Construction Law Today : Construction Lawyer & Attorney : Joshua Glazov : Design Build Contracts, Construction Bankruptcy

The D'Oench, Duhme doctrine and Section 13(e) of the Federal Deposit Insurance Act (a/k/a 12 U.S.C. §1823(e)) were active in Sacramento late last month to deny a borrower's claim for reformation of her loan documents.  The decision: Magdaleno v. IndyMac Bancorp, Inc. (PDF).

Backstory: Magdaleno v. IndyMac Bancorp, Inc.

Catalina Magdelano borrowed money from IndyMac. Her mortgage broker assured her that the interest rate on her loan would be a 30-year fixed rate with interest at 1% per year. But the documents for the loan set an adjustable rate starting at 1% per year, with a 9.950% maximum. Then IndyMac failed and the FDIC was appointed as IndyMac's conservator. Ultimately, the FDIC transferred the borrower's loan to a new lender: OneWest Bank.

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This past Thursday the San Diego Chapter of the Associated General Contractors (the "San Diego AGC") sued the California Department of Transportation ("CalTrans") claiming that racial and gender contracting quotas under CalTrans's 2009 Disadvantaged Business Enterprise (the "DBE Program") are illegal.
 
Representing the the San Diego AGC, the Pacific Legal Foundation filed the Complaintstarting the lawsuit in the United States District Court for the Eastern District of California.  The lawsuit focuses on a March 4 internal CalTrans Memo from CalTrams Division of Local Assistance Chief, Denix D. Anbiah. 

The memo says that on projects receiving federal funds (this includes federal infrastructure stimulus grants), Caltrans must award at least 6.75% of contracts to women or a group composed of African-Americans, Asian-Pacific Americans, and Native Americans.  The group doen't include Latinos.

The lawsuit claims that that the DBE Program violates the 14th Amendment to the United States Constitution, The Civil Rights Act of 1964, various other federal statutes, and the California Declaration of Rights, a/k/a Proposition 290.

The San Diego AGC's lawsuit also asks the judge to enjoin CalTrans from adopting, enforcing, or attempting or threatening to enforce, the parts of the DBE Program that the San Diego AGC claims discriminates against, or grants  preferential treatment to, anyone based on race, sex, color, ethnicity, or national origin.

Tip to Jon Ortiz of the Sacramento Bee for breaking this story in his article California Challenged on Race-, Gender-Based Contracts.

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