By Thomas Paschos, Esq. of Thomas Paschos & Associates, P.C. In Hawkins v. Community Bank of Raymore, 577 U.S. ___ (March 22, 2016), the Community Bank of Raymore in Missouri approved $2 million in residential development loans to a local company, on the condition that the spouses of the two men who owned the business also signed the guarantee. The spouses, Valerie Hawkins and Janice Patterson, agreed to do so. After the company failed to make payments on the loans in April 2012 and the bank declared them to be in default, it demanded payment from both the business and the two women who were co-guarantors. The plaintiffs sued the bank, arguing that it had unlawfully required them to execute the guaranties and that the bankaEUR(TM)s requirement constituted discrimination against them on the basis of their marital status in violation of ECOA. The district court granted summary judgment concluding that the plaintiffs were not aEURoeapplicantsaEUR? within the meaning of ECOA and, as a result, the bank had not violated ECOA by requiring them to execute the guaranties. The plaintiffs appealed arguing that the FedaEUR(TM)s regulation provided aEURoethe term [applicant] includes guarantors.aEUR? The Eighth Circuit affirmed the district courtaEUR(TM)s order of summary judgment in favor of the bank. The court applied the Supreme CourtaEUR(TM)s Chevron deference, which requires that courts defer to agency interpretations of federal statutes when the statute is ambiguous and the agency interpretation is not unreasonable. Using the Chevron analysis, the Eighth Circuit ruled that the meaning of the word aEURoeapplicant,aEUR? as used in ECOA, was not ambiguous. The Eighth Circuit thus declined to defer to the FedaEUR(TM)s expanded definition of aEURoeapplicantaEUR? and affirmed the district courtaEUR(TM)s order granting summary judgment in favor of Raymore. Hawkins and Patterson petitioned the Supreme Court for a writ of certiorari, which the Court granted. The Supreme Court was faced with two issues: (1) Whether aEURoeprimarily and unconditionally liableaEUR? spousal guarantors are unambiguously excluded from being Equal Credit Opportunity Act (ECOA) aEURoeapplicantsaEUR? because they are not integrally part of aEURoeany aspect of a credit transactionaEUR?; and (2) whether the Federal Reserve Board has authority under the ECOA to include by regulation spousal guarantors as aEURoeapplicantsaEUR? to further the purposes of eliminating discrimination against married women. The Supreme Court upheld the Eighth CircuitaEUR(TM)s decision that spousal guarantors could not bring a discrimination claim against creditors under the Equal Credit Opportunity Act (aEURoeECOAaEUR?) because the guarantors did not qualify as aEURoeapplicantsaEUR? protected by the ECOA. The judgment was affirmed by an equally divided Court. This first 4-4 decision from the Supreme Court since the death of Justice Scalia leaves unresolved, on a national level, whether the Board of Governors of the Federal Reserve acted within its authority when it revised Reg. B and changed the definition of aEURoeapplicantaEUR? under the Equal Credit Opportunity Act to include the spouses of persons who guaranty commercial debt. For additional information, please contact Thomas at TPaschos@paschoslaw.com or (856)354-1900