Pauly

Joseph and Judy Pauly are farmers who entered into a ten-year agreement with the United States Department of Agriculture (USDA) whereby the USDA agreed to restructure the Paulys’ debt in exchange for a portion of the appreciation in the value of their farm during the term of the agreement. When the USDA sought to recapture a portion of the appreciation upon expiration of the agreement, the Pau-lys initiated this suit. The Paulys allege that the Government misled them by representing, through its agents, that no recapture would be due upon expiration of the agreement and that, therefore, the Government should now be estopped from recovering a portion of the appreciation. Alternatively, the Paulys argue that the Government or its agents are hable for tort damages arising from fraud in the inducement.

The district court affirmed the USDA’s determination that appreciation was due under the agreement and granted in part the USDA’s motion for summary judgment. However, the district court remanded to the USDA to reassess the amount of recapture under its current regulation, which excludes capital improvements from the calculation of appreciation. Both parties appealed.

We affirm in…