Background
Michael Wells, proceeding pro se, appealed from the District of Nevada after the district court granted summary judgment to the United States Small Business Administration in a contract dispute involving Wells’ unconditional guarantee of an SBA loan. Wells argued that the SBA breached the guaranty contract by failing to make the required written demand for payment, that the district court failed to address his challenge to the agency’s finding of personal liability and wage garnishment, and that the administrative wage-garnishment process was unconstitutional.
The court’s reasoning
The panel stated that summary judgment is reviewed de novo and is proper when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. On the contract issue, the court held that paragraph 1 of the guaranty did not make "written demand" a term of art incorporating the requirements of 31 U.S.C. Section 3716(a) or 31 C.F.R. Section 901.2, and instead gave the phrase its ordinary meaning. The panel concluded that the April 13, 2010 letter advising Wells of the amount needed to bring the loan current and asking him to begin making payments was sufficient to satisfy paragraph 1, so the SBA did not breach the contract and Wells became liable for the remaining amounts due under the note. The court also held that the district court did address Wells’s challenge to the agency’s liability determination and that the SBA hearing official correctly found Wells liable for the remaining amounts due under the note. On the constitutional issue raised for the first time on appeal, the panel held that administrative recovery of debts owed to the sovereign may be handled by executive officials under Murray’s Lessee and that SEC v. Jarkesy did not undermine that practice, so Wells’s challenge to the wage-garnishment proceedings failed.
What it means going forward
The decision leaves in place summary judgment for the SBA, confirms Wells’s liability under the guaranty, and allows the agency’s administrative wage-garnishment collection efforts to stand.