Court Opinion

ID: 2963590
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:12:31.320408+00
Date Added: 2024-06-11T11:42:43.568203
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

          No. 95-1148

                                   YVONNE RAMSDELL,

                                Plaintiff - Appellant,

                                          v.

                               ERSKINE BOWLES, ET AL.,

                               Defendants - Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                     [Hon. Morton A. Brody, U.S. District Judge]
                                            ___________________
                   [Hon. Eugene W. Beaulieu, U.S. Magistrate Judge]
                                             _____________________

                                 ____________________

                                        Before

                                Boudin, Circuit Judge,
                                        _____________

                           Campbell, Senior Circuit Judge,
                                     ____________________

                        and Schwarzer,* Senior District Judge.
                                        _____________________

                                _____________________

               Ralph A. Dyer, with whom Law Offices of Ralph A. Dyer, P.A.,
               _____________            __________________________________
          was on brief for appellant.
               Stephen G. Morrell, with whom  Judy A.S. Metcalf and  Eaton,
               __________________             _________________      ______
          Peabody, Bradford & Veague, P.A., were on brief for appellees.
          ________________________________

                                 ____________________

                                   August 30, 1995
                              
          ____________________

          *    Of   the  District  of   Northern  California,  sitting   by
          designation.

                                 ____________________

                                         -2-

                   SCHWARZER, District Judge.  Yvonne Ramsdell brought suit
                   SCHWARZER, District Judge
                              ______________

          against  Machias Savings Bank and its directors (collectively the

           Bank )  alleging  claims   arising  out  of  a  series  of  loan

          transactions in  which the  Bank provided  financing to  Ramsdell

          Construction  Company  ( Ramsdell ),  owned  by  Mrs.  Ramsdell s

          husband and  son.  Because  Mrs. Ramsdell alleged a  violation of

          the Equal Credit Opportunity Act (the  ECOA ), 15 U.S.C.    1691-

          1693 (1988), the district court  had jurisdiction over that claim

          under 28 U.S.C.   1331 and over the supplemental state law claims

          under 28 U.S.C.    1367.  Mrs. Ramsdell now  appeals the district

          court s grant of the Bank s motion for summary judgment.  We have

          jurisdiction under 28 U.S.C.   1291 and affirm.

                   Ramsdell  Construction   Company  was   engaged  in  the

          construction business  in Machias, Maine.   In 1989 and  1991, it

          obtained loans from the Bank to finance its operations.  In early

          1992, having  defaulted on  the loans, Ramsdell decided to obtain

          additional  financing to  enable it  to  complete a  construction

          project  for which  it had  a contract  with the  Town  of Lubec,

          Maine.  The  Bank agreed to make  the loan on the  condition that

          the loan would be guaranteed by the Small Business Administration

          (the  SBA )  and that  Mrs. Ramsdell would  also sign  a personal

          guarantee.   This loan,  sometimes referred to  as the  SBA loan,

          closed in  June 1992.   Meanwhile Ramsdell continued work  on the

          Lubec  project with  interim financing  from  the Bank.   At  the

          closing,  $75,000  of the  loan  proceeds  was  used to  set  off

          advances the Bank  had made in the  interim to finance  the work.

                                         -2-

          Notwithstanding this infusion of funds, Ramsdell defaulted on the

          Lubec  contract in  the fall  of 1992  and went  into bankruptcy.

          Foreclosure proceedings were  brought in the state  court against

          Mrs. Ramsdell and others who  were borrowers or guarantors of the

          loans.  Apparently, discovery taken in the state court action was

          later used by the parties in the instant action.

                                PROCEDURAL BACKGROUND
                                PROCEDURAL BACKGROUND

                   The complaint, filed on April 14, 1994, alleged that the

          Bank had violated the ECOA (Count I), breached the loan agreement

          with  Ramsdell  (Count  II),   interfered  with  plaintiff s  and

          Ramsdell s advantageous relationships  (Counts IV,  VI and  VII),

          violated its duty of good  faith and fair dealing (Count  V), and

          acted negligently (Count VIII).  It also  alleged that individual

          defendants had aided  and abetted the breach (Count  III) and had

          interfered with advantageous relationships  (Counts IV and  VII).

          Additional counts have been abandoned on appeal.  Originally, the

          complaint also named the SBA  as a defendant; however, the claims

          against the SBA were later dismissed.

                   The  Bank  filed  a  motion  for  summary  judgment   on

          November 2, 1994.   Mrs. Ramsdell moved for an  extension of time

          to file her opposition until November 21, 1994 (the date on which

          it would  have been due, in any event,  under Local Rule 19(c) of

          the District of Maine).  She filed her opposition on November 22,

          1994, one  day late.   On  December 2,  1994, the  Bank moved  to

          strike  the opposition as untimely and further asked that certain

          marked  material be  struck  as  immaterial or  as  barred by  an

                                         -3-

          earlier confidentiality order  issued by the court.   On December

          6,  1994, the  magistrate  judge granted  the  motion to  strike,

          before objections had  been filed; on December 8,  1994, he filed

          his  recommended  decision  granting  summary  judgment.    After

          receiving the  objections, the magistrate judge treated them as a

          motion for reconsideration, which he denied  by order of December

          12,  1994.   Mrs. Ramsdell  then filed  a brief  seeking  de novo
                                                                    _______

          review of the magistrate judge s recommended decision; on January

          3,  1995,  the  district  court  issued  its  order  adopting the

          recommended decision and granting judgment for the Bank.

                                 THE MOTION TO STRIKE
                                 THE MOTION TO STRIKE

                   In his  initial order granting the motion to strike, the

          magistrate  judge, relying  on  the  court s  inherent  power  to

          enforce its  rules, concluded that although the court is  usually

          generous to those who miss by  slight amounts various limitations

          on pleadings . . . Plaintiff s response to the Motion for Summary

          Judgment is properly  stricken.  (R. 102.)   The magistrate judge

          found  that a  chart  Mrs.  Ramsdell offered  in  support of  the

          opposition was  not authenticated and ha[d] no evidentiary value 

          and that the opposition was  replete with  immaterial, irrelevant

          and prejudicial statements.    (R. 100-01.)   On reconsideration,

          the  magistrate  judge  applied the  seven  factors  we suggested

          district  courts  examine  when exercising  their  discretion  in

          ruling  on  a motion  for  reconsideration of  a  dismissal order

          entered due to a plaintiff s  failure to file a timely opposition

          to a motion, viz: 

                                         -4-

                    (1) the nature  of the case, (2)  the degree

                    of tardiness, (3) the reasons underlying the

                    tardiness,   (4)   the   character  of   the

                    omission,  (5)  the  existence  vel  non  of
                                                    ________

                    cognizable  prejudice  to  the nonmovant  in

                    consequence of the omission,  (6) the effect

                    of granting  (or denying) the motion  on the

                    administration of  justice, and  (7) whether

                    the belated  filing would, in  any event, be

                    more than an empty exercise.

          United States  v. Roberts,  978 F.2d 17,  21-22 (1st  Cir. 1992).
          _________________________

          Acknowledging   the  district  court s    great  leeway   in  the

          application and  enforcement  of its  local  rules,  we  held  in

          Roberts that  a refusal  to grant  relief  on reconsideration  is
          _______

          reviewed  for  abuse  of  discretion.  Id. at  20.     In  making
                                                 ___

          discretionary judgments,  a district court abuses  its discretion

          when  a  relevant  factor  deserving  of  significant  weight  is

          overlooked,  or when an  improper factor is  accorded significant

          weight,  or  when the  court  considers  the appropriate  mix  of

          factors, but commits a palpable error of judgment  in calibrating

          the decisional scales.   Id. at 21.
                                   ___

                   We  are  satisfied   that  the  magistrate  judge   gave

          appropriate  consideration  to  each  of  the  relevant  factors.

          First,  we  note that  here,  unlike  in  Roberts, there  was  no
                                                    _______

          question  about  Local   Rule  19(c) s   interpretation  or   its

          application to the  facts of the case.  Compare Roberts, 978 F.2d
                                                  _______ _______

                                         -5-

          at 19-20.  Although Mrs. Ramsdell  argued in her reply brief that

          her opposition was  in fact filed in a timely  manner under Local

          Rule 19(c) and  Fed. R. Civ.  P. 6(a), she  waived that  argument

          both by failing to raise it in the district court and  by failing

          to raise  it in her  opening brief on  appeal.  See,  e.g., Aetna
                                                          __________  _____

          Casualty Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1571 (1st Cir.
          ___________________________________

          1994) (appellant failed  to preserve issue for appeal  by failing

          to raise it at trial and by failing to  raise it in opening brief

          on appeal); Pignons S.A. de Mecanique v. Polaroid Corp., 701 F.2d
                      ___________________________________________

          1, 3 (1st Cir. 1983) (arguments not presented in initial brief on

          appeal are waived).1

                   Moreover, we note that Mrs. Ramsdell was represented  by

          Maine counsel  who was  on notice  that Local  Rule 19  was being

          strictly enforced  and that neglect was not an acceptable excuse.

          See Cardente v. Fleet Bank of Maine, Inc., 146 F. Supp. 13, 20-22
          ___ _____________________________________

          (D. Me.  1993); Winters, 812 F. Supp. at  4; Greene v. Union Mut.
                          _______                      ____________________

          Life Ins. Co. of Am., 764  F.2d 19, 23 (1st Cir. 1985)  (district
          ____________________

          court reasonably found  breakdown of counsel s office  procedures

          not an adequate excuse for late filing).
                              
          ____________________

          1   Even if Mrs. Ramsdell had preserved  the issue of whether her
          opposition was  in fact timely  filed under Local Rule  19(c) and
          Fed. R. Civ. P. 6(a), her application  of the rules is incorrect.
          Regarding the  operation  of Local  Rule 19(c),  the District  of
          Maine has  previously held  that although  the prescribed  10-day
          response period excludes weekends  and holidays per Fed. R.  Civ.
          P.  6(a), the  three-day mailing  period  does not.   See,  e.g.,
                                                                __________
          Winters v. F.D.I.C., 812 F. Supp. 1, 4 (D. Me. 1992).  The  three
          ___________________
          extra days for  mailing objections filed pursuant to   Local Rule
          19(c) are "clearly calendar days."  Id.  Mrs. Ramsdell s argument
                                              ___
          that  her opposition  was due  November  22, 1994,  depends on  a
          calculation that excludes weekend days from the three-day mailing
          period.  Thus her argument fails.

                                         -6-

                   Finally, Mrs. Ramsdell failed to show that she  suffered

          prejudice as  a  result  of  the magistrate  judge  striking  her

          opposition to the  motion for summary  judgment.  The  magistrate

          judge  acted  pursuant  to  Local  Rule  19(c), which  states  in

          relevant part:

                       Unless  within  ten  (10) days  after  the
                    filing of a  motion the opposing party files
                    written objection  thereto, incorporating  a
                    memorandum of law, the  opposing party shall
                    be deemed to have waived objection.

          Following  the  interpretation  of Local  Rule  19(c)  previously

          explicated  by  the  District  of Maine  in  F.D.I.C.  v.  Bandon
                                                       ____________________

          Assocs., 780 F. Supp. 60, 62 (D. Me. 1991),  the magistrate judge
          _______

          ruled that the penalty embodied  in Rule 19(c) amounts to  only a

          limited waiver:   [A] failure to  respond to a Motion for Summary

          Judgment does not amount to a waiver of Plaintiff s objection . .

          . . [A] party  who fails to object in a timely  fashion is deemed

          to have consented to the moving party s statement of facts to the

          extent  that   statement  is  supported  by   appropriate  record

          citations.   (R. 103,  citation  and   internal  quotation  marks

          omitted.)  And,  as the judge further  observed, summary judgment

          is appropriate  only if the  record before the  court establishes

          that the moving party is entitled to judgment as a matter of law.

          See Winters, 812 F. Supp. at 2.  Therefore, the striking  of Mrs.
          ___ _______

          Ramsdell s opposition  did not bar her from obtaining a favorable

          ruling based on issues of law presented  by the motion if she was

          entitled  to  one.   Moreover,  had  the  judge ignored  disputed

          material issues of  fact as a result of  striking the opposition,

                                         -7-

          she  could have  called them  to our  attention  in her  brief on

          appeal; but she failed to do so. 

                   We conclude  that the magistrate judge did not abuse his

          discretion in striking the opposition.

                                 THE SUMMARY JUDGMENT
                                 THE SUMMARY JUDGMENT

                   We  turn then  to review  of the  judgment below  on the

          merits,  pursuant to the  applicable de novo  standard of review.
                                               _______

          E.H. Ashley & Co. v.  Wells Fargo Alarm Services, 907 F.2d  1274,
          ________________________________________________

          1277 (1st Cir. 1990).

                    The ECOA Violations
                    The ECOA Violations
                    ___________________

                   Count I of the complaint alleges that  the Bank violated

          the ECOA  by demanding that  Mrs. Ramsdell guarantee each  of the

          three loan transactions between the  Bank and the Ramsdells.  The

          ECOA makes  it  unlawful for any creditor to discriminate against

          any  applicant,  with   respect  to  any   aspect  of  a   credit

          transaction--(1) on  the basis of  . . . marital  status . . . . 

          15 U.S.C.   1691 (a)(1) (1988).   The first two loan transactions

          in which the Bank demanded guarantees from Mrs. Ramsdell occurred

          in  1989 and  1991; thus,  the alleged  violations based  thereon

          occurred  more than  two  years before  Mrs.  Ramsdell filed  her

          complaint.   See Farrell  v. Bank  of N.H.--Portsmouth, 929  F.2d
                       ___ _____________________________________

          871, 873 (1st  Cir. 1991) (violation deemed to  occur when lender

          makes demand for spouse s signature).  The ECOA provides that  no

          . . .  action shall be brought more than two  years from the date

          of the occurrence of the violation . . . .   15 U.S.C.   1691e(f)

          (1988).

                                         -8-

                   Mrs. Ramsdell does not  dispute that the statute has run

          but argues that  equitable tolling is available under the ECOA to

          avoid  an   onerous  two  year   limitation  period  .  .   .  . 

          (Appellant s  Br. at  32.)    As we  noted  in Farrell,  however,
                                                         _______

          Congress in 1976 extended the  limitations period from one to two

          years to afford  claimants a reasonable time to  bring an action.

          Farrell,  929 F.2d  at 874.    In light  of Congress   deliberate
          _______

          exercise  of its  judgment regarding  what is  a reasonable  time

          limit, that limit should not lightly be circumvented as  onerous.

          While equitable  tolling may be  available in a proper  case, see
                                                                        ___

          id., the mere fact that plaintiff has let the time to file run is
          ___

          not sufficient to  invoke equitable intervention.   Mrs. Ramsdell

          has  come forward with  no facts on  which equitable intervention

          might be grounded.

                   The  third  loan  transaction  took place  in  May 1992,

          within the two  year period.  At  the closing, the Bank  required

          Mrs. Ramsdell  to sign  both a  note  evidencing the  loan and  a

          guarantee.  The  regulations issued by the Board  of Governors of

          the Federal System interpreting the ECOA provide in relevant part

          that    a  creditor  shall  not  require   the  signature  of  an

          applicant s  spouse  .  .  .  on any  credit  instrument  if  the
                                                                    _______

          applicant   qualifies   under   the   creditor s   standards   of
          _________________________________________________________________

          creditworthiness  for  the   amount  and  terms  of   the  credit
          _________________________________________________________________

          requested.    12 C.F.R.    202.7(d)(1)  (1992) (emphasis  added).
          _________

          The district court found that  Ramsdell and Mr. Ramsdell were not

           qualifie[d] under  the creditor s standards  of creditworthiness

                                         -9-

          for the  amount and  terms of  the credit requested.    (R.  107,

          175.)  The  court based this finding on three  observations:  (1)

          that the Bank had issued notices of  default on the 1989 and 1991

          loans; (2) that  the Bank had insisted  that $75,000 of  the 1992

          SBA loan be  applied to the defaulted  loans; and (3) that  there

          was no evidence to the contrary.  Id. 
                                            ___

                   Mrs. Ramsdell now challenges the court s finding on  two

          grounds.    First, she  argues  that  there  was no  question  of

          creditworthiness  because the  $75,000  payment  was intended  to

          cover the  Bank s risk  under the  new loan.   But  the complaint

          itself  alleges  that  the  existing  loans  had  an  outstanding

          principal   balance  of  $900,000,   and  the   Bank s  directors

          authorized  the additional  working  capital  line  only  on  the

          condition that the Bank s overall loss exposure not be increased.

          Given that exposure,  Ramsdell s lack of creditworthiness  was an

          issue not reasonably disputable.  

                   Second,  citing  12  C.F.R.     202.2(p), Mrs.  Ramsdell

          argues that the burden of proving lack of creditworthiness was on

          the Bank.   But that  section defines credit scoring  systems and

          says nothing about the  burden of proof under the  ECOA.  Section

          202.7(d)(1)  triggers liability under  the act by  specifying the

          condition under which it is  unlawful to require the signature of

          an applicant s spouse,  viz, when the applicant  is creditworthy.

          We do  not read that  section as creating an  affirmative defense

          for banks  premised on  their proving  lack of  creditworthiness.

          Thus, the burden  was on Mrs. Ramsdell to come forward with proof

                                         -10-

          that Ramsdell  and Mr. Ramsdell  were creditworthy.   She offered

          none.

                    Breach of Contract
                    Breach of Contract
                    __________________

                   Count  II  of  the  complaint  alleges  that   SBA  loan

          proceeds were improperly diverted by the Bank for its benefit  in

          breach of the loan agreement.  The loan agreement, by its  terms,

          unambiguously provided that   interim financing utilized  for the

          [Lubec  contract and  working capital]  may be  repaid from  loan

          proceeds.  (Complaint  36.)   The court determined  that  interim

          financing  referred to the $75,000  that the Bank had advanced to

          Ramsdell  prior to the closing of  the loan to enable Ramsdell to

          continue work  on the Lubec  contract.  If interim  financing was

          intended  to  exclude  the  $75,000 advance,  the  burden  was on

          Mrs. Ramsdell  to  come  forward with  facts  creating  a triable

          issue.  She did not do so.

                    Aiding and Abetting Breach of Contract
                    Aiding and Abetting Breach of Contract
                    ______________________________________

                   Count III charges  the Bank s directors with authorizing

          and  directing the  diversion of  the $75,000.   In  view  of our

          disposition of the diversion claim, this claim also fails.

                    Interference with Advantageous Contractual Relations
                    Interference with Advantageous Contractual Relations
                    ____________________________________________________

                   Count   IV  alleges   that  the  Bank   interfered  with

          Mrs. Ramsdell s  contract with  the SBA  by  wrongfully diverting

          proceeds from the  SBA loan.  In  view of our disposition  of the

          diversion claim, this claim fails.

                    Breach of Contract -- Bad Faith
                    Breach of Contract -- Bad Faith
                    _______________________________

                                         -11-

                   Count V alleges that  the Bank violated its duty of good

          faith  and  fair  dealing  owed  to  Mrs.  Ramsdell by  diverting

          proceeds  from the  SBA  loan  and  interfering  with  Ramsdell s

          financial  affairs.  Maine recognizes that the Uniform Commercial

          Code imposes a  duty of  good faith  and fair  dealing on  banks,

           requiring   honesty  in  fact  in  the  conduct  or  transaction

          concerned.   First  NH Banks  Granite State  v. Scarborough,  615
                       ______________________________________________

          A.2d 248,  250 (Me.  1992); see also  Diversified Foods,  Inc. v.
                                      ________  ___________________________

          First Nat.  Bank of  Boston, 605  A.2d  609, 614  (Me. 1992)  (no
          ___________________________

          evidence that banks  acted dishonestly, with ulterior motives, or

          for  anything other  than business  reasons  in exercising  their

          rights  under the  loan agreement ).    No facts  appear here  to

          support a  claim  that the  Bank acted  dishonestly or  otherwise

          improperly with respect to its contract with Mrs. Ramsdell.

                    Interference with Advantageous Contractual Relations
                    Interference with Advantageous Contractual Relations
                    ____________________________________________________

                   Counts  VI   and  VII   allege  interference   with  the

          contractual relations  between Ramsdell  and the  Town of  Lubec.

          Mrs. Ramsdell argues, in her  reply brief, that these counts  are

          tort actions  for interference with  a property right.   They are

          not claims for  breach of contract.   (R.  Br. 21.)  But  she has

          failed to establish  a property right of her own  in the contract

          between  Ramsdell and the Town of  Lubec to support such a claim.

          See Harmon v.  Harmon, 404 A.2d 1020, 1024  (Me. 1979) (requiring
          ___ _________________

          proof  that plaintiff,  but for tortious interference of another,

          . . . would in all likelihood have received a  gift or a specific

          profit from  a transaction  . . . . ).   Lacking such  proof, she

                                         -12-

          attempts  to  rely,   presumably  by  analogy,  on   third  party

          beneficiary principles, claiming to be a beneficiary of the Lubec

          contract.  Under  Maine law, however,  a person must  demonstrate

          that she is  an intended beneficiary of a contract to maintain an
                          ________

          action for its breach.   F.O. Bailey Co. v. Ledgewood,  Inc., 603
                                   ___________________________________

          A.2d 466, 468 (Me. 1992)  (emphasis added).  The Ledgewood court,
                                                           _________

          following  the Restatement (Second) of Contracts   302, held that

          it is not enough for a plaintiff to show that she benefitted from

          a contract; she must  come forward with evidence of  a  clear and

          definite   intent on  the  promisee s  part  that  the  plaintiff

          receive an enforceable benefit under the contract.  Id.   No such
                                                              ___

          evidence has been offered here.   

                    Negligence
                    Negligence
                    __________

                   Count  VIII makes  two  allegations: (1)  that the  Bank

          negligently underestimated  Ramsdell s cash  requirement, thereby

          causing the SBA  to lend Ramsdell  less than  the SBA would  have

          been willing to  lend and ultimately causing  Ramsdell s business

          to fail;  and (2)  that Mrs. Ramsdell  executed the  guarantee in

          reliance  on the Bank s  representations that the  Lubec contract

          would  generate  sufficient cash  to  repay  the  SBA loan.    As

          interpreted in her brief, the count alleges a failure by the Bank

          to prepare cash projections, a  business plan, and loan  analysis

          in   a  professional  manner.    While  those  allegations  might

          withstand a motion  to dismiss, in opposing a  motion for summary

          judgment  the   adverse   party  may  not  rest  upon   the  mere

          allegations . . . of the . . . adverse party s pleading but . . .

                                         -13-

          must set  forth specific  facts showing that  there is  a genuine

          issue for trial.   Fed. R. Civ. P. 56(e).  Her brief offers none.

                   AFFIRMED.
                   AFFIRMED

                                         -14-