Court Opinion

ID: 4709091
Source: CourtListenerOpinion
Date Created: 2021-08-04 18:01:17.216034+00
Date Added: 2024-06-11T08:06:54.307200
License: Public Domain

Case: 19-50796     Document: 00515965058          Page: 1    Date Filed: 08/04/2021

              United States Court of Appeals
                   for the Fifth Circuit                             United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                       August 4, 2021
                                   No. 19-50796                        Lyle W. Cayce
                                                                            Clerk

   A.J. Rabe, Incorporated,

                                                            Plaintiff—Appellant,

                                       versus

   Farm Service Agency; United States Department of
   Agriculture; National Appeal Division,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 6:18-CV-116

   Before Stewart, Costa, and Willett, Circuit Judges.
   Per Curiam:*
          Plaintiff-Appellant A.J. Rabe, Inc. (“Rabe, Inc.”) appeals the district
   court’s grant of summary judgment in favor of the United States. We
   AFFIRM.

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 19-50796     Document: 00515965058           Page: 2    Date Filed: 08/04/2021

                                    No. 19-50796

                       I. Facts & Procedural History
          Rabe, Inc. is a Texas corporation. In June 2016, it applied for a
   $300,000 loan with the Farm Service Agency (“FSA”). FSA determined
   that Rabe, Inc. was ineligible for the loan because of a lack of
   creditworthiness. In reaching this conclusion, FSA found that Rabe Inc. and
   its president, Arvell J. Rabe (“Rabe”), had unpaid debts and a federal tax
   lien. Rabe, Inc. unsuccessfully appealed the FSA’s determination, first at a
   reconsideration meeting, then at a hearing before the National Appeals
   Division (“NAD”), and finally before the NAD Director.
         In 2018, Rabe, Inc. filed suit in the district court seeking review of the
   agency decisions. The United States filed a motion to dismiss, or
   alternatively, a motion for summary judgment. The district court issued an
   order adopting the magistrate judge’s report and recommendation and
   granted summary judgment for the United States. Rabe, Inc. appeals.
                               II. Discussion
         We review a district court’s grant of summary judgment de novo. Binh
   Hoa Le v. Exeter Fin. Corp., 990 F.3d 410, 414 (5th Cir. 2021). Summary
   judgment is proper “if the movant shows that there is no genuine dispute as
   to any material fact and the movant is entitled to judgment as a matter of
   law.” Fed. R. Civ. P. 56(a).
         While NAD decisions are reviewable by district courts, see 7 U.S.C.
   § 6999, we will affirm unless the final agency decision is “arbitrary,
   capricious, an abuse of discretion, or otherwise not in accordance with law.”
   Adkins v. Silverman, 899 F.3d 395, 401 (5th Cir. 2018); 5 U.S.C. § 706(2)(A).
   To qualify for a loan from the FSA, an applicant must have an “acceptable
   credit history as demonstrated by debt repayment.” 7 C.F.R. § 764.101(d).
   Applicants with a history of failure to repay past debts when the ability to

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                                     No. 19-50796

   repay was within their control have an unacceptable credit history. Id.
   § 764.101(d)(3).
          On appeal, Rabe, Inc. makes a single argument: that the FSA violated
   its own procedures in denying Rabe, Inc.’s loan application. The FSA
   handbook requires officials to provide applicants with “clear, specific
   reasons” for denial of a loan. Rabe, Inc. argues that the FSA changed its
   reasoning for denying the loan and thus violated the handbook’s mandate of
   providing clear and specific reasons. The change in reasoning described by
   Rabe, Inc. pertains exclusively to the FSA’s treatment of a judgment against
   Rabe in favor of a livestock company, Knoxville Livestock. Rabe, Inc. states
   that it was substantially harmed by this error because the alleged change in
   reasoning prevented it from creating a successful argument in favor of its
   appeal. Furthermore, Rabe, Inc. argues that the NAD and the district court
   improperly failed to respond to his argument regarding violation of the FSA
   handbook.
          The United States argues that Rabe, Inc. did not raise this issue before
   the district court. A party may not raise an issue for the first time on appeal.
   Belliveau v. Barco, Inc., 987 F.3d 122, 129 n.3 (5th Cir. 2021). Rabe, Inc. had
   raised before the agency and before the district court concerns about the
   accuracy of the FSA’s analysis of a judgment against him in favor of Knoxville
   Livestock, which seems to be the true crux of his appeal. 1 However, it does
   not appear that Rabe, Inc. had previously framed this issue as one relating to
   the FSA handbook’s requirement of “clear, specific reasons” for a loan
   denial. Nevertheless, even if this argument is not waived, it is easily
   dispensed with because the record demonstrates that the FSA did comply
   with its handbook.

          1
              See infra note 2.

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           In the initial denial, Rabe, Inc. was informed that it was ineligible based
   on “unacceptable credit history,” and the denial listed several accounts that
   were subject to liens or debts used to make that determination. After the
   reconsideration meeting, Rabe, Inc. was again informed that it lacked
   creditworthiness because of delinquent debts, relying on many of the same
   accounts. The NAD then reached the same conclusion for the same reasons,
   as did the NAD director. The explanations offered at each stage of the appeal
   do not contradict each other, and, as required by the handbook, each clearly
   and specifically addressed the reasons supporting the decision. While Rabe,
   Inc. makes much of perceived inconsistencies regarding the FSA’s treatment
   of one judgment against Rabe in favor of Knoxville Livestock, 2 the agency
   never relied solely on this judgment in making its determination that Rabe,
   Inc. overall had an unsatisfactory credit history.
           Even if the FSA had deviated slightly from its handbook procedures,
   and assuming arguendo that deviating from FSA handbooks constitutes a
   procedural error, “[p]rocedural perfection in administrative proceedings is
   not required.” Mays v. Bowen, 837 F.2d 1362, 1364 (5th Cir. 1988). We will

           2
               Rabe, Inc. argues that initially, the stated reason for the loan denial was an
   unsatisfactory credit history, including a judgment in favor of Knoxville Livestock. Rabe,
   Inc. then states that after it sought reconsideration, the FSA stopped focusing on the
   existence of unpaid judgments and based its decision instead on the Knoxville Livestock
   judgment, noting that it “is still in existence and was created as a result of the applicant
   making a purchase of livestock and attempting to pay for them by means of a draft on the
   lender. The applicant stated that the lender was not aware of the draft at the time it was
   written and did not honor the draft.” Rabe, Inc. contends that this statement was incorrect
   because “the bank upon which a draft was made was not a lender for purposes of that
   transaction.” A potential inaccuracy in the FSA’s description of the Knoxville Livestock
   judgment does not amount to changed reasoning. Moreover, Rabe, Inc. misrepresents the
   record in claiming that the FSA “based its decision” on the Knoxville Livestock judgment,
   when the FSA clearly relied on multiple judgments, stating “[t]he fact that there have been
   multiple judgments filed against the applicant and a member of the entity become an issue
   in that it creates a pattern of nonpayment of debt.”

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   not vacate a judgment unless a procedural error affected “the substantial
   rights of a party.” Id. The FSA made it abundantly clear that Rabe, Inc.’s
   ineligibility rested on its overall credit history. Rabe, Inc. had full notice of
   the issue it needed to overcome in its appeals, and its substantial rights were
   not affected by any potential error.
            Rabe, Inc.’s sole argument on appeal fails, and we conclude that the
   FSA’s determination was not arbitrary or capricious given Rabe, Inc.’s debt
   history. We thus conclude that the district court did not err by granting the
   motion for summary judgment.
                                   III. Conclusion
            For the foregoing reasons, we AFFIRM the judgment of the district
   court.

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