MBG Industries v. WestAmerica Bank

Filed 3/23/07 MBG Industries v. WestAmerica Bank CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Fresno County. M. Bruce Smith, Judge.

Sagaser, Jones & Hahesy, Scott D. Laird and David W. Burnett for Cross-Complainants and Appellants.

The Law Firm of Powell and Pool and Don J. Pool for Cross-Defendant and Respondent.

-ooOoo-

Cross-complainants MBG Industries, Inc. (MBG) and Michelle Ross (Ross) (collectively appellants) appeal from the judgment entered after the trial court granted summary judgment in favor of cross-defendant WestAmerica Bank (WAB) on appellants cross-complaint, which alleged WAB discriminated against them when it denied MBGs loan application. We will affirm.

FACTS AND PROCEDURAL HISTORY

Summary of Facts

In June 1997, Michael Ross, doing business as Pacific Control Company, originated a business credit line with WAB. By June 2004, the line had a maximum limit of $300,000. On June 27, 2004, Michael Ross committed suicide. After his death, his wife Michelle Ross took full control of MBG, a California S-Corporation which owned and operated Pacific Control Company, becoming MBGs president and sole shareholder. On July 1, 2004, WAB downgraded the rating on the credit line due to Michaels death and because the credit line had been close to fully utilized with no reductions for over one year and the financial information was stale.^[1] The credit line matured on June 30, 2004, and was not repaid immediately.

Ross requested WAB renew the credit line. On September 2, 2004, a written application for business credit was submitted to WAB on MBGs behalf, which Ross signed as MBGs president. MBG and Ross submitted financial information to WAB in support of the application. MBGs balance sheet showed that as of July 31, 2004, MBG had negative shareholder equity in excess of $153,751 and a negative net profit of $164,773.53 for the first seven months of 2004. The balance sheet also indicated that either Michelle or Michael Ross had loaned MBG $72,500. MBGs financial statements showed it had a $31,966 net loss for 2003. In August or September 2004, MBG borrowed money from its shareholder to meet its ongoing business operations.

When Dan Bradford, a relationship manager for WAB who was responsible for client contact on appellants application, submitted MBGs credit request to underwriting on September 2, he explained in an e-mail the request was for a $200,000 revolving line of credit and a $100,000 term loan to restructure the existing debt with WAB, and this structure was his suggestion to Ross, who is open to whatever plan we suggest. If you need to structure another way - please do so. Bradford also provided information regarding MBG, including that Ross had become MBGs sole shareholder in July 2004, the contractors license was in MBGs name, and Ross had two key people on her management team, one of whom had been with the company 13 years and would be the qualifying person on the contractors license, while the other had been with the company six years.

David Martin, a WAB credit administrator, reviewed the credit application. In reviewing the application, Martin asked Bradford on September 7 to obtain further information on several issues, including the companys operating structure, how the corporation was capitalized and the transition from sole proprietorship took place from an accounting standpoint, the details of a job that caused a $200,000 loss in 2004, the status of property that appeared to have been purchased with funds from the sole proprietorship, and what the $73,000 note payable from Ross was for, which would need to be subordinated. With respect to the property, Martin stated he needed to know if it would be sold and the borrower would need to be approached about taking a first deed of trust in the property. Martin explained that if the property were sold, the sale proceeds would need to be used to pay off the loan currently applied for, but noted that even if that were done, MBGs total net worth would still be low, thereby requiring a second deed of trust on the personal residence. If the deeds of trust had been provided and the note subordinated, Martin would not have needed anything else before recommending to his supervisor that the credit be granted, although he did not know what other requirements WAB might have imposed.

On September 10, Bradford responded to Martins questions by e-mail. Bradford explained that Ross told him the corporation was established in 2002 and the business had been operating under the corporation since October 2003. With respect to the accounting transition questions, Ross told Bradford to contact MBGs certified public accountant, who Bradford was trying to reach. Ross explained to Bradford the $200,000 loss resulted from problems on one particular job and the $73,000 note represented personal funds loaned to MBG during that job. With respect to the property, Ross said personal funds were used to purchase it and although she had no plans to build on the property, she wanted to keep it.

Martin, who did not have authority to approve the application because the amount requested exceeded his approval limit, discussed the application with his hub manager, Dewey Hamilton, who did have the authority to approve it. Hamilton and Martin had a conversation about the application with someone from credit administration, during which they discussed the weaknesses evidenced in MBGs balance sheet and operating performance. After this conversation, the decision was made to decline the application.

At the time, Martin explained the decline decision in written comments as follows: This decision was driven by the borrowers declining and currently negative net worth position, significant interim net loss and expectation of a net loss at FYE, the recent suicide death of the principal, Michael Ross, which prompted the downgrade to the current risk rating, and the uncertainty that arises with his widow taking over the company. [] Company net worth was $13M at FYE 12/31/2003, dropping from $306M at FYE 12/31/2002. The decline was driven by a significant $370M withdrawal from the company, which was used to purchase 480 acres of unencumbered mountain property as evidenced on the principals personal financial statement. At the 07/31/2004 7-month interim period, net worth had dropped further to -$154M due to a -$165M interim net loss driven by a reported -$200M loss on one job. [] The company also stopped operating as a sole proprietorship effective 09/30/2003 and began operating as an S-Corp effective 10/01/2003. There is an unexplained -$134M adjustment to net worth at 12/31/2003, which compounded the significant withdrawal previously mentioned. The adjustment reflects the ending sole proprietors equity, which is not included in the capitalization of the company as an S-Corp. The borrowers CPA would have to provide the bank an explanation as to how the S-Corp was capitalized and the translation of proprietors ending equity of $134M to common stock of the corporation value of $55M and retained earnings of -$42M.

Although Martin had suggested to Bradford the need to consider additional collateral, Martin never personally followed up with that suggestion and did not ask Bradford to do so because it was not within the scope of his job to push Bradford to ask questions of his customers. When the decision to decline the application was made, Martin had not yet received an explanation from the accountant. Martin admitted that one reason the application was declined was that Michael Ross was no longer running the company, which raised management succession issues and uncertainty regarding Rosss qualifications, expertise, knowledge and experience in the business.

WAB would not have approved the application unless Hamilton recommended it. Based on MBGs financial information contained in documents submitted in support of the application, which showed that as of December 31, 2003, MBG had a tangible net worth of $13,010 and a $31,166 net loss, and from January through July 31, 2004, MBG had a tangible net worth of negative $153,751.70 and a net loss of $164,773.53, Hamilton would not have recommended WAB approve the application. Based on this same financial information, Ken Vestal, a vice-president and senior credit officer with WAB, also would not have recommended WAB approve the application.

WAB informed MBG and Ross of its decision to deny the loan application in a September 14, 2004 letter, and notified MBG and Ross that same day that WAB was suing on the note and moving ex-parte for a writ of attachment. According to Ross, she was willing to structure the loan in whatever manner WAB required, including signing a personal guarantee, subordinating any debt MBG owed her, and pledging her own real property, but no one from WAB ever requested that she provide a deed of trust on her properties.

During Martins 18 months of employment at WAB, he had seen the bank approve a commercial credit application when the applicant had a negative net worth at the time the application was submitted, and had personally been involved with less than five such applications. In those situations, additional collateral or subordination of debt was offered in support of the application. Martin did not recall whether the applicants on those loans were male or female. During Martins tenure at WAB, he has also been involved in the approval of less than 20 commercial credit applications where the applicant had an interim net loss at the time of the application. In approving the applications, WAB took into consideration historical fiscal year-end results and the businesss financial position.

Appellants immediately began seeking a loan from another bank to satisfy WABs claims. They submitted a loan application to United Security Bank (USB) and offered to obtain a business loan guarantee from Valley Small Business Development Corporation (VSBDC). On November 17, 2004, USB issued a letter which contained a conditional commitment for a $300,000 revolving credit line. The letter stated that loan approval was subject to obtaining a business loan guarantee from Valley Small Business Development Corporation (VSBDC) for 90 percent of the loan amount that met VSBDCs conditions and terms. Ultimately, USB issued MBG a $300,000 line of credit, which VSBDC guaranteed. WAB does not make loans that require a VSBDC guarantee and was not a VSBDC approved lender.

This Lawsuit

After WAB filed suit against appellants seeking to recover the amount Michael Ross had borrowed, appellants filed a cross-complaint against WAB which alleged three causes of action for discrimination based on Rosss status as a female and unmarried widow, and MBGs status as a female-owned business: (1) violation of the Unruh Civil Rights Act (Civ. Code, 51 et seq.) (Unruh Act); (2) violation of Californias Equal Credit Opportunity Act (Civ. Code, 1812.30 et seq.); and (3) violation of the federal Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) (ECOA). Specifically, appellants alleged they were qualified for the credit for which they applied; despite their qualifications, their credit application was rejected and denied; a male managing and controlling the same amount of earnings and other property over which appellants had management and control would have received credit; and WABs denial of credit was not based on appellants earnings and other property over which they had management and control, but was based on Rosss protected status as a female or unmarried widow and MBGs status as a female-owned business.

WAB filed a motion for summary judgment or, in the alternative, summary adjudication on the cross-complaint. As relevant to this appeal, WAB contended the first and third causes of action had no merit because appellants could not establish a prima facie case, as they were not qualified for the credit for which MBG applied, and even if they were qualified, WAB had a valid, nondiscriminatory reason for denying the application.^[2] Appellants opposed the motion, arguing that WAB failed to prove that MBG was not qualified for the loan and WABs asserted reason for denying the application was a pretext for discrimination.

The trial court granted the motion, finding that WAB presented a credible, non-discriminatory justification for denying MBGs credit application and appellants did not present substantial evidence to show the justification was false or that suggested WABs denial of credit was the result of discrimination. After judgment was entered in WABs favor, appellants filed a timely notice of appeal.

DISCUSSION

Standard of Review

We review an order granting summary judgment de novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 860 (Aguilar).) We independently review the record and apply the same rules and standards as the trial court. (Zavala v. Arce (1997) 58 Cal.App.4th 915, 925.) The trial court must grant the motion if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. (Code Civ. Proc., 437c, subd. (c).)

In performing our independent review of a defendants summary judgment motion, we apply the rules pertaining to summary judgment procedure. A defendant moving for summary judgment has the initial burden of showing that a cause of action lacks merit because one or more elements of the cause of action cannot be established or there is an affirmative defense to that cause of action. (Code Civ. Proc., 437c, subd. (o); Aguilar, 25 Cal.4th at p. 850.) If the defendant fails to make this initial showing, it is unnecessary to examine the plaintiffs opposing evidence and the motion must be denied. However, if the moving papers make a prima facie showing that justifies a judgment in the defendants favor, the burden shifts to the plaintiff to make a prima facie showing of the existence of a triable issue of material fact. (Code Civ. Proc., 437c, subd. (p)(2); Aguilar, 25 Cal.4th at p. 849.)

In determining whether the parties have met their respective burdens, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom, and must view such evidence [citation] and such inferences [citations] in the light most favorable to the opposing party. (Aguilar, 25 Cal.4th. at pp. 844-845.) There is a triable issue of fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar, 25 Cal.4th at p. 850, fn. omitted.) Consequently, a defendant moving for summary judgment must present evidence that would require a trier of fact not to find any underlying material fact more likely than not. (Id. at p. 845.)

When conducting its independent review, an appellate court considers all the evidence set forth in the moving and opposition papers except that to which objections were made and sustained. (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65-66.) In addition, the appellate court must consider all inferences reasonably drawn from that evidence. (Aguilar, supra, 25 Cal.4th at p. 843.) The admissible evidence and the reasonable inferences are viewed in the light most favorable to the party opposing the motion for summary judgment. (Ibid.)

The Burden of Proof in Credit Discrimination Cases

Appellants allege when WAB denied the credit application, it discriminated against appellants because Ross is female and a widow, and MBG is a female-owned business. They claim violations of the Unruh Act and the ECOA. The language of the Unruh Act protects the right of persons, no matter what their sex, race, color to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever. (Civ. Code, 51, subd. (b).) The objective of the [Unruh] Act is to prohibit businesses from engaging in unreasonable, arbitrary or invidious discrimination. [Citation.] Therefore, the [Unruh] Act applies not merely in situations where businesses exclude individuals altogether, but where treatment is unequal. (Pizarro v. Lambs Players Theatre (2006) 135 Cal.App.4th 1171, 1174.) The ECOA prohibits creditors from discriminating against any credit applicant with respect to any aspect of a credit transaction ... on the basis of race, color, religion, national origin, sex or marital status. (15 U.S.C. 1691(a)(1).)

The parties agree that the burden-shifting scheme of federal employment discrimination law as set forth in McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, provides the analytical framework for appellants claims of credit discrimination under both the Unruh Act and ECOA. (See Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 354 [noting that California has adopted burden-shifting test established by the United States Supreme Court for trying discrimination claims based on a disparate treatment theory]; Barber v. Rancho Mortgage & Investment Corp. (1994) 26 Cal.App.4th 1819, 1833-1835 [applying burden-shifting test to claims of credit and housing discrimination]; Mays v. Buckeye Rural Elec. Co-op., Inc. (6th Cir. 2002) 277 F.3d 873, 876-877 [applying Title VIIs framework in construing ECOA]; Lewis v. ACB Business Services, Inc. (6th Cir. 1998) 135 F.3d 389, 406 [same]; Rosa v. Park West Bank & Trust Co. (1st. Cir. 2000) 214 F.3d 213, 215 [same].)

Under the McDonnell Douglas analysis, the plaintiff must first establish a prima facie case of discrimination. (McDonnell Douglas, supra, 411 U.S. at p. 802.) In the credit discrimination context, a plaintiff can establish a prima facie case of discrimination by offering evidence showing: 1) the plaintiff belongs to a protected class; 2) the plaintiff applied for and was qualified for a loan from the defendant; 3) the loan was rejected despite the plaintiffs qualifications; and 4) the defendant continued to approve loans for applicants outside of the plaintiffs protected class with similar qualifications. (See, e.g., Rowe v. Union Planters Bank(8th Cir. 2002) 289 F.3d 533, 535 [listing prima facie elements for credit discrimination claim brought under the ECOA]; Matthiesen v. Banc One Mortgage Corp. (10th Cir. 1999) 173 F.3d 1242, 1246 [same]; Sallion v. SunTrust Bank, Atlanta (N.D.Ga. 2000) 87 F.Supp.2d 1323, 1329 [same].) If the plaintiff makes such a showing, a presumption of discrimination arises which, if unanswered by the defendant, is mandatory, i.e. it requires judgment for the plaintiff. (Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95, 112.)

At the second stage, the burden of production is placed upon the defendant to articulate a legitimate non-discriminatory reason for its adverse action. (See Texas Dept. of Community Affairs v. Burdine (1981) 450 U.S. 248, 254 (Burdine).) Once the defendant satisfies its burden of production, the presumption of discrimination disappears and the plaintiff then has the burden of persuading the court that the proffered reason for the defendants action is a pretext for discrimination. (Burdine, supra, 450 U.S. at 256.) The plaintiff may satisfy this burden either directly, by persuading the court that a discriminatory reason more likely motivated the employer, or indirectly, by showing that the employers proffered explanation is unworthy of belief. (Ibid.) [A]lthough the presumption of discrimination drops out of the picture once the defendant meets its burden of production, [citation], the trier of fact may still consider the evidence establishing the plaintiffs prima facie case and inferences properly drawn therefrom on the issue of whether the defendants explanation is pretextual. [Citation.] (Reeves v. Sanderson Plumbing Products, Inc. (2000) 530 U.S. 133, 143 (Reeves).) A plaintiffs prima facie case, combined with sufficient evidence to find that the defendants asserted justification is false, may permit the trier of fact to conclude that the defendant unlawfully discriminated against the plaintiff. (Reeves, supra, 530 U.S. at p. 148.)

By its motion, WAB contended appellants could not establish an element of their prima facie case, namely that MBG was qualified for credit with WAB, and even if qualified, WAB had a legitimate business reason for denying the loan application. In opposing the motion, appellants asserted WAB had not met its burden of proving MBG was not qualified for credit and there was sufficient evidence to raise an issue of fact as to whether WABs asserted reason for denying the application was false and a pretext for discrimination. We address each of these contentions in turn.

Prima Facie Case

In their opening brief, appellants state, without citation to the record, that the trial court correctly concluded a prima facie case of discrimination was established. As WAB points out, the trial court never made such a conclusion. A review of its written order on the motion reveals that while the trial court recognized one of the grounds for WABs motion was its contention MBG cannot establish it was qualified for the loan it requested from WAB[,] the trial court never made an express finding on this issue. Its failure to do so, however, does not preclude our review of the issue, as our review is independent of the trial courts.^[3]

The evidence shows that at the time of MBGs application, it was insolvent, a fact appellants do not dispute. Interim financial statements establish that as of July 31, 2004, MBG had negative shareholder equity in excess of $153,751, negative net profit through the first seven months of 2004 of $164,773.53, and the company borrowed money from its shareholders to meet ongoing business operations both before July 31, 2004, and sometime during August or September 2004. In a declaration submitted in support of the motion, Hamilton stated that he was familiar with WABs credit policies, he supervised credit administrators who evaluate loan packages and consults with them regarding whether loans should be approved under WABs credit policies, and that based on MBGs financial information, he would not have recommended approval of the application.

By this evidence, WAB showed that appellants could not establish an essential element of their case, namely that MBG was qualified for the credit for which it applied, as Hamilton, who in essence had authority to approve the application since WAB would not have approved it without his recommendation, would not have recommended approval. While WAB did not present specific evidence of WABs qualification criteria or underwriting guidelines, Hamiltons declaration shows the application would not have been approved because of MBGs financial condition.

Appellants assert that Martins testimony directly contradicts Hamiltons declaration, as Martin testified WAB had approved loans where the applicant had a negative net worth or an interim operating loss. Appellants argue that since WAB approved loans in those situations, MBG was not necessarily disqualified from obtaining the credit it requested due to its negative net worth or operating losses. Martins testimony, however, does not show that WAB approved applications where the applicant was in the same financial condition as MBG, i.e. where the company had a negative net worth, a current year operating loss and a net loss in the year prior, and the companys shareholders were loaning funds to keep the company afloat at the time of the application. Since there is no evidence WAB loaned money in a situation similar to MBGs, Martins testimony does not cast doubt on Hamiltons statement that he would not have approved the application based on MBGs financial condition or the conclusion that MBG was not qualified for the credit for which it applied.

Appellants do not assert the loan they ultimately received from USB shows they were qualified for the loan with WAB. They would be hard-pressed to do so, as there is no evidence WAB and USB used the same lending criteria or that the same financial information was submitted to both lenders. Moreover, the USB loan was made on different terms than those WAB considered, as shown by the third-party guarantee from VSBDC on the USB loan. Although appellants emphasize that USB did not request the guarantee and they were the ones who offered it, the facts remain that receipt of the USB loan was conditioned on obtaining the guarantee, the guarantee was not offered as part of the application to WAB, and even if it had been, WAB does not make loans that require VSBDC guarantees and was not an approved VSBDC lender.

In sum, WAB presented sufficient evidence from which a trier of fact could conclude MBG was not qualified for the credit for which it applied. Appellants have not provided any evidence, nor can the court conclude from the record, that MBG was in fact qualified. Simply put, appellants failed to create a triable issue of fact on this issue and therefore summary judgment was properly granted on this ground.

Legitimate Reason for Denial of Credit

Even if MBG was qualified for the credit applied for, however, and a prima facie case established, WAB clearly has met its burden of articulating a legitimate, non-discriminatory reason for the denial of credit. WAB offered sufficient evidence to support its position that appellants application was denied because WAB considered MBG to be a credit risk. Martins comments when the loan was declined state the decision to deny the application was based, at least in part, on MBGs declining and currently negative net worth position, and its significant net loss as well as the expectation of a net loss at the end of the fiscal year. Moreover, Hamilton stated in his declaration that he would not have recommended approval of the application based on MBGs financial condition. This evidence was sufficient to satisfy WABs burden of articulating a legitimate, non-discriminatory reason for its decision to deny the application. (See Reeves, supra, 530 U.S. at p. 142 [explaining defendants burden to produce evidence that the plaintiff was rejected for a legitimate, nondiscriminatory reason, is one of production, not persuasion, thereby involving no credibility assessment].)

Pretext

Appellants attempt to demonstrate that WABs articulated reason for its denial was a pretext for discrimination on two bases: (1) WABs proferred explanation was false; and (2) a discriminatory reason more likely motivated WAB.

First, appellants assert WABs explanation for denying the application, i.e. MBGs poor financial condition, is false because Martin testified WAB loaned money to other applicants with interim operating losses or a negative net worth. As we explained above, this testimony does not cast doubt on WABs asserted reason because Martin did not testify that credit was given to applicants that were in a financial condition similar to MBGs, which undisputedly was poor. There simply is no evidence even suggesting that WAB did not deny the application because of MBGs financial condition.

Appellants attempt to show a discriminatory reason more likely motivated the decision by alleging WAB acted out of the ordinary when it rejected the application without asking for additional collateral, receiving additional information from MBGs accountant, or interviewing Ross about her qualifications to run MBG. Appellants assert this evidence, coupled with Martins use of the word widow in his written comments made when the application was declined, would lead a fact finder to the following conclusion: WAB did not want to qualify MBG for a loan because of Rosss sex and marital status, and because MBG was a female-owned business. Having reviewed the evidence presented in support of this allegation, we conclude no reasonable juror could find this contention to be true.

Although the evidence appellants rely on shows that WAB may not have bent over backward to extend credit to MBG, there certainly is no evidence to suggest that this was because Ross was a single woman or MBG a female-owned company. Appellants have not presented any evidence to suggest that WAB routinely investigates every option before declining an application, that in other cases it waited until it received all requested information before making a decision, or that it had a practice of investigating the management of a business before extending credit, particularly in cases where the business was clearly in financial trouble.^[4] Without such evidence, it is left for the trier of fact to speculate as to the reasons WAB did not do the things appellants contends it should have. However, speculation cannot be regarded as substantial responsive evidence that a proferred explanation is untrue or pretextual. (Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718, 1735.)

That Martin used the word widow to describe Ross does not change this analysis. Appellants contend Martins comment shows WAB was concerned about a woman taking over MBG, pointing to evidence that WAB extended credit to Michael Ross from 1997 to June 2004 and downgraded the loans credit status after learning of Michael Rosss suicide. We fail to see the downgrade of the loan as evidence of such concern, however, for the simple reason that there is no evidence WAB knew when it downgraded the loan on July 1, 2004, four days after Michael Rosss death, that Ross would be running the company. Moreover, while appellants contend the downgrade was prohibited gender and marital status discrimination, the case they rely on for this proposition, Miller v. American Express Co. (9th Cir. 1982) 688 F.2d 1235, does not support it. In that case, a credit card company cancelled a widows supplemental account when her husband, who was the basic cardholder, died. The appellate court held the credit card companys policy of terminating a supplemental cardholders account on the basic cardholders death violated an ECOA regulation that prohibits creditors from terminating existing open end accounts on which a person is contractually liable on the basis of a change in marital status. (Miller, supra, 688 F.2d at pp. 1237, 1238-1240.) This case, however, has no application here, where Michael Rosss loan was downgraded and there is no evidence the loan was an open end account or that Ross was contractually liable on the loan. That WAB extended credit to Michael Ross in the past also does not show discriminatory animus, as prior renewals were based on the fact that the business had positive net worth and net profits.

Appellants assert the word widow is pejorative and Martins use of it evidence of discriminatory animus that precludes summary judgment in this case. Appellants rely on Ash v. Tyson Foods, Inc. (2006) 546 U.S. 454 [126 S.Ct. 1195], where the United States Supreme Court rejected the Eleventh Circuit Court of Appeals conclusion that a supervisors use of the word boy with respect to two African-American employees who failed to receive promotions was not evidence of discriminatory animus unless the word was accompanied by a racial classification such as black or white. (Id., 126 S.Ct. at p. 1197.) The Court reasoned that while the word would not always be evidence of racial animus, it did not follow that the word standing alone was always benign, and explained [t]he speakers meaning may depend on various factors including context, inflection, tone of voice, local custom and historical usage. (Ibid.) The Court concluded the appellate courts decision was erroneous insofar as it held that modifiers or qualifications are necessary in all instances to render the disputed term probative of bias. (Ibid.)

Based on this case, appellants argue there is necessarily a factual issue here whether Martins use of the word widow is evidence of discriminatory animus. We disagree. When the comment is read in context, it merely describes one of several reasons for denying the application, which began with MBGs declining and negative net worth, MBGs significant net loss and an expectation the losses would continue for the fiscal year, Michael Rosss death, and the uncertainty that arises with his widow taking over the company. As we read it, the word widow was used merely to describe what in fact Ross was, a woman who has lost her husband by death and usu[ally] has not remarried. (Merriam-Websters Collegiate Dict. (10th ed. 1999) p. 1352.) Based on Martins comments, it appears WAB was not concerned about a woman taking over the company; it was concerned about anyone other than Michael Ross doing so. This interpretation is bolstered by Martins explanation of the comment in his deposition, i.e. that there was concern about management succession issues.

Appellants contend Martins explanation is suspect because he never actually investigated Rosss qualifications. In essence, appellants are arguing one of WABs asserted reasons for denying the loan is false. There is no evidence, however, that WAB had a policy of investigating management succession issues before denying loan applications, that it routinely investigated other applicants in similar situations, or the extent of any such investigations. There also is no evidence that even if it had determined Ross was highly qualified to run MBG and its concerns about management succession allayed, it still would have approved the loan given MBGs poor financial condition. There is simply nothing to suggest WAB would not have had the same concern had the company been taken over by a man.

In sum, based on the totality of the evidence presented, we conclude reasonable jurors could not find WAB discriminated against appellants on the basis of Rosss sex and marital status or MBGs status as a female-owned business in the determination that MBG was not qualified for a loan. Accordingly, the trial court properly granted summary judgment on appellants claims under the Unruh Act and ECOA.

DISPOSITION

The judgment is affirmed. WestAmerica Bank is awarded its costs on appeal.

_____________________

Gomes, J.

WE CONCUR:

_____________________

Vartabedian, Acting P.J.

_____________________

Dawson, J.

Publication Courtesy of California attorney referral.

Analysis and review provided by Vista Property line Lawyers.

^[1]Under the terms of Michael Rosss loan, the borrowers death constitutes an event of default.

^[2]With respect to the second cause of action, WAB asserted it had no merit because Ross did not apply for the credit in her individual capacity and MBG did not have standing to assert the claim. The trial court granted summary judgment on that cause of action on those grounds. Appellants do not appeal that ruling, and challenge only the propriety of summary judgment entered on the Unruh Act and ECOA causes of action.

^[3]We note that although appellants make no argument on the issue of whether WAB established MBG was not qualified for the credit applied for in its discussion of whether a prima facie case has been established, they do address that issue in their discussion of whether WAB established it had a legitimate business purpose for denying the loan.

^[4]The absence of evidence of how WAB treated other applicants distinguishes the present case from the one on which appellants rely, Lindsey v. SLT Los Angeles, LLC (9th Cir. 2006) 447 F.3d 1138, in which a fashion show company represented by African-Americans claimed a hotel racially discriminated against them when the hotel placed a much smaller groups bar mitzvah party in a large ballroom the company had reserved for a fashion show, and instead split up the fashion show between two rooms in the hotel. The appellate court concluded in Lindsey there was substantial evidence non-African-Americans were treated differently from African-Americans as shown by the hotel representative never consulting with or offering the bar mitzvah group the option of another room, while claiming his decision was based on the companys refusal of other options; the representatives emphasis on certain documents that favored the bar mitzvah group but ignoring documents that favored the company; the representative refused to offer any assistance to the company in relocating the event; and the representative allowed a non-African American group that could fit in another room to have the only room the African-American group could fit in. (Id., 447 F.3d at pp. 1152-1153.) In contrast here, there is no evidence that WAB treated men or male-owned businesses differently than it treated Ross and MBG.