Summary of a Recent
Judicial Development in
Administrative Law

7 U.S.C. § 6912(e) Inapplicable in Rural
Housing Service Dispute

Harrison M. Pittman
Staff Attorney

Summary of Decision

In United States v. Childers, 789 N.E.2d 691 (Ohio Ct. App. 2003), the Ohio Court of Appeals held that 7 U.S.C. § 6912(e), a statute that requires a plaintiff to exhaust administrative remedies before it may bring a judicial action, was inapplicable.

Background

Defendant Deborah Childers and her husband received a rural housing loan from the Rural Housing Service (RHS), an agency within the United States Department Agriculture. Childers, 789 N.E.2d at 692. Childers defaulted on the loan and RHS brought a foreclosure action against her. See id. Childers argued that RHS was precluded from foreclosing on her home because RHS failed to properly service her loan. See id. The trial court ruled in favor of the government, and Childers appealed to the Ohio Court of Appeals. See id.

Arguments

Relying on Cottrell v. United States, 213 B.R. 33 (M.D. Ala. 1997), RHS argued that Childers was precluded from asserting that the government could not foreclose on her home because she had failed to exhaust her administrative remedies pursuant to 7 U.S.C. § 6912(e). See id. at 694.

Analysis and Holding

The appeals court explained that in Cottrell, the district court held that a plaintiff was precluded from bringing an action to declare an RHS foreclosure sale null and void because it had failed to exhaust its administrative remedies. See id. It also explained that § 6912(e) requires a person to "'exhaust all administrative appeal procedures . . . before . . . [bringing] an action in a court of competent jurisdiction against- (1) the Secretary; (2) the Department; or (3) an agency, office, officer, or employee of the Department." Id. (quoting 7 U.S.C. § 6912(e)). The appeals court rejected RHS's argument and held that "[h]ere, Ms. Childers is not bringing an action against the government; rather, she is defending an action brought by the government. Thus, . . . [§ 6912(e)] and Cottrell are inapplicable . . . ." Id.

The case was decided on May 8, 2003; this summary was posted Apr. 30, 2004.