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Cartwright v. American Savings & Loan Association

decided: July 14, 1989.


Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 82 C 637, Richard Mills, Judge.

Cudahy, Coffey and Easterbrook, Circuit Judges.

Author: Coffey

COFFEY, Circuit Judge

The plaintiffs-appellants Mary Cartwright and the Northwest Indiana Open Housing Center commenced a suit alleging that the defendant-appellee American Savings & Loan Association ("American Savings") refused to approve an application for a home construction loan in 1980 because of Mary Cartwright's race and sex and engaged in "redlining" in the neighborhood where Mrs. Cartwright intended to build,*fn1 in violation of the Fair Housing Act (42 U.S.C. §§ 3604 and 3605), the Equal Credit Opportunity Act (15 U.S.C. § 1691) and civil rights statutes (42 U.S.C. §§ 1981 and 1982). American Savings moved for involuntary dismissal pursuant to Fed. R. Civ. P. 41(b), arguing that the facts and the law presented during the court trial failed to establish a right to relief. The district judge agreed. We affirm.


On August 24, 1965, the plaintiff-appellant Mary Cartwright, a black female, and her first husband, Shishmon Bailey, obtained a mortgage loan from the defendant-appellee American Savings for a single-family residence at 5901 Columbia Avenue, Hammond, Indiana. Some twelve years later, on December 5, 1977, American Savings approved a second mortgage on the same real estate at 5901 Columbia in the amount of $15,000.

On or about July 10, 1980, Mary Cartwright and her second husband, Lawrence Cartwright, purchased lots 29 through 33 at 1112 Merrill Street in the East Hammond (Indiana) urban renewal area. The Cartwrights purchased the property from the City of Hammond for $1.00 per lot, conditioned upon the Cartwrights constructing only a single-family residence.

On August 28, 1980, Mary and Lawrence Cartwright applied for a $90,000 home mortgage loan from American Savings to finance the construction of a home on the Merrill Street property.*fn2 The Cartwrights estimated the approximate value of their new residence at $91,250. Louis Green, vice-president of American Savings charged with mortgage loan responsibility, accepted the Cartwrights' application on August 28, 1980, and collected their application fee of $190.00 for a credit check and an appraisal of the building venture.

Mary Cartwright and Louis Green's testimony differed as to the events following their initial August 28, 1980, meeting. Green testified that he took the Cartwrights' loan application on August 28, 1980, and ordered a credit check and an appraisal of their anticipated Merrill Street building venture.*fn3 Green further testified that Mrs. Cartwright called him twice in the months following their August 28, 1980, meeting concerning her loan application. According to Green, the first contact occurred in early September 1980, when the appellant called Green inquiring about the status of the loan and Green stated he found the credit report on file, but noted that the appraiser Lee had not as of that date filed his completed property appraisal. Green told the appellant that he would check the status of the appraisal and advise her. Green telephoned Vernon Lee & Associates and was informed that the appraisal was delayed because "they were having problems finding homes of comparable value in that particular area."*fn4 Green testified:

"So I called Mrs. Cartwright back, and Mrs. Cartwright, after explaining to her that we were having a little difficulty in finding market comparables, said to me, 'Well, I have several friends of mine that are in the process of building homes like or larger than this.'

And I asked her, 'Could you possibly get us some information to that effect, something that we'd have a handle on the market in that particular area?' And she said, 'I'll be happy to do that.' And I said, 'You can either get it to me or get it to Vern Lee, his office,' and I -- I assume I told her where his office was."

Green also stated that Mary Cartwright thereafter failed to communicate the comparable housing information she had agreed to provide and that he was awaiting the information to allow American Savings' loan committee "to make a decision on the loan, to put as much information as we can get to them." He further testified that because Mrs. Cartwright failed to provide the comparable housing information, he was unable to submit the Cartwrights' 1980 loan application to American Savings' loan committee for approval or rejection.

Green stated that he had another conversation with the appellant in March of 1981 when she called and said that she was still interested in building on the Merrill Street site, but that she was having some "personal problems" and had to work them out first. He testified he had no further contact with Mrs. Cartwright until May 1982.

Mary Cartwright's testimony contrasted with Green's in that she stated that Green asked her during their initial August 28, 1980, meeting if she could obtain information regarding the value of comparable homes in the vicinity of the Cartwrights' Merrill Street property, and that she never told Green that she would do so. Her ex-husband, Lawrence Cartwright, corroborated her testimony that she did not agree to provide the information during the meeting on August 28. Further, Mary Cartwright testified that she contacted Green four times in the two months following their August 28, 1980, meeting each time inquiring into the status of the loan application. She stated on each occasion Green informed her he was "working on it" and would get back to her, but failed to do so. She denied having any contact with Green from November 1980 to April 1982; denied requesting that American Savings put her 1980 loan application "on hold" during that period; and also denied advising Green of any "personal problems." Finally, she stated that she had called the Northwest Indiana Open Housing Center complaining about American Savings' treatment of her 1980 loan application after Green advised her during the April 22, 1982, telephone conversation that her application had not been completed because of her failure to forward the comparable housing information she had volunteered to provide.*fn5

It is undisputed that Green and Mrs. Cartwright had telephone conversations on May 4 and May 14, 1982. Mary Cartwright tape-recorded both of these conversations without Green's knowledge or consent.*fn6 According to the transcript of the May 4 conversation, Green informed Mrs. Cartwright that her 1980 loan application "just died a natural death" because she failed to provide American Savings with the comparable housing information as she had agreed. The appellant also told Green during the May 4 conversation that she was no longer married to Lawrence Cartwright*fn7 and therefore was interested in building a more modest home (costing $80,000 rather than $90,000 as originally contemplated) on the Merrill Street site. Green advised her that she would thus be required to file a new loan application. The May 4 transcript also reveals that the appellant inquired of Green regarding the availability of financial assistance for low income borrowers, and Green told her that bond money was available through the Indiana Housing Authority, and that (unlike American Savings) another local financial institution, the Lake Mortgage Company, was participating in the bond program. According to the transcript of the May 14, 1982, telephone conversation, Green and the appellant arranged to meet at American Savings on May 28, 1982, so the appellant could file a new home loan application.

Both Green and Mary Cartwright testified that Green advised the appellant during the May 28, 1982, meeting that interest rates were extremely high (17 1/2 percent) at the time and that it would be more economically advantageous for her to sell her home rather than offer it for rent and apply the sale proceeds toward the construction costs of her proposed new Merrill Street residence. Green also reiterated that Mrs. Cartwright could apply for Indiana Housing Authority bond money through the Lake Mortgage Company. The appellant testified that Green also told her during this meeting that she should sell her Columbia Avenue home because "being a woman you can't take care of two properties." Although Green and Cartwright arranged the May 28, 1982, meeting so Cartwright could file a new loan application, she chose not to complete an application at that time but did file a new loan application in early October 1982, which American Savings approved on November 22, 1982.*fn8 Mary Cartwright had no contact with Green or American Savings between the May 28, 1982, meeting and the commencement of this suit on August 27, 1982.

The trial court resolved the conflicts in the Louis Green and Mary Cartwright testimony in favor of Green, finding initially that Mary Cartwright "volunteered" to supply American Savings with information regarding comparable homes in the vicinity of the Cartwrights' Merrill Street property, and secondly, that Mary Cartwright told Green in late 1980 or early 1981 that she was in fact having "personal problems" and stated she would get back to him. The court also found as follows:

"At all times relevant hereto, Mary Cartwright was a creditworthy individual and her credit history with American Savings was considered good. She had been a customer of American Savings since at least August of 1965. Mrs. Cartwright was and is an articulate and intelligent person.

American Savings did not reject or otherwise turn down or deny the loan application of Mary and Lawrence Cartwright. . . . Mary Cartwright was not required by American Savings to provide American Savings with the values of homes being built and (sic) the redevelopment area of Hammond . . . American Savings' treatment of Mary and Lawrence Cartwrights' 1980 loan application was not based upon the race of Mary and/or Lawrence Cartwright and the racial character of the community in which they intended to build. American Savings' treatment of Mary Cartwright's loan inquiries in 1982 was not based upon Cartwright's race and/or sex or the racial character of the community in which she intended to build. American Savings has not engaged in the practice of 'redlining' in the central Hammond area, and has in fact provided a significant number of mortgage loans in this area."

In its conclusions of law, the trial court stated that the appellants failed to make out a prima facie case under § 3605 of the Fair Housing Act (42 U.S.C. § 3601 et seq.), captioned "Discrimination in financing of housing,"*fn9 initially stating:

"There is no evidence indicating that American Savings rejected or otherwise denied the August 1980 application. This application, because of lack of communication, inconsistent positions taken by Mrs. Cartwright, and total misunderstanding, went into abeyance and into limbo. Therefore, the plaintiffs have not proved that the loan was rejected . . .,"

as § 3605 requires. The court also concluded that American Savings did not discriminate against Mary Cartwright and require that she (unlike other borrowers) provide comparable housing information, because "Mary Cartwright volunteered to provide the comparable housing information." Lastly, the court concluded that American Savings did not engage in "redlining" within the meaning of § 3605 because

"The plaintiffs' evidence fails to offer a comparison between American Savings and other lending institutions; the relevant amount of total mortgage activity in all relevant areas; the number of mortgage applications received by American Savings, and the number of those applications rejected or withdrawn; or a relationship of comparable transactions from areas other than the area where the Cartwrights intended to build. This raw data does not establish that American Savings has engaged in any form of redlining."

In addition, the trial court found that the appellants' claims "do not fall within the ambit of" § 3604 of the Fair Housing Act, captioned "Discrimination in sale or rental of housing,"*fn10 because § 3604 applies to discrimination in the sale or rental of housing rather than discrimination in the financing of housing, as the appellants alleged. The trial court also concluded that the appellants' claims under the Fair Housing Act were barred by the 180-day statute of limitations contained in the Act, reasoning that the alleged discriminatory conduct at issue occurred between August 28, 1980, and February 3, 1981, or more than 180 days before the appellants filed their complaint on August 27, 1982.*fn11 With respect to the appellants' claims under the Equal Credit Opportunity Act (15 U.S.C. § 1691),*fn12 the court found no violation, stating:

"With respect to the August 1980 application, there was no evidence of discrimination by the defendant. As discussed previously, the application went into abeyance because of the total lack of consistent communication and understanding between Mrs. Cartwright and Mr. Green. Such lack of communication does not amount to discriminatory conduct by American Savings. Also, the application was not rejected and therefore no adverse action was taken with respect to the loan.

With respect to the 1982 transaction, there has also not been a violation of the Equal Credit Opportunity Act. There is no evidence of race or sex discrimination regarding this transaction. Mrs. Cartwright never applied for a mortgage in early 1982 from American Savings."

The district court also denied relief under 42 U.S.C. §§ 1981 and 1982 because the appellants failed to establish to the court's satisfaction that American Savings intentionally discriminated against Mary Cartwright.

Lastly, the trial court ruled that the Northwest Indiana Open Housing Center was not entitled to relief under its theory that American Savings' discriminatory treatment of Mary Cartwright impaired its mission of eliminating housing discrimination in Northwest Indiana because "the Northwest Indiana Open Housing Center has failed to demonstrate that it suffered any injury from acts of the defendant."*fn13


The plaintiffs-appellants challenge certain findings of fact and conclusions of law relating to each of the causes of ...

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