Beverly Wigginton, et al v. Bank of America Corporation, et al

Filing

Filed opinion of the court by Judge Easterbrook. AFFIRMED. William J. Bauer, Circuit Judge; Frank H. Easterbrook, Circuit Judge and Michael S. Kanne, Circuit Judge. [6613366-1] [6613366] [13-3249]

Case: 13-3249

Document: 52

Filed: 10/16/2014

Pages: 5

In the

United States Court of Appeals
For the Seventh Circuit
____________________  
No.  13-­‐‑3249  
BEVERLY   WIGGINTON,   RICHARD   WIGGINTON,   and   TRINITY  
LOVE  WIGGINTON,  
Plaintiffs-­‐‑Appellants,  
v.  
BANK  OF  AMERICA  CORPORATION,  et  al.,  

Defendants-­‐‑Appellees.  

____________________  
Appeal  from  the  United  States  District  Court  for  the  
Northern  District  of  Illinois,  Western  Division.  
No.  11  C  50162  —  Frederick  J.  Kapala,  Judge.  

____________________  

ARGUED  OCTOBER  9,  2014  —  DECIDED  OCTOBER  16,  2014  
____________________  
Before  BAUER,  EASTERBROOK,  and  KANNE,  Circuit  Judges.  
EASTERBROOK,   Circuit   Judge.   Beverly   and   Richard   Wig-­‐‑
ginton   receive   disability   benefits   from   the   Social   Security  
Administration.   They   applied   to   Bank   of   America   for   a  
mortgage   loan   and   said   that   they   would   use   the   disability  
benefits  to  repay.  The  Bank  then  asked  for  information  from  
their   physicians,   or   the   Administration,   showing   that   the  
benefits  would  last  for  at  least  three  years.  When  no  such  in-­‐‑

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No.  13-­‐‑3249  

formation   was   forthcoming,   the   Bank   declined   to   make   the  
loan.   An   administrative   complaint   and   negotiations   fol-­‐‑
lowed;  by  the  time  the  Bank  decided  to  advance  the  money,  
the  property’s  owner  had  pulled  out  of  the  transaction.  
The   Wiggintons   contend   in   this   suit   that   the   Bank’s   de-­‐‑
mand   for   information   violated   the   Fair   Housing   Act,   the  
Americans  with  Disabilities  Act,  and  the  Rehabilitation  Act.  
The  district  court  recruited  counsel  to  assist  the  Wiggintons,  
and   the   complaint   was   twice   amended   to   add   details   and  
new   defendants,   including   multiple   federal   agencies.   The  
court   eventually   dismissed   the   suit   on   the   pleadings,   2013  
U.S.   Dist.   LEXIS   129337   (N.D.   Ill.   Sept.   11,   2013),   ruling   that  
the   Wiggintons   had   not   narrated   a   plausible   complaint   of  
discrimination.   The   court   added   that   the   Equal   Credit   Op-­‐‑
portunity  Act,  15  U.S.C.  §1691(b)(2),  provides  that  it  does  not  
constitute   discrimination   (at   least   for   the   purpose   of   that  
statute)  for  a  bank  to  collect  information  about  “whether  the  
applicant’s   income   derives   from   any   public   assistance   pro-­‐‑
gram   if   such   inquiry   is   for   the   purpose   of   determining   the  
amount   and   probable   continuance   of   income   levels,   credit  
history,  or  other  pertinent  element  of  credit-­‐‑worthiness”.  
It   does   not   take   much   to   allege   discrimination,   see  
Swierkiewicz   v.   Sorema   N.A.,   534   U.S.   506   (2002);   Swanson   v.  
Citibank,  N.A.,  614  F.3d  400  (7th  Cir.  2010),  but  one  essential  
allegation   is   missing   from   the   Wiggintons’   complaint:   that  
someone   else   has   been   treated   differently.   The   Bank   appar-­‐‑
ently  asks  everyone  who  applies  for  a  loan  to  provide  a  good  
reason  for  it  to  think  that  the  applicant’s  current  income  will  
continue.   The   Bank’s   operations   manuals,   and   the   advice   it  
has   received   from   several   federal   agencies,   including   the  
Department   of   Housing   and   Urban   Development   and   the  

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No.  13-­‐‑3249  

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Federal   Housing   Administration,   which   was   to   insure   the  
loan,   set   the   three-­‐‑year-­‐‑continuation   standard,   and   these  
documents  also  call  on  banks  to  collect  information  from  any  
applicant   who   relies   on   governmental-­‐‑assistance   programs  
for   repayment.   See   HUD   Handbook   4155.1   §§  4.D.1.a,  
4.D.2.k,   4.E.3.c.   If   the   Bank   regularly   asks   non-­‐‑disabled   ap-­‐‑
plicants  to  show  that  their  income  can  be  expected  to  contin-­‐‑
ue  for  at  least  three  years,  there  has  been  no  discrimination.  
Plaintiffs’   complaint   and   appellate   brief   suppose   that  
federal   law   blocks   a   bank   from   asking   either   the   nature   of  
the  disability  (from  which  the  likely  duration  of  benefits  can  
be   inferred)   or   the   probability   that   the   paying   agency   will  
continue   the   benefits.   Yet   the   statutes   forbid   discrimination,  
not   requests   for   knowledge   that   will   enable   banks   to   apply  
uniform   standards.   Section   805(a)   of   the   Fair   Housing   Act,  
42  U.S.C.  §3605(a),  makes  it  unlawful  for  anyone  in  the  resi-­‐‑
dential  real-­‐‑estate  business  “to  discriminate  against  any  per-­‐‑
son  in  making  available  such  a  transaction  …  because  of  …  
handicap”.  The  Rehabilitation  Act,  29  U.S.C.  §794,  says  that  
“[n]o   otherwise   qualified   individual   with   a   disability   …  
shall,   solely   by   reason   of   her   or   his   disability,   be   excluded  
from  the  participation  in  …  or  be  subjected  to  discrimination  
under   any   program   or   activity   receiving   Federal   financial  
assistance”.   Title   III   of   the   Americans   with   Disabilities   Act,  
42   U.S.C.   §12182(a)   provides   that   “[n]o   individual   shall   be  
discriminated  against  on  the  basis  of  disability  in  the  full  and  
equal  enjoyment  of”  places  of  public  accommodation.  None  
of   these   statutes   forbids   asking   applicants   for   information  
that   will   be   used   to   apply   the   same   standards   that   govern  
non-­‐‑disabled  persons.  

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If  all  disability  benefits  were  locked  in  for  life,  then  a  re-­‐‑
quest  for  information  might  be  gratuitous.  Yet  Social  Securi-­‐‑
ty  disability  benefits  depend  on  the  continuation  of  the  disa-­‐‑
bility—and  plaintiffs,  who  have  declined  to  reveal  the  nature  
of   their   disabilities,   do   not   contend   that   the   Bank   knew   (or  
should   have   known)   that   their   entitlement   to   benefits   was  
bound  to  last  indefinitely.  Benefits  based  on  obesity,  for  ex-­‐‑
ample,  lapse  if  the  recipient  loses  weight  and  regains  ability  
to   work.   Benefits   based   on   many   conditions   can   end   if   im-­‐‑
proved  medication  (or  a  person’s  improved  ability  to  stick  to  
a  schedule  of  medication)  improves  his  condition.  The  recip-­‐‑
ient’s   level   of   education   can   be   important;   if   a   person   goes  
back  to  school  and  expands  the  range  of  jobs  he  can  do,  ben-­‐‑
efits  may  cease.  
Disability   benefits   under   private   programs   likewise   can  
change.   One   kind   of   program   that   employers   provide   as   a  
fringe   benefit   awards   payments   for   two   years   if   the   person  
can  no  longer  do  his  job,  but  after  two  years  only  if  the  per-­‐‑
son  cannot  perform  any  job  in  the  economy.  Benefits  under  a  
program  such  as  this  can  end  without  any  change  in  the  re-­‐‑
cipient’s   education   or   physical   condition.   The   possibility   of  
such  changes  makes  it  prudent  for  potential  lenders  to  know  
what  kind  of  disability  an  applicant  has  and  how  that  disa-­‐‑
bility   is   treated   by   the   public   or   private   payor.   That’s   why  
the   Equal   Credit   Opportunity   Act   permits   requests   for   in-­‐‑
formation   about   all   public-­‐‑assistance   benefits.   A   potential  
lender  likewise  wants  to  know  what  kind  of  job  an  applicant  
holds,  for  how  long,  and  whether  that  job  is  likely  to  last—
for  that  matter,  whether  the  employer  is  likely  to  remain  in  
business.  Learning  about  the  probable  duration  of  disability  
benefits  is  no  different  in  principle.  

Case: 13-3249

No.  13-­‐‑3249  

Document: 52

Filed: 10/16/2014

Pages: 5

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Because  the  complaint  does  not  allege  that  plaintiffs  have  
been   treated   worse   than   other   applicants   for   loans,   the   dis-­‐‑
trict   court   properly   dismissed   the   suit.   Plaintiffs   observe  
that,   three   years   after   denying   their   application,   the   Bank  
settled  a  suit  by  the  Department  of  Justice  and  promised  not  
to   ask   for   the   sort   of   information   it   sought   from   plaintiffs.  
Under  the  settlement,  the  Bank  will  use  an  applicant’s  histo-­‐‑
ry  of  receiving  benefits  as  sufficient  reason  to  think  that  they  
will  continue.  Settlements  do  not  affect  third  parties’  rights,  
however.   Litigation   may   be   settled   for   business   reasons.  
Plaintiffs’   suit   depends   on   the   three   statutes   they   have   in-­‐‑
voked,  not  on  subsequent  settlements.  
As   for   the   claims   against   the   federal   agencies:   Plaintiffs  
concede   that   the   district   court   properly   dismissed   them   but  
ask   for   permission   to   amend   their   complaint   a   third   time.  
Even  now,  however,  they  do  not  explain  what  theory  could  
produce   a   remedy   against   the   federal   agencies   or   how   they  
could   avoid   a   defense   of   sovereign   immunity.   The   district  
court  did  not  abuse  its  discretion  in  bringing  this  litigation  to  
a  close.  
AFFIRMED