Ballard v. Bank of America, N.A.

Summarized by Kristen Siracusa , Office of the U.S. Trustee
12 years 4 months ago

Citation:

No. 13-1418, ---F.3d --- (4th Cir. Oct. 30, 2013)

Tag(s):

Ruling:

The Court concluded that Appellant, by executing a series of four loan restructuring agreements, waived “any and all” claims (including her ECOA claims) against the Bank in exchange for the Bank’s waiver of the company’s defaults. The Court reasoned that the Bank did not require Appellant to execute a prospective waiver of her ECOA rights and instead obtained her waiver only in exchange for its agreement to restructure the loan after the company defaulted. This afforded both parties a negotiated benefit: a means of escaping default for the borrower, and protection against future claims for the lender. The Court also held that Appellant waived her claims for unjust enrichment and for declaratory relief. In dicta, the Court addressed whether the Bank violated ECOA. This was not, however, necessary to deciding the appeal, as the Court concluded that the Appellant waived her ECOA rights. However, the Court intimated that the Bank may well have violated ECOA by requiring Appellant to sign as an unlimited guarantor without first determining that her husband was not creditworthy. The Court reasoned that it makes sense to treat the co-owner of a property as a joint applicant for a loan benefitting that property; as the repayment of the loan will depend on business decisions made by the co-owners jointly. However, the Court stated that it makes less sense to treat a spouse as a joint applicant merely because she happens to co-own some assets with her applicant husband. Accepting this theory would permit an unlimited spousal guarantee in almost every instance.

Procedural context:

Appeal from the United States District Court for the District of Maryland, at Greenbelt. District Judge Roger W. Titus dismissed the Appellant's federal and state Equal Credit Opportunity Act ("ECOA") claims, and Appellant's claims for unjust enrichment and for declaratory judgment. The District Court held that the complaint failed to state a claim upon which relief can be granted and that waiver and limitations barred her claims.

Facts:

Appellant's husband owns and operates a food-packing company. He entered into an agreement with Bank of America to obtain a $4.1 million loan for the company. The Bank required Appellant to sign the loan agreement as a guarantor. Following defaults by the company, the Bank restructured the debt, requiring Appellant to guarantee each new agreement. The restructuring agreements contained comprehensive waiver provisions of claims against the Bank. Appellant co-owned a home in Maryland and a winery in California with her husband. These assets, among others, secured the loans to the company. The Bank recorded consensual liens on both properties. Appellant filed the action against the Bank alleging that the Bank violated the federal and state ECOA by requiring her to serve as her husband's guarantor.

Judge(s):

Motz, Shedd, and Thacker, Circuit Judges

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