schweiker v. McClure, 456 U.S. 188, 195-96 

(1982). Only a "substantial showing" of personal bias can 

overcome this presumption. Roberts v. Morton, 549 F . 2d 158, 164 

(10th Cir. 1976), cert. denied, 434 U.S. 834 (1977). Moreover, 

the impermissible interest generating the bias must be realistic 

and more than "remote". Dugan v. Ohio, 277 U.S. 61, 65 (1928) . 

We reject Reed's first argument because he has failed to meet 

this burden. He presented no direct evidence that the sale of the 

Ives Farm would have any effect on the relationship between Mr. 

Mahaffey and the Olivers. The mere showing of a general business 

relationship is insufficient to disqualify a decisionmaker. See 

Schweicker, 456 U.S. at 196 - 97. Rather, Reed must show that 

Mahaffey had a "direct, personal, pecuniary interest" in the 

outcome, Wolkenstein v. Reville, 694 F.2d 35, 42 (2d Cir. 1982), 

cert. denied, 462 U.S. 1105 (1983), and Reed has failed to make 

that showing. Reed does speculate that the Olivers will sow the 

profits they reap from the Ives Farm into the farm they now lease 

from Mahaffey. But the prospect that Mahaffey will harvest any 

gain from these events is too remote to demonstrate that he had a 

substantial personal interest in the Committee's decision. 

3 

Appellate Case: 92-1002 Document: 010110149257 Date Filed: 12/04/1992 Page: 3 
After reviewing the briefs and record, we reject Reed's other 

arguments for substantially the reasons given by the district 

court. 

AFFIRMED. 

4 

ENTERED FOR THE COURT 

Deanell Reece Tacha 

Circuit Judge 

Appellate Case: 92-1002 Document: 010110149257 Date Filed: 12/04/1992 Page: 4