Tina Alexander v. Ameripro Funding, Incorpo
2017 U.S. App. LEXIS 2768
| 5th Cir. | 2017Background
- Twelve Houston-area individuals receiving Section 8 housing vouchers sought mortgages from AmeriPro Funding, Inc. and Wells Fargo Bank, N.A.; some applied, some inquired only.
- Plaintiffs allege AmeriPro (an originator) refused to consider Section 8 income when evaluating loan applications so it could sell loans to Wells Fargo, and that Wells Fargo (a secondary-market purchaser and some-time originator) had a policy not to purchase mortgages based on Section 8 income.
- Plaintiffs sued under the Equal Credit Opportunity Act (ECOA), claiming discrimination because their public-assistance income was not considered in credit decisions.
- The district court dismissed all claims under Rule 12(b)(6); plaintiffs appealed.
- The Fifth Circuit affirmed dismissal for (1) two plaintiffs who applied directly to Wells Fargo (insufficient factual allegations tying Wells Fargo’s secondary-market policy to origination conduct), and (2) six plaintiffs who only inquired (not "applicants" under ECOA). The court reversed as to four plaintiffs who filed applications with AmeriPro, finding plausible ECOA claims against AmeriPro and remanding those claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs who only inquired are "applicants" under the ECOA | Inquirers say they were discouraged from applying and thus effectively denied; regulation prohibits discouragement | Defendants say no application or request for credit was made, so no "applicant" and no private cause of action | Inquirers are not "applicants"; dismissal affirmed |
| Whether Wells Fargo is a "creditor" liable under ECOA for AmeriPro applicants' claims | Plaintiffs (and CFPB amicus) argue Wells Fargo’s purchase guidelines drove AmeriPro’s origination practices, making Wells Fargo a participating creditor | Wells Fargo argues secondary-market underwriting/purchasing policies do not make it a creditor for primary-market decisions absent participation in individual credit decisions | Wells Fargo not plausibly a creditor for AmeriPro applicants; claims against Wells Fargo dismissed |
| Whether AmeriPro plausibly violated ECOA by refusing to consider Section 8 income | AmeriPro Applicants allege they applied, were told Section 8 income would not be considered because loans could not be sold, and received worse terms | AmeriPro argued pleadings were conclusory and insufficient under Iqbal/Twombly | AmeriPro Applicants plausibly alleged discrimination under ECOA; claims against AmeriPro survive and are remanded |
| Whether Wells Fargo applicants alleged facts tying Wells Fargo’s secondary-market policy to their loan-originations | Wells Fargo applicants point to Wells Fargo’s published policy excluding Section 8-based loans | Wells Fargo contends secondary-market purchase policy is irrelevant to its conduct as an originator and plaintiffs’ allegations are conclusory | Allegations insufficient to show Wells Fargo discriminated as an originating creditor; dismissal affirmed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard: factual allegations must make liability plausible)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (framework for circumstantial discrimination evidence)
- Fierros v. Texas Dep’t of Health, 274 F.3d 187 (5th Cir. standard applying McDonnell Douglas in discrimination context)
- Martin K. Eby Const. Co. v. Dallas Area Rapid Transit, 369 F.3d 464 (12(b)(6) factual-pleading review statement)
- Shanbaum v. United States, 32 F.3d 180 (de novo review of dismissal)
- Moore v. United States Dep’t of Agriculture, 993 F.2d 1222 (applicant can prevail even with incomplete application where application was submitted)
- Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co., 476 F.3d 436 ("applicant" is unambiguous)
- Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937 (definition of "apply"/"applicant")
- Estate of Davis v. Wells Fargo Bank, 633 F.3d 529 (ECOA requires alleging applicant status and discriminatory treatment)
- In re Simmerman, 463 B.R. 47 (assignee liable under ECOA only when it influences individual credit decisions)