Valerie Hawkins v. Community Bank of Raymore
2014 U.S. App. LEXIS 15006
| 8th Cir. | 2014Background
- PHC Development, LLC (borrower) obtained >$2,000,000 in loans from Community Bank; Gary Hawkins and Chris Patterson (PHC members) were primary principals.
- Valerie Hawkins and Janice Patterson (wives of the principals) signed personal guaranties (and Patterson signed a deed of trust) to secure the loans, though they had no ownership interest in PHC.
- PHC defaulted in April 2012; Community accelerated the loans and sought payment from PHC and the guarantors (Hawkins and Patterson).
- Hawkins and Patterson sued, claiming Community required their guaranties because of their marital status, violating the Equal Credit Opportunity Act (ECOA); Community counterclaimed for breach of guaranty.
- The district court granted summary judgment to Community, holding Hawkins and Patterson were not “applicants” under the ECOA; it also struck their jury demand (which became moot after disposition).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether guarantors qualify as “applicants” under the ECOA | Guarantors are included in the regulatory definition (12 C.F.R. §202.2(e)); thus Hawkins and Patterson are applicants and protected from marital-status discrimination | The statutory definition of “applicant” (15 U.S.C. §1691a(b)) requires a person to request credit; executing a guaranty is not an application for credit, so guarantors are not applicants | A guarantor is not an “applicant” under the unambiguous statutory text; no ECOA violation proven (summary judgment for Community) |
| Whether the court should defer to the Federal Reserve/CFPB regulation including guarantors as applicants (Chevron deference) | Regulation is a reasonable interpretation and should be afforded deference, making guarantors applicants | The statute is unambiguous that an applicant requests credit for her own benefit; therefore agency reinterpretation is not owed Chevron deference | Court refused Chevron deference because the ECOA’s text unambiguously excludes guarantors from being applicants; the regulation cannot override the statute |
| Whether striking the jury demand was error | Hawkins and Patterson contended striking their jury demand was improper | Community argued resolution on summary judgment rendered jury demand moot | Moot: because summary judgment disposed of the ECOA claim and counterclaims were dismissed, the jury-demand issue was moot |
Key Cases Cited
- Barnhardt v. Open Harvest Coop., 742 F.3d 365 (8th Cir. 2014) (standard of review for summary judgment)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (two-step framework for agency deference)
- North Dakota v. E.P.A., 730 F.3d 750 (8th Cir. 2013) (describing Chevron framework)
- Bifulco v. United States, 447 U.S. 381 (1980) (courts cannot manufacture ambiguity where Congress’ intent is clear)
- Moran Foods, Inc. v. Mid-Atlantic Market Dev. Co., 476 F.3d 436 (7th Cir. 2007) (distinguishing applicants from guarantors under ECOA)
- RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., 754 F.3d 380 (6th Cir. 2014) (reached contrary conclusion on guarantor ambiguity under ECOA)
- Mayes v. Chrysler Credit Corp., 37 F.3d 9 (1st Cir. 1994) (discussing ECOA’s purpose to prevent discriminatory denial of credit to married women)