Appendix — Jones v. Pennsylvania Minority Business Development Authority

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IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-1644

NORMAN K. JONES

Apellant

V.

THE PENNSYLVANIA MINORITY BUSINESS

DEVELOPMENT

AUTHORITY; ISABELLE SMITH; EUGENE HESS

Appellees

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

District Judge: The Honorable Jay C. Waldeman

D.C. Civil No. 97-cv-04486

Argued: April 27, 2000

Before: BECKER, Chief Judge, BARRY,

and BRIGHT,* Circuit Judges

JUDGEMENT

This cause came to be heard on the record

from the United States District Court for Eastern District of

Pennsylvania and was argued on April 27, 2000.

After consideration of all contentions raised by the

appellant, it is ADJUDGED and ORDERED that the

judgment of the District Court be and is hereby affirmed.

Costs are taxed against appellant.

Marcia M. Waldron, Acting Clerk

Dated: July 28, 2000

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UNREPORTED/NOT PROCEDURAL

IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-1644

NORMAN K. JONES

Apellant

Vv.

THE PENNSYLVANIA MINORITY BUSINESS

DEVELOPMENT AUTHORITY (PMBDA); ISABELLE

SMITH; EUGENE HESS

Appellees

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

District Judge: The Honorable Jay C. Waldeman

D.C. Civil No. 97-cv-04486

Argued: April 27, 2000

Before: The Honorable Myron H. Bright, United States

Circuit Judge for the Eighth Circuit, Sitting by

Designation

Reginald C. Allen, Esquire (Argued)

Harper & Paul

140 West Maplewood Avenue

Philadelphia, PA 19144

Attorney for Appellant

George A. Michak, Esquire (Argued)

Commonwealth of Pennsylvania

Office of Chief Counsel

524 Forum Building

Harrisburg, PA 17120

Attorney for Appellee

MEMORANDUM OPINION OF THE COURT

BARRY, Circuit Judge:

Appellant Norman K. Jones appeals the District

Court’s grant of summary judgment on his claim of

discrimination under Title II of the Americans with Disability

Act (“ADA”) against the Pennsylvania Minority Business

Development Authority (“PMBDA”), Isabelle Smith and

Eugene Hess. We exercise appellant jurisdiction pursuant to

28 U.S.C. § 1291. After reviewing the extensive record in

this case, we are satisfied that the District

Court correctly granted summary judgment and, accordingly,

we will affirm.

~The parties are eminently familiar with the facts of

the case. As a result, we provide only a brief summary of

those facts at the outset and will incorporate additional facts

as they are relevant to our discussion of the issues.

POPOL OR west p

On April 24, 1995, Jones, as the president and sole

shareholder of Street Sounds Recording and Production, Co.,

Inc. (“Street Sounds”), applied to the PMBDA for a $60,000

business loan. The application was initially reviewed and

processed by Kelbin Carolina, then the PMBDA regional

representative for Philadelphia. Later in the process, the

application was handled by Eugene Hess, a PMBDA

economic development analyst. At all times, Isabelle Smith

was the PMBDA executive director.

In his application, Jones indicated that Street Sounds

“was forced to inactivate in 1992 & 1993 due to a secondary

job related injury . . . [he sustained] at the U.S. Postal

Service.” App. At 5304. In a subsequent letter to Carolina,

Jones explained that he was “permanently disabled” from his

“normal occupation (postal worker) and will continue to

receive monthly disability compensation indefinitely or’ until

he is no longer considered disabled, which he stated was “not

a possibility.” Id. At 5501. Jones claimed that he

suffered from generalized anxiety disorder.

Smith was concerned about the extent of Jones’s

disability and whether it would prevent him from running the

business for which he was seeking the loan. Carolina,

however, told her that Jones’s disability would not present a

problem and it appears that the issue was, for the most part,

dropped.

On July 13, 1995, Jones’s loan application was

presented to the Loan Evaluation Committee, which

recommended to the Board of Directors that the loan be

approved. The Board accepted the recommendation and

approved the loan on July 27, 1995.

A commitment letter was then sent to Jones, listing

the conditions he was required to meet before the loan could

—_

close. See id. At 5532-38. As pertinent to this appeal, the

following conditions were required:

1. Borrower shall establish at or prior to closing

an escrow account at a bank acceptable to PMBDA

for deposit of PMBDA funds. Escrow funds shall

include Borrower’s capital contribution.

y PMBDA will require as security for this Loan:

a. a second mortgage on certain real property located

at 6013 Magnolia Street, Philadelphia, Pennsylvania

19144, subject only to that certain mortgage in the

principal amount of $17,800 . . . .[and] b. a second

mortgage on certain real property located at 450 East

Walnut Lane, Philadelphia, PA 19144, subject only to

that certain mortgage in the principal of $55,000 or

less. Borrower shall make a capital contribution to the

Project at closing in the amount of Twenty Thousand

Dollars ($20,000). The Borrower shall provide proof

of equity injection into the Project in the amount of

$20,000, prior to losing of the PMBDA Loan.

Id. At 5532-37. The commitment letter also stated that the

loan proceeds were to be-used strictly for video production

($20,500), and audio and video promotion ($39,500). See id.

At 5538. Thus, none of the proceeds was designated as

unrestricted working capital.

A closing date was scheduled for April 3, 1996.

Although the parties met on that day, the closing did not

occur. The reasons for the failure appear to be two-fold.

First, as Jones concedes, “{b]y the time of closing [he] had

still been unable to receive back mortgage waivers on both of

the properties he pledged as collateral.” Appellant’s Br. at

13. Second, Jones and Abayomi Osumipedi, PMBDA’s

escrow agent, were unable to open an escrow account at the

designated bank because the bank refused to sign PMBDA’s

anti-discrimination clause.

On April 3rd, Jones also informed PMBDA that he

wanted to change the terms of the loan agreement. He asked

to use $20,000 of the loan proceeds as unrestricted working

capital. In addition, he requested a credit toward satisfaction

of the equity injection for all prior business expenditures

made on behalf of Street Sounds. :

PMBDA partially agreed. It granted Jones

permission to use $10,000 of the loan as unrestricted working

capital. Furthermore, it allowed him to take a credit for prior

business expenditures, but only for those made after July 1,

1995, and provided that the proper receipts were submitted.

Upon learning of the approval of only $10,000 as unrestricted

working capital, Jones informed PMBDA that he needed the

whole loan as working capital because Street Sounds was

currently non-operational. See App. at 344.

PMBDA began to question Jones’s ability to satisfy

the requirements of the commitment letter and, ultimately, to

repay the loan. It informed Jones of its concerns on April 26,

1996:

1. It has come to the attention of the Authority that a

second mortgage as described in item 6a [i.e., the

property located at 6013 Magnolia Street] may be

unattainable. Please explain why this property is

unavailable for use as collateral and what collateral

and what collateral of equal value will be substituted.

2. It is the understanding of the Authority that the

$20,000 required at the time of closing . . . was not

provided either in cash or in receipts for purchases

pertaining to the business dated from July 1, 1995 or

thereafter.

3. You indicated [in a conversation with Mr. Hess]

that the business has not been in operation for

approximately a year. At the July 13, 1995 [LEC]

meeting, the members of the Committee were under

the impression that the business was an ongoing

concer ....

An explanation of your business operations is needed.

Id. At 74.

Jones attempted to satisfy the requirements of the

commitment letter by, among other things, submitting

numerous receipts and canceled checks intended to show

business expenditures on the part of Street Sounds. He also

purchased a new property at 6009 Magnolia Street to be used

as collateral in lien of 6013 Magnolia Street.

PMBDA, however, was not convinced. It remained

concerning for several reasons: (1) the canceled checks

submitted by Jones as business expenditures only added up to

about $11,000; (2) Street Sounds’s tax returns were prepared

on a modified cash basis, making it difficult to determine

changes to accounts such as paid-in-capital; (3) 6009

Magnolia was appraised at $42,000, yet Jones only paid

$15,000 for the property; (4) it was not clear whether the

property at 6009 Magnolia would be used for the business;

and (5) it was not clear whether Jones was still using his

disability payments to keep Street Sounds operating. See id.

At 5144. In addition, PMBDA rejected Jones’s request for a

credit totaling 11,731 for business equipment that he

purportedly sold to Street Sounds. Although Jones contended

that he sold the equipment to Street Sounds on December 18,

1995, it was discovered that Street Sounds owned the

equipment as far back as 1991.

On September 26, 1996, despite Jones’s insistence

that he could satisfy the requirements of the commitment

letter, the PMBDA Board voted to rescind the loan.

Following the rescission, Jones filed the present action in the

United States District Court for the Eastern District of

Pennsylvania, alleging that PMBDA and its officers

rescinded the loan on account of his disability.

Il.

Title II of the ADA provides that “no qualified

individual with a disability shall, by reason of such disability,

be excluded from participation in or be denied the benefits of

the services, programs, or activities of a public entity, or be

subjected to discrimination by any such entity.” 42 U.S.C. §

12132. A “qualified individual with a disability” is defined

as “an individual with a disability who, with or without

reasonable modifications to rules, policies, or practices . . .

meets the essential eligibility requirements for the receipt of

services . . . provided by a public entity.” Id. § 12131(2).

A plaintiff establishes a prima facie case of disability

under the ADA by showing: (1) that he or she has a

disability; (2) that he or she is otherwise qualified; and (3)

that he or she has suffered an adverse decision as a result of

discrimination. See Shaner v. Synthes, 200 F.3d 494, 500

(3d Cir. 2000). It is the plaintiff's burden to establish that he

or she is otherwise qualified to receive the benefits he or she

was denied. See Walton v. Mental Health Ass’n of S.E. PA.

168 F. 3d 661, 670 (3d Cir. 1999). If the plaintiff satisfies

this initial burden, the burden of production shifts to the

defendant to articulate a legitimate, nondiscriminatory reason

for the denial. See id. At 668. Finally, if the defendant

articulates a legitimate, nondiscriminatory reason, the

plaintiff can defeat summary judgment only by “[p]ointing to

some evidence, direct or circumstantial, from which a fact

finder could reasonably either (1) disbelieve the employer’s

articulated legitimate reasons; or (2) believe than an

invidious discriminatory reason was more likely than not a

motivating or determinative cause of the [defendant’s]

action.” Id. (quoting Lawrence v. National Westminister

Bank N.J., 98 F. 3d 61,

66 (3d Cir. 1996).

The District Court found that Jones was an individual

with a disability for purposes of the ADA and appellees do

not vigorously contest this issue. A review of the record

shows that Jones’s evidence of disability is, at best,

questionable. Nonetheless, given our ultimate disposition of

the claim, we will assume, for the limited purpose of this

appeal, that Jones has a disability within the ambit of the

ADA.

The pertinent issue in this case is whether Jones is a

“qualified individual.” The District Court determined that

Jones was not qualified because he failed to meet the

eligibility requirements set forth in the commitment letter.

First, the Court stated that “i]t is uncontroverted that the

scheduled closing fell through because plaintiff had not

obtained the mortgage waivers.” The Court noted that it was

understandable for PMBDA to have rejected the substituted

collateral, i.e., 6009 Magnolia Street, because “[a]ny prudent

lender would be skeptical about a claim that one had sold his

property . . . for $22,000 less than and barely 40% of the

market price.” Second, the Court noted that Jones failed to

satisfy the $20,000 equity injection. The Court pointed out

that Jones attempted to use “a purported transfer of $11,731

worth of equipment from [himself] . . . to Sound Streets for

which plaintiff did not have dated receipts or comparable

evidence of market value.” The Court also rejected Jones’s

argument that he had presented proof of his ability to make a

cash injection. The Court explained that “[w]ith his

statement of September 24, 1996 that a cash injection [was]

still possible, plaintiff provided no supporting ‘evidence or

explanation of when or how such an injection be made.

We agree with the District Court that Jones failed to

meet the requirements set forth in the commitment letter and,

consequently, did not qualify for the PMBDA loan. The

evidence indicates that Jones as not able to obtain mortgage

waivers on the properties he pledged as collateral at the time.

of the scheduling closing and Jones concedes as much.

Although he argues that he attempted to substitute the

original collateral with the property at 6009 Magnolia, as the

District Court pointed out, the value of that property was

highly suspect. In addition, Jones did not present evidence to

support his contention that he could, in fact, meet the

required equity injection. Many of the bank statements Jones

submitted are dated later than the loan rescission and,

therefore, were not relevant to PMBDA’s decision to rescind

the loan. Further more the $11,731 in business expenditures

which Jones submitted as part of the equity injection

requirement was rejected by PMBDA as a “sham”

--transaction - a characterization firmly supported by the

record. Ultimately, it was Jones’s burden to establish that

was qualified to receive the benefit, i.e., that he satisfied the

loan requirements. He failed to do so.

We reject Jones’s contention that the collateral and

equity injection requirements were not “essential” to

receiving the PMBDA loan. Jones submits that PMBDA

“approved loans with hundreds of thousands of dollars in

collateral deficiency and did not even regard [his] collateral

deficiency as substantial.” Carolina explained in hid

deposition testimony, however, that some loans were indeed

approved without collateral, but only where the borrower’s

“total assets exceeded the loan amount.” Jones provided no

evidence which would indicate that this was his situation.

Furthermore, Jones’s reliance on an audit report indicating

that loans were made with collateral deficiencies is

misguided. PMBDA had been threatened with termination

because of its poor default rate and, as the District Court

opined, “it is nonsensical to suggest that PMBDA was

obliged to continue to engage in the kind of conduct which

jeopardized its funding and resulted in the highly critical

audit report.”

Jones argues, nonetheless, that there was direct and

circumstantial evidence of discrimination on the part of

PMBDA and its officers. In support, he points to several

occasions on which Smith questioned whether Jones’s

disability would present a problem.

With two exceptions, however, there inquiries all

occurred before July of 1995 and, hence, prior to PMBDA’s

approval of Jones’s loan application. There is, therefore, no

“link” between these allegedly discriminatory remarks and

the adverse decision, i.e., the loan rescission, which occurred

over a year later. See Bailey v. Amsted Indus., Inc., 172 F.

3d 1041, 1045 (8th Cir. 1999) (“[Plaintiff] failed to establish

a prima facie case of discrimination [under the ADA]

because he failed to show that his discharge occurred under

circumstances that raise an inference of unlawful

discrimination.”); see also Greer v. Emerson Elec. Co., 185

F.3d 917, (8th Cir. 1999)(no prima facie case of

discrimination under the ADA “because the record contains

no evidence from which to reasonably infer that [her]

discharge was on account of an actual or perceived

disability.”’)

Moreover, although PMBDA was obviously aware of

Jones’s disability at the time it rescinded the loan - indeed, he

had told PMBDA of his disability when he applied for the

loan - that awareness, alone, does not establish that the

disability was the basis for the rescission. See Kelly v.

Drexel Univ., 94 F. 3d 102, 108 (3d Cir. 1996) (“[W]e hold

that the mere fact that an employer is aware of an employee’s

impairment is insufficient to demonstrate either that the

employer regarding the employee as disabled or that that

perception caused the adverse employment action.”’).

The two statements made after the loan was approved,

which Jones contends evidence that his disability was the

basis for the rescission, are equally unconvincing. The first

is an e-mail which Ms. Smith sent to Emily White on April

23, 1996:

“Gene [Hess] spoke to Abayomi [Osumipedi] and this

client did not have the $20,000 equity injection as per

the loan documents. This entire situation is suspect.

In the LEC meeting last year this client indicated that

this business was in operation. Karen and I both

questioned the client because he had been receiving

disability from a work related injury. PMBDA will

send a letter to the client to have a meeting to discuss

this matter and possibly with for May. Can we refuse

to disburse a loan when there is adverse information?

Kelbin was the Rep on this deal and there could not

have been proof of the equity injection prior to

coming to the LEC if these types of problems are now

coming to light.” App. at 775. The second is found

in Ms. Smith’s deposition testimony in which she

responded to the question “[dJid you discuss the issue

of disability with Eugene Hess [at the time you

drafted the resolution for rescission of the loan] “by

stating: “I may have, in regards to whether his

disability payments were continuing, if he still had a

source of income, because the source of income was

not on his tax statements.”

App. At 564. These isolated references to Jones’s disability,

however, are consistent with PMBDA’s overall concern with

Jones’s ability to satisfy the loan requirements and repay the

loan. As the District Court explained: “Plaintiff himself

informed defendants of his disability and stated it was the

reason his business had been inactive in the past. Ms. Smith

and any others asked to approve plaintiff’ loan application

had a legitimate interest in determining whether plaintiff's

disability would prevent him from managing and working

full-time in the future at Street Sounds as required by

PMBDA regulations.” The few times that Jones’s disability

was mentioned in connection with his loan application,

therefore, do not support his contention that he suffered an

“adverse . . . decision as a result of discrimination.” Gaul v.

Lucent Techs, Inc., 134 F. 3d 576, 580 (3d Cir. 1998). In

sum, although many questions arose during the entire loan

approval process regarding Jones’s ability to repay the loan

and the risks involved in granting him the loan, there is no

~ evidence that any of them implicated his disability in order

than a wholly nondiscriminatory manner.

Il.

In conclusion, we are persuaded that Jones has failed

to establish a prima facie case of disability-based

discrimination under the ADA. Despite Jones’s contentions

to the contrary, the record indicates that it was his failure to

satisfy the loan requirements, and not his disability, that

ultimately resulted in the rescission of his loan. Thus, we

find that “there exists no genuine issue of material fact that

would permit a reasonable jury to find” that the rescission of

the loan was the “result of discrimination.” International

Union, United Auto, Aerospace & Agric. Implement

Workers of America v. Skinner Engine Co., 188 F. 3d 130,

137 (3d Cir. 1999) quoting Miller v. Indiana Hosp., 843 F. 2d

139, 143 (3d Cir. 1988). Accordingly, we will affirm the

judgment of the District Court.

TO THE CLERK OF THE COURT:

Kindly file the foregoing Memorandum Opinion.

Circuit Judge

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

NORMAN K. JONES : CIVIL

ACTION

Vv.

THE PENNSYLVANIA MINORITY

BUSINESS DEVELOPMENT

AUTHORITY, ISABELLE SMITH and

EUGENE HESS ; NO. 97-

4486

ORDER

AND NOW, this day of

consistent with the accompanying memorandum, IT IS

HEREBY ORDERED that plaintiff's Motion for Summary

Judgment is DENIED; defendants’ Motion for Summary

Judgment is GRANTED; and, accordingly JUDGMENT is

ENTERED in the above action for the defendants

BY THE COURT:

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

NORMAN K. JONES : CIVIL

ACTION

V.

THE PENNSYLVANIA MINORITY

BUSINESS DEVELOPMENT

AUTHORITY, ISABELLE SMITH and :

EUGENE HESS : NO. 97-

4486

MEMORANDUM

I. Background

Plaintiff has asserted claims under Title II of the

Americans with Disabilities Act, 42 U.S.C. §§ 12131-12133,

and the Rehabilitation Act of 1073, 28 U.S.C. § 294(a). He

alleges that defendants denied him a loan because he is

disabled. He seeks “compensatory and punitive damages”

for “physical and emotional injury,” “mental anguish” and

“economic injury.”

Presently before the court are the parties’ cross

motions for summary judgment.

II. Legal Standard

When consideration a motion for summary judgment,

the court must determine whether “the pleadings, depositions,

answers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine issue

of material fact and that the moving party is entitled to

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

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986);

Armold_ Pontiac-GMC, Inc. v. General Motors Corp., 786

F.2d 564, 568 (3d Cir. 1986). Only facts that may affect the

outcome of a case are “material.”” Anderson, 477 U.S. at 248.

All reasonable inference from the record are drawn in favor

of the non-movant. Id. At 256.

Although the movant has the initial burden of

demonstrating the absence of genuine issues of material fact,

the non-movant must then establish the existence of each

element on which he bears the burden of proof. J.F. Feeser

Inc. v. Serv-A-Portion, Inc., 909 F. 2d 1524, 1531 (3d Cir.

1990) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323

(1986)), cert. denied, 499 U.S. 921 (1991). The non-moving

party may not rest on his pleadings but must come forward

with evidence from which a reasonable jury could return a

verdict in his favor. Anderson, 479 U.S. at 248; Williams v.

Borough of West Chester, 891 F. 2d 458, 460 (3d Cir. 1989);

Woods v. Bentsen, 889 F. Supp. 179, 184 (E.D. Pa. 1995).

III. Facts

While the parties clearly differ on the conclusions to

be drawn, the pertinent facts are essentially uncontroverted.

They are as follows.

Plaintiff was a postal worker from 1988 to October

1991. Plaintiff is now the president and sole shareholder of

Street Sounds Recording and Production Co., Inc. (“Street

Sounds”). In 1991, while employed by the U.S. Postal

Service, plaintiff was the subject of an internal sexual

harassment investigation. As a result, he developed a stress-

related condition which was originally diagnosed as an

“adjustment disorder with mixed emotional features.” The

diagnosis was later changed to “generalized anxiety

disorder.” plaintiff's condition involves “difficulty

concentrating, mistrust of all authority figures and feelings of

being on edge,” as well as a “greatly decreased sex drive”

and “sleeping difficulties.” Plaintiff was “not able to work in

any structured work situation” resembling the postal service.

Plaintiff has received workmen’s compensation from the U.S.

Department of Labor since 1993.

Defendant Pennsylvania Minority Business

Development Authority (““PMBDA” is an agency of the

Commonwealth of Pennsylvania created for the purpose of

providing low-interest loans to minority-owned and operated

businesses. At all times relevant tc this action, defendant

Isabelle Smith was the PMBDA executive director and

defendant Eugene Hess was a PMBDA economic

development analyst.

By early 1995, the PMBDA had become the subject

of considerable criticism because of the high delinquency and

default rates of its loans. In January 1995, the Pennsylvania

House of Representatives passed a resolution that no new

funds would be appropriated by the House for the PMBDA

until a comprehensive audit was conducted. See House

Resolution 25 (1995). The resulting audit was completed in

May 1995. The audit report criticized the PMBDA, inter

alia, for lack of controls over loan decumentation resulting in

“potential losses due to loans being approved without merit

or inadequate collateral coverage.”

On April 24, 1995 plaintiff applied to the PMBDA for

a $60,000 business loan for Street Sounds. He presented a

business plan according to which the funds would be used to

record and to market rhythm and blues and rap music.

Although Street Sounds was incorporated in 1991, the

proposal was pitched as a start-up plan because the business

had been relatively inactive due to plaintiff's lack of capital

and disability.

Plaintiff stated in his application that he was on

disability status from the U.S. Postal Service and was

receiving monthly disability checks. In a letter of May 18,

1995, plaintiff noted that he could use these payments as

working capital and to service the loan.

Plaintiffs initial contact as the PMBDA was Kelbin

Carolina, then the PMBDA regional representative for

Philadelphia. In November 1995 Mr. Carolina’s position was

terminated. After Mr. Carolina’s departure, Mr. Hess took

over as plaintiff's contact. Mr. Carolina had formed a

positive opinion of plaintiff and his business proposal. When

Mr. Carolina presented the application to Ms. Smith, she

noted plaintiff's receipt of disability payments and expressed

a concern about “whether (plaintiff) could manage the

business” for which the loan was sought as required by

PMBDA regulations. She also expressed skepticism about

the merits of the business proposal. Mr. Carolina told Ms.

Smith that he believed that plaintiff was competent and able

to manage Street Sounds.

Ms. Smith also objected to plaintiff's plan to run the

business out of his residence and required that some business

address be established. Plaintiff agreed to designate 2318

Rosemarie Avenue, where he had previously been residing,

as Street Sound’s business address.

Plaintiff's application was presented to the Loan

Evaluation Committee on July 13, 1995. The committee

voted to recommend approval of plaintiff's loan to the

PMBDA Board of Directors. The Board met on July 27,

1995 and voted to approve the loan, subject to the fulfillment

by Street Sounds of certain conditions. The PMBDA notified

defendant by commitment letter dated August 18, 1995 of its

approval and of the conditions required of Street Sounds.

In accordance with PMBDA standard procedures,

plaintiff was to provide at closing an “equity injection” equal

to 25% of the total business project costs of $80,000 and to

secure the loan with sound mortgages on his real property at

6013 Magnolia Street and 450 East Walnut Lane. The

commitment letter also restricted the use of the loan funds to

video production and audio and video promotion instead of

unrestricted working capital. The letter notified plaintiff that

the commitment would expire on November 30, 1995. In

December, plaintiff requested and obtained a ninety-day

extension of the loan commitment to February 28, 1996.

A closing was scheduled for April 3, 1996. The

closing did not go through because plaintiff had not obtained

mortgage waivers on the properties at 6013 Magnolia Street

and 450 E. Walnut Lane. Plaintiff also stated that he wished

to change the terms of the loan agreement.

On April 4, 1996 plaintiff requested that Street

Sounds be allowed to use $20,000 of the loan proceeds as

unrestricted working capital and that Street Sound’s prior

expenditures be credited towards satisfaction of the $20,000

equity injection requirement. The PMBDA agreed to amend

the terms of the proposed loan to allow $10,000 of the

proceeds to be used as unrestricted working capital and to

credit Street Sounds for any purchases made after July 1,

1995, the month the application had been approved. On

April 22, 1996, plaintiff renewed his request to allocate

$20,000 of the proceeds for unrestricted working capital.

This response was not approved.

About one month later, plaintiff obtained a mortgage

waiver on the 450 E. Walnut Lane property. By letter of

April 26, 1996, Ms. Smith informed plaintiff that the

PMBDA was concerned that he had still failed to obtain a

mortgage waiver on the property at 6013 Magnolia Street and

that he had not provided the equity injection in cash or

receipts for purchases.

Plaintiff responded by letter of July 16, 1999 that he

wished to substitute a newly acquired property at 6009

Magnolia Street. Plaintiff also submitted canceled checks

showing expenditures by Street Sounds after July 1, 1995 of

almost $11,000 for rent and utilities on the Rosemarie

Avenue Apartment and a copy of corporate minutes stating:

“on December 18, 1995 Street Sounds Recording and

Production Co., Inc. agreed to purchase equipment and

convert loans from stockholders into paid in capital.

Equipment purchased from stockholders on December 18,

1995 totaled $11,731.00.” No receipts were provided for the

equipment.

On August 12, 1996 plaintiff met with Mr. Hess to

discuss the unresolved issues regarding his loan application.

Mr. Hess informed plaintiff that the PMBDA would not

accept the corporate minutes as evidence that he had in fact

provided $11,000 worth of equipment and that the PMBDA

was concerned about the collateral value of the 6009

Magnolia Street property and lack of success of Street

Sounds over the previous five years.

According to the documentation submitted by

plaintiff the property at 6009 Magnolia Street was appraised

at $42,000 only nine days after he purchased it for $15,000

with a $10,000 mortgage. Plaintiff's explanation was that he

purchased the property from‘a friend at substantially below

market value and made $5,000 worth of renovations. The

PMBDA required further proof of the claimed market value

of the property. None was forthcoming.

On August 28, 1996, plaintiff submitted a receipt

made out and signed by himself showing the transfer of

equipment valued at $11,731 to Street Sounds in December

1995. No receipts of the underlying purchases or evidence of

the equipment’s market value were provided. Defendants

rejected this documentation as evidence of capital

contribution for the equity injection requirement.

By letter of September 9, 1996, Ms. Smith notified

plaintiff that the PMBDA intended to rescind the loan

commitment because he had not made the required equity

injection, did not provide sufficient collateral and had not

presented sufficient evidence of likelihood that he could meet

the projected debt service. The PMBDA declined to accept

copies of bank statements from April 1995 showing $27,000

as proof of plaintiff's assets and ability to make a capital

contribution in September 1996. On September 24, 1996,

plaintiff requested the PMBDA to reconsider and stated that

he had provided “near total collateral” and that a capital

contribution was “still possible.” No new evidence of

collateral or of plaintiffs capacity to make the equity

injection was provided. On September 26, 1996, the

PMBDA Board voted to rescind the commitment to lend

$60,000 to Street Sounds and so advised plaintiff by

correspondence of that date.

IV. Discussion

A. The ADA Claim

To establish a violation of Title Il of the ADA a

plaintiff must show that he was a qualified individual with a

disability, that he was denied the benefit of a public program

or service or otherwise discriminated against, and the

discrimination or denial of the benefit was due to his

disability. See 42 U.S.C. § 12132; Weinreich v. Los Angeles

County Metropolitan Transp. Authority, 114 F. 3d 976 (9th

Cir. 1997), cert. denied 118 S. Ct. 423; Adelman v. Dunmire,

1997 WL 164240, at 1 (E.D. Pa. March 28, 1997), aff'd, 149

F. 3d 1163 (3d Cir. 1998). The parties do not dispute that

plaintiff was denied the benefit of the loan program provided

by the PMBDA. Defendants argue that plaintiff was not

disabled, was not qualified and was not in any event denied a

loan for any reason related to his claimed disability.

For the purposes of the ADA, “disability” means:

“(A) a physical or mental impairment that substantially limits

one or more of the major life activities of such individual; (B)

a record of such an impairment; or (C) being regarded as

having such an impairment.” 42 U.S.C. § 12102. Jerry

Cimmet, a psychologist, states in his report that plaintiff has

suffered from “generalized anxiety” since at least November

1993. Defendants challenge that this impairment limits a

major life activity.

Major life activities include “functions such as caring

for oneself, performing manual tasks, walking, seeing,

hearing, speaking, breathing, learning, and working” Taylor

v. Phoenixville School Dist. 174 F. 3d 142, 152 (3 Cir. 1999)

(quoting 29 C.F.R. § 1630.2(I)) Plaintiff contends that his

generalized anxiety disorder causes him to be substantially

impaired in the major life activities of working, interacting

with people, sleeping, concentrating and functioning

sexually.

When considering impairments of activities other

than working, the inquiry is directed at comparing the

plaintiff's ability compared with the “average person in the

general population.” Mondzelewski v. Pathmark Stores, Inc.,

162 F. 3d 778, 783 (2d Cir. 1998). An individual is

substantially limited in working where there is “a significant

restriction in the ability ‘to perform either a class of jobs or a

broad range of jobs in various classes as compared to the

average person having comparable training, skill and

abilities.” Mondzelewski, 162 F. 3d at 783 (quoting 29

C.F.R. § 1630.2(j)(3)(1). Dr. Cimmet’s conclusion that

plaintiff is unable to work in a structured work situation is

sufficient to show that he is restricted from performing most

of the jobs for which he would otherwise be qualified.

Defendants assert that even if plaintiff was disabled at

the time of his application, he was not a qualified individual

with a disability. A “qualified individual with a disability” is

“an individual with a disability who, with, or without

reasonable modifications to rules, policies, or practices, . . .

or the provision of auxiliary aids and services, meets the

essential eligibility requirements for the receipt of services.”

See 42 USC. §12131(2). “Essential _ eligibility

requirements” are those reasonably necessary to accomplish

the purpose of the program. See Pottggen v. Missouri State

High School Activities Ass’n, 40 F. 3d 926, 931 (8th Cir.

1994); Bowers v. National Collegiate Athletic Ass’n, 974 F.

Supp. 459, 466 (D.N.J. 1997).

Defendants argue plaintiff did not meet the eligibility

requirements specified in the commitment letter and that

those requirements were essential to the loan program. It is

uncontroverted that the scheduled closing fell through

because plaintiff had not obtained the mortgage waivers.

Defendants assert that the loan was ultimately rescinded

because plaintiff never showed the ability to satisfy the terms

of the commitment letter.

Plaintiff states that he satisfied the collateral

requirement by substituting the 6009 Magnolia Street

property for the 6013 Magnolia Street property. Defendants

rejected the substitution due to their concern that plaintiff

was substantially overstating this equity in the 6009

Magnolia Street property. Any prudent lender would be

skeptical about a claim that one had sold his property, even 1)

a friend, for $22,000 less than and barely 40% of the market

price. Defendants’ desire for further proof of the claimed

market value was consistent with sound lending policies

essential to the operation of the PMBDA program.

Defendants contend plaintiff also failed to present

proof that he was able to make the required $20,000 equity

injection. Plaintiff states that he presented receipts showing

purchases by Street Sounds of nearly $22,000. Over half of

this amount, however, consisted of a purported transfer of

$11,731 worth of equipment from plaintiff to Street Sounds

for which plaintiff did not have dated receipts or comparable

evidence of market value. Depreciation schedules he

provided indicated the equipment was old and had been

largely depreciated.

Plaintiff asserts that he presented proof of the

capacity to make the $20,000 equity injection in cash. He

refers to the copies of 1995 bank statements. In accordance

with PMBDA policy, this was rejected as too old to prove

plaintiff's current capacity to make the capital contribution.

Mr. Carolina’s uncontroverted deposition testimony is that

the policy of the PMBDA was not to rely on old bank

statements but to require current verification of the ability to

make a cash equity injection. It is uncontroverted that

plaintiff did not submit updated records of bank deposits.

With his statement of September 24, 1996 that a “cash

injection [was] still possible,” plaintiff provided no

supporting evidence or explanation of when or how such an

injection could be made. Plaintiff has presented no evidence

that he demonstrated to defendants an ability to meet the

equity injection requirement.

Defendants assert with force that collateral and equity

injection were essential eligibility requirements. PMBDA

regulations require that any loan recipient “pledge and

maintain real and personal property as collateral, in the form

and amount necessary to reasonably assure payment of the

loan in the event of default or bankruptcy.” See 12 Pa. Code

§ 81.112(a)(3). “At least 25% of the eligible project costs

shall be contributed in cash from sources other than the

authority.” See 12 Pa. Code § 81.112(a)(3). These

requirements clearly are designed to ensure the credit

worthiness of borrowers, to protect public funds, to avoid

defaults and to help ensure the availability of funds for future

qualified applicants.

Plaintiff points to a statement in Mr. Carolina’s

affidavit that some loans were provided without collateral.

He overlooks, however, Mr. Carolina’s explanation that such

loans had been approved only where the borrower’s “total

assets exceeded the loan amount.” There is no evidence that

plaintiff presented proof of assets exceeding the loan amount.

There is also no evidence that any such loan was made after

the General assembly threatened to terminate funding

because of the default rate. Plaintiff also points to the report

of the audit of the PMBDA, which notes that several loan

files contained no documentation of collateral. The report

did not state, however, that the loans had been approved

without sufficient collateral. Moreover, it is nonsensical to

suggest that the PMBDA was obliged to continue to engage

in the kind of conduct with jeopardized its funding and

resulted in the highly critical audit report.

Plaintiff points to a statement in PMBDA’s

Operational Manual which provides: “[t]hat portion of the

25% equity contribution spent prior to submitting the

application can be considered on a case-by-case basis, given

the approval of the Executive Director.” Plaintiff presents no

evidence that he requested such approval or could have

demonstrated sufficient prior expenditures to satisfy the

requirement. Plaintiff presented no evidence to the agency to

substantiate the value of equipment for which he sought a

credit. Moreover, the Operational Manual also provides that

as of July 7, 1994, the equity injection “must be from

business savings (investment account) or cash equity

(personal savings account), “which would preclude

satisfaction of the equity injection requirement by prior

expenditures.

The ADA requires that a reasonable accommodation

be made for an individual’s disability, so that he is not

disadvantaged by reason of the disability, so that he is not

disadvantaged by reason of the disability. It does not require

that an individual must be accommodated because he

happens to have a disability. Plaintiff does not contend that

he failed to meet the terms of the commitment letter for

reasons related to his anxiety or that he could have satisfied

the essential eligibility requirements for a PMBDA loan if the

affects of his disability were accommodated. The PMBDA

operates a loan program and not a grant program. It is clear

that giving money to applicants without adequate collateral,

capital or equity would fundamentally alter the program and

impose an undue burden from increased defaults and

depletion of funds for credit worthy borrowers.

Even if the collateral and equity injection

requirements were non-essential, the denial of plaintiff's loan

request for the reason that he failed to meet the terms of the

commitment letter was not disability discrimination. A

public agency does not engage in disability discrimination.

A public agency does not engage in disability discrimination

when it denies benefits to a disabled person who does not

meet conditions of the program unrelated to the applicant’s

disability. See Bowen v. American Hosp. Ass’n, 476 US.

610, 630 (1986) (no discrimination where hospital refused to

treat child who had not satisfied hospital requirement of

parental consent); Sandison_v. Michigan High School

Athletic Ass’n, Inc., 64 F. 3d 1026, 1030 (6th Cir. 1995) (no

discrimination where disabled student was denied

participation in athletic program because of age); Lucero v.

Hart, 915 F. 2d 1367, 1372 (9th Cir. 1990) (employee with

emotional disability fired because she could not meet typing

requirement). Plaintiff has presented no evidence that his

failure to meet the collateral and equity injection

requirements was occasioned by his disability.

Plaintiff contends that the PMBDA discrimination

against him by imposing stricter requirements on Street

Sounds than it did on other applicants. He points to the

statement of Mr. Carolina that the PMBDA had funded

home-based businesses. Nowhere in the record, however, is

any information provided regarding the nature of those

home-based businesses. It is clear that some businesses can

more successfully be operated out of the home than can

others. There is no evidence that these other businesses were

similar to Street Sounds. Moreover, the requirement that

Street Sounds have a business address was not related to the

denial of the loan.

Plaintiff also contends that he should have been given

more time to fulfill the loan requirements. By letter of April

12, 1996, Mr. Hess warned plaintiff of the importance of

timely completion of the loan requirements. Mr. Hess

explained to plaintiff defendants’ concerns at their August

12, 1996 meeting. It is uncontroverted that Ms. Smith

warned plaintiff again of the problems in her letter of

September 9, 1996. Plaintiff's response on September 24,

1996 did not demonstrate that even with still more time he

had the ability to satisfy the terms for a loan.

Plaintiff states that other loans had been approved

after a longer delay, relying on the PMBDA audit report. He

fails to note, however, that the report was very critical of the

length of the process and that the agency was encouraged to

take steps to ameliorate the problem. Also, there is no

indication that these loans involved applicants who failed to

demonstrate the capacity to meet the requirements for a loan.

Moreover, it is uncontroverted that the loan commitment was

rescinded only when after more than five months of

discussions with plaintiff subsequent to the failure of the

scheduled closing and well after the expiration of the

extension of the loan commitment, plaintiff was still unable

to demonstrate an ability to satisfy the terms. From the

evidence presented, one could not reasonably conclude that

defendants discriminated against plaintiff by not giving him

sufficient time to satisfy the terms of the commitment letter.

Plaintiff finally contends that defendants

demonstrated bias by questioning him about his disability.

That defendants questioned him about the extent or affect of

his disability is not evidence of discrimination. Plaintiff

himself informed defendants of his disability and stated it

was a reason his business had been inactive in the past. Ms.

Smith and any others asked to approve plaintiff's loan

application had a legitimate interest in determining whether

plaintiff's disability would prevent him from managing and

working full-time in the future at Street Sounds as required

by PMBDA regulations. See 12 Pa. Code § 81.111(a)(6) &

(7).

Once plaintiff assured the PMBDA that he could and

would fulfill the management and full-time work

requirements, the loan application was approved and indeed

the loan commitment was even extended. Defendants

worked with plaintiff for over sixteen months in an effort to

grant him a loan. The loan approval was rescinded only after

plaintiff failed at the scheduled closing, during the extended

commitment period and thereafter to satisfy the terms to

which he agreed and on which the loan was approved.

From the record presented, one simply cannot

reasonably find that defendants’ reasons for ultimately

denying the loan were untrue or that the decision was

motivated by or related to plaintiff's general anxiety

condition.

- B. Rehabilitation Act Claim

The Rehabilitation Act applies only to programs

receiving federal assistance. See 29 U.S.C. § 794(a); Shiring

v. Runyon, 90 F. 3d 827, 830 (3d Cir. 1996). It is

uncontroverted that the PMBDA does not receive federal

funds.

V. Conclusion

Plaintiff has not sustained his claims. One cannot

reasonably find from the competent evidence of record that

defendants’ stated reasons for denying plaintiff a loan were

untruthful or that they discriminated against him because of

his disability. There is no evidence that plaintiff's disability

is what prevented his qualification for the benefit in question.

Accordingly, defendants’ motion will be granted. An

appropriate order will be entered.

IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-1644

NORMAN K. JONES

Apellant

Vv.

THE PENNSYLVANIA MINORITY BUSINESS

DEVELOPMENT

AUTHORITY; ISABELLE SMITH; EUGENE HESS

Appellees

Present: BECKER, Chief Judge, SLOVITER,

MANSMANN, SCIRICA, NYGAARD, ALITO, ROTH,

McKEE, RENDELL, BARRY, AMBRO, FUENTES, and

BRIGHT* Circuit Judges

SUR PETITION FOR PANEL REHEARING

WITH SUGGESTION FOR REHEARING EN BANC

The petition for rehearing filed by Appellant having

been submitted to the judges who participated in the decision

of this Court, and to all the other available circuit judges in

active service, and no judge who concurred in the decision

having asked for rehearing, and a majority of the circuit

judges of the circuit in regular active service not having

voted for rehearing by the court en banc, the petition for

rehearing is DENIED. 5

BY THE COURT

Circuit Judge

DATED: October 31, 2000

*The Honorable Myron H. Bright, United States Circuit

Judge for the Eighth Circuit, limited to panel vote only.