Jul 19, 2010

Recent Cases (cont.)

Petty v. Portofino Council of Co-Owners, Inc., 2010 U.S. Dist. LEXIS 22935 (March 12, 2010)

The plaintiffs, Jeffrey, Cindy and Christopher Petty's charged defendants, the Portofino Council of Co-Owners, Inc., with violating the Fair Housing Act, along with violating state laws regulating defamation, libel, slander, negligent misrepresentation, breach of fiduciary duty, and intentional infliction of emotional distress. The Defendant responded to the claims by filing a motion to dismiss.

The Pettys purchased a home in Corpus Christi, Texas and claim that they were harassed by the defendant in a variety of ways including the disconnection of their phone lines, which interfered with providing the proper care for their deaf son. Additionally, reasonable accommodations were denied the plaintiffs by limiting their ability to take the son’s service dog through the building so that the dog could relieve itself outside. The plaintiff not only claims that the defendant failed to make reasonable accommodations for their deaf son but also regulated the plaintiff’s children’s access to common areas in the condominium which affected their accessiblity to the dwelling. Lastly the plaintiffs charged the defendant with intimidating potential buyers of the plaintiff’s condominium and denying their application.

The Plaintiffs brought a familial status claim under Fair Housing Act §§ 3604(a)-(b), and a section 3617 claim. The plaintiffs demonstarted that defendant's discrimination affected the availability of the housing, and not merely the habitability of the housing, as required to make to make a valid claim. The court denied the defendants motion to dismiss and stated that the plaintiff’s claims were valid. The court agreed that the defendant’s actions limited the tenant’s availability to housing by making the entrances to the condo inaccessible to the tenant’s children and pets. In addition, the defendant blocked the plaintiff’s attempt to sell the condo. This pecuniary loss is what the court used to establish the injury suffered by the plaintiffs, which is a required element of the FHA claim.

The plaintiffs also filed a Disability Claim under FHA §3604 (f) and 3617, which prohibits discrimination in the sale or rental [of a property] or in any other way making dwelling unavailable for sale or rent due to disability. The court found that the failure to make reasonable accommodations for the plaintiff's son constituted discrimination based on a person's disability.

The state claims made by the plaintiffs include Negligent Representation, Breach of Fiduciary Duty and Intentional Infliction of Emotional Distress. The plaintiffs were unable to satisfy the requirements for the first claim which alleged that the defendants negligently represented that the plaintiff/homeowner, Jeff Petty, was a hacker. For the second claim the plaintiff attempted to establish that there was a “confidence…to act with good conscience and good faith…” between the two parties, or a fiduciary duty, due to their association as co-owners. However, case law has established that no duty exists between co-owner associates.

Finally, the court denied the defendants motion to dismiss the plaintiff's claim for Intentional Infliction of Emotional Distress for any acts that occurred after to May 8, 2007. The plaintiff attempted to establish that there had been continued violation of the Fair Housing Act by including the claims prior to this date, however the motion to dismiss was granted for those claims regarding acts which took place before May 8, 2007 and outside of the statute of limitations.

Ojo v. Farmers Group, Inc., 600 F.3d 1201 (9th Cir. 2010)

African American homeowner, Patrick O. Ojo complained that the Farmers Group insurance practices resulted in disparate treatment under FHA as a result of insurance company’s use of credit scores as a qualifying factor in determining insurance rate. Complainant claims that using credit scores factor that had a “racially disparate impact”

The district court found that the there was reverse preemption under the McCarran-Ferguson Act (MFA) 15 USC § 1012 (b) and Texas Insurance Code sections 544.002; 544.002, 559.051 and 559.052 . According to the MFA no federal law can “invalidate or impair or supersede” any state law made to regulate the insurance business. In other words, the state law, in this case the Texas Insurance Code which permits the use of credit scoring, allows the insurers to get around the FHA law against disparate impact on minorities because the Texas Insurance Code permissive law. In this case the state law would pre-empt the federal law. In most cases, it is the federal law which pre-empts the state law.

Ojo appealed and the three judge panel reversed the decision and held that “Texas law does not reverse preempt” the FHA claim. However the 9th Circuit Court of Appeals ultimately certified the unprecedented question of whether the Texas Insurance Code, in fact, reverse preempts (or overrides) the FHA claim because it has a “legally sufficient non-discriminatory reason” under the Insurance Code for using the credit scoring factor resulting in disparate impact.

Jul 13, 2010

Recent Cases

Marshall Fincher v. South Bend Heritage Foundation, 606 F.3d 331 (7th Cir. 2010)

Fincher, tenant, sued the landlord after being denied Section 8 housing based on a prior eviction,claiming he was denied due process of law and suffered the effects of a breach of contract between the defendant and Housing and Urban Development Contract. The District Court a granted summary judgment to the defendant and the Appellate Court affirmed.

The Plaintiff brought a complaint against both the South Bend Housing Authority and the South Bend Heritage Foundation. The case against the Housing Authority was remanded to the state courts because the eviction process involved in the claim against the state agency is inherently a state issue. In the complaint against SBHF the plaintiff stated that did not have the opportunity to exercise his due process rights and that he was a party to the contract between the landlord and HUD because he was the recipient of the benefit.

The Appellate Court denied both claims. Pertaining to the first claim, the plaintiff concedes that there is well established case law for the 7th Circuit in Edison v. Pierce, 745 f.2d 453 (7th Cir. 1984) which states that recipients of Section 8 benefit have no right to due process when rejected from a specific housing unit, however, he asks that the Court overturn this precedent. With no new changes in law or flaws in the reason of the case exist to justify a overturn the Court’s previous decision. Secondly the Court rejected Fincher’s claim that he is third party-beneficiary to the contract between SBHF and HUD because he did not produce the contract or identify and any provisions (as required to establish an issue of law) that would establish the basis of his claim.

Equal Rights Center v. Archstone Multifamily Series I Trust, 602 F.3d 597 (4th Cir 2010)

The Equal Rights Center brought a claim against Archstone, Niles Bolton, and others for failure to comply with the FHA and ADA in the design and construction of 71 apartment buildings. Archstone, the apartment owners, sought to indemnify themselves against FHA and ADA by making the architect liable. The owners appealed and the appellate court affirmed the District Court’s decision to grant a summary judgment to the defendant, and deny the owner the motion to amend the complaint for contribution. The 4th Circuit Court of Appeals stated that the law was “non-delegable” and that the owner could not insulate himself from responsibility to meet requirements and that the purpose of both the FHA and ADA would have been undermined by allowing the architect to be held liable because it would not make the intended parties accountable or responsive to the law.

Archstone settled with the Equal Rights plaintiffs and filed a cross claim against Niles Bolton, the architect asserting several state-law based causes of action including express indemnity, implied indemnity, breach of contract, and professional negligence. Essentially it is Archstones position that the contract between the owner and the architect provides that the Architect make good defects that result from the architect’s failure to meet the professional standard of care. Archstone in its third party complaint, sought to recover damages, attorney’s fees and costs paid by Archstone to the Equal Rights plaintiffs and recover costs for retrofitting the portions of properties that didn’t meet ADA and FHA requirements. The Court found first, that the claims by Archstone were preempted under the federal law and secondly that the intent to recover losses and damages resulting from the non-compliance represented de facto indemnification from the federal statutes.

Finally, Archstone attempted to amend its complaint to include a claim for contribution, which the district court denied because it changed the nature of the claim regarding the liability and would therefore require additional discovery and “change the character of the litigation”, the appellate court agreed and affirmed the district ‘ decision to deny the amendment.

HUD Acts to Strengthen Anti-Discrimmination Policies in Recognition of LGBT Pride Month

In celebration of LGBT Pride Month the U.S. Depart of Housing and Urban Development (HUD) announced an update in policy which proposes new methods for addressing LGBT individuals faced with housing discrimination. The Fair Housing Act does not address housing discrimination based on sexual orientation specifically, nor does it cover gender identity-based discrimination. However, HUD Secretary Shaun Donovan suggest that these types of issues could be addressed using other protect groups, for example LGBT parties could claim gender discrimination or discrimination based on a perceived disability.
The announcement by HUD regarding adding stronger policy, also encourages individuals to look at state laws and other local protections such as are enacted in approx. 20 states and a number of municipalities, which prohibit LGBT discrimination. HUD says local laws are not used in place of HUD but that they (local laws) can work in concert with the administrative efforts of HUD. Tenants can still file a complaint under the Fair Housing Act in federal district court.
The uncertainty of the economy makes housing an issue for all; however, according to National Center for Transgender Equality, those susceptible to discrimination, such as the LGBT community among others, find themselves especially vulnerable when no laws explicitly address these issues. Currently a significant number of transgender people are suffering eviction or homeless due to the lack of firm policy addressing LGBT non-discrimination. For this reason advocates want to see stronger law enacted to protect the housing of transgender tenants.
Three new bills are pending in the House, which would add specific language that speaks to discrimination in housing based on sexual orientation or gender identity. In addition to the efforts of some elected officials to pass more meaningful and impactful law, HUD has also taken steps to address such discrimination, including proposing policy that would address the issue in the core HUD housing programs requiring participant’s compliance with any local anti-discrimination laws addressing sexual orientation and gender identity. Mortgage and loan discrimination based on the same type of discrimination is also a target for reform. Though these changes in policy still must face review by the public and the laws must be voted though the House, these are long awaited steps in the right direction.