Timothy M. Bajjani v. U.S. Small Business Administration ( 2020 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-14580
Non-Argument Calendar
________________________
D.C. Docket No. 1:18-cv-00459-ELR
TIMOTHY M. BAJJANI,
Plaintiff-Appellant,
versus
U.S. SMALL BUSINESS ADMINISTRATION,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(August 13, 2020)
Before ROSENBAUM, LUCK, and LAGOA, Circuit Judges.
PER CURIAM:
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Timothy Bajjani sought review of two administrative decisions of the Small
Business Administration garnishing his wages. The district court granted summary
judgment for the Administration, concluding that the administrative decisions were
not arbitrary and capricious. Bajjani now appeals the grant of summary judgment
for the Administration. We affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The Loan
This case concerns the Administration’s 504 loan program.
The [Administration]’s 504 loan program . . . provides financial
assistance through 10 or 20 year loans to small businesses. Under the
program, a certified development company or CDC issues a debenture
to fund the borrower’s acquisition of the real property, machinery and
equipment needed for a business venture. The debenture, which is
guaranteed 100 percent by the [Administration], is sent to a central
servicing agent which disburses or sells the debenture to a pool of
private investors. The proceeds of the debenture are used to fund the
504 loan.
United States v. Sobecki, No. 3:96–CV–668RP, 1998 WL 175870, at *2 (N.D. Ind.
Mar. 26, 1998); see also Mitec Partners, LLC v. U.S. Bank Nat’l Ass’n, 605 F.3d
617, 620 n.2 (8th Cir. 2010). 1
1
See also Office of Financial Assistance | Resources, U.S. Small Business Administration,
https://www.sba.gov/offices/headquarters/ofa/resources/4049 (last visited August 11, 2020) (“The
504 Loan Program provides approved small businesses with long-term, fixed-rate financing used
to acquire fixed assets for expansion or modernization. [These] loans are made available through
Certified Development Companies (CDCs), SBA’s community based partners for providing 504
Loans.”).
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On May 1, 2006, the Administration guaranteed a loan between Georgia
Mountains Economic Development Corp. (a certified development company) and
RLB Friendship, LLC (the borrower) for RLB Friendship to acquire a piece of
property and lease it to Georgia Hydraulic Cylinder, Inc. On May 18, 2006, RLB
Friendship signed a twenty-year SBA-guaranteed $798,000 note in favor of Georgia
Mountains, secured by the property. The note was junior to a first mortgage on the
property in the amount of $967,500. Joe Bajjani, father of Timothy Bajjani and RLB
Friendship’s managing member and sole owner, signed the note and personally
guaranteed the loan. Additional collateral for the note included guarantees from
RLB Holdings, Inc., Bajjani Services, Inc., and Georgia Hydraulic––all companies
wholly owned by Joe Bajjani. Accompanying the note was the May 1 debenture
guarantee. The standard document provided that, “[p]rior to 504 Loan Closing, [the
certified development company] must require Borrower . . . to certify that [it] will
not, without prior consent of [the certified development company] and [the
Administration] . . . [c]hange the ownership structure of interests in the business
during the term of the Note . . . .” The note had similar language: “Borrower is in
default if Borrower . . . changes ownership or business structure without [the
certified development company]’s prior written consent . . . .”
On September 5, 2007, Joe Bajjani, planning his estate, sought permission
from Georgia Mountains and the Administration to transfer a forty-nine percent
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interest in Georgia Hydraulic to his adult son, Bajjani.2 Georgia Mountains
recommended that the Administration approve the transfer. However, before the
Administration would approve the transfer, Bajjani had to sign an unconditional
guarantee adding him to the loan as a personal guarantor. Georgia Mountains, using
the Administration’s “Unconditional Guarantee” form, prepared Bajjani’s
guarantee. Bajjani signed the guarantee in October 2007, and Georgia Mountains
signed and assigned the guarantee to the Administration on November 19, 2007.
Fast-forward five years later. Georgia Hydraulic filed a Chapter 11 bankruptcy
petition.
First Administrative Hearing
In 2014, RLB Friendship defaulted on the note. As a result, the Department
of the Treasury notified Bajjani of the Administration’s intent to garnish his wages–
–specifically, to garnish fifteen percent of his monthly net income. 3 Bajjani
administratively appealed, claiming: (1) he did not owe the debt; and (2) that the
proposed garnishment would cause financial hardship.
On November 20, 2015, the Administration sent Bajjani a letter, setting the
appeal for a hearing and assigning a hearing officer to preside over the proceeding.
2
We will refer to the plaintiff as Bajjani and the plaintiff’s father as either Joe Bajjani or
the father.
3
At the time of the administrative wage garnishment, the property was not used to offset
the remaining balance on the note because RLB Friendship “surrendered [the property] to the first
secured creditor.”
4
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In the letter, the first hearing officer informed Bajjani that he “appeared to be
appealing the garnishment due to one or more of the following usual reasons:
(1) Existence of the Debt; (2) Amount of the Debt; (3) Terms of the Garnishment;
and (4) Financial Hardship.” He also told Bajjani that he will only consider “written
materials and other records” submitted by him and the Administration. If Bajjani
was appealing due to the first three reasons, the first hearing officer said, then he had
to “submit additional evidence.” But if his appeal was limited to arguing financial
hardship, the first hearing officer continued, then Bajjani had to submit a “Financial
Disclosure Statement” where his income and expenses would be “compared against
averages for those expenses by families of the same size and income as [his] family.”
In response, Bajjani’s counsel sent a written communication to the first
hearing officer, arguing that Bajjani was not a borrower on the loan agreement
because he was not listed as a guarantor. The first hearing officer replied,
[Y]ou question Mr. Bajjani’s liability on the debt given the fact he was
not listed as a guarantor on the loan agreement you attached to your
letter.
....
As to Mr. Bajjani’s personal liability, he executed an Unconditional
Guarantee pursuant to a change to the Loan Authorization requested by
[Georgia Mountains]. As stated in the enclosed “327 Modification or
Administrative Action/CDC General Request,” this change was made
due to the fact [the father] transferred 49% of the corporation’s non-
voting stock to his son[, Timothy Bajjani]. As an owner, Timothy
Bajjani, under [administrative] regulations, was required to guarantee
the loan. Accordingly, Timothy Bajjani executed a Statement of
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Personal History and executed an Unconditional Guarantee. Copies of
all these documents are included with this mailing.
I don’t believe there is any question regarding Timothy Bajjani’s
personal liability on the loan. With that having been said, if [Timothy
Bajjani] wants to pursue his Administrative Wage Garnishment appeal
it will be necessary for him to . . . provide copies of the [sic] all the
documents mentioned in my November 20, 2015 letter.
Bajjani and the Administration submitted additional evidence. Bajjani
provided the loan agreement, a “Financial Disclosure Statement,” and recent income
and tax information. The Administration submitted the loan modification, the
“Unconditional Guarantee” Bajjani signed, a “Statement of Personal History” that
detailed the transaction history and communications relevant to the loan, and other
records that established the “amount and past-due status of the debt.”
On August 31, 2016, the first hearing officer, determining that “no oral
hearing [was] needed,” 13 C.F.R. § 140.11(f)(3)(iii), conducted a “paper hearing . . .
based upon a review of the written record.” His determination was based on “the
available pertinent material records related to [Bajjani’s] account, including those
submitted by [Bajjani] and those held by the [Administration].”
Bajjani objected to the amount of the administrative wage garnishment
because he did not owe the debt and the amount of the proposed garnishment would
cause him financial hardship. Rejecting both these arguments, the first hearing
officer concluded that an administrative wage garnishment was appropriate,
although for a different amount. As to whether Bajjani was responsible for the debt,
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the first hearing officer found Bajjani failed to provide any information or
documentation in support of this objection. Regarding Bajjani’s objection that a
withholding of fifteen percent of his monthly net income would cause him a financial
hardship, the first hearing officer found that Bajjani had “partially proven” a
financial hardship. The first hearing officer calculated Bajjani’s “net family monthly
disposable income” as $4,458.22. Fifteen percent of that figure was $668.73. The
first hearing officer next subtracted Bajjani’s “accepted” monthly expenses of
$4,239 from his net monthly disposable income of $4,458.22, leaving $219.22.
“Since [the $219.22] amount [was] below the figure that equates to 15 percent of
[Bajjani’s] family monthly disposable income ($668.73),” the first hearing officer
determined, a garnishment of Bajjani’s wages is “excessive, if the amount exceeds
$219.22 per month.” “Based on these findings,” the first hearing officer ordered that
Bajjani’s employer “withhold from [Bajjani’s] wages the amount of $219.22 per
month until the debt is paid in full.” The first hearing officer stated that, under the
Administrative Procedure Act, “this [decision was] the final agency decision for
purposes of judicial review” and Bajjani could “seek judicial review in Federal
district court.”
Second Administrative Hearing
A month after the first hearing officer’s decision, Bajjani’s wages were not
garnished. Instead, the Department of the Treasury re-notified Bajjani of the
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Administration’s intent to garnish his wages, and Bajjani again requested a hearing
to oppose the garnishment. 4 This time, Bajjani argued only that he did not owe the
debt.
The second hearing officer did not originally know of the first decision. In
preparation for the hearing, Bajjani submitted an affidavit from his father as
evidence that he did not owe the debt. Bajjani’s father attested that, in
September 2007, he “notified the first hearing officer . . . of [his] intention” to
transfer forty-nine percent of his stock to his son. The first hearing officer, according
to the father, “instructed” him that Bajjani would need to be added to the loan as a
guarantor to execute the transfer. The second hearing officer recognized the name
of the first hearing officer and contacted him to inquire about the father’s
representations. In response, the first hearing officer stated that he had never spoken
with the father and had previously issued an opinion as to the garnishment of
Bajjani’s wages. In light of the first hearing officer’s decision, the second hearing
officer, “[w]ithout ruling on the merits of [Bajjani’s] argument,” rejected Bajjani’s
appeal on res judicata grounds and determined that the proposed garnishment was
appropriate. The second hearing officer ended his decision explaining that this was
4
The district court explained that the administrative record was silent as to why the
Department of the Treasury sent Bajjani a second garnishment notice. The district court found
that “the second [notice] was sent in error.”
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the “final agency decision for purposes of judicial review under the Administrative
Procedures Act,” and Bajjani could seek review in “Federal District Court.”
District Court Proceedings
Bajjani filed suit against the Administration in the Northern District of
Georgia, challenging both administrative decisions. The parties agreed that no
discovery was needed and moved for summary judgment. In his motion, Bajjani
argued that the first hearing officer’s decision that the guarantee was valid and the
second hearing officer’s decision that res judicata barred relitigating the validity of
the guarantee were arbitrary and capricious. The district court, finding that the
administrative decisions were not arbitrary and capricious, granted summary
judgment for the Administration.
As to the first hearing officer’s decision concerning the validity of the
guarantee, Bajjani asserted that this decision was arbitrary and capricious because:
(1) the validity of the guarantee was beyond the scope of the hearing as Bajjani’s
appeal was brought under the Administration’s informal procedure for a financial-
hardship review; and (2) the guarantee was void given that “he . . . received no
consideration for signing the guarant[ee] because the transfer of ownership from his
father to him never took place.” The district court rejected both arguments.
First, the court found that Bajjani appealed the Administration’s decision for
“reasons in addition to financial hardship,” including that he did not owe the
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debt. Therefore, the district court concluded, the validity of Bajjani’s guarantee was
“prominently before [the first hearing officer].” The court added that Bajjani had
“several opportunities to challenge the validity of the guarant[ee],” but chose not to
do so, and cannot “seek refuge in his own failures and conveniently contend that the
issue was never before [the first hearing officer].” As to Bajjani’s second argument–
–that he received no consideration for the guarantee given that his father did not
execute the transfer––the district court concluded that the first hearing officer had
“reason to believe [Bajjani] ha[d] received consideration.” The first hearing officer
had the unconditional guarantee form Bajjani signed that said “Joe Bajjani
transferred 49% of the corporation’s non-voting stock to his son[, Timothy Bajjani].”
Because Bajjani’s only evidence to rebut this finding was “based upon information
not before [the first hearing officer] at the time he made his decision”––the
bankruptcy record—the district court could not consider it.
As to the second hearing officer’s res judicata determination, Bajjani argued
that this decision was arbitrary and capricious because: (1) the first hearing was not
sufficiently “trial-like” to apply res judicata; (2) res judicata could not apply after
the second hearing officer reopened the case and accepted and evaluated newly
presented evidence; and (3) res judicata should not be applied to enforce a void
contract. The district court concluded that the first hearing was sufficiently trial-
like. “In his first hearing,” the district court reasoned, “it [was] undisputed that
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[Bajjani] had due notice, was given ample opportunity to be heard, was represented
by counsel, and afforded several occasions to present evidence.” As to whether the
second hearing officer reopened the hearing, the district court said that the hearing
officer did not consider the merits of Bajjani’s claims, but only determined the
res judicata effect of the first hearing. Finally, as to his third argument, the district
court concluded that there was no public policy exception to res judicata where a
guarantee was made without consideration. The validity of the guarantee went to
the merits of Bajjani’s claims, which was decided at the first hearing.
STANDARD OF REVIEW
We review de novo the district court’s grant of summary judgment “while
applying the appropriate standard of review to the agency’s decision.” Black
Warrior Riverkeeper, Inc. v. U.S. Army Corps of Eng’rs, 781 F.3d 1271, 1288 (11th
Cir. 2015). The hearing officers’ decisions were “final agency action[s]” subject to
judicial review under the Administrative Procedure Act. 5 U.S.C. § 704. “Under
the Administrative Procedure Act, we must ‘hold unlawful and set aside agency
action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.’” Black Warrior, 781 F.3d at
1288 (quoting 5 U.S.C. § 706(2)(A)). “The arbitrary and capricious standard is
‘exceedingly deferential.’” Defs. of Wildlife v. U.S. Dep’t of Navy, 733 F.3d 1106,
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1115 (11th Cir. 2013) (quoting Fund for Animals, Inc. v. Rice, 85 F.3d 535, 541
(11th Cir. 1996)).
An agency action is arbitrary and capricious where (1) “the agency ‘relied on
factors which Congress has not intended it to consider,’” (2) “the agency ‘failed to
consider an important aspect of the problem,’” (3) “the agency explained its decision
in a way ‘that runs counter to the evidence,’” or (4) “the action ‘is so implausible
that it could not be ascribed to a difference in view or the product of agency
expertise.’” Id. (quoting Miccosukee Tribe of Indians of Fla. v. United States, 566
F.3d 1257, 1264 (11th Cir. 2009)). We must not conduct our “own investigation”
or “substitute [our] judgment” for that of the administrative agency, Sierra Club v.
Van Antwerp, 526 F.3d 1353, 1360 (11th Cir. 2008), and must limit our review to
“the information that was before the agency at the time of its decision,” Salmeron-
Salmeron v. Spivey, 926 F.3d 1283, 1286 (11th Cir. 2019).
DISCUSSION
Bajjani raises three issues on appeal. First, he argues that the district court
erred in finding as not arbitrary and capricious the first hearing officer’s
determination that Bajjani’s guarantee of the Administration’s loan was valid.
Second, he contends that the district court erred in finding as not arbitrary and
capricious the second hearing officer’s determination that it was barred by res
judicata from relitigating the validity of the guarantee. And third, he claim that the
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district court erred in applying an arbitrary and capricious standard of review, as
opposed to a de novo review, when assessing the validity of the guarantee and the
applicability of res judicata.
Validity of the Guarantee
Bajjani argues that a contract with a federal agency cannot be enforced if the
contract is void under the laws of the state in which it is made. Under Georgia law,
he contends, a guarantee executed after the original loan obligation––as here––must
be founded on new consideration that flows directly to the guarantor. Because “any
possible legal consideration that may have flowed to [Bajjani] did not occur as the
proposed stock transfer was cancelled immediately following his execution of the
Guaranty,” Bajjani says, “he cannot be held financially responsible to the
[Administration] under the Guaranty [because it] is void and unenforceable under
Georgia law.” According to Bajjani, this lack of consideration is evidenced by the
bankruptcy proceedings where Joe Bajjani indicated that he wholly owned the
companies.
We agree with the district court that the Administration’s conclusion that the
guarantee was a valid obligation was not arbitrary or capricious. First, Bajjani’s
guarantee provided that he “may not claim or assert any local or state law against
[the Administration] to deny any obligation.” Under the plain terms of the guarantee,
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Bajjani could not use Georgia law to defeat the Administration’s attempt to enforce
the guarantee and garnish his wages.
Second, the Administration had substantial evidence that Bajjani received
consideration in exchange for the guarantee. The evidence presented to the first
hearing officer included the modification to the loan and the personal guarantee.
Those documents showed that the loan was modified when Bajjani, in exchange for
his father transferring a forty-nine percent interest in his companies to his son,
personally guaranteed the loan. The forty-nine percent interest was valid
consideration.
Bajjani argued that his father reneged on the agreement to transfer forty-nine
percent of the stock and, as proof, points to the sworn statements made during the
bankruptcy proceedings. But the record of the bankruptcy proceedings was not
introduced by Bajjani at the first administrative hearing. Bajjani did not rebut the
Administration’s evidence that he received consideration for the guarantee; indeed,
the first hearing officer only had six documents in evidence: (a) “SBA Financial
disclosure Statement dated April 27, 2016 and accompanying documents”;
(b) “Paycheck stubs, 2014 1040 Federal Income Tax Return, W-2’s”; (c) “SBA
agency records and copies of the agency’s electronic records, which were presented
to establish the evidence, amount and past-due status of the debt”; (d) “the
Department of Treasury’s transaction history and communication log”; (e) “Hearing
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Request Administrative Wage Garnishment”; and (f) “Notice of Intent to Initiate
Wage Garnishment Proceedings.” The hearing officer said those documents were
“submitted by [Bajjani] and held by the [Administration].” Because the bankruptcy
record was “information not before [the first hearing officer] at the time he made his
decision,” we, like the district court, cannot consider it. There was no evidence that
Bajjani did not receive consideration for the guarantee, and the only evidence before
the first hearing officer was that he did. See Salmeron-Salmeron, 926 F.3d at 1286
(“It is a foundational principal of administrative law that a reviewing court must
review only the information that was before the agency at the time of its decision in
assessing whether that decision was permissible.” (citing Camp v. Pitts, 411 U.S.
138, 142 (1973))).
Res Judicata
Bajjani argues that the second hearing officer was not bound by res judicata
because the first hearing was not trial-like. The first hearing, Bajjani contends, was
solely a financial hardship review. As such, he argues, the first hearing officer could
not “address the issue of the validity of the underlying loan or loan guaranty.”
Because the first hearing was not a full hearing, he says, a subsequent administrative
body could not be bound under res judicata. We disagree.
“[W]hen an administrative agency is acting in a judicial capacity and resolves
disputed issues of fact properly before it which the parties have had an adequate
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opportunity to litigate, the courts have not hesitated to apply res judicata . . . .”
United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 (1966). However,
“res judicata may apply to some administrative proceedings but not others,” and
“each situation calls for careful examination.” Garner v. Giarusso, 571 F.2d 1330,
1336 (5th Cir. 1978). “When [formality in an administrative hearing] is sufficiently
diminished, the administrative decision may not be res judicata. The starting point
in drawing the line is the observation that res judicata applies when what the agency
does resembles what a trial court does.” Lake Lucerne Civic Ass’n, Inc. v. Dolphin
Stadium Corp., 878 F.2d 1360, 1367 (11th Cir. 1989) (alteration in original) (internal
quotation marks omitted).
To determine whether an administrative decision should be given prelusive
effect, we look to “the character of the administrative hearing” and “examine the
procedural due process . . . afforded to the interested parties.” Id. (internal quotation
marks omitted). Procedural due process is afforded when there is “due notice, a fair
opportunity to be heard in person and through counsel, the right to present evidence,
and the right to cross-examine adverse witnesses.” Id. In other words, was there a
“full hearing.” Garner, 571 F.2d at 1336; see also Burney v. Polk Cmty. Coll., 728
F.2d 1374, 1380 (11th Cir. 1984) (noting that a school board that dismissed a public
school teacher after a “full hearing” at which plaintiff was represented by counsel
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had “res judicata effect” (citing Jennings v. Caddo Parish Sch. Bd., 531 F.2d 1331
(5th Cir. 1976))).
The requirements of administrative res judicata have been satisfied. As the
district court concluded, the “procedures and processes [were] sufficiently trial-like”
because Bajjani had due notice, was given ample opportunity to be heard, was
represented by counsel, was afforded several occasions to present evidence, and, if
needed, allowed to present witnesses. The first hearing was a full administrative
hearing, and was not limited to financial-hardship issues, as Bajjani claims. The
Administration informed Bajjani that his hearing would be an “Administrative Wage
Garnishment Hearing.” During an administrative wage garnishment hearing, a
person may challenge the Administration’s decision “due to one or more of the
following usual reasons: (1) Existence of the Debt[;] (2) Amount of the Debt[;]
(3) Terms of the Garnishment[; and] (4) Financial Hardship.” At the first hearing,
Bajjani challenged the amount of debt he owed and the financial hardship the
garnishment would cause him.
Bajjani argues that, even if res judicata might have properly applied, it could
not apply at the second hearing because the hearing officer allowed the appeal of the
second wage garnishment to proceed to hearing, received newly presented evidence,
and reopened the issue. As support, Bajjani cites to Cherry v. Heckler, 760 F.2d
1186 (11th Cir. 1985), for the proposition that a “final decision by [an administrative
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agency] will be deemed reopened if it is ‘reconsidered on the merits to any extent
and at any administrative level.’” Id. at 1189 (quoting McGowan v. Harris, 666 F.2d
60, 65 (4th Cir. 1981)). However, in Cherry, we said that a subsequent
administrative law judge does not reopen a case when she merely “look[s] far enough
into the proffered factual and legal support to determine whether it is the same
claim.” Id. (internal quotation marks omitted). After assessing the evidence
presented at the second hearing, and only then, may the administrative law judge
determine whether the case should be reopened as a “discretionary matter.” Id.
(internal quotation marks omitted).
Here, the second hearing officer found out about the first hearing officer’s
decision while reviewing the newly presented evidence. The second hearing officer
evaluated this new evidence and determined that res judicata applied. This did not
reopen the case. As we explained in Passopulos v. Sullivan, 976 F.2d 642 (11th Cir.
1992), “an ALJ does not reopen a prior final decision when the ALJ evaluates
evidence presented in support of the original application solely to make a reasoned
determination of its res judicata effect on the second application.” Id. at 646.
Bajjani finally argues that administrative res judicata is not to be rigidly
applied and it shouldn’t be applied because the guarantee was void. Bajjani is right
that res judicata “applies even more flexibly in the administrative context than it does
when a second court of competent jurisdiction is reviewing the decision of a first
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court,” Maldonado v. U.S. Att’y Gen., 664 F.3d 1369, 1377 (11th Cir. 2011), and
that the doctrine will not be “automatically and rigidly applied in the face of contrary
public policy,” Quinones Candelario v. Postmaster Gen., 906 F.2d 798, 801 (1st Cir.
1990); see also Tipler v. E.I. duPont deNemours & Co., 443 F.2d 125, 128 (6th Cir.
1971) (noting that the rule of res judicata “[is] qualified or rejected when [its]
application would contravene an overriding public policy”). But Bajjani points to
no public policy that will be contravened by the application of res judicata where a
party guarantees a loan without consideration, and we do not see any apparent policy
that will be violated if res judicata is applied.
District Court Standard of Review
Bajjani argues that, where the underlying agency action contravened
applicable law, the district court should have reviewed his appeal de novo rather than
under the arbitrary-and-capricious standard. But, as the Administration asserts,
“[Bajjani] misunderstands the contours of judicial review under the APA.”
In all cases agency action must be set aside if the action was ‘arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with
law’ or if the action failed to meet statutory, procedural, or
constitutional requirements. 5 U.S.C. §§ 706(2) (A), (B), (C), (D)
(1964 ed., Supp. V). In certain narrow, specifically limited situations,
the agency action is to be set aside if the action was not supported by
‘substantial evidence.’ And in other equally narrow circumstances the
reviewing court is to engage in a de novo review of the action and set
it aside if it was ‘unwarranted by the facts.’ 5 U.S.C. §§ 706(2)(E), (F)
(1964 ed., Supp. V).
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Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 413–14 (1971)
(emphasis added), abrogated on other grounds by Califono v. Sanders, 430 U.S. 99
(1977); see also Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985) (“The
reviewing court is not generally empowered to conduct a de novo inquiry into the
[agency] matter being reviewed and to reach its own conclusions based on such an
inquiry.”). Under section 706(2)(F), “de novo review of whether the
[Administration’s decisions] were ‘unwarranted by the facts’ is authorized . . . in
only two limited circumstances”: (1) “when the action is adjudicatory in nature and
the agency factfinding procedures are inadequate” and (2) “when issues that were
not before the agency are raised in a proceeding to enforce nonadjudicatory agency
action.” Overton Park, 401 U.S. at 415 (quoting 5 U.S.C. § 706(2)(F)). Neither
narrow circumstance applies here. Although the Administration’s decisions were
adjudicatory in nature, its fact-finding procedures were not inadequate and the
validity of the guarantee was before the first hearing officer.
CONCLUSION
Because the Administration did not arbitrarily and capriciously decide
Bajjani’s claims, we affirm the district court’s summary judgment for the
Administration.
AFFIRMED.
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