The opinion of the court was delivered by: STEWART DALZELL
Plaintiff Janice Silverman filed this action against defendant Eastrich Multiple Investor Fund, L.P. ("Eastrich"), alleging that Eastrich violated her rights under the Equal Credit Opportunity Act (the "ECOA"), 15 U.S.C. §§ 1691-1691f, by requiring her to guarantee a loan it made to her husband and his company.
Mrs. Silverman seeks not only damages, but also protection from the enforcement of a $ 10 million state court judgment against her as guarantor.
Shortly after filing the complaint, Mrs. Silverman filed a "petition" for a preliminary injunction, asking us to enjoin Eastrich from executing on its state court judgment. Later, Eastrich filed a motion to dismiss Mrs. Silverman's complaint for failure to state a claim upon which relief may be granted.
After careful consideration of the briefs and the parties' arguments at the hearing, we will deny Mrs. Silverman's motion for injunctive relief and grant Eastrich's motion to dismiss the complaint. The following will constitute our Rule 52(a) findings and conclusions as to Mrs. Silverman's motion for a final injunction and declaration, and our Rule 12(b)(6) analysis for any residual legal claims she may be regarded to have asserted.
The undisputed facts of this case, as established at the preliminary injunction hearing, are that Janice Silverman is a professor who has taught theater at Temple University since 1975. Her husband of thirty years, Leon Silverman, is a lawyer and entrepreneur who engages in commercial real estate businesses. Some of Mr. Silverman's ventures have stemmed from his partnership in a New Jersey general partnership known as Hunt's Pier Associates ("Hunt's Pier").
On February 2, 1986, Atlantic Financial Federal ("Atlantic Financial"), a federally-chartered savings and loan institution, loaned $ 10 million to Hunt's Pier. With that money, Hunt's Pier purchased a number of properties at the South Jersey shore. Although Mrs. Silverman, unlike her husband, was not a partner in Hunt's Pier, Atlantic Financial required that she sign a personal guaranty securing the loan, and she did so at the closing held in Atlantic Financial's counsel's office on February 28, 1986.
Mr. Silverman and his three partners in Hunt's Pier also signed loan guarantees at Atlantic Financial's request.
On January 11, 1990, the Office of Thrift Supervision, Department of the United States Treasury, declared Atlantic Financial insolvent and ordered it closed. Thereafter, the Resolution Trust Corporation (the "RTC") took control of Hunt's Pier's loan. Hunt's Pier subsequently defaulted on the loan and, on May 23, 1991, the RTC issued a notice of default and accelerated the debt.
In October of that year, Hunt's Pier filed for reorganization under Chapter 11 of the Bankruptcy Code and, on February 10, 1993, the United States Bankruptcy Court for the Eastern District of Pennsylvania confirmed Hunt's Pier's Third Amended Plan of Reorganization (the "Reorganization Plan" or the "Plan"). The Reorganization Plan did not release Hunt's Pier from its principal obligations on the $ 10 million loan,
but it did extend the dates for the payment of principal and interest on the loan, ultimately extending the term of the note from February of 1991 to February of 1998. Reorganization Plan at 19. The Plan further provided that it did not affect the RTC's rights and remedies under the Loan Documents, including, but not limited to, "its rights and remedies under any guarantee executed by any of [the Proponents of the Plan] in connection with the Loan Documents, which rights and remedies shall continue to be enforceable unaffected by the modification of the Loan Documents provided by this Plan." Id. at 20; see also id. at 12.
On August 18, 1993, defendant Eastrich purchased all of the RTC's rights in the loan. Less than a year later, on April 21, 1994, Eastrich confessed judgment against the loan guarantors in the Philadelphia Court of Common Pleas.
Under the ECOA, it is unlawful "for any creditor to discriminate against any [credit] applicant with respect to any aspect of a credit transaction on the basis of . . . marital status." 15 U.S.C § 1691(a)(1). In particular, Federal Reserve Board Regulation B, the ECOA's implementing regulation, 12 C.F.R. §§ 202.1-202.14, states that:
a creditor shall not require the signature of an applicant's spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor's standards of creditworthiness for the amount and terms of the credit requested.
Earlier regulations under the Act defined "applicant" as:
any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may be contractually liable regarding an extension of credit other than a guarantor, surety, endorser, or similar party.
12 C.F.R. § 202.0(e)(1985)(cited in Stern v. Espirito Santo Bank of Florida, 791 F. Supp. 865, 867 (S.D. Fla. 1992)) (emphasis added). In the mid-eighties, however, the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") adopted a revised Regulation B to include guarantors, sureties and endorsers as applicants. Specifically, the amended regulation defines an "applicant" as:
any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regarding an extension of credit. For purposes of § 202.7(d), the term ...