Weingarten v. FIRST MTG. CO. OF PA.

• Decision Date: 02 March 1979
• Docket Number: Civ. A. No. 77-3088.
• Citation: 466 F. Supp. 349
• Parties: Jerome J. WEINGARTEN and Dorothy T. Weingarten, his wife and Milton J. Carter and Patricia E. Carter v. FIRST MORTGAGE CO. OF PA. and Victor Henry Associates, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

466 F. Supp. 349

Jerome J. WEINGARTEN and Dorothy T. Weingarten, his wife and Milton J. Carter and Patricia E. Carter v. FIRST MORTGAGE CO. OF PA. and Victor Henry Associates, Inc.

Civ. A. No. 77-3088.

United States District Court, E. D. Pennsylvania.

March 2, 1979.

Walter D. Campbell, Levittown, Pa., for plaintiffs.

Nathan L. Posner, E. Gerald Donnelly, Jr., Fox, Rothschild, O'Brien & Frankel, Philadelphia, Pa., for First Mortgage.

Louis Podel, Harold Levy Associates, Philadelphia, Pa., for Victor Henry.

MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

This is an action brought by the plaintiffs pursuant to the Truth in Lending Act of 1968 (TIL), 15 U.S.C. § 1601 et seq. In their eight-count complaint the plaintiffs seek rescission of a loan agreement and damages in connection with a loan made by defendant First Mortgage Co. of Pa. (First Mortgage) and arranged by Victor Henry Associates, Inc. (Victor Henry). In counts one through four, the plaintiffs allege that both defendants violated the TIL and in counts five through eight, the plaintiffs allege that both defendants breached their contractual agreement. Defendants filed motions for summary judgment which the Court denied by Order dated June 28, 1978 on the ground that there were genuine issues of material fact. The Court reconsidered its Order at defendants' request and on July 12, 1978 reaffirmed its Order denying summary judgment. Defendant First Mortgage, after deposing the plaintiffs and the two other guarantors on the loan, filed another motion for summary judgment, the summary judgment motion which is presently before this Court. After a review of the record, including the depositions of the plaintiffs and the other two guarantors on the loan, the Court finds that, on the record as it now exists, there is no genuine issue as to any material fact and, for the reasons hereinafter discussed, grants the defendant's motion for summary judgment.¹

Fed.R.Civ.P. 56(c) provides in pertinent part:

Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Thus, in examining the propriety of a motion for summary judgment, the court must first determine whether there is a genuine issue as to any material fact.² Summary judgment may not be used to deprive a litigant of a full trial of genuine fact issues but may be granted where there are no disputed issues of material fact. If there is a genuine issue as to any material fact, the motion for summary judgment will not be granted. Ettinger v. Johnson, 556 F.2d 692, 696 (3d Cir. 1977); Fairbanks, Morse & Co. v. Consolidated Fisheries Co., 190 F.2d 817, 824 (3d Cir. 1951); Toebelman v. Missouri-Kansas Pipe Line Co., 130 F.2d 1016, 1018 (3d Cir. 1942). In considering a summary judgment motion, all doubts as to the existence of material facts should be resolved against the movant. Hicks v. ABT Associates, Inc., 572 F.2d 960, 967 (3d Cir. 1978); Abdallah v. Caribbean Security Agency, 557 F.2d 61, 63 (3d Cir. 1977); Scott v. Plante, 532 F.2d 939, 945 (3d Cir. 1976). In addition, Fed.R.Civ.P. 56(e) provides in relevant part:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.

General Electric Co. v. Hol-Gar Manufacturing Corp., 431 F.Supp. 881, 884 (E.D.Pa. 1977), aff'd, 573 F.2d 1301 (3d Cir. 1978). If the opposing party does not so respond, summary judgment may appropriately be granted. First National Bank v. Cities Service, 391 U.S. 253, 288, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Proctor v. State Farm Mutual Automobile Insurance Co., 182 U.S. App.D.C. 264, 277, 561 F.2d 262, 275 (1977).

The Court, having reviewed the depositions and the loan documents which have been filed of record in this case, and having resolved all doubts concerning facts against the movant (defendant), finds that there is no genuine issue as to any material fact in this case.

The depositions of the plaintiffs, the depositions of Mr. and Mrs. Levine and the loan documents are in substantial agreement concerning the material facts. Defendant, First Mortgage, made a $55,000 loan, which loan was arranged by Victor Henry. M & J Sales and Service, Inc. (M & J Sales) was incorporated by Lawrence Levine and plaintiffs Jerome J. Weingarten and Milton J. Carter for the purpose of purchasing and operating a sewing machine business. After several unsuccessful attempts to obtain a commercial loan, Messrs. Levine, Weingarten and Carter retained Victor Henry to arrange for a loan. Victor Henry contacted First Mortgage, which agreed to make a $55,000.00 loan to M & J Sales on the condition that the plaintiffs and Mr. and Mrs. Levine become guarantors and provide as security second mortgages on their individual residences. Settlement in condition with the loan transaction took place on March 4, 1975, at which time First Mortgage delivered its check made payable to M & J Sales, in the amount of $50,542.09, the net proceeds from the $55,000.00 loan. The check was deposited in the corporate account of M & J Sales, and the proceeds from the loan were used to purchase and set up the sewing machine business.

Plaintiff, Jerome J. Weingarten, in his deposition, stated that "the purpose of the loan was to buy the business," (Jerome J. Weingarten, N.T. 55) and that the proceeds of the loan "were going to be used to buy the business from the Singer Company so that we could go into business and form our own business." (Jerome J. Weingarten, N.T. 42). In response to the question whether he and his wife received any of the proceeds of the loan, Mr. Weingarten responded that "We did not borrow it for us to use. It was for the business." (Jerome J. Weingarten, N.T. 54-55). Similarly, plaintiff Dorothy T. Weingarten, in her deposition, stated that the proceeds of the loan went into the business and that she did not personally receive any of the proceeds from the loan. (Dorothy T. Weingarten, N.T. 36, 40). Plaintiff Milton J. Carter, in his deposition, stated that the three men intended to use the money borrowed "to buy a business and to have a business of our own," (Milton J. Carter, N.T. 13), and that the money left over beyond the purchase price of the business would be used for business purposes. (Milton J. Carter, N.T. 23-24). Plaintiff Patricia E. Carter, in her deposition, stated that she knew that the money from the loan was to be used in the business (Patricia E. Carter, N.T. 10-11), that the purpose of the loan was for the three men to go into business for themselves (Patricia E. Carter, N.T. 21), and that she knew that she was not going to derive any direct personal benefit from the loan (Patricia E. Carter, N.T. 31). Lawrence Levine, in his deposition, stated that the only purpose of the loan was to buy the business (Lawrence Levine, N.T. 32-33) and that none of the six individuals received any of the proceeds from the loan. (Lawrence Levine, N.T. 33, 51, 72). Bella Levine, in her deposition, stated that she did not receive any of the money personally and that the only purpose of the loan was to buy the business. (Bella Levine, N.T. 13).

The Court has examined all of the following documents which have been filed of record in this case: the commitment letter, the disclosure statement, certified copies of M & J Sales resolutions, the loan agreement, the security agreements, the guarantee agreements, the guarantee affidavit forms, the corporate installment note, the bond and warrant, the mortgage, and the notices of the right of rescission. In all of these documents, without exception, the parties have designated M & J Sales as the borrower and the plaintiffs, together with Mr. and Mrs. Levine, as guarantors.

The Truth in Lending Act, 15 U.S.C. § 1601 et seq., which we refer to herein as the TIL, provides that certain disclosures must be made to the consumer in credit transactions and makes available to the consumer legal remedies where disclosures are not made in accordance with the Act.

The TIL states, in 15 U.S.C. § 1602(h), that the word "consumer," used with reference to a credit transaction, means:

a transaction in which the party to whom credit is offered or extended is a natural person, and the money, property, or services which are the subject of the transaction are primarily for personal, family, household, or agricultural purposes.

The material facts in this case, as to which there is no genuine issue, make it abundantly clear that the $55,000.00 loan transaction was not "primarily for personal, family, household, or agricultural purposes," and is therefore not a consumer credit transaction as defined in the TIL. The loan documents and the depositions all agree that the loan was for a business purpose, that is, the purchase of the sewing machine business by M & J Sales.

Furthermore, the TIL specifically exempts the transaction before this Court. In 15 U.S.C. § 1603, the Act provides:

This subchapter does not apply to the following:

(1) Credit transactions involving extensions of credit for business or commercial purposes, . . . or to organizations.

The depositions are in agreement that the extension of credit in the transaction before the Court was for "business or...