UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

C.F. TRUST, INCORPORATED,
Plaintiff-Appellee,

v.

NANCY A. PETERSON,
                                                       No. 96-1656
Defendant-Appellant,

and

BARRIE M. PETERSON, Trustee,
Defendant.

C.F. TRUST, INCORPORATED,
Plaintiff-Appellee,

v.

NANCY A. PETERSON,
                                                       No. 96-1704
Defendant-Appellant,

and

BARRIE M. PETERSON, Trustee,
Defendant.

Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Leonie M. Brinkema, District Judge.
(CA-96-265-A, CA-96-264-A)

Argued: May 6, 1997

Decided: July 15, 1997

Before LUTTIG, WILLIAMS, and MICHAEL,
Circuit Judges.
Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: James Thomas Bacon, ALLRED, BACON, HALFHILL
& YOUNG, P.C., Fairfax, Virginia, for Appellant. Harvey Alan
Levin, BIRCH, HORTON, BITTNER & CHEROT, Washington,
D.C., for Appellee. ON BRIEF: James H. Lister, BIRCH, HORTON,
BITTNER & CHEROT, Washington, D.C., for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Appellant Nancy Peterson appeals from the district court's denial
of her motion to vacate a confessed judgment obtained by appellee
C.F. Trust, Inc., on a pair of promissory notes endorsed by Nancy
Peterson. We affirm.

I.

On November 1, 1993, two promissory notes were executed by
DEP Inc. in favor of Central Fidelity Bank. DEP was 100% owned
by Scott Peterson, with Barrie Peterson, Scott's father and former
owner of the company, serving as trustee of the company. The notes
were signed and endorsed by Nancy Peterson, Barrie Peterson's wife,
as well as by Scott and Barrie Peterson, J.A. at 85, 89. By her signa-
ture, Nancy Peterson agreed "unconditionally to be bound, jointly and
severally, by all the terms and conditions of [the] Note[s]." J.A. at 85,
89. Nancy Peterson had never been an officer, director, or shareholder
of DEP, nor was she in any other way affiliated with the company,
except by virtue of her marriage to Barrie Peterson. Indeed, the record

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evidence indicates that the only reason that Central Fidelity requested
that Nancy Peterson sign the notes was because of her marriage to
Barrie Peterson. J.A. at 33-34. There is also evidence that Central
Fidelity assured the Petersons that it would not seek to collect on the
notes from the assets of Nancy Peterson. J.A. at 33-34.

About two years later, on August 29, 1995, C.F. Trust acquired the
notes from Central Fidelity. Subsequently, on February 1, 1996, C.F.
Trust, attempting to collect on the notes, obtained a confessed judg-
ment on the notes in the Circuit Court of Prince William County, Vir-
ginia. The case was removed to the federal district court and, on
March 4, 1996, Nancy Peterson moved to vacate the confessed judg-
ment, arguing that under both the federal Equal Credit Opportunity
Act, 15 U.S.C. §§ 1691-1691f, and the Virginia Equal Credit Oppor-
tunity Act, Va. Code Ann. §§ 59.1-21.19 to 59.1-21.28, her endorse-
ment on the notes was invalid, because those statutes prohibit a
creditor from requiring the spouse of an applicant for credit to sign
any credit instrument unless the creditor determines that the applicant
is not independently creditworthy, see, e.g., 12 C.F.R. § 202.7(d)(1)
("[A] creditor shall not require the signature of an applicant's spouse
or other person, other than a joint applicant, on any credit instrument
if the applicant qualifies under the creditor's standards of credit-
worthiness for the amount and terms of the credit requested."); see
also 15 U.S.C. § 1691(a)(1).

Following what was essentially a balancing of the equities, the dis-
trict court denied Nancy Peterson's motion to vacate the confessed
judgment. J.A. at 27-28. Because the district court left the confessed
judgment intact, it did not address the merits of Nancy Peterson's
ECOA claims.

II.

Nancy Peterson argues that the district court erred in engaging in
a balancing test because, under Virginia law, the court was "re-
quire[d]" to vacate the confessed judgment once she asserted an ade-
quate defense under ECOA to her liability on the notes. See
Appellant's Br. at 9-10. We disagree.

Under Virginia law, even if a debtor raises an adequate defense to
liability on an underlying debt, the court may, in its discretion, refuse

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to vacate a confessed judgment on that debt. Thus, the Virginia Code
provides that

          [a]ny judgment confessed under the provisions of
          § 8.01-432 may be set aside or reduced upon a motion of the
          judgment debtor[,] . . . on any ground which would have
          been an adequate defense or setoff in an action at law insti-
          tuted upon the judgment creditor's note . . . upon which such
          judgment was confessed.

Va. Code. Ann. § 8.01-433 (emphasis added). Although an adequate
defense may be a necessary condition to a court's decision to vacate
a confessed judgment, it is not necessarily a sufficient one, as the stat-
ute's discretionary language makes clear. Rather, a court is free, in its
discretion, to refuse to vacate a confessed judgment even where an
adequate defense has been asserted.

Here, the district court exercised the discretion accorded it under
Virginia law and concluded that, notwithstanding the possibility that
Nancy Peterson might have an adequate defense to liability under
either the federal or state ECOA, the confessed judgment should
stand. In the course of exercising its discretion, the court balanced
several factors both in favor of and against granting Nancy Peterson's
motion to vacate the confessed the judgment. The court considered
the "very legitimate" "policy considerations" underlying ECOA's
requirement that "some independent and justified reason why [wives]
should have to risk their credit, and not just for the status of being a
spouse," J.A. at 28, noting that "wives in particular ought not be
forced to have to put their credit on the line just for the sake of the
fact that they are the wife," J.A. at 27-28. Against this, however, the
court "counterweighted" several important factors in support of C.F.
Trust. The court thus considered the relative innocence of C.F. Trust
as compared to Nancy Peterson, finding that while Nancy Peterson
"was a party to the original documents, who had access to counsel,
[and who] never moved to have her name removed as guarantor from
the documents," J.A. at 27, C.F. Trust was essentially an "innocent
holder of what would appear on its face to be a valid note and con-
fess[ed] judgment," with "nothing in the record to suggest . . . that
C.F. Trust . . . was in any respect the actual creditor involved in the
alleged violation of ECOA," J.A. at 26-27. The court also considered

                     4
the public policy benefits of confessed judgments generally, com-
menting on how "the whole beauty of [confessed judgments] is [that
they] allow[ ] creditors to be able to . . . immediately . . . start enforce-
ment proceedings when there has been a default." J.A. at 27. Balanc-
ing these various factors, the court was "satisfied that in this case the
motion to vacate should be denied, that the confess[ed] judgment
should be permitted to stand," J.A. at 28, and so ruled.

We believe that in refusing to vacate the confessed judgment, the
district court properly exercised the discretion afforded it under Vir-
ginia law. Accordingly, the judgment of the district court is affirmed.

AFFIRMED

MICHAEL, Circuit Judge, concurring:

I concur in the result. I cannot agree with the majority's holding
that under the Virginia statute "a court is free, in its discretion, to
refuse to vacate a confessed judgment even where an adequate
defense has been asserted." Ante at 5. However, I join in affirming
because the plaintiff failed to present or forecast evidence that C.F.
Trust was a "creditor" under the Equal Credit Opportunity Act. See
15 U.S.C. § 1691(a)(1) ("It shall be unlawful for any creditor to dis-
criminate against any applicant . . . ." (emphasis added)). Because the
plaintiff failed to offer an adequate defense, the district court's denial
of the plaintiff's motion to vacate was proper.

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