16630 Southfield Ltd. Partnership v. Flagstar Bank, F.S.B.
2013 U.S. App. LEXIS 16798
6th Cir.2013Background
- Samir Danou, Iraqi-born naturalized US citizen, and his family/trust own real estate ventures in Michigan.
- May 2006: Southfield borrowed $13 million from Flagstar; Danou entities guaranteed, with collateral from Southfield and Triple Creek.
- 2011–2012: Flagstar investigated Southfield; allegedly refused further refinancing and extension despite Danou offering additional collateral and a wife's guaranty.
- Nov 2009 restructuring left ~ $6.5 million due in 2012; 2012 extension denial followed by no application provided.
- Plaintiffs allege discrimination based on national origin under ECOA; district court dismissed; on appeal, court affirms dismissal under Rule 12(b)(6).
- Court analyzes Twombly/Iqbal plausibility standard and finds no plausible inference of discrimination; alternative explanations evident; no adequately pled comparators.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Plausibility of ECOA discrimination claim | Danou argues Iraqi origin supports discrimination inference | Flagstar contends no plausible discriminatory inference given explanations | Dismissed: no plausible discrimination inferred |
| Effect of alternate explanations on pleading | Alternative reasons do not negate discrimination claim | Alternative explanations undermine plausibility | Dismissed: other explanations render claim implausible |
| Role of comparators in pleading discrimination | Allegations of similarly situated Caucasian/non-Iraqi borrowers exist | Plaintiffs fail to identify similarly situated individuals | Dismissed: naked allegations of comparators insufficient |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court 2007) (plausibility pleading standard; need more than mere allegations of conduct)
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court 2009) (requirement of plausible factual allegations; not mere conclusory statements)
- Tellabs, Inc. v. Makor, 551 U.S. 308 (Supreme Court 2007) (intent required to be at least as compelling as competing inferences)
- Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452 (6th Cir. 2011) (multiple plausible explanations do not automatically bar discovery)
- Keys v. Humana, Inc., 684 F.3d 605 (6th Cir. 2012) (disparate treatment of similarly situated individuals may support inference of discrimination)