Ramsdell v. Erskine Bowles

Opinion

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.



____________________


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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.


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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


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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: 


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(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
                                                  _______ _______


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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,


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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).


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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


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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


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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
                    _______________________________


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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


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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 . . .


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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


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