Court Opinion

ID: 8984762
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:38:49.533671+00
Date Added: 2024-06-11T17:10:45.250411
License: Public Domain

CARROLL, District Judge,
dissenting in part and concurring in part:
I respectfully dissent with respect to the holding of the amended opinion that the Loves’ amended complaint states a tort claim against the United States. For the original opinion see Love v. United States, 871 F.2d 1488 (9th Cir.1989).
The basic issue confronting this Court is the nature of the claim(s), if any, of persons who obtained emergency farm loans from the Farmers Home Administration (FmHA) and thereafter were not advised by the FmHA personnel of their opportunity under 7 U.S.C. § 1981a to seek deferral — prior to foreclosure — of loan payments in instances of temporary inability to pay due to circumstances beyond their control.
Section 1981a and rights of borrowers under that program, have been addressed by a number of federal courts. This is one of the two eases, the other is LaPlant v. United States, 872 F.2d 881 (9th Cir.1989), where a court specifically discussed whether the failure of FmHA to advise borrowers that they had the opportunity to request a loan deferral gives rise to a contract or tort claim against the United States.1
The issue of contract versus tort as a practical matter cannot be dictated by the manner in which plaintiffs draft their complaint. United States v. Neustadt, 366 U.S. 696, 705, 81 S.Ct. 1294, 1299, 6 L.Ed.2d 614 (1961); Art Metal-USA, Inc. v. United States, 753 F.2d 1151 (D.C.Cir.1985). Otherwise district courts would be inundated with Federal Tort claims and the Court of Claims would become a court of little resort.
In deciding whether an action is one in contract or tort, the nature of the claim against the United States must be determined. Aleutco Corporation v. United States, 244 F.2d 674, 679 (3rd Cir.1957).
The claim that the Loves assert is not a “classic tort,” i.e., “a private or civil wrong or injury, other than a breach of contract, for which the Court will provide remedy in *1250the form of an action for damages.” Black’s Law Dictionary, Fifth Edition.2
The claim here, despite the Majority's Amended Opinion to the contrary, does not evolve from some implied promise arising out of a contractual relationship. The genesis of plaintiffs’ claim is that governmental agents failed to advise them of a specific right guaranteed them by statute (§ 1981a) and incorporated by law as a part of their FmHA loan agreement. In Re LaFortune, 652 F.2d 842, 846 (9th Cir.1981), citing Home Building & Loan Assoc. v. Blaisdell, 290 U.S. 398, 429, 54 S.Ct. 231, 236, 78 L.Ed. 413 (1974).
Plaintiffs’ tort claim is based on a promise made to them by the government in a contract. The holding in Woodbury v. United States, 313 F.2d 291, 295 (9th Cir.1963) is decisive on this issue:
Many breaches of contract can also be treated as torts. But in cases such as this, where the ‘tort’ complained of is based entirely upon breach by the government of a promise made by it in a contract, so that the claim is in substance a breach of contract claim, and only incidentally and conceptually also a tort claim, we do not think that the common law or local state law right to ‘waive the breach and sue in tort’ brings the case within the Federal Tort Claims Act. The notion of such a waiver of breach and suit in tort is a product of the history of English forms of action; it should not defeat the long established policy that government contracts are to be given a uniform interpretation and applications depending upon the vagaries of the laws of fifty different states.
The wisdom of the “established policy” articulated in Woodbury is self-evident with respect to claims relating to § 1981a. As noted in Lathan v. Block, 627 F.Supp. 397, 399 (D.N.D.1986) “approximately 240,-000 to 265,000 persons nationwide have mortgaged real estate to FmHA to secure FmHA farm program loans.”3 The need for uniform treatment under federal law is patently necessary under these circumstances. We should affirm on all but the Bivens claim.

. The Love panel and the LaPlant panel filed opinions that conflicted on the issue of whether an action against the FmHA for breach of good faith under Montana law sounds in tort or contract. The mandate in each case was stayed pending further order of court. Id., 872 F.2d at 889. The Love panel is the first to issue an amended opinion.

. It is far from clear that the facts of this case would, in any event, give rise to a tort claim under Montana state law. As stated by Judge Hatfield in Darko v. U.S. Dept. of Agriculture, Farmer’s Home, 646 F.Supp. 223 (D.Mont.1986) "... the precise nature and extent of the obligation [implied duty of good faith] are not readily ascertainable under present Montana de-cisional law ...”
Any attempt to draw settled principles from Montana cases is uncertain at best and involves decisions assessing punitive damages claims, traditional tort injuries and bad faith. The Montana Supreme Court continues to speak to this issue. See particularly O’Bagy v. First Interstate Bank, — Mont. -, 785 P.2d 190 (1990); Dunfee v. Baskin-Robbins, Inc., 221 Mont. 447, 720 P.2d 1148 (1986).
The implications of the majority opinion can be far reaching, given states such as California where "a covenant of good faith and fair dealing is implied into every contract, commercial, insurance, employment or otherwise.” Nicholson v. United Pacific Insurance Co., 219 Mont. 32, 710 P.2d 1342, 1347 (1985).
Loves’ conversion claim based on the form of the security agreement is foreclosed by an examination of the copy of the agreement which is attached to their amended complaint. The agreement complies in every respect with Montana Code Annotated § 30-9-203(1) (1985) (Uniform Commercial Code). The unambiguous language in the agreement establishes that Loves' granted the United States a security interest in the described property. See In Re Amex-Protein Development Corporation, 504 F.2d 1056 (9th Cir.1974).

. For a detailed history of this farm credit legislation, see Curry v. Block, 541 F.Supp. 506, 509-11 (D.S.D.1982).