Ricardo Gomez v. Quicken Loans , 629 F. App'x 799 ( 2015 )

FILED
NOT FOR PUBLICATION NOV 02 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
RICARDO GOMEZ, an individual, No. 13-56084
Plaintiff - Appellant, D.C. No. 2:12-cv-10456-RGK-SH
v.
MEMORANDUM*
QUICKEN LOANS, INC.,
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted June 5, 2015
Pasadena, California
Before: M. SMITH and N. R. SMITH, Circuit Judges, and LEFKOW,** Senior
District Judge.
Ricardo Gomez, an individual with a disability who derives part of his
income from Social Security Disability Insurance (SSDI), a public assistance
*
This disposition is not appropriate for publication and is not
precedent except as provided by 9th Cir. R. 36-3.
** The Honorable Joan Humphrey Lefkow, Senior District Judge for the
U.S. District Court for the Northern District of Illinois, sitting by designation.
program, appeals from the district court’s order dismissing his complaint for
failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6).1 We
reverse in part, affirm in part, and remand.
Gomez claims that Quicken Loans, Inc. (Quicken)’s request for “medical
proof of his current and future disability” as a condition to approving his mortgage
loans violated (1) the Fair Housing Act, 42 U.S.C. § 3601 et seq. (FHA); (2) the
Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. (ECOA); (3) the Fair
Employment and Housing Act, Cal. Gov’t. Code. § 12900 et seq. (FEHA); and (4)
the Unruh Civil Rights Act, Cal. Civ. Code § 51 et seq. (Unruh). The FHA, FEHA,
and Unruh each make it illegal for an entity to discriminate against an individual in
the housing or credit transaction context because of a disability. The ECOA and
FEHA further prohibit discrimination on the basis of whether an individual
receives income from public assistance. See 15 U.S.C. § 1691(a)(2); Cal. Gov’t
Code §§ 12955(a), 12927(h), (i).
Gomez pursued two theories of discrimination liability; namely, that
Quicken purposefully treated him unfairly because of his disability and source of
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Gomez also seeks review of the district court’s denial of his Motion to
Alter Judgment pursuant to Federal Rules of Civil Procedure 59(e) and 60(b).
Because we reverse in part the district court’s judgment and grant leave to amend,
we do not reach this issue.
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income (disparate treatment), and that Quicken had a neutral business policy that
resulted in his being treated unfairly because of his disability and source of income
(disparate impact). The district court dismissed Gomez’s claims, citing 15 U.S.C.
§ 1691(b)(2) of the ECOA, and reasoning that “information related to the source of
current and future income is material to Defendant’s legitimate and non-
discriminatory need to evaluate Plaintiff’s creditworthiness.”
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). A court must accept all well-pled facts as true and
construe facts “in the light most favorable to the plaintiff.” Lazy Y Ranch Ltd., v.
Behrens, 546 F.3d 580, 588 (9th Cir. 2008). An affirmative defense cannot serve as
a basis for dismissal unless it is obvious on the face of the complaint. See Rivera v.
Peri & Sons Farms, Inc., 735 F.3d 892, 902 (9th Cir. 2013).
Although information about an individual’s receipt of disability income may
serve a legitimate purpose, the statutes do not insulate all behavior related to the
evaluation of creditworthiness from judicial review. Section 1691(b)(2) of the
ECOA, for example, on which the district court relied, merely allows a lender to
inquire into the source of an applicant’s disability income, not the medical reason
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for it. See Al-Nashiri v. MacDonald, 741 F.3d 1002, 1009 (9th Cir. 2013) (the plain
meaning of the statute controls “unless its application leads to unreasonable or
impracticable results”). Gomez alleges that Quicken treated individuals receiving
disability income with special scrutiny by requiring them to divulge medical
information in order to obtain mortgage loans. In other words, disabled individuals
like Gomez were subject to the presumption that their SSDI award letters were
insufficient evidence of income and asked to meet a higher standard of proof than
other applicants. Drawing all reasonable inferences in Gomez’s favor, as we must
at the pleading stage, such a presumption gives rise to a plausible inference of
intentional discrimination. Indeed, underwriting materials published by Fannie
Mae emphasize that SSDI income is “considered stable, predictable, and likely to
continue” and that a lender “is not expected to request additional documentation
from the borrower.” Selling Guide: Fannie Mae Single Family § B3-3.2-01 at 276
(Dec. 30, 2009).
Even if the purpose of Quicken’s policy is benign, Gomez has stated a claim
for disparate treatment because he has pled the existence of a facially
discriminatory policy. To be facially discriminatory, a policy must “explicitly
classif[y] or distinguish[] among persons by reference to criteria . . . which have
been determined improper bases for differentiation.” De la Cruz v. Tormey, 582
4
F.2d 45, 49 (9th Cir. 1978); see Cmty. House, Inc., v. City of Boise, 490 F.3d 1041,
1048 (9th Cir. 2006) (“A facially discriminatory policy is one which on its face
applies less favorably to a protected group.”). Here, Gomez’s amended complaint
alleges that disabled individuals receiving SSDI must disclose medical information
about their disabilities to qualify for a loan. In contrast, no other applicant is
required to reveal such sensitive information. As such, by its terms, the policy
applies less favorably to a protected group of which Gomez is a part. That Gomez
ultimately received the loan does not change this conclusion.
However, Gomez fails to state a claim for relief under an alternate theory of
disparate impact. To make a prima facie case of disparate impact, the complaint
must allege “(1) the occurrence of certain outwardly neutral practices, and (2) a
significantly adverse or disproportionate impact on persons of a particular type
produced by the defendant’s neutral acts or practices.” The Comm. Concerning
Cmty. Improvement v. City of Modesto, 583 F.3d 690, 711 (9th Cir. 2009). While
Gomez has satisfied the second element, the complaint fails to state how Quicken’s
practices were “outwardly neutral.” Gomez failed to expressly allege, for example,
that Quicken applied a uniform standard of assessing creditworthiness that resulted
in a discriminatory impact. Gomez need not state the precise contours of
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Quicken’s policy at the pleading stage, but he must allege how the challenged
policy could be facially neutral.
Notwithstanding this shortcoming in the pleadings, the district court erred by
dismissing Gomez’s disparate impact claim with prejudice. “Dismissal without
leave to amend is proper only if it is clear, upon de novo review, that the complaint
could not be saved by any amendment.” MHC Fin. Ltd. P'ship v. City of San
Rafael, 714 F.3d 1118, 1132-33 (9th Cir. 2013); see also Fed. R. Civ. P. 15(a)(2).
As this deficiency is curable by amendment, Gomez should be granted leave to
amend the complaint.
Each party shall bear its own costs on appeal.
REVERSED IN PART, AFFIRMED IN PART, AND REMANDED.
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