Source: https://law.justia.com/cases/federal/appellate-courts/F3/282/521/581895/
Timestamp: 2020-04-02 17:28:40
Document Index: 245870442

Matched Legal Cases: ['§ 1951', '§ 1951', '§ 701', '§ 706', '§ 2001', '§ 2001']

Donald and Patsy Israel, Richard and Shirley Quinton, All D/b/a Israel and Quinton Farms, Plaintiffs-appellants, v. United States Department of Agriculture, Farm Service Agency, Defendant-appellee, 282 F.3d 521 (7th Cir. 2002) :: Justia
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Donald and Patsy Israel, Richard and Shirley Quinton, All D/b/a Israel and Quinton Farms, Plaintiffs-appellants, v. United States Department of Agriculture, Farm Service Agency, Defendant-appellee, 282 F.3d 521 (7th Cir. 2002)
US Court of Appeals for the Seventh Circuit - 282 F.3d 521 (7th Cir. 2002) Argued October 23, 2001
In April 1994, plaintiffs advised the FSA that they might arrange private financing to replace their FSA loan. The FSA told plaintiffs that this would cause the Agreement to "kick in," and that plaintiffs would then owe the FSA approximately $23,000.00 under the terms of the Agreement.2 Plaintiffs never obtained private financing and, thus, did not trigger the Agreement by "pay [ing] the loan in full." On January 26, 1998, the FSA sent plaintiffs a letter and advised them that the payoff amount remaining on their loan was $118,910.20. The letter did not reference the Agreement.
On June 30, 1999, the FSA wrote plaintiffs a letter that stated, " [t]he purpose of this letter is to inform you that the Shared Appreciation Agreement ... you entered into as a result of receiving a `debt write down' will expire on September 14, 1999, which is 10 years after the date you signed it.... We have determined the amount of shared appreciation due is $96,500." The FSA calculated the amount due by using the following equation:
times .50 (Agreement percent share) equals $ 96,500 (appreciation demanded)
On January 3, 2000, Hearing Officer Benner, relying in part on 7 C.F.R. §§ 1951.914 and 1922.201, held that the FSA's decision to demand $96,500 in shared appreciation was not erroneous. Benner wrote:
The Appellant's Shared Appreciation Agreement (SAA) expired on September 14, 1999.... Therefore, the Agency decision to calculate shared appreciation due is correct according to regulations.
On or about February 4, 2000, plaintiffs appealed Hearing Officer Benner's decision to the Director of the National Appeals Division of the Department of Agriculture. In a decision dated March 17, 2000, Director Norman Cooper upheld Hearing Officer Benner's decision and concluded that " [a]ppellants failed to prove by a preponderance of evidence that the Agency decision was erroneous." Director Cooper stated:
Regulations at 7 C.F.R. § 1951.914(b) and the [Agreement] specify that the Agency can recapture a portion of the written-off debt by taking a share of any positive appreciation in the value of the real property. The Agency must collect 50 percent of any positive appreciation in the market value of the security between the date the [Agreement] was executed and the date it expires....
Notwithstanding the Appellants' arguments on review that the [Agreement] is ambiguous and regulations are irrelevant, the terms of the [Agreement] are clear and published regulations, by law, are a proper basis for the Hearing Officer's determination....
On April 17, 2000, plaintiffs filed suit in the Western District of Wisconsin pursuant to the Administrative Procedure Act, 5 U.S.C. §§ 701-706. On appeal, plaintiffs relied on the lack of a specific reference to the expiration of the Agreement in the formula for calculating recapture to support their contention that the Agreement's expiration was not a triggering event. The plaintiffs also relied on their conversations with Drewiske and Corbett to support this reading of the Agreement. In the alternative, plaintiffs argued that the FSA should be estopped from collecting $96,500 because plaintiffs relied to their detriment on statements made by FSA officers Drewiske and Corbett.
On March 2, 2001, the district court affirmed the agency's determinations. The district court noted that " [t]he language of the [A]greement requires recovery of appreciation `between the date of this Agreement and either the expiration date of the Agreement or the date Borrower pays the loan in full, ceases farming or transfers title of the security.'" The district court noted that the use of the disjunctive "or" strongly supported the position that the Agreement allowed recapture at the expiration of the Agreement, in this case on September 14, 1999. The district court rejected plaintiffs' argument that any conversation with Drewiske or Corbett should control over the plain language of the Agreement. The district court stated that Hearing Officer Benner and Director Cooper were presented with the same evidence and found for the FSA. Further, the district court noted that it was "not the role of the [district] court to reweigh the evidence that was presented to the agency; rather, the court must consider whether the [Agency's] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." The district court then held that it could not conclude "that there was a clear error of judgment in the agency's interpretation of the" Agreement.
("recapture provision") (emphasis added). Thus, in plaintiffs' case, the Agreement provides for 50% recapture of appreciation on whichever of the following dates occurs first: the Agreement's expiration on September 14, 1999, the date plaintiffs pay the loan in full, the date the plaintiffs cease farming, or the date that the plaintiffs transfer title of their property. Both parties agree that plaintiffs did not pay their loan in full, cease farming, or transfer the title of their property. Therefore, the Agreement's expiration on September 14, 1999 was the first triggering event under the recapture provision.
Director Cooper found that the plain language of recapture provision provides for recapture at the expiration date of the Agreement, and we agree. The recapture provision clearly states that recapture is allowed at "the expiration date of the Agreement." We reject plaintiffs' contention that the formula provision negates the clear language of the recapture provision solely because the formula provision does not mention the expiration date of the Agreement explicitly, as does the recapture provision. Because the plain language of the Agreement provides for recapture at "the expiration date of the Agreement," we cannot conclude that the agency's determinations were "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" or "unsupported by substantial evidence." 5 U.S.C. §§ 706(2) (A), (E).
The agency's determinations are also strongly supported by the language of the relevant statute. Plaintiffs' loan was secured by a real estate mortgage that stated that the Agreement was entered into pursuant to 7 U.S.C. § 2001. Section 2001(e) (4) states that " [r]ecapture shall take place at the end of the term of the agreement, or sooner — (A) on the conveyance of the real security property; (B) on the repayment of the loans; (C) if the borrower ceases farming operations." Id. at § 2001(e) (4) (emphasis added). Thus, the quoted language demonstrates that the FSA did not err in concluding that recapture is provided for at the expiration of the Agreement.
We have found only one other court that has interpreted this type of agreement, and that court reached the same conclusion as we do now. See In re Moncur, No. 98-03213, 1999 WL 33287727, at *4 (Bankr.D. Idaho May 27, 1999). In Moncur, the bankruptcy court was faced with an identical agreement and with the same issue. After examining the agreement as a whole, as well as the federal statute and regulations concerning the agreement, the Moncur court concluded that " [w]ithout question, the [FSA's loan] program contemplated a recapture payment at the conclusion of the [agreement] term if payment in full of the write-down balance had not been made during the term of the [agreement]." Id. Therefore, the bankruptcy court construed the agreement in favor of the FSA and held that recapture was allowed at the agreement's expiration. See id.3
The FSA was formerly called the Farmers Home Administration
The Agreement would "kick in" because private financing would result in the FSA loan being paid off in full, one of the triggering events under the Agreement. The FSA calculated the amount owed as follows: the Agreement allowed the FSA to recapture 50% of any positive appreciation that accrued to plaintiffs' property. The appraised value of the property in 1994 was $198,000 and $152,000 in 1989. Thus, the total appreciation was $46,000, and the FSA was entitled to half of that amount — $23,000
Plaintiffs concede that their estoppel argument is without merit, and therefore it need not be addressed