Knaub v. United States

22 Cl. Ct. 268, 1991 U.S. Claims LEXIS 3, 1991 WL 1088
CourtUnited States Court of Claims
DecidedJanuary 8, 1991
DocketNo. 318-89C
StatusPublished
Cited by20 cases

This text of 22 Cl. Ct. 268 (Knaub v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Knaub v. United States, 22 Cl. Ct. 268, 1991 U.S. Claims LEXIS 3, 1991 WL 1088 (cc 1991).

Opinion

OPINION

MARGOLIS, Judge.

This contract action is before the court on the defendant’s motion for summary judgment and the plaintiffs’ cross-motion for summary judgment. Plaintiffs who are farmers bring suit challenging determinations by the Secretary of Agriculture (“Secretary”) that plaintiffs collectively qualified as only one “person” for payment limitation purposes under price support and production adjustment programs administered by the United States Department of Agriculture (“USDA”) during crop years 1987 and 1988. Plaintiffs seek damages for breach of contract based on alternative theories: (1) wrongful determinations by representatives of the Secretary; (2) estoppel; or (3) denial of plaintiffs’ procedural due process rights. Defendant, the United States, moves for summary judgment, arguing that the Secretary’s determinations should be upheld because they are rationally based on the administrative record and that plaintiffs’ estoppel and due process claims are not properly before this court. Plaintiffs also move for summary judgment, arguing that the Secretary’s determinations are not rationally based and that the plaintiffs are entitled to relief due to estoppel and denial of their due process rights. After careful review of the administrative record, and after hearing oral argument, this court grants the defendant’s motion for summary judgment and denies the plaintiffs’ cross-motion for summary judgment.

BACKGROUND

The Commodity Credit Corporation (“CCC”), through the Agricultural Stabilization and Conservation Service (“ASCS”) of the USDA, administers price support and production adjustment programs. Raines v. United States, 12 Cl.Ct. 530, 532 n. 1 (1987). Three levels of authority exist under the ASCS. Id. On the local and state levels, programs are administered by county and state ASCS committees. 7 C.F.R. § 713.2 (1987 and 1988).1 On the federal level, the Deputy Administrator, State and County Operations (“DASCO”) supervises the state committees. Id. Programs were operated in crop years 1987 and 1988 in accordance with the Agricultural Adjustment Act of 1949, as amended, 7 U.S.C. § 1421 et seq., the Food and [270]*270Agriculture Act of 1977, as amended, 7 U.S.C. § 1309 et seq., the Food Security Act of 1985, as amended, 7 U.S.C. § 1308, et seq. and the Commodity Credit Corporation Charter Act, 15 U.S.C. § 714 et seq., as well as the applicable regulations, 7 C.F.R. §§ 713.1-713.116, 795.1-795.24. The purpose of the programs is to obtain a reduction of acreage from production of specified crops in order to adjust the total national acreage of the crops. 7 C.F.R. § 713.49(d).

ASCS program payments are governed by the number of “persons” recognized by ASCS. Id. § 795. Payments under the programs at issue in this case are limited to $50,000 for each “person.” Id. § 713.1. Regulations promulgated by USDA count individuals, partnerships, corporations, and other legal entities that constitute a single unit because of legal or economic relationships as one “person”. Id. § 795. The regulations define a number of relationships that may cause a group of individuals to qualify as only one “person” for payment limitation purposes. Id. § 795.6. For example, prior to 1989, a husband and wife always qualified as one person. Id. § 795.11. Additionally, a corporation cannot be a “person” separate from the individual owner if the individual owns more than fifty percent of the stock in the corporation. Id. § 795.8(a).

An individual or legal entity engaged in “custom farming” is combined with the individual or entity for whom or which custom farming is performed unless the individual or entity performing custom farming meets certain requirements to be considered as a separate person. Id. § 795.16. The custom farming regulation provides:

(a) Custom farming is the performance of services on a farm such as land preparation, seeding, cultivation, applying pesticides, and harvesting for hire with remuneration on a unit of work basis, except that, for the purpose of applying the provisions of this section, the harvesting of crops and the application of agricultural chemicals by firms regularly engaged in such businesses shall not be regarded as custom farming. A person performing custom farming shall be considered as being separate from the person for whom the custom farming is performed only if:
(1) The compensation for the custom farming is paid at a unit of work rate customary in the area and is in no way dependent upon the amount of the crop produced, and (2) the person performing the custom farming (and any other entity in which such person has more than a 20-percent interest) has no interest, directly or indirectly, (i) in the crop on the farm by taking any risk in the production of the crop, sharing in the proceeds, of the crop, granting or guaranteeing the financing of the crop, (ii) in the allotment on the farm, or (iii) in the farm as landowner, landlord, mortgage holder, trustee, lienholder, guarantor, agent, manager, tenant, sharecropper, or any other similar capacity.
(b) A person having more than a 20-percent interest in any legal entity performing custom farming shall be considered as being separate from the person for whom the custom farming is performed only if:
(1) The compensation for the custom farming service is paid at a unit of work rate customary in the area and is in no way dependent upon the amount of the crop produced, and (2) the person having such interest in the legal entity performing the custom farming has no interest, directly or indirectly, (i) in the crop on the farm by taking any risk in the production of the crop, sharing in the proceeds of the crop, (ii) in the allotment on the farm, or (iii) in the farm as landowner, landlord, mortgage holder, trustee, lienholder, guarantor, agent, manager, tenant, sharecropper, ,,or in any other similar capacity.

Id.

Another regulation, governing financing, provides that in order to be considered a separate “person” for payment limitation purposes, an individual must:

(a) Have a separate and distinct interest in the land or crop involved,
[271]*271(b) Exercise separate responsibility for such interest, and
(c) Be responsible for the cost of farming related to such interest from a fund or account separate from that of any other individual or entity.

Id. § 795.3(b)(1).

Compliance with the above payment limitation regulations, id. § 795, is a prerequisite to full payment, id. §§ 713.103(c), 713.-1(b).

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Cite This Page — Counsel Stack

Bluebook (online)
22 Cl. Ct. 268, 1991 U.S. Claims LEXIS 3, 1991 WL 1088, Counsel Stack Legal Research, https://law.counselstack.com/opinion/knaub-v-united-states-cc-1991.