Hawkins v. Community Bank of Raymore, --- F.

3d ---- (2014

2014 WL 3826820
Only the Westlaw citation is currently available.
United States ourt o! "##eals$
%i&hth ircuit.
'alerie (. )"W*+,S$ +ndividually- (anice ".
.atterson$ +ndividually .lainti!!s/"##ellants
v.
O00U,+12 3",* O4 5"20O5%$ 6e!endant/
"##ellee.
,o. 13/3067. 8 Sub9itted: "#ril 1;$ 2014. 8 4iled: "u&. 7$
2014.
Synopsis
Background: Wives who were required to join in executing
guaranties of loans to limited liability company (LLC) in
which their husbands had interest brought cause of action
against lender for allegedly discriminating against them based
on their marital status in violation of provisions of the Equal
Credit pportunity !ct (EC!)" #he $nited %tates &istrict
Court for the Western &istrict of 'issouri granted lender(s
motion for summary judgment) and wives appealed"

[Holding:] #he Court of !ppeals) *ruender) Circuit +udge)
held that wives) by virtue of being required to join in
executing guaranties of loans to limited liability company
(LLC) in which their husbands had interest) did not apply to
lender for credit and thus did not qualify as ,applicants-
protected by provisions of the EC!"

!ffirmed"

!ppeal from $nited %tates &istrict Court for the Western
&istrict of 'issouri./ansas City"
Attorneys and Law Firms
+ohn '" &uggan) argued) of verland 0ar1) /% (&eron !"
!nli1er) of verland 0ar1) /%") &avid Lewis 2allew) of
verland 0ar1) /%) on the brief)) for appellant"
*reer %hirreffs Lang) argued) of /ansas City) ' (+ustin
'arshall 3ichols) on the brief) of /ansas City) '))) for
appellee"
2efore %'4#5) CLL#3) and *6$E3&E6) Circuit
+udges"
Opinion
*6$E3&E6) Circuit +udge"
*1 7alerie 5aw1ins (,5aw1ins-) and +anice 0atterson
(,0atterson-) appeal the district court(s
8
grant of summary
judgment in favor of Community 2an1 of 6aymore
(,Community-) on their claim under the Equal Credit
pportunity !ct (,EC!-)) 89 $"%"C" : 8;<8 et seq., and the
district court(s order stri1ing their demand for a jury trial" =or
the reasons described below) we affirm"

! Background
5aw1ins is married to *ary 5aw1ins) and 0atterson is married
to Chris 0atterson" 05C &evelopment) LLC (,05C-)) is a
'issouri limited liability company with two members> *ary
5aw1ins and Chris 0atterson) the latter in his capacity as
trustee of the Chris L" 0atterson and +anice !" 0atterson #rust"
3either 5aw1ins nor 0atterson have any legal interest in 05C"
2etween ?@@9 and ?@@A) Community made four loans.
totaling more than B?)@@@)@@@.to 05C to fund the
development of a residential subdivision" Each loan was
modified several times" 4n connection with each loan and each
modification) 5aw1ins) 0atterson) and their husbands executed
personal guaranties in favor of Community to secure the loans"
0atterson also executed a deed of trust in connection with one
of the modifications" 4n !pril ?@8?) 05C failed to ma1e
payments due under the loan agreements" Community
declared the loans to be in default) accelerated the loans) and
demanded payment both from 05C and from 5aw1ins and
0atterson as guarantors"

%oon thereafter) 5aw1ins and 0atterson filed this action
against Community) see1ing damages and an order declaring
that their guaranties were void and unenforceable" #hey
alleged that Community had required them to execute the
guaranties securing 05C(s loans solely because they are
married to their respective husbands" #hey claimed that this
requirement constituted discrimination against them on the
basis of their marital status) in violation of the EC!"
Community) in turn) filed several stateClaw counterclaims)
including claims for breach of the guaranties" !s an
affirmative defense to the breachCofCguaranty claims) 5aw1ins
and 0atterson argued that the guaranties were unenforceable as
violative of the EC!"

Community moved for summary judgment on 5aw1ins and
0atterson(s EC! claim and on its breachCofCguaranty
counterclaims" #he district court concluded that 5aw1ins and
{0099999.0029/00533698.RTF / } 2014 Thomson Reuters. No clam to or!nal ".#. $o%ernment
&or's.
1
Hawkins v. Community Bank of Raymore, --- F.3d ---- (2014
0atterson were not ,applicants- within the meaning of the
EC! and thus that Community had not violated the EC!
by requiring them to execute the guaranties" !ccordingly) the
district court granted summary judgment in favor of
Community on 5aw1ins and 0atterson(s EC! claim and on
their EC!Cbased affirmative defense to Community(s
breachCofCguaranty counterclaims" #he district court then
dismissed Community(s stateClaw counterclaims without
prejudice) declining to exercise continuing supplemental
jurisdiction pursuant to ?A $"%"C" : 8D;E(c)(D)" 5aw1ins and
0atterson timely appealed the grant of summary judgment in
favor of Community and the district court(s order stri1ing their
demand for a jury trial"

! "iscussion
*#
[1]
We review the district court(s grant of summary
judgment de novo, viewing the record in the light most
favorable to the nonmoving parties and giving them the
benefit of all reasonable inferences" Barnhardt v. Open
Harvest Co-op., EF? ="Dd D;9) D;< (Ath Cir"?@8F)" %ummary
judgment is proper only if ,there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a
matter of law"- =ed"6"Civ"0" 9;(a)"

#he EC! ma1es it ,unlawful for any creditor to discriminate
against any applicant) with respect to any aspect of a credit
transaction """ on the basis of """ marital status"- 89 $"%"C" :
8;<8(a)" #he statute defines ,applicant- as ,any person who
applies to a creditor directly for an extension) renewal) or
continuation of credit) or applies to a creditor indirectly by use
of an existing credit plan for an amount exceeding a
previously established credit limit"- 89 $"%"C" : 8;<8a(b)"
4nterpreting this statutory definition) the =ederal 6eserve 2an1
promulgated 8? C "="6" : ?@?"?(e)) which provides that ,the
term GapplicantH includes guarantors"-
?
6elying on : ?@?"?(e))
5aw1ins and 0atterson argue that they qualify as applicants
within the meaning of the EC! because they guaranteed
05C(s debt to Community" #hey do not argue that they qualify
as applicants on any other basis"

[#]

[$]
#his case turns) then) on whether we should apply :
?@?"?(e)(s definition of applicant) which would permit
5aw1ins and 0atterson to pursue an EC! claim as applicants
solely because they executed guarantees to secure 05C(s
loans" 4f they do not qualify as applicants) then Community
did not violate the EC! by requiring them to execute the
guaranties" See 89 $"%"C" : 8;<8(a) (proscribing only
discrimination against applicants)" #o determine whether we
should defer to the =ederal 6eserve(s interpretation of the
EC!(s definition of applicant) we apply the twoCstep
framewor1 established by Chevron U.S.A., Inc. v. Natural
Resources Defense Councl, F;E $"%" ADE) 8@F %"Ct" ?EEA) A8
L"Ed"?d ;<F (8<AF)" $nder the Chevron framewor1) ,we as1
first whether the intent of Congress is clear as to the precise
question at issue" 4f) by employing traditional tools of statutory
construction) we determine that Congress( intent is clear) that
is the end of the matter"- North Da!ota v. ".#.A., ED@ ="Dd E9@)
E;D (Ath Cir"?@8D) (alteration omitted) (quoting Baptst Health
v. $ho%pson, F9A ="Dd E;A) EED (Ath Cir"?@@;))" nly if we
conclude that ,the statute is silent or ambiguous with respect
to the specific issue- presented will we then proceed to the
second step of the Chevron framewor1) which requires us to
consider whether ,the agency(s reading fills a gap or defines a
term in a reasonable way in light of the Legislature(s design"-
Id. (quoting Baptst Health, F9A ="Dd at EED)"

[%]

[&]

[']
!pplying the first step of the Chevron framewor1) we
conclude that the text of the EC! clearly provides that a
person does not qualify as an applicant under the statute solely
by virtue of executing a guaranty to secure the debt of another"
#o qualify as an applicant under the EC!) a person must
,applGyH to a creditor directly for """ credit) or """ indirectly by
use of an existing credit plan for an amount exceeding a
previously established credit limit"- 89 $"%"C" : 8;<8a(b)" #o
,apply- means ,to ma1e an appeal or request espGeciallyH
formally and often in writing and usuGallyH for something of
benefit to oneself"- Webster(s #hird 3ew 4nternational
&ictionary 8@9 (?@@?)" #hus) the plain language of the EC!
unmista1ably provides that a person is an applicant only if she
requests credit" 2ut a person does not) by executing a
guaranty) request credit" ,! Iguaranty( """ GisH a promise to
answer for another person(s debt) default) or failure to
perform" 'ore specifically) a guaranty is an underta1ing by a
guarantor to answer for payment of some debt) or performance
of some contract) of another person in the event of default"- DA
!m"+ur"?d *uaranty : 8 (?@8F)" ! guaranty is collateral and
secondary to the underlying loan transaction between the
lender and the borrower" While a guarantor no doubt desires
for a lender to extend credit to a borrower) it does not follow
from the execution of a guaranty that a guarantor has
requested credit or otherwise been involved in applying for
credit" #hus) a guarantor does not request credit and therefore
cannot qualify as an applicant under the unambiguous text of
the EC!"
D

*$
[(]
#he %ixth Circuit recently reached the contrary
conclusion) finding it to be ambiguous whether a guarantor
qualifies as an applicant under the EC!" R& BB Acquston,
&&C v. Brd'e%ll Co%%ons Dev. (rp., E9F ="Dd DA@) ?@8F
WL ?;@<;8; (;th Cir"?@8F)
F
#he court ac1nowledged that ,GaH
guarantor does not traditionally approach a creditor herself for
credit" 6ather) """ a guarantor is a third party to the larger
application process"- Id. at JF" With this much we agree) and
for us) this ends the inquiry because it demonstrates that a
guarantor unambiguously does not request credit" ,Where
Congress has manifested its intention) we may not
manufacture ambiguity in order to defeat that intent"- Bfulco
v. Unted States, FFE $"%" DA8) DAE) 8@@ %"Ct" ??FE) ;9
L"Ed"?d ?@9 (8<A@)" 3evertheless) the court went on to assert
{0099999.0029/00533698.RTF / } 2014 Thomson Reuters. No clam to or!nal ".#. $o%ernment
&or's.
2
Hawkins v. Community Bank of Raymore, --- F.3d ---- (2014
that ,a guarantor does formally approach a creditor in the
sense that the guarantor offers up her own personal liability to
the creditor if the borrower defaults"- R& BB Acquston, E9F
="Dd DA@) ?@8F WL ?;@<;8;) at JF" We find it to be
unambiguous that assuming a secondary) contingent liability
does not amount to a request for credit" ! guarantor engages in
different conduct) receives different benefits) and exposes
herself to different legal consequences than does a credit
applicant" ,G#Hhere is nothing ambiguous about Iapplicant( and
no way to confuse an applicant with a guarantor"- )oran
*oods, Inc. v. )d+Atlantc )ar!et Dev. Co., FE; ="Dd FD;)
FF8 (Eth Cir"?@@E) (discussing whether the =ederal 6eserve(s
interpretation of applicant to include guarantors warrants
Chevron deference)"
9

[)]

[*]

[1+]
2ecause the text of the EC! is unambiguous
regarding whether a guarantor constitutes an applicant) we will
not defer to the =ederal 6eserve(s interpretation of applicant)
and we conclude that a guarantor is not protected from
maritalCstatus discrimination by the EC!" ur conclusion
also comports with the purposes and policies underlying the
EC!" ,#he statute was initially designed) at least in part) to
curtail the practice of creditors who refused to grant a wife(s
credit application without a guaranty from her husband"-
)a,es v. Chr,sler Credt Corp., DE ="Dd <) 88 (8st Cir"8<<F)K
see also )oran *oods, FE; ="Dd at FF8 (,GWHhat the !ct was
intended to do was forbid a creditor to deny credit to a woman
on the basis of a belief that she would not be a good credit ris1
because she would be distracted by child care or some other
stereotypically female responsibility"-)K Anderson v. Unted
*n. Co., ;;; ="?d 8?EF) 8?EE (<th Cir"8<A?)" #hese policies
focus on ensuring fair access to credit by preventing lenders
from excluding borrowers from the credit mar1et based on the
borrowers( marital status" 2ut the considerations are different
in the case of a guarantor" 2y requesting the execution of a
guaranty) a lender does not thereby exclude the guarantor from
the lending process or deny the guarantor access to credit"
5ere) 5aw1ins and 0atterson do not claim that they were
excluded from the lending process due to their marital status"
4ndeed) they complain that they were improperly ncluded in
that process by being required to execute guaranties" #hus) we
believe that the purposes and policies of the EC! buttress
our interpretation of the statute(s plain meaning"
;

*% !s noted above) 5aw1ins and 0atterson do not argue that
they qualify as applicants for any reason other than their status
as guarantors" #hey have not alleged that they participated in
the loanCapplication process) and they have disclaimed having
any interest in 05C" !ccordingly) we conclude that 5aw1ins
and 0atterson are not applicants under the EC!) and thus
Community did not violate the EC! by requiring them to
execute the guaranties" !s such) the district court did not err in
granting summary judgment in favor of Community on
5aw1ins and 0atterson(s EC! claim or their EC!Cbased
affirmative defense"

=inally) because the district court properly granted summary
judgment in favor of Community on 5aw1ins and 0atterson(s
EC! claim and dismissed Community(s counterclaims) this
case will not proceed to trial" !s such) 5aw1ins and
0atterson(s argument that the district court erred in stri1ing
their demand for a jury trial is moot"

! ,onclusion
=or the foregoing reasons) we affirm"

CLL#3) Circuit +udge) concurring"
4 agree with the court that a guarantor is not an ,applicant-
within the meaning of 89 $"%"C" : 8;<8(a)" #he =ederal
6eserve 2oard thus exceeded its authority when it purported
to redefine ,applicant- in 8? C"="6" : ?@?"?(e) to include
,guarantors- for purposes of rules relating to when a creditor
may require the signature of a spouse or other person on a
credit instrument" 4 add these further reasons for joining the
judgment of the court"

#he Equal Credit pportunity !ct defines ,applicant)- in
relevant part) as ,any person who applies to a creditor """ for """
credit"- 89 $"%"C" : 8;<8a(b)" #he ordinary meaning of ,to
apply)- as understood at the time of the statute(s enactment in
8<EF and significant amendment in 8<E;) is ,to ma1e an
appeal or a request """ usu-all,. for so%ethn' of /eneft to
oneself """ LMto a ban1 for a loanN"- 0e/ster1s $hrd Ne2
Internatonal Dctonar, 8@9 (8<E8) (emphasis added)" $nder
that usual meaning) an ,applicant- who ,applies for credit- is
one who requests credit to benefit herself) not credit to benefit
a third party" #hat there are unusual meanings of ,apply- that
encompass ma1ing a request on behalf of another is not
sufficient to ma1e a term ambiguous for purposes of Chevron,
U.S.A., Inc. v. Natural Resources Defense Councl, Inc., F;E
$"%" ADE) 8@F %"Ct" ?EEA) A8 L"Ed"?d ;<F (8<AF)" !nalysis
under the first step of Chevron to determine whether the
statutory text is unambiguous begins with ordinary meaning"
Carcer v. Sala3ar, 999 $"%" DE<) DAA) 8?< %"Ct" 8@9A) 8E?
L"Ed"?d E<8 (?@@<)"

#he context of the EC! confirms that Congress employed
the ordinary meaning of ,apply- in the phrase ,applies for
credit"- #he statute contemplates a firstCparty applicant who
requests credit to benefit herself" %ection 8;<8(d)(8) directs
that within thirty days ,after receipt of a completed application
for credit) a creditor shall notify the applcant of its action on
the application"- (emphasis added)" #he statute(s use of the
definite article shows that the applicant is the single person to
whom credit would be extended) not a third party as1ing on
behalf of the putative debtor" See also %"6ep" 3o" <FO9A<) at
{0099999.0029/00533698.RTF / } 2014 Thomson Reuters. No clam to or!nal ".#. $o%ernment
&or's.
3
Hawkins v. Community Bank of Raymore, --- F.3d ---- (2014
EO8@ (8<E;)" %imilarly) the statute as amended in 8<<8 refers
to a creditor ta1ing action in connection with ,the applicant(s
application for a loan)- 89 $"%"C" : 8;<8(e)(8)) and it would
be unnatural to conclude that a third party who offers a
promise in support of an application thereby submits what the
statute describes as an ,application for a loan)- d., and a
,completed application for credit)- d. : 8;<8(d)(8)"

*& #he statute defines ,adverse action- on a credit application)
but excludes from that phrase ,a refusal to extend additional
credit under an e4stn' credt arran'e%ent 2here the
applcant s delnquent or other2se n default.- 89 $"%"C" :
8;<8(d)(;) (emphasis added)" #his provision confirms that
,the applicant- is the person to whom credit is extended and
who is responsible for ma1ing payments on an existing loan" !
guarantor or other thirdCparty requestor does not in ordinary
usage become ,delinquent- or ,in default- on a loan or other
existing credit arrangement" 2ut if a guarantor could be an
,applicant)- then the creditor(s refusal to extend additional
credit to a delinquent borrower would be an ,adverse action-
on the 'uarantor1s ,application)- thus entitling the thirdCparty
guarantor to a statement of reasons that the creditor need not
furnish to the firstCparty applicant" Id. : 8;<8(d)(?)" #his is not
a natural reading of the text"

#he statute specifically envisions the involvement of a third
party who requests an extension of credit to a firstCparty
applicant) but distinguishes between the thirdparty requestor
and the ,applicant-> ,Where a creditor has been requested /,
a thrd part, to ma1e a specific extension of credit directly or
indirectly to an applcant, the notification and statement of
reasons required by this subsection may be made directly by
such creditor) or indirectly throu'h the thrd part,, provided in
either case that the identity of the creditor is disclosed"- Id. :
8;<8(d)(F) (emphases added)" !gain) the statutory text
confirms that the ,applicant- is the party to whom credit will
be extended" When ordinary meaning aligns with the natural
reading of a term in the context of a statute) there is no
ambiguity that gives an agency license to adopt an alternative
definition" Carcer, 999 $"%" at DAAO<@"

#he regulators seemed to recogniPe the plain meaning of
,applicant- in the first decade after the EC! was enacted"
#he 2oard solicited comment in 8<E; about the meaning of
,applicant)- Equal Credit pportunity) F8 =ed"6eg" ?<)AE@)
?<)AE8 (proposed +uly ?@) 8<E;)) but ,to resolve confusion
about the scope of this term)- the 2oard specifically provided
that ,a guarantor) surety) endorser) or similar party- is not an
applicant" Equal Credit pportunity) F8 =ed"6eg" F<)8?D)
F<)8?F) F<)8D? (proposed 3ov" A) 8<E;)" !s the 2oard
ac1nowledged) the unadorned statutory definition of
,applicant- was sufficient to forbid a creditor to require the
signature of a guarantor on a discriminatory basis" Id. at
F<)8?F" 4f a creditworthy married person applies for credit)
and the creditor demands based solely on marital status that
her or his spouse sign a guaranty as a condition of extending
credit) then the creditor has violated the statute and
regulations) and the married applicant has a cause of action
against the creditor as an ,aggrieved applicant"- 89 $"%"C" :
8;<8e(a)"

*' #he 2oard(s effort to ,redefine Iapplicant( """ to include
guarantors- apparently was motivated by dissatisfaction with
Congress(s decision to limit the cause of action under the
EC! to an ,aggrieved applcant.- See Equal Credit
pportunityK 6evision of 6egulation 2K fficial %taff
Commentary) 9@ =ed"6eg" 8@)A<@) 8@)A<8) 8@)A<; (proposed
'ar" 8A) 8<A9)" #he regulators observed that if a creditor
illegally required a spouse to sign a guaranty as a condition of
extending credit to an applicant) then only the applicant.not
the guarantor.had ,standing to sue- as an ,aggrieved
applicant"- Id. at 8@)A<8K see also Equal Credit pportunityK
6evision of 6egulation 2K fficial %taff Commentary) 9@
=ed"6eg" FA)@8A) FA)@?@ (3ov" ?@) 8<A9)" #he redefinition of
,applicant- in 8? C"="6" : ?@?"?(e) to include ,guarantors-
was designed to give guarantors independent standing to sue"
#he 2oard believed that allowing guarantors to bring suit
would have the effect of ,enhancing protections)- although the
2oard also thought ,guarantors) if they have standing to sue)
would merely join in the lawsuit- brought by ,applicants- in
the normal case" 9@ =ed"6eg" at FA)@?9"

Whatever might be the salutary effects of the change in policy)
it was not a choice for the 2oard to ma1e" Congress opted to
limit the cause of action to an ,aggrieved applicant)- and the
statute gave ,applicant- its ordinary meaning of one who
applies for credit to benefit oneself" !ny decision to expand
the civil liability of creditors and to provide a cause of action
for guarantors must come from Congress"

8
#he 5onorable &ean Whipple) $nited %tates &istrict
+udge for the Western &istrict of 'issouri"
?
Congress has since amended the EC! to vest
authority to promulgate regulations under the statute
in the Consumer =inancial 0rotection 2ureau) rather
than in the =ederal 6eserve 2oard" See &oddO=ran1
Wall %treet 6eform and Consumer 0rotection !ct)
0ub"L" 3o" 888O?@D) : 8@A9(8)) 8?F %tat" 8DE;) ?@AD
(?@8@)"
D
!s noted above) a request for credit can be made
directly) or it can be made indirectly by see1ing to
increase the credit limit on an existing credit plan" 89
$"%"C" : 8;<8 a(b)" !s we have explained) we
certainly do not view executing a guaranty as a drect
request for credit" !nd 5aw1ins and 0atterson have
not argued that this case involves the sort of ,indirect-
request recogniPed under the EC!"
{0099999.0029/00533698.RTF / } 2014 Thomson Reuters. No clam to or!nal ".#. $o%ernment
&or's.
4
Hawkins v. Community Bank of Raymore, --- F.3d ---- (2014
F
5aw1ins and 0atterson also argue that several other
circuits have applied : ?@?"?(e)(s definition of
applicant to include guarantors" See, e.'., Slver%an v.
"astrch )ultple Investor *und, &.#., 98 ="Dd ?A (Dd
Cir"8<<9)K )a,es v. Chr,sler Credt Corp., DE ="Dd <
(8st Cir"8<<F)" 5owever) these cases applied the
regulatory definition without considering whether that
definition warranted Chevron deference" !s such) we
do not find those cases to be instructive here"
9
4n R& BB Acquston, the court also observed that the
EC!(s separate use of the terms ,applicant- and
,debtor- in other portions of the statute ,suggests that
the applicant and the debtor are not always the same
person"- E9F ="Dd DA@) ?@8F WL ?;@<;8;) at JF"
=rom this) the court inferred that ,it would be
reasonable to conclude that the applicant could be a
third party) such as a guarantor"- Id. We are not
persuaded that the EC!(s distinction between
applicants and debtors compels the conclusion that a
person can qualify as an applicant without appl,n'
for credit) that is) without requesting credit" #he
EC!(s definition of applicant unambiguously does
not include guarantors) and we are not inclined to
inject ambiguity into the statute(s plain text" See
Bfulco, FFE $"%" at DAE"
;
We also note that under 'issouri law) which governs
the loans and guaranties in this case) ,coCownership of
property by a husband and wife creates a presumption
of tenancy by the entirety"- &ederle v. &ederle, <8;
%"W"?d F?D) F?< ('o"Ct"!pp"8<<;)" ,!n execution
arising from a judgment against one spouse alone
cannot affect property held by a husband and wife as
tenants by the entireties"- 0ehrhe% v. Brent, A<F
%"W"?d ??E) ??< ('o"Ct"!pp"8<<9)" #hus) it li1ely
was necessary for 5aw1ins and 0atterson to execute
their guaranties in order to induce Community to loan
B?)@@@)@@@ to 05C because Community would then
be able to execute on any marital assets in the event of
a default" Community(s request that 5aw1ins and
0atterson execute guaranties would then have been
,sound commercial practice unrelated to any
stereotypical view of a wife(s role"- )oran, FE; ="Dd
at FF?"
{0099999.0029/00533698.RTF / } 2014 Thomson Reuters. No clam to or!nal ".#. $o%ernment
&or's.
5
Hawkins v. Community Bank of Raymore, --- F.3d ---- (2014
End of Document
2014 Thomson Reuters. No claim to original U.S. Government
Works.

{0099999.0029/00533698.RTF / } 2014 Thomson Reuters. No clam to or!nal ".#. $o%ernment
&or's.
6