Vaguely Worded Complaint Pleading A Violation Of The Fair Housing Act Meets The Higher Standard Required For Federal Pleadings Pronounced By The Supreme Court

The Seventh Circuit in Swanson v. Citibank, N.A., 10-1122 (7th Cir. July 2010) has allowed a vaguely worded complaint alleging violations of the Fair Housing Act to proceed despite a strong dissent from Judge Posner. In this case the Plaintiff applied for a home-equity loan with the Bank having been previously denied a home-equity loan from another lender. A Bank representative told the Plaintiff that because she owned her home jointly with her husband he had to apply as well. The Plaintiff suspected that this was a ploy to discourage African-Americans from submitting loan applications. She therefore asked to speak to a manager who confirmed the Bank’s policy and that its loan criteria were more stringent than those of other banks but otherwise did not want to discourage her from applying for the loan. She applied for the loan and was ultimately turned down. Plaintiff cried discrimination and sued under the Fair Housing Act. The court explored the recent pronouncements by the Supreme Court in a trio of cases, _Bell Atlantic Corp. v. Twombly_, 550 U.S. 544, 563, 127 S.Ct. 1955 (2007 _Erickson v. Pardus_, 551 U.S. 89, 127 S.Ct. 2197 (2007), and _Ashcroft v. Iqbal_, — U.S. —-, 129 S.Ct. 1937 (2009) on what it takes to state a claim under Rule 8 of the Federal Rules of Civil Procedure. It read these cases as requiring the plaintiff to give enough details about the subject-matter of the case to present a story that holds together. In other words, the court will ask itself could these things have happened, not did they happen. In the case before it the Plaintiff’s complaint identifies the type of discrimination that she thinks occurs (racial), by whom (the Bank, through the manager, and the outside appraisers it used), and when (in connection with her effort in early 2009 to obtain a home-equity loan). This is all that she needed to put in the complaint to state a claim under FHA. Judge Posner dissented believing that the complaint lacked additional allegations to support the inference of discrimination such as the fact that the Plaintiff was competing with a white person for a loan. Also, other facts alleged in the complaint actually refuted the discrimination theory. The Bank was the second bank to turn down the loan request and the loan was approved subject to an appraisal which turned out not to support the loan request.

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