United States of America v. LaBatte et al

Filing 18

ORDER granting 14 Motion for Summary Judgment. Signed by U.S. District Judge Charles B. Kornmann on 11/30/2018. (SAC)

UNITED STATES DISTRICT COURT

D£C fl 3 20)g

DISTRICT OF SOUTH DAKOTA
NORTHERN DIVISION

UNITED STATES OF AMERICA,

.

1:17-CV-01032-CBK

Plaintiff,
vs.

ORDER

BRENDAN J. LABATTE; TIMOTHY
LABATTE; and DALE VOGT,
Defendants

BACKGROUND

On December 7,2017,plaintifffiled a complaint against defendants to foreclose on secured

property pursuant to two outstanding loans to Brendan J. LaBatte ("borrower"). Defendant Dale
Vogt has a judgment lien, filed after plaintiffs lien, on chattel securing the loans, and defendant
Timothy LaBatte maintains possession of the secured chattel on his property. The court dismissed
defendant Roberts County, South Dakota, which also held a lien on the secured property at issue
here, after it disclaimed its interest in this case. Defendant Timothy LaBatte filed an answer to the

foreclosure complaint pro se. Defendants Brendan J. LaBatte and Dale Vogt did not file an answer
to the foreclosure complaint. On September 7, 2018, plaintiff moved for summary judgment
requesting a judgment of foreclosure, a decree of sale, and a finding that plaintiffs interest is

superior to any other stated interest. No defendant has filed a response to the motion for summary
judgment or requested to enlarge the deadline for responding.

The court has jurisdiction over this case because it is a proceeding commenced by the
United States. 28 U.S.C. § 1345.

DECISION

I. Standard of Review

The purpose of summary judgment is to determine whether there is a "genuine issue for
trial" with regard to a claim or defense or "part of each claim or defense." Matsushita Elec. Indus.
Co.. Ltd. V. Zenith Radio Corp.. 475 U.S. 574, 587 (1986); Fed. R. Civ. P. 56(a). Summary
judgment should be granted only where there is "no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). If facts are disputed,
"[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." Anderson v. Libertv Lobby. Inc.. 477 U.S.
242, 248 (1986). The moving party bears the burden of showing that the material facts in the case
are undisputed and "inferences to be drawn from the underlying facts . . . must be viewed in the
light most favorable to the party opposing the motion." Celotex Corp. v. Catrett. 477 U.S. 317,
322-23 (1986); United States v. Diebold. Inc.. 369 U.S. 654,655(1962)(per curiam). However, a

nonmoving party "may not rest on mere allegations or denials" and "must do more than show that
there is some metaphysical doubt as to the material facts." Anderson at 256; and Matsushita at
587. In sum, an issue offact is genuine if, based upon the evidence in the record, a reasonable jury
could return a verdict for the nonmoving party. Anderson at 248.

When the United States is a creditor, the law of the state where the court is situated applies

when giving effect to a promissory note. See 28 U.S.C. § 2410(c). The issue of foreclosure is
therefore governed by South Dakota Law. See Donovan v. Farmers Home Admin.. 19 F.3d 1267,
1269(8th Cir. 1994). District Courts will grant summaryjudgment and foreclosure reliefon chattel
securing a promissory note where the Farm Services Agency has followed its administrative

procedures in seeking relief on such note. U.S. v. Morse. 2011 WL 197579 *2 (D.S.D. 2011)
(internal citations omitted).

Under Local Rule 7.1, defendants were required to serve and file a responsive brief to
plaintiffs motion for summary judgment containing opposing legal arguments and authorities in

support thereof within 21 calendar days. No defendant filed such a motion, nor did any defendant
file a motion to enlarge the time in which to respond. Under Local Rule 56.1(d), "[a]ll material
facts set forth in the movanfs statement of material facts will be deemed to be admitted unless

controverted by the opposing party's statement of material facts." Because the defendants have

not responded to the motion for summary judgment or statement of material facts submitted in
connection therewith, the Court, under the Local Rule, deems the statement of material facts to be
admitted.

II. A Judgment of Foreclosure Should be Entered Against Borrower

Plaintiff requests that this court enter judgment against borrower in the amount of
$36,950.13 as of August 20,2018, together with any additional sums advanced, costs or expenses

expended, and interest accruing at a daily rate of $1.0806. Plaintiff also requests that this court

adjudge borrower's security interest in the secured chattel property to be foreclosed. Plaintiff has
provided as evidence promissory notes signed by borrower, a security agreement, acceleration
notice, and the UCC filings indicating plaintiff has perfected its interest in the specific chattel
identified in its complaint and any after acquired replacement chattel.

Borrower signed two promissory notes. The first indicates that borrower borrowed
$14,000, at a rate of 1.125%, on February 22, 2013, with payment due in full on February 22,

2014. The second promissory note, also signed February 22, 2013, indicates that borrower
borrowed $21,000 at a rate of 1.125%, due in seven yearly installments, with the first installment
of$3137.00 due on February 22,2013. The security agreement provides plaintiffa security interest
in, inter alia^ the following farm and other equipment, together with all replacements,
substitutions, additions, and accessions thereto:

Quantity

Line

Kind

Manufacturer

Size and

Serial or Model

Condition

Type

No.

No.

1

1

Tractor

IHC

656

Fair

To be purchased

2

1

Tractor

JD

4010

Fair

To be purchased

3

1

Mower

International

Good

To be purchased

4

1

9-Wheel Rake

5

1

Square

6

1

Bale Fork

s 7

1

Feed Wagon

To be purchased
NH

268

Fair

3Pt

Fair

WF

Fair

21082

Baler/Accumulator

Algoma

709

..

8

17

Cattle

Panels

&

Good

Posts

Tools

9

in

Tool

Chest
10

1

Bobcat Trailer

Homemade

Fair

Not Titled

Four of the items listed above were "[t]o be purchased." However, plaintiff alleges that borrower

only purchased the 9-Wheel Rake, and then also purchased a Ford 5000 Tractor (1966, Serial
#9C12BB7016), a Rowse Mower (S-9, Serial Number CC-R2S-25), a Sickle Mower, a Gehl VRake (520-6 each side, Serial Number 9705), and a Delta Trailer (6x16, Serial Number
4MWBS16206N017001, 2006). The provision in the security agreement providing plaintiff with
an interest in "all replacements, substitutions, additions, and accessions," to the equipment listed
above encumbers these five additional items.

The security agreement provides for acceleration of payment upon default Doc. 1-3,

4(b)(1). The security agreement also provides that borrower shall assemble the secured property
and make it available to plaintiff at the times and places designated by plaintiff. Id. at 4(b)(2).
Plaintiff provided defendant notice of acceleration on January 28, 2015. Doc. 1-5.

As plaintiff has noted, "[s]uits brought to enforce promissory notes are among the most
suitable classes of cases for summary judgment, especially when the moving party shows
execution, delivery, and amount of the note." U.S. v. Schwandt Bros.. WL 2171060 *3 (D.S.D.

2006)(internal citations omitted). Plaintiff has so shown execution and amount and the borrower
has failed to dispute delivery. Doc. 1-1,1-2. Because no genuine issue of material fact exists that
foreclosure on the promissory notes is proper, a judgment of foreclosure should therefore be
entered against borrower.

in. Plaintiffs Security Interest is Senior to Any Outstanding Security Interests Held by
Defendants

Plaintiff states that defendant Dale Vogt has a judgment lien of$6,099 that may affect the

chattel property at issue in this action. Plaintiff indicates that Dale Vogt's lien was recorded in
September of2015.This is over two years after plaintiffperfected its interest in the chattel property
securing the loans it made, on February 22, 2013. Doc. 1-4. According to SDCL 44-2-1,"[ojther
things being equal, different liens upon the same property have priority according to the time of
their creation." Therefore, plaintiffs lien is superior to any lien Dale Vogt may have on the same
property as a result of the judgment perfected in September of2015.
In his answer to plaintiffs complaint, defendant Timothy LaBatte states that he has a
"Security Agreement, Mechanics Lien Storage Lien, and am part and full time owner of any and
all property [t]hat is on my residence . . .." Doc. 8. South Dakota's statute regarding mechanic's
liens provides that such liens are prior and superior to all other liens "except those of the state or
of the United States, and except existing liens, mortgages, or other encumbrances then of record .
.. SDCL 44-9-1. Any mechanics lien Timothy LaBatte has over the secured chattels is therefore
inferior to the United States' interest in this case.

Defendant Timothy LaBatte also states in his answer to plaintiffs complaint that he "would

be harmed, financially by what [t]he USA has done, by attempting to remove Agricultural
equipment [t]hat was promised generations ago, by right ofTreaty." He refers earlier in this same
document to the "Lake Traverse Treaty of 1867." The Court is obliged to liberally construe this
pro se answer. Erickson v. Pardus. 551 U.S. 89, 94(2007);see also Native Am. Council ofTribes

V. Solem. 691 F.2d 382(8th Cir. 1982). Nonetheless, pro se pleadings must still comply with the
requirements contained in the Federal Rules of Civil Procedure and must contain "more than labels

and conclusions." Bell Atl. Corp. v. Twomblv. 550 U.S. 544, 555 (2007). The treaty establishing
the Lake Traverse Reservation—the Treaty with the Sioux - Sisseton and Wahpeton Bands,
1867—contains no right to agricultural equipment that would invalidate plaintiffs foreclosure on
the secured property at issue here.

Defendant Timothy LaBatte also states that his ,sons were "denied being Generational
Farmers." The Court is aware that the state ofNorth Dakota provides preference for "Generational
Farmers" through its f^ily farm exception to its anti-corporate farming statute, but that fact is
irrelevant to the foreclosure at issue here. NDCC § 10-06.1-12; see also North Dakota Farm
Bureau, Inc. v. Stenehiem. 2018 WL 4550391 (N.D. 2018). The Court is otherwise unaware of

"Generational Farmers" as a legal category.
IV. A Decree of Sale Should be Entered

In light of the Court's finding that a judgment of foreclosure should be entered against
borrower, and that no other interests are superior to plaintiffs in this case, the Court should also

enter a decree of sale directing the United States Marshal or his deputy to sell the chattel property.
Plaintiff shall submit a proposed order to the Court to this effect. The proposed order should
include the requirement that borrower assemble the secured property and make it available to
plaintiff at the times and places designated by plaintiff.

ORDER

Now,therefore,
IT IS ORDERED:

1. Plaintiffs motion for summary judgment, Doc. 14, is granted.

2. Under the terms of the promissory notes and the detailed accounting provided by
plaintiff in Doc. 17-2,judgment hereby enters against borrower in the amount of
$36,950.13 as of August 20, 2018, plus prejudgment interest through the date of this
judgment and post-judgment interest under 28 U.S.C. § 1961(a).
3. Plaintiff shall have and recover judgment offoreclosure upon the farm and other
equipment described in Section II, above.

4. The interest of the defendants in the property described in Section II above shall be
foreclosed. Excluding any senior lienholders, the following persons and entities shall
be barred and foreclosed of, and from, all rights, title and interest in said property:(a)

all defendants, together with each and every person or entity claiming under them;(b)
all persons claiming any lien or encumbrance of any kind or character upon, or
against, such property, that is subsequent in time or priority, or both, to the lien

created by plaintiffs secured interest; and (c) any and all persons claiming to have
acquired any right, title, or interest in, and to the secured chattels foreclosed upon
herein.

Dated this ^^dajToTNovember,2018.
lis
BY THE COURT:

CHARLES B. KORNMANN

United S.tates District Judge