CTE Investments, LLC v. Zweifel, et al

Filing 33

ORDER. Defendants' motion to dismiss, [Doc. # 15], is GRANTED, and this case is DISMISSED, without prejudice. Signed on 3/31/14 by District Judge Nanette K. Laughrey. (Matthes, Renea)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
CTE INVESTMENTS, LLC,
Plaintiff,
v.
CLINT ZWEIFEL and BRUCE RING,
Defendants.

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No. 2:13-CV-04204-NKL

ORDER
Defendants Clint Zweifel and Bruce Ring move to dismiss the Amended
Complaint of Plaintiff CTE Investments, LLC (“CTE”) for failure to state a claim. [Doc.
# 15]. For the reasons set forth below, Defendants’ motion is GRANTED and this case is
DISMISSED, without prejudice.
I.

Background
This case arises from the denial of CTE’s application for a loan under the Missouri

Linked Deposit Program, which authorizes the State Treasurer, Clint Zweifel, to invest
funds in eligible lending institutions to provide low-interest loans to eligible borrowers.
To receive such a loan, a borrower must first submit an application for approval to the
Director of Investments, Bruce Ring. CTE is a one-hundred percent female-owned
Missouri company engaged primarily in the wholesale and retail sale of mobile homes.
CTE also owns a parcel of land known as Eagle Estates, which functions as both a
residential mobile home community and a sales lot for mobile homes.
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In September of 2012, the Bank of Bloomsdale, an eligible lender, preapproved
CTE for a loan under the Linked Deposit Program and submitted CTE’s application for
approval to the State Treasurer’s Office. Ring initially denied the application on the
ground that the proposed venture to be financed by the loan did not qualify for the
program. A representative from the Bank of Bloomsdale then contacted Ring to discuss
resubmitting CTE’s application. At this time, Ring stated his belief that CTE is not an
eligible borrower because CTE is a real estate holding company and that, as a result, any
future applications by CTE would be denied. CTE claims that Ring’s decision to deny its
application was incorrect, arbitrary, and capricious. CTE maintains that it is not a real
estate holding company and that it meets all of the requirements for participation in the
Linked Deposit Program.
CTE subsequently initiated this action under 42 U.S.C. § 1983, claiming that its
loan application was denied on the basis of gender in violation of the Equal Protection
Clause of the Fourteenth Amendment. In support of this claim, CTE alleges that only
three percent of the loans issued under the Linked Deposit Program in 2012 were made to
female-owned business. CTE also alleges that “similarly situated small businesses
owned by non minority loan applicants have been approved by the Treasurer’s Office.”
II.

Discussion
Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants move to dismiss

CTE’s Amended Complaint for failure to state a claim. A complaint must contain “a
short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.
R. Civ. P. 8(a)(2). The complaint does not have to present “detailed factual allegations,”
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but it “must contain sufficient factual matter, accepted as true, to state a claim to relief
that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation
omitted). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. When considering a motion to dismiss, the Court must accept
as true all well-pleaded factual allegations and draw all reasonable inferences from those
allegations in favor of the plaintiff. See Gomez v. Wells Fargo Bank, N.A., 676 F.3d 655,
660 (8th Cir. 2012). Legal conclusions and bare recitations of the elements of a cause of
action, however, are not entitled to the presumption of truth. Iqbal, 556 U.S. at 679-80.
Defendants argue that CTE’s allegation of disparate impact, the only well-pleaded
factual allegation that supports CTE’s claim of gender discrimination, is not sufficient to
state a plausible claim under section 1983. The familiar McDonnell Douglas burdenshifting analysis generally applies to this claim. See, e.g., Allen v. City of Pocahontas,
Ark., 340 F.3d 551, 557-58 (8th Cir. 2003). However, “a plaintiff need not plead facts
establishing a prima facie case of discrimination under McDonnell Douglas in order to
defeat a motion to dismiss.” Hager v. Ark. Dep’t of Health, 735 F.3d 1009, 1014 (8th
Cir. 2013) (citing Swierkiewicz v. Sorema N. A., 534 U.S. 506, 510-11 (2002)).
Nonetheless, a discrimination claim is still subject to the “the ordinary rules for assessing
the sufficiency of a complaint,” which require consideration of whether the complaint
sets forth factual allegations “that raise a right to relief above the speculative level.” Id.
at 1014-15 (“In Twombly, the Supreme Court stated that Swierkiewicz did not change the
law of pleading. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 (2007)).
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Thus, CTE’s conclusory allegation that similarly situated, non-minority owned
businesses received loans under the Linked Deposit Program is not sufficient to state a
plausible claim for gender discrimination. This assertion is a mere recitation of the bare
elements of such a claim and fails to raise CTE’s right to relief above the speculative
level. See Hager, 735 F.3d at 1015 (“Hager does not state a § 1983 claim for gender
discrimination. . . . Hager’s conclusory assertion that she was discharged under
circumstances similarly situated men were not imports legal language couched as a
factual allegation and fails to raise a right to relief above the speculative level.”); Keevan
v. Smith, 100 F.3d 644, 647-48 (8th Cir. 1996) (“To establish a gender-based claim under
the Equal Protection Clause, the appellants must, as a threshold matter, demonstrate that
they have been treated differently by a state actor than others who are similarly situated
simply because appellants belong to a particular protected class.”). The absence of any
well-pleaded allegation of a similarly situated business receiving a loan is fatal to CTE’s
claim. See Hager, 735 F.3d at 1015; Keevan, 100 F.3d at 648 (“Absent a threshold
showing that she is similarly situated to those who allegedly receive favorable treatment,
the plaintiff does not have a viable equal protection claim.” (quotation omitted)).
CTE’s allegation of disparate impact fails to correct this deficiency. CTE alleges
that female-owned businesses received only three percent of the total loans issued under
the Linked Deposit Program in 2012. However, CTE does not provide any further
context or allegations that might suggest that this disparate impact is the result of
purposeful discrimination, let alone that a discriminatory animus motivated the specific
denial of CTE’s application. CTE’s allegation of disparate impact, without more, thus
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fails to state a claim under the Equal Protection Clause. See, e.g., Foster v. Wyrick, 823
F.2d 218, 221 (8th Cir. 1987) (“[A]n official act is not unconstitutional solely because it
has a racially disproportionate impact. . . . Thus, appellant’s allegation that MSP’s
employment practices and procedures have a discriminatory impact on black inmates
fails to state a cause of action under the Equal Protection Clause, . . . .”); Cummings v.
McCarter, 826 F. Supp. 299, 302 (E.D. Mo. 1993) (“To the extent Cummings is making a
claim based on disparate impact, he has failed to state a claim under § 1983 because
violation of that statute requires intentional discrimination.”).
The bulk of CTE’s Amended Complaint and brief in opposition to Defendants’
motion to dismiss is devoted to whether Ring correctly determined that CTE is a real
estate holding company. Even assuming that Ring’s decision was incorrect and that
CTE’s loan application should not have been denied, this is insufficient to state a claim
under the Equal Protection Clause.
The unlawful administration by state officers of a state statute fair on its
face, resulting in its unequal application to those who are entitled to be
treated alike, is not a denial of equal protection unless there is shown to be
present in it an element of intentional or purposeful discrimination.
Batra v. Bd. of Regents of Univ. of Neb., 79 F.3d 717, 721 (8th Cir. 1996) (quoting
Snowden v. Hughes, 321 U.S. 1, 8 (1944)). In this case, CTE simply presumes that
gender motivated the denial of its application without providing any allegations to
support such an inference. Consequently, CTE’s Amended Complaint fails to state a
claim for unlawful discrimination. See id. at 722 (“[T]he key requirement is that plaintiff
allege and prove unlawful, purposeful discrimination.”); Albright v. Oliver, 975 F.2d 343,
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348 (7th Cir. 1992) (“[Y]ou must be singled out because of your membership in the
[protected] class, and not just be the random victim of governmental incompetence.”).
III.

Conclusion
For the foregoing reasons, Defendants’ motion to dismiss, [Doc. # 15], is

GRANTED, and this case is DISMISSED, without prejudice.

/s Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: March 31, 2014
Jefferson City, Missouri

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