Summary
holding the FmHA was entitled to summary judgment based on undisputed evidence that the debtor signed promissory notes, received loans, and defaulted on his repayment obligations, and the lack of any evidence to support legal or equitable defenses to the government's claim
Summary of this case from U.S. v. CranmoreOpinion
Case No. 8:00CV632
January 7, 2002
MEMORANDUM AND ORDER GRANTING SUMMARY JUDGMENT
This matter comes before the court upon the Plaintiff United States of America's Motion for Summary Judgment (Filing No. 24), Defendant Terry Tieken's Motion to Vacate a Void Judgment (Filing No. 26), and Defendant Terry Tieken's Amended Motion to Vacate a Void Judgment Clarification of Objections (Filing No. 27). Plaintiff United States of America is represented by Ellyn Grant, and Defendant Terry L. Tieken appears pro se. Defendant Mary Ellen Tieken waived personal service of the Summons (Filing No. 2), but has made no other appearance in this matter. The Court has considered Filing Nos. 24, 26, and 27, the Plaintiff's Brief in Support of Its Motion for Summary Judgment, and Plaintiff's Response to Defendant's Motion to Vacate a Void Judgment. Because there is no judgment to vacate, Filing Nos. 26 and 27 are construed as Defendant Tieken's opposition to the Plaintiff's motion for summary judgment, and Plaintiff's Response to Defendant's Motion shall be construed and considered as the Plaintiff's reply brief.
Procedural Background
This action is brought by the United States of America on behalf of the Farmers Home Administration, now known as the Rural Housing Service, and the U.S. Department of Agriculture (collectively the "Government"). The Government seeks a judgment of foreclosure against property owned by Defendant Terry Tieken. Mary Ellen Tieken was Terry Tieken's spouse from 1983 to 1988. The Complaint does not allege that she is a responsible party on the loan documents. Rather, she is identified as a party who may have an interest in the proceeds from the sale of the property, if the Court orders a sale. Tieken filed a response to the Complaint (Filing No. 5) that was construed by the Court to be a motion to dismiss (Filing 17). Tieken alleged that he had been making payments on the loans in question, but that the Government was returning his payments and not crediting his account. After an evidentiary hearing was held on the issues, the Court found that:
The evidentiary hearing was conducted on April 18, 2001, Magistrate Judge Kathleen Jaudzemis presiding. The Transcript of Proceedings is Filing No. 16.
[U]pon Tieken's default in repayment of his debt to the United States Department of Agriculture Rural Housing Service, f/k/a Farmers Home Administration ("RHS"), the RHS accelerated the loan, making the entire indebtedness immediately due and payable. See Exhibit 5, letter of June 8, 2000, from RHS to Tieken. . . . Tieken stated on the record that he understood the reasoning behind the return of his payments, even if he did not agree with that approach.
Order dated May 1, 2001 (Filing No. 17). Based on these findings, the Court denied Tieken's response to the Complaint to the extent that it represented a motion to dismiss. Defendants did not formally answer, and on August 29, 2001, the Government filed its Motion for Summary Judgment.
Factual Background
The following facts are not in dispute based upon the Government's evidence, Tieken's answers to the Government's request for admissions, and Tieken's authentication of key documents. See Declaration of Ellyn Grant, and accompanying exhibits, specifically including Exhibit 2, Defendant's Answers to Admissions and Interrogatories and Requests for Production of Documents, and Affidavit of Michael T. Buethe and accompanying exhibits (Filing No. 25).
On November 16, 1977, Wayne and Kimberley Goodrich received a loan from the Government in exchange for which they signed a promissory note in favor of the Government in the amount of $19,000, and executed a mortgage. The Goodrichs' mortgaged property was legally described as:
Lots (5) and (6) in Block Two (2) Harlan's Subdivision of a part of Block Two (2), in Academy Addition to the City of York, in York County, Nebraska.
(Hereafter "York County property").
On June 3, 1980, Terry L. Tieken and Myra L. Tieken, Terry's spouse from 1978 to 1983, bought the York County property. In connection with the purchase, the Tiekens executed an assumption agreement thereby assuming payments on the Goodrichs' note to the Government in the remaining amount of $18,808.85. The Tiekens received a second loan from the Government and executed a promissory note in the amount of $5,220.00. To secure both loans, the Tiekens' executed a mortgage on the York County property in favor of the Government.
Pursuant to the assumption agreement, the Tiekens agreed to make monthly installment payments in the amount of $207, commencing on July 3, 1980, and continuing until July 3, 2013, with an interest rate of 13 percent per annum.
Pursuant to the promissory note, the Tiekens agreed to make monthly payments in the amount of $58 over a period of 396 installments with an interest rate of 13 percent per annum.
In 1983, Terry and Myra Tieken divorced. Pursuant to the Property Settlement Agreement that was incorporated into their Decree of Dissolution, the York County property was awarded to Terry Tieken. The Property Settlement Agreement also provided that Terry Tieken would assume and be solely liable on the mortgage to the Government. The Government has released Myra Tieken from any personal liability on the loans. Buethe Affidavit at paragraph 7 and Exhibits F, G, H and I attached thereto.
Before filing this action, the Government's attorney made a demand for payment upon Tieken. As of October 3, 2000, there was due and owing on the mortgage note the principal sum of $12,882.48, plus interest of $625.19. In addition, the daily rate of $4.5880 in interest has been accruing since October 3, 2000. Also, there was $40,766.80 in interest credit or subsidy subject to recapture. See Exhibits 1 and 2, attached to the Declaration of Ellyn Grant.
Summary Judgment Standard of Review and Analysis
Pursuant to Federal Rule of Civil Procedure 56, summary judgment is appropriate when, viewing the facts and inferences in the light most favorable to the nonmoving party, "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Harder v. ACandS, 179 F.3d 609, 611 (8th Cir. 1999). In making this determination, the function of the Court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The Court must "look to the substantive law to determine whether an element is essential to a case, and `[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Dulany v. Carhahan, 132 F.3d 1234, 1237 (8th Cir. 1997) (quoting Anderson, 477 U.S. at 248).
The proponent of a motion for summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In response to the proponent's showing, the opponent's burden is to "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 474 U.S. 574, 586 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis omitted); Prudential Ins. Co. v. Hinkel, 121 F.3d 364, 366 (8th Cir. 1997) (quoting Fed.R.Civ.P. 56(e), cert. denied, 522 U.S. 1048 (1998)). Summary judgment is "properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex, 477 U.S. at 325.
It is well-established that actions on promissory notes raise issues suitable for disposition on summary judgment. Federal Deposit Ins. Corp. v. Cardinal Oil Well Servicing Co., Inc., 837 F.2d 1369, 1371 (5th Cir. 1988). In a suit on a promissory note written in favor of the government, a prima facie case is established when the government introduces evidence of the promissory note, the guaranty, and the default. U.S. v. Irby, 517 F.2d 1042, 1043 (5th Cir. 1975) citing Southern Glass and Builders Supply Co. v. United States, 398 F.2d 109 (5th Cir. 1968). See also U.S. v. MacDonald, 25 F.3d 1051 (6th Cir. 1994) (the government satisfied its burden on summary judgment by proving that debtor signed promissory notes, received loans, and defaulted on his repayment obligations). Once the prima facie case is demonstrated, the burden shifts to the adverse party, who is required to show the nonexistence, extinguishment, or variance in payment of the obligation. Id.
As a preliminary matter, the Court finds that its exercise of jurisdiction over the parties and over the subject matter of this action is proper. See 28 U.S.C. § 1345. In this case, the United States has established its prima facie case. The Government has established the existence of the promissory notes by producing undisputed evidence that on June 3, 1980, Terry and Myra Tieken executed: 1) an assumption agreement, whereby they agreed to pay the entire unpaid indebtedness of a promissory note originally executed by the Goodrichs, and 2) a promissory note for the $5,220 loan. The Government has demonstrated the guaranty by producing undisputed evidence that Terry and Myra Tieken executed a real estate mortgage for the benefit of the Government in the total amount of $24,028.85, on their property legally described as:
Lots (5) and (6) in Block Two (2) Harlan's Subdivision of a part of Block Two (2), in Academy Addition to the City of York, in York County, Nebraska.See Declaration of Ellyn Grant at Exhibits 1 and 2 and the documents incorporated therein.
The Court notes that the Government cannot make its prima facie case solely with Tieken's admissions. Tieken has not admitted that he has defaulted under the terms and conditions of the mortgage note, and he has not admitted that he has failed, neglected or refused to comply with the demand for payment made by the United States Attorney's Office. See Defendant's Answers Nos. 1 and 2, Exhibit 2, attached to the Declaration of Ellyn Grant. However, Tieken has admitted that he knew that the loan had been accelerated, and as a consequence of the acceleration, the late payments that Tieken had submitted to the government could not be accepted and were returned to Tieken. Transcript of Proceedings at 14 (Filing No. 16).
To establish as uncontroverted the fact of Tieken's default, the Government offers the Affidavit of Michael T. Buethe, the Acting State Director of Rural Development, formerly the Farmers Home Administration. Buethe states based on his personal knowledge that:
The defendant, Terry L. Tieken, has failed to pay Rural Development installments of principal and interest when due, and has failed to pay real estate taxes in violation of the provisions of the notes and mortgages. Rural Development has accelerated the indebtedness and made demand for payment in full. No payments have been received.
Buethe Affidavit at paragraph 9. To dispute Buethe's Affidavit, Tieken has offered only his statement that he does not believe he has defaulted. Tieken's beliefs and convictions that he has not defaulted do not satisfy a defendant's burden under Fed.R.Civ.P. 56. The nonmoving party must show more than "`some metaphysical doubt as to the material facts; [it] must show there is sufficient evidence to support a jury verdict in [its] favor.'" Chism v. W.R. Grace Co., 158 F.3d 988, 990 (8th Cir. 1998) (quoting Matsushita Elec. Indus. Co., Ltd., 475 U.S. at 586).
Because Tieken has not come forward with a showing of the type required under Fed.R.Civ.P. 56(e), the Government's prima facie case is established. The burden now shifts to Tieken to demonstrate the nonexistence, extinguishment, or variance in payment of the obligation. Irby, 517 F.2d at 1043. Tieken has offered no proof that there has been an extinguishment or variance in the payment obligations associated with the assumption agreement and the promissory note. Having admitted the existence of the promissory note, Tieken's only affirmative defense to the Government's foreclosure action is to demonstrate that the assumption agreement and promissory note have been satisfied or that his obligations under them have somehow changed. He has offered no revised contracts, no cancelled checks, no evidence of timely payments — not one material fact to oppose the Government's motion, presumably because he cannot. "Rule 56(e) . . . requires the nonmoving party to go beyond the pleadings and by [his] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324. Tieken has wholly failed to satisfy this requirement.
Tieken attached to his Answers to Admissions and Interrogatories and Requests for Production of Documents copies of three (3) Applications for Settlement of Indebtedness in which he extends an offer to settle his debt with the Government with a payment of "zero" dollars. See Exhibit 2, attached to the Declaration of Ellyn Grant. These documents are signed by him but are not signed by the Government. There is no indication that the documents were received by the Government, and yet Tieken asserts that the third Application for Settlement was his response to the Government's demand for payment. Even if Tieken intended the third Application for Settlement to respond to the Government's demand, it did not respond in a manner that resolved the dispute.
As for Tieken's complaint that Government attorney's declaration is somehow invalid, the Court notes that such a declaration is allowed in place of an affidavit sworn upon an oath provided that it satisfies the requirements of 28 U.S.C. § 1746. The Government attorney's Declaration satisfies the requirements of the statute in declaring under penalty of perjury that the statements made are true and correct. The Declaration serves only one purpose, to established that the documents attached to the Declaration are what they purport to be. Because the Declaration establishes the authenticity of the documents, the Court may rely upon those documents in considering the motion.
Tieken also challenges Buethe's Affidavit as "not a properly formatted or executed affidavit." The Court disagrees. Buethe's Affidavit is made based on his personal knowledge; it contains relevant facts; and it is sworn and notarized. In his capacity as Acting State Director of Rural Development, Buethe has knowledge of Tieken's loan file and its contents. This is just the type of affidavit evidence contemplated by Fed.R.Civ.P. 56.
The Court has examined the record in the light most favorable to the nonmoving party, as it must, and finds that entry of summary judgment in favor of the Government is required. See Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir. 1992). The Government has established its prima facie case, and Tieken has failed to meet his burden of proving the extinguishment, non-existence, or variance in payment of the debt. No genuine issues of material fact remain for trial, and the Government has established that it is entitled to summary judgment as a matter of law.
IT IS ORDERED:
(1) The Government's Motion for Summary Judgment (Filing No. 24) is GRANTED; and
(2) Tieken's Motion to Vacate a Void Judgment (Filing No. 26) and Amended Motion to Vacate a Void Judgment Clarification of Objections (Filing No. 27), to the extent they seek affirmative relief, are denied; and
(3) The Judgment and Decree of Foreclosure and Order for Sale will be filed herewith.