Hawkins v. Community Bank of Raymore (14-520)

argument 14-520

Hawkins v. Community Bank of Raymore

Supreme Court of the United States 50 min 6 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the central issue in Hawkins v. Community Bank of Raymore?

John G. Roberts 0:00

We'll hear argument next in case fourteen five twenty, Hawkins versus the Community Bank of Raymore. Mr Duggan.

Unknown 0:08

Mr Chief Justice, and may it please the court. Persons who jointly and severally agree to repay the applied for debt are applicants under a COA. And that is precisely what occurred here. My clients were required in violation of regulation V in a COA As spousal guarantors to become jointly and severally liable to repay the debts of their husband's business. which clearly qualif qualifies them as applicants both under the straightforward language of ECOA as well as the regulation B that was adopted by the regulators. In this particular instance, as in many credit transactions, the real applicants in this transaction are not a to be formed limited liability company or corporation But the persons that will stand as guarantors behind that company.

Anthony M. Kennedy 0:58

Didn't the the Federal Reserve Board Originally I think in nineteen seventy seven, take the opposite position and said explicitly that applicant excludes guarantors.

Unknown 1:12

Your Honor uh uh Your Honor, with regard to that position that was taken by the FDIC in nineteen seventy seven, they were responding to claims by the industry that they did not want Applicants broadly defined to include guarantors for notice provisions and in response to that The regulation was crafted in a way that did in fact address that concern, but it was never intended to eliminate the potential claims for spousal guarantors When the case law came down and said we're relying on the regulation v of nineteen seventy seven. According to what the regulators adopted then in nineteen eighty five, they said We were mistaken, we've been misinterpreted about what our intent was. We now need to modify the regulation to make it clear

Unknown 1:59

That those persons who are discriminated against based on marital status have the right to bring the claim.

Antonin Scalia 2:04

Do you have to give notice to uh to guarantors now?

Unknown 2:07

No, you do not.

Antonin Scalia 2:08

How can that be? I mean they are either applicants or they are not applicants. For applicants, you have to give them notice. Yeah. The agency can make that up?

Unknown 2:19

Well I think the court has already ruled um uh in the Duke Energy case that regulators in appropriate circumstances can even take a defined term under the statute. In that case they'll term modification. I

Antonin Scalia 2:34

never liked that case.

Unknown 2:37

Um Uh what what happened in this case, Your Honor, was very, very uh reasonable by the regulators. They came out in nineteen.

Samuel A. Alito 2:48

Well, everybody agrees that PhC development is an applicant, right? Agreed. Why didn't PhC Development sue and claim that requiring the guarantees uh was in violation of the law.

Unknown 3:05

At that point in time the case law that had developed so far And the regulation B made it clear that the spouses had standing to bring the claim and the spouses were the ones that asserted the claim.

Anthony M. Kennedy 3:17

But why why does it matter if there's always somebody to bring a claim? In what set of cases does the answer to this question matter? I think it's important for

Unknown 3:25

several reasons. First of all, spouses who are required to sign uh jointly and severally with their husbands' businesses and their husbands are going to undertake potential adverse credit uh uh consequences in the future. Let me give you an example. Divorce or death of the primary operator of the business. If the wife has become jointly and severally liable to repay the husband's debt She then is going to be strapped with his credit profile in a business that she never had any operational authority, that she never was involved in and she wasn't an investor on. She was simply required to sign. Because she was the spouse of the husband. And what's important to understand in these cases,

Antonin Scalia 4:04

wait, well you say she was required to sign. She wasn't required to sign some somebody put a gun to her head? She wanted the husband to get the loan, and this was the deal. And I

Unknown 4:13

think

Antonin Scalia 4:14

that's exactly what the regulators are. Oh, but don't talk about it as she was required to sign. She was not required to sign. There was a requirement placed upon if he if he was to get the loan, he had to get her to sign.