United States v. Chappell

In 1982, Ronald and Susan Chappell (defendants) entered into a loan for $92,000 from the Farmers Home Administration, the predecessor in interest to the Farm Service Agency (FSA) (plaintiff), which are both agencies of the United States government. The loan was for the purpose of purchasing a dairy farm and was secured by a mortgage. Unfortunately, the Chappells encountered significant difficulties in operating the dairy farm, including seriously ill cattle, structural problems with the barn, plumbing and electrical problems with the house and barn, and a nonfunctioning septic system. Additionally, the profitability of dairy farming in the area declined, the Chappells experienced a high mortality rate in their herd, and the herd produced a low milk output. As a result, the Chappells incurred serious cashflow difficulties. The Farmers Home Administration worked with the Chappells and paid their state real estate taxes for nine years and advanced additional funds. These funds were added to the loan, and the mortgage was refinanced. The Farmers Home Administration and the Chappells entered into a new mortgage deed in 1988. However, the Chappells stopped paying the loan payments that year. Approximately three-and-a-half years later, the FSA accelerated the full amount of the debt. About a year after that, the Chappells abandoned the property. The FSA then waited another 18 months to foreclose on the property. At that point, the property had been abandoned for over 18 months, which caused the property to deteriorate substantially. Additionally, the real estate market in the area suffered an enormous downturn. The foreclosure resulted in a sale for $40,000, leaving a deficiency on the loan of approximately $140,000. The FSA sued the Chappells for the deficiency. The FSA moved for summary judgment, and the Chappells also moved for summary judgment.