Summary of a Recent
Judicial
Development in
Finance & Credit
Administrative Remedies Must Be Exhausted Prior
to Bringing a Claim Against the Government
Walt McCarterNational AgLaw Center Research Associate
Summary of Decision
In United States v. Cyr, No. Civ. 03-97-B-W, 2004 WL 1571808 (D. Me. Mar. 26, 2004), the United States District Court for the District of Maine granted the government's motion for summary judgment to foreclose on certain real property because the borrower had not exhausted her administrative remedies for challenging the denial of her homestead exemption.
Background
The Cyrs executed several promissory notes and mortgages in favor of the United States Department of Rural Development, giving the government a security interest in the Cyrs' residential and farm real estate. Id. at *3. After the couple divorced, Robertine Cyr became the sole owner of their residential property and sought homestead protection for the property. Id. The government accelerated the loan covering her residence, and she appealed. Id. The Farm Service Agency advised her that it would not consider her request for homestead protection unless her ex-husband also conveyed the farm real estate he owned. Id. Robertine requested homestead protection from the Farm Service Agency several times, and all her requests were denied. Id. The government moved to foreclose on the residential property, and Robertine opposed the motion. Id.
Arguments
The government argued that Robertine did not exhaust her administrative remedies as required by 7 U.S.C. § 6912(e). Id. at *4.
Robertine argued that the government should be barred from foreclosing on her property because it had failed to comply with her requests for homestead exemption, and that she had exhausted her administrative remedies by timely requesting a homestead exemption and appealing the FSA's denial after the initial acceleration of her loan. Id.
Analysis and Holdings
Under 7 U.S.C. § 1912(e), a person shall exhaust all administrative appeal procedures established by the Secretary of Agriculture or required by law before the person may bring an action against the Department of Agriculture. Id. at *5. Robertine was advised by the FSA of her right to mediation and to request a hearing with the National Appeals Division of the Department of Agriculture. Id. She had appealed the initial refusal of homestead protection, but then the FSA had halted acceleration of her loan and a final determination was never made. Id. When the FSA again accelerated her loan, she again requested the exemption but never renewed her appeal, and thus she had not exhausted her administrative remedies. Id. Therefore the court granted the United States' motion for summary judgment and allowed them to foreclose on her property. Id. at *6.
The case was decided on March 26, 2004.