Hawkins v. Community Bank of Raymore

Whether spousal guarantors have standing to bring a claim under the Equal Credit Opportunity Act (ECOA), and whether the Federal Reserve Board can include spousal guarantors as “applicants” to avoid discrimination against married women.

Respondent loaned over $2,000,000 to PHC Development, LLC (“PHC”), a Missouri company with two members. Petitioners, spouses of the PHC members, were required to execute personal guaranties for the loans. When PHC failed to make payment in April 2012, the respondent declared default and demanded payment from PHC and from petitioners as guarantors.

Petitioners filed an action against respondent, alleging that the respondent required them to execute guaranties solely because they are married to their respective husbands. They alleged that this requirement violated the Equal Credit Opportunity Act (hereafter, “ECOA”; 15 U.S.C. § 1691) by discriminating against them on basis of marital status. The respondent filed counterclaims, including claims for breach of their guaranties. Petitioners argued that the guaranties were unenforceable as an affirmative defense to respondent’s claims.

The district court granted summary judgment to respondent for the ECOA claim and ECOA-based affirmative defense. The Eighth Circuit affirmed, holding that guarantors are not “applicants” and therefore do not have standing to bring a claim under the ECOA.

The Supreme Court granted cert to decide: (1) whether spousal guarantors are excluded from being ECOA “applicants,” and (2) whether the Federal Reserve Board has authority to include spousal guarantors as “applicants” to eliminate discrimination.