Opinion ID: 449291
Heading Depth: 2
Heading Rank: 2

Heading: Whether Plaintiff Has a Cause of Action Against VA and GC

Text: 14 Plaintiff also sued VA and GC, seeking legal and equitable relief for wrongful foreclosure on the grounds that VA, in concert with GC, deprived plaintiff of his property by failing to carry out its duty to help plaintiff avoid foreclosure on his home. The district court ruled that plaintiff had no cause of action against VA and GC, and that plaintiff was not entitled to equitable relief from the foreclosure under Georgia law. 15 On appeal, plaintiff contends that the VA's own manuals and guidelines create an obligation on the part of the VA to help veterans retain their homes during temporary financial difficulties. VA Loan Guaranty Bulletin No. 566 at p. 3 (1980). Plaintiff argues that these manuals and guidelines give rise to an implied cause of action against VA and private lenders whenever VA fails properly to help a veteran avoid foreclosure. Both the Ninth Circuit, in Rank v. Nimmo, 677 F.2d 692 (9th Cir.), cert. denied, 459 U.S. 907, 103 S.Ct. 210, 74 L.Ed.2d 168 (1982), and the D.C. Circuit, in Simpson v. Cleland, 640 F.2d 1354 (D.C.Cir.1981), have squarely rejected claims identical to plaintiff's. The D.C. Circuit explained: 16 In the view compelled upon us by Cort v. Ash [422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) ] and its progeny, we must conclude ... that appellant lacks any express or implied right of action in federal court to enforce duties V.A. and lenders may have pursuant to V.A. publications.... The now familiar Cort v. Ash factors relevant to implying a private cause of action are: whether appellant belongs to the class for whose especial benefit the statute was enacted; whether there is any indication of legislative intent ... to create such a remedy; whether implying a remedy is consistent with the underlying purpose of the legislative scheme; and whether the cause of action is one traditionally relegated to state law. Cort v. Ash, supra, 422 U.S. at 78, 95 S.Ct. at 2087. Appellant in this case cannot demonstrate that any specific statute creates a federal right in his favor. He lacks a statutory basis for his action. The V.A. publications on which he relies are not sufficient as the basis for his suit. Nor has appellant cited any statutory language or legislative history which even arguably indicates a legislative intent to establish a private right of action in a case such as this. Finally, and most importantly, appellant, represented by able counsel, had, and may possibly still have, access to state remedies to set aside the foreclosure which he suffered, remedies which are traditionally relegated to state law. Id. 17 Simpson v. Cleland, 640 F.2d at 1359-60 (citations and footnotes omitted). The Ninth Circuit agreed, holding that neither the statutory language nor the legislative history of the VA Act provides any 'indication of legislative intent ... to create such a remedy' against the private lender. Rank v. Nimmo, 677 F.2d at 697 (quoting Cort v. Ash, 422 U.S. at 78, 95 S.Ct. at 2087). 18 We find the reasoning of Simpson and Rank persuasive on this issue, particularly in view of the fact that no federal appellate court to date has reached a contrary conclusion. 1 Furthermore, although this circuit has not previously addressed the particular issue raised in this case, the former Fifth Circuit, in United States v. Harvey, 659 F.2d 62 (5th Cir. Unit B 1981), 2 rejected the same theoretical foundation on which plaintiff's claim is based. The facts in Harvey were similar to those in the instant case, except that the loan had been provided directly by VA rather than by a private lender. When VA foreclosed on the loan, the veteran sued VA, arguing that a VA manual created a duty on the part of VA to help veterans avoid foreclosure. On appeal, the former Fifth Circuit held: 19 In sum, although the VA manual clearly authorizes, and may encourage, the employees to cooperate with defaulting mortgagors toward the end that such mortgagors might retain their homes, the manual does not create substantive rights in the mortgagor enforceable in federal court. 20 Id. at 65-66. Although the Harvey court did not specifically address whether the manual created an implied private right of action in the mortgagor, see id. at 66 n. 7, the court's conclusion, that the manual did not create substantive rights enforceable by the mortgagor, is irreconcilable with the existence of such a cause of action. We therefore hold that plaintiff has no cause of action against VA and GC, and we affirm the district court's grant of summary judgment in favor of both defendants. 3