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Note: This case is not published in an official reporter and may not be cited as authority. Consult with counsel before relying on this case.
A district court magistrate addressed damages after a default judgment was entered for discrimination under the Fair Housing Act (FHA) and the Civil Rights Act of 1866. The magistrate's report and recommendation included $7,000 in compensatory damages, $6,600 in punitive damages, $9,700 in attorney fees, and $2, 100 in costs.
Gonzalez, a 23-year-old Honduran woman, responded to an ad for a basement unit in a three-flat owned by the Rakkas', who lived in one of the units. After touring the unit with Mrs. Rakkas, Gonzalez offered a deposit. Mrs. Rakkas refused to rent it, expressing concern over her youth and specifically stating, "Oh, Spanish people, they like to have loud music. Boom! Boom! You can hear it upstairs." Gonzalez contacted Open Housing Center (OHC, an equal housing organization that "tested" allegations of discrimination. Champlain, a black investigator, was the first tester. When she called to set up an appointment, Mrs. Rakkas inquired about her nationality, to which she replied she was "French." After viewing the unit and expressing interest, Champlain was told that another person had come to see it before her.
Baker, a white tester, also phoned and was given an appointment only after she stated she was of Northern European descent. When they toured the unit, Mrs. Rakkas said that the reason for this screening was that she wanted someone "nice and clear." and used the word "clear" several times; Baker took this to mean "light or fair skinned." Mrs. Rakkas agreed to rent to Baker. Later that day, Baker called to say she was no longer interested in the unit. Gonzalez then called to reaffirm her interest, but Mrs. Rakkas told her she would not rent to her, refusing to give a reason.
Gonzalez sued the Rakkas' for discrimination based on race, color, and national origin, alleging violations of the Fair Housing Act and the Civil Rights Act of 1866 (CRA). The district court entered a default judgment on the liability portion of the case. The damages portion was referred to a magistrate, who made findings and recommendations.
The magistrate revisited liability, noting that section 3604(a) of the FHA makes it unlawful to refuse to rent to someone on the basis of race, color, or national origin. However, the "Mrs. Murphy" rule, in section 3603(b), exempts units in dwellings occupied by no more than four families, if the owner actually maintains and occupies one of the units. Because the building had only three units and the Rakkas' resided therein, they were not liable under this section of the FHA for refusing to rent to Gonzalez. Section 1982 of the CRA, however, "prohibits discrimination on the basis of race in connection with housing, including the lease or rental of dwellings." The Rakkas' were liable for this civil rights violation. FHA section 3604(c) prohibits statements, with respect to the rental or sale of a dwelling, that discriminate on the basis of race, color, or national origin. The Mrs. Murphy rule does not preclude liability for such statement, so Mrs. Rakkas' statements regarding Spanish people subjected her to liability under the FHA. Further, under agency rules, Mr. Rakkas also was liable for his wife's actions and statements.
Regarding damages, the court noted that under the CRA and the FHA, a plaintiff is entitled to recover compensatory damages, punitive damages, injunctive relief, attorney fees, and costs. Compensatory damages include damages for intangible injuries such as emotional distress, humiliation, and embarrassment, and may be recovered regardless of whether there is any direct economic loss as a result of the defendant's discriminatory conduct. Under section 1982, a plaintiff should be awarded damages in an amount that fairly compensates her for her injuries. This amount was set at $7,000. The magistrate did not allow separate recovery of compensatory damages under the FHA claim. Punitive damages are awarded to punish and deter similar conduct by the defendant and where a defendant acts with reckless or callous disregard for the plaintiff s rights. The court found evidence justifying punitive damages and awarded $6,600, an amount equal to one year of rent under the proposed lease. The magistrate found it unlikely that the defendants would repeat their discriminatory acts and refused to impose injunctive relief. Finally, the court awarded $9,700 in attorney fees and $2,100 in costs to Gonzalez.
Gonzalez v. Rakkas, 1995 WL 451034 (E.D.N.Y. 1995). [Note: This opinion was not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]