Ramsdell v. Erskine Bowles

                  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-