The Sixth Circuit dismissed an Equal Credit Opportunity Act (ECOA) lawsuit because the plaintiffs failed to make a case that the creditor denied their request for a loan restructuring for a discriminatory reason. 16630 Southfield Ltd. Partnership v. Flagstar Bank, F.S.B., 727 F.3d 502 (6th Cir. 2013).

The plaintiffs, one of whom was a naturalized U.S. citizen from Iraq, obtained a loan for a real estate venture. The loan was later restructured when the plaintiffs had difficulties making payments. When the restructured loan was coming due, the plaintiffs requested an extension and offered additional collateral and a guarantor, but Flagstar denied the request.

The lawsuit alleged that the creditor discriminated against the plaintiffs because of their national origin in denying the second restructuring request. On appeal, the Sixth Circuit affirmed the dismissal of the lawsuit, relying on the Supreme Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Those cases held that a plaintiff responding to a motion to dismiss cannot simply respond with conclusory allegations but must instead offer specific facts that support the plaintiff’s legal theory.

In this case, the court found that the plaintiffs’ mere allegation that other unidentified borrowers were more favorably treated was insufficient to explain how their national origin played a role in the Flagstar’s decision to deny their second restructuring request. The court also noted that it was reasonable for the creditor to deny the restructuring request after it had already extended one repayment deadline.

Whether a creditor is dealing with a lawsuit or a fair lending examination the result is determined by the facts. In this case the plaintiff’s lack of facts saved the creditor. If discovery had shown similar cases where non-minority borrowers had obtained restructuring the facts likely would have led to a bad result for the creditor.