Jan 29, 2010

7th Circuit Carves out More Space for Post-Acquisition FHA Claims

Bloch v. Frischholz, 587 F.3d 771(7th Cir. 2009)

Decided November 13, 2009

The 7th Circuit Court of Appeals unanimously held in Bloch v. Frischholz,that the Fair Housing Act (FHA) protects persons from discrimination not only before, but also after housing has been acquired. Though bright-line rules were not necessarily developed, the court discusses three provisions through which post-acquisition claims can now more clearly be established.

Since 2004, after the Court's decision in Halprin v. Prairie Single Family Homes, the Fair Housing law in the 7th Circuit concerning post-acquisition conduct has been construed very narrowly because as the court stated,"the FHA by and large [is] concerned only [with] access to housing." Id. Halprin has lead many courts to focus on the timing of the discrimination rather than whether discrimination actually occurred. Bloch, to a certain extends, clarifies this area of the law by ruling that the FHA reaches a "range of post-acquisition conduct." Bloch v. Frischhol.

The plaintiff's in Bloch claimed that the condo association's refusal to allow Jewish members to affix a mezuzah (religious symbol) to their door posts violated three provisions of the FHA under post-acquisition legal theories. The court addresses each claim:

Claim 1 - Post-Acquisition Unavailability Through Constructive Eviction

Section 3604(a) of the FHA makes it unlawful "to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin."

This provision is focused on access to housing and is not necessarily targeted at post-acquisition conduct; however, should the post-acquisition discriminatory conduct effectively deny access to already-owned or rented property, 3604(a) may be violated. The plaintiffs argued that the Association's religious discrimination amounted to "constructive eviction," a doctrine in real property whereby a landlord renders property unavailable due to a failure to perform a legal duty (provide heat or water). The issue here is whether by refusing to allow the Bloch's to place the mezuzah outside their door, the association constructively evicted the Bloch's on the basis of religion because the Jewish faith requires the ability of followers to affix a mezuzah to their doorposts.

The issue rested on the court's interpretation of "unavailable." In a case of constructive eviction, the plaintiff must show that the residence is "unfit for occupancy," often to the point that one is "compelled to leave." (Citing Black's Law Dictionary). The Bloch Court provided that diminution of property values, blatant discriminatory acts, or the lack of an elevator service does not cross the unavailability threshold. On the other hand, changing the locks of a tenant without providing the key because of race, or not providing heat on the basis that the tenant has children, would amount to unavailability.

Inseparable from any argument as to whether a unit is unavailable is the question of whether the plaintiff vacated the premises. While the court in Bloch does not establish a bright line rule requiring that the plaintiff vacated the unit, it appears that the plaintiff must either provide evidence that they vacated, or had an intent to vacate the premises but were unable to do so. The Court appears to establish a reasonableness standard in stating that since the the Blochs neither vacated nor provided a reason why they failed to vacate, a reasonable jury would be unable to find that the Association made the unit unavailable.

Thus, a post-acquisition claim under section 3604(a) requires that the premises be made effectively unavailable to its residents because of race, color, religion, sex, familial status, or national origin, and that the residents left the premises or intended to leave but were unable to do so.

Claim 2 - The Right to Inhabit as a Privilege of Sale and Abuse of Contractual Powers.

Section 3604(b) makes it unlawful "[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin."

First, the court finds that a 3604(b) allows for the same constructive eviction theory as under 3604(a) because the availability of housing already acquired is a privilege of sale. Making the premises unavailable is therefore a deprivation of one's right to privileges of sale.

Additionally, a post-acquisition claim can be made under 3604(b) where a resident agrees to subject themselves to rules imposed by a Board as a condition of the housing housing purchase. Should the board enforce those rules in a discriminatory fashion, there may be a 3604(b) violation. For example, if a condo association board rules against leaving trash cans outside a resident's unit, but only penalizes black residents for breaking the rule, the black residents will have a valid post-acquisition 3604(b) claim.

Here, if the Bloch's can show that the condo association selectively enforced, or expanded the scope of the rule in order to specifically target the Bloch's use of the mezuzah, they may prevail on the 3604(b) claim.

Claim 3: Denial of the Right to Full Enjoyment of Premises

Section 3617 makes it unlawful "to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title."

The language of 3617 on its face seems to suggest that for a 3617 action to be valid, the plaintiff must possess a separate cause of action under 3603-3606, of which they tried to exercise, and were later discriminated against on the basis of having that right. A post-acquisition claim under this reading would require one of the above two post-acquisition theories to be satisfied before a 3617 action could be pursued (except with handicapped cases). This provision is usually violated when a person is denied housing on the basis of race (3604) etc. and then is threatened not to pursue legal action for that denial (3617).

However, the court Bloch expands this meaning to allow for a 3617 claimindependent of any other FHA cause of action. This decision almost has the effect of overruling Halprin in that it protects a residents right against discrimination that interferes with the enjoyment of their already acquired housing. This reading is consistent with the intent of the FHA's purpose to "replace the ghettos by truly integrated and balanced living patterns." Trafficante v. Metro. Life Ins. Co., 409 U.S. 205 (1972). Additionally, the court cites HUD's interpretation of 3617 which prohibits "interfering with persons in their enjoyment of a dwelling because of the race [or] religion . . . of such persons." 24 C.F.R. 100.400(c)(2).

While the extent of this protection is to be worked out in the years to come, the court did provide a four part test for 3617 claims: The plaintiff must show that (1) she is a protected individual under the FHA, (2) she was engaged in the exercise or enjoyment of her fair housing rights, (3) the defendants coerced, threatened, intimidated, or interfered with the plaintiff on account of her protected activity under the FHA ("Interference" is more than a "quarrel among neighbors" or an "isolated act of discrimination," but rather is a "pattern of harassment, invidiously motivated."), and (4) the defendants were motivated by an intent to discriminate.

(The Bloch case was remanded and the case is pending before the district court.)

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