Brown v. City National Bank

• Court: District Court, N.D. California
• Decided: March 19, 2025
• Docket: 3:23-cv-03195
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ELAINE BROWN, Case No. 23-cv-03195-AMO Plaintiff, 8 ORDER GRANTING MOTION TO 9 v. DISMISS 10 CITY NATIONAL BANK, Re: Dkt. No. 22 Defendant. 11 12 13 Before the Court is Defendant City National Bank’s (“CNB”) motion to dismiss Plaintiff 14 Elaine Brown’s First Amended Complaint (“FAC”). This Order assumes familiarity with the facts 15 of the case and the Court’s January 18, 2024 Order dismissing Brown’s initial complaint (ECF 16 19). The motion is fully briefed and suitable for decision without oral argument. See Civ. L.R. 17 7-6. Having read the parties’ papers and carefully considered the arguments made therein, as well 18 as the relevant legal authority, the Court hereby GRANTS the motion to dismiss for the following 19 reasons. 20 I. DISCUSSION 21 On February 19, 2024, Brown filed the FAC, alleging CNB violated the Equal Credit 22 Opportunity Act (“ECOA”) and related state laws because CNB denied her a home loan due to her 23 race. ECF 20. On March 11, 2024, CNB moved to dismiss the FAC for failure to state a claim.1 24 1 CNB requests that the Court take judicial notice of a page from the Consumer Financial 25 Protection Bureau’s (“CFPB”) website and a page from the U.S. Census Bureau’s website. ECF 10. Brown does not object to the request. Courts may take judicial notice of matters that “can be 26 accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). “In general, websites and their contents may be judicially noticed.” 27 Threshold Enters. Ltd. v. Pressed Juicery, Inc., 445 F. Supp. 3d 139, 146 (N.D. Cal. 2020) 1 ECF 22. 2 Under Federal Rule of Civil Procedure 12(b)(6), dismissal is required where a complaint 3 lacks either a “cognizable legal theory” or “sufficient facts alleged” under such a theory. Godecke 4 v. Kinetic Concepts, Inc., 937 F.3d 1201, 1208 (9th Cir. 2019) (citation omitted). To allege 5 sufficient facts, a plaintiff must “state a claim to relief that is plausible on its face,” i.e., factual 6 content that allows the court to draw the reasonable inference that the defendant is liable for the 7 misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 8 Twombly, 550 U.S. 544, 570 (2007)). A court evaluating a motion to dismiss “accept[s] factual 9 allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the 10 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 11 2008). However, “allegations in a complaint . . . may not simply recite the elements of a cause of 12 action [and] must contain sufficient allegations of underlying facts to give fair notice and to enable 13 the opposing party to defend itself effectively.” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 14 2014) (citations omitted). The Court may dismiss a claim “where there is either a lack of a 15 cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal claim.” 16 Hinds Invs., L.P. v. Angioli, 654 F.3d 846, 850 (9th Cir. 2011). The Court first considers the 17 sufficiency of Brown’s ECOA claim before turning to her state law claims. 18 A. Equal Credit Opportunity Act Claim 19 CNB moves to dismiss Brown’s ECOA cause of action for failure to state a claim. The 20 ECOA makes it unlawful “for any creditor to discriminate against any applicant, with respect to 21 any aspect of a credit transaction [] on the basis of race, color, religion, national origin, sex or 22 marital status, or age (provided the applicant has the capacity to contract).” 15 U.S.C. § 1691(a); 23 see Schlegel v. Wells Fargo Bank, NA, 720 F.3d 1204, 1210 (9th Cir. 2013). To state a claim 24 under the ECOA, the complaint must plausibly allege that (1) the plaintiff was an “applicant”; (2) 25 the defendant was a “creditor”; and (3) the defendant discriminated against the plaintiff with 26

27 (“We may properly take judicial notice of United States Census Bureau data.”); Wittbecker v. 1 respect to any aspect of a credit transaction on the basis of the plaintiff’s membership in a 2 protected class. See 15 U.S.C. §§ 1691(a), 1691e(a). ECOA claims may be alleged under either a 3 disparate treatment theory of discrimination or through evidence of disparate impact. See Texas 4 Dep’t of Hous. & Cmty. Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519, 545-46 (2015) 5 (“Inclusive Communities”); Pfaff v. U.S. Dep’t of Hous. & Urb. Dev., 88 F.3d 739, 745 (9th Cir. 6 1996). 7 CNB again challenges Brown’s claim brought under a disparate impact theory. Brown 8 does not address CNB’s arguments, see ECF 22 at 16-19, and thus concedes the issue, see Qureshi 9 v. Countrywide Home Loans, Inc., No. C09-4198 SBA, 2010 WL 841669, at *6 n.2 (N.D. Cal. 10 Mar. 10, 2010) (dismissing without leave to amend claims plaintiff “abandoned” by failing to 11 respond to arguments defendant made in its motion to dismiss). In any event, Brown still has not 12 alleged a “specific, identified . . . practice or selection criterion” that caused a significant disparate 13 impact on a protected class. Merritt v. Countrywide Fin. Corp., No. 09-CV-01179-BLF, 2016 WL 14 6573989, at *12 (N.D. Cal. June 29, 2016), aff’d, 783 F. App’x 717 (9th Cir. 2019) (citing Stout v. 15 Potter, 276 F.3d 1118, 1121 (9th Cir. 2002)). Brown alleges that CNB failed to expand its loan 16 products and services in majority-Black and Hispanic neighborhoods in the Oakland-Emeryville 17 area, and that CNB engaged in discriminatory lending and redlining policies in Los Angeles. FAC 18 ¶¶ 12-20. This does not constitute a sufficiently specific, affirmative practice or policy, and 19 Brown fails to establish a nexus between her allegations and the denial of her loan application. 20 See Merritt, 2016 WL 6573989, at *12 (“Plaintiffs have failed to establish that this purported 21 policy, rather than Plaintiffs’ own financials, led Defendants to offer them subprime loans. . . . 22 This defect is fatal to Plaintiffs’ [ECOA] claim.”) (citing Inclusive Communities, 576 U.S. at 541). 23 Moreover, the FAC fails to state a claim under the disparate treatment theory, which 24 requires Brown to plead that (1) she belongs to a “protected class”; (2) she “applied for credit with 25 defendants”; (3) she “qualified for credit”; and (4) she “was denied credit despite being qualified.” 26 See, e.g., Canatella v. Reverse Mortg. Sols. Inc., No. 13-CV-05937-HSG, 2016 WL 6070508, at 27 *2-5 (N.D. Cal. Oct. 17, 2016). Specific allegations of discriminatory intent or motive are 1 F.3d 1075, 1081 (9th Cir. 2012) (requiring allegations of discriminatory intent in a disparate 2 treatment claim under Title VII); Gamble v. City of Escondido, 104 F.3d 300, 304-05 (9th Cir. 3 1997) (holding that the elements of Title VII discrimination claims, including allegations of 4 disparate treatment, are the same as the elements for FHA discrimination claims). Discriminatory 5 intent or motive means a “decision maker . . . selected or reaffirmed a particular course of action at 6 least in part ‘because of,’ not merely ‘in spite of,’ its adverse effects upon an identifiable group.” 7 Pers. Adm’r of Massachusetts v. Feeney, 442 U.S. 256, 259 (1979). 8 The FAC fails to sufficiently allege CNB denied Brown’s loan at least in part because of 9 her race. Brown asks the Court to infer discriminatory motive by considering together “the fact 10 that Ms. Brown was unequivocally qualified for [the] loan,” “the unequivocal public 11 acknowledgment of CNB’s discriminatory policies and practices in the City of Los Angeles,” and 12 “reasonable indicia that similar practices were befalling the Black and Hispanic communities in 13 the Emeryville-Oakland census tract.” FAC ¶ 52. Brown correctly contends that she need not 14 supply direct evidence of discriminatory motive, but any circumstantial evidence still must 15 “demonstrat[e] that a discriminatory reason more likely than not motivated” the defendant’s 16 conduct. Pac. Shores Props., LLC v. City of Newport Beach, 730 F.3d 1142, 1158 (9th Cir. 2013). 17 The Court cannot find, taking as true the facts before it, that a discriminatory reason more 18 likely than not motivated the denial of Brown’s loan. Brown argues the Court may infer from the 19 Department of Justice (“DOJ”) complaint and the resulting Consent Order that CNB has a 20 “predilection . . . for affirmatively applying discriminatory animus when determining which 21 communities it chose to offer its credit services.” ECF 26 at 14. Relatedly, Brown alleges some 22 of the CNB employees who handled her loan application were based in Los Angeles, and that 23 those employees were “either privy to or involved in” CNB’s purported discriminatory policies 24 there. FAC ¶ 53. CNB argues Brown has not adequately connected the allegations of CNB’s 25 conduct related to the DOJ complaint with the denial of Brown’s loan. ECF 27 at 4-5. The Court 26 agrees. CNB denied the allegations in the DOJ complaint, but even if they were shown to be true, 27 an allegation that its employees were aware of or implicated in discriminatory policies in Los 1 to infer that discriminatory intent drove CNB to deny Brown’s loan specifically. See Wood, 678 2 F.3d at 1081. Even accepting as true Brown’s allegation that she qualified for the loan,2 the FAC 3 would not establish that the denial was at least in part motivated by Brown’s race, as the 4 allegations are insufficient for the Court to conclude the denial of the loan was more likely 5 motivated by Brown’s race than by any other possible factor. Pers. Adm’r of Massachusetts, 442 6 U.S. at 259. Thus, the Court dismisses Brown’s ECOA claim, as the FAC again fails to show 7 discriminatory motive. 8 In response to the Court’s order, ECF 32, the parties filed supplemental briefing addressing 9 whether further amendment of Brown’s complaint would be futile, ECF 33; ECF 34. Brown 10 stated that “without knowing why the Court believes the current facts are insufficient, it is not 11 possible for any party . . . to competently state whether a further amendment would be futile.” 12 ECF 33 at 3. She further states that she “alleged additional facts set forth in the amended 13 complaint in paragraphs 21 through 48” and believes they cure the deficiencies the Court 14 identified in its order dismissing the initial complaint. Id. However, nearly all of the allegations 15 in paragraphs 21 through 48 of the FAC were alleged in the initial complaint. Compare FAC ¶¶ 16 21-48 with Complaint (ECF 1) ¶¶ 4, 28, 30-52. Because Brown has not cured the deficiencies the 17 Court identified in the initial complaint, and has failed to identify additional facts she would allege 18 in a second amended complaint, the Court determines amendment would be futile, see Leadsinger, 19 Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008) (finding no abuse of discretion in 20 denying leave to amend where the amendment would be futile). Brown’s ECOA claim is 21 therefore DISMISSED with prejudice. 22 B. State Law Claims 23 As the Court dismisses Brown’s ECOA claim, only her state claims remain. Courts have 24 discretion to “decline to exercise supplemental jurisdiction over a claim . . . if [it] has dismissed all 25

26 2 The parties dispute whether Brown has made an adequate showing of this element. See ECF 22 at 14-16; ECF 26 at 15-16. Because the Court finds Brown has failed to establish discriminatory 27 motive, it need not resolve the issue. The parties do not dispute the remaining elements of a 1 claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c). “[I]n the usual case in which 2 all federal-law claims are eliminated before trial, the balance of factors . . . will point toward 3 || declining to exercise jurisdiction over the remaining state-law claims.” Carnegie-Mellon Univ. v. 4 Cohill, 484 U.S. 343, 350 n.7 (1988); see also Acri v. Varian Assocs., Inc., 114 F.3d 999, 1001 5 (9th Cir. 1997). The Court thus declines to exercise supplemental jurisdiction and dismisses 6 || Brown’s state law claims without prejudice. 7 || ID. CONCLUSION 8 For the foregoing reasons, the Court GRANTS CNB’s motion to dismiss. 9 10 IT IS SO ORDERED. 11 Dated: March 19, 2025 □□

ARACELI MARTINEZ-OLGUIN 14 United States District Judge 15 16

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