Opinion ID: 2995551
Heading Depth: 2
Heading Rank: 2

Heading: Review of Agency Determination

Text: Plaintiffs contend that the agency’s determinations were erroneous because expiration of the Agreement was not a triggering event under the Agreement. To determine what events triggered recapture under the Agreement, we must examine the language of the Agreement itself. First, we must determine whether the relevant clause of the Agreement is ambiguous. See Funeral Fin. Sys. v. United States, 234 F.3d 1015, 1018 (7th Cir. 2000). If that clause is not open to any other reasonable interpretation, and is therefore unambiguous, then the language of the Agreement must dictate the disposition of this dispute. See id. The relevant provision of the Agreement provides that plaintiffs agreed to pay the FSA: 2. Fifty (50) percent of any positive appreciation in the market value of the property securing the loan above as described in the security instruments 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, if such event occurs after four years but before the expiration date of this 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. Plaintiffs contend, however, that the Agreement does not provide a formula for recapture at the expiration date of the Agreement, and therefore, the Agreement’s expiration should not constitute a triggering event. The formula provision states that the amount of recapture will be based on the difference between the value of the security at the time of disposal or cessation by Borrower of farming and the value of the security at the time [the] Agreement is entered into. Plaintiffs’ argument is unpersuasive. 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. sec.sec. 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. sec. 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 sec. 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  (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 Finally, plaintiffs appeal the district court’s decision insofar as it contains a monetary judgment against them. However, the order of the district court only affirmed the agency determinations and did not result in an enforceable monetary judgment. See Israel v. U.S. Dept. of Agr., 135 F. Supp. 2d 945, 954 (W.D. Wis. 2001).