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Wagner v. PennWest Farm Credit

April 2, 1997

DEWEY A. WAGNER,

APPELLANT

v.

PENNWEST FARM CREDIT, ACA; A CORPORATION

DEWEY A. WAGNER,

APPELLANT

v.

PENNWEST FARM CREDIT, ACA; A CORPORATION; GARY J. GAERTNER, TRUSTEE; JAMES L. WITHERUP; KATHY L. WEAVER

DEWEY A. WAGNER,

APPELLANT

v.

PENNWEST FARM CREDIT, ACA; A CORPORATION



On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Nos. 95-cv-00006E, 95-cv-00007E, 95-cv-00008E)

Before: SLOVITER, Chief Judge, STAPLETON and ALDISERT, Circuit Judges

SLOVITER, Chief Judge.

Submitted Pursuant to Third Circuit LAR 34.1(a) March 24, 1997

Opinion filed April 2, 1997

OPINION OF THE COURT

This appeal comes before us on the contention of appellant Dewey A. Wagner that the bankruptcy court, in an order affirmed by the district court, erred in holding that debtor Wagner's statutory right of first refusal under the Agricultural Credit Act ("ACA" or "Act"), 12 U.S.C. Section(s) 2001 -- 2279aa-14 (1988), was not property of the bankruptcy estate. In order to decide that issue we confront the underlying question whether there is an implied private right of action under the Agricultural Credit Act, an issue this court has not yet decided.

I.

Most of the facts in this case relevant to that issue are not in dispute. On April 4, 1980, Wagner signed a loan agreement with PennWest Farm Credit, ACA, ("PennWest"), secured by a mortgage on a nineteen acre piece of property in Venango County, Pennsylvania. PennWest is a corporation organized and existing under the federal Farm Credit System. See 12 U.S.C. Section(s) 2091. After Wagner defaulted on the payments due, PennWest obtained judgment against Wagner in the Venango County Court of Common Pleas and took title to the property following a sheriff's sale.

The ACA requires an institution of the Farm Credit System that acquires agricultural real estate as a result of a loan foreclosure to provide the previous owner a right of first refusal. See 12 U.S.C. 2219a(a). This is effected by requiring an institution that elects to sell acquired real estate to notify the previous owner within fifteen days of such election of that owner's right to purchase the property at its fair market value as established by an accredited appraiser or to offer to purchase it at a lesser price. See 12 U.S.C. Section(s) 2219a(b)(1). If the previous owner offers to purchase the property at the appraised value within thirty days after receiving the notice of first refusal, the Act requires that the institution "shall, within 15 days after the receipt of such offer, accept such offer and sell the property to the previous owner." 12 U.S.C. Section(s) 2219a(b)(3). If the previous owner's offer is for less than the appraised value, the institution must notify the previous owner within fifteen days whether it is accepting or rejecting that bid. See 12 U.S.C. Section(s) 2219a(b)(4).

PennWest's certified appraiser valued the property at $65,000. By letter dated November 16, 1993, PennWest offered to sell back the property to Wagner at $65,000. The terms set forth in PennWest's letter were cash sale, with the sale to be closed within fifteen days of PennWest's receipt of Wagner's offer. Wagner did submit an offer to purchase the property at the appraised price, but he did not close within the fifteen days nor within the two deadline extensions ending on March 3, 1994.

PennWest then began a competitive bidding process, and advertised in several newspapers that it was accepting a minimum $65,000 bid on the property. There were approximately fifty inquirers and information packets were sent to each of them. Because there were no bids at that price, PennWest eliminated the minimum bid requirement entirely and sent a second bid packet to the same fifty inquirers, requesting them to submit bids by May 4, 1994. The highest bid received was from James Witherup and Kathy Weaver ("the Buyers") in the amount of $44,000.

By letter of May 9, 1994, PennWest advised Wagner that it had accepted a bid for $44,000 and that he had a statutory right of first refusal under the same terms and conditions, which included a cash sale to be closed within fifteen days of receipt of the offer. Wagner exercised his right of first refusal and made a timely offer to purchase the property for $44,000. The closing date was fixed for June 29, 1994. However, Wagner did not tender the sales price on that day. Upon inquiry, Jeffrey Trotten, Wagner's agent, told PennWest's representative that Wagner had withdrawn his application for financing the day before.

Instead, Wagner followed a different course. On June 29, the day fixed for the closing, Wagner filed a quiet title action in Venango County which prevented PennWest from selling the property to the Buyers. Then, on July 12, 1994 Wagner filed a petition under Chapter 12 of the Bankruptcy Code. Wagner also filed a determination of property rights in the bankruptcy court, stating a claim almost identical to that in his quiet title action. His quiet title action was removed to the bankruptcy court as an adversary proceeding.

On September 14, 1994, a hearing was held in the bankruptcy court in which three matters were raised: the removed quiet title action, the action for determination of property rights, and PennWest's request for relief from the automatic stay. The bankruptcy court found that Wagner had been adequately informed by PennWest of his rights of first refusal and that Wagner had failed to exercise those rights in a timely manner. Bankruptcy Ct. Op. (Nov. 23, 1994). Since Wagner's right of first ...


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