United States District Court, N.D. New York
March 22, 2004.
TANYA R. POWELL, Plaintiff,
AMERICAN GENERAL FINANCE, INC., BENEFICIAL, a.k.a. HOUSEHOLD FINANCE REALTY CORP., INC., BSB BANK & TRUST CO., INC., NBT BANK, CHARTER ONE BANK, FSB, CITIFINANCIAL, INC., HSBC BANK, INC., and M&T BANK CORP., INC., Defendants
The opinion of the court was delivered by: FREDERICK SCULLIN, Chief Judge, District Page 2
MEMORANDUM-DECISION AND ORDER
[EDITORS' NOTE: THIS PAGE CONTAINED ATTORNEY NAMES.]
Plaintiff filed a complaint in this Court on December 31, 2002,
alleging that Defendants engaged in unfair and discriminatory lending
practices in violation of federal banking laws and the United States
Constitution. More specifically, she alleges violations of the Seventh,
Ninth, Tenth, Fourteenth and Fifteenth Amendments to the United States
Constitution. She also alleges violations of the Fair Housing Act
("FHA"), the Equal Credit Opportunity Act ("ECOA"), the Community
Reinvestment Act ("CRA"), and the Truth-in-Lending Act ("TILA").
See 42 U.S.C. § 3603; 15 U.S.C. § 1691;
12 U.S.C. § 2901; 15 U.S.C. § 1601;*fn1 respectively.
Plaintiff, an African-American resident of Binghamton, filed her
pro se complaint on December 31, 2002, and her amended complaint
on February 26, 2003. She alleges that Defendants discriminated against
her based on her gender and race by declining to extend her business
credit, personal credit, or a home mortgage loan. She also alleges that
Defendants have systematically discriminated against African-Americans by
denying them personal and business credit on the basis of race.
Presently before the Court are all Defendants' motions to dismiss the
complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).
A. Standard for Dismissal
In considering a motion to dismiss for failure to state a claim
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the
court must accept the allegations in the complaint as true and draw all
reasonable inferences in favor of the nonmoving party. See Fed.
R. Civ. P. 12(b)(6); see also Burnette v. Carothers,
192 F.3d 52, 56 (2d Cir. 1999). Hence, dismissal is appropriate only if "`it
appears beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief" Sheppard v.
Beerman, 18 F.3d 147, 150 (2d Cir. 1994) (citations omitted). This
standard is "applied with particular strictness when the plaintiff
complains of a civil rights violation." Branum v. Clark,
927 F.2d 698, 705 (2d Cir. 1991) (citations omitted).
Where a litigant proceeds pro se, the court must construe the
allegations in the complaint liberally and dismiss the complaint only
where the litigant could prove no set of facts entitling her to relief.
See Lerman v. Ed. of Elections, 232 F.3d 135, 140 (2d Cir.
With these standards in mind, the Court will address Plaintiff's
B. Plaintiff's standing
Article III, Section 2 of the United States Constitution limits the
jurisdiction of federal courts to "cases and controversies." See,
e.g., Flast v. Cohen, 392 U.S. 83, 94-95 (1968). Part of this
limitation on federal court jurisdiction requires that a plaintiff have
standing to bring her claim. See id. at 99-100. A plaintiff only
has standing if she can show that she is "a proper party to request an
adjudication of a particular issue. . . ." Id. at 100. A
plaintiff can demonstrate that
she has standing by showing that (1) she has sustained an injury;
(2) the injury is fairly traceable to a defendant's conduct; and (3) the
injury may be redressed through the relief that the plaintiff seeks.
See Fed. Election Comm'n v. Akins, 524 U.S. 11, 19 (1998)
(citations omitted). To demonstrate an injury, a plaintiff must show that
she sustained an actual, concrete injury that is neither ""`conjectural
or hypothetical.'"" Lujan v. Defenders of Wildlife,
504 U.S. 555, 560 (1992) (quotation omitted).
Defendant BSB Bank & Trust Co. ("BSB") asserts that Plaintiff lacks
standing to bring her claim because she did not apply to it for credit.
According to Defendant BSB, it has no record of Plaintiff applying for
credit in January, 2003. Defendant BSB contends instead that Plaintiff
solicited it for funds to support Enable Organization, a not-for-profit
organization for which she has no authority to act.
Plaintiff has alleged that Defendants injured her by unlawfully denying
her credit and potentially causing her business to fail. Furthermore,
this Court can grant monetary relief for causes of action arising under
the United States Constitution or federal banking laws and so Plaintiff's
injury is redressible. Although Defendant BSB alleges that Plaintiff did
not, in fact, apply to it for credit, such an argument attacks the
viability of Plaintiffs claim, which is not at issue in this motion.*fn2
Accordingly, the Court denies Defendant BSB's motion to dismiss to the
extent that it is based upon Plaintiff's lack of standing.
C. Plaintiff's claim under Regulation Z of TILA
TILA's Regulation Z protects consumers against predatory lending
practices by requiring lenders to disclose credit terms to borrowers.
See Pechinski v. Astoria Fed. S&L Ass'n, 238 F. Supp.2d 640,
642 (S.D.N.Y.) (citations omitted), aff'd, 345 F.3d 78 (2d
Cir. 2003). Regulation Z's provisions also restrict or ban certain
creditor practices in the areas of account cancellation, collections,
interest rates, solicitations, and bill error resolution. See
12 C.F.R. § 226.5 et seq. A plaintiff may state a cause of
action under TILA by alleging a violation of one of its provisions.
See Beaumont v. Citibank N.A., No. 01 Civ. 3393, 2002 WL 483431,
*3 (S.D.N.Y. Mar. 28, 2002). All Defendants moved to dismiss Plaintiffs
claims under TILA.*fn3
Defendants point out that TILA protects consumers by requiring that
banks and other creditors disclose credit terms to borrowers.
See 15 U.S.C. § 1602(u). According to Defendants,
they never extended any credit to Plaintiff at any time, and so she
cannot state a claim under the statute.*fn4 Moreover, Defendant
Citifinancial ("Citi") claims that, even if it had discriminated against
Plaintiff based on her race, TILA does not create a cause of action for
Plaintiff asserts only that Defendants denied credit to her and to
other African-Americans on the basis of race.
Although the language of TILA does not explicitly restrict the coverage
of the statute to an existing credit account, the provisions of
the statute demonstrate that Congress framed the statute to govern
existing credit accounts and credit account solicitation materials.
See, e.g., 12 C.F.R. § 226.6. Plaintiff has not alleged that
she had any type of account with any of the Defendants at any time or
that Defendants solicited her for a credit account. TILA has no
provisions that govern credit denial or racially discriminatory lending,
both of which form the crux of Plaintiff's claims. Accordingly, the Court
grants all Defendants' motions to dismiss Plaintiff's claims under TILA.
D. Plaintiff's claims under the CRA
The CRA requires a federal regulatory agency to assess whether a
lending institution endeavors to meet the credit needs of an entire
community, including low-income neighborhoods. See
12 U.S.C. § 2903(a)(1). The statute has no sharply delineated standards.
However, it broadly requires federal supervisory agencies to examine a
lending institution's efforts to lend to a broad spectrum of the
community when processing an application for eligibility as a deposit
facility. See Lee v. Ed. of Governors of Fed. Reserve Sys.,
118 F.3d 905, 913 (2d Cir. 1997). All Defendants moved for dismissal of
Plaintiff's claims under the CRA on the ground that the statute creates
private right of action.
As a basis for her claim, Plaintiff contends broadly that Defendants
have not complied with the CRA because they have failed to create loan
products which target African-American and working-class populations.
However, the Second Circuit has held that the CRA does not create a
private right of action. See id. (citation omitted). Therefore,
the Court grants all Defendants' motions to dismiss Plaintiff's claims
under the CRA.
E. Plaintiff's claims under the Seventh, Ninth, and Tenth
Amendments to the United States Constitution
The Seventh Amendment preserves the right to a jury trial in civil
cases. See U.S. Const. Amend. VII. As Defendants correctly point
out, a claim under the Seventh Amendment does not arise unless a
plaintiff has not received a jury trial on a cause of action for certain
types of legal relief. See Charter Communications Entm't I, LLC v.
McGuinness, No. 3:OOCV287, 2003 U.S. Dist. LEXIS 17240, *3 (D.
Conn., Sept. 29, 2003). Plaintiff has not alleged any facts which would
support a claim under the Seventh Amendment. Accordingly, the Court
grants all Defendants' motions to dismiss Plaintiff's Seventh Amendment
The Ninth Amendment does not create an independent cause of action.
See Rini v. Zwirn, 886 F. Supp. 270, 289 (E.D.N.Y. 1995)
(citation omitted). The Supreme Court has repeatedly interpreted the
Tenth Amendment, the reserved powers amendment, to speak only to issues
of federalism and state's rights. See, e.g., United States v.
Morrison, 529 U.S. 598, 649 n.18 (2000) (Souter, dissenting).
Accordingly, the Court grants all Defendants' motions to dismiss
Plaintiff's Ninth and Tenth Amendment claims.
F. Plaintiff's claims under the Fourteenth and Fifteenth
Amendments to the United States Constitution
Both the Fourteenth and Fifteenth Amendment restrain state action.
See, e.g., Tancredi v. Metro. Life Ins. Co., 316 F.3d 308, 312
(2d Cir. 2003) (citations omitted); Romeu v. Cohen,
265 F.3d 118, 128 (2d Cir. 2001). Plaintiff contends that, although
Defendants may claim that they are acting privately, their acts are
actually public and therefore subject to the Fourteenth Amendment. As
support for her assertion that Defendants' acts are public, Plaintiff
points out that Congress may enact laws that punish private
Plaintiff is correct in her assertion that Congress may regulate the
banking industry, including private banks, pursuant to the interstate
commerce clause. See U.S. Const. Art. I, § 8. However, a
plaintiff's complaint of discriminatory lending practices against private
banking institutions, even where a state or federal authority has heavily
regulated the industry, does not allege sufficient state action. See
Davidson v. Citicorp/Citibank, N.A., No. 90 CIV. 0941, 1990 WL
96991, *2 (S.D.N.Y. July 2, 1990) (citation omitted). Even read as
broadly as possible, Plaintiff's allegations do not form the basis for a
Fourteenth or Fifteenth Amendment claim; the banking statutes under which
Plaintiff asserted her other claims are the most appropriate remedy for
the discrimination of which she complains. Accordingly, the Court grants
all Defendants' motions to dismiss Plaintiff's claims under the
Fourteenth and Fifteenth Amendments.
G. Plaintiff's claim under Regulation B of the ECOA
Regulation B, part of the ECOA, prohibits lenders from denying credit
to individuals because of their race, color, religion, national origin,
sex, marital status, or age. See
15 U.S.C. § 1691 et seq.; see also
12 C.F.R. § 202.1.*fn5 The ECOA provides for a private cause
of action based on disparate impact or disparate treatment. See
Jones v. Ford Motor Credit Co., No. 00 CIV. 8330, 2002 WL 88431, *3
(S.D.N.Y. Jan. 22, 2002), rev'd on other grounds, 358 F.3d 205
(2d Cir. 2004). Courts analyze disparate treatment claims under the ECOA
in the same manner as Title VII employment cases. See Gross v. United
States Small Bus. Admin., 669 F. Supp. 50, 52 (N.D.N.Y. 1987)
(citations omitted). Therefore, to establish her claim, a plaintiff must
allege that she was a member of a protected class, that she was qualified
for the loan that she requested, and that the lender declined the loan
and showed a preference for a non-protected individual. See id. To
establish a prima facie case under a disparate impact theory, a
plaintiff must identify a specific policy or practice which the defendant
has used to discriminate and must also demonstrate with statistical
evidence that the practice or policy has an adverse effect on the
protected group. See Jones, 2002 WL 88431, at *3 (citations
Plaintiff alleges both disparate impact and disparate treatment causes
of action. She contends that banks have engaged in unfair business
practices that have prevented African-Americans from purchasing homes
and maintaining businesses for many years. As support for her disparate
impact claim, Plaintiff alleges that Defendants engage in certain
practices that have a disproportionate impact on African-American credit
and loan applicants. For example, Defendants routinely reject
applications for small loans. Defendants also rely upon information that
credit bureaus, appraisers, and brokers supply regarding a credit
application. Defendants also
rely on income levels and credit histories as indicators of
creditworthiness; such factors disproportionately affect
African-Americans. Plaintiff has also enumerated several more general
allegations. For instance, she alleges that banks and the U.S. banking
system have made credit unavailable to African-Americans.
As support for her disparate treatment claim, Plaintiff contends that
the loan officers to whom she gave her loan applications were all white
and did not adequately consider her application. Furthermore, she
contends that Defendants subjected her application to onerous
requirements even though her debt ratio "was not a problem." See
Amended Complaint at ¶ 20.
Defendants contend that Plaintiff has not alleged any actual events,
policies, or actions which she claims constitute discrimination, nor has
she alleged any circumstances that give rise to an inference of racial
discrimination.*fn6 As a result, her case fails on the first prong of
the disparate impact analysis because it articulates no policy or
practice. With respect to any disparate treatment claims, Plaintiff has
provided only a bare and unsupported assertion that she was qualified for
the loan; she has not alleged that she was more qualified than white
Although a motion for dismissal under 12(b)(6) tests only the adequacy
of a plaintiff's complaint, Defendants are correct in their assertion
that Plaintiff alleges no specific policy to support her disparate impact
claim. See Hack v. President & Fellows of Yale Coll.,
237 F.3d 81, 91 (2d Cir. 2000) (citation omitted). She broadly alleges that
Defendants' reliance on indicators of creditworthiness, such as credit
histories and income levels of applicants, causes banks to deny
credit disproportionally to African-American loan candidates.
However, ECOA regulations explicitly permit lenders to use race-blind
factors such as credit histories and income levels when determining
whether to extend credit. See 12 C.F.R. § 202.6(b)(5)(6).
Moreover, the regulations explicitly permit lenders to utilize
third-party credit rating organizations. See
12 C.F.R. § 202.10(b). Likewise, Plaintiff's complaint fails to allege a
"`causal connection between a facially neutral policy . . . and the
resultant proportion of minority' group members in the population at
issue." See Hack, 237 F.3d at 90-91 (quotation omitted).*fn7
In Jones, another ECOA case, the plaintiffs' case survived a motion
for dismissal because they alleged that a specific policy a
creditor's subjective computation of loan rates resulted in
disproportionately high interest rates for African-American borrowers.
See Jones, 2002 WL 88431, at * 1. In contrast, Plaintiff has not
alleged that Defendants used any subjective indicators when making loan
Plaintiff's three allegations in support of her disparate treatment
claim are that loan officers with whom she met were all white, that
Defendants subjected her application to more stringent scrutiny, and that
her debt ratio was acceptable and she therefore should have received the
requested loans. However, the race of the loan officers is not a fact
supporting an inference of discriminatory intent on the part of
Defendants. Furthermore, Plaintiff acknowledges that Defendants provided
her with legitimate reasons for rejecting her application, such as lack
credit history, lack of collateral, and the absence of a co-signer.
She does not allege any facts which would tend to show that she actually
had a sufficient credit history, sufficient collateral, and/or a
necessary co-signer. Whether her debt ratio was acceptable does not bear
on any of Defendants' stated reasons for declining to extend credit to
Plaintiff, and she provides no specific allegations as to exactly how
Defendants subjected her application to additional scrutiny vis-a-vis
non-minority loan applicants.
Accordingly, the Court grants all Defendants' motions to dismiss
Plaintiff's claims under the ECOA.
H. Plaintiff's claim under the FHA
The FHA prohibits discrimination against protected classes in any
transactions involving the sale or rental of housing. See
42 U.S.C. § 3604; see also Mitchell v. Shane, 350 F.3d 39, 47
(2d Cir. 2003). Plaintiff states generally that American banks have for
many years deliberately prevented African-Americans from obtaining home
loans at market rates.
In response, Defendants Citi, HSBC, M&T and NBT contend that
Plaintiff has not alleged that they denied her housing or granted her
housing on discriminatory terms or conditions. According to Defendants,
although the FHA allows for several types of actions, including one based
on failure to provide housing loans in a nondiscriminatory manner,
Plaintiff did not allege any facts showing that she engaged in any real
estate transaction or applied to Defendants for a home loan.
Defendants American General, Beneficial, Charter One, and BSB have
largely relied upon the same arguments that they raised with respect to
Plaintiff's claims under the ECOA; that is, that
even if they did reject Plaintiff's application for a home loan,
she has provided no specific allegations supporting a disparate treatment
or disparate impact claim.
Plaintiff did not allege that she applied for a housing-related loan or
engaged in a housing-related transaction with Defendant Citi. Likewise,
she alleges that she applied for business loans, not housing loans, from
Defendants HSBC, M&T, and NBT. Therefore, Plaintiff has not alleged
sufficient facts to support a prima facie case with respect to
With regard to the other Defendants, including Beneficial,
American-General, BSB Bank, and Charter One, Plaintiff alleged that she
applied either for a mortgage loan or for an unspecified loan. Construing
Plaintiff's pro se claims to suggest their strongest possible
allegations, she has alleged that these Defendants declined to approve
her application for a housing loan. However, as Defendants point out,
Plaintiff's claims under the FHA suffer from the same deficiencies as her
claims under the ECOA. That is, Plaintiff simply has not alleged
sufficient facts to support a claim of discrimination. She did not allege
how Defendants treated her differently from white applicants, nor has she
offered any specific examples of discriminatory policies. Her generalized
statement that banks discriminated against African-Americans from the
1900s onward is not sufficient to support a claim under the FHA.
Accordingly, the Court grants all Defendants' motions for dismissal of
Plaintiff's FHA claims.
After carefully considering the file in this matter and the parties'
submissions, as well as the applicable law, and for the reasons stated
herein, the Court hereby
ORDERS that all Defendants' motions to dismiss are
GRANTED in their entirety; and the Court further
ORDERS that Defendant Charter One Bank, FSB's motion for a
more definite statement is DENIED as moot; and the Court
ORDERS that the Clerk of the Court enter judgment in favor of
Defendants and close this case.
IT IS SO ORDERED.