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November 27, 1989


The opinion of the court was delivered by: Richard Mills, District Judge:


We deal here with the Agricultural Credit Act of 1987.

As involved here, that Act has been interpreted by both the Eighth and Ninth Circuits, but not our Seventh Circuit. Thus we will address this case in this manner.

Plaintiffs Donald and Barbara Walker, appearing pro se, filed a "civil rights complaint" against the Defendant in conjunction with a motion to preliminarily enjoin a state court proceeding between the parties. The facts giving rise to the suit are not in dispute, although the legal effect of those facts is disputed.


The Walkers borrowed some $103,600 from the Federal Land Bank of St. Louis, now known as the Farm Credit Bank of St. Louis (hereinafter referred to FCB) in December of 1978. The note signed by the Walkers included, at the bottom, the following words:

  For value received, the undersigned hereby
  guarantees the payment of the within note,
  according to the terms thereof, both as to
  principal and as to interest.

This short paragraph was signed by the manager of the Federal Land Bank Association of Hillsboro (hereinafter FLBH).

Apparently all did not go well with the Walkers' agricultural endeavors, because the FCB, on May 5, 1988, forwarded to the Walkers a copy of FCB's distressed loan restructuring policy and an application to restructure their loan. The Walkers were to complete these forms and return them by June 22, 1988. Instead, though, the Walkers returned to the FCB the forms which were in most respects wholly incomplete; the distressed loan restructuring application information requests were responded to with the question "Does this comply with H.R. 3030?" This question refers to the House Resolution which was later crafted into the Agricultural Credit Act of 1987, Part C of which is entitled "Rights of Borrowers; Loan Restructuring" — in other words, the Walkers were obliquely questioning whether the restructuring application complied with their rights under the Agricultural Credit Act of 1987 (hereinafter 1987 Act). Also forwarded with this incomplete restructuring application were some ten pages of requests for information from the FCB.

On June 24, 1988, in response to the Walkers' submissions, FCB sent a second letter apprising the Walkers of their right to apply to have their distressed loan restructured, and noted the FCB's receipt of the incomplete application. This second letter detailed the information necessary to be supplied in order for consideration of the restructuring application, and allowed the Walkers until July 5, 1988, to comply prior to the commencement of foreclosure proceedings on the loan.

The Walkers never responded, though, and so on July 6, 1988, FCB informed the Walkers that their distressed loan restructuring application was denied for being incomplete, and that commencement of foreclosure proceedings was imminent. This prompted the Walkers to send a letter to FCB requesting a credit review committee reconsideration of the denial of the restructuring application and for the names of three approved appraisers; this letter was dated July 12, 1988. On July 21, 1988, FCB responded by letter that a credit review committee hearing was only available when a completed application was submitted. Additionally, FCB responded to the Walkers' request for the names of three approved appraisers by noting that such appraisers are only to be made available by the FCB in the event restructuring is denied on the merits, whereas the Walkers' application was denied because it was not completed.


Following the above actions, FCB commenced foreclosure proceedings in the Illinois state courts. This prompted the Walkers to file the instant suit, and also to seek preliminary injunctive relief to stay the state court proceedings pending resolution of their federal cause of action. The original complaint filed by the Walkers, dubbed a "civil rights complaint," raised four different grounds why the Walkers believed the FCB had infringed upon their federal constitutional rights in bringing the foreclosure action.

After oral argument, this Court denied the Walkers' request for preliminary injunctive relief in part on the ground that the complaint had little likelihood of succeeding on the merits. Specifically, we found that the complaint, framed in terms of 42 U.S.C. § 1983, would likely fail for want of any state action.

As we further noted, neither the mere institution of a foreclosure proceeding nor the use of a state's tribunals establish state action; by the same token, the FCB is, itself, not a state actor, and thus is not a "person" for purposes of § 1983. We also denied injunctive relief on the grounds that no private remedy exists under the 1987 Act, and also that any preliminary injunctive relief was likely barred by virtue of the Anti-Injunction Act, 28 U.S.C. § 2283.

Following their unsuccessful bid to enjoin the state court proceeding in our Court, the Walkers filed a bankruptcy petition and thus automatically stayed the foreclosure proceeding. That petition, though, was dismissed, and the FCB immediately filed a motion for summary judgment. The Walkers responded to this motion by moving to dismiss without prejudice, but we denied that motion on authority of Rule 41(a)(2) of the Federal Rules of Civil Procedure. The Walkers then responded to the motion for summary judgment and asked for leave to file an amended complaint. The proposed amended complaint raises essentially the same factual basis as their original complaint, but this time the pleading is framed in terms of a declaratory judgment action, and is premised upon the Walkers' view that ...

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