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.

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