Taylor v. Accredited Home Lenders, Inc.

• Decision Date: 19 September 2008
• Docket Number: Civil No. 07cv1732 JAH (JMA).
• Citation: 580 F.Supp.2d 1062
• Court: U.S. District Court — Southern District of California
• Parties: Dana TAYLOR, Plaintiff, v. ACCREDITED HOME LENDERS, INC., and Accredited Home Lenders Holding Company, Defendants.

Page 1062

580 F.Supp.2d 1062

Dana TAYLOR, Plaintiff, v. ACCREDITED HOME LENDERS, INC., and Accredited Home Lenders Holding Company, Defendants.

Civil No. 07cv1732 JAH (JMA).

United States District Court, S.D. California.

September 19, 2008.

Jennie Lee Anderson, Lori Erin Andrus, Micha Star Liberty, Andrus Liberty & Anderson LLP, San Francisco, CA, Barry Walker, The Walker Law Firm, Birmingham, AL, for Plaintiff.

Edward P. Swan, Jr., Andrea M. Kimball, Luce Forward Hamilton and Scripps, San Diego, CA, Kirk D. Jensen, Matthew P. Previn, Buckley Kolar LLP, Washington, DC, for Defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS [Doc. No. 5]

JOHN A. HOUSTON, District Judge.

INTRODUCTION

On August 31, 2007, Plaintiff, a resident of Alabama, filed a complaint, on behalf of herself and other similarly situated African American homeowners, against Accredited Home Lenders, Inc., and Accredited Home Lenders Holding Company. Plaintiff alleges Defendants' subjective finance charges in their "discretionary pricing policy" have a widespread discriminatory impact on African American applicants for home mortgage loans, in violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691, et. seq. and the Fair Housing Act ("FHA"), 42 U.S.C. § 3601, et. seq. Complaint at 2. The discretionary pricing policy allows brokers to impose discretionary mark-ups as additional points in interest. Id. at 8. Plaintiff alleges the discretionary pricing policy, "although facially neutral ... has a disproportionately adverse effect on African Americans compared to similarly-situated Caucasians in that African Americans pay disparately more discretionary charges than similarly-situated Caucasians." Id. at 8-9.

Plaintiff further alleges she entered into a mortgage transaction with Accredited on July 29, 2005, and was subject to Defendant's discretionary pricing policy, and, as a result was charged a disproportionately greater amount in non-risk-related credit charges than similarly situated Caucasian persons. Id. at 10. She seeks certification of the class, declaratory relief, injunctive relief, disgorgement and damages.

Defendants filed a motion to dismiss on November 5, 2007. Plaintiff filed an opposition on January 17, 2008, and Defendants filed a reply on February 19, 2008. Plaintiff filed a notice of recent decision in support of her opposition on February 25, 2008, and Defendant filed a response on April 30, 2008. A hearing was held on May 5, 2008, after which the Court took the matter under submission. Plaintiff filed a notice of recent decision in support of her opposition to the motion on June 1, 2006. Defendants filed a response to the notice on June 9, 2008, and a notice of recent decision on June 10, 2008. Plaintiff filed a response to Defendants' notice of recent decision on June 12, 2008. As set forth below, the Court DENIES the motion.

LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal is warranted under Rule 12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984); see Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) ("Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law."). Alternatively, a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson, 749 F.2d at 534. While a plaintiff need not give "detailed factual allegations," he must plead sufficient facts that, if true, "raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007).

In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe all inferences from them in the light most favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir.2002); Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996). However, legal conclusions need not be taken as true merely because they are cast in the form of factual allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir.2003); Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.1981). When ruling on a motion to dismiss, the Court may consider the facts alleged in the complaint, documents attached to the complaint, documents relied upon but not attached to the complaint when authenticity is not contested, and matters of which the Court takes judicial notice. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.2001). If a court determines that a complaint fails to state a claim, the court should grant leave to amend unless it determines that the pleading could not possibly be cured by the allegation of other facts. See Doe v. United States, 58 F.3d 494, 497 (9th Cir.1995).

DISCUSSION

Defendants seek to dismiss the complaint (1) as time barred, (2) as an improper disparate impact claim, because neither the FHA nor the ECOA permit disparate impact claims (3) for failure to state a claim of disparate impact under the FHA or the ECOA, (4) because the ECOA does not permit Plaintiff to bring claims under both the ECOA and the FHA; (5) the ECOA claim is prohibited by the multiplecreditor rule; (6) Plaintiff fails to state any claims against Accredited Home Lenders Holding Company (the "Holding Company").

I. Statute of Limitations

Defendants argue Plaintiffs claims are barred, because they were filed beyond the two year statute of limitations. A civil action seeking relief under the FHA must be commenced "no later than 2 years after the occurrence or the termination of an alleged discriminatory housing practice ..." 42 U.S.C. § 3613(1)(A). An action brought under the ECOA must be commenced no more "than two years after the date of the occurrence of the violation." 15 U.S.C. § 1691e(f). Plaintiff alleges she entered into a mortgage transaction with Defendants and was subject to the discriminatory credit charges on July 9, 2005. Plaintiffs action filed on August 31, 2007, is outside the two year limitations period. Plaintiff argues the continuing violation doctrine, fraudulent concealment and the discovery rule demonstrate her complaint is timely.

A. Continuing Violation Doctrine

Plaintiff argues Defendants discriminatory practices have been continuous and ongoing and her complaint is timely under the continuing violation doctrine. Defendants argue the complaint alleges the extension of credit at a higher rate is the violation, as such the violation occurred and terminated when the loan closed. They argue the allegations support a single isolated incident. Defendants maintain Plaintiff is confusing continuing violation with continuing effects.

In Havens Realty Corp. v. Coleman, the Supreme Court held that where a plaintiff challenges an ongoing discriminatory practice rather than an isolated incident of conduct, and the practice continues into the limitations period, the complaint is timely if filed within the statutory period from the last occurrence of the practice. 455 U.S. 363, 380-81, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982). The Court reasoned the purpose of statutes of limitations is to keep "stale" claims out of court and there is no staleness issue with a challenge to continuing violations. Id. at 381, 102 S.Ct. 1114. The Court determined the plaintiffs' FHA claims alleging the defendants' practice of "racial steering"—encouraging patterns of segregation in housing by steering members of a racial group to buildings occupied by members of the same race and steering them from buildings occupied by members of other races-deprived them of the benefits of living in an integrated neighborhood were not based upon an isolated incident of discrimination, but an ongoing practice of which the last incident occurred within the limitations period. Id.

Plaintiff maintains she suffers an actionable wrong every time she makes a mortgage payment improperly inflated by the discretionary pricing policy. Defendant argues Plaintiff alleges an isolated incident, the extension of credit at a higher rate, which occurred and terminated when the loan closed.

Here, the alleged specific discriminatory act is being charged a higher amount in non-risk related credit charges than similarly situated Caucasian persons based upon Defendants' discretionary pricing policy. Plaintiff is being charged a higher amount in credit charges than non-African Americans every time she makes a payment on the loan. The Court agrees that each mortgage statement that seeks inflated payments for the loan based upon discriminatory terms is another violation visited upon Plaintiff. As such, the Court finds, as alleged, the complaint is timely.

B. Fraudulent Concealment and Discovery Rule

Because this Court finds the complaint timely pursuant to the continuing violation doctrine, fraudulent concealment and the discovery rule will not be addressed.

II. Whether the ECOA or FHA Allows Disparate Impact Claims

Defendants argue the decision in Smith v. City of Jackson, 544 U.S. 228, 125 S.Ct. 1536, 161 L.Ed.2d 410 (2005) demonstrates neither the ECOA or the FHA allows disparate impact claims and lower court decisions allowing disparate impact claims are no longer viable precedent. They maintain the Smith opinion indicates the text of an anti-discrimination statute determines whether the statute permits disparate impact claims and the language of ECOA section 701 and the FHA section 805 mirror Title VII section 703(a)(1) and Age Discrimination in Employment Act ("ADEA") section 4(a)(1) which permit disparate treatment claims but not disparate impact claims. They further argue neither of the statutes has any language focusing on the effects of actions comparable to the language of Title VII section...