BNT AD AGENCY, LLC v. CITY OF GREENSBORO

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

BNT AD AGENCY, LLC, )

)

Plaintiff, )

)

v. ) 1:14CV767

)

CITY OF GREENSBORO, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge

Plaintiff BNT Ad Agency, LLC, brings a claim for racial

discrimination under 42 U.S.C. § 1981 against the City of

Greensboro (“the City”). (Doc. 5.) Defendant has moved for

summary judgment pursuant to Fed. R. Civ. P. 56(a). (Doc. 71.)

Because this court finds that Plaintiff has failed to raise any

genuine issue of material fact regarding whether the City

discriminated against Plaintiff, as a minority-owned business,

based on race, the City’s motion for summary judgment will be

granted.

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

Plaintiff is owned by Michael and Ramona Woods (“the

Woods”), who are both African-Americans. Plaintiff sought a

$300,000 economic development loan from the City’s Office of

Economic Development and Business Support (“EDBS”) in 2013 to

produce a sitcom, “Whatcha Cookin’.” (Amended Complaint (“Am.

Compl.”) (Doc. 5) ¶¶ 16–18; Def.’s Brief in Support of Motion

for Summary Judgment (“Def.’s Br.”) (Doc. 72), Ex. B, Andrew S.

Scott, III Affidavit (“Scott Aff.”) (Doc. 72-2) ¶ 11.) EDBS

staff assisted Plaintiff in applying for the loan. (Scott Aff.

(Doc. 72-2) ¶ 11.) Plaintiff was originally going to pledge

commercial property as collateral, on which the City would have

taken a third position lien. (Michael Woods Affidavit (“Woods

Aff.” (Doc. 77) ¶ 13.) EDBS determined that the commercial

property would be insufficient collateral, due to the amount of

debt on the property, as well as the tax value of the property.

(Scott Aff. (Doc. 72-2) ¶ 14.) The parties therefore agreed that

the Woods’ personal residence would secure the loan. (Id. ¶¶ 15–

16.) The Woods provided a financial statement to EDBS, which

listed assets and liabilities. (Scott Aff. Ex. A (Doc. 72-2) at

25.) The financial statement included a “Personal Residence”

valued at $1,100,000 as an asset. (Id.) On the same financial

statement, the Woods responded to the question “Mortgages on

Real Estate” with “Personal Residence $509,000,” indicating one

lien on the property (Id.) The conditions pertaining to the

collateral were as follows: (1) the City would have no worse

than a second position lien on the Woods’ personal residence;

and (2) the amount of outstanding mortgage debt on the residence

was $509,000. (Scott Aff. (Doc. 72-2) ¶ 26). The house was

independently appraised at a value of $975,000. (Id. ¶ 16.) EDBS

staff and Plaintiff agreed to these terms and, as a result, the

proposed loan agreement was presented to the Greensboro City

Council. (Id. ¶ 17.) The City Council considered Plaintiff’s

loan request on June 18, 2013, for a hearing and vote on a

proposed resolution (the “Resolution”), to authorize the

$300,000 loan. (Am. Compl. (Doc. 5) ¶ 22; Def.’s Br. Ex. F,

S. Mujeeb Shah-Khan Affidavit (“Shah-Khan Aff.”) (Doc. 72-6)

¶ 7.) The loan conditions included proof of Plaintiff’s

investment in the sitcom and a pledge of the Woods’ residence as

collateral, on which the City would take a second position lien

as agreed. (Scott Aff. (Doc. 72-2) ¶¶ 21, 25.) The City Council

voted in favor of authorizing the loan on those conditions at

the June 18, 2013 meeting. (Am. Compl. (Doc. 5) ¶ 22.)

Several days later, Plaintiff asked to close the loan as

soon as possible in order to make payroll disbursements. (Scott

Aff. (Doc. 72-2) ¶ 26.) The City, however, became aware that

Plaintiff had provided inaccurate information about the proposed

collateral. (Id.) In particular, there was $71,000 more debt on

the collateral than the Woods had represented to the City

Council, and there were two liens, not one, on the residence.

(Am. Compl. (Doc. 5) ¶ 25; Scott Aff. (Doc. 72-2) ¶ 26.) The

Woods and Plaintiff could not provide a second lien position as

agreed upon and approved; instead the City would receive a third

lien position. (Am. Compl. (Doc. 5) ¶ 25; Scott Aff. (Doc. 72-2)

¶ 26.)

In light of these developments, Plaintiff requested that

the City Council adopt a proposed Amended Resolution (the

“Amended Resolution”) to modify the loan in several ways: (1)

the City would take a third, instead of a second, lien position

on the personal residence; and (2) the debt amount on the

collateral would be corrected to reflect the additional $71,000.

(Am. Compl. (Doc. 5) ¶¶ 25–26; Scott Aff. (Doc. 72-2) ¶¶ 32–33.)

The City Council considered the Amended Resolution at a

public meeting on July 16, 2013. (Am. Compl. (Doc. 5) ¶ 29;

Scott Aff. (Doc. 72-2) ¶ 34.) Council members and city staff

raised concerns about the new terms. (Scott Aff. (Doc. 72-2)

¶ 35.) The City Council ultimately voted 6-3 against adopting

the Amended Resolution, (Def.’s Brief in Support of Motion to

Dismiss Ex. C (Doc. 11-3) at 36)1, but left the original

Resolution in place until February 18, 2014, (Shah-Khan Aff.

(Doc. 72-6) ¶ 27). Plaintiff could have chosen to proceed with

1 All citations in this Memorandum Opinion and Order to

documents filed with the court refer to the page numbers located

at the bottom right-hand corner of the documents as they appear

on CM/ECF.

the loan under the original Resolution terms until that point.

(Id.) The City’s attorney made Plaintiff aware of the continued

availability of the original loan in November 2013. (Id. ¶ 30.)

Plaintiff filed suit against the City and six Greensboro

City Councilmembers in Guilford County Superior Court in August

2014, asserting several claims, including a claim for racial

discrimination under 42 U.S.C. § 1981, arising from the City

Council’s decision not to adopt the Amended Resolution.

(Complaint (Doc. 2) ¶¶ 30–61.) Defendant removed the case to

federal court on the grounds that the complaint involved a

federal question. (Petition for Removal (Doc. 1) at 3.)

Defendants moved to dismiss Plaintiff’s claims for failure to

state a claim under Fed. R. Civ. P. 12(b)(6), (Defs.’ Motions to

Dismiss (Docs. 10, 12)), and this court granted those motions,

(Memorandum Opinion & Order (Doc. 29)). Plaintiff appealed the

dismissal of its Section 1981 race discrimination claim against

the City to the Fourth Circuit Court of Appeals. (Notice of

Appeal (Doc. 34).) The Fourth Circuit reversed the order

dismissing the Section 1981 claim and remanded the case back to

this court for further proceedings. Woods v. City of Greensboro,

855 F.3d 639, 642 (4th Cir. 2017).2 Only the Section 1981 claim

against the City remains. Id. at 653.

On remand, following discovery, the City moved for summary

judgment, (Def.’s Motion for Summary Judgment (Doc. 71)), and

submitted a memorandum in support of that motion, (Doc. 72)).

Plaintiff responded to the motion, (Pl.’s Brief in Response to

Motion for Summary Judgment (“Pl.’s Br.”) (Doc. 76)), to which

the City replied, (Defendant’s Reply Brief (Doc. 84)).

Plaintiff’s attorney has also moved to withdraw from the case

and strike the Reply to Defendant’s Motion for Summary Judgment

based on a lack of good faith support for the arguments in that

motion. (Motion by Norman B. Smith, Attorney for Plaintiff, to

Withdraw from Further Representation and to have Stricken Two

Briefs (Doc. 80); Brief in Support of Motions by Norman B. Smith

to Withdraw from Further Representation of Plaintiffs and to

have Stricken Briefs (Doc. 81).) This court held a hearing on

Attorney Smith’s motions and denied both the motion to withdraw

and the motion to strike. (Transcript of Motion Hearing

04/04/2019 (Doc. 85) 15:8–16.)

2 After the Fourth Circuit remanded this case, BNT Ad Agency,

LLC was the sole remaining plaintiff. (Order (Doc. 50) at 1.) The

name of the case was therefore amended to reflect this change.

(Id.)

II. STANDARD OF REVIEW

Summary judgment is appropriate when “there is no genuine

dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Celotex

Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). This court must

look to substantive law to determine which facts are material —

only those facts “that might affect the outcome of the suit

under the governing law will properly preclude the entry of

summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 248 (1986). “On summary judgment the inferences to be drawn

from the underlying facts . . . must be viewed in the light most

favorable to the party opposing the motion.” United States v.

Diebold, Inc., 369 U.S. 654, 655 (1962) (per curiam).

This court therefore must determine whether the evidence

“is so one-sided that one party must prevail as a matter of

law.” Anderson, 477 U.S. at 252. The moving party bears the

initial burden of demonstrating “that there is an absence of

evidence to support the nonmoving party’s case.” Celotex Corp.,

477 U.S. at 325. If the “moving party discharges its burden

. . ., the nonmoving party then must come forward with specific

facts showing that there is a genuine issue for trial.” McLean

v. Patten Cmtys., Inc., 332 F.3d 714, 718–19 (4th Cir. 2003).

Ultimately, summary judgment should be granted “unless a

reasonable jury could return a verdict for the nonmoving party

on the evidence presented.” Id. at 719.

III. LEGAL FRAMEWORK

Plaintiff claims Defendant violated Section 1981 by

refusing to adopt the Amended Resolution authorizing a loan to

Plaintiff. Section 1981 gives “[a]ll persons . . . the same

rights . . . to make and enforce contracts . . . as is enjoyed

by white citizens.” 42 U.S.C. § 1981(a) (2012). A plaintiff may

prove a Section 1981 violation by either direct evidence of

discrimination or through circumstantial evidence. Moore v. City

of Charlotte, 754 F.2d 1100, 1105 (4th Cir. 1985).

To prove a case of discrimination by direct evidence, a

plaintiff must “produce direct evidence of a stated purpose to

discriminate . . . of sufficient probative force to reflect a

genuine issue of material fact.” Johnson v. Toys “R” Us-

Delaware, Inc., 95 F. App’x 1, 6 (4th Cir. 2004) (quoting

Goldberg v. B. Green & Co., 836 F.2d 845, 848 (4th Cir. 1988))

(applying the standard for direct evidence from Goldberg to a

Section 1981 claim).

In the absence of any evidence of direct discrimination,

the Fourth Circuit has imported the McDonnell Douglas analytical

framework from the Title VII context into the analysis for

racial discrimination claims under Section 1981. See Guessous v.

Fairview Prop. Invs., LLC, 828 F.3d 208, 216 (4th Cir. 2016)

(explaining that the McDonnell Douglas framework was “developed

for Title VII discrimination cases,” but “has since been held to

apply in discrimination cases arising under § 1981”). Under the

McDonnell Douglas framework, the plaintiff must first “proffer

sufficient circumstantial evidence” to “establish a prima facie

case of discrimination.” Williams v. Staples, Inc., 372 F.3d

662, 667 (4th Cir. 2004).

The Fourth Circuit has not considered a claim alleging

discrimination in the terms and conditions in lending under

Section 1981; Williams v. Staples, Inc., a Fourth Circuit case

dealing with Section 1981 racial discrimination, applies to all

Section 1981 cases relating to “the purchase of goods or

services.” Williams, 372 F.3d at 667. To establish a traditional

prima facie case of discrimination under Williams, a plaintiff

must

establish that: (1) [they are] a member of a protected

class; (2) [they] sought to enter into a contractual

relationship with the defendant; (3) [they] met the

defendant’s ordinary requirements to pay for and to

receive goods or services ordinarily provided by the

defendant to other similarly situated customers; and

(4) [they were] denied the opportunity to contract for

goods or services that [were] otherwise afforded to

white customers.”

Id. After the plaintiff successfully makes out a prima facie

case of discrimination, “the defendant may respond by producing

evidence that it acted with a legitimate, nondiscriminatory

reason,” at which point the “plaintiff may adduce evidence

showing that the defendant’s proffered reason was mere pretext

and that race was the real reason for the defendant’s less

favorable treatment of the plaintiff.” Id. While the burden

shifts back and forth between the plaintiff and defendant,

“[t]he ultimate burden of persuading the trier of fact that the

defendant intentionally discriminated against the plaintiff

remains at all time with the plaintiff.” Texas Dep’t of Cmty.

Affairs v. Burdine, 450 U.S. 248, 253 (1981).

However, Williams did not specifically address

discrimination in lending; it instead applies to “purchases of

goods or services.” Williams, 372 F.3d at 667. Plaintiff urges

the court to depart from the Williams/McDonnell Douglas

framework when considering alleged lending discrimination under

Section 1981; in Plaintiff’s view, “the inquiry in the context

of lending should extend to an examination of how plaintiff was

treated overall in comparison to how non-minorities were

treated.” (Pl.’s Br. (Doc. 76) at 6.) Plaintiff provides no

authority for such a test, and this court could not find any.

Such a test is not persuasive here, as there is no dispute that

Plaintiff was considered for this loan and did in fact receive

the loan as requested initially. Instead, Plaintiff’s claims

must be considered within the context of a requested

modification of a loan having been agreed to by Plaintiff in the

first instance.

Various courts have taken different approaches to analyzing

discriminatory lending cases. The Seventh Circuit declined to

apply the McDonnell Douglas burden-shifting framework in “usual”

credit discrimination cases. Latimore v. Citibank Fed. Sav.

Bank, 151 F.3d 712, 714 (7th Cir. 1998). That court reasoned

that lending does not present a “comparable competitive

situation” to discriminatory hiring cases, such as McDonnell

Douglas, in which a minority candidate and a white candidate vie

for the same job. Id. Rarely, the court noted, will there be a

situation in which a minority loan candidate and a white loan

candidate be in competition for a loan; though “when we have an

approximation to such a situation, a variant of the McDonnell

Douglas standard may apply.”3 Id. Instead, “[i]t is always open

to a plaintiff in a discrimination case to try to show in a

conventional way, without relying on any special doctrines of

3 This court is not persuaded the Seventh Circuit’s test

should be applied, as this court does not find competition for a

job or a loan to be a necessary part of the McDonnell Douglas

analysis. Instead, it seems to this court that while there may

be some competition for loan funds, the question remains whether

minority borrowers are treated differently and less favorably,

similar to the employment context, in a manner sufficient to

establish discriminatory intent. That fact does not require

competition.

burden-shifting, that there is enough evidence, direct or

circumstantial, of discrimination to create a triable issue.”

Id. at 715.

The Third Circuit applied an adapted version of the

McDonnell Douglas framework when plaintiffs plead Section 1981

racial discrimination in lending claims. Anderson v. Wachovia

Mortg. Corp., 621 F.3d 261, 273–75 (3d Cir. 2010). Plaintiffs

under the Third Circuit’s test must show

(1) that [they] belong[] to a protected class, (2)

that [they] applied [for] and [were] qualified for

credit that was available from the defendant, (3) that

[their] application was denied or that its approval

was made subject to unreasonable or overly burdensome

conditions, and (4) that some additional evidence

exists that establishes a causal nexus between the

harm suffered and the plaintiff’s membership in a

protected class, from which a reasonable juror could

infer, in light of common experience, that the

defendant acted with discriminatory intent.

Id. at 275.

In adopting this new test, thereby modifying the third

prong of the traditional prima facie test — the “similarly

situated” requirement — the Third Circuit reasoned that

“requiring evidence of similarly situated individuals in the

lending context would be overly burdensome” because “the parties

would likely have considerable difficulty determining which

applicants are similarly situated.” Id. at 274. The District

Court for the Eastern District of Virginia, the District Court

for the Eastern District of North Carolina, and the District

Court for the District of Maryland have applied the Anderson

test in lending discrimination cases under Section 1981. Best

Med. Int’l, Inc. v. Wells Fargo Bank, N.A., 937 F. Supp. 2d 685,

697 (E.D. Va. 2013); Pitt v. First Tenn. Bank Nat’l Ass’n, No.

4:17-CV-132-BO, 2018 WL 2391114, at *1 (E.D.N.C. May 24, 2018);

Flippings v. U.S. Home Mortg., No. TDC-15-4021, 2017 WL 728179,

at *3 (D. Md. Feb. 23, 2017).4

This court finds the Third Circuit’s reasons for adopting a

new test for Section 1981 lending cases, and the district court

opinions in this circuit, persuasive. This court will therefore

join the district courts for the Eastern District of North

Carolina and the Eastern District of Virginia in adopting the

Anderson test in the Section 1981 lending discrimination

context.

4 The Fourth Circuit, in an unpublished opinion, has applied

the Eighth Circuit prima facie test for discrimination in Fair

Housing Act (“FHA”) and Equal Credit Opportunity Act (“ECOA”)

lending discrimination cases, in which the plaintiff must prove

“1) they are members of a protected class; 2) they applied for

and were qualified for an extension of credit; 3) [the lender]

rejected their application for credit despite their

qualifications; and 4) [the lender] continued to extend credit

to others of similar credit stature . . . .” Wise v. Vilsack,

496 F. App’x 283, 285 (4th Cir. 2012) (citing Rowe v. Union

Planters Bank of Southeast Mo., 289 F.3d 533, 535 (8th Cir.

2002)). Given that Wise dealt with FHA and ECOA claims, as

opposed to Section 1981 claims, this court declines to adopt

this prima facie test.

IV. ANALYSIS

Plaintiff fails to present any evidence to establish

discrimination. For that reason, Defendant’s motion for summary

judgment will be granted.

A. Direct Evidence

Plaintiff fails to produce direct evidence of

discrimination. A plaintiff must “produce direct evidence of a

stated purpose to discriminate . . . of sufficient probative

force to reflect a genuine issue of material fact.” Johnson, 95

F. App’x at 6 (quoting Goldberg, 836 F.2d 845, 848 (4th Cir.

1988)).

Here, Plaintiff only offers the affidavit of Michael Woods.

(Doc. 77.) Affidavits submitted on summary judgment must “be

made on personal knowledge [and] set out facts that would be

admissible in evidence.” Fed. R. Civ. P. 56(c)(4). “[H]earsay,

like other evidence inadmissible at trial, is ordinarily an

inadequate basis for summary judgment.” U.S. Dep’t of Hous. &

Urban Dev. v. Cost Control Mktg. & Sales Mgmt. of Virginia,

Inc., 64 F.3d 920, 926 (4th Cir. 1995). Further, this court

“generally consider[s] self-serving opinions without objective

corroboration not significantly probative” when considering a

motion for summary judgment. Evans v. Techs. Applications &

Serv. Co., 80 F.3d 954, 962 (4th Cir. 1996).

Plaintiff fails to “produce direct evidence of a stated

purpose to discriminate,” as Mr. Woods’ affidavit does not

contain any evidence that is not “self-serving” and “without

objective corroboration.” For example, Mr. Woods claims that the

City never gave Plaintiff an opportunity to consolidate the

first and second liens. (Woods Aff. (Doc. 77) ¶ 18.) This is

false — the original loan was kept open for several months,

which was communicated to Plaintiff.5 (Shah-Khan Aff. (Doc. 72-6)

5 Mr. Woods states in his affidavit that “[i]t is not

correct that plaintiff was ever informed that the loan remained

available for more than seven months until February,

2014 . . . .” (Woods Aff. (Doc. 77) ¶ 18.) This is not

sufficient to create a material issue of fact, as Plaintiff does

not dispute the loan was in fact kept open as described by the

City. (Woods Aff. (Doc. 77) ¶ 18; Shah-Khan Aff. (Doc. 72-6)

¶ 27; Shah-Khan Aff. Ex. G (Doc. 72-6) at 71.) In addition, the

City attorney did respond to Plaintiff in November 2013,

stating, “If anything, the City and your clients could proceed

under the original terms . . . . The original terms are still

available.” (Shah-Khan Aff. Ex. G (Doc. 72-6) at 71.) Even

assuming Mr. Woods’ statement is true — that the City was

willing to accept a third position on the commercial property,

(Woods Aff. (Doc. 77) ¶ 13), and the City later required a

second position on the residence, there is nothing

discriminatory about this fact. The Woods provided a financial

statement to EDBS, which listed assets and liabilities, (Scott

Aff. Ex. A (Doc. 72-2) at 25). The financial statement included

a “Personal Residence” valued at $1,100,000 as an asset. (Id.)

On the same financial statement, the Woods responded to the

question “Mortgages on Real Estate” with “Personal Residence

$509,000.” (Id.) Thus, even if the Woods did not realize the

City would require a second position lien, it was the Woods’ own

statement which led the City to believe it would be taking a

second position lien on the Woods’ residence.

(Footnote continued on next page)

¶ 27; Shah-Khan Aff. Ex. G (Doc. 72-6) at 71.) Further,

Plaintiff contends that Mr. Woods’ statements that the City

being willing to accept a third position lien on Plaintiff’s

commercial property but not the residential property is direct

evidence of discrimination. (Pl.’s Br. (Doc. 76) at 8; Woods

Aff. (Doc. 77) ¶ 13.) There is no direct evidence of

discrimination apparent in Mr. Woods’ statements, and therefore

his affidavit is not sufficient to support a finding of direct

evidence of discrimination.

Because Plaintiff has not submitted direct evidence of

intentional discrimination, Plaintiff must prove a Section 1981

violation through circumstantial evidence.

B. The Anderson Framework

Plaintiff’s case fails under the Third Circuit’s test as

well.

There is no dispute Plaintiff meets the first two prongs of

the Third Circuit test. The first prong of the Anderson

Mr. Woods does not challenge, explain, or contest the fact

he provided the information contained in the Woods’ financial

statement; that his personal residence had a value of $1,100,00

with one mortgage in the amount of $509,000. Mr. Woods’

assertion that “Plaintiff had assumed that the third lien

likewise would carry over to the homeplace,” (Woods Aff. (Doc.

77) ¶ 13), fails to establish direct evidence of discrimination

because the Woods’ financial statement, provided to the City,

clearly shows that the City would occupy a second, not a third

lien position on the residence.

framework requires Plaintiff to prove it is a member of a

protected class. Anderson, 621 F.3d at 275. “A minority-owned

corporation may establish an ‘imputed racial identity’ for

purposes of demonstrating standing to bring a claim of race

discrimination under federal law.” Carnell Constr. Corp. v.

Danville Redev. & Hous. Auth., 745 F.3d 703, 715 (4th Cir. 2014)

(citation omitted). Because Plaintiff is minority-owned and has

established an “imputed racial identity,” Woods, 855 F.3d at

646, Plaintiff is a member of a protected class for the purpose

of the Anderson analysis. Under the second requirement,

Plaintiff must have applied, and have been qualified, for credit

from Defendant. Anderson, 621 F.3d at 275. Here, Plaintiff

applied for credit from the Defendant and was arguably qualified

for credit of some kind, given the City kept its original offer

open for some time. (Shah-Khan Aff. (Doc. 72-6) ¶ 27.) This is

enough to satisfy the second requirement. Plaintiff, however,

fails on the third and fourth prongs.

Regarding the third prong, the court must consider whether

the City subjected Plaintiff’s loan application to “unreasonable

or overly burdensome conditions” when the City refused to take a

third position lien on Plaintiff’s proposed collateral.

Anderson, 621 F.3d at 275. Plaintiff’s only evidence to support

this is Mr. Woods’ affidavit.

Affidavits submitted on summary judgment must “be made on

personal knowledge [and] set out facts that would be admissible

in evidence.” Fed. R. Civ. P. 56(c)(4). “[H]earsay . . . is

ordinarily an inadequate basis for summary judgment,” U.S. Dep’t

of Hous. & Urban Dev., 64 F.3d at 926, and this court

“consider[s] self-serving opinions without objective

corroboration not significantly probative” when considering a

motion for summary judgment. Evans, 80 F.3d at 962.

Mr. Woods, in his affidavit, contends that he talked to

people in the television industry who said “that the sitcom was

likely to succeed and that the revenue projections were not

unrealistic,” (Woods Aff. (Doc. 77) ¶ 7), and that Plaintiff’s

credit was “excellent.” (Id. ¶ 8.) These statements, however,

are inadmissible hearsay, with regards to the former, and “self-

serving opinions without objective corroboration” regarding the

latter. Plaintiff provides no other evidence that the City’s

demand was unreasonable, and therefore fails to satisfy the

third prong. Significantly, Plaintiff never explains why it was

not able to execute the loan pursuant to the terms it had

received from the City — a second lien position — nor does

Plaintiff ever explain how its “excellent” credit was determined

in light of a disclosed first lien which was not, in fact,

correct and which the Woods were unable to deliver when the loan

was approved. Mr. Woods only states that the Woods “easily”

could have consolidated the first and second loans, (id. ¶ 18),

though fails to produce sufficient facts to support a jury

finding that this could have been done.

Considering the fourth prong, Plaintiff does not provide

any “additional evidence” that “establishes a causal nexus

between the harm suffered and the plaintiff’s membership in a

protected class.” Anderson, 621 F.3d at 275. To demonstrate that

Plaintiff has been treated unfairly compared to nonminority

businesses, Plaintiff offers for comparison several nonminority

owned companies as comparators: Kotis Holdings, LLC (“Kotis”),

(Pl.’s Resp. (Doc. 76) at 6); Beacon Management Corporation6

(“Beacon”), (id. at 7); Oakley Capital (“Oakley”), (Pl.’s Br.

Ex. A, Michael Woods Dep. (“Woods Dep.”) (Doc. 72-1) at 25);

Wind Hill Properties (“Wind Hill”), (id. at 26); Habitat for

Humanity, (Def.’s Response to Pl.’s Interrogatories (Doc. 72-13)

at ); and Affordable Housing Management, Inc., (id. at 10-11),

all of which received loans from the City where the City took a

third position lien on the collateral.

6 Beacon Management Corp. is the parent company of

Churchview Place Limited Partnership and Rocky Knoll LLP,

offered as comparators by Plaintiff, (Woods Aff. (Doc. 77)

¶ 20), both of which received loans from the City pursuant to

the North Carolina Housing Finance Agency Qualified Allocation

Plan. (Scott Aff. (Doc. 72-2) ¶¶ 43, 45–46.) This court will

therefore refer to these loans as loans made to Beacon.

In an effort to show that Kotis was equally or less

deserving of credit than Plaintiff in order to establish

unfavorable treatment, Mr. Woods claims Kotis had “large amounts

of unpaid taxes,” (Woods Aff. (Doc. 77) ¶ 19), and provides

documents from the Guilford County Tax Department supporting

this assertion. (Woods Aff. Ex. B (Doc. 77-2).) Mr. Woods,

however, provides no objective evidence of Plaintiff’s tax

documents or financial situation, nor does Mr. Woods explain how

these facts made Kotis a more or less favorable borrower.

Further, the tax listings Mr. Woods attaches only contain one

listing as to Kotis Holdings, and that tax listing is for the

year 2018. (Id. at 4.) That listing is wholly irrelevant to this

case. The other companies are alleged to be associated with Mr.

and Mrs. Kotis, but are not shown to have borrowed money from

the City and thus are also irrelevant to this court’s analysis.

Moreover, Mr. Woods states that the loans sought by Kotis

“were supported by third deeds of trust, [and] essentially

sought working capital.” (Woods Aff. (Doc. 77) ¶ 19.) This

statement fails to make the loans comparable. Indeed, the City’s

loan to Kotis was made as part of the Long Term Vacant Big Box

Revitalization Loan Program, which was to increase the tax base

by increasing the tax value of the real estate parcel. (Scott

Aff. (Doc. 72-2) ¶ 40.) In contrast, the loan to Plaintiff was

not made pursuant to any established government economic

development program. (Id. ¶¶ 4, 11.)

With respect to Beacon, Mr. Woods merely states that Beacon

is managed by a Caucasian man and that the City has taken a

third lien position on loans to Beacon. (Woods Aff. (Doc. 77)

¶ 20.) Plaintiff fails to mention that the City’s loans to

Beacon were part of the North Carolina Housing Finance Agency

(“NCHFA”) Qualified Allocation Plan to create affordable

housing. (Scott Aff. (Doc. 72-2) ¶¶ 43, 46.) Plaintiff further

produces no evidence demonstrating similarities between

Plaintiff and Habitat for Humanity, Wind Hill, or Affordable

Housing Management, Inc., though the court notes that the loans

made to these three entities were affordable housing loans also

made pursuant to the NCHFA Qualified Allocation Plan. (Id.

¶¶ 44, 47; Def.’s Response to Pl.’s Interrogatories (Doc. 72-13)

at 10-11.) Plaintiff is therefore not similarly situated with

these four companies.

Plaintiff fails to produce any evidence demonstrating

similarities between Plaintiff and Oakley. Nevertheless, this

court finds that Plaintiff and Oakley are not similarly

situated, because the loan made to Oakley was a commercial real

estate development loan made as part of the Downtown Urban

Redevelopment Project. (Scott Aff. (Doc. 72-2) ¶ 41.)

The City has detailed several material differences between

Plaintiff and Plaintiff’s proffered comparators in the City’s

Brief in Support of Motion for Summary Judgment. (Def.’s Br.

(Doc. 72) at 22–29.) The court finds several of these

differences compelling, such as the fact that “[n]one of the

alleged comparators was a television company like BNT who

provided false information to the City and sought to secure its

loan with its owners’ personal residence” and that “[t]here is

no evidence that [the comparators] asked for resolutions to be

amended immediately after they were passed and the Council then

adopted new resolutions changing initial loan terms.” (Id. at

22.)

In support of Plaintiff’s own credit-worthiness, Plaintiff

only submits Mr. Woods’ affidavit, in which he states that

Plaintiff’s credit was “excellent,” and that Plaintiff “easily

could have obtained the loan from commercial banks.” (Woods Aff.

(Doc. 77) ¶ 8.) Mr. Woods, however, admitted that the Woods

approached at least one bank regarding a $300,000 loan around

the same time and were told that “the banks could not do it.”

(Woods Dep. (Doc. 72-1) at 17.) Indeed, asserting that Plaintiff

could have obtained the loan from commercial banks misses the

point — Plaintiff did get a loan from the City, but Plaintiff

wanted different terms. Plaintiff has not presented competent

evidence of anything commercial banks might have offered under

similar circumstances; in fact, quite the opposite.

While Mr. Woods provides the Guilford County Tax Department

documents, which arguably fall under the Fed. R. Evid. 803(8)

public records exception to the general hearsay prohibition, the

fact that Kotis was behind on taxes is not, on its face, enough

for this court to find that the City discriminated against

Plaintiff based on Plaintiff’s race. Evidence of Kotis’ tax

problems is little help to this court without Plaintiff’s own

tax history and financial information for comparison. Indeed,

that the loans to the proposed comparators were made pursuant to

government programs makes it even more difficult to compare the

credit-worthiness of these companies and Plaintiff. Mr. Woods’

assertions as to the excellence of Plaintiff’s credit do not

fill this gap, as these are “self-serving opinions without

objective corroboration” and therefore are “not significantly

probative.” Plaintiff thus submits insufficient evidence for the

court to find that Plaintiff “establishe[d] a causal nexus

between the harm suffered and the plaintiff’s membership in a

protected class.”

Because Plaintiff fails to produce direct evidence of

racial discrimination and fails to satisfy the Anderson test,

Plaintiff fails to prove a case of Section 1981 racial

discrimination.

C. The Fourth Circuit Goods or Services Test and Seventh

Circuit Lending Discrimination Test

This court would reach the same conclusion under the Fourth

and Seventh Circuit tests as well.

Even if the court were to find that lending is a service

for the purposes of applying Williams, Plaintiff would fail on

the “similarly situated” prong. Plaintiff does satisfy the first

two requirements under the Williams test, as Plaintiff is a

member of a suspect class, satisfying the first requirement, and

Plaintiff unequivocally sought to contract with the City for a

loan, satisfying the second requirement. (Am. Compl. (Doc. 5)

¶¶ 16–18; Scott Aff. (Doc. 72-2) ¶ 11.)

Plaintiff fails, however, to satisfy the “similarly

situated” requirement, the third prong of the prima facie case.

The Fourth Circuit has not specifically addressed the standard

for “similarly situated” in the services context.

Nevertheless, this court finds the test from the Title VII

context helpful, that “plaintiffs are required to show that they

are similar in all relevant respects to their comparator.”

Haywood v. Locke, 387 F. App’x 355, 359 (4th Cir. 2010). While

exact symmetry between Plaintiff’s situation or actions and

those of others is not required, they must be materially

similar. See Moore, 754 F.2d at 1107 (misconduct must be of

“comparable seriousness” in disparate discipline comparison). It

is this court’s task to discern the relative similarity of

conduct or misconduct relied on by the parties at summary

judgment. Id. The Eleventh Circuit has held that “a plaintiff

asserting an intentional-discrimination claim under McDonnell

Douglas must demonstrate that she and her proffered comparators

were ‘similarly situated in all material respects.’” Lewis v.

City of Union City, 918 F.3d 1213, 1218 (11th Cir. 2019).

In the lending context, the Eleventh Circuit, in Boykin v.

Bank of America Corp., 162 F. App’x 837, 839 (11th Cir. 2005),

provides further guidance on which factors are relevant in

determining whether plaintiffs and their proposed comparators

are “identical or directly comparable in all material respects”

in the context of Fair Housing Act (“FHA”) lending

discrimination cases. While the present case was brought under

Section 1981, the 11th Circuit analyzes FHA cases under the

McDonnell Douglas framework, id., and thus is useful to this

court in determining whether Plaintiff is “similarly situated”

with Plaintiff’s proposed comparators under the Section 1981

McDonnell Douglas framework. The Eleventh Circuit held that “a

comparator’s credit qualifications and loan details must be

nearly identical to the Plaintiff’s in order to prevent this

court from second guessing the [lender’s] decision and confusing

apples with oranges.” Boykin, 162 F. App’x at 839 (quotation

marks omitted) (quoting Cooley v. Sterling Bank, 280 F. Supp. 2d

1331, 1340 (M.D. Ala. 2003)).

Plaintiff offers several companies for comparison, most

prominently Kotis and Beacon, that received loans from the City

where the City took a third position lien on the collateral.

However, even Plaintiff concedes that, if the court applied the

traditional Williams prima facie framework to loans, “the

proffered comparators [would] not match in all relevant

respects.” (Pl.’s Br. (Doc. 76) at 7.)

The court agrees that Plaintiff would not be similarly

situated with these companies in all material respects.

Plaintiff fails to provide sufficient evidence that Plaintiff

has comparable “credit qualifications” to the proposed

comparators, or that Plaintiff is directly comparable in all

material respects with regards to the “loan details” themselves.

First, considering the “credit qualifications” of Plaintiff

and the suggested comparators, Plaintiff fails to submit any

evidence of the relevant financial status of the proposed

comparators. Again, Plaintiff provides only Mr. Woods’ affidavit

as evidence, which is insufficient to demonstrate that Plaintiff

is similarly situated with the proposed comparators. Mr. Woods’

contention that Kotis owed back-taxes from several of the Kotis

Holding entities, (Woods Aff. (Doc. 77) ¶ 19), supported by the

documents from the Guilford County Tax Department, (Woods Aff.

Ex. B (Doc. 77-2)), does not create a material issue of fact

because Mr. Woods provides no objective comparative evidence of

Plaintiff’s tax documents or financial situation. Indeed,

Plaintiff produces no evidence of the equity available in the

Kotis properties, as compared to the Woods. With respect to the

other companies, Plaintiff again provides no evidence whatsoever

that these companies and Plaintiff were comparable candidates

for credit. In support of Plaintiff’s own credit-worthiness,

Plaintiff only relies upon Mr. Woods’ affidavit, in which he

self-servingly states that Plaintiff’s credit was “excellent,”

and that Plaintiff “easily could have obtained the loan from

commercial banks.” (Woods Aff. (Doc. 77) ¶ 8.) Mr. Woods’

conclusory statement that his credit was “excellent” may be

genuine as to his opinion of his credit, but it is irrelevant

here because the critical issue is the opinion of the lender.

Mr. Woods offers no objective evidence of equity in his property

of a third lien, why “excellent credit” suggests the City or any

lender would issue a loan in exchange for a third position to

any borrower, nor does it offer any basis to allow a fact-finder

to make any kind of comparison, and, resultingly, infer

discriminatory intent.

As the court has already stated, without corroborating

objective evidence, neither hearsay, U.S. Dep’t of Hous. & Urban

Dev., 64 F.3d at 926, nor self-serving statements in an

affidavit, Evans, 80 F.3d at 962, will defeat a motion for

summary judgment. Given that Plaintiff fails to provide

sufficient “corroborating objective evidence” to support the

assertions and conclusions in Mr. Woods’ affidavit, Plaintiff

would not satisfy the third prong.

Second, a comparison of Plaintiff’s “loan details” with

those of the proposed comparators reveals few similarities. The

loans to potential comparators were affordable housing

development loans (Beacon, Wind Hill, Habitat for Humanity, and

Affordable Housing Management, Inc.) and commercial real estate

development loans (Kotis and Oakley), both of which are types of

loans typically made by the City. (Scott Aff. (Doc. 72-2) ¶¶ 40–

41, 43–47.) In contrast, the City advised Plaintiff at least

twice that their loan was unique. (Scott Aff. (Doc. 72-2) ¶¶ 20,

35.)

Further, in the case of Kotis, the commercial real estate

development loan at issue was accounted for in the City’s

budget. (Id. ¶¶ 40.1, 40.3.) In comparison, Plaintiff sought a

unique loan for which money was not allocated in the City’s

budget. (Scott Aff. (Doc. 72-2) ¶ 20.) With regards to Oakley,

the commercial real estate development loan was made under an

established government program, as opposed to Plaintiff’s, which

was not. (Scott Aff. (Doc. 72-2) ¶ 41.)

The affordable housing loans on which the City took a third

position lien are also distinct from Plaintiff’s situation. The

subordination of the City’s lien to third position in these

loans was made pursuant to NCHFA Qualified Allocation Plan, an

established agency plan, which required the City to take a third

position lien. (Scott Aff. (Doc. 72-2) ¶¶ 43–47.) With

Plaintiff’s loan, by contrast, the City’s third position was not

due to any other government program. Plaintiff’s loan details

are therefore not similar to those of the affordable housing

development loans.

Because Plaintiff fails to produce direct evidence of

racial discrimination and fails to produce similarly situated

comparators under the Williams/McDonnell Douglas burden shifting

framework sufficient to support an inference or finding of

discrimination, Plaintiff fails to demonstrate a material issue

of fact for a Section 1981 racial discrimination claim under

Williams, in response to the City’s motion for summary judgment.

For the same reasons stated above, under the Seventh

Circuit test, Plaintiff fails to “show in a conventional way,

without relying on any special doctrines of burden-shifting,

that there is enough evidence, direct or circumstantial, of

discrimination to create a triable issue.” Latimore, 151 F.3d at

715.

“Generally, an affidavit filed in opposition to a motion

for summary judgment must present evidence in substantially the

same form as if the affiant were testifying in court.” Evans, 80

F.3d at 962. Affidavits submitted on summary judgment must “be

made on personal knowledge [and] set out facts that would be

admissible in evidence.” Fed. R. Civ. P. 56(c)(4). Conclusory

statements alone will not defeat a motion for summary judgment.

Evans, 80 F.3d at 962. Mr. Woods’ affidavit fails to provide any

material evidence that is not hearsay or conclusory statements.

Because Plaintiff fails to raise a genuine dispute as to

any material fact, summary judgment is therefore appropriate.

V. CONCLUSION

For the foregoing reasons, this court finds that

Defendant’s motion for summary judgment should be granted.

IT IS THEREFORE ORDERED that Defendant’s Motion for Summary

Judgment, (Doc. 71), is GRANTED.

IT IS FURTHER ORDERED that Defendant’s Motion to Exclude

Expert Testimony of Howard Rockness, (Doc. 69), is DENIED AS

MOOT.

A judgment in accordance with this Memorandum Opinion and

Order will be entered contemporaneously herewith.

This the 18th day of September, 2019.

bh) Wi a L. Wehr.

United States District Ju

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