USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 93-1851
MICHELE MAYES,
Defendant, Appellant,
v.
CHRYSLER CREDIT CORPORATION,
Plaintiff, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
___________________
____________________
Before
Breyer,* Chief Judge,
___________
Torruella and Boudin, Circuit Judges.
______________
____________________
Christopher C. Trundy for appellant.
_____________________
Paul Marshall Harris with whom Lynne F. Riley and
_____________________
______________
were on brief for appellee.

Powers & H
__________

____________________
October 11, 1994
____________________

____________________

*Chief Judge Stephen Breyer heard oral argument in this matter,

did not participate in the drafting or the issuance of the pane
opinion.
The remaining two panelists therefore issue this opin
pursuant to 28 U.S.C.
46(d).

BOUDIN, Circuit Judge.

______________
Albert L.

Silva, d/b/a Rainbow Motors

Nantucket car dealership.

financing

arrangements

("Chrysler") to
was

In 1984, Jean

Mayes purchased

("Rainbow Motors"), a

In May 1985 he then

with

finance his

Chrysler

entered into

Credit

car inventory.

Corporation

The "borrower"

to be Rainbow Motors, Jean Mayes being its president and

sole shareholder.
To
Jean

support

Mayes but

"Continuing

the financing,
also

Guaranty,"

joint and several

his wife,
a

Chrysler required
Michele

document

Mayes, to

imposing

not only
sign

unconditional

liability on the guarantors for

the debts

of Rainbow Motors
compensated
land

to Rainbow

participate
as

Michele Mayes

corporate attorney

rented

listed

to Chrysler.

in
a

Motors.

managing the
director

and also

and

was a

owned or

She assertedly

dealership,
officer.

although
Allegedly,

well-

co-owned
did

not

she was
it

was

Chrysler's practice to seek spousal guaranties as a matter of

course.
Rainbow Motors

thereafter accumulated

Chrysler and, in December

action
district

against

Rainbow

court seeking

a large debt

to

1990, Chrysler brought the present

Motors
payment

and Michele
of an

$750,126.41.

Michele Mayes did

the guaranty

but pleaded waiver and

Mayes

in

outstanding debt

the
of

not dispute the existence of

estoppel as affirmative

-2-2-

defenses to Chrysler's claim against her.

Michele Mayes did

not assert any counterclaim.

A non-jury trial was

held in the district court

on May

25

and 26, 1993.

1993,

In a brief memorandum and order on May 26,

the district

court said

that Michele

Mayes had

not

presented adequate evidence at trial to support her equitable

defense

of waiver

Mayes had

argued

or estoppel.
at trial

that the

Equal Credit Opportunity Act,

the

The

court also

said that

guaranty violated

15 U.S.C.

the

1691 et seq., but

________

court said that this defense had been waived because not

asserted in the answer,

and was in any event

The district court entered judgment

against both

in favor of Chrysler and

Rainbow Motors and Michele Mayes

of $750,126.41.
We address

in the amount

Michele Mayes alone has appealed.

first her principal argument,

Equal Credit Opportunity

respond

without merit.

directly to

the

Act.

based on the

Michele Mayes' brief does not

district court's

ruling that

the

statutory defense has been waived for failure to assert it in

the answer.
appears

See Fed. R. Civ. P. 8(a).

to be two-fold:

resolve the issue on

The indirect response

first, that the

district court did

the merits; and second, that,

in the indirect "public policy" version in which the

is urged, it is

embraced by the "estoppel" defense

properly pleaded.

-3-3-

at least
defense
that was

We have some doubt about either branch of this response.

In

its

final

footnoted

decision,

court

prefaced

its

discussion of the merits by saying that it did not

need to reach

the issue.

answer merely

said as

"because

the district

of its

identifying

any

Nevertheless, we

As for the estoppel

an affirmative defense

own

actions" should

such

actions or

think

that Chrysler

be estopped,

mentioning

that Mayes

defense, the

has

the

without
statute.

no defense

on

the

merits and prefer to rest our decision on that ground.

The district court said that a
could

not

be

counterclaim.
issue,

but

directly.
argued

asserted

as

violation of the statute

defense

but

only

as

There appears to be more than one view on this

Michele

Mayes

Instead

does not

her brief

"that there was a

challenge

responds

violation of the

the

that she

ruling
has not

ECOA, but rather

that the policy of the act should be applied to the guarantee

by

the

Court

sitting

formulation, casting

in

equity."

This

rather

awkward

the defense as one of public policy, is

apparently designed to meet yet another concern.

The
in

Equal Credit Opportunity

general

terms, that

Act pertinently provides,

creditor

may not

"discriminate

against any applicant, with respect to any aspect of a credit

transaction .
status."

. on

15 U.S.C.

the basis

of .

1691(a)(1).

secured Mayes' guaranty

. .

sex or

At the

marital

time Chrysler

in 1985, a regulation of the Federal

-4-4-

Reserve

Board--the

then-operative version

of

C.F.R.

was

not

202.2(e)--expressly provided

that

"applicant."

Mutual Federal Savings & Loan

_______________________________

See
___

Morse v.
_____

a guarantor

12

an

Ass'n, 536 F. Supp. 1271, 1278 (D. Mass. 1982) (Aldrich, J.).
_____

This regulation apparently reflected the Federal Reserve

Board's understanding of the statute's original purpose.
statute was initially designed, at least in
the

practice of

creditors

who refused

credit application without a guaranty from

to

The

part, to curtail
grant a

wife's

her husband.

See
___

Anderson v. United Finance Co., 666 F.2d 1274, 1277 (9th Cir.
________
__________________
1982).
a

wife

Under the
(or a

original Federal Reserve Board regulation,

husband) who

was

denied credit

because the

spouse

refused to guarantee the

action, depending on the

loan might have

a cause of

circumstances; but where the spouse

did guarantee the loan, that spouse--not being an applicant-had no basis for a claim or any defense against collection.
Eventually
regulation,

the

Federal

effective on

Reserve

October

1,

Board
1986,

revised

its

extending

the

definition of an "applicant" to include "guarantors . . . and

similar parties."

12 C.F.R.

48026 (Nov. 20, 1985).

202.2(e), adopted 50 Fed. Reg.

Michele Mayes does not claim that the

regulation applies retroactively to her case.

Cf.
___

Boatman's
_________

First National Bank v. Koger, 784 F. Supp. 815 (D. Kan. 1992)
___________________
_____
(holding that the regulation

is not retroactive).

Instead--

-5-5-

to put

the best face

urge that
after

Chrysler's conduct

the new

guarantor

on her argument--she

can be

was unlawful, both

regulation, even

if a

taken to
before and

pre-October 1,

1986,

had no standing to assert a direct claim under the

statute.

Public

policy,

in

effect,

is

offered

as

substitute for standing.

Assuming arguendo a violation by Chrysler, we think that
________
Mayes' contention has some
Chrysler's
unlawful

conduct
when the

in

weight but not quite enough.

seeking

financing

the

spousal

If

guaranty

arrangement was

was

made, Michele

Mayes' defense would not directly affront the general precept

that

effect

party's conduct
when the

should be

conduct occurred.

judged

by the

rules in

See generally
_____________

Bowen v.
_____

Georgetown University Hospital, 488 U.S. 204, 208 (1988).

______________________________

On

the

of

other

hand,

there

in

what Mayes

retroactivity
argument

depends on a

remains
seeks

strong

in this

element
case,

rather loose description

and her

of what was

arguably unlawful in Chrysler's conduct.

At the time Chrysler
question and
reason

secured the

to believe that it

might be liable

guaranty, Chrysler might

should not seek

that time the core

withholding or conditioning

have had

the guaranty and

to the de facto borrower (Jean

________

refused to extend credit to

But at

made the financing arrangements in

Mayes) if it

him without a spousal guarantee.

of the conduct

made unlawful was

the loan to the borrower.

-6-6-

Under

the
think

regulation as it then
that

guaranty

it would

since the

stood, Chrysler had

be unable

to

regulation

collect on

said that

the

no reason to
any spousal
guaranteeing

spouse was not a protected party.

The Federal Reserve Board
the guarantor

is protected by

and Chrysler is now

attempted.

But we

to bar Chrysler
1985
not

has changed its position now,

the terms of

on notice that

the regulation,

such a defense might

think it stretches public policy

from collecting

now on a

be

too far

guaranty made

in

when in 1985 its right to collect on the guaranty would

reasonably have been thought in doubt.

Put differently,

the regulation's change in "standing" is actually a surrogate

for

an enlarged

view of what

is unlawful

about Chrysler's

conduct.
One

might

imagine cases

arises after the

_____

new

regime;

public policy

even to conduct that occurred

after

retroactive statutes can be

for retroactivity.

that

event is of such a force and character that

it should be applied
the

where

all,

the

prior to

presumption

against

overcome when Congress

provides

E.g., Pension Benefit Guaranty Corp. v.

____ ______________________________

R. A. Gray & Co., 467 U.S. 717 (1984).

But in this appeal we

_______________
are given

no reason to think

rare and exigent

situation.

that our case presents

Accordingly, we

such a

have no reason

to consider Chrysler's defense of its conduct on the merits.

-7-7-

Two remaining
First,

Michele

claims of error can

Mayes

argues

that

be answered quickly.
Chrysler

introduced

irrelevant and prejudicial information into the proceeding by

referring to the bankruptcy of her husband, by claiming
her statutory

defense was belatedly pled,

to show that Chrysler

guaranty

in

this

irrelevant to our own legal

the

fact that

the

and by attempting

had good reason for requiring

instance.

guaranty

All

of

these

her own

matters

determination which is based

predated

that

the

change

in

are
on
the

regulation.
Second, Michele Mayes renews
she

has an

cutting

equitable

off credit

on appeal an argument that

defense because

temporarily to

Chrysler itself,

Rainbow Motors

by

in 1988,

caused the financial hardships that led to its default on the

debt.

This argument rests

proposition
Mayes']

that "the

witnesses

entirely on the

uncontroverted testimony

was

that

Chrysler

withheld agreed upon financing

Although
of

the

brief's central
of [Michele

Credit

wrongfully

for the 1989 selling season."

there are no findings on this point, a brief review

record

complicated

shows

than

the

that

the

situation

is

far

"uncontroverted testimony"

more

reference

would suggest.
It

appears

dealership of
that

the

that

Chrysler

Jean Mayes located

credit

arrangements

also

financed

another

in Hingham, Massachusetts,
were

in

certain

respects

-8-8-

interrelated, and

that the "hold" placed

financing was connected to

dealership.
Motors

Whether or

was

conceded issue

wrongful,
at trial.

on Rainbow Motors'

alleged problems with the Hingham

not the cutoff of credit

wrongfulness
It is

was

to Rainbow

certainly

the obligation of

not

one who

appeals

on

such

treatment of this

grounds

to

address

the

evidence.

The

point offered in Michele Mayes' brief does

not attempt the task.

Affirmed.
________

-9-9-