Byron F David

UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

In re:

BYRON DAVID Case No. 18-12396-KHK

Debtor Chapter 11

MEMORANDUM OPINION

This matter came before the Court on the Debtor, Byron David’s, Omnibus Objections to

Claims 3-3, 4-3, 5-3, 6-3 and 7-3 (Docket Nos. 65-69) filed by Summit Community Bank

(“Summit”).1 Summit filed Responses to the Debtor’s Objections at Docket Nos. 85, 86, 88, 89

and 90. The Court conducted an evidentiary hearing on the Objections on October 9, 2019. At the

conclusion of the hearing, the Court took the matters under advisement.

I. Background

Lisa and Byron David were married in 1991. Until 2012, Mr. David was part owner of

Blue Ridge Technical Services, Inc. (“Blue Ridge”) along with his partner Kenneth Woolfrey.

Lisa David was an accountant by trade and served as the bookkeeper for her husband’s company.

She was also part owner of David-Cantrall and Associates, Inc. (“David-Cantrall”) a real estate

investment company, along with her partners, Wesley and John Cantrall and Michael Firetti.

From 2005 to 2012, Summit loaned over three million dollars to David-Cantrall and

companies owned and controlled by its partners as evidenced by Summit’s proofs of claims and

supporting documents. The promissory notes for the loans bore the signatures of the partners and

1 Claim 3-3 is for $1,217, 519.62 owed on loan # 359186. Claim 4-3 is for $288,582.76 owed on loan # 358003.

Claim 5-3 is for $574,014.66 owed on loan # 358367. Claim 6-3 is for $295,580.81 owed on loan # 360540. Claim

7-3 is for $210,227.75 owed on loan # 362232. The total amount owed is $2,585,925.60 making Summit Bank the

largest creditor in this case. All the claims are unsecured.

were secured by deeds of trusts on properties owned by the partners and their spouses and by their

personal guarantees.

When the companies defaulted on the loans, Summit foreclosed on the properties under the

deeds of trust, including the Davids’ personal residence. After disposition of those assets, Summit

sued Byron David for the deficiencies due on the notes.

This proceeding was commenced by Mr. David’s voluntary Chapter 7 petition filed on July

10, 2018. On April 10, 2019, the Court granted the Debtor’s Motion to Convert his Chapter 7 case

to a Chapter 11 case. Summit’s five claims for the deficiencies are based on the personal guarantees

attached to its proofs of claims. The Debtor denies signing the guarantees and asks this Court to

disallow all of Summit’s claims in their entirety. For the reasons stated below, this Court overrules

the Debtor’s Objection to Claim 4-3 and sustains his Objections to Claims 3-3, 5-3, 6-3 and 7-3.

II. Findings of Fact

Lisa David handled her family’s household finances from 1991 to 2012. Transcript (“Tr.”)

136:12-14. On August 29, 2012, Mr. David discovered irregularities within their household

finances after receiving a phone call from USAA saying that a joint credit card had been overrun.

Tr. 135:10-11. Later that afternoon, after Mr. David confronted his wife about this and other

discrepancies, Lisa David committed suicide by shooting herself in the abdomen in her front yard.

She died the same day as a result of her self-inflicted wounds. Tr. 138:16; Exhibit (“Ex.”) B-Death

Certificate of Lisa David.

Following Lisa’s death, additional discrepancies in the Davids’ personal and business

financial affairs were uncovered. On August 30, 2012, Blue Ridge discovered it was unable to

make payroll and that its checking account was empty. Tr. 139: 6-12. When the partners tried to

establish an equity line of credit in order to make payroll, they discovered that the business had

already overrun a line of credit for $250,000 the partners did not know existed, and that the line of

credit was secured by personal guarantees bearing the signatures of Mr. and Mrs. David and Mr.

and Mrs. Woolfrey that Mr. David and the Woolfreys did not sign. Tr. 139:5-140:12.

Thereafter, Blue Ridge hired Cindy Vu, a forensic accountant, to investigate Blue Ridge’s

finances. Ms. Vu determined that Lisa David had embezzled more than three million dollars to pay

Summit and other creditors. Tr. 141:16-142:6. See also Debtor’s Motion for Summary Judgment

(Docket No. 78), Fraud Examination Report (Ex. J), at 2. Ms. Vu concluded that Lisa David

misappropriated $2,812,202.81 in company funds by, among other things, failing to file business

tax returns, failing to pay employee 401(k) accounts, skimming from accounts receivables and

forging the signatures of Byron David, Kenneth Woolfrey and Debra Woolfrey to incur a bank

loan on behalf of Blue Ridge from the Bank of Clarke County in the amount of $500,000. Id. at 8.

Also in the days following Lisa’s death, Ellen LoCascio, a retired Central Intelligence

Agency engineer and friend of 23 years to the David family, discovered hundreds of other

suspicious documents in Lisa David’s home office. Some documents had been shredded and

others had been altered by cutting and pasting or taping, including receipts and various loan

documents. Included were altered documents related to Blue Ridge and altered Internal Revenue

Service documents. Tr. 52-53; Ex. F – Original Documents found in Lisa David’s home office.

Mr. David was not aware of the personal guarantees bearing his signature held by the bank

until after Lisa died in 2012 when Summit’s bank officers came to his home to discuss his financial

obligations and the upcoming foreclosure of his residence. Tr. 143-145.

Prior to 2012, as a matter of policy, Summit scanned all loan documents. It stored the

original promissory notes and deeds of trust and destroyed all other original documents related to

the loans, including personal guarantees, after the scans were created in accordance with its then

current document retention policy. Tr. 34:7. Sometime after Summit sued Mr. David to collect

on the personal guarantees, the bank changed its policy and now stores all original guarantees on

its loans along with the original notes and deeds of trust. Tr. 33-34.

Mr. David denies having signed any of the guarantees supporting Claims 3-3 through 7-3.

However, when he was sued by Summit in Loudoun Court Circuit Court before he filed for

bankruptcy, he initially admitted he signed the guarantee supporting Claim 4-3 identified in this

proceeding as Exhibit 4. See Ex. 169 - Response to Plaintiff Summit’s Request for Admissions at

1. The Admissions were endorsed and submitted by Mr. David’s counsel on October 18, 2013.

Id. at 17. Then, on November 1, 2013, in response to Summit’s Interrogatories in the state court

proceeding, Mr. David again admitted he signed one loan guarantee; however, he claimed the

guarantee was unenforceable because it violated statutes regarding the extension of credit to a

spouse, and because it was replaced by a guarantee signed by someone else. Ex. 170 - Defendant

Byron David’s Answers to Plaintiff’s First Interrogatories at 3. Blue Ridge also filed a separate

civil action against Summit. In his Response to the Defendant’s Interrogatories in that case, Mr.

David denied signing the guarantees and stated that Lisa David forged his signature on the

documents without his knowledge or authority. This Response was signed by Mr. David and

acknowledged on October 24, 2013. Ex. 173- Plaintiff’s Response to Defendant’s First

Interrogatories at 2-4.

Mr. David and Summit both hired certified forensic document examiners as experts to

determine who put pen to paper on the guarantees. Mr. David hired John W. Hargett, III. See Ex.

161 – Expert Report from John Hargett. Summit hired Robert N. Morris. See Ex. 158 – Expert

Report of Ronald Morris. The examiners attested they did not examine any of the

acknowledgements that followed the last page of the guarantees and therefore they gave no weight

in their expert reports to the notary signatures or seals. Tr. 95-96; 99-101 and 199.2

Mr. Hargett examined 5 original Allonges and 32 other photocopied documents bearing

Mr. David’s signature. Of the 37 documents examined, Mr. Hargett concluded the following to a

reasonable degree of certainty:

1. The Allonges, bearing pen and ink signatures, were not signed by Mr. David. Tr.

75:12-76:3. The Allonges are identified as Exhibits 20, 53, 85, 113 and 142.

2. Five of the remaining 32 signatures on the photocopies of documents appeared to be

the signatures of Mr. David and are identified as Exhibits 4, 7, 34, 37, and 70. Tr. 76:8-

1.

3. Even though five of the remaining signatures on the photocopied documents appeared

to be Mr. David’s, it was impossible to tell who actually put pen to paper on the original

documents from which the photocopies were made because the originals had been

destroyed by Summit and were not available for comparison. Ex. 161 at 1. See also Tr.

76-78; Tr. 85:8-15; Ex. 160 at 7.

4. The remaining 27 signatures that were examined did not appear to be penned by Mr.

David. Tr. 76:11-14.

5. To a reasonable degree of probability, the features of the forged signatures of Byron

David agree with Lisa David’s signature in that they all loop to the left; the terminal

stroke of the last loop tends to go down below the line of writing; and the beginning

and ending strokes are tapered suggesting fast writing. Ex.161 at 3.

Mr. Morris examined the 5 original Allonges and 36 other questionable signatures of Mr.

David and made the following conclusions:

1. The Allonges, bearing pen and ink signatures, were not signed by Mr. David. Tr. 225:1-

20.

2. In all probability, Mr. David wrote the signatures appearing on five of the photocopied

documents identified as Exhibits 4, 7, 34, 37, and 70. These documents are identified

in Mr. Morris’ Expert Report as Q25 through Q30 respectively.3

3. Mr. Morris could not conclude that Byron David signed the original documents

represented by Exhibits 4, 7, 34, 37 and 70 because all of the handwriting

characteristics, qualities and features that would have been found on the original

documents were not recorded on the photocopies.

2 Acknowledgments are always separate attachments that follow the last page of the guarantee instruments. Tr. 236,

245-246, 249, 256-258.

3 Mr. Morris noted that the signatures identified as Q29 and Q30 are identical.

4. He could not determine whether Mr. David wrote any of the remaining questioned

signatures in his name.

5. He could not determine whether Lisa David signed Byron David’s name on originals

of the remaining photocopied documents examined because he did not have the proper

samples to make comparisons. Ex. 158 at 6.

The signatures on the Allonges and guarantees were notarized. Victoria (DeMeza) Melby,

one of the notaries, testified that Exhibits 20, 53, 85, 113 & 142 looked like original documents

with her signature and seal. Tr. 105-113. She testified she usually had everyone before her and

checked their identification cards before they signed the documents she notarized. Tr. 105. She

did not recall Mr. David putting pen to paper in front of her to endorse the aforementioned

documents. Tr. 114-115.

Kerry Self, owner of Leesburg Title and Escrow and a notary, testified she sometimes

notarized 50 to 100 documents per day. Tr. 120. She identified her signature and seal on Exhibits

7 and 37. Tr. 124:1-21; 125:16-20. She did not recall notarizing any of the documents for Mr.

David. Tr. 122-123. She testified she never notarized a document without having the person in

front of her. Tr. 123: 4-7. However, although she routinely made photocopies of identification

cards of the individuals who signed before her, she admitted she did not do so for documents

involving David-Cantrell because of her long-standing business relationship with Lisa David. Tr.

129-130.

In his testimony, Mr. David denied signing any of the guarantees before notaries. He

specifically denied appearing before Kerry Self except to sign other documents at a closing on real

estate that he and Lisa David purchased with a loan from Middleburg Bank. Tr. 145-146. He

specifically denied ever appearing before Victoria Melby except to sign guardianship documents

for his children after Lisa’s death. Tr. 147-148.

Mr. David also denied ever appearing before Jeanne Estes, a friend of Lisa’s whose notary

seal and signature appear on Exhibit 70. Tr. 155.

III. Conclusions of Law

A claim for which a proof of claim has been filed is allowed unless an objection is filed. If

an objection is filed, the Court is required to determine the amount and validity of the claim as of

the date of the filing of the petition. A properly filed claim is prima facie evidence of the amount

and validity of the claim. Therefore, the objecting party has the initial burden of presenting

sufficient evidence to overcome the prima facie effect of the filed proof of claim. Once the

objecting party has done so, the burden of proof shifts to the creditor to establish the amount and

validity of its claim. See Official Comm. of Unsecured Creditors v. Fairchild Dornier GmbH (In

re Dornier Aviation (N. Am.) Inc.), Adversary No. 02–8199–SSM, 2005 WL 4781236, at *11

(Bankr. E.D.Va. Feb.8, 2005) (citing 11 U.S.C. § 502(a)-(b); Fed. R. Bankr.P. 3001(f); C–4 Media

Cable S., L.P. v. Reds T.V. & Cable, Inc. (In re C–4 Media Cable S., L.P.), 150 B.R. 374, 377

(Bankr.E.D.Va.1992)); Fed. R. Bankr. P. 9017; Fed. R. Evid. 301; 4 Collier at P 501.02[3][d]).

Mr. David contends that Summit’s claims are not valid and must be disallowed because

the guarantees supporting them are forgeries and because of the doctrine of spoliation. He also

contends that Summit’s claims should be barred under the equitable doctrine of unconscionability

and because Summit violated the Equal Credit Opportunity Act by requiring him to sign the

guarantees. The Court will examine each theory in turn.

A. Forgery

But for admitting he signed Exhibit 4 in this proceeding, Mr. David steadfastly denied

being involved in Lisa David’s business before her death. His testimony was consistent and

credible on this point and this Court is persuaded that Summit failed to produce sufficient evidence

to refute his testimony.

Ms. LoCascio gave compelling testimony supporting Mr. David’s assertion that Lisa David

was capable of and had in fact fabricated financial statements. She identified Exhibit F as a small

fraction of the documents she found in Lisa’s home office after she died. Tr. 52: 7-9; 56:15-17.

Moreover, Cindy Vu’s Fraud Examination Report confirms that Lisa David had forged several

documents in order to secure loans for Blue Ridge in the past.

Although Summit produced evidence through witness testimony that Mr. David signed

four of the guarantees before notaries, neither notary who gave evidence could attest that she

remembered Mr. David signing the original guarantees. Ms. Melby gave tentative responses. For

example, when asked to describe her procedure for notarizing documents, she responded,

“[U]sually (emphasis added) everybody that’s signing is there, and I take I.D., and then we notarize

it.” Tr.105:19-20. Even under direct examination, when handed the original Allonges represented

by Exhibits 20 and 53, she did not recognize the first pages of either document. Tr. 106-107; 110.

When asked to identify her signature on the original acknowledgment of Exhibit 20 she replied,

“It looks like my signature, and it’s my notary number, but …” and “It looks like it…” and “I

mean, it looks (emphasis added) like an original.” Tr. 106:13; 107:21. She seemed reluctant to

commit to her answers leaving the Court to question her credibility.

Ms. Melby was also the notary who acknowledged Mr. David’s signature on the Allonges.

As previously stated, both experts concluded that the pen and ink signatures appended to the

Allonges were not genuine signatures of Byron David. Tr. 75:17-25; 225:1-20. In light of their

opinions, this Court gives no weight to Ms. Melby’s acknowledgments and declines to conclude

that any of the signatures on the photocopied documents she acknowledged are genuine.

Ms. Self was more self-assured when she testified; however, she freely admitted that she

routinely bent her own rules when notarizing documents for Lisa David because of their long-

standing relationship. Tr. 130: 16-22. Furthermore, two of the acknowledgements indicate

differences in Ms. Self’s notary seals. The printed name on her seal on Exhibit 7 appears to be

straight and the middle initial of her name is followed by a period. However, on Exhibit 37, the

middle initial of the printed name on her seal is not followed by a period and the middle initial

itself is not aligned with her first and last names. These exhibits clearly support Mr. David’s

assertion that the documents are fabrications.

The opinions of the handwriting experts for the parties were very similar. As previously

stated, they agreed that Mr. David did not put pen to paper on any of the Allonges produced by

Summit. Next, they agreed that only five of the signatures on the various guarantees to the notes

and extensions of the notes were probably penned by Mr. David. However, both experts

acknowledged that it was not possible to establish whether the five photocopied guarantees

appearing to have his signature were genuine or the products of fabrication because these

documents could not be compared to the original instruments with penned signatures that were

destroyed by Summit. Indeed, Summit’s own expert has opined that computer software such as

Photoshop can be used to digitally apply the signature of an unsuspecting victim from some other

document onto an entirely different document, and that the technology to do so was available when

the documents relevant to this case were signed.4

Mr. David’s specific denials of signing the guarantees attached to Claims 3-3, 5-3, 6-3 and

7-3 and other evidence before the Court tends to show that some of the documents that serve as

the bases for these claims are fabrications that may be forgeries created by Lisa David. For

4 See Ex. C – Article by Ronald N. Morris entitled “Is it Fabricated” wherein he states, “courts must take the

position of "[n]o original, no case!" (internal quotation marks omitted). See also Ex. D - Excerpt from THE

FORENSIC LABORATORY HANDBOOK: PROCEDURES AND PRACTICE (acknowledging the field of

forensic document examination has universally recognized that the availability of original documents is critical and

necessary to a meaningful document analysis); and Ex. E – Excerpt from FORENSIC SCIENCE: AN

INTRODUCTION TO SCIENTIFIC AND INVESTIGATIVE TECHNIQUES (addressing issues that arise when

analyzing photocopied documents).

.

example, Claim 6-3 is based on a promissory note dated January 5, 2006 that states the borrowers

agree to pay interest for only one month - from January 6, 2006 to February 6, 2006 - even though

the term of the note appears to be one year. Moreover, the date on the acknowledgment of the

guarantee for the note is January of 2005, one full year before the borrowers signed the note. For

these reasons, the Court finds Mr. David has met his burden of rebutting the presumptive validity

of Claims 3-3, 5-3, 6-3 and 7-3, and that Summit must bear the ultimate burden of proving that

Mr. David signed the instruments it seeks to enforce by a preponderance of the evidence. Id.

B. Spoliation

Spoliation refers to “the destruction or material alteration of evidence or to the failure to

preserve property for another's use as evidence in pending or reasonably foreseeable litigation.”

Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001) (citing West v. Goodyear Tire

& Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999).

A party has a duty to preserve evidence that may be relevant to anticipated litigation. In

determining whether and at what point the duty arose, the Court must consider the totality of the

circumstances, including the extent to which the party was on notice that specific and identifiable

litigation was likely and that the evidence would be relevant. VA Code Ann. §8.01-379.2:1.

Mr. David contends that Summit’s claims should be disallowed because the lender is

responsible for destroying the original documents which, according to the experts, are necessary

to prove Mr. David did not put pen to paper on the originals. However, Summit had no duty to

preserve the guarantees in perpetuity. While it is undisputed that Summit seeks to enforce original

documents it destroyed, the duty to preserve arises when a party “reasonably should know that the

evidence may be relevant to anticipated litigation.” Silvestri, 271 F.3d at 591 (citing Kronisch v.

United States, 150 F.3d 112, 126 (2d Cir. 1998)). In the instant case, Summit destroyed the

documents long before thoughts of litigation against Byron David arose. Its long-standing blanket

policy of destroying guarantees was not in effect for the sole purpose of spoliating evidence for

litigation. See Summit v. David-Cantrall and Associates, et. al., Case No. CL80949-00 (Cir. Ct.

Loudoun Oct. 19, 2015), Depo. Tr. of Patrick Frye, Corporate Designee of Summit Community

Bank at 23:19-23, 24:1-5, 26:4-16 and 27:8-15. That Summit reversed its document retention

policy to that of retaining original guarantees is not relevant here as no evidence was presented to

show Summit was aware of the pending litigation with Mr. David when the guarantees were

destroyed. Summit testified “less than half of 1% of all loans proceed to litigation.” See Tr. 34:7;

182:23.

Moreover, “spoliation is not a substantive claim or defense but a ‘rule of evidence,’ and

thus is ‘administered at the discretion of the trial court.”’ Id. at 450 (quoting Vodusek v. Bayliner

Marine Corp., 71 F.3d 148, 155 (4th Cir.1995)). However, the Court's inherent authority may only

be exercised to sanction “bad-faith conduct,” and “must be exercised with restraint and discretion,”

Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S. Ct. 2123, 115 L. Ed. 2d 27 (1991).

Although the evidence at issue is central to the claims and defenses, Mr. David failed to

meet his burden as to the first and second elements of spoliation. The Court finds that Summit’s

duty to preserve the guarantees did not arise at the time of the signing of the guarantees or their

destruction as the bank was not on notice that specific and identifiable litigation was likely even

though the evidence would be relevant. Therefore, the Court cannot disallow the claims based on

spoliation of the original guarantees.

C. Unconscionability

The Debtor argues that the “guarantee” instruments Summit seeks to enforce are really

“suretyships.” Under Virginia law, the primary distinction between a guarantee and a suretyship

is that, in a guarantee, “the guarantor contracts to pay, if by the use of due diligence, the debt

cannot be made out of the principal debtor.” Piedmont G. & M. Co. v. Morris, 86 Va. 941, 944-45

(1890). In contrast, a “surety undertakes directly for the payment, and so is responsible at once if

the principal debtor makes default.” Id. Virginia case law provides if the instrument creates a

suretyship, then the guarantor might have additional defenses against the lender’s collection

actions.5 However, the Loudoun County Circuit Court found that the law of suretyship did not

apply in this case. See Obj. to Debtor’s Motion for Summary Judgment (Docket No. 87), Ex. E.

This Court agrees with the Circuit Court, especially since Mr. David would not benefit under the

facts of this case by arguing that the guarantee he signed created a suretyship. A guarantee requires

the lender to proceed against the borrower and then against the guarantor, and that is what Summit

did in this case. See Phoenix Insurance Co. v. Lester Brothers, Inc., 203 Va. 02, 807 (1962). When

Summit was unable to seek recourse against Lisa David, it first pursued the corporate borrowers

of the loans. Only after foreclosing on the properties of the corporate owners did Summit seek

redress against Mr. David personally.

In the alternative, Mr. David pleads that the guarantees are facially unconscionable and

unenforceable because they are of an indefinite duration and do not provide a means for the signer

to terminate or revoke them. A party claiming that a contract is unenforceable because it is

unconscionable bears the burden of proving unconscionability by clear and convincing evidence.

Rogers v. Yourshaw, 18 Va. App. 816, 822 (1994). Absent evidence of gross disparity in value

exchanged there exists no basis to claim unconscionability. Drewry v. Drewry, 8 Va. App. 460

(1989). Further, to determine the contract unconscionable, the Court must find that there is

inequality so gross as to shock the conscience. Id.

Mr. David fails to meet his burden of proving that there was gross inequality in the value

exchanged. While certain signatures are inauthentic, no evidence before this Court proves these

5 See Board of Supervisors of Fairfax County v. Southern Cross Coal Corp., 238 Va. 91, 94, 380 S.E.2d 636 (1989)

(An accommodation surety is entitled to the “strictissimi juris” rule which states that the surety is discharged by any

change in the obligation underlying a bond no matter how slight.)

standard guarantee documents shock the conscience. Upon close examination of the disputed

guarantees and their corresponding loans, the value exchanged regarding Claims 3-3 through 7-3

and the terms at issue do not express a gross inequality. For instance, loan number 362232 (Ex.

126) issued April 28, 2006 at a 0.5% interest rate for a loan amount of $199,750 fails to shock the

conscience. Because Mr. David has failed to prove any of the loans shock the conscience, he cannot

prevail on the theory of unconscionability.

D. Equal Credit Opportunity Act (ECOA)

“The purpose of the ECOA is to eradicate credit discrimination waged against women,

especially married women whom creditors traditionally refuse to consider for individual credit.”

Anderson v. United Finance Co., 666 F.2d 1274, 1277 (9th Cir. 1982). “It is generally held that

the burden is on the spouse asserting a defense under the ECOA to prove that the applicant was

otherwise creditworthy.” Roper Bros. Lumber Co. v. Westover Homes, Inc., 44 Va. Cir. 448, 450

(Cir. Ct. of Spotsylvania County 1998) (emphasis added). The ECOA makes it unlawful for any

“creditor to discriminate against any applicant, with respect to any aspect of a credit transaction

on the basis of . . . marital status.” 15 U.S.C.S. §1691(a)(1) (2006). Regulation B of the ECOA

further states, “… a creditor shall not require the signature of an applicant spouse or other person,

other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor’s

standards of creditworthiness for the amount and terms of the credit requested.” 12 C.F.R.

202.7(d)(1) (2013). To state a claim under 12 C.F. R § 202.7(d)(1), the Debtor must show (1)

Summit determined that Lisa David was creditworthy in her own right; and (2) Summit

nonetheless required Byron David to sign a “credit instrument.” Id. § 202.7(d) (1). See also In re

Woodford, 600 B.R. 520, 523 (2019).

The Debtor alleges that Summit violated ECOA regulations by requiring Lisa David, the

applicant, to provide it with the guarantees of Mr. David because it did not conduct an independent

creditworthiness analysis of Lisa David. Instead, it required his guarantees solely because he was

the spouse of a female principal borrower.

However, Summit reasonably concluded that Mr. David’s guarantee was required. Mr.

David presented no evidence to show Summit ever assessed the individual creditworthiness of

Mrs. David and found her worthy. Summit admitted it assessed the creditworthiness of the

borrowing businesses and their owners. Tr. 43-45. However, Mr. David was not a de facto joint

applicant merely because he was Lisa David’s spouse as other factors were also considered in the

companies’ credit applications. Summit considered the extent of the co-mingled assets, evaluation

of the collateral, the “cash flow . . . [of the] operating company”, and the underlying ownership

before making the loans. The Bank required the signature of Mr. David because his wife, who held

most of her assets jointly with her husband, chose to submit a joint financial statement with her

spouse for review by Summit in its assessment of the creditworthiness of the operating companies.

Tr. 39:22-25; 40:1-19; 43:3-25; 44:1-9. In other words, Lisa David made the decision to make Mr.

David a co-applicant by submitting a joint financial statement instead of a statement in her name

alone. Therefore, Summit’s actions were “sound commercial practice unrelated to any

stereotypical view of a wife’s role.” Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co., LLC, 476 F.3d

436, 442 (7th Cir. 2007). For this reason, Mr. David’s challenge to Summit’s claims based on

ECOA violations fails.

IV. Conclusion

In consideration of the evidence and arguments presented, the Court finds that Claim 4-3

is a valid claim against Mr. David’s estate. Although it carries no acknowledgement, Mr. David

admitted or confirmed on at least three occasions that he executed Exhibit 4, which is his guarantee

for loan number 358003 supporting Claim 4-3. He therefore cannot claim that this guarantee is a

forgery.

The Court reaches a different result, however, with respect to Claims 3-3, 5-3, 6-3 and 7-

3. Once the burden of proof of validity shifted to the bank, Summit failed to produce evidence

sufficient to prove the photocopied guarantees supporting these claims were genuine copies of

original documents signed by Byron David. This Court is not persuaded it should rely on a

determination that “in all probability” Mr. David penned any of the four signatures that appear on

the photocopied guarantees supporting these claims. Nor will the Court assume that any of the

photocopied guarantees are genuine copies of original documents signed by Mr. David merely

because each signature appears to be acknowledged by a notary. It cannot do so when the

acknowledgements were not examined by the forensic experts and some show clear signs of

fabrication.

The Court is persuaded that Claims 3-3, 5-3, 6-3 and 7-3 are based on fabricated

photocopied documents, and that Lisa David had a history of committing forgery and fraud and

had the opportunity, means and motivation to forge Byron David’s signature on the guarantees

supporting these claims. The weight of the evidence leads the Court to conclude that the documents

supporting these claims are not genuine. Accordingly, the Court finds that Summit has failed to

show by a preponderance of the evidence that the claims are valid and therefore, Claims 3-3, 5-3,

6-3 and 7-3 will be disallowed in their entirety.

The Court will enter a separate order consistent with these Findings of Fact and

Conclusions of Law.

Date: _J_a_n_ _2_7_ 2_0__2_0_ _/s_/_ K__li_n_e_tt_e_ _H_._ K__in_d_r_e_d____

Klinette H. Kindred

Electronic copies to: United States Bankruptcy Judge

James P. Campbell Entered on Docket: January 27, 2020

Mark B. Callahan

Donald F. King

Jack Frankel