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March 24, 1997

A.B. & S. AUTO SERVICE, INC. and JERRY L. BONNER, Plaintiffs,

The opinion of the court was delivered by: WILLIAMS

 Plaintiffs AB&S Auto Service, Inc. and Jerry L. Bonner bring this action under the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., against defendant South Shore Bank of Chicago. Both parties' cross-motions for summary judgment are presently before the court. For the following reasons the court denies plaintiffs' motion for summary judgment and grants defendant's motion for summary judgment.


 A.B. & S. Auto Service, Inc. ("AB&S") is an automobile repair shop located in Chicago. *fn1" Jerry L. Bonner ("Bonner") is AB&S's president and he is an African-American. (Def.'s 12(m) Stmt. PP 3, 4.) South Shore Bank (the "bank") is a commercial bank with its main office located at 71st and Jeffery Boulevard, in Chicago's South Shore neighborhood. The bank maintains three branch offices on Chicago's South Side and a loan production office in the Austin neighborhood on Chicago's West Side. (Def.'s 12(m) Stmt. PP 1, 2.) The bank participates in the loan guarantee program sponsored by the Small Business Administration ("SBA"). (Def.'s 12(m) Stmt. P 5.) The SBA requires all SBA loan applicants to complete an SBA Form 912 Statement of Personal History. The SBA Form 912 asks applicants if they have ever been charged with or arrested or convicted for any criminal offense other than a minor motor vehicle violation and asks applicants to provide details. In addition form 912 states: "The fact that you have an arrest or conviction record will not necessarily disqualify you." Before submitting a business loan guarantee request to the SBA for approval, the bank is expected to make an independent judgment concerning an applicant's criminal record in evaluating the applicant's character and other relevant factors. (Def.'s 12(m) Stmt. P 5-9.)

 In February 1995, AB&S applied for a $ 230,000 business loan from the bank after having a similar SBA loan request rejected by LaSalle Bank Lakeview. (Def.'s 12(m)Stmt. P 10.) On December 27, 1994, Bonner submitted to the bank the completed SBA form 912. In response to form 912's question about arrests and convictions, Bonner listed five incidents in which he was arrested and charged, but not convicted *fn2" : 1) "domestic matters (husband/wife)" sometime between 1982 and 1984; 2) possession of a controlled substance in 1985; 3) disorderly conduct between 1985 and 1990; 4) possession of a controlled substance in May 1990; and 5) possession of a stolen car in September 1994. (Def.'s 12(m) Stmt. P 12.) Bonner did not deny engaging in any of the conduct for which he was arrested. (Def.'s 12(m) Stmt. P 13.) Bonner also listed one conviction for aggravated battery for stabbing and seriously injuring a man in 1983. (Def.'s 12(m) Stmt. P 11.) He maintains that he acted in defense of himself and his wife who were assaulted by a number of assailants. (Pl.'s 12(n) Resp. Stmt. P 11.)

 The bank reviews applications through a loan committee process. (Pl.'s 12(n) Stmt. P 3.) Ms. Leslie Davis, an African-American Vice President at the bank, reviewed the application of Bonner and recommended it for approval. (Pl.'s 12(m) Stmt. P 5.) However, at the loan committee meeting, Jim Bringley and Dick Turner agreed that Bonner's loan request should be denied. David Shyrock did not get involved in the decision. (Pl.'s 12(n) Resp. Stmt. P 21.) *fn3" Concern was expressed about Bonner's criminal record as set forth in the SBA Form 912. They found the criminal record to reflect poorly on Bonner's judgment and character. (Def.'s 12(m) Stmt. P 21.) The bank decided not to make the $ 230,000 SBA loan to AB&S. *fn4" Bonner's criminal record was a motivating factor in the bank's decision not to make the loan. However, the bank does not automatically reject business loan applications made by people with criminal records. The bank's general practice in evaluating business loan applications is to consider an applicant's criminal history and the surrounding facts on a case-by-case basis and to utilize that information in evaluating the applicant's character and judgment which, in turn, is used in assessing the ability and willingness of the applicant to repay the loan. (Def.'s 12(m) Stmt. P 22-25.)

 During the last 15 years, the bank has considered thousands of business loan applications. There is no evidence that the bank has denied any loan requests because of an applicant's criminal history other than AB&S's $ 230,000 loan request. (Def.'s 12(m) Stmt. PP 26, 27.) The bank does not keep records of rejected business loan applicants; specifically, the bank does not keep records of applicants who were rejected on the basis of a criminal record. (Pl.'s 12(n) Stmt. P 11.) The bank does not keep records that indicate the race of a rejected loan applicant. (Def.'s 12(m) Stmt. P 27; Pl.'s 12(n) Resp. Stmt. P 27.) The bank has made at least three business loans to applicants with criminal records. One of the these three applicants was African-American. (Def.'s 12(m) Stmt. PP 28, 29.)

 Plaintiffs initiated this action under both 42 U.S.C. § 1981 and the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691 et seq. Plaintiffs allege that the bank's practice of considering an applicant's criminal record in making business loan decisions has an unlawful disparate impact on African-American men. (Compl. PP 15-16, 22-23.) On December 13, 1995, plaintiffs voluntarily dismissed the § 1981 claim, leaving only the ECOA claim. Now pursuant to Fed. R. Civ. P. 56(c), defendant moves this court for summary judgment because plaintiffs cannot establish a prima facie under the ECOA. According to defendant, even if plaintiff could establish the prima facie case, the bank is still entitled to summary judgment because consideration of an applicant's criminal record in evaluating SBA loan requests is justified as relevant to creditworthiness and the bank's obligation to do so as an SBA-approved lender. (Def.'s Mem. Supp. Sum. J. at 4-5.) Plaintiffs also move this court for summary judgment on the grounds that considering an applicant's criminal record, without relating it to creditworthiness, discriminates against blacks and is unjustified. (Pl.'s Mem Supp. Summ. J. at 8.)

 Motion for Summary Judgment

 Both plaintiffs Bonner and AB&S and defendant South Shore Bank move this court to enter summary judgment on their behalf under Rule 56 of the Federal Rules of Civil Procedure. The court will render summary judgment only if the factual record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Bratton v. Roadway Package Sys., Inc., 77 F.3d 168, 173 (7th Cir. 1996)(quoting Fed. R. Civ. P. 56(c)). The court will not render summary judgment if "a reasonable jury could return a verdict for the nonmoving party." Sullivan v. Cox, 78 F.3d 322, 325 (7th Cir. 1996)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986)). In ruling on a motion for summary judgment, the court views the facts in the light most favorable to the nonmoving party. Bratton, 77 F.3d at 171 (citation omitted); Sullivan, 78 F.3d at 325 (citation omitted).

 On a motion for summary judgment, the moving party "bears the initial burden of showing that no genuine issue of material fact exists." Hudson Ins. Co. v. City of Chicago Heights, 48 F.3d 234, 237 (7th Cir. 1995)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)). Then the burden shifts to the nonmoving party, which "must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); accord, NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 234 (7th Cir.) (citations omitted), cert. denied, 515 U.S. 1104, 132 L. Ed. 2d 257, 115 S. Ct. 2249 (1995).

 Where cross-motions for summary judgment have been submitted, the court is not required to grant judgment as a matter of law for one side or the other. International Underwriting Services, Inc., v. The Prudential Insurance Company of America, No. 95 C 5633, 1997 WL 75646, *4 (N.D. Ill. Feb. 18, 1997)(citing Heublein, Inc. v. U.S., 996 F.2d 1455, 1461 (2d Cir. 1993)). The court must evaluate each party's motion on its own merits, resolving factual uncertainties and drawing all reasonable inferences against the party whose motion is under consideration. ...

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