Takeaway Lessons from Recent Court Rulings on Fair Housing Law

In this month’s lesson, the Coach reviews recent court rulings on fair housing law. In each case, we review the events leading up to the dispute and how it landed in court. Then, we explain the legal issues involved, what the court decided and why, and highlight the takeaway lessons that you can use to avoid similar fair housing problems at your community. Finally, you can take the Coach’s Quiz to see how much you’ve learned.

RACE

Community Accused of Discriminating

Against Parents of Biracial Children

In May 2017, a court ordered the owner and managers of a Maine community to pay $15,000 in damages and a $10,000 civil penalty for race discrimination against the parents of biracial children.

WHAT HAPPENED: The case was filed by the state human rights commission on behalf of the parents of two minor children. The mother was white and the father was African American; their daughters were biracial and had African-American features. One of the girls was severely disabled and used a wheelchair, which was essentially a modified stroller. The girls lived with their mother, but when the disabled child was diagnosed as being terminally ill, the father planned to move in to help with her care.

A husband and wife owned the community; the husband was the manager and his wife worked in the office. In response to an ad, the mother called and spoke with the manager about an available townhome; she had a Section 8 voucher and had to be out of their current home in a month. After a lengthy discussion, she said the husband was sympathetic to her daughter’s condition and told her to expect a call from the office manager.

At the office the next day, however, the owner’s wife was taken ill; after being treated, she returned to work, but her duties were curtailed.

Meanwhile, the mother completed a written application, listing herself and the two girls as occupants, along with their father as a live-in aide. Soon after, the community conducted a credit check and scheduled a walk-through.

When she arrived at the walk-though with the children, the mother said the husband gave her daughter a weird look when he first saw her in her stroller. The mother said she was used to people looking at them in this fashion, but the other daughter said it was “not normal.” According to the girl, the manager asked her whether it was her father who was going to be living with them and she said yes; both the mother and the girl said they noted a change in the manager’s demeanor once he found out the girls’ father would be moving in.

After submitting the paperwork, the mother said she didn’t hear back about the status of her application and her attempts to communicate with the husband were unsuccessful. The day before they were supposed to move in, the mother said that the office manager emailed her, explaining that the husband had been so busy that he couldn’t complete the paperwork and could not help her “at this time.” He said the same thing when she spoke with him by phone the next day. The unit, which was not rented to anyone else, remained available for rental for months after the family was turned away.

The family filed a fair housing complaint with the state’s human rights commission, which sued the community for discriminating against the family based on race. After a series of proceedings, the court held a trial on the family’s claims that the community denied them housing because of the delay in processing their application.

DECISION: In favor of the family.

REASONING: The court found the community liable for violating fair housing law by denying housing to the family because of race.

At the trial, the husband denied that race played any factor in the delay in processing the mother’s application, insisting that he didn’t even know the girl’s father was African American. The court didn’t believe it: Based on what happened at the walk-through, the husband knew that the girls were the mother’s biological children, and that she was white, so it must have dawned on him that the father, who would be living with them, was African American.

The community argued that it had legitimate nondiscriminatory reasons for the delay in processing her application, offering various explanations for why the application process ended: The wife couldn’t do the paperwork, the office manager failed or refused to do so, and the husband had run out of time.

The court didn’t believe that the wife’s illness—or any of the other alleged justifications—adequately explained why the community discontinued the application process. Concluding that they were simply excuses, the court found that race was a motivating factor in the community’s decision to end the family’s application process.

• Maine Human Rights Commission v. Megunticook Management and Realty Co., May 2017

TAKEAWAY LESSON: Whenever you deny a rental application, you should document the legitimate, nondiscriminatory reasons for the denial—at the time you made the decision—to counter any suggestions that you came up with reasons after the fact to cover up discriminatory motives.

OCCUPANCY STANDARDS

Does Rule Limiting Studios to One Occupant

Violate Fair Housing Law?

In May 2017, a court ruled that a Washington community’s rule limiting studio units to one occupant violated fair housing law based on familial status.

WHAT HAPPENED: The community was a 96-unit apartment building: There were 57 425-square-foot studios, six 560-square-foot studios, and 33 one-bedroom units. The community rented the studio units only to single occupants.

While performing fair housing testing, a fair housing organization confirmed that the community was not renting the studio units to more than one occupant.

After filing a HUD complaint, the fair housing organization sued, accusing the community of violating fair housing law by applying a facially neutral occupancy restriction that resulted in a disparate, adverse effect based on familial status.

Both sides asked the court for judgment without a trial.

DECISION: In favor of the fair housing organization.

REASONING: The court ruled that the community violated fair housing law by applying an overly restrictive occupancy policy that had an adverse effect on families with children.

To bring a claim based on disparate impact (otherwise known as discriminatory effect), the organization had to show that the community applied outwardly neutral practices that resulted in a significantly adverse or disproportionate effect based on a protected characteristic. In this case, the fair housing group satisfied that requirement by producing statistical evidence from an expert on the policy’s discriminatory effect on families with children.

As a result, the community had to establish a legitimate, nondiscriminatory business reason for the policy by showing that: (1) it had a business necessity important enough to justify the occupancy policy; and (2) its policy was the least restrictive way to achieve that purpose.

The community offered two reasons to justify its policy limiting studios to one occupant. The first was based on its system for handling utility costs. Since it had only one electric meter, one water meter, and one gas meter for the entire building, the community explained that residents didn’t pay separately for water, electricity, or gas. Instead, the community paid the bill and incorporated the costs into the rent using a formula that “reflects the occupancy characteristics of the building.” The community argued that allowing more than one occupant in the studios would require the installation of meters in every unit to ensure a fair system for billing for the use of utilities in the building.

The court was not persuaded: Although ensuring a fair system for billing for the use of utilities in a particular apartment building was a worthy goal, the community offered no evidence that would allow the court to conclude that the community’s concern about fairness was anything more than an arbitrary, after-the-fact justification for the discriminatory policy.

The court also rejected the community’s other reason for the rule: that the configuration of the studio units was designed to accommodate only one person. The community failed to provide evidence that the units could not adequately accommodate more than one person. In fact, the city code allowed two people to occupy a studio unit as small as 150 square feet.

• Fair Housing Center of Washington v. Breier-Scheetz Properties, LLC, May 2017

TAKEAWAY LESSON: Under fair housing law, it’s unlawful to adopt overly restrictive occupancy standards that have the effect of excluding families with children. Whatever your policy, you should be prepared to show that you have substantial, legitimate, nondiscriminatory business reasons for your occupancy policy. Among other things, you should check applicable state and local occupancy codes, since some include an occupancy provision. Federal fair housing law generally defers to reasonable state and local restrictions on occupancy, so if your occupancy policy conforms to the codes, it will be difficult for your policy to be challenged.

RACE

Did Community Refuse to Rent to Hispanic Woman

Because of Her Race—or Because She Was a ‘Troublemaker’?

In August 2017, a court ruled that a Hispanic prospect could pursue claims that a Pennsylvania community denied her housing based on her race.

WHAT HAPPENED: In her complaint, the prospect stated that she recently moved from Puerto Rico and wanted to live closer to her daughter and grandchildren, who lived at the community. She arranged for a tour, accompanied by her daughter and son-in-law. During the tour, the prospect was apparently startled by a dog, fell down the stairs, and was taken to the hospital.

In incident reports submitted the next day, the prospect and the daughter complained that the dog’s owner had violated the community’s rules by leaving the dog unsupervised.

Despite her fall, the prospect submitted a rental application, but it was denied. The prospect sued, claiming that the community violated fair housing law by denying her housing due to her race.

The community asked the court for judgment without a trial.

DECISION: Request denied.

REASONING: Further proceedings were needed to resolve the prospect’s claim that the community denied her housing based on her race.

The community argued that the case should be dismissed because the prospect failed to prove she was qualified to rent at the community. According to a manager, it was the community’s unwritten policy to deny applications submitted by individuals threatening a lawsuit—that is, people with a “reputation of being a troublemaker.” But the court noted conflicting evidence, including the opinion of the leasing agent that the prospect was qualified to rent there.

Even if she were qualified to rent, the community argued that it had a legitimate, nondiscriminatory reason for denying her application: her “reputation of being a troublemaker” based on her unfounded allegation that the community was liable for her fall. According to an employee, the daughter came into the office threatening legal action unless the community paid the hospital bill from her mother’s fall.

In an effort to cast doubt on the community’s explanation, the prospect argued that the real reason for the denial was her Hispanic heritage, not her alleged threat of legal action. Among other things, the prospect argued that in her case, the community didn’t follow its own standard procedures for reviewing applications from people suspected of threatening legal action before denying her application.

Because of conflicting evidence, the court said further proceedings would be needed to resolve the case. It would be up to a jury to decide whether the prospect was qualified to rent at the community and whether the community’s actual reason for denying her application was her reputation as a troublemaker—or her race.

• Diaz v. Amore Limited Partnership, August 2017

TAKEAWAY: If you have policies in place for handling a given situation, then you should be prepared to show that you followed those procedures—or explain the reasons why you didn’t follow them in a particular case. Failure to follow standard procedures may not be enough to prove you did anything wrong, but it could be used against you to cast doubts about your motives.

NATIONAL ORIGIN

Did Community Discriminate Against Latino Residents

by Requiring All Occupants to Verify Lawful Immigration Status?

Here’s an update to a case that the Coach covered in May 2017. A court recently ruled that a Virginia mobile home park did not discriminate against four Latino families on the basis of race or national origin by requiring all residents and household occupants to present documentation of lawful immigration status.

WHAT HAPPENED: The lawsuit was filed by four married couples living at the park. All were noncitizen Latinos of Salvadorian or Bolivian national origin—the husbands were lawfully present in the United States, but the wives were not.

Until 2015, the park required all parties to a lease to provide documentation of lawful immigration status, so the husbands signed the leases, which had been renewed over the years. In 2015, however, the park changed its policy to require all occupants to provide documentation of lawful presence in the United States; the wives were unable to provide the documentation because they were in the country illegally. Because they didn’t produce the required documentation, the park converted their leases to month-to-month tenancies and raised the rent.

The residents sued, arguing that the community’s implementation of the new policy amounted to intentional discrimination on the basis of race and national origin. In earlier proceedings, the court refused to dismiss the case.

Both sides asked the court for judgment without a trial.

DECISION: In favor of the community.

REASONING: The community did not discriminate against the residents based on their race or national origin by requiring all occupants to produce documentation of lawful immigration status.

Although they were members of a protected class who were denied the opportunity to renew their rental agreements, the residents failed to prove that they were qualified to renew their leases under the park’s policies. That’s because some of the adult occupants could not produce the requisite forms showing lawful status—a requirement that applied uniformly to every household and applicant seeking to rent at the park. It was undisputed that the wives were unable to satisfy the policy—and prove lawful presence in the United States—not because of their race or national origin, but because they were, in fact, unlawfully present in the United States.

The residents failed to prove that the park harbored discriminatory intent against Latinos. In fact, the community presented proof that the park regularly rented lots to Latinos and noncitizens, more than half the park’s residents were Latino, its advertising was aimed at Latinos, and it employed Spanish-speakers at the park. Furthermore, the community leased lots to the husbands for years and never used the husbands’ race, national origin, or non-citizenship to deny them the right to enter rental agreements.

• De Reyes v. Waples, April 2017

TAKEAWAY LESSON: Fair housing law protects everyone—whether a U.S. citizen, lawful resident, or an unauthorized immigrant—from housing discrimination based on race, color, religion, sex, national origin, disability, and familial status. Fair housing law doesn’t specifically prevent conventional housing communities from turning away unlawful immigrants, but the law is in flux so it could be a risky practice.

ASSISTANCE ANIMALS

Community Challenges Punitive Damage Award

for Denying Request for Emotional Support Animal

Here’s an update to a case from the Virgin Islands that the Coach covered in September 2016. A court recently ruled that the community association must pay $45,000 in punitive damages for denying a resident’s request for an exception to its no-pet policy so she could keep an assistance animal as a reasonable accommodation for her disability.

The case dates back to 2009 when, during a six-month period, the resident suffered the loss of four people close to her, in unexpected, and in some cases, violent circumstances. One of those people was murdered in her presence. This bereavement caused her significant emotional and mental distress, causing physical symptoms, including insomnia and panic attacks. Around this time, the resident rescued a seven-pound stray Chihuahua, which helped her cope and made her feel safe.

Three months later, the community informed her that she had to remove the dog from the premises or face fines and possible legal action for violating the no-pet policy. After the community began assessing fines, the resident submitted a note explaining that the dog was a necessary companion. According to the resident, the office manager told her that her request was insufficient, but never explained what type of documentation was needed.

Eventually, the community sued for a court order requiring her to remove the dog from her unit. The resident wrote again, asking what documentation was needed to keep the dog, but the community didn’t respond. The community filed a lien on her property to cover expenses; though the lien was ultimately removed, the resident moved out. The resident’s attorney submitted a request for a reasonable accommodation, but the community did not respond or explain what documentation was needed to support a reasonable accommodation request. 

The resident sued, accusing the community of disability discrimination by denying her reasonable accommodation request to keep the dog as an assistance animal.

After a series of proceedings, the case went to trial last year. Ruling that the community violated fair housing law, the court awarded her $12,000 in compensatory damages for unlawfully denying her reasonable accommodation request to keep her assistance animal. The court also ordered the community to pay her $45,000 in punitive damages, ruling that the community was aware of its obligations under fair housing law, but acted with “reckless or callous indifference” to her federally protected right to request a reasonable accommodation.

The community asked the court to eliminate or reduce the punitive damage award.

DECISION: Request denied.

REASONING: Upholding the $45,000 punitive damage award, the court rejected the community’s claim that it did not act with “reckless or callous indifference” to her federally protected right. The evidence at trial proved otherwise: Despite being aware of its obligations under fair housing law, the community made no attempt to obtain relevant information regarding her disability despite her repeated requests for information and accommodation. Instead, it refused to engage in a dialogue with her, imposed fines against her, put a lien on her property, and sued her to remove the dog.

• Nelson v. Long Reef Condominium Homeowners Association, May 2017

TAKEAWAY LESSON: Whatever your policies on pet ownership, you must consider making an exception as a reasonable accommodation when requested by applicants or residents who need to keep an assistance animal due to a disability. Disputes over assistance animals often land in court, so it’s a good idea to get legal advice before taking action against residents for violating your policy if they say they have a disability-related need for an assistance animal.

DISABILITY

Indiana Community Accused of Denying Application

Because of Family Member’s Disability

Here’s an update to a case from Indiana that the Coach covered in the May 2016 lesson. After a court recently refused the community’s request to dismiss the case, the parties agreed to a settlement to resolve the matter.

WHAT HAPPENED: The lawsuit was filed after a woman allegedly visited the 156-unit cooperative community and expressed interest in a two-story townhouse for herself, her children, and her mother, who was quadriplegic. According to the daughter, she and the children intended to use the upstairs bedrooms, while her mother, who spent most days in a hospital bed due to paralysis, would use the downstairs living room.

After a second visit, the daughter said she and her mother filled out applications and soon after received an invitation to a “new member meeting.” According to the daughter, she went to the meeting and mentioned that her mother could not climb stairs; when asked why, she explained that her mother was quadriplegic.

A few days later, according to the daughter, the community rejected her application, explaining that the community wasn’t handicapped accessible and “it will be a liability to offer you a unit that is not accommodating to everyone in the household.”

After receiving the rejection letter, the daughter contacted a fair housing advocacy group, which investigated her claim. During the investigation, the group allegedly uncovered overly restrictive rules that discriminated against families with children.

The fair housing group sued the community for discrimination based on disability and familial status. The community asked the court to dismiss the case.

DECISION: Request denied.

REASONING: The court refused to dismiss the claim that the community discriminated against the family of the disabled woman. The complaint alleged that the mother, who had quadriplegia, was disabled and that the community became aware of this disability. According to the family, the community sent a rejection letter, explicitly stating that it would not rent to the family due to the mother’s disability. Nothing more was needed to allow further proceedings on the disability discrimination claim. (The court also refused to dismiss claims alleging discrimination based on familial status.)

• Fair Housing Center of Central Indiana v. Grandville Cooperative Inc., January 2017

Editor’s Note: In August 2017, the Fair Housing Center of Central Indiana announced a settlement in the case, stating that the community denied the allegations and admitted no wrongdoing, but agreed to resolve the case by entering into a settlement benefiting all involved parties.

TAKEAWAY LESSON: The law bans discrimination against applicants because they—or someone associated with them—has a disability. That means that it’s unlawful to exclude or otherwise discriminate against an applicant or resident because a family member, friend, or guest has a disability.

• Fair Housing Act: 42 USC §3601 et seq.