Swanson v. Citibank, N.A

Brief Fact Summary.

Plaintiffsued the Defendants, alleging they violated Fair Housing Act § 3605 by working together to devalue her home in the appraisal as a pretense to deny her a loan on account of her race. Defendants filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The district court dismissed her complaint for failure to state a claim.

Synopsis of Rule of Law.

Under the plausibility standard espoused in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a court is not to consider whether a set of facts are probable, but rather, whether a set of facts are possible.

Facts.

Gloria Swanson (Plaintiff) applied for a home-equity loan with Citibank, N.A. (Citibank) (defendant). Upon speaking to a Citibank representative, Plaintiff suspected that the representative was discouraging her from applying because she was black, and asked to speak with a manager. Plaintiff disclosed to the representative and manager that she had previously been denied a home-equity loan by another bank. The manager informed Plaintiff that it was more difficult to obtain a loan at Citibank than at other banks. Plaintiff nevertheless applied for a loan the next day. Citibank conditionally approved Plaintiff based upon her representation that her home was worth $270,000.00.  Citibank thereafter arranged for Andre Lanier (Defendant) of PCI Appraisal Services (PCI) (Defendant) to appraise Plaintiff’s home. Lanier appraised Plaintiff’s home at $170,000.00. Plaintiff subsequently hired another appraiser, who valued her home at $240,000.00.  In light of Lanier’s low appraisal, Citibank declined to grant Plaintiff a home-equity loan. 

Issue.

Whether the court’s role is to determine whether a set of alleged facts are probable under the plausibility standard espoused in Twombly.

Held.

No. The district court’s dismissal of Plaintiff’s claims against all three defendants is reversed.

Dissent.

(Posner, J.):Plaintiff does not set forth a plausible set of facts. Plaintiff’s complaint would have been stronger if, for example, she alleged she was competing against a white person for a loan but was denied on the basis of her race. However, the denial of the loan was in fact based on the low appraisal of her home. Citibank had granted a conditional loan based upon Plaintiff’s representation that her home was worth $270,000.00. Lanier’s appraisal of $170,000.00 rendered a $50,000.00 loan impractical. Plaintiff’s complaint itself acknowledges that home values had been falling and that she had previously been denied a loan by another bank. Considering also that Plaintiff was applying for this loan just after a financial crash in 2008, a finding of discrimination based on these facts is implausible.

Discussion.

The term “plausible” does not mean that a court should determine what set of facts is more likely or probable. Rather, the plausibility standard only requires a plaintiff to allege a set of facts that are possible. Here, Plaintiff has alleged discrimination on the basis of race against Defendants. In regards to her claim against Citibank, Plaintiff has identified the type of discrimination alleged, the actors she believes responsible for the discrimination, and the timing of the alleged discrimination. These facts are sufficient to state a cause of action against Citibank. The fact that Plaintiff includes additional unnecessary facts does not invalidate her complaint. In regards to Lanier and PCI, Plaintiff alleges that they discriminatorily devalued her home in their appraisal in connection with her loan application because she is black. Although Plaintiff will need to produce additional evidence to ultimately prove her case, she has set forth sufficient facts to survive a Rule 12(b)(6) motion.