Trial court rejects guarantor's attempt to utilize a claim of negligent loan administration as an affirmative defense
Posted on 04/13/2015 at 10:45 AM by William Serangeli
On April 8, 2015, Chief Judge Arthur E. Gamble issued his Findings of Fact, Conclusions of Law and Judgment in Case No. EQCE075195. In those Findings of Fact, Chief Judge Gamble specifically rejected a Guarantor's affirmative defense that the guaranty should not be enforced because the lending bank was negligent in its loan administration. Specifically, the Guarantor had attempted to utilize the bank's own internal policies and requirements for financial covenants as evidence of negligent loan administration. Chief Judge Gamble ruled that 'If after pleading for forbearance and extensions of credit, a customer could use a bank's waiver of internal policies and controls against the bank to defeat liability on a loan or guaranty, there would be a chilling effect on the availability of credit. Banks would be reluctant to cooperate with customers to work out problem loans if their forbearance could be used against them in a collection action. The Court concluded that in the absence of expert testimony or published banking standards, a claim for negligent loan administration, if permitted, could not rest on the Bank's internal policies alone.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
Questions, Contact us today.
The material, whether written or oral (including videos) that is posted on the various blogs of Dickinson Law is not intended, nor should it be construed or relied upon, as legal advice. The opinions expressed in the various blog posting are those of the individual author, they may not reflect the opinions of the firm. Your use of the Dickinson Law blog postings does NOT create an attorney-client relationship between you and Dickinson, Mackaman, Tyler & Hagen, P.C. or any of its attorneys. If specific legal information is needed, please retain and consult with an attorney of your own selection.