Opposition Brief — Hawkins v. Cmty. Bank of Raymore, 135 S. Ct. 1492 (2015) (No. 14-520)

| ne Coun US.

FLED

No. 14-520 DEC 30 2014

) OFFICE OF THE CLERK

In The

Supreme Court of the United States

°

VALERIE J. HAWKINS, and

JANICE A. PATTERSON,

Petitioners,

Vv.

COMMUNITY BANK OF RAYMORE,

Respondent.

+

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

°

BRIEF IN OPPOSITION FOR RESPONDENT

COMMUNITY BANK OF RAYMORE

°

GREER S. LANG

Counsel of Record

LATHROP & Gace, LLP

2345 Grand Blvd., Suite 2800

Kansas City, Missouri 64108

(816) 292-2000

(816) 292-2001 (facsimile)

glang@lathropgage.com

Attorneys for Respondent

Community Bank of Raymore

COCKLE LEGAL BRIEFS | 800) 2725-4564

WWW COCKLELEGALBRIEFS COM

i

COUNTERSTATEMENT OF

QUESTION PRESENTED

Did the Federal Reserve Board exceed its author-

ity when it purported to re-define who is an “appli-

cant” for credit under 15 U.S.C. §169la(b) of the

Equal Credit Opportunity Act to include guarantors

in Regulation B, 12 C.F.R. §202.2(e), thereby purport-

ing to expand the conduct made unlawful and the

persons protected by the ECOA’s non-discrimination

provisions, despite the unambiguous definition of that

term provided by Congress?

‘i

CORPORATE DISCLOSURE

Respondent Community Bank of Raymore

(“CBR”) is a wholly-owned subsidiary of LoLynn

Financial Corporation, a Missouri corporation. There

is no publicly-held corporation that owns ten percent

or more of CBR’s stock.

ill

TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF QUESTION PRE-

a sceptomiasiaiaiioiion i

CORPORATE DISCLOSURE .....................:.02000: ii

ee CIID critniciicsiniesnsticccincisssicscudetiansiins iii

_ |g TEER means vi

ESAT LS EEN A ae ae ee One 1

STATEMENT OF THE CASE.....................-.000000+ 3

REASONS FOR DENYING THE PETITION ..... 10

I. Review is not warranted because it will

have no effect on the outcome of this case

where Petitioners repeatedly represented

that they have an interest in PHC, and

actually do, and that their guaranties

were provided at PHC’s request, and

Petitioners waived any alleged ECOA-

SI siociiscthstndansinsinhiniiepiehiegciigihsenidicladendieeittadnaie 10

A. Petitioners are bound by their

admission that their guaranties were

provided at PHC’s request. Thus, Peti-

tioners cannot show that they were

required to provide their guaranties

in purported violation of the ECOA.... 14

II.

iv

TABLE OF CONTENTS—Continued

Page

B. Petitioners cannot contradict their rep-

resentation that they have “a direct

and substantial economic interest

in [PHC] and expect[ed] to derive

substantial benefits from any loans”

they guaranteed. Thus, CBR could

properly require their guaranties .......

C. Petitioners waived any ECOA-claims

in the valid, retrospective waivers in

EEE as ea

The Eighth Circuit’s recent disagreement

with the Sixth Circuit on the issue of

whether the statutory definition of the

term “applicant” in the ECOA is un-

ambiguous does not warrant review. The

Eighth Circuit correctly interpreted the

statutory definition according to its plain

meaning, whereas the Sixth Circuit

ignored basic rules of statutory construc-

tion and its prior holdings in order to

manufacture an ambiguity. Further, in

its most recent amendment of the ECOA

in 2010, Congress made clear that the

“applicant” is the borrower, not third

parties who participate in the larger loan

transaction, such as guarantors................

A. Recognizing its paramount obligation

to interpret the ECOA according to

its plain meaning, the Eighth Circuit

refused to manufacture an ambiguity

to validate an invalid regulation.........

16

19

21

v

TABLE OF CONTENTS—Continued

Page

B. The Sixth Circuit manufactured an

“ambiguity” in order to impose its

own view of what would best effectu-

ate the ECOA’s goal of preventing

marital-status discrimination............. 28

C. Congressional silence is not a license

for courts to ignore a statute's plain

meaning. But here, Congress has

not remained silent. In the 2010

amendments to the ECOA, Congress

re-confirmed that the “applicant” is

the person who applies for a loan to

BI TI icceleitiinindnindertennuncnsiawenteihieienitdne 32

III. The Eighth Circuit’s decision does not

“conflict” with any decisions by a state

court of last resort. The Alaska, Iowa,

Missouri and Virginia Supreme Courts

have never actually decided the issue.

Rather, those courts merely assumed,

without challenge and without conduct-

ing the required Chevron-analysis, that

the regulatory re-definition is valid.......... 36

ET aise scosicnsidinneioaadieadaiaaledeipinsindbini 38

APPENDIX

United States District Court for the Western

District of Missouri Order, Dated November

Be IEE siinsinincetonenemstncsinseniipinminpeniliemctetianssinniants App. 1

vl

TABLE OF AUTHORITIES

Page

CASES

Anderson v. United Fin. Co., 666 F.2d 1274 (9th

ERE IASI en ee nye ieee eS =r RTD 10

Apex Hosiery Co. v. Leader, 310 U.S. 469, 60

REEL Re a ae ae OO re 33

Arizonans for Official English v. Arizona, 520

ab WY Big | 1: ; RCE neNNneEr 37

Arvest Bank v. Uppalapati, No. 11-03175-S-

DGK, 2013 WL 85336 (W.D.Mo. Jan. 7, 2013)....... 32

Ballard v. Bank of America, 734 F.3d 308 (4th

NIRS CARESS SRE ODE PE Sm DI 16, 19, 20

Bank of the West v. Kline, 782 N.W.2d 453

EEE ee aL ere ee 36, 37

Barney v. Holzer Clinic, Ltd., 110 F.3d 1207

I a le cea ie 30

Baybank v. Bornhofft, 694 N.E.2d 854 (Mass.

SIT i6 istididabactnindinaasiideeaddanupnnpidadsaialimnnsmedmnieaais 17,19

Boone Nat. Sav. & Loan Ass’n v. Crouch, 47

S.W.3d 371 (Mo. banc 2004).............................. 36, 37

Carcieri v. Salazar, 555 U.S. 379, 129 S.Ct.

a. RN Be Ne 27

CB 2010 LLC v. Ithaca Coatings, No. 12-13930,

2013 WL 2250168 (E.D.Mich. May 22,

SRE eee eR eee ee nL Ne 19, 20, 21

Central Bank of Kansas City v. Perry, 427

S.W.3d 285 (Mo. Ct. App. 2014).................:ccceeeeeeee 24

Vil

TABLE OF AUTHORITIES—Continued

Page

Champion Bank v. Regional Development, LLC,

No. 4:08CV1807-CDP, 2009 WL 1351122

Sy SEU MN acti ciieiscaidtintennittcninngniinainncies 32

Chevron, U.S.A. Inc. v. Natural Res. Def. Coun-

cil, 467 U.S. 837, 104 S.Ct. 2778 (1984)......... passim

Citgo Petroleum Corp. v. Bulk Petroleum Corp.,

No. 08-CV654-TCK-PJC, 2010 WL 3931496

Ns Ty ig We ieciicdnidiosennotetnicinianiisennnnin 31

Cole v. Intern. Union, United Auto., Aerospace

& Ayr. Implement Workers of America, 533

F.3d 932 (Sth Cir. 2008) ................cc0.0.00......84, 25, 37

Coney v. Union Pacific R.R., 136 F.3d 1195 (8th

LE Pe Oe Re ere NCS Paeaieoe 15

Connecticut Nat. Bank v. Germain, 503 U.S.

Sy Re I, II CI cictsietscdscinsicesssocscnneenenercees 22

Empire Bank v. Dumond, No. 13-CV-388, 2013

WL 6238605 (N.D.Okla. Dec. 3, 2013) ............. 30, 31

Erlenbaugh v. U.S., 409 U.S. 239, 93 S.Ct. 477

IIIT sachet eecteitanacnistghuceigel aladiceadlathaeeatelanaelitalaiicmsncpacninn 33

Eure v. Jefferson National Bank, 448 S.E.2d

I IIIT 1s ntiessinsetniicinnmdiaiinipieiabebedianets 37

Hawkins v. Community Bank of Raymore, 761

ee Ie CG ID eiinicctcsresivncccniiinaccecnseei passim

Henderson v. Henderson’s Ex’r, 13 Mo. 151,

REET ASENADERe OE eNOS 18

Vili

TABLE OF AUTHORITIES—Continued

Page

Johnson ex rel. Johnson v. JF Enterprises,

LLC, 400 S.W.3d 763 (Mo. 2013) .............c:cecceceeeeeee 17

Mayes v. Chrysler Credit Corp., 37 F.3d 9 (1st

I I dtaliatinicdeabasatuninitniiiadiccsemienietianendaies 10, 13, 32

Midlantic Nat'l Bank v. Hansen, 48 F.3d 693

STEIN: SUITE cis titsiinnceehilcieehtipniblgntsbaieetideispatanidiiemien 16

Moran Foods, Inc. v. Mid-Atlantic Market

Development Co., LLC, 476 F.3d 436 (7th Cir.

_—_, ARERR RE eee ere ee 10, 11, 18, 25, 32

Noriega v. Pastrana, 130 S.Ct. 1002 (2010)............... 13

Regions Hosp. v. Shalala, 522 U.S. 448, 118

Se Saar Tih cethareegenchieinnbaciealiceneiidieaitiie 23

Riggs Nat'l Bank v. Webster, 832 F.Supp. 147

SE TIT ssi hrccndasssieahtiiashiaibieneestesnnnasinnnieanmnbaainnicinaiags 17

RL BB Acquisition, LLC v. Bridgemill Com-

mons Development Group, LLC, 754 F.3d 380

cll passim

Schindler Elevator Corp. v. U.S. ex rel. Kirk,

tS Eearsee 22, 28, 29

Silverman v. Eastrich Multiple Investor Fund,

em Ee ff ee 32

Smithville 169 v. Citizen’s Bank & Trust,

No. 4:11-CV-0872-DFK, 2013 WL 434044

UR I Rs a cclesuniisioctia 32

Still v. Cunningham, 94 P.3d 1104 (Alaska

RRR AS RSE ne ean an, a a ee 36

ix

TABLE OF AUTHORITIES—Continued

Page

Thompson v. Koenen, 396 S.W.3d 429 (Mo. Ct.

NaI cicticnseieesiesatlinahceibiesisecinneeaibasuelicninieiad dias 19

Truckenbrodt v. First Alliance Mortgage Co.,

No. 96-C-822, 1996 WL422150 (N.D.IIl. July

Ss TE iidiidecdcniiindasitinicuibsspinhbiimianantiondasianeidesianbedapniiads 19

U.S. v. Meadors, 753 F.2d 590 (7th Cir. 1985)........... 14

U.S. v. Rutherford, 442 U.S. 544, 99 S.Ct. 2470

5 ACESTEREVER TERE ar eevee En STR Henan NOD REO 33

U.S. v. Wilkens, 742 F.3d 354 (8th Cir. 2014)...... 24, 37

Utility Air Regulatory Group v. E.PA., 134

ca a eaomaananeliiie 27

Warnebold v. Union Pacific R.R., 963 F.2d 222

| ___ a IRRED eeee ani cearoe nen DEC N a ener 21

Warren v. Paragon Technologies Group, Inc.,

ee ee ee I GU, TD cree virecnsosnncesnnncsensowsasises 15

STATUTES

IN IE seiheli hdsiihiniiihcseneinisiaiassdesipiabenciubiniiioiineanieh passim

I I a Cia deicienitialadis passim

AE EEN ee erent 2, 33, 34, 35

I a a 35

a a 29

ee I Cs BI CIID oscernececesccniacusconcteniunossevens 17

Mo. Rev. Stat. Ann. §474.160 ...00..0......0cccccceceeceeeeeeees 17

es SA, ee RO ccc cccscccesenivinsenstnnnaveowsenns 17

xX

TABLE OF AUTHORITIES—Continued

Page

REGULATIONS

RC nee SE EE Ie 12

ge 2 8 Se 10, 12, 19, 31

I 7, 12, 14, 16

OTHER AUTHORITIES

Dodd-Frank Wall Street Reform and Consumer

Protection Act, Pub.L. No. 111-203, 124 Stat.

I ial 22, 33, 34

Equal Credit Opportunity Act, Pub.L. No. 94-

fk | | ___ RERR ORS repenons mc Ennen mane 10

Official Staff Interpretations, 12 C.F.R. Pt. 202,

I cctlicisnsinctiintidomadatelniinnidhebsincenatinlient 16

Revision of Regulation B, 50 Fed.Reg. 48,018

EERSTE A Ea eerste een Be ORE eee eRe ener 12

S.Rep. No. 589, 94th Cong., 2nd Sess. 3 (1976),

reprinted in 1976 U.S. CoDE Conc. & ADMIN.

EAE SS Ey Aa kee eae cE 11, 12

Webster’s Third New International Dictionary

ERE REALE Ne ee een hie SEN es eee 24

Webster’s Third New International Dictionary

ESR ESI RIE Pn eC me 26

xl

TABLE OF AUTHORITIES—Continued

Page

TREATISES

STEPHEN M. SHAPIRO, et al., SUPREME COURT

PRACTICE, Ch. 4.4(f) (10th ed. 2013)...........0..0000000.. 13

2B NORMAN J. SINGER, et al., SUTHERLAND

STATUTES AND STATUTORY CONSTRUCTION,

re en sceciceemtineusnmuadenniinmaaaanse 33

1

INTRODUCTION

Petitioners request that the Court grant a writ of

certiorari to review the Eighth Circuit's decision in

Hawkins v. Community Bank of Raymore, 761 F.3d

937 (8th Cir. 2014). In Hawkins, the Eighth Circuit

held that a guarantor is not an “applicant” for credit

under the plain meaning of the statutory definition

provided by Congress in the Equal Credit Opportuni-

ty Act (“ECOA”), 15 U.S.C. §1691, et seg., and that the

Federal Reserve Board (“FRB”) exceeded its authority

when, more than 10 years after the ECOA’s enact-

ment, and though the original regulatory definition—

consistent with the plain meaning of the statutory

definition—expressly excluded guarantors, it at-

tempted to re-define the regulatory definition to

include guarantors.

Although the Eighth Circuit reached a different

result than the Sixth Circuit did two months earlier

in RL BB Acquisition, LLC v. Bridgemill Commons

Development Group, LLC, 754 F.3d 380 (6th Cir.

2014), the petition should be denied because Petition-

ers have failed to demonstrate that the Eighth Cir-

cuit, applying the two-step inquiry dictated by

Chevron, U.S.A. Inc. v. Natural Res. Def. Council, 467

U.S. 837, 104 S.Ct. 2778 (1984), and well-defined

rules of statutory construction, erred in finding that

the statutory definition is unambiguous and does not

include guarantors. Nor have Petitioners shown that

the disagreement between the Eighth and Sixth

Circuits creates an intolerable conflict.

2

Recognizing the inherent weakness in the Sixth

Circuit’s “ambiguity” finding, Petitioners argue that

the Court should examine the statute using the

definition they wish Congress had used: “The ques-

tion for this Court is whether...guarantors are ‘appli-

cants’ for ‘any aspect of a credit transaction’ under the

ECOA.” (Pet. at 4). But that is not the statutory

definition Congress provided. And neither Petitioners

nor the Court are at liberty to rewrite Congress’

unambiguous definition under the guise of statutory

construction. Moreover, Congress re-confirmed in the

2010 amendments to the ECOA that the “applicant”

is the first-party loan applicant who applies for credit

directly for its own benefit, and not third parties

“connected with” the applicant, such as the borrow-

er’s owners or guarantors. See 15 U.S.C. §1691c-2.

Further, contrary to Petitioners’ assertion, the

Eighth Circuit’s decision does not “conflict” with the

decision of any state court of last resort. Rather, in

the Alaska, Iowa, Missouri and Virginia Supreme

Court decisions to which Petitioners cite, the courts

merely assumed—without challenge by the litigants,

without performing the required Chevron-analysis,

and without actually deciding the issue—that the

FRB’s regulatory re-definition is valid. Thus, those

decisions do not conflict with the Eighth Circuit’s

decision in Hawkins, because the courts in those

cases did not address or decide the issue.

More importantly, however, the petition should

be denied because any decision this Court reaches

regarding the FRB’s authority to re-define who is an

3

“applicant” under the ECOA will have no impact on

the ultimate outcome of this case. That is because

Regulation B, even if it is valid, only prohibits a bank

from requiring a spousal-guaranty, and expressly

permits requiring a spousal-guaranty when the

guarantor-spouse has an interest in the borrowing

entity or otherwise benefits from the loan. Here, over

the course of five years, Petitioners repeatedly repre-

sented to CBR that their guaranties were being

provided “at the request of the Borrower” and that

they had “a direct and substantial economic interest

in the Borrower and expect{ed] to derive substantial

benefits from [the] loans....” Because Petitioners are

bound by their representations, they cannot show

that CBR required their guaranties. Further, Peti-

tioners waived any alleged ECOA-violations pursuant

to the valid, retrospective waivers in their guaranties.

Thus, even though the Eighth and Sixth Circuits

disagree over whether the FRB’s regulatory re-

definition of the term “applicant” to include guaran-

tors is valid, resolution of that issue is irrelevant to

the ultimate outcome of this case. Accordingly, this

case does not present the proper vehicle for the Court

to address that issue. The petition should therefore be

denied.

+

STATEMENT OF THE CASE

In 2004, Gary Hawkins, a successful certified

public accountant, and Chris Patterson, as co-trustee

4

of the Chris L. Patterson and Janice A. Patterson

Living Trust dated June 14, 2000 (the “Trust”), decid-

ed to embark on a speculative, side venture to develop

a residential subdivision in Peculiar, Missouri (the

“PHC-Property”), in the hope of capitalizing on the

booming real estate market. To avoid personal! liabil-

ity with regard to their development activities, they

chose to acquire and develop the PHC-Property

through PHC Development, LLC, a Missouri limited

liability company (“PHC”) they formed for that pur-

pose. Gary Hawkins and the Trust’ are two of PHC’s

members.

Petitioners Valerie Hawkins (“Hawkins”) and

Janice Patterson (“Patterson”) are Gary Hawkins’ and

Chris Patterson’s spouses. Hawkins is a Missouri-

licensed speech-language pathologist. She received

her undergraduate degree in 1986 and her Master’s

degree in 2011. Patterson received her bachelor’s

degree in business administration in 1977 and,

together with her husband, owns and operates sever-

al companies that own and operate a number of

convenience stores/gas stations in Missouri. The

Pattersons’ companies are owned by the Trust, and

the Pattersons are the Trust’s sole trustees and

lifetime beneficiaries.

' The Trust’s capital contributions to PHC came from the

Patterson's jointly-owned account, held in the name of their

d/b/a, “Patterson Enterprises.” All of the checks for the Trust’s

capital contributions were written and signed by Janice Patter-

son.

5

Between 2005 and 2008, PHC applied for and

obtained four commercial loans from CBR in the total

sum of $2,077,900 to acquire and develop the PHC-

Property. Collectively, the loans were modified, ex-

tended and renewed twelve times. At PHC’s request.

each of the loans and renewals was guaranteed by

Petitioners and Gary Hawkins and Chris Patterson.*

Petitioners each signed a total of sixteen guaranties.

In signing their first three guaranties, Petition-

ers affirmatively represented and warranted, in

writing, that they were being provided “at the request

of [PHC],” and that they each had “a direct and

substantial economic interest in [PHC] and expect/ed]

to derive substantial benefits from any loans and

financial accommodations resulting in the creation of

the indebtedness guarantied....”

In signing their remaining thirteen guaranties,

Petitioners represented and warranted, in writing,

that “no representations or agreements of any kind”

were made to them “which would limit or qualify in

any way the terms of [their guaranties)”; that their

guaranties were being “executed at [PHC’s] request

and not at the request of [CBR]”; that they read,

understood and agreed to the terms of their guaranties;

* The Joans and several of the Pattersons’ guaranties were

secured by deeds of trust on the PHC-Property and/or one of the

Pattersons’ convenience stores, known as the “Rush Hour.” The

Rush Hour was owned by one of the Pattersons’ limited liability

companies, Patterson Raymore. LLC (“Patterson Raymore”),

which is also owned by the Trust.

6

that the guaranties fully reflected their intentions;

and that they had an opportunity to consult with

their own counsel prior to signing them. Petitioners

also unambiguously waived any claims or defenses

against CBR, other than actual payment:

GUARANTOR’S WAIVERS ....

Guarantor also waives any and all rights or

defenses based on suretyship or impairment

of collateral including, but not limited to, any

rights or defenses arising by reason of...(C)

any disability or other defense of Borrower,

of any other guarantor, or of any other per-

son...other than payment in full..., of the In-

debtedness;...or (F) any defenses given to

guarantors at law or in equity other than ac-

tual payment and performance of the In-

debtedness.

Guarantor further waives and agrees not to

assert or claim at any time any deductions to

the amount guaranteed under this Guaranty

for any claim of setoff, counterclaim, counter

demand, recoupment or similar right....

GUARANTOR’S UNDERSTANDING WITH

RESPECT TO WAIVERS. Guarantor war-

rants and agrees that each of the waivers set

forth above is made with Guarantor’s full

knowledge of its significance and conse-

quences....

On April 16, 2012, after PHC refused to make

required loan payments, CBR declared the loans in

default and made demand for payment on PHC,

7

Petitioners and the other guarantors. CBR subse-

quently foreclosed on the PHC-Property and the Rush

Hour.

Attempting to retract their prior, repeated repre-

sentations made to induce CBR to make and renew

the loans, on May 31, 2012, Petitioners sued CBR in

the District Court, claiming for the first time that

they had no interest in PHC and that CBR “required”

their guaranties. Petitioners claimed that by doing so,

without first performing a creditworthiness-analysis

of their husbands,’ CBR discriminated against them

on the basis of their marital status in violation of the

ECOA, 15 U.S.C. §1691l(a), and Regulation B, 12

C.F.R. §202.7(d).‘ Petitioners made these assertions

notwithstanding that (1) Hawkins admitted in sworn

testimony that Gary Hawkins did not have the finan-

cial wherewithal to do the PHC-project on his own; (2)

Chris Patterson signed numerous loan documents

acknowledging that the PHC-membership interest is

* Patterson also asserted that as a trustee and beneficiary

of the Trust she had a direct interest in Patterson Raymore and

the Rush Hour, and that CBR violated the ECOA by “requiring”

her to sign the Patterson Raymore deeds of trust on its behalf.

* At the same time, PHC, Gary Hawkins. Chris Patterson,

Patterson Raymore and the Patterson’s operating company,

Patterson Oil Co., Inc., sued CBR in the Circuit Court of Cass

County, Missouri, seeking to escape liability on the loans, Garv

Hawkins’ and Chris Patterson's guaranties and the deeds of

trust. See PHC Development, et al. v. Community Bank of

Raymore, No. 12CA-CV001896 and Patterson Oil Co., et al. v.

Community Bank of Raymore, No. 12CA-CV001932. Those

actions remain pending.

8

held by the Trust, rather than by himself, individual-

ly; and (3) Patterson admitted in sworn testimony

that she, the Trust, and the Pattersons’ LLC’s are one

and the same: “I am me, I am the trust, I am every

LLC....We’re all one.”

After Petitioners sued CBR, it asserted a coun-

terclaim for breach of Petitioners’ guaranties, and

subsequently amended its counterclaim to include a

claim for fraud, based on Petitioners’ assertion that

the representations they made in their guaranties

were false. Petitioners asserted CBR’s alleged ECOA-

violation as an affirmative defense.

On summary judgment, the District Court held

that Petitioners, as guarantors, were not “applicants,”

and that CBR did not violate the ECOA by obtaining

their guaranties. (Petitioners’ Appendix (“Pet.App.”)

20-23).° The District Court entered judgment against

Petitioners on their ECOA-claim and struck their

ECOA-defense (the “ECOA Ruling”). Id. In an earlier

ruling, the District Court struck Petitioners’ jury

demand (the “Jury Waiver Ruling”), finding that

Petitioners were educated and sophisticated and that

they “knowingly and voluntarily” agreed to waive

their right to a jury trial when they signed their

guaranties. In doing so, the District Court found that

Petitioners repeatedly represented that they read,

* The District Court also held that Patterson could not state

an ECOA-claim based on the Patterson Raymore deeds of trust.

(Pet.App. 23). Petitioners did not appeal that ruling.

9

understood and agreed to the terms of their guaran-

ties, that their guaranties fully reflected their inten-

tions, and that they had the opportunity to discuss

the same with their attorneys, and held that it would

not “allow the Plaintiffs to evade the agreed-upon

waiver simply because they no longer wish to be

bound by it.” (Respondent’s Appendix (“Resp.App.”) 8-

9).

After declining to exercise supplemental jurisdic-

tion over CBR’s counterclaims,’ the District Court

entered its Amended Judgment on September 10,

2013. Petitioners appealed the ECOA and Jury Waiv-

er Rulings. However, on appeal, Petitioner’s did not

challenge the District Court’s conclusion that they

“knowingly and voluntarily” waived their right to a

jury trial or any of the factual findings supporting

that conclusion.

On August 5, 2014, the Eighth Circuit affirmed

the ECOA Ruling and declined to review the Jury

Waiver Ruling, finding it was moot. (Pet.App. 10-11).

Hawkins, 761 F.3d 937. In affirming the ECOA Rul-

ing, the Eighth Circuit, applying the two-step inquiry

required by Chevron, correctly determined that (1)

the statutory definition of the term “applicant” in 15

U.S.C. §1691la(b) is unambiguous and does not in-

clude a guarantor, and (2) the FRB exceeded its

* CBR subsequently re-filed its counterclaims in state court.

See Community Bank of Raymore v. Valerie Hawkins, et al., Case

No. 13CA-CV002998. That action is still pending.

10

authority when it purported to re-define that term to

include guarantors in 12 C.F_R. §202.2(e).

S

REASONS FOR DENYING THE PETITION

I. Review is not warranted because it will

have no effect on the outcome of this case

where Petitioners repeatedly represented

that they have an interest in PHC, and ac-

tually do, and that their guaranties were

provided at PHC’s request, and Petition-

ers waived any alleged ECOA-violations.

The ECOA was enacted in 1974’ “to eradicate

discrimination waged against women, especially

married women whom creditors traditionally refused

to consider for individual credit.” Anderson v. United

Fin. Co., 666 F.2d 1274, 1277 (9th Cir. 1982): see also

Mayes v. Chrysler Credit Corp., 37 F.3d 9, 11 (1st Cir.

1994). Prior to its enactment, creditors traditionally

refused to extend individual credit to married women

and required that husbands co-sign their wives’ loan

applications as a condition of approving such loans.

Anderson, 666 F.2d at 1277. Thus, as Judge Posner

recognized in Moran Foods, Inc. v. Mid-Atlantic

Market Development Co., LLC, 476 F.3d 436 (7th Cir.

" The ECOA was amended in 1976 to prohibit discrimina-

tion against an applicant on the basis of race, color, religion,

national origin and age, in addition to sex and marital status.

Equal Credit Opportunity Act, Pub.L. No. 94-239, §2, 90 Stat.

251 (1976).

ll

2007), “[s]o far as the prohibition against discrimina-

tion on the basis of marriage is concerned...it is

apparent that what the [ECOA) was intended to do

was to forbid a creditor to deny credit to a woman on

the basis of a belief that she would be not be a good

credit risk because she would be distracted by child

care or some other stereotypically female responsibil-

ity.” Id. at 441 (citations omitted).

The ECOA provides that “(ijt shall be unlawful

for any creditor to discriminate against any applicant,

with respect to any aspect of a credit transaction...on

the basis of...marital status...” 15 U.S.C.

§1691(a)emphasis added). For purposes of the pro-

scribed conduct, Congress unambiguously defined an

“applicant” as:

[A]ny person who applies to a creditor direct-

ly for an extension, renewal, or continuation

of credit, or applies to a creditor indirectly by

use of an existing credit plan for an amount

exceeding a previously established credit

limit.

15 U.S.C. §1691a(b).

Consistent with Congress’ express intent “that

the essential prohibition in [the] legislation is di-

rected at discrimination against applicants,” S.Rep.

No. 589, 94th Cong., 2nd Sess. 3 (1976), reprinted in

1976 U.S. Cope Conc. & ADMIN. News 403, 407

12

(“S.Rep. No. 94-589”\emphasis added),’ the original

regulations adopted by the FRB, acknowledging the

unambiguous, statutory definition, expressly excluded

guarantors from the regulatory definition:

Applicant means any person who requests or

who has received an extension of credit from

a creditor, and includes any person who is or

may be contractually liable regarding an ex-

tension of credit other than a guarantor, sure-

ty, endorser, or similar party.

12 C.F.R. §202.2(e) (1977)(emphasis added).

However, effective December 16, 1985, in direct

conflict with Congress’ clear intent, the FRB purport-

ed to substantively change the ECOA’s scope by re-

defining the term “applicant” to include guarantors.

12 C.F.R. §202.2(e) (1985).* Despite the FRB’s attempt

* Not surprisingly, the word “guarantor” does not appear

anywhere in the ECOA’s legislative history. /d.

* In re-defining who is an “applicant” for credit, the FRB

claimed that “the principal effect of the amendment [was] to give

guarantors...standing to seek legal remedies when a violation

occurs under §202.7(d).” Revision of Regulation B, 50 Fed.Reg.

48,018, 48,020 (1985). However, the Official Staff Interpreta-

tions confirmed that the effect of the amendment was much

broader than simply granting “standing” to a guarantor where

requiring a guaranty constituted discrimination against the

“applicant” for credit and that, under the FRB’s re-definition,

the ECOA and Regulation B would now “bar a creditor from

requiring the signature of a guarantor’s spouse just as they bar

the creditor from requiring the signature of an applicant's

spouse.” 50 Fed.Reg. 48.018, 48,052 (emphasis added). Thus, the

FRB’s re-definition purports to substantively change both the

(Continued on following page)

13

to re-define the term “applicant” to include guaran-

tors, Congress has never amended the statutory

definition to include anyone other than those persons

that come within the term’s plain meaning, i.e., a

borrower. And it has never expanded the conduct

prohibited by the ECOA to encompass anything other

than discrimination against an “applicant.”

Petitioners suggest that the disagreement be-

tween the Eighth Circuit in Hawkins, 761 F.3d 937

and the Sixth Circuit in RL BB Acquisition, 754 F.3d

380, regarding the validity of the FRB's re-definition

of the term “applicant” to include guarantors, war-

rants review of that issue in this case. But resolution

of that issue is irrelevant to the ultimate outcome of

this case, which, irrespective of the FRB’s re-

definition, can be sustained on a number of alterna-

tive grounds. See Noriega v. Pastrana, 130 S.Ct. 1002,

1009 (2010)(noting that review of a statute’s validity

is not warranted where decision can be sustained on

alternate grounds); STEPHEN M. SHAPIRO, et al., Su-

PREME COURT PRACTICE, Ch. 4.4(f) at 249 (10th ed.

2013\noting that where resolution of an issue “is

irrelevant to the ultimate outcome of the case before

the Court,” review is not warranted).

conduct prohibited and the persons afforded protection. See

Mayes, 37 F.3d at 11 (“the regulation’s change in ‘standing’ was

actually a surrogate for an enlarged view of what is unlaw-

hy |

14

A. Petitioners are bound by their admis-

sion that their guaranties were pro-

vided at PHC’s’ request. Thus,

Petitioners cannot show that they

were required to provide their guar-

anties in purported violation of the

ECOA.

The fundamental prohibition in the regulations

implemented by the FRB is that a creditor shall not

require the signature of the applicant’s spouse on a

credit instrument except in limited circumstances. 12

C.F.R. §202.7(d). But nothing in the ECOA or the

regulations prohibits a creditor from obtaining a

spousal-guaranty when it is offered or provided at the

borrower’s request. Jd.; see also U.S. v. Meadors, 753

F.2d 590, 593 (7th Cir. 1985)(holding that the ECOA

was not implicated where wife was not required to

sign guaranty, but voluntarily did so).

Here, over the course of five years, in order to

induce CBR to loan PHC over $2 million for a specu-

lative real estate venture, Petitioners represented on

sixteen separate occasions that their guaranties were

being provided “at the request of [PHC/.” On each

occasion, Petitioners also acknowledged that they

read, understood and agreed to the terms of their

guaranties, that their guaranties fully reflected their

intentions, and that they had the opportunity to

consult with counsel prior to signing them. And while

Petitioners had no qualms in making these represen-

tations to induce CBR to make the loans, now that

they no longer find them convenient, Petitioners seek

15

to cavalierly toss their solemn, written representa-

tions aside.

The District Court, finding that Petitioners were

sophisticated and educated and that they “knowingly

and voluntarily” waived their right to a jury trial

when they signed their multiple guaranties, refused

to allow Petitioners to evade their repeated, written

representations when they similarly sought to recant

that agreement “simply because they no longer

wish[ed] to be bound by it.” (Resp.App. 5-9). Petition-

ers did not appeal! that ruling and are bound by the

District Court’s findings and conclusions. Coney v.

Union Pacific R.R., 136 F.3d 1195, 1197 (8th Cir.

1998). And just like Petitioners are bound by their

knowing and voluntary waiver of their right to a jury

trial, they are equally bound by their repeated repre-

sentations that their guaranties were provided at

PHC’s request. Warren v. Paragon Technologies Group.

Inc., 950 S.W.2d 844, 846 (Mo. 1997)(“Parties are

presumed to read what they sign.”).

Because CBR did not require Petitioners’ guaran-

ties, whether the FRB’s re-definition of “applicant” to

include guarantors is valid or not is irrelevant to the

outcome of this case, as neither the ECOA nor Regu-

lation B prohibit a spouse from voluntarily providing

a guaranty, as Petitioners did here. Thus. the petition

should be denied.

16

B. Petitioners cannot contradict their

representation that they have “a di-

rect and substantial economic interest

in [PHC] and expectied] to derive sub-

stantial benefits from any loans” they

guaranteed. Thus, CBR could properly

require their guaranties.

Petitioners claim that they have no interest in

PHC or the loans. But that is not what they repre-

sented to CBR when they signed their first three

guaranties. Rather, to induce CBR to loan PHC over

$2 million, Petitioners confirmed, in writing, that:

13. RELIANCE. I acknowledge that you

are relying on this Guaranty in extending

credit to the Borrower, and I have signed this

Guaranty to induce you to extend such cred-

it. [represent and warrant to you that I have

a direct and substantial economic interest in

[PHC] and expect to derive substantial bene-

fii. from any loans and financial accommo-

dations...guarantied hereby.

The Official Staff Interpretations of Regulation B

permit a lender to require the owners of the borrower

to guarantee a loan. Official Staff Interpretations, 12

C.F.R. Pt. 202, Supp. I, §202.7(d)6). And the cases

hold that “a lender can require the signature of a

borrower’s spouse who co-owns the entity benefiting

from the loan.” Ballard v. Bank of America, 734

F.3d 308, 310-11 (4th Cir. 2013); see, e.g., Midlantic

Natl Bank v. Hansen, 48 F.3d 693, 700 (3d Cir.

1995\where loans financed company co-owned by

17

spouses, “at the very least,” wife was a de facto joint

applicant who could be required to guarantee lcans);

Riggs Nat'l Bank v. Webster, 832 F.Supp. 147, 151

(D.Md. 1993where loan was obtained to renovate

property owned by borrower’s wife, she was a “de

facto joint applicant” who could be required to sign

loan); Baybank v. Bornhofft, 694 N.E.2d 854, 859

(Mass. 1998)(where co-maker owned a 25% interest

in trust that received loan proceeds and trust’s

assets were collateral for the loan, co-maker/

beneficiary was a joint applicant and could be re-

quired to sign loan).

Despite their belated protestations that they

have no interest in PHC or the loans, Petitioners’

assertions contradict the express representations

they made to induce CBR to make the loans.” If those

representations were untrue, Petitioners could easily

have struck those statements from their guaranties

and given CBR a ‘air chance to protect itself against

after-the-fact charges of wrongdoing. Permitting

Petitioners to disavow those representations now,

only after the loans have been fully funded and are in

default, would violate Missouri’s parol evidence rule,

destroying the sanctity of written contracts. Johnson

" In Missouri, spouses have a marital interest in the other

spouse’s property which is subject to a forced, elective-share at

death. Mo. Rev. Stat. Ann. §§ 474.160, 474.170. This marital

interest is more than a “mere expectancy.” and permits a wife to

maintain an action during her husband's lifetime to recover

property transferred in fraud of her martial interest. Id. at

§474.150.

18

ex rel. Johnson v. JF Enterprises, LLC, 400 S.W.3d

763, 769 (Mo. 2013)(the parol evidence rule is a

substantive rule that precludes the use of extrinsic

evidence to contradict an integrated agreement, and

is intended to preserve the sanctity of contracts).

Missouri law prohibits Petitioners from using their

own fraud to escape the bar of the parol evidence

rule. Henderson v. Henderson’s Ex’r, 13 Mo. 151, 1850

WL 4163, 2 (1850)(a party cannot use its own fraud to

vary or contradict a contract). Thus, because Peti-

tioners cannot contradict their written representa-

tions, and because obtaining their guaranties was

permissible in light of Petitioners’ representations,

any decision by this Court regarding the FRB’s au-

thority to re-define “applicant” to include guarantors

will not change the outcome of this case."

Moreover, while Petitioners claim that Chris

Patterson, as a co-trustee, and not the Trust, is the

PHC-member, Patterson admitted that she and the

" As the Eighth Circuit noted, under Missouri law, “co-

ownership of property [and accounts] by a husband and wife

creates a presumption of tenancy by the entireties,” such that

“execution against one spouse alone cannot affect property

held...as tenants by the entirety.” Hawkins, 761 F.3d at 942, n. 6

(internal citations omitted). Considering that Missouri spouses

can move their property in and out of tenancy by the entirety

status at whim, depriving a creditor of access to assets and

accounts it took into consideration in deciding to extend credit

prior to default and before the lending relationship failed,

requiring Petitioners’ guaranties would have been a “sound

commercial practice unrelated to any stereotypical view of a

wife’s role.” Jd. (quoting Moran Foods, 476 F.3d at 442).

19

Trust are one and the same: “I am me, I am the trust,

I am every LLC....We’re all one.” Further, all capital

contributions made to PHC came from jointly-owned

funds in the Pattersons’ joint account, held in the

name of their d/b/a, “Patterson Enterprises,” giving

Patterson a direct interest in PHC. And Patterson, as

a co-trustee and lifetime beneficiary of the Trust,

holds a legal and beneficial interest in the PHC-

membership interest. Horn v. Muckerman, 307

S.W.2d 482, 485 (Mo. 1957); Thompson v. Koenen, 396

S.W.3d 429, 435 (Mo. Ct. App. 2013). Because Patter-

son has an interest in the PHC-membership interest

and hence, PHC, even under the FRB’s re-definition,

Patterson’s guaranties could have properly been

required. See Baybank, supra. Thus, the validity of 12

C.F.R. §202.2(e) is irrelevant to the ultimate outcome

of this case, and the petition should therefore be

denied.

C. Petitioners waived any ECOA-claims

in the valid, retrospective waivers in

their guaranties.

Rights under the ECOA, like other federal statu-

tory rights, can be waived. Ballard, 734 F.3d at 313-

314; CB 2010 LLC v. Ithaca Coatings, No. 12-13930,

2013 WL 2250168, 9 (E.D.Mich. May 22, 2013); see

also Truckenbrodt v. First Alliance Mortgage Co., No.

96-C-822, 1996 WL422150, 2 (N.D_Ill. July 24, 1996)

(“There is no indication that Congress intended to

preclude a waiver of judicial remedies under the

ECOA.”).

20

In CB 2010, the court held that although such

rights can only be waived retrospectively, where the

conduct complained of was the bank’s obtaining

guaranties without first making a creditworthiness

determination, as Petitioners claim here, the alleged

ECOA-violation had already occurred at the time the

defendants signed their guaranties. 2013 WL

2250168, 9. Thus, the waiver of claims and defenses

in the defendants’ guaranties operated retrospectively

and barred their ECOA-claim. /d.; Ballard, 734 F.3d

at 313-314 (declining to enforce waiver in original

guaranties, but holding that waivers in subsequent

loan-restructuring was valid).

Like the retrospective waivers in the CB 2010

guaranties, which are identical to the waivers in the

last thirteen guaranties Petitioners signed, Petition-

ers waived “any defenses given to guarantors at law

or in equity other than actual payment and perfor-

mance of the Indebtedness,” and waived and agreed

not to assert “any claim of setoff, counterclaim, coun-

ter demand, recoupment or similar right.” 2013 WL

2250168, 9. Petitioners similarly warranted that

“each of the waivers...[was] made with Guarantor’s

full knowledge of its significance and consequences,”

that they fully read, understood and agreed to the

guaranties’ terms, that the guaranties fully reflected

their intentions, and that they had an opportunity to

consult with counsel prior to signing them. /d.

Because any alleged ECOA-violations occurred

before Petitioners signed their guaranties, the waivers

in those guaranties are valid, retrospective waivers

21

and bar Petitioners’ ECOA-claims and defenses. CB

2010, supra at 3, 9; accord, Warnebold v. Union

Pacific R.R., 963 F.2d 222, 223 (8th Cir. 1992). Thus,

whether the FRB’s re-definition is valid is irrelevant

to the outcome of this case. The petition should

therefore be denied.

IT.

The Eighth Circuit’s recent disagreement

with the Sixth Circuit on the issue of

whether the statutory definition of the

term “applicant” in the ECOA is unam-

biguous does not warrant review. The

Eighth Circuit correctly interpreted the

statutory definition according to its plain

meaning, whereas the Sixth Circuit ig-

nored basic rules of statutory construc-

tion and its prior holdings in order to

manufacture an ambiguity. Further, in its

most recent amendment of the ECOA in

2010, Congress made clear that the “ap-

plicant” is the borrower, not third parties

who participate in the larger loan trans-

action, such as guarantors.

This case raises the unremarkable question of

a federal agency’s authority to adopt regulations

that directly contradict Congress’ clear intent, as

unambiguously expressed in a statute. Although the

Court has not previously addressed Regulation B’s

22

validity,” there is nothing exceptional about applying

the now-canonical, two-step analysis dictated by the

Court in Chevron to determine whether the FRB’s re-

definition of the term “applicant” to include guaran-

tors is valid.

Under Chevron’s framework, a court must first

determine “whether Congress has directly spoken to

the precise question at issue. If the intent of Congress

is clear, that is the end of the matter; for the court, as

well as the agency, must give effect to the unambigu-

ously expressed intent of Congress.” 467 U.S. at 842.

104 S.Ct. at 2781. Thus, “liJf a court, employing

traditional tools of statutory construction, ascertains

that Congress had an intention on the precise ques-

tion at issue, that intention is the law and must be

given effect.” Jd. at 843, n. 9, 104 S.Ct. 2782, n. 9.

“Statutory construction must begin with the language

employed by Congress and the assumption that the

ordinary meaning of that language accurately ex-

presses the legislative purpose.” Schindler Elevator

Corp. v. U.S. ex rel. Kirk, 131 S.Ct. 1885, 1891

(2011 citation omitted). Thus, “[w]hen the words of a

statute are unambiguous...[the] first canon [of statu-

tory construction] is also the last,” and the “judicial

inquiry is complete.” Connecticut Nat. Bank v.

* The ECOA was amended in 2010 to transfer rule-making

authority to the Consumer Financial Protection Bureau

(“CFPB”). See Dodd-Frank Wall Street Reform and Consumer

Protection Act, Pub.L. No. 111-203, §§ 1085(1), (3), 124 Stat.

2083 (2010) (“Dodd-Frank Act”).

23

Germain, 503 U.S. 249, 253-254, 112 S.Ct. 1146,

1149 (1992). It is only where “the statute is silent or

ambiguous with respect to the specific issue” present-

ed that a court proceeds to Chevron’s second step,

requiring that the court determine whether “the

agency's reading fills a gap or determines a term in a

reasonable way in light of the Legislature’s design.”

Regions Hosp. v. Shalala, 522 U.S. 448, 450, 118 S.Ct.

909, 911 (1998)(citing Chevron, 467 U.S. at 843, n. 11,

104 S.Ct. at 2782, n. 11).

A. Recognizing its paramount obligation

to interpret the ECOA according to its

plain meaning, the Eighth Circuit re-

fused to manufacture an ambiguity to

validate an invalid regulation.

In Hawkins, the Eighth Circuit, applying well-

defined rules of statutory construction, held that the

statutory definition of the term “applicant” is not

ambiguous and that under that definition, a guaran-

tor is not an “applicant” and chus, is not entitled to

protection from marital-status discrimination under

the ECOA. Hawkins, 761 F.3d at 941-943.

In reaching this conclusion, the Eighth Circuit

noted that Congress explicitly provided that “[t]o

qualify as an applicant under the ECOA, a person

must ‘applly] to a creditor directly for...credit....’” Id.

at 941 (quoting §1691a(b)). Looking to the definition

of the term “apply,” which means “to make an appeal

or request esp(ecially] formally and often in writing

24

and usulally] for something of benefit to oneself,” id.

(quoting Webster’s Third New International Diction-

ary 105 (2002)), the court concluded that “the plain

language of the ECOA unmistakably provides that a

person is an applicant only if she requests credit.” Jd.

Recognizing that “a guaranty is an undertaking...to

answer for payment of some debt, or performance of

some contract, of another person in the event of

default,” which is “collateral and secondary to the

underlying loan transaction between the lender and

borrower,”” the court reasoned that by signing a

guaranty, a person does not request credit. 761 F.2d

Seizing upon the Eighth Circuit’s use of the term “sec-

ondary,” Petitioners argue that the court ignored that their

guaranties render them “primarily and unconditionally” liable.

Petitioners, however, admitted in the Eighth Circuit that their

liability was contingent on PHC’s default. Moreover, their

argument ignores the very nature of a guaranty, which only

subjects them to liability in the event of default. Central Bank of

Kansas City v. Perry, 427 S.W.3d 285, 288 (Mo. Ct. App. 2014X“A

guaranty is a contract in which a guarantor agrees to become

secondarily liable for the obligation of a debtor in the event the

debtor does not perform the primary obligation....The heart of a

contract for guaranty is that the signor has agreed to be liable

principally for another’s debt,” upon default.). That contingent

liability distinguishes a guarantor from a co-maker, who is

responsible for making payments both before and after default.

Further, Petitioners failed to raise this argument in the District

Court, and only raised it for the first time in their reply in the

Eighth Circuit, thereby waiving it. Cole v. Intern. Union, United

Auto., Aerospace & Agr. Implement Workers of America, 533 F.3d

932, 936 (8th Cir. 2008)arguments not raised in the district

court in opposing summary judgment are waived on appeal):

U.S. v. Wilkens, 742 F.3d 354, 360 (8th Cir. 2014 arguments not

raised in an opening brief on appeal are waived).

25

at 941-942 (internal citation omitted). And because a

guarantor does not request credit, the court concluded

that a guarantor does not “qualify as an applicant

under the unambiguous text of the ECOA.” Jd. at 941.

In reaching this conclusion, the court agreed with

Judge Posner, who similarly found that “there is

nothing ambiguous about [the term] ‘applicant’ and

no way to confuse an applicant with a guarantor.” Jd.

at 942 (quoting Moran Foods, 476 F.3d at 441). The

court therefore held that it would not defer to the

FRB’s re-definition, and that “a guarantor is not

protected from marital-status discrimination by the

ECOA.” Id. at 942. Thus, because Petitioners only

argued that they qualified as “applicants” based on

their status as guarantors and did not assert that

they participated in the loan application process, * the

court held that Petitioners are not “applicants,” and

that CBR did not violate the ECOA by “requiring”

their guaranties. Jd. at 943.

Judge Colloton, in his concurring opinion, noted

that under the “usual meaning” of the term “to apply,”

‘* Petitioners suggest that even if they were not applicants

in connection with the original loans, they were on each renewal!

because they “certainly wanted ‘an extension, renewal or

continuation of credit.’” Petitioners waived this argument by

failing to raise it in the District Court. Cole, 533 F.3d at 936.

Further, Petitioners’ argument, bereft of any facts, fails to

explain how a guarantor’s mere hope that the maturity date of a

loan will be postponed constitutes a request or application “for

an extension, renewal or continuation of credit.” 15 U.S.C.

§1691a(b).

26

as understood at the time the ECOA was enacted, “an

‘applicant’ who ‘applies for credit’ is the one who

requests credit to benefit herself, not credit to benefit

a third party.” Jd. at 943 (citing Webster’s Third New

International Dictionary 105 (1971)). Examining the

text of the ECOA, as a whole, Judge Colloton found

that “[t]he context of the ECOA confirms that Con-

gress employed the ordinary meaning of the term

‘apply in the phrase ‘applies for credit,’” and that the

statute “contemplates a first-party applicant who

requests credit to benefit herself.” Jd. For example,

Judge Colloton noted that “the use of the definite

article” in §1691(d)(1), which requires that within 30

days “after receipt of a completed application for

credit, a creditor shall notify the applicant of its

action on the application,” id. (emphasis in original),

“shows that the applicant is the single person to

whom credit would be extended, not a third party

asking on behalf of the putative debtor.” 761 F.3d at

943.

Further confirming that the “applicant” is the

borrower to whom credit is extended, Judge Colloton

looked to the 1991 amendment adding §1691(e)1),

which “refers to a creditor taking action in connection

with ‘the applicant’s application for a loan,” and

pointed out that “it would be unnatural to conclude

that a third party who offers a promise in support of

an application thereby submits what the statute

describes as an ‘application for a loan’...and a ‘com-

pleted application for credit[.)’” 761 F.2d at 943-944

(citing §§ 1691(d)(1) and (eX1)). Likewise, Judge

27

Colloton noted that in §1691(d)(4), the statute “specif-

ically envisions the involvement of a third party who

requests an extension of credit to a first-party appli-

cant, but distinguishes between the third-party

requestor and the ‘applicant.’” Jd. at 944. Judge

Colloton concluded that this distinction between the

applicant and a third party in the statutory text,

again, confirms that “the ‘applicant’ is the party to

whom credit will be extended.” Jd.

Because “an agency has no power to ‘tailor’

legislation to bureaucratic policy goals by rewriting

unambiguous statutory terms,” and can only exercise

its discretion in the “interstices created by statutory

silence or ambiguity,” Utility Air Regulatory Group v.

E.PA., 134 S.Ct. 2427, 2445 (2014), as Judge Colloton

aptly acknowledged, “[wjhen the ordinary meaning

[of a term] aligns with a natural reading of [that]

term in the context of the statute, there is no ambigu-

ity that gives an agency license to adopt an alterna-

tive meaning. Id. (citing Carcieri v. Salazar, 555 U.S.

379, 388, 129 S.Ct. 1058, 1064 (2009)). If Congress

had wanted to include guarantors within the protec-

tion of the statute, it could have easily done so. By

only providing protection to the “applicant,” it did not.

Under Chevron, that should be the end of the inquiry.

Any dissatisfaction with that result lies with Con-

gress, not this Court.

28

B. The Sixth Circuit manufactured an

“ambiguity” in order to impose its own

view of what would best effectuate the

ECOA’s goal of preventing marital-

status discrimination.

In contrast to the plain meaning adopted by the

Eighth Circuit, two months earlier, in RL BB Acquisi-

tion, 754 F.3d 380, the Sixth Circuit, in order to

achieve what it perceived are the ECOA’s broad

remedial goals, focused its analysis on two words in

the statutory definition (“applies” and “credit”), in

isolation, to conclude that the statutory definition is

“ambiguous” and “could” be construed to “encompass

all those who offer promises in support of an applica-

tion—including guarantors,” who the court rational-

ized “make a formal request for aid in the form of

credit for a third party.” Jd. at 384-385. The Sixth

Circuit reached this result under the guise of statuto-

ry construction, notwithstanding its acknowledgment

that the statute does not “overtly include guarantors,”

and although it recognized that “[a] guarantor does

not traditionally approach a creditor herself asking

for credit,” but instead, “is a third party to the larger

application process.” Jd." Rather than assuming that

the ordinary meaning of the term “applies” “accurate-

ly expresses the legislative purpose,” see Schindler

* As the Eighth Circuit concluded, recognition that a

guarantor does not apply for credit in the “traditional” and usual

sense of the word should have ended the Sixth Circuit’s inquiry

because it “demonstrates that a guarantor unambiguously does

not request credit.” Hawkins, 761 F.3d at 941.

29

Elevator Corp., 131 S.Ct. at 1891, the Sixth Circuit,

stretching to find an ambiguity, rationalized that

because a guarantor offers her guaranty “in consider-

ation for the credit she hopes the borrower will re-

ceive,” a guarantor “does formally approach a creditor

in the sense that [she] offers up her own personal

liability to the creditor if the borrower defaults.” Jd.

But a guarantor does not “apply” for a loan by the

mere “hope” that credit will be extended to the

borrower, and the act of providing a guaranty has

never been thought of as applying for anything direct-

ly, within the traditional, plain meaning of that term.

Significantly, the Sixth Circuit’s conclusion

ignored the context in which the term “applies” is

used (including that, by the statute’s express terms, it

is limited to the person who “applies for credit direct-

ly”), 15 U.S.C. §169la(b)(emphasis added), and that

Congress explicitly distinguished between the appli-

cant and a third party who requests credit on the

applicant’s behalf. 15 U.S.C. §1691(d)(4). The court

also ignored that when Congress has intended to

include someone other than the person applying for

something for its own benefit within the term “appli-

cant,” it has expressly said so. See, e.g., 18 U.S.C.

§923(d)(1)(B)(providing that the “applicant” under the

Gun Control Act includes, “in the case of a corpora-

tion, partnership, or association, any individual

possessing, directly or indirectly, the power to direct

or cause the direction of the management and policies

of the corporation, partnership, or association....”).

Congress’ refusal to broadly define the “applicant” in

30

the ECOA makes clear that it intended that the term

be interpreted according to its plain meaning and

only encompass those persons requesting credit for

their own benefit.

Compounding its error, the court found that the

definition of the term “credit” in §1691la(d), which

uses the word “debtor” rather than “applicant,”

furthered the purported ambiguity by somehow

suggesting that the “applicant” and the “debtor” “are

not always the same person.” 754 F.3d at 385. From

that, the court jumped to the illogical conclusion that

“liJf an applicant is not necessarily the debtor, it

would be reasonable to conclude that the applicant

could be a third party, such as a guarantor.” /d. Its

conclusion, however, ignored its prior decision in

Barney v. Holzer Clinic, Ltd., 110 F.3d 1207 (6th Cir.

1997), where it acknowledged that the debtor and the

applicant are one and the same; the only distinction

being that prior to an extension of credit, that person

is an “applicant,” whereas after the extension of

credit, he becomes a “debtor.” Jd. at 1209. It also

ignored that Congress explicitly distinguished be-

tween the applicant and a third party requestor, and

chose to only prohibit discrimination against and

confer rights on the former. See 15 U.S.C. §1691(d\4).

The Sixth Circuit found comfort in its conclusion

based on its erroneous belief that it “accords with the

vast majority of courts that have examined the issue,”

754 F.3d at 386 (citing Empire Bank v. Dumond, No.

13-CV-388, 2013 WL 6238605, 6 (N.D.Okla. Dec. 3,

2013)), and that Congress has remained silent and

31

done nothing to “clarifly] that the term ‘applicant’

cannot include guarantors.” Jd.”

But the so-called “vast majority” to which the

Sixth Circuit referred never decided whether the

statutory definition is ambiguous, or whether the

regulatory definition is valid.’ Rather, other than the

Sixth Circuit, itself, the only courts that have actually

decided the issue after conducting the required Chev-

ron-analysis, have uniformly held that the statutory

definition is unambiguous and does not include

* Petitioners acknowledge the tenuous nature of the Sixth

Circuit’s “ambiguity” finding by arguing not that the statutory

definition is ambiguous, but that it contains a “gap” because it

does not expressly excluae guarantors. According to Petitioners,

in order to prevent the FRB from usurping its legislative role,

not only was Congress required to plainly state who the appli-

cant is, as it did, but it was apparently required to also state

everyone it isn’t. No rule of statutory construction requires such

useless redundancy.

“ The Dumond court, without discussion, found that

“[wJhether the term ‘applicant’ includes guarantors is not

unambiguous,” and held, ipso facto, that the FRB’s re-definition

in §202.2(e) is valid. 2013 WL 6238605, 6. It did so, however,

without examining the statutory language, without conducting a

Chevron-analysis, and without even attempting to explain what

it thought was “not unambiguous” with the statutory definition.

Like the Sixth Circuit, the court’s conclusion appears to have

been based on its own self-justification that “[a]ecepting that the

term includes guarantors would best effectuate the ECOA’s goal

of preventing discrimination on the basis of marital] status,” and

a reluctance to invalidate the FRB’s regulatory scheme unless it

was directed to do so by the Tenth Circuit. Jd. (citing Citgo

Petroleum Corp. v. Bulk Petroleum Corp., No. 08-CV654-TCK-

PJC, 2010 WL 3931496 (N.D.Okla. Oct. 5, 2010)).

32

guarantors. Hawkins, 761 F.3d 937; Moran Foods,

476 F.3d 436; Smithville 169 v. Citizen’s Bank &

Trust, No. 4:11-CV-0872-DFK, 2013 WL 434044

(W.D.Mo. Feb. 5, 2013); Arvest Bank v. Uppalapati,

No. 11-03175-S-DGK, 2013 WL 85336 (W.D.Mo. Jan.

7, 2013); Champion Bank v. Regional Development,

LLC, No. 4:08CV1807-CDP, 2009 WL 1351122 (E.D.Mo.

May 13, 2009).”

C. Congressional silence is not a license

for courts to ignore a statute’s plain

meaning. But here, Congress has not

remained silent. In the 2010 amend-

ments to the ECOA, Congress re-

confirmed that the “applicant” is the

person who applies for a loan to bene-

fit itself.

Moreover, while the Sixth Circuit justified its

ambiguity finding in perceived congressional] silence,

this Court has been clear that legislative silence is no

aid to interpretation where, as in this case, there is

* The other circuits that have touched on the issue of

whether guarantors are protected under the ECOA did so

without performing the required Chevron-analysis, and merely

assumed, without challenge, that the FRB’s re-definition is

valid. See, e.g., Silverman v. Eastrich Multiple Investor Fund,

L.P., 51 F.3d 28 (3d Cir. 1995); Mayes, 37 F.3d 9. Significantly,

these courts were never asked to decide whether the FRB’s re-

definition is valid, nor did they purport to decide that issue. The

fact that these and other courts, as well as the litigants, simply

assumed that the regulatory re-definition is valid is not an

excuse to flout the usual rules of statutory construction.

33

no evidence that the FRB’s re-definition was ever

brought to Congress’ attention. It is only where “an

agencys statutory construction has been ‘fully

brought to the attention of the public and the Con-

gress, and the latter has not sought to alter that

interpretation although it has amended the statute in

other respects,” that the Court will presume that “the

legislative intent has been correctly discerned.” U.S.

v. Rutherford, 442 U.S. 544, 554, n. 10, 99 S.Ct. 2470,

2476, n. 10 (1979 quoting Apex Hosiery Co. v. Leader,

310 U.S. 469, 489, 60 S.Ct. 982, 989 (1940)); see also

2B NORMAN J. SINGER, et al., SUTHERLAND STATUTES

AND STATUTORY CONSTRUCTION, §49:9 at 134-135 (7th

ed. 2008\(the congressional-acquiescence argument is

inapplicable “where nothing indicates that the legis-

lature had its attention directed to the administrative

interpretation upon reenactment”).

Moreover, although no evidence exists to suggest

that the FRB’s re-definition has ever been brought to

Congress’ attention, significantly, when Congress

amended the ECOA as part of the Dodd-Frank Act, it

enacted §1691c-2, relating to the collection of data for

small business loans. Pub.L. No. 111-203, §1071(a),

124 Stat. 2056 (2010). That statute, which must be

read in pari materia with the ECOA’s other provi-

sions, see Erlenbaugh v. U.S., 409 U.S. 239, 244, 93

S.Ct. 477, 480 (1972), makes clear that the “appli-

cant” is the first-party loan applicant who applies for

credit directly for its own benefit, and does not in-

clude the applicant’s owners or others who are “con-

nected with” it.

34

For example, in §1691c-2(e)(2), which requires

that financial institutions compile and maintain

certain information provided by any “loan applicant,”

including...“the amount of credit...applied for, and the

amount of credit...approved for such applicant,”

Congress re-confirmed that the “credit” applied for is

the credit extended to the first-party applicant, and

does not include a third party, such as a guarantor,

who merely agrees, as part of the larger loan transac-

tion, to be liable for repayment in the event of a

default, but does not apply for or receive any credit.

15 U.S.C. §1691c-2(eX2\C). Likewise, in §1691c-

2(e(3), which prohibits the inclusion of certain per-

sonally identifiable information “concerning any

individual who is, or is connected with, the women-

owned, minority-owned, or small business loan appli-

cant” in such a compilation, Congress clearly distin-

guished between the applicant and third parties who

are “connected with” the applicant, whether through

ownership or otherwise. /d.

Given this clear statement of who the applicant

is, and Congress’ distinction between the applicant

and those “connected with” the applicant, there is no

room to suggest that Congress acquiesced in the

FRB’s re-definition, thereby expanding the scope of

the ECOA’s protection and what it makes unlawful.

On the contrary, in the Dodd-Frank Act, Congress re-

confirmed that the “applicant” is the first-party

applicant who “applies for credit directly” for its own

benefit. Had Congress been aware of the FRB’s re-

definition (though no evidence suggests that is the

35

case), and intended to encompass third parties, such

as guarantors, within the ECOA’s scope, it would

have had no need to distinguish between the appli-

cant, its owners and others “connected with” the

applicant, as it did in §1691c-2. In so doing, Congress

implicitly re-confirmed the plain meaning of the

statutory definition, and rejected any attempt to

expand the ECOA’s protection to third parties, such

as guarantors.”

In Hawkins, the Eighth Circuit, applying the

time-tested framework of Chevron and well-known

rules of statutory construction, correctly concluded

that guarantors are not “applicants” under the

ECOA. Now that the issue has actually been brought

to the forefront through the Sixth and Eighth Cir-

cuits’ decisions, this Court should deny the petition so

that the circuit and lower courts can have an oppor-

tunity to fully examine and weigh in on the issue.

Petitioners have failed to demonstrate that the nar-

row conflict between the Sixth and Eighth Circuits

would be intolerable were it allowed to continue. And

this Court will undoubtedly benefit from a more

thorough and thoughtful consideration of the issue by

other courts before it steps into the fray.

” Petitioners’ hypothetical of a minority-owned, limited

liability company loan applicant that is denied credit based on

the racial make-up of its owners is irrelevant in construing the

plain meaning of the statute. Under that plain meaning, if the

LLC could demonstrate discrimination, the LLC-applicant, not

its owners, who chose to conduct business in a corporate form,

would be the “aggrieved applicant” under §1691e.

36

Ill. The Eighth Circuit’s decision does not

“conflict” with any decisions by a state

court of last resort. The Alaska, Iowa,

Missouri and Virginia Supreme Courts

have never actually decided the issue. Ra-

ther, those courts merely assumed, with-

out challenge and without conducting the

required Chevron-analysis, that the regu-

latory re-definition is valid.

Petitioners suggest that the Eighth Circuit’s

decision directly conflicts with decisions by the Su-

preme Courts of Alaska, Iowa, Missouri and Virginia,

and that certiorari is warranted to resolve this “split.”

But Petitioners fail to disclose that none of the liti-

gants in those cases challenged the validity of the

FRB’s re-definition, and that the courts, without

conducting the required Chevron-analysis, merely

assumed, without actually deciding, that the regula-

tory re-definition is valid and that a guarantor is

protected. See Still v. Cunningham, 94 P.3d 1104

(Alaska 2004);” Bank of the West v. Kline, 782 N.W.2d

453 (Iowa 2010);” Boone Nat. Sav. & Loan Ass’n v.

” Significantly, the Cunningham court, acknowledging the

plain meaning of the statute, noted that the corporate-borrower

was the loan applicant under the statute; but citing to §202.2(e),

found that the guarantor-husband was also an “applicant” and

that it was his creditworthiness, not the borrower’s, that had to

be examined to determine whether the wife’s guaranty was

properly required. Id. at 1115.

* The Kline court similarly acknowledged that under the

statutory definition without more, the LLC-borrower was the

only “applicant.” But based on the FRB’s re-definition, the court

(Continued on following page)

37

Crouch, 47 S.W.3d 371 (Mo. banc 2004);” Eure v.

Jefferson National Bank, 448 S.E.2d 417 (Virginia

1994).” Thus, these cases do not actually “conflict”

with the Eighth Circuit’s decision in Hawkins, be-

cause the courts never actually addressed or decided

the issue.

While state courts that are granted concurrent

jurisdiction are not bound to agree with or apply the

decisions of federal courts of appeals when interpret-

ing federal law, see Arizonans for Official English v.

Arizona, 520 U.S. 43, 58 n. 11, 117 S.Ct. 1055, 1064 n.

11 (1997), now that the issue has been squarely

raised, it can hardly be questioned that given the

opportunity to actually decide the issue, presumably

with arguments from the litigants (something that

found that the guarantor-spouses were also “applicants.’ /d. at

457-458.

” Contrary to Petitioners’ assertion, in Crouch. the Mis-

souri Supreme Court did not “find,” let alone examine, whether

the FRB’s re-definition was a valid exercise of its regulatory

authority. Id.

* In Kline, Couch and Eure, the courts held that a guaran-

tor-spouse could assert an alleged ECOA-violation as an affirm-

ative defense for recoupment or equitable estoppel based on

illegality to avoid liability under her guaranty. Aline, 782

N.W.2d at 458-463; Crouch, 47 S.W.3d at 375-376; Eure, 448

S.E.2d 418-421 Although Petitioners do not make any argument

regarding an illegality-defense directly in their petition, they

attempted to do so in their briefing in the Eighth Circuit.

Petitioners, however, waived that argument by failing to argue

it in the District Court, and the Eighth Circuit did not address

that waived argument on appeal. See Cole, 533 F.3d at 936;

Wilkens, 742 F.3d at 360.

38

was missing in each of the foregoing cases), these

courts may very well reconsider their earlier deci-

sions. Because they should be permitted to do so, and

because the Court will benefit from an earnest and

intelligent discourse on the issue by these and other

courts, Petitioners’ request for certiorari should be

denied.

¢

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

GREER S. LANG

Counsel of Record

THOMAS STAHL

JUSTIN NICHOLS

LATHROP & GAGE, LLP

2345 Grand Blvd., Suite 2800

Kansas City, Missouri 64108

(816) 292-2000

(816) 292-2001 (facsimile)

glang@lathropgage.com

tstah]@lathropgage.com

jnichols@lathropgage.com

Attorneys for Respondent

Community Bank of Raymore

App. 1

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

VALERIE J. HAWKINS and )

JANICE A. PATTERSON, )

Plaintiffs, )

) No. 12-CV-00670-DW

v.

) (Filed Nov. 30, 2012)

COMMUNITY BANK

OF RAYMORE,

Defendant. )

ORDER

Pending before the Court is the Defendant Com-

munity Bank of Raymore’s (the “Defendant”) Motion

to Strike Plaintiffs’ Demand for a Jury Trial (the

“Motion”). See Doc. 18. The Defendant filed sugges-

tions in support of the Motion (Doc. 19), the Plaintiffs

Valerie J. Hawkins (“Valerie”) and Janice A. Patterson

(“Janice”) (collectively, the “Plaintiffs”) filed sugges-

tions in opposition (Doc. 20), and the Defendant filed

a reply brief (Doc. 24). As explained below, the Plain-

tiffs contractually waived their right to a jury trial.

Consequently, the Motion is GRANTED.

I.

A.

The following facts are primarily taken from the

parties’ briefs. Only those facts and issues necessary

to decide the pending Motion are discussed below, and

App. 2

they are simplified to the extent possible. The De-

fendant loaned PHC Development, LLC (“PHC”) the

principal sum of $2,077,900.00 so that PHC could

acquire and develop a residential facility known as

the Fox’s Den Subdivision in Peculiar, Missouri. The

principal amount is based on four separate loans,

which were issued, modified, extended, and/or re-

newed a total of sixteen times. Both Plaintiffs guar-

anteed repayment of the four loans, as did their

husbands, Gary A. Hawkins (“Gary”) and Chris L.

Patterson (“Chris”). Both Plaintiffs also executed new

Commercial Guaranties in conjunction with the modi-

fications, extensions, and/or renewals of the loans.

The Plaintiffs filed this suit on May 31, 2012.

They allege in part that the Defendant wrongly

required them to guaranty the loans simply because

they were married to Gary and Chris, and that the

Defendant “was required to evaluate the need for the

claimed Guaranties signed by [Plaintiffs] without

discriminating on the basis of marital status.” Doc. 1,

at 9 52. According to the Plaintiffs, this requirement

violated the Equal Credit Opportunity Act (“ECOA”).

The Defendant has declared a default on the loans,

and filed a counterclaim for breach of the guaranties.

B.

Three of the original guaranties provided that

arbitration was the preferred method of resolution,

and did not include a provision waiving the right to

a jury trial. Importantly, however, the modifications,

App. 3

extensions, and/or renewals of the guaranties all

contained an explicit jury trial waiver provision. See

Doc. 4-1, p. 39 (Loan No. 9035923, dated 11/1/10); 4-1,

p. 42 (same); Doc. 4-2, p. 96 (Loan 9037410, dated

11/1/10); 4-2, p. 99 (same); Doc. 4-1, p. 102 (Loan. No.

9036698, dated 6/15/09); 4-1, p. 105 (same); Doc. 4-2,

p. 50 (Loan No. 9036970, dated 6/15/09); 4-2, p. 53

(same). These agreements state: “This Guaranty, to-

gether with any Related Documents, constitutes the

entire understanding and agreement of the parties as

to the matters set forth in this Guaranty.”

The jury waiver provision provides that:

WAIVE JURY. Lender and Guarantor hereby

waive the right to any jury trial in any ac-

tion, proceeding, or counterclaim brought by

either Lender or Guarantor against the other.

Immediately below this waiver, the Commercial

Guaranties state that: “EACH UNDERSIGNED

GUARANTOR ACKNOWLEDGES HAVING READ

ALL THE PROVISIONS OF THIS GUARANTY AND

AGREES TO ITS TERMS.” The Commercial Guaran-

ties also expressly provided that the Plaintiffs had an

opportunity to be advised by their attorney.

C.

Despite these contractual provisions, the Plain-

tiffs’ Complaint includes a demand for a jury trial.

Doc. 1, p. 13. In the parties’ Joint Proposed Schedul-

ing Order/Discovery Plan, the Defendant stated that

it intended on filing a motion to strike that demand.

App. 4

Because the bench/jury trial issue would affect sched-

uling issues and deadlines, the Court directed the

Defendant to file its motion. The motion was filed,

has been fully briefed, and is ready for resolution.

Il.

A party may waive by contract its right to a jury

trial, and federal law governs the waiver analysis.

Westgate GV at the Woods, LLC uv. Dickson, 2010 WL

4721245, at * 2 (W.D. Mo. Nov. 15, 2010). “Jury trial

waivers are common in loan agreements and loan

guaranties and are regularly enforced.” Hilicrest

Bank, N.A. v. Cordsen, 2011 WL 2633273, at * 1 (W.D.

Mo. July 5, 2011). The waiver must be “knowing and

voluntary,” and four primary factors should be con-

sidered: “(1) the relative bargaining power of the

parties; (2) the sophistication of the parties; (3) the

negotiability of the contract terms; and (4) the con-

spicuousness of the waiver provision.” Hardee's Food

Sys., Inc. v. Hallbeck, 2010 WL 4363420, at * 3 (E.D.

Mo. Oct. 27, 2010). Each factor is addressed in turn.

A.

First, the Court must determine whether there

was a “gross disparity in bargaining power.” Popular

Leasing USA, Inc. v. Turner Constr. Co., 2005 WL

2874741, at * 1 (E.D. Mo. Oct. 31, 2005); Boyd v. U.S.

Bank Nat'l Ass’n., 2007 WL 2822518, at * 19 (D. Kan.

Sept. 26, 2007) (recognizing that “the relevant inquiry

is whether this disparity was ‘gross’”). For example,

App. 5

in Westgate, one of the non-moving parties claimed he

could not “read above a second-grade level and lacked

the sophistication to understand the jury waiver pro-

vision.” Westgate, 2010 WL 4721245, at * 3. In en-

forcing the waiver, Judge Kays ruled that “a gross

disparity in bargaining power did not exist between

the parties because the Dicksons had the opportunity

to consult with an attorney and negotiate the terms of

each contract.” Id. at * 4.

Here, the Plaintiffs expressly acknowledged in

the Commercial Guaranties that “Guarantor has had

the opportunity to be advised by Guarantor’s attorney

with respect to this Guaranty; [and] the Guaranty

fully reflects Guarantor’s intentions. ” This ac-

knowledgment undermines any notion of a gross

disparity in bargaining power. Westgate, 2010 WL

4721245, at * 4. Any alleged disparity is also under-

mined because the loans were not for a necessity of

life; they were issued to promote a commiercial real

estate development project. See Westside-Marrero

Jeep Eagle, Inc. v. Chrysler Corp., Inc., 56 F. Supp. 2d

694, 709 (E.D. La. 1999) (“The ability to take out a

loan to start up a profit making cable company is not

a necessity of life such that Defendant was compelled

to accept Plaintiff’s loan on whatever terms it was

offered.”) (citations and quotations omitted). For

these reasons, the first factor weighs in favor of a

knowing and voluntary waiver.

App. 6

B.

Second, the Court must examine the sophistica-

tion of the non-moving party. This is because “[llarge

disparities in education and familiarity with the

commercial processes can permit an overreaching

party to turn the other party’s lack of knowledge into

an unfair advantage.” Boyd, 2007 WL 2822518, at

* 19. Here, Plaintiff Valerie Hawkins is an educated

individual. She is a 1986 graduate of Northwest

Missouri State University, and also received a Master

of Science degree from the University of Central

Missouri in 2011. Doc. 19-2, p. 52.

Among other business endeavors, Plaintiff Janice

Patterson and her family members operate CLP Fox

Trotters (“CLP”). CLP is a business that owns, breeds,

and sells “one of the world’s most popular gaited

horses — the Fox Trotter.” Doc. 19-2, p. 33-43. Under

the circumstances, there are no large disparities in

education or a lack of familiarity with commercial

processes. And, even if there was such a disparity, the

waiver in this case is “unambiguous and specialized

knowledge or sophistication is not required to under-

stand the jury waiver provision.” Westgate, 2010 WL

4721245, at * 3 (citations and quotations omitted).

For these reasons, the second factor also weighs in

favor of a knowing and voluntary waiver.

C.

Third, the Court must consider whether the

Plaintiffs had an opportunity to negotiate the terms

App. 7

of the Guaranties. Here, the Plaintiffs do not argue

that they even attempted to negotiate or otherwise

alter any terms of the Guaranties. The Plaintiffs

summarily claim they had “little opportunity’ to con-

sult an attorney or “otherwise analyze the contents of

the personal guaranty prior to their execution.” Doc.

20, p. 7. The Plaintiffs also claim they were unaware

of the jury waiver provision. See Doc. 20-7, p. 2; Doc.

20-8, p. 2.

These conclusory statements made in litigation

are directly contrary to what the Plaintiffs expressly

agreed to in the guaranties. As discussed above, the

Plaintiffs expressly agreed that they had read all of

the terms (which would necessarily include the jury

waiver), had agreed to all of the terms (which would

necessarily include the jury waiver), and had an

opportunity to consult an attorney. Finally, the De-

fendant argues (and the Plaintiffs have not shown

otherwise) that the Plaintiffs’ husbands (and co-

guarantors) were able to negotiate some terms of the

Guaranties. For these reasons, the third factor also

weighs in favor of finding a knowing and voluntary

waiver.

D.

Fourth, the Court must consider whether the

waiver provision is conspicuous. A conspicuous waiver

provision will more likely be enforced than a provi-

sion that is “buried in a lengthy document.” See

Morris v. McFarland Clinic P-C., 2004 WL 306110, at

App. 8

* 3 (S.D. Iowa Jan. 29, 2004). Here, the waiver provi-

sion is conspicuous. The Commercial Guaranties are

only three pages in length, and the waiver provision

is conspicuously titled “WAIVE JURY.” The waiver

provision states, clearly and unambiguously:

WAIVE JURY. Lender and Guarantor hereby

waive the right to any jury trial in any ac-

tion, proceeding, or counterclaim brought by

either Lender or Guarantor against the other.

Immediately below that provision is an acknow!-

edgment that the guarantor has “read all the provi-

sions of this guaranty and agrees to its terms.” Under

these circumstances, the fourth factor weighs in favor

of finding a knowing and voluntary waiver. Westgate,

2010 WL 4721245, at * 4 (enforcing waiver in part

because “the waiver was distinctly set apart in its

own subparagraph, and the paragraph heading

plainly read ‘Waiver of Jury Trial.’”).

Iil.

The Plaintiffs argue that a ruling on the Motion

is premature because discovery could shed light on

whether the waiver was made knowingly and volun-

tarily. They also suggest that the Defendant “unilat-

erally slip[ped] a jury trial waiver into later

guaranties without discussing such an alteration

with Plaintiffs.” Doc. 20, p. 5. These arguments are

not persuasive.

In fact, this is not a close call. By signing the

Commercial Guaranties, the Plaintiffs expressly

App. 9

acknowledged that they read and understood all of

the provisions, that they had an opportunity to dis-

cuss those provisions with their attorney, and ex-

pressly agreed to the jury waiver. See, e.g., Popular

Leasing USA, Inc., 2005 WL 2874741, at * 2 (recog-

nizing that “a party who signs a contract is presumed

to have knowledge of its contents”). This Court will

not allow the Plaintiffs to evade the agreed-upon

waiver simply because they no longer wish to be

bound by it.

Nor have the Plaintiffs shown how any discovery

could alter the foregoing analysis. They have not

alleged that they were fraudulently induced into the

jury waiver, or explained how discovery could show

that the waiver was not knowing or voluntary. As a

result, the Motion is not premature and further

discovery is not necessary to resolve it. See Hillcrest

Bank, 2011 WL 2633273, at * 1 (enforcing jury waiver

even though non-moving party argued that issues of

fact were unresolved).

' The Plaintiffs argue that a jury trial is required in cases

brought under the ECOA. See 15 U.S.C. § 1691(a). The Plaintiffs

then claim that “[l]ittle to no case law discusses the intersection

between a right to a jury trial under ECOA and whether it can

be waived.” Doc. 20, p. 3. But the case the Plaintiffs cite for this

alleged lack of case law expressly held that “the ECOA claim

falls within the scope of the jury waiver provision and the court

finds that the jury waiver applies to the instant case.” Boyd,

2007 WL 2822518, at * 20.

App. 10

IV.

For the reasons set forth above, it is hereby

ORDERED that the Defendant’s Motion to Strike

Plaintiffs’ Demand for a Jury Trial (Doc. 18) is

GRANTED, and the Court STRIKES the Plaintiffs’

demand for a jury trial. The Plaintiffs’ request for an

oral argument is denied as unnecessary.

IT IS SO ORDERED.

Date: /s/ Dean Whipple

November 29, 2012 Dean Whipple

United States District Judge