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High court’s tie vote upholds loan bias ruling

The Supreme Court on Tuesday issued its first tie vote since the death of Justice Antonin Scalia, leaving in place a lower court ruling that barred two Missouri women from suing a bank for loan discrimination.

The justices divided 4-4 in a case that considered whether the women could bring claims under the Equal Credit Opportunity Act after a bank required them to guarantee their husbands’ business loans. The law protects loan applicants from bias based on marital status.

Lower courts ruled that the law covers only those who apply for credit and not those who guarantee to secure the debt.

The one-sentence opinion does not set a national precedent and does not identify how each justice voted. It simply upholds a decision from the 8th U.S. Circuit Court of Appeals that applies to Missouri and six other nearby states.

Kansas City attorney Greer Lang, of Lathrop & Gage, represented the defendant, the Community Bank of Raymore. Lang received the Influential Appellate award in the 2016 Missouri Lawyers Awards.

She said she and her client are pleased with the decision.

“We’re viewing it as a victory and we’re hopeful that this decision will help the bank in its continuing efforts in ongoing litigation with the borrower and the guarantors to recover on its loans,” Lang said, noting three related lawsuits pending in Cass County Circuit Court.

Lang said it’s a mixed win, however, in that it did not establish precedence.

“Obviously, we took our responsibility in presenting the issue to the court very seriously and it’s an issue that is very important to all banks and lending institutions nationally,” she said. “So while we’re very pleased that we got a victory for the bank here, it’s definitely bittersweet not to have secured a victory that would have provided precedence nationally on the issue.”

The justices took on the case because other courts had ruled differently in similar cases.

Scalia died in February and the court is operating with only eight justices. Scalia had participated in arguments in the case on the first day of the court’s term on Oct. 5.

Valerie Hawkins and Janice Patterson claimed that signing as guarantors made them both responsible to repay the loans in full and put their credit at risk, placing them in the same position as loan applicants. They also argued that Federal Reserve Board regulations that say the law banning discrimination covers credit guarantees.

The Obama administration sided with the women, saying that when a creditor requires a person to guarantee their spouse’s loan solely because of marital status, that discriminates against both the primary borrower and the guarantor.

The bank asserted that the discrimination must be against the person who wanted to borrow the money.

The American Bankers Association and other industry groups argued that allowing a spouse who guarantees a loan to be treated like an applicant would open lenders to more liability that Congress anticipated when it passed the law.

The case is Hawkins v. Community Bank of Raymore, 14-520.

Missouri Lawyers Weekly staff contributed to this report.

 

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