Woods v. First National Bank of Durango

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
July 13, 2017
TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court

RESON LEE WOODS and SHAUN K.
WOODS,

Plaintiff Counter
Defendants - Appellees/
Cross - Appellants,
Nos. 15-1491 & 15-1492
(D.C. No. 1:11-CV-02676-WYD-CBS)
v. (D. Colo.)

FIRST NATIONAL BANK OF
DURANGO, a chartered National
Bank,

Defendant
Counterclaimant -
Appellant/Cross - Appellee.

ORDER AND JUDGMENT *

Before TYMKOVICH, Chief Judge, BACHARACH, and MORITZ, Circuit
Judges.

TYMKOVICH, Chief Judge.

*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
 Reson and Shaun Woods submitted a single loan application to the First

National Bank of Durango to finance a construction project. The application

envisioned (1) a $480,000 construction loan for 18 months, and (2) a $482,000

First National in-house mortgage, known as a permanent take-out loan. Shortly

thereafter, the Woodses closed on the $480,000 construction loan. They were

tentatively approved for the permanent take-out loan subject to re-verification of

all loan parameters. More than a year after their initial application, the Woodses

re-applied for the permanent take-out loan to re-finance the construction loan.

First National denied the loan and issued a written adverse action notice

informing the Woodses of the decision. The Woodses filed a complaint alleging

First National failed to comply with notice requirements set forth in the Equal

Credit Opportunity Act (ECOA) when it failed to send an adverse action notice

closer to the date of the Woodses’ initial loan application.

The case went to trial, where the jury found in favor of First National’s

claim that it had complied with ECOA’s notice requirements. The district court

thus entered judgment against the Woodses and in favor of First National. The

Woodses then filed a motion to alter or amend judgment, or in the alternative, for

a new trial, arguing it was impossible to reconcile the jury verdict with the

uncontroverted evidence presented at trial. The district court denied the motion.

The Woodses appeal, challenging both the underlying jury verdict and an

evidentiary ruling by the district court concerning a handwritten reverification

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approval condition on an internal First National credit approval memorandum for

the permanent take-out loan. First National cross-appeals from the district court’s

denial of its post-trial motion for attorneys’ fees.

Exercising jurisdiction under 28 U.S.C. § 1291, we affirm on all issues.

I. Background

On March 6, 2008, the Woodses signed and submitted a single loan

application to First National, seeking (1) a $480,000 construction loan for 18

months, and (2) a $482,000 First National permanent take-out loan. 1 A loan

officer signed the application on March 10, 2008, and the application was

transferred to the First National Loan Committee for consideration.

According to an internal First National credit approval memorandum, the

Woodses were approved for the construction loan on April 8, 2008, on the

condition that no more than $340,000 would be funded until closing on the sale of

a specified property the Woodses owned. The parties closed on the construction

loan on April 15, 2008, at which time they executed documentation, including a

side letter agreement confirming the approval condition. According to another

1
First National argues the jury could have reasonably found the Woodses
did not submit an application for the permanent take-out loan in March 2008
when they submitted their application for the construction loan. We disagree.
The weight of the evidence introduced at trial—including internal bank
documents and testimony by First National employees—shows that First National
considered the March 2008 application as one for both a construction loan and a
permanent take-out loan. Whether that application was complete as to the
permanent take-out loan, however, is a separate issue.

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internal bank memorandum, on April 8 the Woodses were also approved for a

permanent take-out loan subject to “re-verification of all loan parameters

including income, assets, credit, appraisal (final).” App. 687. This condition was

handwritten on the memorandum form.

After the April 15, 2008 closing on the construction loan, there were

several communications between the parties, including:

! an e-mail sent on March 16, 2009 suggesting First National was

unable to pursue the mortgage-loan request at the time and

encouraging the Woodses to seek other options;

! a letter sent on April 3, 2009 suggesting First National would not be

able to provide permanent financing for the maturing construction

loan, encouraging the Woodses to seek other options, and asking for

the Woodses’ approval to release information requested by a

different mortgage company;

! an e-mail sent on April 6, 2009 following up on the April 3 letter;

! a letter sent on May 29, 2009, acknowledging the Woodses’ ongoing

search for a permanent mortgage; and

! letters sent on June 30, July 17, and August 26, 2009 asking how the

Woodses were progressing in securing a long-term mortgage.

On September 16, 2009, the Woodses signed and submitted another loan

application to First National for a permanent take-out loan. This application

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became complete on October 10, 2009 when the Woodses submitted required loan

disclosure documents. On October 29, 2009, First National sent an adverse action

notice to the Woodses denying the application.

In 2012, the Woodses filed a complaint alleging they had submitted a

complete application for permanent take-out financing with their initial March

2008 application, and that First National had failed to issue an ECOA-compliant

notification of its decision to deny that loan. Before trial, the Woodses filed a

motion in limine seeking to exclude the handwritten reverification approval

condition on First National’s credit approval memorandum for the permanent

take-out loan, which required reverification of all loan parameters before

approval. The Woodses also sought to exclude any mention of the reverification

condition at trial. The district court denied the motion.

At trial, the Woodses introduced the credit approval memorandum in

unredacted form and elicited testimony about the handwritten approval condition.

But when First National called the loan officer to testify about her discussion with

the Woodses at the construction loan closing, the Woodses objected. Under the

Colorado Statute of Frauds, the Woodses argued, an approval condition is a credit

agreement which can only be enforced if it is in a writing signed by the person

against whom enforcement is sought. The district court overruled the objection,

but instructed the loan officer to limit her answer to what was on the credit

approval memorandum. The loan officer then testified that approval of the

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permanent loan was subject to reverification, and that she had informed the

Woodses about this condition at the construction loan closing.

The jury ultimately found in favor of First National. In its completed

verdict form, the jury found (1) the Woodses had submitted a completed

application to First National for credit seeking a permanent take-out loan; (2)

First National had taken an adverse action; and (3) First National had not failed to

notify the Woodses in writing in conformity with the ECOA. The district court

entered judgment against the Woodses and in favor of First National on the

ECOA claim. The Woodses filed a timely Rule 59 motion to alter or amend

judgment or, in the alternative, for a new trial, arguing it was impossible to

reconcile the jury verdict with the uncontroverted evidence presented at trial. The

district court denied the motion. The district court also denied First National’s

timely post-trial motion for attorneys’ fees.

II. Analysis

The Woodses challenge the district court’s denial of their motion for post-

trial relief and its admission of evidence concerning the reverification approval

condition for the permanent take-out loan. First National challenges the district

court’s denial of its motion for attorneys’ fees. For the reasons below, we affirm

the district court in full.

A. The Woodses’ Motion for Post-Trial Relief

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 The Woodses contend the district court abused its discretion in denying

their motion to alter or amend the judgment or for a new trial, arguing the jury’s

conclusion that First National complied with ECOA’s notice requirements was

contrary to the weight of the evidence. We disagree for two reasons: a motion to

alter or amend is not available for claims that a verdict was against the weight of

the evidence, and the jury’s findings were not overwhelmingly against the weight

of the evidence introduced at trial.

“We review denials of Rule 59(a) and Rule 59(e) motions for abuse of

discretion.” Hill v. J.B. Hunt Transp., Inc., 815 F.3d 651, 657 (10th Cir. 2016).

“A trial court’s decision will not be disturbed unless the appellate court has a

definite and firm conviction that the lower court made a clear error of judgment

or exceeded the bounds of permissible choice in the circumstances.” Headwaters

Res., Inc. v. Ill. Union Ins. Co., 770 F.3d 885, 899 (10th Cir. 2014) (quoting

Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997)).

As an initial matter, the Woodses’ claim that the district court erred in

denying their motion to alter or amend the judgment must fail. A court may grant

a Rule 59(e) motion to alter or amend a judgment “only to correct manifest errors

of law or to present newly discovered evidence.” Loughridge v. Chiles Power

Supply Co., 431 F.3d 1268, 1275 (10th Cir. 2005) (quoting Phelps v. Hamilton,

122 F.3d 1309, 1324 (10th Cir.1997) (quotation marks omitted)). We have

previously held that a Rule 59(e) motion cannot be used to address the weight or

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sufficiency of the evidence. See Elm Ridge Exploration Co., 721 F.3d 1199, 1216

(10th Cir. 2013) (citing Velazquez v. Figueroa-Gomez, 996 F.2d 425, 427 n.1 (1st

Cir. 1993)). Accordingly, the district court did not abuse its discretion in denying

the Woodses’ motion to alter or amend the judgment.

That leaves us with the Woodses’ Rule 59(a) motion for a new trial. If a

Rule 59(a) motion “asserts that the jury verdict is not supported by the evidence,

the verdict must stand unless it is clearly, decidedly, or overwhelmingly against

the weight of the evidence.” M.D. Mark, Inc. v. Kerr-McGee Corp., 565 F.3d

753, 762 (10th Cir. 2009) (quoting Anaeme v. Diagnostek, 164 F.3d 1275, 1284

(10th Cir. 1999) (quotation marks omitted)).

The jury verdict found that First National was not liable under the ECOA,

which requires creditors to notify applicants of any action taken on a completed

application for credit within thirty days of receipt of the completed application.

15 U.S.C. § 1691(d)(1). The regulations define an application as “an oral or

written request for an extension of credit that is made in accordance with

procedures used by a creditor for the type of credit requested.” 12 C.F.R.

§ 202.9(f). When a creditor takes an adverse action 2 against an applicant, the

applicant is entitled to a written statement of reasons or a written notification of

2
ECOA defines an adverse action as “a denial or revocation of credit, a
change in the terms of an existing credit arrangement, or a refusal to grant credit
in substantially the amount or on substantially the terms requested.” 15 U.S.C.
§ 1691(d)(6).

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the applicant’s right to obtain a written statement of reasons. 15 U.S.C.

§ 1691(d)(2). The statement of reasons must contain “the specific reasons for the

adverse action taken.” 15 U.S.C. § 1691(d)(3).

Based on the evidence introduced at trial, a reasonable jury could have

concluded First National complied with ECOA’s notification requirements. The

jury heard evidence of two different loan applications for credit. The first was

dated March 6, 2008, and the second was dated September 16, 2009 and finalized

on October 10, 2009. First National sent an ECOA-compliant adverse action

notice to the Woodses on October 29, 2009. In its completed verdict form, the

jury was not asked to (and thus did not) specify to which application it was

referring. But the jury could have been referring to First National’s actions taken

on the second loan application, and not to any actions taken regarding the

March 6 loan application. In light of this possibility, we cannot say the jury’s

conclusion was overwhelmingly contrary to the weight of the evidence.

To be sure, there was evidence in the record suggesting First National

decided to deny the Woodses’ initial application for the permanent take-out loan

as early as August 2008 yet failed to issue an ECOA-compliant adverse action

notice within thirty days. Several First National employees testified that a bank

employee made the decision not to extend permanent take-out financing at that

time. But the jury was never asked to decide when the adverse action occurred,

nor was it asked to specify which loan application was the subject of that adverse

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action. Perhaps if it had, then the Woodses might have been entitled to a new

trial. But as written, the completed verdict form is not overwhelmingly against

the weight of the evidence presented at trial. Perhaps the jury decided any

decision in August 2008 was not an adverse action within the meaning of ECOA

because the First National employee did not have final decision-making authority.

Or, in light of the reverification condition on the credit approval memorandum for

the permanent take-out loan, the jury could have reasonably concluded First

National did not consider the Woodses’ application for the take-out loan complete

in August 2008.

In sum, a reasonable jury could have found any decision made in August

2008 was not an adverse action triggering ECOA’s notice requirements, either

because the Woodses’ application was not complete as to the permanent take-out

loan or because the First National employee’s decision to deny the loan was not

final. Put differently, although the jury could have found First National took an

adverse action on the Woodses’ March 6 application in August 2008, the evidence

also supports the opposite conclusion. As the district court stated when it denied

the Woodses’ motion for a new trial, the jury was presented with two different

narratives at trial. There was evidence supporting both versions of the case.

Although a different jury might have accepted the Woodses’ narrative instead,

this possibility does not require a new trial.

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 Accordingly, we affirm the district court’s denial of the Woodses’ motion

for post-trial relief.

B. Admission of Testimony About the Reverification Approval Condition

The Woodses next argue the district court erred in admitting evidence

concerning the reverification approval condition on the credit approval

memorandum, because the condition was not in a writing signed by the Woodses.

We reject this argument, because the Woodses invited any error that occurred.

“We review a trial court’s decision to admit evidence for abuse of

discretion.” Ryan Dev. Co., L.C. v. Ind. Lumbermens Mut. Ins. Co., 711 F.3d

1165, 1170 (10th Cir. 2013). “A party may claim error in a ruling to

admit . . . evidence only if the error affects a substantial right of the party

and . . . a party, on the record” both (1) timely objects or moves to strike, and (2)

states the specific ground for doing so. See Fed. R. Evid. 103(a).

“Generally, a party introducing evidence cannot complain on appeal that

the evidence was erroneously admitted.” Vehicle Mkt. Res., Inc., v. Mitchell Int’l,

Inc., 839 F.3d 1251, 1257 (10th Cir. 2016). That is, “the party introducing the

evidence waives—rather than forfeits—any objection to its admission, meaning

‘we do not consider the claim at all, even under the forgiving plain-error

standard.’” Id. at 1258 (quoting Hancock v. Trammell, 798 F.3d 1002, 1011 n.3

(10th Cir. 2015), cert. denied sub nom. Hancock v. Duckworth, 137 S. Ct. 53

(2016)). We treat the objection as waived, because the party “invited the error

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that it now seeks to challenge.” Vehicle Mkt. Res., 839 F.3d at 1258 (quoting

United States v. Zubia-Torres, 550 F.3d 1202, 1205 (10th Cir. 2008)).

The Woodses admitted the unredacted credit approval memorandum—

including the handwritten reverification approval condition—into evidence at

trial. They also asked several witnesses to testify about the meaning of the

reverification condition and its origin. The Woodses then objected when First

National called the loan officer to testify about her conversations with the

Woodses regarding the condition. But the Woodses had already questioned

another witness about whether the Woodses had been made aware of the approval

condition. On appeal, then, the Woodses are challenging a condition they

created: they introduced the unredacted credit approval memorandum into

evidence and made the memorandum and reverification approval condition central

issues at trial. The Woodses have therefore waived any objection to the

admission of evidence concerning the reverification approval condition on the

credit approval memorandum. For that reason, we need not reach the parties’

arguments about the Colorado Credit Agreement Statute of Frauds.

But even if we narrowly construed the Woodses’ challenge as an objection

to the loan officer’s testimony about the reverification condition, their claim

would still fail. The district court instructed the loan officer to limit her answer

in a manner consistent with the unredacted credit approval memorandum. And

although the Woodses contend they were “compelled” to introduce the

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memorandum without contemporaneous objection, we have previously rejected

similar arguments. See, e.g., Vehicle Mkt. Res., 839 F.3d at 1258 (“[A party]

‘cannot avoid the consequence of its own trial tactic by arguing it was forced’ by

the district court’s in limine ruling ‘to introduce the evidence . . . .’”) (quoting

Canny v. Dr. Pepper/Seven-Up Bottling Grp., Inc., 439 F.3d 894, 904 (8th Cir.

2006)). In any event, the district court’s pre-trial ruling on the motion in limine

did not prevent the Woodses from objecting contemporaneously at trial. Indeed,

the court expressly invited the parties to renew their objections to the challenged

evidence during trial, and the Woodses failed to do so.

Accordingly, we affirm the district court’s admission of evidence regarding

the reverification approval condition in the credit approval memorandum.

C. First National’s Post-Trial Motion for Attorneys’ Fees

In its cross-appeal, First National argues it is entitled to attorneys’ fees.

Specifically, First National claims the costs and expenses it incurred in defending

the present ECOA action were incurred in connection with the enforcement of the

parties’ construction loan agreement, which contains an attorneys’ fees and

expenses provision. But First National reads this provision too broadly. We

therefore affirm the district court’s denial of First National’s motion.

“We review for abuse of discretion the district court’s denial of a motion

for attorneys’ fees under Federal Rule of Civil Procedure 54(d)(2).” Vanguard

Envtl., Inc. v. Kerin, 528 F.3d 756, 758 (10th Cir. 2008). “Subsidiary factual

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findings will only be reversed if clearly erroneous.” Iqbal v. Golf Course

Superintendents Ass’n of Am., 900 F.2d 227, 228 (10th Cir. 1990).

Generally, a party seeking attorneys’ fees under Federal Rule of Civil

Procedure 54(d)(2) must specify the statute, rule, or other grounds entitling the

party to the award. See Fed. R. Civ. P. 54(d)(2); Vanguard Envtl., 528 F.3d at

758. Here, First National seeks attorneys’ fees under the construction loan

agreement. According to the attorneys’ fees and expenses provision in the

construction loan agreement, “[b]orrower agrees to pay all of Lender’s reasonable

costs and expenses, including Lender’s reasonable attorneys’ fees and Lender’s

legal expenses, incurred in connection with the enforcement of this Agreement.”

Supp. App. 127. But the district court denied First National’s motion because it

concluded the provision in the construction loan agreement did not entitle First

National to fees and expenses in this litigation, which did not involve enforcing

the terms of the construction loan agreement.

We agree with the district court. First National incurred its litigation

expenses defending against the Woodses’ ECOA claim, which concerned a

different loan and alleged agreement (i.e., for the permanent take-out loan), and

not enforcement of the terms of the construction loan agreement. In an attempt to

justify its broad interpretation of the fees provision in the construction loan

agreement, First National argues the provision is not limited to direct claims for

enforcement of the construction loan agreement, but rather extends broadly to any

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fees incurred in connection with such enforcement. First National thus contends

it would not have been successful in defending the ECOA claim unless the

provisions of the construction loan agreement were enforced against the Woodses.

In other words, because First National asserted the construction loan agreement as

a defense, this case is covered by the fees provision. But enforcing the

construction loan agreement was not necessary for First National to prevail. The

construction loan agreement was only tangentially relevant as background to the

main issue in the litigation, which involved the permanent take-out loan. First

National’s attorneys’ fees and expenses therefore were not incurred in connection

with the enforcement of the construction loan agreement.

III. Conclusion

For these reasons, we AFFIRM the judgment of the district court in full.

ENTERED FOR THE COURT

Timothy M. Tymkovich
Chief Judge

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Woods v. First National Bank of Durango, Nos. 15-1491 and 15-1492,
Bacharach, J., concurring in part and dissenting in part.

I respectfully concur in part and dissent in part. I join the majority in

affirming the district court’s denial of the Woodses’ motion to alter or

amend the judgment and First National Bank of Durango’s motion for

attorney fees. See Maj. Op. Parts II(A), (C). But I respectfully dissent

regarding affirmance of the denial of the Woodses’ motion for a new trial.

See Maj. Op. Part II(A). On that ruling, I would reverse. As a result, I

would decline to reach the Woodses’ challenges on the evidentiary rulings.

See Maj. Op. Part II(B).

***

In Part II(A), the majority addresses a claim under the Equal Credit

Opportunity Act. For this claim, the historical facts are largely undisputed.

Mr. and Mrs. Woods applied in March 2008 for both a construction loan

and a take-out loan. The construction loan would require repayment within

eighteen months.

The Woodses knew that they could not repay the loan within eighteen

months. But they could repay the loan if the bank approved the second of

the requested loans. That loan was called a take-out loan and would permit

repayment within 30 years. Approving the construction loan without

approving the take-out loan would do the Woodses little except to require
the impossible: repayment of a loan in eighteen months without any

possibility of avoiding a delinquency.

But that was precisely the dilemma thrust upon the Woodses. The

bank quickly approved the construction loan and tentatively approved the

take-out loan. Then, in August 2008, the bank internally decided to deny

the take-out loan. But the bank declined to tell the Woodses that they

would not get the take-out loan. The Woodses knew that they would need

to repay the construction loan within eighteen months, but they did not

know that the bank had denied the application for a take-out loan.

The bank waited until January 2009 to suggest to the Woodses that

they might consider alternative financing. In April 2009, the bank decided

that it might reconsider if the Woodses were to file a “new application.”

Appellants’ App’x at 695. The Woodses filed a new application in

September 2009, which became complete on October 10, 2009. The bank

then rejected this new application.

The delay in denying the March 2008 application for a take-out loan

created liability under the Equal Credit Opportunity Act. The jury’s

contrary decision is impossible to reconcile with existing law and the facts

elicited at trial. Thus, in my view, the district court erred in denying the

Woodses’ motion for a new trial. Because the majority disagrees in

Part II(A), I respectfully dissent on this part of the order and judgment.

2
I. Standard of Review

In considering this ruling, we apply the abuse-of-discretion standard.

See Elm Ridge Exploration Co., 721 F.3d at 1216; Loughridge v. Chiles

Power Supply Co., 431 F.3d 1268, 1275 (10th Cir. 2005).

II. The Undisputed Evidence of an Adverse Action Without the
Required Notice

The Equal Credit Opportunity Act generally sets a 30-day time limit

for a bank to notify a borrower of any adverse action taken on a completed

loan application. 15 U.S.C. § 1691(d)(1)-(2); 12 C.F.R. § 202.9(a)(1). An

application is “complete” if the bank “has received all the information that

the [bank] regularly obtains and considers in evaluating applications for

the amount and type of credit requested . . . .” 12 C.F.R. § 202.2(f). And

the term “adverse action” refers to

a denial or revocation of credit, a change in the terms of an
existing credit arrangement, or a refusal to grant credit in
substantially the amount or on substantially the terms
requested. Such term does not include a refusal to extend
additional credit under an existing credit arrangement where
the applicant is delinquent or otherwise in default, or where
such additional credit would exceed a previously established
credit limit.

15 U.S.C. § 1691(d)(6).

Under these definitions, the bank would have been in violation of the

Equal Credit Opportunity Act upon proof of four historical facts:

1. The Woodses applied for a take-out loan in March 2008.

3
 2. The bank took adverse action on the March 2008 application in
August 2008.

3. The application was complete at the time of the adverse action. 1

4. The bank did not notify the Woodses of the adverse action
within 30 days of August 2008.

The bank denies violating the Act, arguing that the Woodses did not

complete an application for a take-out loan in March 2008 and that there

was no adverse action taken in August 2008. In addition, the bank argues

that the verdict form was ambiguous and could have been referring to the

second application (made in September 2009), which would not have

resulted in a statutory violation.

In my view, however, the undisputed evidence showed the presence

of each of the four historical facts. And even if the verdict form had been

ambiguous, the district court should have granted the motion for a new

trial because of the overwhelming evidence of a statutory violation.

A. The Woodses applied for a permanent take-out loan in
March 2008.

The bank argues that a jury could reasonably have found that the

Woodses did not apply for a take-out loan in March 2008. Appellee’s Resp.

Br. at 25-28. I disagree.

1
The Act’s implementing regulations provide that even if a bank takes
adverse action “on an incomplete application,” the bank must provide
notice of that action (subject to certain exceptions). 12 C.F.R.
§ 202.9(a)(1)(ii). The Woodses do not rely on this provision. Nor do I.

4
 The bank points out that the Woodses’ loan application in March

2008 contained multiple boxes. Two of these boxes referred to

“Construction” and “Refinance” and were checked. Three other boxes said

“Purchase,” “Construction-Permanent” and “Other (explain)” and were not

checked. Appellant’s App’x at 676. Because the “Construction-Permanent”

box was unchecked, the bank argues that a jury could reasonably find that

the Woodses had not applied for a take-out loan in March 2008.

For two reasons, this argument cannot be reconciled with the

evidence as a whole. First, shortly after the Woodses completed the

application in March 2008, the bank generated internal documents

unambiguously discussing the application as one for both a construction

loan and a take-out loan. Id. at 132 (“Purpose: Construction loan”);

id. at 138 (“Purpose: Permanent take-out for [First National Bank of

Durango] construction loan”). Second, as discussed below, bank officials

indisputably decided by August 2008 to deny the application for a take-out

loan. How could bank officials have denied an application that didn’t

exist?

B. The bank took adverse action in August 2008 by denying the
March 2008 application for a take-out loan.

The bank denies that it took adverse action in August 2008 on the

application for a take-out loan. This denial is based on two arguments.

First, the bank argues that a jury could reasonably find that the bank had

5
not decided to deny the application for a take-out loan as early as August

2008. Second, the bank argues that any such denial would not constitute an

adverse action because the Woodses were already delinquent on their

construction loan.

In my view, both arguments fail as a matter of law. The undisputed

evidence shows that the bank decided to deny the take-out loan in August

2008. And even if the Woodses were delinquent on the construction loan,

the bank’s denial of the application for a take-out loan would still

constitute adverse action.

1. The bank denied the application for a take-out loan in
August 2008.

The evidence overwhelmingly shows that the bank denied the

application for a take-out loan in August 2008. In my view, a jury could

not reasonably have found otherwise.

The decision-makers for the bank were Mr. Ronald Dunavant and Mr.

Kent Curtis. Mr. Dunavant testified about the bank’s August 2008 decision

in the following exchanges:

Q: After you became aware of these various problems, what
did you do?

A. The discussions with [Mr. Curtis], with discussions with
the Woods[es] as we went along. Progress was made on
the construction that w[as] going on, but we were aware
that we would not be able to make a long-term permanent
takeout so I encouraged them to find other financing to
take that loan out when it was done.

6
 Q. About when did you make that decision?

A. I believe that was in the August 2008 area.

Q. And who made that decision?

A. Kent Curtis.

Appellants’ App’x at 554.

Q. And [] you and Mr. Curtis, sometime in August 2008,
determined that the First National Bank of Durango was
not going to make the permanent loan, correct?

A. I don’t remember the timeline exactly, but that decision
was made.

Q. Well, at your deposition, did you say about four months
in?

A. Approximately, yes.

Q. So am I in the right time frame?

A. Fairly close, I think.

Q. You can accept it as the time frame, then?

A. I’ll do my best.

Q. No, I’m asking, can you accept it as the time frame four
months in?

A. I believe the record shows that, yes, sir.

Q. So you are aware of what the time frame was, then?

A. Close. Yes.

Id. at 591-92. `

7
 Mr. Dunavant undoubtedly had the power to make this decision. He

was a loan officer in charge of managing the Woodses’ construction loan in

2008 and 2009. His direct supervisor was Mr. Curtis. As a practical matter,

Mr. Dunavant and Mr. Curtis were in charge of making decisions about all

of the Woodses’ applications, including the first one for a take-out loan.

Ms. Melissa Zureich, the chief credit officer and executive vice

president of the bank, acknowledged that the decision made by Mr.

Dunavant and Mr. Curtis would constitute a decision by the bank itself:

Q. Did you review Mr. Dunavant’s testimony [in regard to
his decision to deny the take-out loan]?

A. I have.

Q. And did you see that he stated: Mr. Curtis and I, in
August of 2008, decided not to make this loan?

A. I have read that.

Q. And do you believe that to be true or untrue?

A. I believe it to be true.

Q. So as of August 2008, the bank had determined it was not
going to be making the permanent loan; is that correct?

A. According to that testimony, yes.

Q. And you believe it to be true, right?

A. Yes.

Id. at 329-30.

8
 The bank does not question the fact that bank officials decided to

deny the application for a take-out loan in August 2008. Instead, the bank

points to its conditional approval of the take-out loan in April 2008, which

stated that approval was conditional on “re-verification” of the information

in the Woodses’ loan application. It’s true that the bank’s documents

referred to reverification. But there’s also no question that bank officials

had already decided in August 2008 to deny the application for a take-out

loan.

As the bank points out, the Woodses submitted a new application for

a take-out loan in September 2009. If that were the first application, the

bank’s notice of an adverse action would be considered timely. But no

reasonable fact-finder could possibly regard the application for a take-out

loan in September 2009 as the first application. More than a year earlier,

bank officials had already decided to deny the Woodses’ application for a

take-out loan. The Woodses submitted the second application in September

2009 because that’s what they were instructed to do. See Appellants’

App’x at 695 (noting that the bank informed that Woodses that it had

rejected the first take-out loan and that the bank would allow the Woodses

to file a “new application”).

The bank’s references to “re-verification” or disposition on the

second loan application in September 2009 do not wipe away what had

taken place earlier. Thirteen months earlier, bank officials had already

9
decided to deny the Woodses’ application for a take-out loan. Subsequent

reverification and a new application could not undo that fact.

2. Any delinquency on the construction loan is irrelevant.

The bank also argues that any denial of the take-out loan would not

constitute an adverse action because the Woodses were then delinquent on

the construction loan. For this argument, the bank points out that “adverse

action” “does not include a refusal to extend additional credit under an

existing credit arrangement where the applicant is delinquent or otherwise

in default.” 15 U.S.C. § 1691(d)(6).

This argument is invalid as a matter of law. Like the statute, the

regulations state that this affirmative defense applies when the action

relates “to an account taken in connection with inactivity, default, or

delinquency as to that account.” 12 C.F.R. § 202.2(c)(2)(ii) (emphasis

added). 2 Under the statute and regulations, the bank could avoid liability

only if the Woodses had been delinquent on the take-out loan. But, the

Woodses couldn’t have been delinquent on that loan because it had never

2
The regulation was adopted under a statutory delegation of authority
to the Consumer Financial Protection Bureau. 15 U.S.C. § 1691b(a). This
regulation would trigger substantial deference if the statute were
ambiguous. See Treadway v. Gateway Chevrolet Oldsmobile Inc., 362 F.3d
971, 975 n.3 (7th Cir. 2004) (according substantial deference to 12 C.F.R.
§ 202.2(c)(1)(i)). We need not decide whether § 1691(d)(6) is ambiguous,
for that section itself exempts bank action relating to “an existing credit
arrangement,” not a new loan application. 15 U.S.C. § 1691(d)(6).

10
been issued. The only loan issued was the construction loan, not the take-

out loan.

The bank does not argue to the contrary. Instead, the bank contends

only that the Woodses were delinquent on the construction loan. The

problem is that the Woodses are not claiming that the bank took adverse

action on the construction loan; their claim involves adverse action on the

application for a take-out loan. Thus, the bank cannot avoid liability based

on the Woodses’ delinquency on the construction loan.

C. The Woodses’ March 2008 application for a take-out loan
was complete when the application was denied.

The bank argues that its action in August 2008 could be considered

“adverse” only if the application for a take-out loan had been complete by

that time. The bank points out that in April 2008, the bank provisionally

approved the take-out loan subject to reverification. According to the bank,

it asked the Woodses to submit the second application to allow this

reverification. For the sake of argument, we may assume that the bank

could not have taken an adverse action on the take-out loan unless that

application had been complete by August 2008. Even with this assumption,

there is no question that the application for a take-out loan was complete

by August 2008.

The Equal Credit Opportunity Act’s regulations state that a loan

application is considered complete when the “creditor has received all the

11
information that the creditor regularly obtains and considers in evaluating

applications for the amount and type of credit requested” from the

applicant. 12 C.F.R. § 202.2(f).

Any reasonable jury would have to find that by August 2008, the

bank had received all of the information that is regularly considered when

evaluating loan applications. The bank does not deny that it had all the

required materials in April 2008, when the bank provisionally approved the

Woodses’ application for a take-out loan; the bank said only that it would

be reverifying the correctness of the information. And even without

reverification, bank officials testified that they had decided by August

2008 to deny the application, establishing that the bank had everything

needed for a decision.

Though the bank contends that it needed reverification, its internal

documents characterized the submission in September 2009 as a “new

application” because the bank had already denied the first application.

Appellants’ App’x at 695.

In sum, the bank had everything it needed by August 2008, so the

Woodses’ application for a take-out loan was complete by that time.

12
III. The Bank’s Other Arguments

Finally, the bank argues that regardless of whether it violated the Act

with respect to the March 2008 application, the verdict form was

ambiguous about which loan application was being addressed. According to

the bank, the jury could have read the verdict form as referring to the

Woodses’ September 2009 application. And, as discussed above, the bank

timely responded to the application submitted in September 2009. The bank

contends that the Woodses bypassed any opportunity to object to the

verdict form, precluding reversal.

I would reject this contention, for the problem with the verdict is

unrelated to an ambiguity in the jury’s findings; the problem is that the

evidence overwhelmingly showed that the bank had failed to provide

timely notice after deciding to deny the application for a take-out loan. The

potential ambiguity of the questions posed to the jury would not have

affected the predominance of evidence creating liability. Thus, the

Woodses are entitled to a new trial regardless of whether they had objected

to the verdict form.

* * *

In my view, the verdict conflicted with the great weight of the

evidence. The undisputed evidence showed that

 the Woodses had applied for a take-out loan in March 2008,

13
  bank officials had decided in August 2008 to take adverse
action on that application,

 the application had been complete at the time of the adverse
action, and

 the bank had not notified the Woodses of the adverse action
within the statutory time-period.

Therefore, the bank’s actions created liability under the Equal Credit

Opportunity Act. And as noted above, the ambiguity in the verdict form

does not change this fact. As a result, I believe that the district court erred

in denying the Woodses’ motion for a new trial. In these circumstances, I

respectfully dissent from the majority’s conclusion in Part II(A).

14