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Case Name Jackson v. Novastar Mortgage, Inc. FH-TN-0003
Docket / Court 2:06-cv-2249 ( W.D. Tenn. )
State/Territory Tennessee
Case Type(s) Fair Housing/Lending/Insurance
Case Summary
On April 28, 2006, an African-American homeowner represented by private counsel filed this suit in the U.S. District Court for the Western District of Tennessee against Novastar Mortgage under 42 U.S.C. §§ 1982 and 1983, ... read more >
On April 28, 2006, an African-American homeowner represented by private counsel filed this suit in the U.S. District Court for the Western District of Tennessee against Novastar Mortgage under 42 U.S.C. §§ 1982 and 1983, the Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691.

The plaintiff, acting individually and on behalf of a putative class of all protected racial groups who entered into residential mortgage loans with Novastar, sought injunctive relief, declaratory relief, and damages. The plaintiff claimed that Novastar discriminated against minority borrowers through predatory lending. Specifically, the plaintiff alleged that Novastar engaged in racially discriminatory conduct by targeting undereducated minorities and providing subprime loans to them with interest rates and terms dissimilar to those provided to similarly-situated white borrowers. The plaintiff further alleged that Novastar set interest rates based on the perceived financial sophistication of the borrower rather than the risk of extending the loan, and that it encouraged discriminatory conduct by offering its brokers financial incentives to secure these higher interest rates.

Novastar filed a motion to dismiss, which the District Court (Judge Bernice B. Donald) denied on December 20, 2007, holding that the plaintiff had standing to bring the suit and had sufficiently stated all of her claims. Jackson v. Novastar Mortgage, Inc., 645 F. Supp. 2d 636 (W.D. Tenn. 2007). Novastar appealed this decision to the Sixth Circuit on August 1, 2008.

Meanwhile, on September 12, 2008, one of Novastar's creditors filed an involuntary bankruptcy petition against Novastar in the U.S. Bankruptcy Court for the District of Delaware. In Re: Novastar Mortgage Inc., 1:08-BK-12125 (Bankr. Del. 2008). Under the federal bankruptcy code, the filing of a bankruptcy petition automatically stays other actions against the debtor.

Consequently, pending resolution of the bankruptcy proceeding in Delaware, the plaintiff in this case was statutorily barred from pursuing her discrimination action against Novastar. On this basis, the Sixth Circuit Court of Appeals (Judges Keith, Cole, and Cook) denied Novastar's petition, and the District Court (Judge Donald) administratively closed the case on December 23, 2008. In its order, however, the District Court emphasized that the parties could easily reopen the case upon resolution of the Delaware bankruptcy litigation. Nevertheless, as of June 15, 2015, the case remains closed, though the bankruptcy action ended in March 2009.

Robert Lake - 06/15/2015


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Issues and Causes of Action
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Issues
Constitutional Clause
Equal Protection
Defendant-type
Bank or credit provider
Discrimination-area
Lending
Discrimination-basis
Race discrimination
General
Disparate Impact
Disparate Treatment
Housing
Pattern or Practice
Predatory lending
Plaintiff Type
Private Plaintiff
Race
Black
Causes of Action Fair Housing Act/Fair Housing Amendments Act (FHAA), 42 U.S.C. §§ 3601 et seq.
Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691
42 U.S.C. § 1981
42 U.S.C. § 1982
Defendant(s) Novastar Mortgage, Inc.
Plaintiff Description African-American homeowner, individually and on behalf of a putative class of similarly-situated borrowers.
Indexed Lawyer Organizations None on record
Class action status sought Yes
Class action status granted No
Prevailing Party None Yet / None
Public Int. Lawyer No
Nature of Relief None
Source of Relief None
Form of Settlement None on record
Order Duration not on record
Case Closing Year 2008
Case Ongoing No
Additional Resources
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Case Studies Insurer Must Pay $100.5 Million in Redlining Case
The New York Times
Written: Oct. 27, 1998
By: Joseph B. Treaster
[ Detail ] [ External Link ]

  Nationwide Settles Virginia Redlining Suit
Property Casualty 360
Written: May. 06, 2000
By: Amanda Levin
[ Detail ] [ External Link ]

  The Origins of Fair Lending Litigation
Written: Dec. 04, 2008
By: Andrew Nash (Washington University in St. Louis)
[ Detail ] [ PDF ] [ External Link ]

Docket(s)
2:06−cv−02249 (W.D. Tenn.) 12/02/2010
FH-TN-0003-9000.pdf | Detail
PACER [Public Access to Court Electronic Records]
General Documents
Complaint 04/28/2006
FH-TN-0003-0001.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Order Denying Defendant's Motion to Dismiss 09/27/2007 (W.D. Tenn.)
FH-TN-0003-0003.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Order Granting Defendant's Motion for Reconsideration and Memorandum Opinion and Order Denying Defendant's Motion to Dismiss 12/20/2007 (645 F.Supp.2d 636) (W.D. Tenn.)
FH-TN-0003-0002.pdf | WESTLAW| LEXIS | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Order Granting Motion to Certify Order For Interlocutory Appeal 08/06/2008 (W.D. Tenn.)
FH-TN-0003-0004.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Order [Denying Leave to Appeal] 10/24/2008
FH-TN-0003-0005.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Order Administratively Closing Case 12/23/2008 (W.D. Tenn.)
FH-TN-0003-0006.pdf | Detail
Document Source: PACER [Public Access to Court Electronic Records]
Judges Cole, Ransey Guy Jr. (Sixth Circuit)
FH-TN-0003-0005
Cook, Deborah L. (Sixth Circuit)
FH-TN-0003-0005
Donald, Bernice Bouie (Sixth Circuit, W.D. Tenn.)
FH-TN-0003-0002 | FH-TN-0003-0003 | FH-TN-0003-0004 | FH-TN-0003-0006
Keith, Damon Jerome (Sixth Circuit, E.D. Mich.)
FH-TN-0003-0005
Monitors/Masters None on record
Plaintiff's Lawyers Clary, Thomas E. III (Tennessee)
FH-TN-0003-9000
Collins, Christa (Florida)
FH-TN-0003-0001
Friedman, Andrew S. (Arizona)
FH-TN-0003-0001 | FH-TN-0003-9000
Harrison, Wendy J. (Arizona)
FH-TN-0003-0001 | FH-TN-0003-9000
Meyer, J. Andrew (Florida)
FH-TN-0003-0001 | FH-TN-0003-9000
Wade, B. J. (Tennessee)
FH-TN-0003-0001 | FH-TN-0003-9000
Defendant's Lawyers Alexander, Bruce E. (District of Columbia)
FH-TN-0003-9000
Feild, R. Porter (Tennessee)
FH-TN-0003-9000
Kider, Mitchel H (District of Columbia)
FH-TN-0003-9000
Other Lawyers None on record

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