Wednesday, December 19, 2012

Corporate Entities Fail To Show Religious Identity To Support Credit Discrimination Claim

In New Louisiana Holdings, LLC v. Arrowsmith, (ND IL, Dec. 4, 2012), an Illinois federal district court dismissed claims under 42 USC Sec. 1981 and the Equal Credit Opportunity Act of anti-Semitic discrimination in the administration of loan agreements.  At issue were loans taken out to acquire a network of nursing homes. Plaintiffs in the case are the LLCs (referred to by the court as corporate entities) that borrowed the funds as well as Harris Schwartzberg who, with his father, acquired the nursing homes through the LLCs.  In the portion of the complaint at issue, the LLCs (the "Corporate Plaintiffs') alleged that GE Capital's agent, Richard Arrowsmith, discriminated against them on the basis of their Jewish racial and religious identities in declaring a series of loan defaults and taking other injurious actions under the loan agreements. The business entities claim to have a Jewish identity because the Schwartzbergs are Jewish. The court held, however that the allegations in the complaint:
fail to provide the Court with a factual basis for finding that Corporate Plaintiffs have acquired a racial or religious identity. Plaintiffs do not allege any facts regarding the ownership structures of Corporate Plaintiffs, whether Corporate Plaintiffs have been certified as having minority identities by a governmental institution, or whether Corporate Plaintiffs' purposes are to serve or advance Jewish interests. For instance, the complaint does not identify whether the Schwartzbergs are the sole shareholders or majority shareholders of Corporate Plaintiffs.
Future of Capitalism reports on the decision.

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