Term: 2015
Docket: 14-520
Hawkins v. Community Bank Of Raymore
- Pro
14-520 HAWKINS V. COMMUNITY BANK OF RAYMORE DECISION BELOW: 761 F.3d 937 CERT. GRANTED 3/2/2015 QUESTION PRESENTED: Community Bank of Raymore¹ sued housewife Valerie Hawkins for over $2 million claiming Ms. Hawkins owed the money under an absolute, unconditional guaranty regardless of whether CBR sued PHC Development, LLC,² the named borrower, or Gary Hawkins, one of PHC's owners. Stated another way, CBR claimed Ms. Hawkins agreed to repay the loans regardless of whether CBR pursued her husband, PHC, or any collateral. CBR claims Ms. Hawkins is "primarily and unconditionally liable" under the agreement she signed. Ms. Hawkins, like Ms. Patterson, was not a member, officer, or otherwise interested in PHC. Petitioners claim that CBR engaged in marital status discrimination under the Equal Credit Opportunity Act ("ECOA") by requiring their guaranties. The Sixth Circuit recently agreed that spousal guarantors have standing as "applicants" to assert ECOA violations. The Eighth Circuit disagreed with the Sixth Circuit, deciding that ECOA "applicants" unambiguously excludes guarantors. The Eighth Circuit ruling contradicts state courts of last resort in Alaska, Iowa, Missouri, and Virginia. Indeed, spousal guarantors in Iowa or Missouri state courts are afforded protection by the ECOA, but not in federal district courts in Iowa or Missouri. The Eighth Circuit's decision raises the following issues not yet decided by this Court: 1. Are "primarily and unconditionally liable" spousal guarantors unambiguously excluded from being ECOA "applicants" because they are not integrally part of "any aspect of a credit transaction"? 2. Did the Federal Reserve Board have authority under the ECOA to include by regulation spousal guarantors as "applicants" to further the purposes of eliminating discrimination against married women? ¹Hereinafter referred to as CBR. ²Hereinafter referred to as PHC. LOWER COURT CASE NUMBER: 13-3065
In the case of Hawkins v. Community Bank of Raymore, two women who were spouses of men with controlling interests in a real estate development company guaranteed loans from the bank to their husbands' business. When the business defaulted on its loan payments, the bank sought repayment from these guarantors. The women argued that they should not be held responsible for repaying these debts because they claimed that their husbands had forced them into signing as guarantors and therefore this was a violation of Equal Credit Opportunity Act (ECOA). However, in 2015, Supreme Court ruled against them stating that ECOA does not apply to loan guarantors but only to applicants or those seeking credit themselves.
The dissenting opinion in the Hawkins v. Community Bank of Raymore case argued that the Equal Credit Opportunity Act (ECOA) should be interpreted to include spousal guarantors as "applicants" and thus, they should receive protection from discrimination under this law. The dissenters believed that a broader interpretation of the term "applicant" was more consistent with Congress's intent when it enacted ECOA - to eradicate credit discrimination waged against women, especially married women whom creditors traditionally refused to consider for individual credit. They pointed out that by requiring spouses to co-sign loans, lenders effectively prevent these individuals from obtaining independent credit history or financial stability separate from their spouse’s finances. Therefore, excluding spousal guarantors from ECOA protections would undermine its purpose and goals.
