John Duggan Argues ECOA Case to the Supreme Court of the United States

John Duggan argued to the Supreme Court of the United States in Hawkins v. Community Bank of Raymore, urging the Court to defer to long-standing federal regulations interpreting the Equal Credit Opportunity Act (“ECOA”).

Mr. Duggan’s clients are the wives of business owners who acquired real estate in Peculiar, Missouri to develop a residential subdivision. The lender required the wives to sign primary, absolute, and unconditional guaranties to repay the applied-for loans as a condition for extending credit to their husband’s business.

The wives filed suit, asserting the lender violated ECOA by requiring their guaranties. ECOA prohibits creditors from discriminating based on marital status against an “applicant with respect to any aspect of a credit transaction.” Regulation B, ECOA’s implementing regulation, specifies in its “Additional Parties Rule” that creditors may not require such spousal signatures.

In order to bring suit and recover money damages, the wives must be ECOA “applicants” which is defined as “any person who applies to a creditor directly for an extension, renewal, or continuation of credit.”  Regulation B further defines “applicant” to include guarantors. The United States Supreme Court granted certiorari to resolve a circuit split and determine whether Regulation B’s “applicant” definition permissibly interpreted ECOA.

Mr. Duggan urged the Court to grant the regulator’s ECOA interpretation deference using the framework first announced in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). ECOA’s text fails to speak with the precision necessary to definitively state “applicant” doesn’t include guarantors and other similar parties. Mr. Duggan insisted that regulators permissibly filled the legislative gap with a reasonable “applicant” interpretation because parties assuming primary, absolute, and unconditional liability (guarantors included) request extensions, renewals, or continuations of credit on behalf of the entity receiving the money.

The Supreme Court of the United States is expected to enter its opinion in the coming months.