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National Community Reinvestment Coalition v. Accredited Home Lenders Holding Co.

August 28, 2008


The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge


Plaintiff National Community Reinvestment Coalition ("NCRC") brings this action against defendants Accredited Home Lenders Holding Company ("Accredited Holding"), Accredited Home Lenders, Inc. ("Accredited, Inc."), and Accredited Mortgage Loan REIT Trust ("Accredited REIT") (all defendants, collectively, unless otherwise noted, "Accredited" or "defendants"), alleging violations of the Fair Housing Act ("FHA"), 42 U.S.C. § § 3601-3631. Specifically, NCRC argues that Accredited's lending policies discriminate against African Americans and Latinos in several major metropolitan areas across the country.

Pending before the Court is defendants' motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). Defendants make four arguments: (1) this Court does not have personal jurisdiction over Accredited Holding and Accredited REIT; (2) plaintiff lacks standing; (3) plaintiff fails to state a claim upon which relief can be granted under Section 804 of the FHA; and (4) that the FHA does not permit claims for discrimination under a disparate impact theory or alternately, even if the FHA permits disparate impact claims, NCRC fails to state a cognizable disparate impact claim. Defs.' Mot. to Dismiss at 1. Upon consideration of the motion, the response and reply thereto, supplemental memoranda, and the applicable law, the motion to dismiss is DENIED.

I. Background

NCRC is a national non-profit organization with a mission to increase fair and equal access to credit, capital and banking services and products for all Americans, regardless of race. Complaint ("Compl.") ¶ 2. NCRC's members include community development corporations, civil rights groups, community reinvestment advocates, local and state government agencies, and churches. Compl. ¶ 12. Among other things, NCRC works to increase the flow of private capital into underserved communities. Compl. ¶ 2, 12.

On July 25, 2007, Plaintiff filed a complaint for Declaratory and Injunctive Relief against Accredited alleging a pattern and practice of discrimination against African-American and Latino homeowners, and against homeowners and prospective homeowners in African-American and Latino neighborhoods. Compl. ¶ 4. NCRC alleges that this pattern and practice results from Accredited's policies to determine whether a prospective borrower is eligible for a mortgage loan. Compl. ¶ 4.

According to the allegations in the complaint, defendant Accredited Holding is a public company that originated over $16 billion in residential mortgage loans in 2005, either directly or through its subsidiaries. Compl. ¶ 13. Plaintiff maintains that Accredited Holding originates some loans in the District of Columbia. Compl. ¶ 13. Defendant Accredited, Inc. is a nationwide mortgage banking company and wholly-owned subsidiary of Accredited Holding. Compl. ¶ 14. Accredited, Inc. is a subprime lender. Compl. ¶ 14. Defendant Accredited REIT Trust is a wholly-owned subsidiary of Accredited, Inc. Compl. ¶ 16. Accredited REIT acquires, holds, manages and services the mortgage assets of Accredited, Inc. throughout the United States, including in the District of Columbia. Compl. ¶ 16.

II. Discussion

A. Standard of Review

Pursuant to Federal Rule of Civil Procedure 8(a), a pleading stating a claim for relief must contain "a short and plain statement of the claim showing that the pleader is entitled to relief" in order to provide to the defendant "fair notice of the claims against him." Ciralsky v. CIA, 355 F. 3d 661, 668-70 (D.C. Cir. 2004) (quoting Fed. R. Civ. P. 8(a)). See also Erickson v. Pardus, --- U.S. ----, 127 S.Ct. 2197, 2200 (2007) (per curiam).

"[W]hen a complaint adequately states a claim, it may not be dismissed based on a district court's assessment that the plaintiff will fail to find evidentiary support for his allegations or prove his claim to the satisfaction of the factfinder." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1969 (2007). In considering a 12(b)(6) motion, the Court should construe the complaint "liberally in the plaintiff's favor," "accept[ing] as true all of the factual allegations" alleged in the complaint. Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 15 (D.C. Cir. 2008) (citing Kassem v. Washington Hosp. Ctr., 513 F. 3d. 251, 253 (D.C. Cir. 2008)). Plaintiff is entitled to "the benefit of all inferences that can be derived from the facts alleged." Kowal v. MCI Communications Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).

B. Personal Jurisdiction over Accredited Holding and Accredited

REIT Defendants maintain that neither Accredited Holding nor Accredited REIT are organized in the District of Columbia and thus are nonresident defendants. Defs.' Mot. to Dismiss at 3. They argue that the Court cannot exercise personal jurisdiction over these two defendants unless first, the District of Columbia's long-arm statute provides jurisdiction and, second, the Court finds jurisdiction would satisfy the constitutional requirements of the Due Process Clause. Defs.' Mot. to Dismiss at 4 (citing GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000)). Defendants argue that NCRC has not alleged specific facts on which the court can find personal jurisdiction. Defs.' Mot. to Dismiss at 4 (citing Atlantigas Corp. v. Nisource, Inc., 290 F. Supp. 2d 34, 42 (D.D.C. 2003)).

Plaintiff has submitted Accredited's SEC filings in support of its claims that Accredited Holding and Accredited REIT have "engaged in substantial lending-related transactions in the District of Columbia which give rise to the Complaint." Pl.'s Mem. in Opp'n at 8. Plaintiff further alleges that these two defendants are alter egos of defendant Accredited, Inc., who does not contest personal jurisdiction. Pl.'s Mem. in Opp'n at 8.

While the plaintiff has the burden of establishing the factual basis for personal jurisdiction, "[i]n determining whether such a basis exists, factual discrepancies appearing in the record must be resolved in favor of the plaintiff." Crane v. New York Zoological Soc., 894 F.2d 454, 456, 282 U.S. App. D.C. 295, 297 (D.C. Cir. 1990) (citing Reuber v. United States, 750 F.2d 1039, 1052 (D.C. Cir. 1984)). "A plaintiff faced with a motion to dismiss for lack of personal jurisdiction is entitled to reasonable discovery, lest the defendant defeat the jurisdiction of a federal court by withholding information on its contacts with the forum." El-Fadl v. Central Bank of Jordan, 75 F.3d 668, 676, 316 U.S. App. D.C. 86, 94 (D.C. Cir. 1996). See also GTE New Media Servs. Inc., 199 F.3d at 1351-52; Caribbean Broad. Sys., Ltd. V. Cable & Wireless PLC, 148 F.3d 1080, 1090 (D.C. Cir. 1998); Edmonds v. U.S. Postal Serv. Gen. Counsel, 949 F.2d 415, 425 (D.C. Cir. 1991); Crane v. Carr, 814 F.2d 758, 760 (D.C. Cir. 1987); Diamond Chem. Co. v. Atofina Chems., Inc., 268 F. Supp. 2d. 1, 15 (D.D.C. 2003) ("The Circuit's standard for permitting jurisdictional discovery is quite liberal").

NCRC has alleged sufficient facts at this stage of the proceedings. Accordingly, the Court DENIES without prejudice the defendants' motion to dismiss the plaintiff's complaint against Accredited Holding ...

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