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Dolores Deleon D/B/A Manila v. Cit Small Business Lending Corporation

May 3, 2013

DOLORES DELEON D/B/A MANILA INTERNATIONAL, LLC,
PLAINTIFF,
v.
CIT SMALL BUSINESS LENDING CORPORATION,
DEFENDANT.



The opinion of the court was delivered by: Philip M. Pro United States District Judge

ORDER

Presently before the Court is Plaintiff Dolores DeLeon doing business as Manila International, LLC's Objections to Magistrate's Findings and Recommendations (Doc. #105), filed on September 7, 2012. Defendant CIT Small Business Lending Corporation filed an Opposition (Doc. #113) on September 24, 2012.

Also before the Court is Defendant's Motion for Summary Judgment (Doc. #131), filed on October 15, 2012. Plaintiff filed an Affidavit of Plaintiff in Opposition to Defendant's Motion for Summary Judgment (Doc. #148) on November 27, 2012. Plaintiff filed an Opposition to Defendant's Motion for Summary Judgment (Doc. #153) on November 29, 2012. Defendant filed a Reply (Doc. #167) on December 17, 2012.

Also before the Court is Defendant's Motion for Sanctions (Doc. #137), filed on November 1, 2012. Plaintiff filed an Opposition (Doc. #155) on November 29, 2012. Defendant filed a Reply (Doc. #161) on December 10, 2012.

Also before the Court is Plaintiff's Motion to Deny or Delay Defendant's Motion for Summary Judgment (Doc. #139), filed on November 9, 2012. Defendant filed an Opposition (Doc. #144) on November 26, 2012. Plaintiff filed a Reply (Doc. #160) on December 6, 2012.

Also before the Court is Defendant's Motion to Strike Plaintiff's Affidavit in Opposition to CIT's Motion for Summary Judgment (Doc. #152), filed on November 29, 2012. Plaintiff filed an Opposition (Doc. #158) on December 5, 2012. Defendant filed a Reply (Doc. #163) on December 13, 2012.

Also before the Court is Defendant's Motion to Strike Plaintiff's Opposition to CIT's Motion for Summary Judgment (Doc. #154), filed on November 29, 2012. Plaintiff filed an Opposition (Doc. #159) on December 5, 2012. Defendant filed a Reply (Doc. #163) on December 13, 2012.

Also before the Court is Defendant's Motion to Strike Plaintiff's Opposition to CIT's Motion for Sanctions (Doc. #157), filed on December 3, 2012. Plaintiff filed an Opposition (Doc. #162) on December 12, 2012. Defendant filed a Reply (Doc. #169) on December 19, 2012.

Also before the Court is Plaintiff's Motion for Sanctions (Doc. #165), filed on December 17, 2012.*fn1 Defendant filed an Opposition (Doc. #173) on January 3, 2013. Plaintiff did not file a reply.

Also before the Court is Plaintiff's Objections to Magistrate's Findings and Recommendations (Doc. #196), filed on March 21, 2013. Defendant filed an Opposition (Doc. #200) on April 8, 2013.

Also before the Court is Plaintiff's Objections to Magistrate's Findings and Recommendations (Doc. #199), filed on April 8, 2013. Defendant filed an Opposition (Doc. #202) on April 25, 2013.

I. BACKGROUND

Plaintiff Dolores DeLeon has been involved in the wedding business since the 1980s. (Def.'s Mot. for Sanctions (Doc. #137), Ex. A at 2.) In 2002, Plaintiff decided to open a wedding chapel in the Hawaiian Market Place on the Las Vegas Strip. (Id.) Plaintiff signed a lease with the Hawaiian Market Place in 2003 and began to build out the leased premises. (Aff. of Pl. in Opp'n to Def.'s Mot. Summ. J. (Doc. #148) ["Pl.'s Aff."] at 3.) To pay for construction of the premises, Plaintiff decided to attempt to obtain a loan guaranteed by the Small Business Administration ("SBA"). (Def.'s Mot. for Sanctions, Ex. A at 3.)

In August 2004, Defendant CIT Small Business Lending Corporation, which is in the business of lending money, sent Plaintiff a letter proposing an SBA-guaranteed loan for Plaintiff's wedding business, Manila International, LLC ("Manila"). (Def.'s Mot. Summ. J. (Doc. #131) ["Def.'s MSJ"], Ex. C at 1, Ex. F.) The letter stated it was a proposal and did "not constitute an agreement, an offer to enter an agreement, or a commitment to lend." (Def.'s MSJ, Ex. F at 1.) Defendant proposed Plaintiff pay $1,000 as a "packaging fee" plus a $500 deposit for out-of-pocket expenses. (Id.) The letter stated the proposal was "subject to and conditioned on [Defendant's] approval and issuance of a conditional commitment letter that sets forth additional terms and conditions of the proposed loan, [Defendant's] receipt of an SBA Guaranty of at least 75% of the loan, and will be subject to additional terms and conditions contained in the Authorization and Loan Agreement which will be issued in writing if SBA approves a loan request submitted to it." (Id. at 2.) The packaging fee and $500 deposit were refundable if Defendant declined the loan, less any out-of-pocket expenses Defendant incurred. (Id.) However, if the Defendant conditionally approved the loan, the packaging fee would be non-refundable at that point. (Id.) Defendant sent Plaintiff a similar letter with different proposed terms in October 2004. (Pl.'s Aff. at 4 & Ex. 2.) Plaintiff "understood these two letters were proposals for discussion only and there was no commitment to lend the money." (Pl.'s Aff. at 4.)

Plaintiff submitted a formal loan application package to Defendant in early December 2004. (Id. at 4-5.) On December 23, 2004, Defendant sent Plaintiff a Conditional Commitment letter. (Pl.'s Aff., Ex. 6.) In the Conditional Commitment, Defendant "conditionally approved" the loan "subject to authorization by the [SBA], and subject to all other terms and conditions set forth in this letter and the draft SBA Loan Authorization attached hereto." (Id. at 1.) The Conditional Commitment provided that Plaintiff must pay a non-refundable $1,000 packaging fee and a $500 costs deposit. (Id.) The Conditional Commitment further provided that it was-- made in reliance on the continuation of the present management, ownership and financial condition and status of the Borrower and guarantor(s) and other facts and circumstances known by the [Defendant] as of the date hereof. Accordingly, should any actual or threatened adverse change, financial or otherwise, affect the Borrower, any guarantor, or any collateral pledged as security, [Defendant] shall have the right to modify the terms of this Conditional Commitment, or withdraw its Conditional Commitment, in which case it shall have no further obligation to Borrower to make any loan, or otherwise. The determination of adverse change shall be made in the sole and absolute discretion of [Defendant]. (Id. at 2.) The Conditional Commitment further provided that if the loan did not close "for reason" within two months of the date of the Conditional Commitment, the Conditional Commitment would "terminate and [Defendant] shall have no obligation to fund the Loan." (Id.) The Conditional Commitment contained a Colorado choice of law provision. (Id. ("This Conditional Commitment shall be governed by the internal laws and judicial decisions of the state of Colorado.").)

Plaintiff signed and returned the Conditional Commitment the next day. (Id.) Plaintiff also paid the $1,500 packaging fee and out-of-pocket expenses deposit. (Pl.'s Aff. at 5.) On January 3, 2005, Plaintiff filed an Application for Business Loan with the SBA in the amount of $500,000. (Def.'s MSJ, Ex. D.) On January 12, 2005, Defendant submitted its application for a guaranty from SBA on the proposed loan. (Pl.'s Aff., Ex. 8.)

On January 24, 2005, Defendant sent Plaintiff a letter enclosing "drafts of loan documents that [Defendant] intends to have executed in conjunction with financing being provided to [Manila]." (Def.'s MSJ, Ex. G.) Among the enclosures were drafts of the SBA Authorization, the loan agreement, the deed of trust, and an SBA guaranty. (Id.) On March 22, 2005, Defendant faxed to Plaintiff contact information for a title company located in Nevada. (Def.'s MSJ, Ex. J; Pl.'s Aff. Exs. 15, 19.) That same date, Defendant's employee, Christina Benney ("Benney"), sent Plaintiff an email stating that Defendant "still need[ed]" certain documents, including a release of a lien on collateral property, a list of machinery and equipment with serial numbers and the value of each item, an "Original Landlord Waiver," and business insurance. (Def.'s MSJ, Ex. K.) Benney further stated that the escrow company had "availability on Friday- provided that I receive everything, I will be able to close your transaction on Friday. Please note that until I have the above, and all

the injection below squared away, I cannot close." (Id.) Benney also requested a contact at Plaintiff's bank to verify where Plaintiff's deposit money came from. (Id.)

On February 14, 2005, Defendant emailed Plaintiff requesting various documents, including Manila's operating agreement, an assignment of the lease to Manila, an Original Landlord Waiver, a vendor and invoices listing, and a tax return from an investor in Plaintiff's business. (Pl.'s Aff., Ex. 14.) Defendant stated in this email that it was "very possible we can get your loan closed and funded next week . . . if you can provide everything to me by this Wednesday at the latest." (Id.) Defendant also advised that there "possibly may [be] additional items" Defendant would require. (Id.)

On March 11, 2005, Defendant amended the proposed loan from $500,000 to $300,000. (Pl.'s Aff., Ex. 13.) That same date, Defendant sent an email to Plaintiff advising her of the new loan amount. (Pl.'s Aff., Ex. 14.) Defendant further stated it was "very doable to get your loan closed and funded by the end of next week, IF you provide the revised breakdown and copies of the corresponding invoices by Monday." (Id.) On March 21, 2005, Defendant sent Plaintiff another email requesting additional information, including bank statements showing Plaintiff withdrew money from her personal accounts to deposit into the business accounts. (Id.) Defendant stated its "goal is to have this closed as soon as possible, but [Defendant] cannot close without having [the equity] injection all buttoned up." (Id.) That same day, Defendant prepared instructions to escrow. (Pl.'s Aff., Ex. 19.) On March 21 and 22, 2005, Defendant completed and signed a compliance review worksheet which certified that Defendant's employees had "reviewed the loan file for the above mentioned loan with regards to SBA Compliance, [Defendant's] legal compliance and [Defendant's] policies. I have identified all omissions, exceptions and/or errors within the loan file on the Exception Memo and all items were addressed and corrected by the closer." (Pl.'s Aff., Ex. 21.)

On March 24, 2005, Defendant faxed to Plaintiff a notice of lien by Republic Services of Nevada on collateral Plaintiff was offering in support of the loan. (Pl.'s Aff., Ex. 10.) Defendant indicated the lien "must be taken care of." (Id. (emphasis omitted).) Plaintiff responded the next day by faxing a receipt from Republic Services of Nevada showing she paid the balance. (Pl.'s Aff., Ex. 11.)

From March 25 through March 29, 2005, Plaintiff and Defendant exchanged emails in which Defendant requested further information, and Plaintiff responded that she had provided such information already, she would provide such information soon, or she requested clarification. (Def.'s MSJ, Ex. L.) On March 29, 2005, Defendant sent Plaintiff another email which listed "outstanding" items, including machinery and equipment invoices, release of liens, business insurance, bank statements, and other documents. (Id.) The email stated that "closing your loan by the end of the week is possible, if all of the documentation is provided by today." (Id.) Defendant also stated it "really want[ed] to get your loan closed, but need[ed] all this documentation to do it." (Id.) That same date, another employee of Defendant certified on a compliance review worksheet that he or she*fn2 "reviewed all appropriate funding documents for the above mentioned loan to ensure compliance with [Defendant's] policy. I authorize the funding on 3/31/05 for $300,000.00." (Pl.'s Aff., Ex. 21.) An April 1, 2005 Final Customer Statement for Plaintiff indicates the loan payoff was funded on March 31, 2005. (Pl.'s Aff., Ex. 20.)

On April 5, 2005, Defendant sent Plaintiff a letter stating that based on "adverse changes," Defendant was "withdrawing it's [sic] loan approval." (Def.'s Mot. for Sanctions, Ex. B.) The identified adverse changes were:

1. Deterioration in collateral value from the ...


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