United States District Court, W.D. Michigan
In re BURNS CONTRACTING, INC. et al., IRON CROSS, LLC et al., BROWNSTONE PROPERTIES, L.L.C. et al., MICKENS GROUP et al., PREMIUM PROPERTIES UNLIMITED, LLC et al., PRECIOUS CREATION, INC. et al., JESSE STRICKLAND et al., REFLECTIONS, LLC et al., J. TAYLOR ELECTRIC, INC. et al., JEFF A. MOYER, Plaintiffs, MERCANTILE BANK MORTGAGE COMPANY, LLC et al. Defendants.
HOLMES BELL, UNITED STATES DISTRICT JUDGE
are 10 cognate cases pending before this Court, and each
Plaintiff filed a complaint alleging discriminatory lending
practices in violation of the Equal Credit Opportunity Act
(“ECOA”), 15 U.S.C. § 1691e. The matter is
before the Court on Defendants' motion to dismiss
Plaintiffs' third-amended complaint for failure to state
Community Reinvestment Act (“CRA”), 12 U.S.C.
§ 2901, is a federal statute that encourages banks to
provide services and make loans to residents in all segments
of the population, with an emphasis on lending to low-income
neighbors. In response to the CRA, Mercantile Bank adopted a
community reinvestment strategy, and created a CRA committee.
As a result of deliberate efforts through the CRA committee,
the bank provided business loans to each Plaintiff.
Julien, a loan officer at Mercantile Bank, approved
Plaintiffs' loans and managed each relationship. In 2006,
Ms. Julien stopped working at Mercantile Bank. After Ms.
Julien left, Plaintiffs allege that Defendants began to treat
them differently. From 2007 through 2009, Defendants made
adverse lending actions, called loans, and foreclosed on
collateral for late payments and tax liens. Plaintiff alleges
that these reasons were mere pretext, and that Defendants
were engaging in discriminatory lending practices. Plaintiff
asserts that Defendants tightened their policies to eliminate
black business borrowers. Plaintiffs refer to emails sent
among Mercantile Bank employees as displaying discriminatory
intent and racial animus.
the 10 cognate cases allege violations of the ECOA.
Defendants argue that Plaintiffs' claims are barred by
the statute of limitations. Defendants also argue that
Plaintiffs have failed to plead the necessary elements of a
plausible discrimination claim.
Rule of Civil Procedure 12(b)(6) provides that a party may
assert “failure to state a claim upon which relief can
be granted” as an affirmative defense. “[T]o
survive a motion to dismiss [under 12(b)(6)], the complaint
must contain either direct or inferential allegations
respecting all material elements to sustain a recovery under
some viable legal theory.” In re Travel Agent
Comm'n Antitrust Litig., 583 F.3d 896, 903 (6th Cir.
2009) (internal quotation marks omitted). In reviewing such a
motion, the Court must “accept all of plaintiff's
factual allegations as true and determine whether any set of
facts consistent with the allegations would entitle the
plaintiff to relief.” G.M. Eng'rs & Assoc.,
Inc. v. W. Bloomfield Twp., 922 F.2d 328, 330 (6th Cir.
1990). As a general rule, however, the Court “need not
accept as true legal conclusions or unwarranted factual
inferences, and conclusory allegations or legal conclusions
masquerading as factual allegations will not suffice.”
In re Travel Agent, 583 F.3d at 903.
a complaint does not need detailed factual allegations, a
“plaintiff's obligation to provide the grounds of
his entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of a cause of
action's elements will not do.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotations omitted). The pleading standard “demands
more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Id. (quoting Twombly,
550 U.S. at 570).
Statute of Limitations Defense
arising under the ECOA and its regulations are subject to a
two-year statute of limitations if the claim accrued before
July 21, 2010. Haug v. PNC Fin. Servs. Grp., Inc.,
930 F.Supp.2d 871, 878 (N.D. Ohio 2013) (“Although PNC
cites to the five-year limitations period as governing the
matter, that period did not take effect until July, 2010, and
the two-year limitations period applied prior to claims
accruing prior to that date.”). Absent an express
statement by Congress that an expansion of the limitations
period should apply retroactively, courts following the
Supreme Court's holding in Landgraf v. USI Film
Prods., 511 U.S. 244, 265 (1994), have uniformly
concluded that “newly enacted legislation that
lengthens a statute of limitations does not apply
retroactively to revive a claim that had expired under the
prior limitations period.” Id. (citing In
re ADC Telecomms., Inc. Secs. Litig., 409 F.3d 974, 977
(8th Cir. 2005); Enter. Mortgage Acceptance Co., LLC,
Secs. Litig. v. Enter. Mortgage Acceptance Co., 391 F.3d
401, 409-10 (2d Cir. 2004); Chenault v. U.S. Postal
Serv., 37 F.3d 535, 539 (9th Cir. 1994)). Further, the
ECOA's “focus is upon the time of discriminatory
actions, not at the time at which the consequences of the
action became painful.” Mays v. Buckeye Elec. Co-op
Inc., 277 F.3d 873, 879 (6th Cir. 2002). Thus, any ECOA
claim accruing before July 21, 2010 is subject to the
two-year limitations period that was in effect under 15
U.S.C. § 1691e(f).
filed a motion to dismiss, arguing that Plaintiffs' claim
accrued in 2008, and the suit is barred by the two-year
statute of limitations. To determine the accrual date, the
Court will look to the specific ECOA and regulatory
violations that Plaintiffs allege caused their injuries.
See Mays, 277 F.3d at 879-80. Plaintiffs allege
claims of intentional racial discrimination and disparate
impact discrimination. Plaintiffs' expert analyzed
statistical data showing that Defendants treated
similarly-situated white and black business owners
differently between 2008 and 2011. (ECF No. 35,
PageID.556-58.) Plaintiffs allege that, in 2006, Defendants
decided “not to lend any more money to black
people.” (Id. at PageID.553.) Plaintiffs also
allege adverse actions taken by Defendants in 2007 and 2008,
after loan officer Pat Julien left Mercantile Bank.
argue that, based on the third-amended complaint,
Plaintiffs' claim accrued no later than 2008. Plaintiffs
argue that the claims accrued by December 31, 2011, at the
earliest, but more likely accrued in 2012, when
Defendants' intentional plan to shrink commercial lending
came to light. (ECF No. 35, PageID.618.) ...