Opinion ID: 2048620
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Heading: ECOA Claim.

Text: The ECOA makes it unlawful for any creditor to discriminate on the basis of marital status. 15 U.S.C. § 1691(a)(1). The Act authorizes the Board of Governors of the Federal Reserve System (Board) to prescribe regulations to carry out the purposes of the Act. 15 U.S.C. § 1691b. The regulations promulgated by the board are codified in Regulation B at Title 12 Code of Federal Regulations parts 201.1-202.14 (1988). The ECOA creates a private cause of action for declaratory and equitable relief and for actual and punitive damage. 15 U.S.C. § 1691e. The provisions of the ECOA are violated when a lender requires a married applicant's spouse to cosign for a loan to the applicant even though the applicant is qualified individually under the lender's standard of credit worthiness. Anderson v. United Fin. Co., 666 F.2d 1274, 1276 (9th Cir.1982). Title 12 Code of Federal Regulations part 202.7(d)(1) states in part: [A] creditor shall not require the signature of an applicant's spouse ... other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor's standards of credit worthiness for the amount and terms of the credit requested. We, like the trial court, find that the bank violated the ECOA when it required Audry's signature on the 1981 promissory note and the October 1982 extension agreement even though the applicants were fully qualified under the bank's standard of creditworthiness. The bank did not appeal from the district court finding. The ECOA provides that no action under the Act shall be brought later than two years from the date of the occurrence of the violation. 15 U.S.C. § 1691e(f). The violations of the ECOA occurred when the bank required Audry's signature on the note and extension agreement. The statute's focus is upon the time of the discriminatory actions, not the time at which the consequences of the action became painful. See Delaware State College v. Ricks, 449 U.S. 250, 258, 101 S.Ct. 498, 504, 66 L.Ed.2d 431, 440 (1980) (applying this limitation period under the Equal Employment Opportunity Act); Abramson v. University of Haw., 594 F.2d 202, 209 (9th Cir.1979). Although an affirmative action for damages under the ECOA would be barred by the two-year limitation of section 1691e(f), the debtor may assert the ECOA claim in the nature of recoupment. In re Remington, 19 B.R. 718, 721 (Bankr.D. Colo.1982). The trial court recognized it could assess damages for violation of the ECOA in the nature of recoupment, but held Audry was not an aggrieved applicant entitled to a damage award. The ECOA prohibits a creditor from discriminating against any applicant on the basis of marital status. 15 U.S.C. § 1691. Any creditor who fails to comply with the ECOA is liable to the aggrieved applicant for actual and punitive damages. We must determine if Audry is considered an aggrieved applicant entitled to maintain a civil action for damages under the ECOA. An applicant is defined by the ECOA as: [A]ny person who applies to a creditor directly for an extension, renewal, or continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit. 15 U.S.C. § 1691a(b). Regulations were adopted by the Board in 1974. These regulations defined an applicant as: Applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may be contractually liable regarding an extension of credit other than a guarantor, surety, endorser, or similar party. 12 C.F.R. § 202.2(e) (1985) (emphasis added). This regulation was amended on January 1, 1986. It now provides: Applicant means any person who requests or who has received an extension of credit from a creditor, and includes any person who is or may become contractually liable regarding an extension of credit. For purposes of § 202.7(d), the term includes guarantors, sureties, endorsers and similar parties. 12 C.F.R. § 202.2(e) (1988). The amended regulation is a substantive change in the definition of an applicant under the Act. It overrules the prior regulation so as to include, not exclude from the definition, a guarantor, surety, endorser, or similar party. When a new or amended regulation changes existing law or regulation it will generally not be given retroactive application. See Sam v. United States, 682 F.2d 925, 932, 230 Ct.Cl. 596 (1982), cert. denied, 459 U.S. 1146, 103 S.Ct. 786, 74 L.Ed.2d 993 (1983); see also Hutchison Nursing Home, Inc. v. Burns, 236 N.W.2d 312, 316 (Iowa 1975). We conclude the definition included in the amended regulation should not be given retroactive application. Credit was extended to and upon the application of D & D Farms, Dean Yoder and Richard Lincoln. Audry did not apply for credit to the bank. We find that Audry was not an aggrieved applicant. This result is supported by decisions from other jurisdictions. In Morse v. Mutual Fed. Sav. & Loan Ass'n, 536 F.Supp. 1271, 1278 (D.Mass.1982), a wife signed a note that was an extension of credit to her husband. The court determined that her signature was that of a guarantor, surety, endorser, or similar party under Regulation B of Title 12 Code of Federal Regulations part 202.2. The wife, therefore, was not an aggrieved applicant entitled to bring a private cause of action under the ECOA. See id. at 1278; see also Evans v. First Fed. Sav. Bank of Ind., 669 F.Supp. 915, 922-23 (N.D.Ind.1987) (not-for-profit housing corporation investigating complaints of discrimination not an applicant). In Delta Diversified, Inc. v. Citizens & Southern Nat. Bank, 171 Ga.App. 625, 320 S.E.2d 767, 771 (1984), the Georgia Court of Appeals held that wives of principal shareholders and officers of a corporation who were sureties on the corporation's note were not applicants as defined by the ECOA. The wives were not, therefore, protected by the ECOA. Id., 320 S.E.2d at 771.