agency or an employee of the Government, whether or not the discretion involved be abused." 28 U.S.C. § 2680(a).
In order for the government to be insulated from liability under the discretionary function exception, the challenged acts must involve "an element of judgment or choice." United States v. Gaubert, 499 U.S. 315, 322, 113 L. Ed. 2d 335, 111 S. Ct. 1267 (1991) (internal quotations and citations omitted). Additionally, the challenged conduct must be "based on considerations of public policy." Gaubert, 499 U.S. at 323 (quotations omitted). "When established governmental policy, as expressed or implied by statute, regulation, or agency guidelines, allows a Government agent to exercise discretion, it must be presumed that the agent's acts are grounded in policy when exercising that discretion." Gaubert, 499 U.S. at 324. In order for a claim not to be precluded by the discretionary function exception, it must involve "facts which would support a finding that the challenged actions are not the kind of conduct that can be said to be grounded in the policy of the regulatory regime." Gaubert, 499 U.S. at 324-325.
In this case, the government contends that the process and standards utilized in evaluating a property for participation in the Section 502 loan program involve the exercise of discretion and are based on policy considerations. The government is certainly correct that the policy decision not to inspect for lead every house considered for the Section 502 loan program is within the ambit of the discretionary function exception. The government may establish or not establish an inspection policy as it sees fit. Having established a policy that mandates the inspection of houses considered for the Section 502 loan program, the government is also free to set standards for safety and suitability. United States v. Varig Airlines, 467 U.S. 797, 104 S. Ct. 2755, 81 L. Ed. 2d 660 (1984). The conduct of administration representatives in inspecting homes also comes within the discretionary function exception insofar as the conduct is "grounded in the policy of the regulatory regime." Gaubert, 499 U.S. at 325. The conduct must be "based on considerations of public policy." Gaubert, 499 U.S. at 323 (quoting Berkovitz v. United States, 486 U.S. 531, 537, 100 L. Ed. 2d 531, 108 S. Ct. 1954 (1988)).
The plaintiffs' claim, however, does not challenge any policy determination or any inspection decision made in furtherance of any governmental policy. Rather, the plaintiffs' claim is that, having determined to inspect homes in order to assess their suitability for the Section 502 loan program, and having defined safety as one element of suitability, the government's failure to detect clearly apparent conditions that made the home unsafe, and therefore unsuitable for the Section 502 loan program, is not clearly "susceptible to policy analysis." Andrulonis v. United States, 952 F.2d 652, 655 (2d Cir. 1991). The inspector's decision not to obtain information that would have revealed the presence of lead plumbing does not implicate any policy consideration and, thus, does not warrant protection under the discretionary function exception. See Andrulonis, 952 F.2d at 655; Indian Towing Company, 350 U.S. at 69. The government's failure to identify harmful conditions present in the property cannot be understood as in furtherance of any governmental policy or as the exercise of discretion pursuant to any governmental policy. See Andrulonis, 952 F.2d at 655 (holding that a negligent omission did not "implicate any policy considerations and thereby warrant protection under the discretionary function exception").
Finally, the government contends that plaintiffs are unable to state a claim under New York state law, as required for plaintiffs' claim to be cognizable under the Federal Tort Claims Act. 28 U.S.C. § 1346(b); FDIC v. Meyer, 510 U.S. 471, 114 S. Ct. 996, 1004, 127 L. Ed. 2d 308 (1994). The government puts forth several bases for concluding that plaintiffs have not stated a claim under New York state law. First, the government notes that New York state law imposes no duty on lenders to inspect property for the benefit of borrowers. Thus, a negligent inspection by a lender may not give rise to liability. Second, the government asserts that disclaimers in the application materials received and completed by the Lemkes made clear that any inspections performed by governmental agents were solely for the benefit of the government and that, in any event, the Lemkes waived any claims when they agreed to purchase the house in "as-is" condition. Finally, the government notes that New York state law does not recognize preconception torts and argues that the government owed no duty to Christina Lemke, who was not born when the Lemkes purchased the house in 1991.
It should be noted that in order to survive the government defendants' motion for summary judgment, the plaintiffs need only demonstrate the possibility that at trial they may be able to prove a claim. Notwithstanding the fact that under New York state law, lenders are not generally liable to borrowers for negligent inspections of properties purchased "as-is," the plaintiffs may be able to prove that the Farmers Home Administration breached a duty it owed to plaintiffs.
"New York recognizes the Good Samaritan tort of negligence in performance of a duty that would not exist were it not for the tortfeasor's voluntary undertaking." Dorking Genetics, 76 F.3d at 1267. Whether the Farmers Home Administration assumed any such duty toward the Lemkes rests on factual determinations that cannot be made on this motion for summary judgment. For example, the Court would have to determine, among other things, whether the Lemkes were led to rely on the inspection conducted by the government or on the Administration's determination of suitability, and then whether the Lemkes did so rely. Therefore, whether the plaintiffs may be able to prove a claim under New York state law depends on factual determinations that can only be made at trial.
This Court is unable to conclude that the plaintiffs will be able to prove no claim under New York State law or that the plaintiffs' claims are precluded by either the misrepresentation or discretionary function exceptions to the Federal Tort Claims Act.
For the reasons stated, the government defendants' motion is denied.
Barrington D. Parker, Jr.
Dated: White Plains, New York
January 12, 1998